Home / Daily Dose / House Committee Chairman Wants Answers from Castro
Print This Post Print This Post

House Committee Chairman Wants Answers from Castro

Senate BHRep. Jeb Hensarling (R-Texas), Chairman of the House Financial Services Committee, on Thursday asked for HUD Secretary Julián Castro to appear before his Committee to answer questions about the effect of recent changes to HUD’s delinquent loan sales program on taxpayers.

In late June, FHA and HUD announced major changes to the Distressed Asset Stabilization Program (DASP) that include principal reduction and capital arrearage forgiveness, payment shock protection, prohibiting buyers of the loans from abandoning lower-value properties, and alternative bidding for non-profit buyers.

DASP, as well as distressed loan sales conducted by the GSEs, have come under heavy criticism in the last year from housing advocacy and civil rights groups due to the large number of these loans being sold to private investors, whom the critics say are interested only in profiting from the foreclosure crisis rather than achieving the best outcomes for borrowers. In April, a coalition of activists called DASP sales a “Wall Street giveaway”; some critics even suggested that this should disqualify Castro from consideration as Hillary Clinton’s vice president. Some have suggested that Castro made the changes to DASP in order to satisfy these critics.

Hensarling wants Castro to appear before committee at a hearing on Wednesday, July 13, to answer questions about how the changes to DASP will affect taxpayers. Hensarling said he believes the changes will create “preferential bidding” options for certain buyers and restrict investor options in the program.

Julian Castro

Julián Castro

Hensarling

Jeb Hensarling

In late March, Hensarling and Sen. Richard Shelby (R-Alabama), Chairman of the Senate Banking Committee, wrote a letter to Castro and FHFA Director Mel Watt saying that any proposed changes to the distressed loan sales programs should be “swiftly and categorically rejected” because such changes would “negatively impact the purpose of those programs and taxpayers alike.” Hensarling said Castro never responded to the letter.

“Secretary Castro was told months in advance that changes harming taxpayers would result in a congressional hearing, and we’re simply following through,” Hensarling said. “Hardworking taxpayers deserve to know why Secretary Castro suddenly decided to expose them to greater losses and worsen the nation’s already unsustainable national debt. The changes he’s making rig the program so certain buyers approved by Washington elites can receive steep discounts on properties and leave taxpayers holding the bag. There have been several media reports that these changes are motivated not by what’s best for taxpayers, but by what’s best for the Secretary’s future ambitions. The timing and impact of these changes certainly raise legitimate questions that need to be answered.”

Castro said in response to Hensarling's request, “I want to thank Chairman Hensarling for his invitation to speak about the recent improvements the Federal Housing Administration made to the Distressed Asset Stabilization ProgramI look forward to answering the Committee’s questions about how this program is providing the greatest opportunity for struggling homeowners to remain in their homes while protecting FHA’s single-family insurance fund.”

About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.
x

Check Also

Mortgage Delinquency by State

Southern states have some of the highest overall loan delinquency rates in the country, but when it comes to mortgage delinquency, the rankings shift. Click through to find out where the highest delinquency rates in the country are.

GET YOUR DAILY DOSE OF DS NEWS

Featuring daily updates on foreclosure, REO, and the secondary market, DS News has the timely and relevant content you need to stay at the top of your game. Get each day’s most important default servicing news and market information delivered directly to your inbox, complimentary, when you subscribe.