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16 | Th e M Rep o RT cover story H UD Secretary Julián Castro has called 2015 "The year of housing opportunity." So when he announced in late March that he was tasking Edward Golding with the newly created role of Principal Deputy Assistant Secretary (PDAS) for the Office of Housing, all attention turned to what this new figure would bring to the role—one he took over from acting commissioner of the FHA Biniam Gebre. Dedicated, visionary, and optimis- tic about the future of homeowner- ship, Golding has spent more than 25 years in mortgage finance in both the public and private sector. Prior to joining HUD in 2013, he held sev- eral senior positions during a 23-year tenure with Freddie Mac—where he served as SVP of Economics and Policy, Program Executive of Making Home Affordable, SVP of Economics and Strategic Analysis, and SVP of Capital Oversight and Economics. Despite his busy schedule shaping the future of American homeown- ership, Golding sat down with us this month to address your pressing questions on the FHA, mortgage insurance, housing, down-payment assistance, and more. M // You're relatively new on the job. What made you interested in public service? What principles drive the way you approach your new role as Principal Deputy Assistant Secretary for the Office of Housing? golding // I am from Ohio and I have been lucky to have a career that has given me the opportu- nity to work in academia, and in the public and private sectors. I believe in public service and come by the commitment from my family, as my father was an academic and my mother worked in the public health administra- tion. Spending time in both the public and private sectors has led me to some core principles that, despite the differences between those environments, work well in both. I think it is important to try to make the right decision. That is often easier said than done, and as Mark Twain said, doing the right thing will gratify some and amaze the rest. I value clarity, simplicity, and collaboration; keeping these things in mind when problem- solving or making a decision gen- erally leads to the right outcome. M // Shortly after HUD Secretary Julián Castro announced the new position of Principal Deputy Assistant Secretary of Housing, Sen. Charles Grassley (R-Iowa) voiced criticism that such a role should have been nominated by the White House and confirmed by the Senate, as has been traditionally done in the past with the role of FHA Commissioner. What is your response to the criticism about the way your hiring was structured? golding // The appointment of a Principal Deputy Assistant Secretary is a necessary step so that HUD can continue to serve the American people. Ultimately, the employees and the public deserve to have someone lead the program. It is important to have committed public servants in leadership roles, as it supports the goal of effectively managing the organization. Also, this is not new; the PDAS position is utilized at other government agencies (such as the departments of State, Labor, and Defense). M // In your new role, how will you continue to promote the FHA's initiative of providing low-cost mortgage insurance to qualified borrowers? golding // FHA has been providing mortgage insurance for 80 years, creating the first fixed- rate mortgage during the Great Depression. With such a history, I welcome the responsibility of carrying on FHA's great tradition. We are coming out of the recession well-positioned to meet our mis- sion, and I look forward to con- tinuing our long history of helping qualified families buy a home. M // At the start of the year, the FHA lowered its mortgage insurance premiums for the first time since 2001. What does the FHA hope to achieve by this action? How would you respond to some criticism that such a move could put taxpayers at increased risk? golding // It was clear that by lowering premiums we could help homeowners and continue to build the Fund. We have been very focused on improving access, and the premium reduction improves access by increasing affordability. The reduction is expected to help more than 800,000 borrowers each year save an average of $900 each. This means about 2 million house- holds will save a total of $2 billion over the next three years, and we anticipate that about a quarter of a million new borrowers will come into the market over the same time period. Prior to the reduction, FHA pre- miums for its 2014 book were more than four times the amount needed to cover the credit risk on those loans. The Urban Institute wrote a report, "FHA: Time to stop overcharging today's borrowers for yesterday's mistakes." Many other advocacy groups were raising con- cerns about the impact of the steep premiums on prospective home- owners, especially first-time buyers. Reducing premiums helps us more effectively serve many low- and moderate-income households. Even with the decrease, pre- miums remain 50 percent above the pre-crisis levels. The decision to reduce premiums allows us to facilitate affordability and continue to build the Fund. M // What are the FHA and HUD currently doing to try and transfer the risk to the private market and away from taxpayers? golding // FHA currently transfers risk to the private sector in different ways. For example, the Distressed Asset Stabilization Program, where mortgage notes are sold to investors, is one of the ways FHA shares risk on non-performing assets with pri- vate sector investors. Additional risk-sharing makes sense only if the incentives for FHA and any private players are appropriately aligned. FHA would have to consider a wide range of fac- tors, including how sharing risk impacts costs to borrowers, affects "ed brings a wealth of knowledge and insight to his new role. [he] has been an invaluable adviser to me during my time as secretary, and I'm confident that his experience and vision will be an incredible asset to FhA and the office of housing." —HUD Secretary Julián Castro 3MReport.indd