Indicating both that it's the right thing to do, and that he's serious about remaining a contender for Clinton's veep, HUD Secretary Julian Castro is tackling the issue his most strident critics on the left are blasting him over: fixing how the agency handles foreclosed homes and loans.
Targeted by progressive activists hoping to kill his chances of being Hillary Clinton’s running mate, Julián Castro is set this week to announce changes to a hot-button Housing and Urban Development program to sell bad mortgages on its books.
The changes, which HUD officials will brief stakeholders and activists on during a conference call on Monday, could be made public as early as Tuesday — depending on when department lawyers give the green light to publishing them in the Federal Register.
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But they won’t take effect before the next auction of HUD mortgages, scheduled for May 18.
Castro’s actions could potentially defuse an issue that activists have been using to question his progressive credentials — and he’ll be doing it at the moment the running mate search has begun to get serious at Clinton campaign headquarters.
Among the changes, according to people with knowledge of what’s coming: The Federal Housing Authority will put out a new plan requiring investors to offer principal reduction for all occupied loans, start a new requirement that all loan modifications be fixed for at least five years and limit any subsequent increase to 1 percent per year, and create a “walk-away prohibition” to block any purchaser of single-family mortgages from abandoning lower-value properties in the hopes of preventing neighborhood blight.
And why does all that matter? Because nearly all HUD foreclosed properties were being sold to the banksters and not people who needed homes, and anti-Wall Street activists were slagging Castro for the practice (rightfully, in my view.)
HUD officials say that the timing isn’t a response to the activist pressure or the presidential campaign calendar.
“It has always been our goal to get the policy right, regardless of arbitrary deadlines, and we expect to announce those changes this week,” said HUD press secretary Cameron French.
But the changes come after two years of calls by activists — joined last September by Sen. Elizabeth Warren (D-Mass.) — for major reforms to the Distressed Asset Stabilization Program. Their calculations — numbers that HUD says are way off — allege that during Castro’s tenure, 98 percent of problematic mortgages the department has sold went to Wall Street firms that they say were responsible for the housing crisis in the first place.
The number of people who believe that the pressure of activists didn't have anything to do with this HUD policy change can be counted on zero hands, and yes, it's something that Castro should have done two years ago, but it looks like this is getting fixed starting this week. He gets credit for doing what activists wanted him to do here, enlightened political self-interest or not.
But it seems to me that, again, Castro remains on the short list for Clinton's veep selection in July.
We'll add our tag for him now, because I'm sure we'll be hearing more from him in the future.4:00