HUD nominee Julian Castro’s confirmation hearing was going smoothly until the subject of eminent domain was posed. The San Antonio mayor freely discussed plans to support efforts to embolden the Senate Banking Committee’s HUD mortgage program and vowed to work with Congress to “wind won” Freddie Mac and Fannie. Once those controversial programs are gone, Castro promised to work with legislators to “create a new housing finance system.”
The bump in the confirmation hearing road emerged when Republican Pennsylvania Senator Pat Toomey began inquiring about the use of eminent domain seizure powers. Toomey was particularly concerned about the utilization of the property seizure law by municipalities to condemn mortgages. The Republican Senator also wanted to know if Julian Castro wanted to keep the FHA from engaging in refinancing mortgages that are confiscated via eminent domain.
The Housing and Urban Development nominee had this to say about using eminent domain to seize properties with owners behind on their mortgages:
“This is an issue of first impression for me. It is not something that the city of San Antonio has tried. I can understand why communities with a whole lot of folks underwater might think pf this method. If I am confirmed, I would look forward to visiting with you and the committee members on what HUD’s programmatic response ought to be.”
HUD has not officially taken a position on the use of eminent domain in relation to home confiscation. Senator Toomey pressed the issue and told HUD nominee Castro that the Senators on the committee deserved to know how he felt about the issue before taking a confirmation vote. Julian Castro again stated his desire to “consult” with the oversight committee on the matter if he is formally appointed to the director position. “I see that I am not going to get an answer to my question,” Toomey concluded.
While discussing the topic of housing finance reform, Castro stated he would get up to speed quickly on the matter. “The current conservatorship of Fannie and Freddie is not sustainable,” the HUD nominee added. The potential new director stated that the FHA should get to play a “strong role” in the process of providing home ownership options for both Americans of “modest means” and fist-time homebuyers.
If confirmed, Julian Castro would be replacing Shaun Donovan as the Housing and Urban Development director. President Barack Obama recently nominated Donovan to the new Office of Management and Budget director position.
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