Scott Turner, President Trump’s nominee for Secretary of the U.S. Department of Housing and Urban Development (HUD), was confirmed today by the U.S. Senate by a vote of 55-44 and was sworn in as the 19th HUD secretary, taking the helm of the sixty-year-old agency at an extraordinary time.
The challenges in the housing market are many, including persistently high mortgage rates, a paucity of housing inventory, growing demand for subsidized housing, record levels of homelessness, and large-scale redevelopment needs following natural disasters.
So, what awaits the new Secretary, President Trump’s former White House Opportunity Zone czar and NFL star, and what are the most significant challenges and opportunities to tackle?
For starters, HUD is a $73 billion enterprise that additionally controls more than $2.6 trillion in government-guaranteed mortgages. As always, policy equals personnel so it will be critical for Secretary Turner to fill key positions with seasoned professionals in public and subsidized housing, fair housing/lending, mortgage banking, and financial markets.
Public and Indian Housing and Project-Based Rental Assistance represent the vast majority of the HUD budget — more than $43 billion and assists over 4.6 million households. The unmet need in public housing is enormous and is related to the housing affordability crisis that millions of Americans are encountering, leaving many homeless.
According to HUD, the number of people experiencing homelessness in 2024 rose more than 18% from the prior year. The National Low Income Housing Coalition estimates there is a shortage of 7.3 million units of affordable rental homes across the country, in particular high-cost metropolitan areas. Turning the tide on this scourge will be one of Secretary Turner’s more significant feats.
Living up to the letter and spirit of the Fair Housing Act is core to HUD’s mission. Secretary Turner will need to navigate difficult terrain that ensures and strengthens HUD’s robust fair lending and fair housing enforcement while resolving the Biden Administration’s withdrawal of the previous Trump administration “disparate impact” rule (and its replacement with an outdated Obama era rule from 2013). He will want to keep any new measures in line with the Supreme Court’s Inclusive Communities decision which outlined a path that permits HUD to fulfill its mission to encourage affordable housing.
The Federal Housing Administration (FHA), while enjoying record levels of capital as home prices have risen, has uncertainty ahead as a large number of borrowers continue to redefault on their loans. The FHA portfolio is north of $1.5 trillion and more than 8 million active loans.
Today, more than 1.7 million FHA borrowers, however, utilized a so-called “partial claim” to get their mortgage current and keep them in their homes. Four years ago, that number was 400,000. FHA has done an admirable job of keeping distressed borrowers in their homes in the aftermath of the pandemic, evolving its workout or “loss mitigation” processes as needed, but these programs can only do so much.
Additionally, HUD’s reverse mortgage portfolio continues to experience stress largely due to the current interest rate environment. Despite a seemingly strong capital position as reflected in the most recent report to Congress, higher interest rates have slowed the origination volume and significantly impacted lenders’ warehouse lines.
All of this points to the need for strong risk management, not only at FHA but throughout the department. Given the magnitude of the portfolio and the complexity of the programs, a keen focus will be vital in the next four years.
HUD’s Housing office will also need to continue to manage its manufactured housing oversight effectively. Manufactured homes currently provide a roof overhead for over 22 million American households, not insignificant at all, so it is incumbent upon HUD to ensure this affordable option remains viable.
Often overlooked is the Government National Mortgage Association (Ginnie Mae), whose senior leadership is understaffed with recent retirements and staff departures. Remarkably, there has not been a Republican Senate-confirmed Ginnie Mae president since 2009, though its importance to our housing system cannot be understated as it backs FHA, USDA, and VA loans. This sub-agency within HUD also has the eyes of the global financial markets on them with nearly half of Ginnie Mae securities owned by foreign investors.
In the next few years, Ginnie Mae will need to transition its Mortgage-Backed Securities (MBS) platform from pool-level to loan-level functionality, including the ability to transfer servicing of individual loans within a pool, a goal set by the last Trump Administration. A large-scale redesign initiative, costing tens of millions of dollars, is underway to ensure that the platform meets the needs and expectations of stakeholders. Ginnie Mae is also making changes that will enhance liquidity for HUD reverse mortgages, significantly reducing Ginnie Mae Issuer default risk through the development of Ginnie Mae HECM MBS 2.0.
In recent years, tens of billions of dollars have flowed through HUD to assist communities with natural disasters. While FEMA is the tip of the spear during these disasters, lesser known is HUD’s outsized role in the long-term recovery of individuals and households and in the redevelopment of devastated communities. Secretary Turner will likely spend a good portion of his time ensuring assistance flows efficiently, effectively, and with integrity, which means those who need actually benefit from the assistance, and in a timely way.
HUD will need to continue to upgrade its IT infrastructure in order to manage the myriad issues awaiting the new HUD Secretary. FHA IT modernization was an important work-in-progress under both the Trump and Biden Administrations. While a focus at FHA, systems need to be modernized throughout HUD to improve performance.
In short, there are enormous challenges and opportunities that await the new HUD Secretary and his team. Secretary Turner beat strong odds when he spearheaded the last Trump Administration’s Opportunity Zones that benefited underserved communities to the tune of billions of private investment that transformed lives.
There is every indication Secretary Turner will again meet the moment for the benefit of millions of Americans who are relying on him today.
Brian Montgomery is a founding partner of Washington, D.C.-based Gate House Strategies. Montgomery previously served as Deputy Secretary of HUD in the first Trump Administration, a position he held concurrently with Commissioner of the Federal Housing Administration.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story:
Brian Montgomery at Brian.montgomery@gatehousedc.com
To contact the editor responsible for this story:
Sarah Wheeler at swheeler@housingwire.com
