Despite promises to restore financial discipline to the Federal Housing Administration (FHA) during his tenure, former commissioner David Stevens enjoyed a close relationship with the Mortgage Bankers Association (MBA), the main lobbyist for top industry players like Wells Fargo and Bank of America, a recent American Banker article reveals.
Stevens’ emails and calendar were obtained from the U.S. Department of Housing and Urban Development (HUD) under the Freedom of Information Act, and show numerous correspondences between the commissioner and the MBA, which may explain, says American Banker, why he never “feuded” with top industry players.
This information, says American Banker, “suggest[s] that the sort of close ties between regulators and the regulated that have been blamed for contributing to the housing crash were alive and well at Stevens’ FHA… despite the fact that shoddy underwriting practices among MBA members have caused mass defaults and hundreds of billions of dollars in government-guaranteed losses.”
Multiple emails detailed in the article show Stevens’ insider knowledge of the MBA’s lobbying strategies and plans, although the commissioner says the enforcement action he took against more than 2,000 lenders shows he was not too close with the industry he was meant to be regulating.
In December of last year, however, he wrote to the ethics department to recuse himself from further MBA dealings, despite continued contact with the organization. This past March, American Banker reports, Stevens and HUD announced he was recusing himself from MBA business, followed by a formal announcement of taking the post of MBA CEO.
Both Stevens and an MBA spokesperson denied too close of a relationship between the two organizations.
“MBA has always had close relationships with officials at HUD and with FHA in particular,” MBA spokesman John Mechem was quoted as saying in the American Banker article. “Given that lenders and the FHA work hand in hand, it’s to be expected that the national trade association representing mortgage lenders would have a close relationship with FHA, and vice versa.”
Read the article here.
Written by Alyssa Gerace