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Republicans demand answers from HUD’s Castro on FHA non-performing loan sales

Hensarling calls for Castro to appear before House Financial Services Committee

Count one of the House of Representatives’ most powerful Republicans among those who were apparently dismayed by the Department of Housing and Urban Development and the Federal Housing Administration’s recent announcement about a series of extensive changes to the non-performing loan sale program.

Last week, HUD and the FHA announced the “most significant improvements to date” for the Distressed Asset Stabilization Program, under which the FHA sells off deeply delinquent loans to private investors.

But House Financial Services Committee Chairman Jeb Hensarling, R-TX, is less than impressed with those changes, going so far as to question HUD, the FHA, and HUD Secretary Julián Castro’s motivations for making the changes.

In a statement from the Republican arm of the House Financial Services Committee, Hensarling said that he “denounces” the DASP changes because they “help liberal special interests at the expense of hardworking taxpayers.”

According to Hensarling, the changes DASP would create “preferential bidding” options for certain buyers and restrict investor options in the program.

Hensarling also cites reports from “several media outlets” (including HousingWire, which cited a Politico report) that claimed the DASP changes were made in an attempt by Castro to “appease liberal critics and bolster his chances of being selected as Hillary Clinton’s running mate.”

The “liberal critics” Hensarling is referring to are a group of progressive organizations that began targeting Castro earlier this year in an attempt to disqualify him Clinton’s potential vice president, using HUD’s practice of selling non-performing loans to private investors to paint Castro in an unflattering light.

And Hensarling is doing more than just making a statement about the non-performing loan sales program changes; he is demanding answers from Castro.

According to the House Financial Services Committee statement, Hensarling is calling on Secretary Castro to appear before the Committee at a hearing next Wednesday to “answer questions about the impact of the policy changes on taxpayers.”

Hensarling said that in March, he and Senate Banking Committee Chairman Richard Shelby, R-AL, sent a letter to Castro promising “immediate hearings…to investigate any changes made to these programs that would undermine their fundamental purpose or otherwise make unwise use of taxpayer dollars.”

According to Hensarling, Castro never responded to that letter, nor did HUD, the FHA, or Castro notify the House Financial Services Committee of the changes to the non-performing loan sales program before they were announced.

And now, Hensarling wants answers.

“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,” Hensarling continued.

“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,” Hensarling added.

“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,” Hensarling concluded. “The timing and impact of these changes certainly raise legitimate questions that need to be answered.”

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