Mortgages

How did HUD miss the housing crisis?

Was it inept? Too free market?

Consolidation Loans

Why did it miss the obvious signals?

Is this an issue of competence?

The Department of Housing and Urban Development ignored the signs of a looming mess.

Bush’s department loosened regulations allowing for this kind of meltdown.

Steve Benen writes:

I’ve marveled for years at the apparent corruption and incompetence in Bush’s Department of Housing and Urban Development, but the Washington Post ran a disconcerting front-page item yesterday explaining that mismanagement and criminal investigations arguably weren’t the most offensive part of Bush’s HUD.

Mortgage Refinance

In late 2006, as economists warned of an imminent housing market collapse, housing Secretary Alphonso Jackson repeatedly insisted that the mounting wave of mortgage failures was a short-term “correction.”

He pushed for legislation that would make it easier for federally backed lenders to make mortgage loans to risky borrowers who put less money down. He issued a rule that was criticized by law enforcement authorities because it could increase the difficulty of detecting and proving mortgage fraud.

As Jackson leaves office this week, much of the attention on his tenure has been focused on investigations into whether his agency directed housing contracts to his friends and political allies. But critics say an equally significant legacy of his four years as the nation’s top housing officer was gross inattention to the looming housing crisis.

They contend that Jackson ignored warnings from within his agency, the Department of Housing and Urban Development, whose inspector general told Congress that some of the secretary’s efforts were “ill-advised policy” and likely to put more families at risk of losing their homes.

Hmm, why does this sound so familiar? Bush puts an unqualified buddy in charge of a major federal agency, the Bush buddy ignores the concerns of qualified aides and experts, the buddy then sees a crisis emerge and chooses to intentionally not act, and when pressed for an explanation, the White House says Bush’s buddy is doing a heckuva job.

It seems to be a running theme with these guys.

And here’s the kicker:

During Jackson’s years on the job, foreclosures for loans insured by HUD’s Federal Housing Administration (FHA) have risen and default rates have hit a record high.

All the while, Jackson enjoyed a chef and a full-time security detail that trailed him to Washington social events. His office launched a new $7 million auditorium and cafeteria at HUD’s headquarters, money that some within the agency believed should have been directed toward housing for the poor. His office solicited an emergency bid to obtain oil portraits of Jackson and four other HUD secretaries at a cost to taxpayers of $100,000. (emphasis added)

But it was Jackson’s decision to honor himself that seals the deal. His portrait was considered an “emergency,” he hired himself a cook at public expense, and was one of the few cabinet secretaries to demand a full-time security detail, despite a low public profile.

And all of this comes on top of the fact that Bush’s HUD secretary has faced investigations from the Justice Department, his own agency’s inspector general, the FBI, and a federal grand jury.