"On the money trail ... $59 Billion and counting"

Campaign Questions
for Mel Martinez

The following questions are intended to illuminate Mel Martinez' fiscal record as Secretary of Housing and Urban Development (HUD), for the purpose of enabling Florida voters to be well informed in their choice of US Senator. Even before Martinez took office, HUD was cited by Congress for being financially 'high risk', open to massive fraud and waste [5]. Indeed HUD's own Inspector General testified in 2000 (just prior to Martinez' arrival), that HUD could not account for $59.6 billion in the prior year, or more than 50% of its mortgage guarantees in that year [5]. Martinez made little or no effort to investigate, recover the money, or to hold the appropriate staff and government contractors responsible. This has serious ramifications for the citizens of a democracy, as well as for anyone dependent on US financial integrity. The point of these questions is to 'follow the money' from HUD to the Florida elections ...

Topics Covered

1. Who's who in greatest revenues and profits from HUD


2. Who's who in HUD's profits on Wall Street


3. Who's who in campaign funding


4. The war on "narco dollars" at HUD


5. Cooked books and back-door privatization


6. Lax regulation


7. Availability of HUD financial data


8. Holding people accountable


9. US mortgage bubble


10. Florida elections

1. Who are the top 10 mortgage banking originators of FHA mortgage insurance?
2. Who are the top 10 Wall Street dealers in Ginnie Mae securities?
3. Who are the top 10 managers of Section 8 housing and other private housing subsidized and financed by HUD?
4. Who are the top 10 buyers and managers of FHA foreclosed properties?
5. Who are the top 10 developers and owners of Hope 6 public housing deals?
6. Who are the top 10 homebuilders in the country whose business depends on HUD regulation and FHA financing, either to purchase their homes or the homes of their buyers?
7. Who are the top 10 syndicators of low income housing tax credits?
8. Who are the top 10 government contractors running FHA, Ginnie Mae and HUD internal operations?
9. Who are the top 10 banks that serve as HUD, FHA, and Ginnie Mae depositories and trustees?
10. Who are the top 10 law, accounting, and lobbying firms providing services related to HUD real estate, mortgage and securities transactions and regulation?

1. Who are the top 25 private and institutional investors in the stock of the companies, REITs, and banks described in (1) above, and in the mortgage backed and tax-exempt bonds and tax syndications they issue?
2. What is the impact on the value of their stock and bond portfolios from these companies' success as a result of their profits from HUD?

1. How do the top companies, banks, and investors making money at HUD compare to the lists of campaign donors to your campaign, to the Republican Party, to President George W. Bush, and to the soft dollar organizations that support these campaigns?

1. What is the impact on the value of US mortgage company and homebuilding stocks from the $500 billion - $1 trillion of US money laundering annually?
2. How would you assess your performance at HUD in preventing such money laundering?
3. How would you assess your performance with respect to the Florida market, given the size of narcotics trafficking revenues and profits in Florida?

5. Cooked books and back-door privatization

In fiscal years 1998 and 1999, HUD had undocumentable adjustments of $17 billion and $59 billion, and refused to finish its audit in fiscal 1999. Audits for fiscal 2000 and 2001 fail to disclose the amount of undocumentable adjustments made to balance HUD's books. Contractors who had been paid hundreds of millions of dollars to provide the computer systems that were blamed for losing track of this money were not fired. [5]

HUD has mysteriously operated its defaulted mortgage portfolios at much lower recovery rates than are possible, thus transferring FHA financial resources to private interests in the billions of dollars annually. At the same time it has used elevated recovery rates for purposes of issuing new originations. Given HUD's 'high risk' financial atmosphere, with the FHA specifically cited on the GAO's hotlist of top management concerns governmentwide, the the opportunity for fraud is staggering. [9]

1. Where is this money going, and who is getting it -- i.e. who is benefitting the most from HUD's failures at financial management?
2. What is the potential revenue, profits and stock market capital gains that could be generated from $17 billion and $59 billion, as well as several billion a year in back-door privitizations on FHA's defaulted mortgage and foreclosed property portfolio?

6. Lax regulation

HUD is responsible for regulatory oversight of the mortgage government sponsored enterprises, Fannie Mae and Freddie Mac. Freddie Mac is currently under criminal investigation by the Department of Justice related to "cooked books." [6]

1. Please explain how Freddie Mac could have been cooking the books if it's regulator was doing its job.

7. Availability of HUD financial data

It appears that HUD's sensitive financial and demographic data can be accessed inappropriately by predatory enterprises, whereas citizens cannot even access routine financial data that is supposed to be made public. [7]

1. Which companies and banks listed in (1) above have access to confidential government data subject to the Privacy Act as a result of their roles with FHA, Ginnie Mae and HUD?
2. What steps are taken to insure that this data is not shared with their investors and Wall Street?
3. What is the value of such data for purposes of insider trading and market rigging?
4. Why does HUD refuse to make its contract budget publicly available and accessible?
5. Why are HUD's financials and portfolio not publicly accessible on a place based basis?
6. Why has HUD taken drastics steps to suppress efforts to provide open citizen access to its software tools and databases on HUD's portfolio?

8. Holding people accountable

As Secretary of HUD you were entrusted with over $100 billion per year in appropriations and loan guarantees, and were responsible for HUD's performance both financially and ethically. Yet it appears that HUD and its big contractors were exempted from the most basic standards of performance, integrity, and accountability [5], whereas innocent people were held to impossible standards and made to suffer severe consequences for not living up to them [8].

1. Do you have the same standards of accountability and fiduciary responsibility for everyone, or do you practice a double standard?

$59.6 billion in undocumented adjustments was reported missing from HUD just before you assumed office, yet you made no discernable effort to clean up the fiscal mess left by the Democrats -- you did not demand a complete audit, rigorously investigate, recover the money, or even hold the responsible contractors accountable; under your leadership HUD refused to disclose its undocumented adjustments for subsequent audits, and remains on the GAO's financial "high risk" list, while the FHA (part of HUD) is still on the GAO's top 10 "management challenges" [5]. HUD is cooking its books by manipulating recovery rate assumptions and refusing to report undocumented adjustments [9], and Freddie Mac is under investigation for cooking its books [6].

Under your leadership HUD evicted Pearlie Rucker along with her grandchildren and great-grandchild when her mentally disabled daughter was caught with drugs several blocks from home; yet George Bush's family was not evicted from public housing (the White House) when his daughters were caught attempting to obtain alcohol illegally, nor was Jeb Bush's family evicted from public housing (the Governor's mansion) when his daughter was convicted of a drug crime -- she was instead mercifully sent to rehab and then allowed to return home in spite of violating the terms of rehab [8].

Under your leadership HUD refused to pay the $2 million owed to Hamilton Securities for financial services rendered which saved HUD and the taxpayers over $2 billion in defaulted loan sales, and you continued to support the legal persecution of Catherine Austin Fitts, president of Hamilton and former Assistant Secretary of Housing under Bush I [8].

And yet, under your leadership HUD has maintained enormous contracts involving access to HUD's most sensitive data with large defense contractors, including AMS (paid hundreds of millions of dollars for installing HUD's faulty accounting system "HUDCAPS," which the HUD Inspector General identified as the primary reason that tens of billions went missing) and Dyncorp (implicated through federal contracts in Eastern Europe in human slave trafficking and pedopholia) [5].

9. US Mortgage Bubble

HUD is responsible for the health of the US mortgage market. HUD runs a large mortgage insurance operation called the Federal Housing Administration (FHA), and a mortgage securities operation called the Government National Mortgage Association (Ginnie Mae). HUD also regulates the government sponsored mortgage enterprises Fannie Mae and Freddie Mac (currently under investigation), which effectively underwrite the mortgage market. Anyone can purchase a home loan guarantee that is issued by the FHA and backed by the US Treasury, regardless of their circumstances. If or when they default on their mortgage, their bank submits a claim to the FHA for payment. The FHA is then expected to recover as much of the loss as possible by either selling off the defaulted loan, or foreclosing on the home. To the untrained eye this appears legitimate, since there is theoretically a home purchased in the bargain that serves as collateral.

However, in recent years the rate of growth for home mortgages issued vs. homes purchased has increased by more than 400.0% vs. 2.5% respectively. This means a significant volume of mortgages is being mysteriously issued with no collateral, creating a virtual mortgage bubble. At the same time, HUD is only recovering roughly 35% on defaulted loans, after cancelling a successful loan sales program that was recovering 70%. In short, the mortgage market is at risk [9].

1. Please describe the expansion of Ginnie Mae authorities and powers under your leadership at HUD. As a Republican, please explain why you would promote government agencies competing with healthy private markets and socializing a significant amount of private markets into government.
2. How does increasing the debt load of minorities, first time homebuyers, and low income people help them achieve the American dream? Wouldn't they be better off with improved skills and competitive access to equity capital to start businesses? Which is more helpful to such communities -- more mortgage debt, or less narcotics trafficking and HUD fraud (including intentionally high default rate policies combined with low recovery rate resolutions)?
3. What is the total number of Hope 6 units under development during your leadership at HUD? What is the total amount of FHA insurance, low income housing tax credits and tax exempt bonds used to develop these units? How does this flow relate to the US mortgage bubble and stock market. Who were the developers of the two Hope 6 projects at the Orlando Housing Authority, where you served as Chairman? Where else are they the developers?
4. There are allegations of significant overissuance of tax-exempt single family mortgage bonds using FHA insurance by the Arkansas Development Finance Agency as part of schemes to launder and leverage the state share of profits from the arms and narcotics trafficking at Mena Arkansas during Iran Contra. Has this pattern of overissuance been a concern with Florida state and local housing agencies?
5. What is the relationship between the US mortgage bubble and the "strong dollar policy"?

10. Florida elections

1. As co-chair of the George W. Bush presidential campaign in Florida, how do you address the significant voter fraud issue that Florida is now known for?
2. Why were Enron and other corporations allowed to "sponsor" the Florida recount?
3. What precautions are being taken in the upcoming election to ensure a legitimate election?

 

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