This story originally appeared in the October 2021 edition of DS News magazine.
To say that Brian D. Montgomery has lived a full and interesting life would be an exercise in understatement. A universally respected veteran of four presidential administrations (both Republican and Democrat), Montgomery most recently served as Deputy Secretary at the Department of Housing and Urban Development from 2020 to 2021 (and acting Deputy Secretary since January 2019). He is the only person to be confirmed to lead the FHA twice, where he served as Federal Housing Commissioner and Assistant Secretary of Housing for a total of 6.5 years under three different presidents.
During his years in public service, Montgomery traveled alongside President George W. Bush on September 11, 2001, including visiting Ground Zero with the president in the days after the World Trade Center attacks. In 2003, Montgomery led a White House working group that oversaw various aspects of the Space Shuttle Columbia disaster investigation. Nor is Montgomery a stranger to the private sector. Between stints in public service, in 2009, he co-founded the Collingwood Group, a Washington, D.C.-area-based advisory firm focused on housing policy (later acquired by SitusAMC ). After departing HUD  in 2021, he co-founded Gate House Strategies, LLC , a DC-based advisory firm “focused within the Financial Services, Mortgage Lending/ Servicing, Community Development, and Public Housing sectors.” In addition to Montgomery, Gate House’s founding partners include former HUD Assistant Secretary, Public and Indian Housing, Hunter Kurtz; former HUD Acting Assistant Secretary for the Office of Policy Development and Research Michael Marshall; former FHA Chief Risk Officer Keith Becker; and former Senior Advisor to the FHA Commissioner Dror Oppenheimer.
As the recipient of Five Star ’s 2021 Lifetime Achievement Award, Montgomery took some time to sit down with DS News and discuss his life, his career, and the perspectives both have brought him.
You’ve had a long career in public service, you’ve been in the private sector, you’ve served under multiple administrations. How did you first wind up pursuing public service and government work?
You know, like they say, life’s got a thousand different journeys and a thousand different stories, and sometimes you’re not the only author. That’s probably the case with me. I started college to be a geologist. I had this fascination with rocks and minerals. Still do. But after starting in that field, I
decided, well, maybe digging through a rock pile at the bottom of a canyon wasn’t what I wanted for the rest of my life. So, I was living in Houston at the time, working in the energy industry, and I was a member of the Young Professional Republican Club, which was a sizeable club in Houston. Most people were there not only because of their shared interests but also to meet people. So, I got to know this gentleman who did volunteer advance work for Vice President Bush. This was when George Herbert Walker Bush was Reagan’s vice president in 1985, I believe. In any event, he asked once we got to know each other better and said, “Hey, you know, the vice president gets to Houston a lot. Could you help us on one of these trips?” So, I drove a Staff car in the Vice President’s motorcade.
Anyway, I got to know more people on the Vice President’s Staff. They convinced me to take a leave of absence from my job in 1988 to work on the George H. W. Bush for President campaign for the three months between the convention and election day, which I did. At that point, I was hooked.
What was it about the experience that appealed to you?
Well, here you are with the center of power and the excitement of the vice president and occasionally the president. You’ve got the airplane, the security, going to big rallies or factory tours. Just the excitement of it. They had offered me a position to come up and start in the administration early in 1989, but I had another job and a commitment. So about nine months later, things changed, and I ended up moving up here in early 1990 and went to work in the president’s advance office, all the way to the end when Clinton was sworn in.
One thing that stands out in your career is your involvement in several significant national disasters, from 9/11 to hurricanes, the Columbia disaster, and even the housing crisis. How did working through those experiences impact you and your views on how the government and the industry can support people affected by those situations?
They all start differently. Hurricanes these days, technology’s so good, you’ve got days, maybe even a week, week and a half to prepare, and the models have gotten pretty good about projecting the path. You have some idea what’s coming at you. 9/11 was a sneak attack. You don’t know what is coming next, but you’ve got a job to do, and you’ve got the President of the United States with you, who’s anxious to get back to Washington, D.C., but that’s the last place you want him to go just yet. You’ve got to run the country, you’ve got to protect Americans, and the world wants to hear from you.
We left Florida, and we went to Barksdale Air Force Base in Shreveport. Then we went to STRATCOM at Offutt Air Force Base in Omaha, Nebraska. In each place, we wanted the world to see us. President Bush finally wore down the objections from everybody, and we flew back that evening, landed about 6:30 if memory serves correctly. While I was at the White House, we dealt with the aftermath of that.
In the Bush administration, we had Hurricane Katrina; we had others. If you remember, just before the 2004 election, Florida was in play, and then, all of a sudden, Florida got hit with three or four hurricanes. In the office I was working in at the time, Cabinet Affairs, we had a significant role in dealing with the aftermath, helping to coordinate the non-FEMA portion. There were workforce grants out of the Department of Labor. Grants were coming out of the U.S. Department of Agriculture for people who lost crops, things of that nature.
You get an enormous sense of satisfaction helping your fellow Americans, not just in their times of distress, but even in the things HUD does—helping people have a roof over their heads. It’s about helping people; it’s about service, that commitment to a team and doing something bigger than you. It’s exhilarating, and it’s refreshing to see the happiness on a family’s face when they move into their first home or a family that was able to get a roof over their head after a natural disaster.
When you were at FHA, one of the things you helped work on was helping design the administration’s modernization bill. Could you talk about the issues you were trying to solve with that and your thoughts on its impact and legacy?
For some time in my first term, the Republicans had the House and the White House. You recall in ‘06, we lost the House, so we had been working with the Democrats, and the Republicans were supportive of FHA modernization. We wanted FHA back in the game because FHA’s market share had shrunk to 2%. I remember Republicans telling me, “You need to go get the Democrats’ support.” And even when we had the House, we had two willing supporters in Barney Frank and Maxine Waters. The political climate was less acrimonious back then, and we were able to get it through the House 415 to 7, making it much more bipartisan. Then, of course, I got kneecapped in the Senate, but that’s a different story.
I always told people that FHA’s got to be there in the good times and in the bad times because when the private capital runs for the hills, you will need an FHA that can pump liquidity into the market when it’s needed. I thought FHA did a heroic job in that effort, just helping many people finance out of a subprime loan, many of whom were delinquent.
You were FHA Commissioner during the housing crisis. How did that shape your understanding of the political nature of your job, as well as what housing priorities needed to be focused on down the line to solve future crises?
It pulled back the curtain on how important FHA is in the safety of a 30-year, fully amortizing mortgage. Unfortunately, the market got a little too creative with some of their products and opened the aperture a little too wide, and we all know what happened.
At the end of the day, whether people were refinancing with FHA or getting a purchase loan through FHA insurance, again, it was just putting a big exclamation point as to why FHA is so critical. People try to politicize it sometimes. [But] I told people back then when it was only a $600 billion corporation, FHA has an important countercyclical role to play, and today it’s a $1.3 trillion corporation.
First and foremost, you want to help people refinance and save their homes and help those who are ready to buy a home, all the while trying to be self-sufficient without having to get taxpayer help, which I think we were pretty good about.
What sort of lessons have you taken away from the COVID-19 crisis? What can it teach us about preparing for future situations?
COVID-19 was something no one in our lifetime had seen unless you happened to be around for the 1918 Spanish Flu. For our part, we quickly figured out that it was not going to be business as usual—even for relatively simple things like appraisals, like closings. Nobody wanted to be around anyone; they certainly didn’t want to have some stranger come into their house and start poking around and doing an appraisal. So we needed to make some quick changes. We had fantastic help from the market, from consumer advocates, from low-income housing advocates. The Hill was reaching out to us every day about what they could do and the best way to do it. For a while, everybody was working together. Look how quickly they got the CARES Act out. We gave borrowers the year, and then later up to six more months, just to hit the pause button on their mortgage.
We’re coming up on the end of those 18 months, and you still have a lot of borrowers in forbearance over one million of them are FHA borrowers. I’m confident FHA will rise to the occasion, working with servicers and trying to provide a soft landing for many of those 1.2 million borrowers, whether it’s a partial claim, some other traditional loss mitigation assistance, interest rate reduction, or loan mod. But a lot of those borrowers still aren’t on their feet, and as you know, to really be successful in a loan mod or loss mitigation, you must have income coming in. So, that’s going to be where it’s going to get tricky. Many of the servicers, they’ve been helping borrowers come out of forbearance already, but when this 18-month period expires, it’s going to be something of a tidal wave of borrowers coming out of forbearance seeking more assistance if they haven’t already.
You’ve joked in the past about how one of your priorities at FHA was trying to bring its technology into the late 1990s. How do you feel about what you were able to accomplish on that front?
When I was Commissioner the first time, I remember trying to get money for some much-needed IT improvements at FHA. But, of course, we never got it. My successors did the same thing, David Stevens and Carol Galante. They had some success getting some funding, but nothing to completely re-do FHA’s IT infrastructure.
Coming out of the government shutdown in 2019, much to our surprise, Congress said, “We’re going to give you that down payment [for FHA IT funding] you’ve been asking for,” and that was $20 million. We had broad bipartisan support to move forward with our plan, which we went to the Hill regularly to outline for them and to brief them on the progress. So, we put a team together led by some career staff, most of whom are still working on this. We had our CIO involved and a lot of the program staff, some of the political staff, but it was driven mainly by the career staff, and most of it was just common sense. We talked with originators, we talked with servicers, we talked with the people that work in claims. The first module we rolled out in February of last year, 2020, was the claims module, not even knowing what COVID-19 would become.
Over the course of weeks, we were able to accept claims electronically. Fast-forwarding to this past year, even today, I don’t know how many of those 1.2 million loans will end up in a claim, but could you imagine if we were still doing that with paper instead of submitting them electronically? They would have been stacking up in the Homeownership Centers, 10 feet high.
That alone showed why the modernization effort was so important. Congress has since given FHA another $20 million and another $20 million, so they’re up to about $60 million. For a while, we were rolling out a new module every 30, 40 days. Then, of course, a new team came in, and they’re in charge now. They’re going to do things the way they want to. But I think they’ll see, as we saw, that Catalyst is needed. It’s data-centric architecture, it moves away from paper, it’s faster, it’s more efficient, and it no longer makes FHA the weakest link in the chain. That was vitally important, so I’m optimistic they’ll continue making the improvements that it needs and working on things of that nature.
How do you think things might have played out differently during your final months or final year if the pandemic hadn’t happened?
Well, we were first working on a housing finance reform plan, which we had delivered to the White House in late 2019. So, speaking for FHA, we were still able to cross some of those things off the list. Then, we were looking to make some more improvements to the reverse mortgage program. Then, in mid to late 2019, Secretary Ben Carson asked us to take a long look at minority homeownership, in particular African Americans, and what we could do to responsibly open the aperture a little. So, we did some good work on that, but when February/March 2020 hit, our focus turned completely to dealing with COVID-19. And while you’ve got to be able to fly the plane and fix it at the same time, that was still largely our focus till the day we left.
On the topic of minority homeownership, are there two or three things you can think of that would help on that front?
The one thing we don’t want to do is put families in homes that aren’t ready to be homeowners. The hard work begins after you move in. It’s not cheap. Beyond the mortgage, it’s not cheap to be a homeowner: the maintenance, the repairs, the utilities, things of that nature. But we’ve got to look at some things we can do in housing counseling earlier. Stress the importance of getting people on a pathway to homeownership because, ultimately, that’s what it is. It’s a journey; it’s a pathway.
There are things we can do with down payment assistance. What we didn’t want to do was re-live what transpired in the housing boom. We got a little too creative in some of these mortgage products. But that said, FHA is still the hallmark of minority homeownership in America. A third of endorsements each year go to minorities. As a matter of fact, about this time last year, we got a little over 40% of endorsements for FHA borrowers to minorities. FHA had never reached that high. The GSEs lag behind that on a percentage basis somewhat. I know they were working hard on doing more in that area as well. And for our part, FHA’s done a pretty good job.
Looking back at your career, what are some accomplishments you’re most proud of?
One guiding principle’s always been, whether you’re a Democrat or Republican, you want to leave the place better than how you found it. Political events, domestic or international, ebb and flow. They sometimes work to your advantage; they sometimes work to your detriment. You have no control over them, so it can make it more challenging to get things done than you’d like. Congress has a funny way of waiting until there’s a catastrophe before they get at it.
With 9/11, who could have foreseen something of that magnitude happening? In the aftermath of that, I found myself running the Office of Cabinet Affairs at the White House, being the White House’s primary point of contact for the shuttle Columbia accident and working with the Accident Investigation Board was something again you never, ever envision. All of a sudden, the Chief of Staff is telling me, “We want you to be the White House point of contact for this catastrophe.” Unlike when the Challenger exploded, and people said, “We’ve got to get the Shuttle going again,” after the Columbia, people were questioning, “Why are we flying this shuttle 20 years later?” That led to a big pivot and charting a new path for America’s space program in 2004, which subsequent Administrations have made some changes to.
Having a hand in that, having a big hand in the aftermath of the housing collapse, and certainly in our nation’s response to COVID-19, I knew Americans weren’t interested in excuses. They just wanted help; they wanted results. So, we left the HUD building on January 20 with our heads held high. We had done a good job for the citizens, for the country, and the taxpayers.
You’ve served under presidential administrations on both sides of the aisle and worked with career politicians across the spectrum. What do you think is the secret to building consensus and collaboration so you can get things done?
Excellent question. You have to go into it with the mentality of “I’m going to get stuff done.” I could care less about the politics of it. I’m sure there’s a Republican way; I’m sure there’s a Democrat way. But at the end of that, there’s the right way too. It requires a little bit of diplomacy and a lot of listening and maybe some negotiations, but you want to get stuff done at the end of the day. It’s rarely you get everything you want, and this is the most challenging step. You go in there, and you want these 10 things. If you can walk out with six of them, or even half of them, at the end of the day, both parties are better for it, and certainly, the American people are better for it. So I try to be collaborative. I try to listen to folks. I try not to be partisan at all.
When I was a holdover in the Obama administration, when Shaun Donovan got confirmed, he returned to the HUD building and needed to be sworn in. The only person that was still there that had a commission was me. There’s a photo of me swearing in Shaun Donovan into his office. Can you imagine that happening today? Later, I’m sure Obama or Biden did a ceremonial swearing-in, but I’m the one that officially swore him in.
How did the founding of Gate House come about, and what are you hoping to accomplish with that?
Several of us, while we were still at HUD after the election, thought maybe we should get together and form an advisory company. There were three of us at first, and two of them ended up taking other jobs before we could get off the ground. Both are younger and have families with kids, so they weren’t exactly at the right point to be an entrepreneur. But there were two or three other guys, and then we added a fourth one, and there was me, making five. Most of us were in our late 50s or early 60s. We said, look, we’ve got a little financial cushion. Let’s launch another firm. We darn sure think there’s going to be a need for it, whether it’s servicing companies, technology companies, litigation support, disaster recovery. We launched it in mid-May, and I have to say, we’re way ahead of our projections.
People are calling us—servicers, law firms, originators, affordable housing developers, technology companies. Now, we’re part of a bigger team bidding on these Homeowner Assistance Fund RFPs coming out of each state. We’ve bid on a handful of states so far in helping to provide solutions for them to help their citizens who’ve fallen behind on their mortgage payments.
You get to the HUD building sometimes, or to the GSEs where we have tremendous expertise, and you never know what issue you didn’t plan for will pop up in the middle of the day. But, trust me, that happened almost every day. What we are trying to accomplish is to provide value through our experience, our relationships, our deep knowledge of the market, the process, and the labyrinth that are those entities, in order to strengthen the foundation of this segment of our economy into the future, because we know how important it is and what a critical time it is right now to meet the needs of many, many people.
Looking back at your career—where you started and where you’ve arrived—if you had a piece of advice you could pass back to your younger self, what would that advice be?
Don’t ever assume anything, especially in a political environment. You never know how people will react to something, especially if you’re telling them you need their help. That was a good way to frame up how I would proceed along with my political career and then my career in the private sector. Stay focused on what you want to get done; establish good, clear metrics around what success looks like; and start executing against them, whether it’s working with Congress or stakeholders, low-income housing advocates, with HUD. You must be committed to the mission and committed that what you’re doing is right. It’s amazing what you can get done.