A lot can be accomplished in 50 years

This year, the Department of Housing and Urban Development (HUD) turns 50. And after 50 years, it’s clear that HUD and the many programs that fall under its jurisdiction, including but far from limited to the Federal Housing Administration (FHA), are broken.

As the chairman of the Financial Services Subcommittee on Housing and Insurance, I hear firsthand from individuals who are getting ready to purchase a new home, from those who lost equity in a home or were pushed into a purchase they couldn’t afford and are now facing foreclosure, and from those who are desperate for temporary housing support so they can get back on their feet. While the depths of the latest economic crisis are behind us, millions of Americans continue to face a housing crisis.

The story in Missouri is the story heard across the nation: housing authorities are full, wait lists are closed, and a lack of affordable housing is a crisis in and of itself. The status quo isn’t acceptable. We don’t seem to be much better off than we were 50 years ago. We continue to throw money at HUD in hopes that these issues will evaporate. Taxpayers have sent more than $550 billion dollars to HUD since fiscal 2002, yet we find ourselves in the same or worse condition year after year. More must be done with less, innovation must be fostered and not rejected outright. We can and must do better.

It’s not just homeowners and those in need who have been impacted by stagnant housing policy: every U.S. taxpayer has had to foot the bill for failures at Fannie Mae, Freddie Mac and the FHA. Despite the warning cries, we are headed down a virtually identical path as the one traveled before the financial crisis hit. We continue to read that both Fannie and Freddie are in trouble; weak earnings reports and operations by Freddie at a level of near loss demonstrate the need for an overhaul of the housing finance system. More failures are likely.

The FHA seems to be gliding down a track of expansion with no regard for proper risk management. In previous years, the FHA’s mission evolved to serve targeted populations such as first-time homebuyers and communities with limited access to credit that were shut out of traditional mortgage markets. Today, in a display of unparalleled mission creep, the FHA has taken on a dramatically expanded role, deciding to grow its way out of its fiscal problems by lowering its premiums and claiming an even greater share of the mortgage insurance market.

Our country needs sustainable housing programs and a mortgage finance system that allows for innovation and puts the U.S. housing market on a forward trajectory. However, the archaic policies at HUD combined with the reckless mismanagement of the FHA and government-sponsored enterprises prohibit a stable housing system from emerging.

So, what will the future of housing look like? If the objective is to build a system that protects taxpayers and homeowners and allows for a smarter housing safety net, the answer is reform. To ensure efficiency, we need organizational reform at HUD and leadership at the FHA and the Federal Housing Finance Agency that understands the importance of risk management. To protect taxpayers, the FHA must return to its mission and allow for more private market participation. To create a stable housing economy, we need to continue to press for responsible housing finance reform that encourages a culture of sustainability among homeowners. To help those most in need, we must push for innovation at HUD, the U.S. Department of Agriculture and other federal agencies that need to reduce the regulatory burdens that those who work tirelessly to serve their communities face.

The House Financial Services Committee will continue to tackle some of the problems inherent in our government-backed housing system. In addition, we must maintain a balance between providing people with an opportunity for the American dream and forcing a fiscal nightmare onto taxpayers across the country.

To make the future brighter, Congress and the Obama administration are going to have to work together and make tough decisions, because the simple truth of the matter is that the status quo serves no one. We cannot continue to head down the exact same broken path we’ve followed or double down on failed policies. It is time for real housing reform to be enacted in America.

Luetkemeyer represents Missouri’s 3rd Congressional District and has served in the House since 2009. He is chairman of the Financial Services Subcommittee on Housing and Insurance, and sits on the Small Business Committee.