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Here We Go Again: HUD Secretary Julian Castro Repeats His Mom's Friend Henry Cisneros's Ploy
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April 05, 2015, 09:11 AM
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Cisneros, a Castro, and movie director Robert Rodriguez

Julian Castro, the Obama’s Administration’s Secretary of Housing and Urban Development, grew up in San Antonio with Henry Cisneros hanging around his house now and then. Cisneros went on to become honorary mayor of San Antonio and the Clinton Administration’s HUD Secretary. In 1994, Cisneros bullied Angelo Mozilo of Countrywide Financial into increasing lending to Hispanics to fight discrimination. Mozilo became a true believer and made Cisneros a director of Countrywide. Here’s a press release from January 13, 2005 in which Angelo Mozilo announces Henry Cisneros will help him lend a trillion dollars to minorities and lower income borrowers, which helped launch the 2005-2007 metastatic era of the housing bubble.

Learning from our national mistakes is racist, however, so …

Here’s a press release from National Association of Realtors:

HUD Secretary Tells Realtors® FHA is Exploring Alternative Credit Scoring Models to Expand Mortgage Access

Apr 01, 2015, 15:09 ET from National Association of Realtors

WASHINGTON, April 1, 2015 /PRNewswire/ — A diverse group of housing industry stakeholders participated in a credit access symposium today to discuss how alternative credit scoring models could expand access to mortgage credit for responsible borrowers who may have thin credit histories or extenuating circumstances like medical debts.

The event, co-hosted by the National Association of Realtors®, the Asian Real Estate Association of America and the National Association of Hispanic Real Estate Professionals, included two roundtable discussions and a keynote address from Secretary of Housing and Urban Development Julian Castro.

“Realtors® support safe, responsible access to mortgage credit for borrowers who can show they are ready and able to own a home and keep up with monthly payments. Unfortunately, overly restrictive lending, except to buyers with near-pristine credit scores, prevents many otherwise qualified buyers from entering the housing market,” said NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark.

NAR first called on federal regulators and the credit and lending communities in 2011 to reassess the entire credit structure and look for ways to increase the availability of credit to qualified borrowers who are good credit risks.

Work by the Harvard University Joint Center for Housing Studies indicates that borrowers with lower incomes as well as minorities face higher rejection rates on their mortgage applications. NAR analysis of mortgage data from 2007 to 2013 indicates that the share of rejected loans due to credit scores was significantly higher for African Americans and American Indians.

“If lenders and the government-sponsored enterprises were to adopt alternative credit scoring methods, such as FICO 9 and VantageScore 3.0, they could expand access to mortgage credit without dramatically increasing risk in the housing market,” said Polychron.

The newer credit scoring models put less emphasis on the impact of unpaid medical bills, and the effect of missed payments on debts that have subsequently been paid off is eliminated. FICO 9 and VantageScore 3.0 incorporate public utility and rental housing payments, information that helps lenders to evaluate younger persons and minorities who might not have a history of credit use. FICO estimates that its new model could improve scores by 25 to 100 basis points.

“The biggest limitation to borrowing is tight credit standards,” said NAHREP Past President Jerry Ascencio. “These conditions are exacerbated by outdated credit scoring models that don’t take into account the unique spending and savings patterns of Hispanic borrowers. Alternative credit scoring models need to consider these patterns so creditworthy borrowers are not turned away from the American Dream of homeownership.”

Jim Park, AREAA past chair, noted that there was a clear consensus from all of the symposium’s participants that the government-sponsored enterprises should update their scoring models and also create added market competition in the credit evaluation system.

“These critical efforts will expand credit to more minority and immigrant consumers and reverse the unfortunate trend of homeownership decline in America,” he said.

At the event, Secretary Castro underscored the agency’s commitment to widening the circle of opportunity for responsible families by making homeownership more affordable and accessible.

“FHA’s work alone will not solve all the industry’s challenges, which is why I appreciate this focus today on out-of-the-box thinking,” he said. “I know that new credit scoring models are being developed so that non-traditional factors can be considered when determining creditworthiness.”

Castro said FHA is exploring the use of new credit scoring models. “We’ll look at every option that brings housing opportunities within reach of more Americans,” he said.

I’ve read a lot about Castro, his Congressman identical twin, and his old Chicano radical mom, but not about his father. So I spent hours one night looking into whether the father of the Castro Twins just might be Henry Cisneros. And … almost certainly Cisneros is not. Cisneros looks like the Mexican Jon Stewart, while the Castro twins look like Chino in West Side Story. I finally found a picture of Julian attending a luncheon for his father upon his retirement as an obscure schoolteacher.

So, that’s kind of boring.

But Castro as a replay of Cisneros as the Great Beige Hope of the Democrats is definitely a Thing. Cisneros appears to be remembered more as a talented politician shipwrecked by a marital scandal than for his role in housing bubble.

Yet, here’s a New York Times article from October 2008 about how Henry Cisneros helped blow up the world:

THE RECKONING

Building Flawed American Dreams

By DAVID STREITFELD and GRETCHEN MORGENSON

Published: October 18, 2008

SAN ANTONIO — A grandson of Mexican immigrants and a former mayor of this town, Henry G. Cisneros has spent years trying to make the dream of homeownership come true for low-income families.

As the Clinton administration’s top housing official in the mid-1990s, Mr. Cisneros loosened mortgage restrictions so first-time buyers could qualify for loans they could never get before.

Then, capitalizing on a housing expansion he helped unleash, he joined the boards of a major builder, KB Home, and the largest mortgage lender in the nation, Countrywide Financial — two companies that rode the housing boom, drawing criticism along the way for abusive business practices.

And Mr. Cisneros became a developer himself. The Lago Vista development here in his hometown once stood as a testament to his life’s work.

But that was at over six years ago, and who can remember anything that doesn’t fit The Narrative?