Lee, we have known one other a long time. I am looking forward to this interview with you about your journey that has landed you into a role that is top of mind of most citizens: How to tackle the enormous and most pressing housing issue of our time, “homelessness.” In my recent visit to Skid Row and the Trust offices, I was deeply moved by the worsening of the crisis, and I’ve often thought of you managing your team and your constituents on Skid Row during COVID. As with many leaders, you are the right one for this most challenging of times. So thanks for sitting down for today’s interview.
Faith Schwartz: Lee, can you share with us your background and how you found yourself in the financial services industry for a very large mortgage company.
Lee Raagas:
Thank you Faith. My background started with a company called Dean Witter and I was an Underwriting Assistant who transitioned into a Loan Officer. The Leader I reported to at the time went to a ‘start-up’ Organization under Plaza Bank, which sold to Fleet Bank which sold to H&R Block. That time in my career taught me about underwriting, appraisals, credit, compliance, capital markets, secondary markets and servicing. I didn’t realize what I was learning at the time but as you know, we had remarkable leaders during that time and I basically received a free masters in housing, economic development and credit structuring / sales. I was there prior to funding the first loan until the peak of $4B fundings per month to the housing collapse. It was inspiring and heartbreaking during that full spectrum of a company.
FS: That is an incredible start to this business. You have a unique ability to be very strategic yet you are drawn to the technical sides of the business, such as deal components and capital markets finance strategies. Tell us about your roles over the years in housing finance.
LR: I started out in Loan Administration (aka Data Integrity and Loan Shipping at the time) so had to understand that “a pull through % of pipeline loans were committed to sell on the secondary market.” I didn’t know what that meant at the time since I was from the origination side of the business. Over time, we had to sell loans through various conduits and my job grew from Loan Administration to Post Sales Operations which including the packaging of debt and the collateral associated with it. I “spoke” origination but had to learn the language of capital and secondary markets since I was delivering the products they sold as well as the language of servicing since we serviced the majority of debt to control and influence performance and compliance. Oftentimes, when in meetings or due diligence or trade environments I was a translator for those different languages of mortgage. That led me to a technology company that served the distressed market when the housing collapse happened, that system was serving the major agencies and banks and the “translation” skills helped at that company. Since I knew many Leaders, I transitioned into consulting and was exposed to many sides of the business… small, large, complex, simple, single asset and community development. It was fascinating.
FS: I’ll say. Just incredible experience. Today you are the CEO of one of the nation’s largest organizations in a complex community to support permanent supportive housing for the homeless, Skid Row Housing Trust. How did you first come to know Skid Row?
LR: An Executive at Skid Row Housing Trust used to work for me at a few previous companies. She was leading a large part of the Organization prior to Los Angeles proposing and voting on two breakthrough initiatives; Proposition HHH which was a bond measure to build and develop affordable / permanent housing and Measure H for services for the individuals that were housed. Those proposals reminded her of initiatives back in the mortgage days and complexities surrounding public education, voting, access, housing, regulation and she called me to provide strategic support to ‘ready’ the Organization if both or either of those passed. I came to LA, toured Skid Row in depth and was moved to use my previous skills to try and contribute solutions to an overwhelming problem at the time.
FS: What is the current state of play with Skid Row Housing Trust with regard to numbers of people being housed, projects completed and projects underway?
LR: We have been very successful, yet we have so much more to do. For your readers, I’d like to share the following Stats & Pipeline:
- 29 Properties
- 2,000 people housed / residents served
- 1,000 more units / apartments in motion and close to lease up for more people to get housed
- 12 Projects in Pipeline
- 188 Employees serving those residents and properties
- Majority of properties are in Skid Row
- Expanding outside and into South Central Los Angeles and Long Beach
- Currently in discussions in San Diego and Orange County
FS: What do you see, longer term, for Skid Row Housing Trust as you evolve the organization to engage at the national level outside of LA?
LR: I break these down into a few approaches / strategies:
The first is diversifying our geographic footprint. Developing or rehabbing properties outside of Los Angeles. As previously outlined, we already have projects in other cities and counties at this time. It’s important to continue to serve the most vulnerable in Skid Row but equally important in applying the solutions we’ve learned and know to other areas to mitigate other risks and challenges of what could become another Skid Row.
The second is diversifying our property types. Continue to build permanent supportive housing but also start addressing the “missing middle” – those who are sliding into homelessness at alarming rates. So build affordable housing and mixed use and mixed income. Really focus on supporting those who are fighting to maintain their housing while lifting those out of homelessness simultaneously. The last effort is supporting those who are pursuing whatever their goals and dreams for housing are but focusing on hard hit communities and facilitating home ownership or rental of choice in all community types.
FS: The work you are describing is desperately needed. Today in Washington DC, under the Biden Administration, the new team is highly engaged in combatting the systemic issues around homelessness and HUD Secretary Fudge has homelessness as one her top priorities for the agency. What three ideas would you put forth to this administration to move the dial forward on combatting this very difficult and challenging issue?
LR: Be brazenly honest about the requirements it will take to solve. There are a lot of discussions and awareness raising around generational poverty and systemic racism but hyper focus on the drivers and move to solve them. Start with looking at the data, openly discuss the pain in the drivers of poverty and move quickly into action. I’m a firm believer and support in beta tests. It’s action, it’s a start. If beta tests / housing works, then repeat with velocity. If it doesn’t work, course correct it quickly and learn from it. There is a lot talk and that is where it needs to start but action needs to follow the words in relatively short order now, the crisis is at dangerous levels.
Put those with experience at the table of decisions. Not just task forces and information gathering meetings, but where the decisions are made. Those making decisions around real estate, housing, homelessness, racism need to have backgrounds in those sectors and experiences they can pull from.
Look for win-win solutions in seemingly disparate approaches. Find what political red and political blue want that is in common and build to that. Find what capitalism and altruism have in common as outcomes and move on that. Find where business and personal needs intersect and create something. Improve the private / public strategies into the current state needs.
FS: I like it Lee! Now with Federal and State funds continuing to focus on building affordable housing and finding ways to prevent the slide into homelessness, what would you recommend the agencies think of first to find more scalable solutions across the country?
LR: Improve what is already there… there is existing, vacant housing stock. Fix it and use it right away. It would be faster than stick building but do it while we are stick building.
Develop what isn’t there… mix it up, create mixed use, affordable with market rate. It doesn’t matter if it’s side by side or within the same building. For example, develop affordable on a bordering zone so that housing typology has access to the same community benefits as a market rate does OR blend 5-10% affordable right into the market rate buildings in many development projects.
Convert what is no longer there… if there is a vacated commercial building and shelters are needed, retrofit that need for five (5) years and have transition programs from that converted shelter into housing.
Get a group of politicians, successful business leaders, successful homeless providers, bankers, etc. together for a think tank and a task force.
Again, create a thought, get disciplined about, take an action…
FS: As I mentioned at the outset, you have literally managed through the pandemic. While circumstances for the homeless will not rebound, we do have some lessons learned and greater attention to the needs. How has the Trust evolved over the last 14 months?
LR: That’s an interesting question. The spirit, commitment and the experience in the community and the Organization has evolved. The outcomes that had to be managed did not. If there was ever a time where theory was proven right, it’s now. The pandemic pushed Organizations like ours to the limit. It put our residents at risk and our employees in strained situations. Lessons learned – we have the answers already, we know what to do so let’s do it. We knew it years ago, we know it now. Greater attention – put an assembly line of solutions together, get Shelters to work with housing providers and have them be providers to housing. Continue to provide programs and services, that really helps and we need more of it across the nation. Coordinate efforts. When people are healthy, positive choices are made. The question of “imagine a catastrophe hitting the most vulnerable?” Well that happened, look at the result in Skid Row. It is absolutely heartbreaking.
Post Script
At Housing Finance Strategies, we are leading change in all things housing. By interviewing key executives like Lee Raagas, our intent is to educate and encourage the industry to constantly grow and evolve. Lee is a tireless advocate and an example of a leader who consistently makes a difference … ultimately providing permanent supportive housing for thousands of formerly homeless individuals.
As the new leaders at HUD take office, and the Department fills their policymaking ranks, we are fortunate to have passionate leaders like Lee in the trenches advancing key policy and homeless initiatives. The homeless crisis continues unabated, but with the vision and leadership of Lee Raagas, we are better positioned to address the opportunities the Administration and Congress have put in front of us. What a powerful interview!
Thanks so much to Lee for taking the time. And as I like to say to our readers: Grow, lead and mentor your peers!