Nicolas P. Retsinas is a senior lecturer in real estate at the Harvard Business School, where he teaches courses in housing finance and real estate in emerging markets. He is also director emeritus of the Joint Center for Housing Studies.
Nic has spent a lifetime in pursuit of knowledge for a purpose. His background in public service includes stints as executive director of the Rhode Island Housing and Mortgage Finance Corporation, commissioner of the Federal Housing Administration, and director of the Office of Thrift Supervision.
Every job Nic has had has been driven by a simple question: How will this affect people? And for Nic, that’s not an academic question. He takes “a genuine interest in just about every soul he meets,” one long-time colleague observes. I had the pleasure of speaking with Nic about his long service to the field on July 29.
Shelterforce: How would you characterize the changes in housing policy and the housing realities for low-income households during the past two decades?
Nic Retsinas: Over the last two decades we’ve learned a lot about housing policy, about how people live, and more importantly why housing matters so much.
There is a little bit of “we told you so” now that there’s been a housing implosion. We realize bad housing, bad housing policy, can be devastating to families, to neighborhoods and, indeed, to our entire economy.
And that’s a lesson you think people have learned?
Time will tell.
In many ways we lurched away from supporting rental housing for at least a decade. Are we now lurching away from affordable homeownership, especially for low- and moderate-income families?
For many years we demonized rental housing. We thought rent was a four letter word. One of the many lessons of the recent crisis is that renting isn’t always bad and it has a place. I don’t know that I would extrapolate from that that owning is now bad. I think the issue is balance. How do we make sure people have an opportunity for the right tenure at the right time?
The real issue is security of tenure. In our country renting traditionally has provided less security of tenure than owning over time. Recent events argue the other way. We want to make sure that people have an ability to live in a decent place and they’re not forced to move from that particular place.
What does an equitable mortgage market look like and what role does the government play?
Well, we know what it doesn’t look like, as we just went through it. It certainly isn’t a market that is unregulated. It is certainly not a market that is obscure and opaque. It is certainly not a market that disguises risk.
There’s an important role for government to play in ensuring that the market is transparent, that capital is reasonably priced and that it is accessible, and also that there is some equity in the marketplace.
How is that done?
Part of it is more information. Part of it is simplification. Part of it is making sure that the regulatory apparatus is not hijacked by the regulated.
Will the Consumer Finance Protection Bureau be able to do its job or will we see subprime lending or worse come back?
The Consumer Finance Protection Bureau is under serious attack. A lot will have do with who eventually leads the bureau, which of course is going to be, sadly, a political question.
I never underestimate the market’s ability to find a way to access people who don’t have the needed skills or who are desperate.
In the early ’90s you were the FHA commissioner. What were some of the challenges that you faced then and what has changed today?
An agency that was in severe financial distress, an agency that was an afterthought in the marketplace, an agency that had not invested in infrastructure, particularly information infrastructure.
The challenges that FHA faces today are much more severe than those we faced 20 years ago: the foreclosures, the disruption, and unraveling of the marketplace.
What can FHA do?
FHA is trying to walk the line, and they’ve been able to do that better than most would have imagined. On the one hand, making sure that they are fiscally prudent, that they don’t need to go to the Congress for a so-called bailout. On the other hand, they want to keep lending to people who aren’t able to get the 20Ð25 percent downpayment, who don’t have necessarily unblemished credit.
The challenge has been how do they make sure they have the processing and the infrastructure to do that and to do that prudently.