Did HUD Ex-Secretary Cisneros Help Mastermind Preditory Lending
Tuesday, 19 February 2008
HUD Secretary Henry Cisneros Modifications to Deregulate Lending in '93 and 94
Did HUD Secretary Cisneros Deregulation Contribute to Predatory Lending and the Foreclosure Crisis?
February 18, 2008
By Janet Ahmad
The Express-News Sunday feature, Henry Cisneros on the hot seat by Jennifer Hiller reported that Cisneros spoke to a group of 750 local building and real estate professionals and blamed the national housing and mortgage crisis on a variety of villains.
According to the article he blamed the national housing and mortgage crisis on mortgage brokers, appraisers who inflated home values, investors... The trouble is Cisneros failed to include his own name as one of the masterminds of predatory lending practices under his direction at HUD. A predatory lending scheme that many experts predict could eventually lead to the worst recession to hit this county, and possibly the entire financial world.
Cisneros can hardly claim innocence in the massive predatory lending scandal that was devised in the 90s and implemented by the building industry (NAHB) through changes he orchestrated while at HUD, which ultimately compensated him generously.
Cisneros made significant HUD policy changes in 93 and 94 that were to become the foundation for the homebuilding industrys massive predatory lending, which created a home buying frenzy that led to artificial inflation in communities in a sham market. If a person had a pulse, builders had a loan for them and a house was thrown up in a few days.
A little history
On January 7, 1993 HUD issued Mortgagee Letter 93-2, Mandatory Direct Endorsement Processing granting authority to Homebuilder owned lenders and affiliate lenders like Countrywide independence to approve their own loans. Without oversight of the industry by HUD, loan approval for single family direct endorsement, Cisneros officially put the foxes in charge of the henhouse.
Then on November 7, 1994 HUD Secretary Henry Cisneros approved Mortgagee Letter 94-54 that allowed lenders to select their own appraisers. As stated: The Department (HUD) will rely upon lenders to assure that only knowledgeable appraisers are chosen to perform HUD appraisals and will rely on the integrity of each individual appraiser.
While Secretary of HUD Cisneros also approved the infamous Mirasol, HOPE VI project that was to become one of the biggest HUD homeownership scandals ever perpetrated on those who could least afford it.
After leaving HUD Cisneros became a board member of a major builder as well as Washington Mutual and Countrywide. He founded American City Vista, an affordable housing joint venture with the same builder that constructed the failed Mirasol project which cost taxpayers millions, including $5M which is still unaccounted for. The homes were eventually boarded up never to be sold to the public.
It would appear whenever there is a federal assistance program for those in need, you can be sure that big business will find ways to amass shocking profits on less than worthy ventures.
See Express-News: Henry Cisneros on the Hot Seat