HUD Chief Ben Carson Needs Congress To Explain Basic Housing Terms

Department of Housing and Urban Development Secretary Ben Carson raised eyebrows Tuesday when he struggled to describe basic terms related to the agency he oversees during a hearing before a congressional panel.

The former neurosurgeon, who had zero experience in housing before President Donald Trump nominated him to lead HUD in December 2016, appeared visibly flustered while answering questions about his department’s policies before the House Financial Services Committee.

Rep. Katie Porter (D-Calif.) asked Carson about services offered by the Federal Housing Administration (FHA), an agency housed under HUD, and government-sponsored enterprises (GSEs), which are financial services corporations created by Congress such as Fannie Mae and Freddie Mac.

But Carson drew several blanks.

Porter: Do you know what the interest rate curtailment schedule is at FHA and how it’s different from the GSEs?

Carson: Well, we tend to try and maintain a lower interest rate at FHA ―

Porter: I’m not asking you about the interest rate, sir. I’m asking you about debenture interest curtailment penalties.

Carson: Explain.

An exasperated Porter then described to the HUD secretary how an agency he oversees functions, pointing out that servicing for nonperforming mortgages is triple the cost of the equivalent servicing at GSEs for a nonperforming loan.

“That tripling of costs in servicing … has the effect of reducing the credit availability to the American people,” Porter said. ”It makes the loans more expensive for the very homeowners that FHA is designed to serve.”

“So my question I’m trying to drive at here is why is FHA ― to use a term that I think we can both understand ― lousy at serving mortgages?” she asked.

Carson responded that he hasn’t had “any discussions about that particular issue but I will look it up, find out what’s going on.”

Mortgage servicing, essentially how a bank manages the loans it makes, played a major role in last decade’s nationwide housing crisis.

Porter continued to pepper Carson with basic questions about HUD’s operations and policies, including whether he knows what an REO is.

“An Oreo?” Carson responded.

“No, not an Oreo,” Porter said. “An R-E-O. R-E-O.”

Carson tried again, “Real estate.”

“What’s the ‘O’ stand for?” Porter asked, prompting Carson to mutter something unclear, which sounded like “E-organization.”

Porter, putting an end to Carson’s awkward guessing game, explained that REO stands for real estate owned, which is what happens when a property goes into foreclosure.

“FHA loans have much higher REO loans ― that is they go to foreclosure rather than to loss mitigation or to non-foreclosure alternatives like short sales than comparable loans at the GSEs,” she said. “I’d like to know why we’re having more foreclosures that end in people losing their homes … at FHA than we are at the GSEs?”

Carson didn’t have an answer, instead offering Porter to “work with the people who do that.” But the freshman lawmaker informed Carson that she performed that very function before being elected to Congress last year.

Porter also asked Carson how HUD plans to change the conveyance process at FHA to address loss recovery differential between FHA loans and GSE loans. But that question was also too difficult for the Housing and Urban Development secretary.

“You’re getting way down in the weeds here,” Carson said, referring to one of his department’s core focuses. “If I got down in the weeds on every issue I wouldn’t get very far.”

Porter ripped into Carson in a statement to HuffPost hours later, stating his “stammering would be funny if it weren’t so scary.”

“In my role as monitor of the big bank settlement during the subprime mortgage meltdown, I saw the human devastation of the 2008 crisis up close,” she said in her statement. “Secretary Carson’s ignorance of the agency he oversees is a slap in the face to the American public, which entrusts him to make sure it doesn’t happen again.”

“I was willing to give Secretary Carson the benefit of the doubt, but his confusion over basic HUD functions was deeply distressing,” she added.

But Carson didn’t seem embarrassed or ashamed by his apparent cluelessness about HUD services that millions of Americans are depending on for assistance. He tweeted after the hearing that he planned to send Porter a box of Oreos.