FHA's new direction.

Author:Snow, Jane Moss
Position:Federal Housing Administration assistant secretary for housing Nicolas P. Retsinas

NIC RETSINAS is breathing new life into the FHA. His background with the Rhode Island housing finance agency has given him the know-how and the connections to get things done. Multifamily housing may be the biggest beneficiary of his leadership at HUD.

IF KNOW-HOW, BRAINS AND CHARM were all it would take to revamp the Federal Housing Administration (FHA), everybody could sit back and relax. Nicolas P. ("Nic") Retsinas, the assistant secretary for housing/FHA commissioner, has more than his share of all three and the drive it takes to use them.

Unfortunately, he is bucking entrenched bureaucracy both inside HUD and in the congressional committees that oversee housing. Furthermore, this very same Washington bureaucracy, in recent years, has become more adept at avoiding decisions and innovations than in developing and acting on new ideas.

In comes Commissioner Retsinas, lauded by HUD Secretary Henry G. Cisneros for his "dynamic leadership." Fresh from the executive directorship of the Rhode Island Housing and Mortgage Finance Corporation (RIHMFC), where he cleaned up the agency and set it on course, Retsinas cut his teeth outside of Washington. Taking over RIHMFC when its reputation was at a record low, in less than three years he turned it into a national model with a top-tier rating from Standard & Poor's, one of only twelve agencies to receive such distinction.

The story of what was accomplished in Rhode Island under his stewardship sheds some light on the man's ability to get things done. The litany of accomplishments speaks for itself. "Innovative, creative programs...provided access and construction activities, redeveloped urban communities, brought new opportunity especially to minorities," says Keith W. Stokes, executive director of the Newport County Chamber of Commerce and a former colleague at RIHMFC. "He leveraged new avenues of federal participation, brought in Fannie Mae. He's one of the few top government administrators who really believes in public service...he brings a lot of magic to any job."

Now this practical experience is being put to good use in reshaping HUD's once-powerful mortgage insurance arm for single-family and multifamily properties--the FHA. How long will this take? Retsina flashes his engaging grin: "Will victory be ours by Tuesday? No." It will take time and hard work, he says, but he feels cautiously optimistic that progress is achievable.

"We have to. There's too much at stake," he says.

Retsinas' strong support of Secretary Cisneros' efforts to commit the federal government to policies that will help break the poverty cycle and expand housing opportunities comes through in his approach to the task of turning the FHA around.

Perhaps the most important element in his strategy is his determination to work as a partner with the various state and local housing finance agencies, keying in on secondary market agencies and other qualified financial institutions, or mortgage lending consortiums, and on residents themselves, to accomplish his two objectives: increasing housing opportunities for all Americans and revitalizing communities.

A time for crafting programs

"There are diverse needs and we need to respond creatively to these needs," he points out. "There is a continuing shortage of rental housing in many markets. In others, we need to rehab the existing stock...perhaps more importantly, find ways to ensure that affordability can be preserved, so our agenda in the coming months is just that--to craft programs."

There is no doubt that Retsinas believes in shaping solutions to problems rather than trying to squeeze complex problems into a set of fixed and predetermined answers.

However, not all the tools to shape the policy responses to these problems are under his control. A great deal will depend on whether the Congress is able to enact a strong housing bill in 1994 that gives HUD more flexibility in the disposition and management of its properties, as well as other authority. So far, this seems a likelihood, according to Capitol Hill sources, but there are no guarantees.

Risk sharing

"There must be more than one arrow in our quiver," Retsinas says.

Specifically, he wants to develop more risk-sharing opportunities. He advocates an ongoing program joining state and local housing finance agencies capable of handling multifamily financing and cites states such as Pennsylvania, Maryland, Florida, Illinois and Massachusetts as candidates where this might be tested.

HUD's current action plan titled "Creating Communities of Opportunity" calls for risk sharing on up to 30,000 multifamily units, with state and local housing finance agencies and the FHA sharing the risk. This approach is seen as a way to increase the number of multifamily units under production and to foster the creation of communities where more people have an ownership stake in the quality of life in their neighborhoods.

The action plan calls for qualified agencies to originate, underwrite and close multifamily loans. HUD will endorse these for mortgage insurance and share an agreed-upon percentage of the risk and premium income with the housing agencies, which will be responsible for servicing and property disposition. Participating government-sponsored enterprises (GSEs) would have their risk counted toward their goals for low- and moderate-income housing.

Thirty-four state housing finance agencies (HFAs) have submitted proposals that are now being evaluated by FHA policy staff. Allocations will be based on state...

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