"Be aspirational:" Housing vet Joe Ventrone on fixing supply

October 11, 2024 5:01 AM

Joe Ventrone has worked in housing policy since 1974. That is almost as long as the Department of Housing and Urban Development has existed.

One of his first jobs was as an elevator operator in the U.S.Senate from 1971 to 1973.

Since elevators were already automatically run at the time, Ventrone's job was mainly "organizational and traffic control," he said.

Reminiscing Ventrone recalls frequently running into the current president.

"I got to know this new senator from Delaware who lost his wife, named Senator Joe Biden," said Ventrone. "So what's really interesting in my life now is I'm sitting here seeing President Biden going through everything he's going through. And I looked back and I said, 'Gee, I knew him when he was first elected to the U.S. Senate and I talked to him.'"

Afterwards, Ventrone went on to work two separate stints at HUD, also serving for 17 years as the deputy staff director at the House Financial Services Committee. He also spent 22 years at the National Association of Realtors.

Currently, the housing policy veteran is a consultant for NAR and is also writing a book rehashing his adventures working on Capitol Hill.

Ventrone says the main issue facing housing is the lack of supply. And only once that is addressed, affordability will increase in tandem. He thinks manufactured housing and rezoning are answers to how supply can be increased in the short-term.

Speaking of HUD, where in total Ventrone worked for almost a decade, the agency has outlived its usefulness, the housing vet said. "HUD was created in the 60's and since then things have changed," he said. "It has to be significantly transformed because right now it's still operating the same way as it was when it was first created."

Vetrone sat down with National Mortgage News to discuss the most impactful housing legislation in the past five decades, why he might be a good choice for a housing czar and the future of affordable housing.

Talk a little bit about our nation's housing supply issue. What legislation is out there to address it?

We have a housing crisis. The good news is that over my 50 years in this area, it has now made the charts, meaning the President of the United States is discussing it. Presidential candidates are discussing it. It's on everyone's radar.

The bad news is they have not found a way to address it, and the way to address it is very, very simple. Our country needs more supply. There's various ways to do it, and state, local and federal, all have a piece of the action. The heavy lifters are basically at the state and local level, and have to open up zoning and local regulations to promote more production of homes. At the federal level, there is now legislation called the National Home Neighborhood Improvement Act that would give tax incentives to refurbish houses. Everyone agrees with the legislation, the problem is, we're in an election year. We have political discourse on the Hill where you can't get anything done. I mean, it took almost an assassination for them to give more money to the Secret Service to protect our presidential candidates, so after the election, hopefully something will come to pass on that legislation.

Can you share your thoughts on Kamala Harris’ proposals to increase housing and address unaffordability concerns?

Harris proposed two things. One was a $25,000 down payment assistance, and the other was a home builder subsidy to build 3 million new homes.It is far more important to address our supply problem than the down payment program. The down payment is a demand thing. The down payment could actually increase the cost of housing, but that is not our problem. Our problem is supply, not demand. We already have demand. We have a lot of demand. People can't execute their desire to purchase a home because there's not enough supply.

You have got to start somewhere. What we need more is a mindset. If there is a mindset in this country, I think the ingenuity of the private sector, our local and state government will be inspired to do something.

If there is a goal to have 3 million houses, this is an aspirational thing. What comes to mind is the U.S. Housing Act of 1949. One of the pillars of the act is that it's a matter of law that everyone should have decent, safe and sanitary housing. That was an aspirational thing. So the way I look at this 3 million homes subsidy idea is aspirational. We have to be aspirational to get something done.

Apart from supply, there is an unaffordability problem. Could something like an additional FHA MIP cut help?

That's on the demand side that it helps people if there is housing. So it's almost like the down payment idea, that's on the demand side. I give much credit to the FHA Commissioner, Julia Gordon, but that is basically a drop in the bucket because it's on the demand side. We need supply.

Single-family zoning is a hot button issue. Everybody likes their little single-family developments with the white picket fences. They don't want anything to change their way of living. But we should think about expanding housing options.

Manufactured housing is something that I've dealt with all of my professional career. When I was at HUD, manufactured housing was a hard nut to crack. Manufactured housing now is coming of age as a suitable, respectable, single-family option. This is where I see the future.

Former President Trump floated the idea of releasing the GSE’s from conservatorship. What’s your take on this?

He tried doing it when he was president and it didn't work, right? I was always a believer that we could reform Fannie and Freddie and get them out of conservatorship. I am not a believer that in my lifetime, that will not happen. Fannie and Freddie are now working well. We now have two utilities that are serving a very important function of mortgage liquidity. The inertia of getting them out of conservatorship…I do not think there's a political will for that to happen. The GSE's will be appendages of the federal government, and they are utilities that will serve the mortgage market. Each political party uses them for their own policy goals.

When Sandra Thompson got appointed to her job. I was at a forum, and I told her, I said, 'Sandra I believe under your leadership, they will get out of conservatorship, and it will be like the cicada event that happens every 17 years and they'll be out of conservatorship.' I do not believe that's the case anymore.

Should there be a housing czar that directs future administrations on housing policy?

I'm actually thinking this through myself, but maybe you do need one person in the White House that can orchestrate all those people. You need to get someone that can corral all those people right and get them to collaborate, talk to each other. Yes, we need it. And with what I know and what I've done, I'll gladly take the job.

What do you think is the biggest issue that mortgage lenders, servicers and players in the housing space will have to face that no one is talking about?

Insurance is literally the next disaster waiting to happen. When you look at states like Florida and California, insurance companies are pulling out and climate change is a factor.

The National Flood Insurance Program is another outdated dinosaur that is a victim of benign neglect. There are ways to fix it. FEMA, to its credit, has come up with a risk rating, but states that it will impact there's political inertia to actually run these programs.

Something has to be done on home insurance, flood insurance, because it is impacting home sales. People can't afford a home. If they can afford a home, they can't afford the insurance bill, and you're required to have [flood] insurance in certain areas. The good news is people are beginning to talk about it. There's articles written at least three times a week on it, but we just haven't dealt with it. But it's something that's going to be dealt with. Climate change is a political hot potato…maybe they need to come up with another word for it.

You worked at NAR since 2003 and recently retired. I'm curious to hear what your take is on the recent NAR settlement and the policy changes that come with that?

They've been around for 115 years, and I think part of their problem is they tend to be too insular. Commissions have always been negotiable, but I think they probably could have done a better job explaining that. The suit that happened in the resulting settlement, is a very unfortunate thing, because when you look under the hood, very little has changed, yet it seems to have disrupted the home buying process to people that we serve, and that is the minority first time home buyer.

If you were to get back into politics and advise those in Congress, what would you push for when it comes to housing policies?

Don't reinvent the wheel, do things to be supportive of things that are already happening at the state and local level. One example is manufactured housing. Manufactured housing now, after all these years, has taken hold, so now there is a movement to remove the axle. These manufactured homes are required to have an axle, because they are mobile. They're on wheels, but now we are using these homes where they're being put on foundations, so why have an axle that adds to the cost? And if they have a basement, they're going to be looking at an axle. They can maybe hang their laundry on it, but it's not necessary and by removing it you're going to reduce the cost. So that is one example. Standards proposals on the Hill to amend the HUD code to remove the axle. That's an example. That's an example of things that the federal legislature can do to reduce the cost of housing and make things work at the local level.

You said that HUD has outlived its usefulness. Please explain?

It was created in the 60's as a result of the racial riots and stuff like that. We are way beyond that. The good news is the last eight years, Trump years, the Biden years, HUD has actually been out of the limelight, doing its job.

I think if we had to do it over again [HUD should be] significantly transformed. It is still operating under some of the same rules of what it was first created.

FHA should be totally separate. And if FHA were totally separate, on the technology side, FHA would be able to do the things they would be able to do. FHA should not be part of HUD, just like Ginnie Mae is technically not a part of HUD. These are independent appendages…so that's something to be continued. We as a country should look at HUD and figure out how it can be pivoted to do better its mission, better in state and local communities.

What is the most impactful piece of legislation passed since you’ve been in housing?

One of the most impactful pieces of legislation was the reform of Freddie Mac in 1992. This legislation basically made Freddie more like Fannie. Freddie Mac was part of the Federal Home Loan Bank System. Freddie Mac started out as a liquidity, a secondary market just for the [savings and loan] industry, and then that legislation basically transformed Freddie to be just like Fannie Mae, so we created similarly situated secondary mortgage markets. We now had a duopoly. So there was a little bit of competition between the two of them.