Federal Government Transactions: Affordable Housing Deals and Counsel

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From LawHub, this is I Am The Law, a podcast where we talk with lawyers about their jobs to shed light on how they fit into the larger legal ecosystem. In this episode, Debby Merritt interviews a transactional lawyer for the U.S. government who discusses the legal role he plays in developing affordable housing.

Debby Merritt:

We're joined today by Kevin Karin, a 2013 graduate of the University of Pennsylvania Law School. Kevin is a transactional attorney for the United States Department of Housing and Urban Development, an agency known by its acronym HUD. Kevin works in HUD's Seattle office. Now, before we talk about your job, tell us a little about the agency.

Kevin Karin:

There are two major pieces to it. It's built a housing, so they want to create more affordable housing so that more people can have access to it and address homelessness and issues like that. And then urban development, they are interested in building communities and not just putting up buildings.

Debby Merritt:

So this is an agency for low income home buyers, but also for other people. What are some of the things you mean by sustainable communities or urban development?

Kevin Karin:

Well, on the one hand, we are trying to make sure that enough housing goes up so that everyone can have a place to call home. But on the other hand, we want to make sure that there are services accessible to people who live in those communities, that there are grocery stores for them to go to, jobs that they can access, and training and things like that that they need in order to thrive as a community.

Debby Merritt:

Okay, so the agency has a fairly broad mission. Let's talk about the way that it's structured. Start with the secretary and tell me from the top down how you work.

Kevin Karin:

It's a cabinet level agency, so it starts at the top with the secretary who's currently Julian Castro, and then there's deputy secretaries for different program areas. We have a headquarters office in Washington DC, and then there are 10 regional offices. Seattle is one of them. And then there are 35 different field offices around the country.

Debby Merritt:

Wow, that's a lot of offices. Are these all filled by political appointments or are you staff people in HUD?

Kevin Karin:

No, the majority of positions are staff. They are not political appointments.

Debby Merritt:

HUD has lawyers who work both in Washington and in the regional offices. What about in your regional office in Seattle? About how many lawyers work there?

Kevin Karin:

We have about 10 attorneys in the Seattle region. We're split into two different departments. And one side does all the litigation, so they do anything from defensive litigation to fair housing, personnel or ethics. The other side, which is the side I work on is transactional and programs. We do the real estate transactions, and we give advice to each of the other program offices.

Debby Merritt:

Tell us about a typical day.

Kevin Karin:

I would probably spend at least half of my time working on a transaction. So a lot of people are familiar with what HUD does in its single family program, which is to provide mortgage insurance for people who are trying to buy their first home or any home typically with a low down payment. So they're often ensuring a mortgage and agreeing to pay the lender if the borrower defaults so that borrower can get a loan at a decent rate.

Debby Merritt:

Let's say I'm a low income person. I want to buy my first home. The home cost $100,000 and I have a $10,000 down payment, so I'm going to borrow 90,000 from my local bank. What role does HUD play in all this?

Kevin Karin:

So if you were to take on that loan and then three years later, you defaulted on the loan and couldn't pay the payment anymore, HUD would pay off the rest of your loan balance to the bank. So that's the bank's insurance they're going to get the money on their loan.

Debby Merritt:

So the bank feels more happy about lending to me than they might otherwise be.

Kevin Karin:

Especially if they consider you a higher risk borrower.

Debby Merritt:

So now that we have the general idea of the transaction, how does your work fit into that?

Kevin Karin:

And what I do is multi-family mortgages. So it's very similar in terms of the incentives, but there are developers who build own, maintain affordable housing. They apply to HUD for mortgage insurance because they want to go to an FHA approved lender, and through HUD's mortgage insurance program, the lender will give them a better rate than they otherwise would get. Let's say the borrower takes out a $6 million loan to construct a new affordable housing facility, and then three years later, defaults on that loan, it's going to be hued that's responsible for that loss, and it's not the lender.

Debby Merritt:

So now what do you as a lawyer do as part of that transaction?

Kevin Karin:

So there are a lot of documents included in these transactions. What we have to do is review that set of documents to make sure that it complies with all of HUD's rules and regulations and that there's no aspect of the transaction that will result in a greater risk of default than there would normally be or nothing that's going to result in any kind of legal issue down the road that could put the project in jeopardy.

Debby Merritt:

Are these documents fairly standard? Do people follow a template or are they all different?

Kevin Karin:

Years ago they weren't as standard, but over time the documents have been standardized and now they're some things like title policies that are always going to look a little bit different.

Debby Merritt:

When you get a standardized form, is there anything there that you need to review or there's still issues to look for?

Kevin Karin:

Sometimes it is only a matter of checking to make sure that they've filled in the blanks correctly and that the terms of the deal are appropriately displayed in the forms. Other times, we will have borrowers or lenders who request to have changes to the standard forms, and then we have to consider whether those changes would be appropriate.

Debby Merritt:

And you're looking in particular for whether or not the changes would increase the risk to HUD, because in the end, we're all taxpayers and we don't want HUD to have to pay out too many of these insurance policies. What about the title policies? You mentioned that those tend to have more variation.

Kevin Karin:

One of the things that we check is to make sure that there are no issues with title with the property. And a title report will show us all of the documents filed with the local county offices that affect the property. We'll find easements, restrictive covenants or other kinds of financing on the title policies. And if we do, then we have to address it to make sure that nothing is going to interfere with the position of the mortgage and that there won't be any legal issues that will arise as a result.

Debby Merritt:

How did you get into this line of work, Kevin?

Kevin Karin:

I did a lot of housing and employment work prior to law school. The first place I worked after college was at Cabrini Green Legal Aid in Chicago, and they did a lot of landlord tenant representation and so that's what first got me interested in doing law myself, working in that environment. And then in law school, I worked at Community Legal Services of Philadelphia in their housing division, and that was again working with tenants who were facing eviction.

Debby Merritt:

So it sounds like you came to HUD then with the commitment to the low income people who were seeking good communities and housing.

Kevin Karin:

Yes, I was attracted to the mission of the agency.

Debby Merritt:

How do you compare your work now with the work that you did earlier? Do you feel that you're in a good position to achieve the ends that you want to achieve?

Kevin Karin:

It's different in nonprofit and government for sure. I do feel good about the agency's mission. I do feel like I play an integral role in helping the agency fulfill its mission. It's a little bit different feeling from being in the nonprofit world. In government, our roles are a little bit more defined. We are constrained sometimes by the regulations and the rules. Part of our job is to make sure that we follow all of the rules that have been put in place. And in the nonprofit world, there's a little bit more freedom, and there's more advocacy than there is in government. So it is definitely a different experience.

Debby Merritt:

And in the end, you may have the satisfaction of seeing hundreds of housing units go up that will satisfy the needs of low income people.

Kevin Karin:

That's right. It's more big picture than it is working with individual clients and seeing how your actions may impact their lives on a day-to-day basis.

Debby Merritt:

Do you ever go to see any of the projects that you've helped to build?

Kevin Karin:

I have not done that yet.

Debby Merritt:

That might be fun down the road.

Kevin Karin:

Yeah, that's something on my list to do. And that would be important to make it more personal because my clients actually are other people who work at HUD. They're other program offices, and so it's not like when you work in legal aid and your client is the person who lives in public housing. My clients are other HUD professionals. You can after a while start to forget that you are doing good for people out in the world because you don't meet those people, and you don't see how it impacts their

Debby Merritt:

Lives. It's not just the paperwork crossing your desk. It's the people and the apartments and the grocery stores and all of the other things that go along with it.

Kevin Karin:

Right. And we have some pictures in our office of apartment buildings that have been built as a result of the agency's efforts. And so you have to remind yourself that that's what you're working towards.

Debby Merritt:

Kevin, I can tell that the mission is one of the great attractions of the job for you. Are there other benefits that you see in working for HUD?

Kevin Karin:

The mission is a huge part of it for me, and I'd want it to be in a mission driven environment. There are also some practical benefits. The hours are much better than a lot of my friends who work for law firms. We actually work about 40 hours a week and some of them work 70 or 80 hours a week at times. The pay and benefits are also good, especially compared to the nonprofit sector. Whereas in the nonprofit sector, an attorney may start at 45 or 50,000. At HUD, an attorney will start closer to 60 or 65,000. And then within three to four years, they may be making close to 80 or 90. Government has good health insurance, some retirement programs as well.

Debby Merritt:

And you get to live in an awesome city.

Kevin Karin:

It is nice to be able to work for the federal government but work in a different area of the country.

Debby Merritt:

What about the downsides? What are the things that make you tear your hair out?

Kevin Karin:

I think one of the downsides is a thing you mentioned earlier. There is a lot of standardization to the process. Some days you are really just making sure that attorneys have filled in the blanks correctly. And you're reviewing those forms because someone has to review them to make sure that they are correct, and that can be a little monotonous at times. Some days you have two or three really hot legal issues to research and dig into and other days, you just don't, and what you're doing is much more routine.

Debby Merritt:

What's an example of a hot legal issue that you've looked at?

Kevin Karin:

One thing that is interesting about working in the Seattle office is we have an office of Native American programs in Seattle, and we have an office of Native American programs that's in Anchorage, Alaska also. And so we might get a question from someone who works in one of those offices related to one of the Native American housing programs, and it might be a question of how Native American housing authorities can use their funds. Can they use them to fund this particular type of program? We will then dig into the regulations and maybe consult with someone in our headquarters office to determine whether the tribe and the housing authority can actually use their money for that purpose. To me, that can be more exciting. It can be more, you really see the practical effect that your advice has.

Debby Merritt:

And it would be nice to go visit that Anchorage location sometime.

Kevin Karin:

It would be, yes. I think by the end of the year, I'll be able to do that.

Debby Merritt:

How do you see your career evolving over the next five to 10 years? Have you thought about that?

Kevin Karin:

I have thought about it. At the current time, I'm not sure how it will unfold. The positions that we have in the regional offices, I am an attorney advisor, and I would remain with that title unless I were to become either the deputy regional counsel or the regional counsel. There are only a few leadership positions in Seattle because we only have about 10 attorneys, so that doesn't leave room for a lot of leadership positions. In Washington DC, it's different. There are a lot more offices and a lot more leadership positions.

Debby Merritt:

Kevin, what about mobility among government offices? You may not be thinking of moving away from HUD, but do attorneys like you who go to work for the federal government, is there much mobility from one agency to another, one program to another?

Kevin Karin:

There are some attorneys who will start with HUD and then work for another agency. Maybe they'll go to the Department of Labor or the FDIC, and then maybe they'll come back. There are a good number of attorneys and non-attorneys who will work for HUD and then they may work for the private sector for a number of years and they may come back to HUD. I do see that happen.

Debby Merritt:

You just mentioned the private sector and I have a question about that. In the private sector, some of the work that you do, particularly the reviewing of routine documents, might be done by non-lawyers. Does that occur also in the government or is everything reviewed by a lawyer?

Kevin Karin:

For the most part, our documents are reviewed by attorneys. We do have paralegals. We are very thankful for their support, but for the most part, we end up doing the legal review ourselves. I think a lot of that is just staffing. In Seattle, for the five program attorneys, we have one paralegal. Certainly one or two paralegals is not going to be able to review all the documents for that many attorneys.

Debby Merritt:

And it suggests that HUD prefers to have the work done by attorneys or they would hire more paralegals I suppose.

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