The April 9, 2008 article, “Looming Deficit Impedes Federal Housing Agency”, is nothing more than a propaganda piece pushed out by the desperate leadership which is remaining in HUD. This evidenced by the fact that the article fails to mention that FORMER Secretary Alphonso Jackson had been forced to resign amid swirling allegations of misconduct, contracting irregularities and under the cloud of an ongoing FBI Investigation. To the contrary, the caption under Mr. Jackson’s photo attributes a statement from him to Congress, as if he were still the Secretary of HUD.

The NY Times also failed to properly address the lawsuit which successfully overturned HUD’s illegal rule change and barred, then Secretary Jackson, from ever participating in a subsequent rulemaking procedure on the issue. In October of 2007, HUD adopted new regulation that banned most of the privately funded down payment assistance programs from being used with FHA loans. In adopting this new regulation, HUD claimed that the need for this rule change was backed by the GAO Report and an “internal study”, which showed loans produced using down payment assistance, were three times as likely to default and had a loss rate of double the average FHA loan. During the entire six months that this case was litigated, HUD never produced this so-called “study”. There were numerous requests for both this study and the data that it was derived from. Even to this day, HUD has not produced the study or data, which they claim backs up the need for banning down payment programs. The GAO Report is irrelevant because the harshest statement made in it, is that the down payment assistance programs“…may lead to a higher incidence of default.” That is hardly an indictment of down payment assistance.

If this had been a truly balanced article, with fair reporting, the NY Times would have asked HUD for a copy of the data which supports their claims. Especially since the reporter goes on to repeat the outrageous lie that HUD will lose $1.5B if Congress does not ban the programs. This is the newest propaganda that has come out of HUD in the past few weeks. Sadly, the NY Times gives this administration a free ride by not forcing them to back up their claims. It appears that the Bush White House and Cabinet can simply fabricate unsupported statistics and the NY Times will blindly publish them without question.

The true story is, there is no “internal study” and there never was one. This is why HUD could never produce this fictional study during the six month trial. The likelihood of HUD suffering a $1.5B loss, due to down payment assistance programs, is virtually impossible. It would be criminal for the leadership in HUD to be so inept and incompetent that they would allow FHA to suffer such a loss. FHA Commissioner, Brian Montgomery, has numerous tools at his disposal, which could be implemented immediately, if FHA were to be facing such losses. Please ask Commissioner Montgomery what steps he has taken to prevent HUD from facing a $1.5B loss. The answer is, “Nothing!” It is simply another lie. FHA is more profitable right now, than they have been in the last four years. That right, FHA is running a HUGE profit each month and has been doing so since last September! Commissioner Montgomery commented at the Mortgage Bankers Association Convention, “FHA is so profitable …um… well, now that we have banned dpa …uh.. our volume is so high, we will not need a positive credit subsidy. I have sent that over to OMB and informed them that we will not need a credit subsidy.” Essentially, Commissioner Montgomery publically stated that FHA had been losing money because its volume had dropped precariously low. That is why, last year, they were pushing for the authority to create new and “competitive” products. This was before the securitization market collapsed. Now, they don’t need those fancy new products because their volume is exploding from the new loan business pouring back in. Mr. Montgomery could not finish his statement that banning dpa had helped FHA because the ban had not gone into effect! He would have been immediately called out on the mat.

Moreover, HUD does not need the down payment programs anymore. Privately funded down payment programs kept FHA alive from 2004 to 2007. FHA would have been insolvent because 30% of FHA’s business was originated using a downpayment program during those years. Now that FHA’s volume has increased and they no longer face stiff competition, Commissioner Montgomery has to turned his back on the same groups which kept him employed. He has continued to go before the press and spout the latest propaganda directed from the White House. Well, it’s time the press called him out and forced him to back up the ridiculous claims he has been making. Ask Mr. Montgomery to start backing up his statements and provide you the studies supporting these claims. If you have the nerve to actually do that, I will bet that you never hear back from him again. He will simply stop taking your calls.

Finally, your article was factually wrong in stating that,”… HUD is not the only agency to raise concerns about seller down payment loans.” The GAO report could be construed to have “raised concerns”. However, the IRS’ concerns had nothing to do with down payment assistance or FHA loans. The IRS was concerned that several of the non-profits were not conducting their affairs in a manner which the IRS deemed to be charitable activity. The IRS has no authority or even an interest in the FHA mortgage pool. To include the IRS as being concerned about “seller down payment loans” is misleading and shows the lack of balanced reporting. The article was written in such a manner as to paint down payment programs in a dark light. In doing so, you played fast and loose with the facts to support the agenda of the White House and the reporter.

I no longer have a vested interest in this business but I cannot tolerate watching those with a personal agenda denigrate the most successful affordable housing program ever created. It is estimated that one million families have achieved the dream of ownership, by utilizing a down payment program and otherwise could not have bought a home. Your reporter was so dismissive of comments made by the officers of Nehemiah and AmeriDream, yet gave complete credence to the unsupported and very farfetched statements made by the administration. To me, this is very ironic, when you consider that AmeriDream and Nehemiah are not under investigation by the FBI nor are their current leaders accused of any wrong doing. Yet, the leadership at HUD is being investigated by the FBI and in Mr. Jackson’s case, for the second time. The first time was when he publically bragged about redirecting HUD contracts to Bush supporters. He later recanted the story and the FBI dropped the matter. Another way of saying that is, “He admitted to lying and the FBI could not find enough evidence to indict him.”

Next time, please make an effort to be balanced and fair in your reporting. A reputable news source like as the NY Times should not allow themselves to be used as pawns by the White House.