CHICAGO - In making his choice for housing secretary, President-elect Barack Obama yesterday rounded out his economic team and gave new prominence to the mortgage crisis that has dragged the country into a recession.

The selection of Shaun Donovan as secretary of Housing and Urban Development puts the current New York City housing commissioner at the forefront of one of the more nettlesome economic challenges confronting the new administration - the soaring foreclosures that are threatening homeownership nationwide.

The Federal Reserve estimates that lenders are on track to initiate 2.25 million foreclosures this year, more than doubling the annual pace before the crisis set in. What's more, falling housing values and a plunging stock market have contributed to $2.8 trillion in lost household wealth in the third quarter.

Donovan joins a team led by Tim Geithner, Obama's nominee for treasury secretary, and Lawrence Summers, who will chair Obama's National Economic Council. Obama has his team working on an ambitious economic recovery plan that includes saving or creating 2.5 million jobs over the next two years.

Stemming foreclosures and stabilizing the battered housing market will be daunting tasks that have already bedeviled Congress and the Bush administration.

"We need to approach the old challenge of affordable housing with new energy, new ideas, and a new, efficient style of leadership," Obama said upon naming Donovan during his Saturday radio address. "We need to understand that the old ways of looking at our cities just won't do."

Donovan will inherit various tools to confront the problem. Obama wants to use the second half of a $700 billion financial industry rescue plan to help stem foreclosures. Congress this year also put in place a $300 billion program designed to let troubled homeowners swap risky loans for more affordable ones, though few have applied. Moreover, homeowners have continued to default on mortgages despite government efforts to lower interest rates and modify repayment terms.

With one in 10 U.S. homeowners delinquent on mortgage payments or in foreclosure, Obama said Donovan would bring "fresh thinking, unencumbered by old ideology and outdated ideas" at the Housing and Urban Development Department to help resolve the housing and economic crisis.

Donovan, head of New York's Housing Preservation and Development Department, is a former Clinton administration HUD official with a national reputation for curtailing low-income foreclosures, developing affordable housing, and managing the nation's largest housing plan.

If confirmed by the Senate, Donovan would become the nation's top housing official in the midst of the worst recession in decades. Falling home values and stricter lending standards have ensnared millions of U.S. households. More than 259,000 homes received a foreclosure-related notice in November, up 28 percent from a year earlier.

Conrad Egan, president of the nonpartisan National Housing Conference, said Obama's selection of Donovan signals that he recognizes HUD can play a big role in the economic recovery.

"It really needs to be a seat at the cabinet table that is the principal point where housing and community development issues are brought together and resolved successfully," Egan said. "HUD has been perceived as a second-tier participant in meeting that challenge."

Shaun Donovan

AGE

42; Jan. 24, 1966

EXPERIENCE

Commissioner, New York City Department of Housing Preservation and Development, March 2004-present; director, Prudential Mortgage Capital Company's FHA lending and affordable-housing initiatives, July 2002-March 2004; visiting scholar, New York University, June 2001-July 2002; consultant, Millennial Housing Commission, June 2001-July 2002; deputy assistant secretary for multifamily housing at HUD, March 2000-March 2001; special assistant at HUD, Oct. 1998-March 2000.

EDUCATION

- B.A. in engineering, Harvard University, 1987; M.A. in architecture, Harvard University, 1995; M.P.A., Harvard University, 1995.