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Katherine M. O’Regan, Assistant Secretary for Policy Development Message from the Assistant Secretary

This edition of Evidence Matters considers challenges and strategies related to housing finance and homeownership. It discusses barriers to buying a home, such as tightened access to mortgage credit, as well as the growing number of older homeowners with mortgage debt. This edition also considers the importance of high-quality, independent homeownership education and counseling. These issues are critical as HUD works to promote and expand sustainable homeownership.

The Office of Policy Development and Research (PD&R) is deeply involved in HUD’s work related to housing finance and homeownership. PD&R publishes regular analyses of national, regional, state, metropolitan, and local housing markets as well as the National Housing Scorecard, which is produced in partnership with the Department of the Treasury. Staff in our office monitor and analyze current trends in the health of the housing and mortgage markets such as foreclosures, home values, and credit terms, informing decisions throughout HUD.

Major PD&R studies have examined adjustable-rate mortgages, neighborhood effects in mortgage default risk, and Federal Housing Administration (FHA) single-family default and loss rates. Our office has published several reports illuminating the implementation and effects of housing counseling, including a comprehensive review of the state of the housing counseling industry and qualitative studies on prepurchase and foreclosure counseling. In 2015, PD&R published a report analyzing the implementation of the second round of the Neighborhood Stabilization Program, which was designed to help communities address the wave of home foreclosures after the housing crisis. With the support of a PD&R Research Partnerships grant, recent research led by Stephanie Moulton at Ohio State University examined the use of reverse mortgages to enable senior households to age in place.

PD&R staff are also overseeing an ongoing randomized controlled trial, The First-Time Homebuyer Education and Counseling Demonstration, which studies prepurchase counseling for first-time homebuyers in partnership with three major national lenders. This study promises to provide rigorous evidence on the effects of different types of housing education and counseling for prospective homeowners across a range of incomes, expanding the research base discussed in this edition of Evidence Matters. The study has recruited more than 5,800 low-, moderate-, and middle-income participants across 28 large metropolitan areas. Participating homeowners are assigned to a treatment group offered remote homebuyer education and counseling, a treatment group offered in-person education and counseling from a HUD-approved housing counseling agency, or a control group that receives no services. Several reports on the demonstration will follow, beginning with a brief report in summer 2016 that will present early insights on the initial enrollee sample.

In addition to research and data, PD&R has played an active role in developing innovations in housing finance in partnership with FHA and other agencies. PD&R worked with FHA to develop FHA’s automated underwriting system, including the TOTAL Mortgage Scorecard. Recently, PD&R staff have been examining recent improvements in credit scoring with the prospect of expanding opportunities for sustainable homeownership. PD&R played an important role in the development of FHA’s Small Building Risk Sharing Initiative, which aims to expand lending to owners of small multifamily buildings — a key source of affordable housing in the United States. And more than 20 years ago, PD&R staff were heavily involved in the creation of FHA’s Home Equity Conversion Mortgage (HECM) program, which offers reverse mortgages for senior households.

On that note, I want to recognize the tremendous contributions of longtime PD&R housing finance staffer Edward J. Szymanoski, who passed away earlier this year. Ed joined PD&R in 1985, where he served most recently as Associate Deputy Assistant Secretary for Economic Affairs. Ed was a principal architect of FHA’s HECM: he developed the HECM actuarial model, proposed core elements of the HECM design, and played a key technical and research role as the HECM demonstration developed into a full-scale program. Ed was an internationally recognized expert in reverse mortgage lending, working with the World Bank on several projects. Over the past few years, Ed played a critical role in helping the HECM program recover from the effects of the housing crisis. We are very grateful for Ed’s many contributions to HUD and housing finance, and we miss him dearly.

— Katherine M. O’Regan, Assistant Secretary for Policy Development and Research


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