Raphael Bostic

Raphael Bostic—a professor at the USC School of Policy, Planning, and Development and President Obama’s nominee for Assistant Secretary of Policy Development and Research for HUD—said the nation needs to change the message it sends to borrowers and lenders in this country.

Bostic said that for decades people bought homes because they wanted to live in them, but that beginning in the late 1990s a trend developed where people began purchasing homes as investment vehicles. All seemed well, as long as housing prices were on the rise, but when home values began to fall, cracks in the system were exposed.

He believes the country needs to have a frank conversation about home ownership and renting and the circumstances under which one or the other may be the better option.

Bostic called for three specific actions that he believes will help: simplify the process of buying a home; increase the financial literacy of borrowers; and enforce rules that protect borrowers.

• How to Address Housing Conditions?
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• Bostic says all levels of government are discussing how to address housing conditions. (28 seconds)
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• Local Government Can Be Creative in addressing the Housing Crisis
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• Bostic says current regulations allow local government to be creative in addressing the housing crisis. (42 seconds)
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Richard Green

Richard Green, Director of the USC Lusk Center for Real Estate at the University of Southern California, believes that Government Sponsored Enterprises (GSEs), such as Fannie Mae and Freddie Mac, will need to change the way they operate to adapt to the environment brought on by the financial meltdown tied to the housing industry.

Green said that the GSE model—this hybrid of public and private organizations—worked well for a while in that it offered something desirable that isn’t found in other places around the world: a 30 year fixed rate mortgage with a prepay option.

However, he called for some alterations to be made. Green said GSEs should be limited in what their investment portfolios contain and that they should be expected to adhere to more stringent capital requirements. He also said that he believes we’ve taken our collective eye off the interest rate ball and that if short-term interest rates go back up to, say, 5 percent, it could put pressure on the housing industry and the GSEs in particular.

• Reforming Fannie Mae and Freddie Mac
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• Green addresses how to reform Fannie Mae and Freddie Mac. (1 minute 15 seconds)
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• Home Ownership is Not the Way to Build Wealth
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• Green contends homeownership is not the key to building wealth. (1 minute 4 seconds)
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Peter Skillern

Peter Skillern, Executive Director of the Community Reinvestment Association of North Carolina, said that the housing crisis has had a disproportionate effect on African Americans and that he has not seen an appropriate response by regulators.

Skillern believes civil rights and housing development are interrelated and that financial regulation reform is necessary to address this connection.

Skillern offered several principles for reform. Lending institutions, he said, need to be more accountable and must offer products and services that are appropriate to borrowers’ needs. Regulators need to be more transparent in how they regulate. And financial institutions must avoid conflicts of interest, such as paying the agencies that rate them.

• Three Goals for National Housing Policy
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• Skillern offers three goals for national housing policy: Modernize FHA, provide greater resources to communities, and expand loan modifications. (40 seconds)
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• Expanding the CRA to other Financial Institutions
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• Skillern suggests the Community Reinvestment Act should expand to other financial institutions. (20 seconds)
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