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27–794 PDF 2017

S. HRG. 115–121 

NOMINATIONS OF BRIAN D. MONTGOMERY, 

ROBERT HUNTER KURTZ, AND SUZANNE 

ISRAEL TUFTS 

HEARING 

BEFORE THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

ON 

NOMINATIONS OF: 

BRIAN D. MONTGOMERY, OF TEXAS, TO BE ASSISTANT SECRETARY FOR

HOUSING, FEDERAL HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

ROBERT HUNTER KURTZ, OF VIRGINIA, TO BE ASSISTANT SECRETARY FOR

PUBLIC AND INDIAN HOUSING, DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT

SUZANNE ISRAEL TUFTS, OF NEW YORK, TO BE ASSISTANT SECRETARY FOR

ADMINISTRATION, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

OCTOBER 26, 2017 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.fdsys.gov/ 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

MIKE CRAPO, Idaho, Chairman 

RICHARD C. SHELBY, Alabama 

BOB CORKER, Tennessee 

PATRICK J. TOOMEY, Pennsylvania 

DEAN HELLER, Nevada 

TIM SCOTT, South Carolina 

BEN SASSE, Nebraska 

TOM COTTON, Arkansas 

MIKE ROUNDS, South Dakota 

DAVID PERDUE, Georgia 

THOM TILLIS, North Carolina 

JOHN KENNEDY, Louisiana 

SHERROD BROWN, Ohio 

JACK REED, Rhode Island 

ROBERT MENENDEZ, New Jersey 

JON TESTER, Montana 

MARK R. WARNER, Virginia 

ELIZABETH WARREN, Massachusetts 

HEIDI HEITKAMP, North Dakota 

JOE DONNELLY, Indiana 

BRIAN SCHATZ, Hawaii 

CHRIS VAN HOLLEN, Maryland 

CATHERINE CORTEZ MASTO, Nevada 

GREGG RICHARD, Staff Director 

MARK POWDEN, Democratic Staff Director 

ELAD ROISMAN, Chief Counsel 

MATT JONES, Professional Staff Member 

ELISHA TUKU, Democratic Chief Counsel 

LAURA SWANSON, Democratic Deputy Staff Director 

BETH COOPER, Democratic Professional Staff Member 

ERIN BARRY, Democratic Professional Staff Member 

MEGAN CHENEY, Democratic Legislative Assistant 

DAWN RATLIFF, Chief Clerk 

JIMMY GUILIANO, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

(II)

C O N T E N T S 

THURSDAY, OCTOBER 26, 2017 

Page 

Opening statement of Chairman Crapo ................................................................. 1 

Opening statements, comments, or prepared statements of: 

Senator Brown .................................................................................................. 2 

NOMINEES 

Brian D. Montgomery, of Texas, to be Assistant Secretary for Housing, Federal Housing Commissioner, Department of Housing and Urban 

Development ......................................................................................................... 5 

Prepared statement .......................................................................................... 29 

Biographical sketch of nominee ....................................................................... 31 

Responses to written questions of: 

Senator Brown ........................................................................................... 65 

Senator Shelby ........................................................................................... 69 

Senator Scott ............................................................................................. 69 

Senator Perdue .......................................................................................... 70 

Senator Kennedy ....................................................................................... 71 

Senator Menendez ..................................................................................... 73 

Senator Donnelly ....................................................................................... 78 

Senator Schatz ........................................................................................... 79 

Senator Cortez Masto ................................................................................ 80 

Robert Hunter Kurtz, of Virginia, to be Assistant Secretary for Public and 

Indian Housing, Department of Housing and Urban Development ................. 7 

Prepared statement .......................................................................................... 46 

Biographical sketch of nominee ....................................................................... 47 

Responses to written questions of: 

Senator Brown ........................................................................................... 82 

Senator Scott ............................................................................................. 84 

Senator Menendez ..................................................................................... 85 

Senator Heitkamp ..................................................................................... 88 

Senator Donnelly ....................................................................................... 90 

Senator Cortez Masto ................................................................................ 90 

Suzanne Israel Tufts, of New York, to be Assistant Secretary for Administration, Department of Housing and Urban Development .................................... 8 

Prepared statement .......................................................................................... 55 

Biographical sketch of nominee ....................................................................... 56 

Responses to written questions of: 

Senator Brown ........................................................................................... 93 

ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

Letters submitted in support of the nomination of Brian D. Montgomery ......... 96 

Letters submitted in support of the nomination of Robert Hunter Kurtz .......... 112 

(III)

(1) 

NOMINATIONS OF BRIAN D. MONTGOMERY, 

OF TEXAS, TO BE ASSISTANT SECRETARY 

FOR HOUSING, FEDERAL HOUSING COMMISSIONER, DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT; ROBERT HUNTER 

KURTZ, OF VIRGINIA, TO BE ASSISTANT 

SECRETARY FOR PUBLIC AND INDIAN 

HOUSING, DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT; AND SUZANNE 

ISRAEL TUFTS, OF NEW YORK, TO BE ASSISTANT SECRETARY FOR ADMINISTRATION, DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

THURSDAY, OCTOBER 26, 2017 

U.S. SENATE, 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

Washington, DC. 

The Committee met at 10 a.m., in room SD–538, Dirksen Senate 

Office Building, Hon. Michael Crapo, Chairman of the Committee, 

presiding. 

OPENING STATEMENT OF CHAIRMAN MIKE CRAPO 

Chairman CRAPO. Good morning. This hearing will come to 

order. 

This morning, we will consider the nominations of three more individuals to serve in key roles in the Department of Housing and 

Urban Development. 

Welcome to all of you, and congratulations on your nominations 

to these important positions. I see friends and family behind you, 

and I welcome them here today as well. 

The nominees before us are Brian Montgomery to be the Assistant Secretary for Housing and Federal Housing Commissioner, 

Hunter Kurtz to be Assistant Secretary for Public and Indian 

Housing, and Suzanne Tufts to be Assistant Secretary for Administration. 

If confirmed, each of these nominees will play a major role in 

promoting access to safe and affordable housing for families in 

America. Each also brings a wealth of experience and expertise 

that will guide them well throughout their service at HUD. 

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The Federal Housing Administration, or FHA, plays a major role 

in our housing finance system by setting credit guidelines and providing insurance for millions of home mortgages across the country, 

yet it has been over 3 years since FHA has had Senate-confirmed 

leadership. 

Brian Montgomery is an ideal candidate to take up that mantle, 

given that he has done it before. He has provided steadfast leadership at the helm of FHA between 2005 and 2009, during one of the 

most trying times that housing markets have ever seen. 

Mr. Montgomery is also no stranger to this Committee, having 

testified before us on six other occasions on matters relating to 

housing and housing finance, and we welcome him back once again. 

Hunter Kurtz has dedicated nearly his entire career to housing 

policy, including over a decade of time at HUD, and has had a 

hand in implementing housing programs at both the local and Federal level. Most recently, he has served as a key voice within HUD, 

as Deputy Chief of Staff for Policy and Programs. Mr. Kurtz will 

bring this programmatic expertise to the Office of Public and Indian Housing, where he will oversee some of HUD’s largest programs, including Public Housing and Housing Choice Vouchers. 

Suzanne Tufts, over her distinguished career as an attorney, consultant, and CEO, has developed an expertise in turnaround management and leadership development for both Government and 

nonprofit organizations. As Assistant Secretary for Administration 

at HUD, she would oversee HUD’s enterprise-level training, staffing, recruitment, and performance management, and would advise 

Secretary Carson on human resource matters. Ms. Tufts’ reputation as an outside-the-box and entrepreneurial thinker will make 

her a great addition to HUD’s leadership team. 

I urge my colleagues to confirm all three of you without delay as 

well as to confirm other HUD nominees that are still pending before the Senate. 

Once again, congratulations to all of you on your nominations to 

these important offices, and thank you for your willingness to 

serve. 

Senator Brown. 

STATEMENT OF SENATOR SHERROD BROWN 

Senator BROWN. Thank you, Mr. Chairman. 

I want to join Chairman Crapo in welcoming our nominees and 

their families and look forward to hearing their introductions too, 

and thanks for your willingness to serve in these key public service 

roles. 

The Committee has gathered today to consider the nominations 

of three individuals to serve at the Department of Housing and 

Urban Development. HUD plays an important role in addressing 

housing needs of families in Ohio and all around the country. 

The Chairman pointed out, not for the first time in this Committee, that these positions have been unfilled for far too long. I 

think it is important—and I absolutely do not blame this Chairman 

for this—it has happened over and over, and I think it is important 

to remind people that in the last Congress, this Committee just refused to move on almost any nominee. That is one reason we have 

so many openings at the Federal Reserve. It is why some of these 

3 

jobs have remained unfilled. And I think it is important that we 

acknowledge that and know that, and that the Trump administration understands that the party that is not his is cooperating now 

with nominees when 2 years ago, when the shoes were on the other 

feet, when it was reversed, this Committee did not cooperate with 

a Democratic President. 

We consider these nominees at a time when the Nation faces a 

number of housing challenges. The gap between housing cost and 

wages has grown wider over the past decade. Over half-a-million 

Americans face homelessness on any given night. A quarter of all 

renters pay more than half of their incomes toward rent. That 

makes your jobs and the job of HUD even more essential to this 

Nation’s national interest. At the same time, we are losing existing 

affordable housing due to physical deterioration, expiring affordability contracts, and increasing rents for previously in expensive 

homes. 

Access to mortgages for creditworthy borrowers remains tight, 

making it hard for families to purchase a home and build well. The 

FHA provides mortgage insurance to help creditworthy borrowers 

access affordable and stable mortgage credit plays an important 

countercyclical role in ensuring credit remains available in all markets and all market conditions. To assist in that role, FHA has 

taken steps to expand its quality assurance program and to upgrade its technology. 

If confirmed, Mr. Montgomery—and welcome—would oversee 

over 1.2 million units of privately owned HUD-assisted affordable 

housing for low-income families. As FHA Commissioner, he would 

be entrusted to guide the FHA into the future, ensuring both broad 

access to mortgage credit and adequate oversight of participating 

lenders to avoid the mistakes of the past. I look forward to hearing 

more from Mr. Montgomery about how he will continue those efforts while protecting taxpayers from lenders who do not play by 

the rules. 

If confirmed as Assistant Secretary for Public and Indian Housing, Mr. Kurtz will oversee the public housing and Section 8 Housing Choice Voucher programs, which help 3.3 million households in 

urban, suburban, and rural communities find affordable housing. 

Mr. Kurtz would administer programs to address the deep housing 

needs of Native American, Alaska Native, and Native Hawaiian 

communities. And there are a number of Members on this Committee that care so much about Indian housing and Native American housing and Native Hawaiian community housing. 

If confirmed as the Assistant Secretary for Administration, Ms. 

Tufts would oversee human resources at the Department. This 

work will become even more critical in the coming years, as many 

in HUD’s workforce near retirement age and with Trump budget 

cuts, which I hope that you will do all you can internally with the 

Secretary to oppose those cuts. 

If confirmed, the nominees before us today would oversee rental 

assistance for 4.5 million low-income seniors, individuals with disabilities, and families; manage the Federal Government’s primary 

mortgage insurance programs; and ensure that HUD has the workforce necessary to deliver on this important mission. 

4 

In addition, they are likely to have a hand in helping families 

and communities from Texas to Puerto Rico—remember Puerto 

Ricans are American citizens, something the White House intermittently remembers and forgets—to help them recover from some of 

the worst natural disasters the Nation has ever seen. HUD will 

have a large role to play in ensuring that the recovery is equitable, 

effective, and leaves our communities more resilient to future disasters. 

Given the importance of HUD’s programs and HUD’s mission, it 

is disappointing the Administration has chosen to undermine it 

with a 15 percent cuts in proposed cuts to HUD’s programs. 

Mr. Montgomery was at that agency and with a President that 

actually understood HUD’s mission and cared about HUD’s mission, and he knows what those budget cuts mean to his job. Thank 

you for taking it in spite of that and still willing to meet this challenge, and we are counting on you in so many ways on these 

issues. 

The budget would eliminate funding for 250,000 Section 8 Housing Choice Vouchers at a time when Federal housing assistance 

reaches just one out of every four eligible households. Despite an estimated $26 billion backlog of repair needs, the Administration proposed cutting the Public Housing Capital Fund by 

nearly 70 percent. I am hopeful that the three of you can teach this 

Secretary of HUD what that means. I am not sure he understands 

it. He is a smart man but did not have a lot of background in housing, and we are counting on the three of you who understand these 

issues perhaps better than your boss. 

While Secretary Carson has committed to advocate for housing 

funds as part of an Administration infrastructure proposal, we 

have yet to see any detailed infrastructure plan from the Administration and no mention of housing in even the loose outlines it has 

released. 

I forward to hearing from each of the nominees about how they 

would approach the important roles for which they have been nominated. 

I would close with suggesting to each of you before you are confirmed, assuming that the three of you likely will, that you read 

Matthew Desmond’s book, ‘‘Evicted’’. When I met with him and I 

asked him to sign the book that I had actually purchased—I want 

you to know that—he wrote on it—he wrote ‘‘Home equals life’’. 

And the importance of public housing, the importance of every 

American having a clean, decent, affordable place to live is about 

as basic and great as anything any of us can do. I know you take 

that role seriously, the three of you, from looking at your backgrounds and discussions you have had with staff. 

We have a lot to do. Thank you. 

Chairman CRAPO. Thank you, Senator Brown. 

We will now administer the oath, and would each of you please 

rise and raise your right hand. Do you swear or affirm that the testimony you are about to give is the truth, the whole truth, and 

nothing but the truth, so help you God? 

Mr. MONTGOMERY. I do. 

Mr. KURTZ. I do. 

Ms. TUFTS. I do. 

5 

Chairman CRAPO. And do you agree to appear and testify before 

any duly constituted Committee of the Senate? 

Mr. MONTGOMERY. I do. 

Mr. KURTZ. I do. 

Ms. TUFTS. I do. 

Chairman CRAPO. You may be seated. 

As I am sure you have been already advised, your written statements will be made a part of the record. We ask you to try to keep 

your testimony to 5 minutes so the Senators will have an opportunity to use their 5 minutes for questioning, and before you begin 

your statement, each of you are certainly invited to introduce your 

family who are here in attendance with you. 

And with that, Mr. Montgomery, please proceed. 

STATEMENT OF BRIAN D. MONTGOMERY, OF TEXAS, TO BE ASSISTANT SECRETARY FOR HOUSING, FEDERAL HOUSING 

COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN 

DEVELOPMENT 

Mr. MONTGOMERY. Thank you, Mr. Chairman 

I would like to introduce my wife, Katy, and my daughter, Emily, 

who just turned 11 on Sunday—she will tell you that, do not 

worry—and Thomas, my son, who is 8 years old. Thank you all for 

being here. 

Well, thank you, Chairman Crapo, Ranking Member Brown, and 

all the Members of the Committee. I am honored to appear before 

you today to once again to be considered as HUD’s Assistant Secretary for Housing and Federal Housing Commissioner, and I am 

grateful to the President and Secretary Carson for their confidence 

in my abilities to serve in this position. 

I was humbled by the confidence this Committee placed in me 12 

years ago, and I sincerely hope that I earned your trust between 

2005 to 2009 and when I previously served as Commissioner, including 6 months into the Obama administration. 

Some of my Republican friends still ask me why I agreed to serve 

in a Democratic administration, and my answer, quite frankly, has 

always been the same: ‘‘They asked for my help.’’ It was literally 

that simple. Now when I am asked why would I want to return to 

HUD, the answer is just as simple: ‘‘I believe I can make a positive 

difference.’’ 

Public service is an honor that I take very seriously, and if confirmed, I will do my best to, once again, further equal access to affordable rental, housing, and home ownership opportunities, and 

seek solutions to restore vitality to the housing market. 

During my tenure at HUD, I am proud of the work we did to preserve FHA as a viable option for homebuyers. Working with this 

Committee, we were able to pass the Housing and Economic Recovery Act of 2008. That legislation placed FHA on sounder financial 

footing by kicking out the seller-funded down-payment programs 

that were hurting borrowers and decimating the FHA Fund of 

more than $15 billion. 

We were also able to expand home ownership opportunities by 

giving borrowers, especially minorities and first-time homebuyers, 

a safer option than the subprime loans that were so prevalent back 

then. 

6 

FHA played no role in the housing boom or the collapse, but it 

was FHA, quite frankly, that stepped in and provided more than 

a trillion dollars in mortgage liquidity that helped more than 8 million families purchase or retain their homes between 2008 and 

2012, and I am extremely proud of the effort that the HUD career 

staff played in that role. 

Putting an exclamation point on that role, one noted economist 

said in 2011, quote, ‘‘If FHA lending had not expanded after private mortgage lending collapsed, the housing market would have 

cratered, taking the economy with it.’’ 

Well, nearly 10 years after the housing collapse, there is still 

much work that needs to be done. The home ownership rate today 

is the same as it was in 1968, and there is too little affordable rental housing in too many communities across America. In fact, HUD’s 

latest ‘‘Worst Case Housing Need’’ report that was released in August indicated that in 2015, the most recent data, more than 8.3 

million low-income households not receiving housing assistance 

paid more than half of their income in rent. 

But getting back to housing, home ownership for many, while the 

market continues to recover, far too many creditworthy borrowers, 

many of them prospective first-time homebuyers and minorities 

and young families, in my opinion, are being left out. 

The Urban Institute has estimated that more than 6 million 

more mortgages would have been made between 2009 and 2015 if 

credit standards had been similar to what they were in the reasonable ones in 2001, well before the housing boom. One reason for the 

tight credit environment is that many lenders remain very sensitive about defaults and claims out of fear of enforcement actions. 

Just to be very clear, fraud and misrepresentation have no place 

in any industry, much less the one that represents the largest investment families will ever make. We must do a better job of providing regulatory clarity to mortgage lenders, but quite frankly, I 

think it is time we start treating them more like partners than adversaries. 

Another key part of FHA’s mission is to support safe and affordable rental housing. During my previous tenure as Commissioner, 

we made unprecedented changes to leverage private capital with 

Federal resources in order to increase the supply of quality rental 

housing for people with limited incomes. 

I was pleased to see Secretary Donovan and his team continue 

that important objective and greatly expand it, I would add. 

But as rental cost, house burdens begin to grow and worst-case 

housing needs remain unmet, there is more work that needs to be 

done. I also believe nonprofit organizations who are at the forefront 

of developing housing solutions could be better utilized at FHA. 

Another high priority is FHA’s technology. I think it is time to 

address the outdated systems there. The GSEs have been able to 

spend millions of dollars upgrading their technology, but as I like 

to say, FHA is still looking for loose change under the sofa cushions. And that has to end. 

FHA and Ginnie Mae generate billion dollars in receipts, and I 

think they should be able to use some of that to fund IT improvements. Doing so will help reduce the financial risk to taxpayers 

7 

and ensure that FHA can operate on a stable platform for years to 

come. 

I thank the Committee for your time today and my consideration 

as nomination of FHA Commissioner, and I look forward to answering your questions. Thank you. 

Senator BROWN [presiding]. Thank you, Mr. Montgomery. 

Mr. Kurtz, welcome, and feel free to introduce anyone you want. 

STATEMENT OF ROBERT HUNTER KURTZ, OF VIRGINIA, TO BE 

ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Mr. KURTZ. Sure. Thank you. Thank you, Chairman Crapo, 

Ranking Member Brown, and Members of the Committee. I am 

humbled and honored to appear before you today as you consider 

my nomination to serve as the Assistant Secretary for Public and 

Indian Housing at the U.S. Department of Housing and Urban Development. 

I want to extend my sincere thanks and gratitude to Secretary 

Carson for recommending me for this position and President 

Trump for nominating me. 

Joining me today are my wife, Abby; my two boys, Liam and 

Henry; my parents, Bob and Candy; my brother, Chase; my sisterin-law, Autumn; and my cousin, Debbie. 

As well, I want to thank my friends from HUD who are here 

today watching this—and watching this hearing, both career and 

political employees. 

Having served at the Department as a political appointee in the 

Bush administration, a career civil servant during the Obama administration, and now again as an appointee in the Trump administration, I believe I bring a unique background and diverse perspective to the position for which I am nominated. 

Additionally, I worked for the city of Detroit, where I interacted 

with many of HUD’s programs. I am a houser at heart, a practitioner of HUD programs, and a true believer in the mission of the 

Department. I have seen firsthand what we can do with HUD programs, but I have also had the opportunity to help craft rules and 

regulations that I have then had to implement at the local level. 

And I can affirm that what I thought was a good idea in my chair 

in Washington made a lot less sense when sitting in my seat in Detroit. 

My time at the city of Detroit, in many ways, was inspirational. 

I was blessed to work with an incredible team to help turn around 

a housing department considered among the worst performing in 

the Nation. In conjunction with the Mayor’s office, private-sector 

developers, and the City’s Housing Commission, we began the development and production of safe and affordable housing for the 

city and its residents. 

While the renaissance that is now taking place in the city of Detroit is something which I am extremely proud, the real reward for 

me is seeing the joy on the faces and individuals that we were able 

to help. They will always be a reminder of what we do in public 

housing and public service on a day-to-day basis. We help people. 

One of the fundamental lessons I have learned in working with 

the City was not only the impact of the policies we create at HUD 

8 

and in Washington, but that a one-size-fits-all approach to creating 

more sustainable, affordable housing does not work. 

The issues that Detroit faces are different than those faced by 

Seattle, Boise, and the tribal lands. We should give serious thought 

to allowing public housing authorities more control of how they 

manage their portfolios and how to find unique ways to address 

their own housing needs. The people who know best are the local 

officials managing the local PHAs, and we should provide them 

with the tools they need to address their own unique issues. If confirmed, this will be a major goal of mine, and I look forward to 

working with you all to make it a reality. 

The Nation is facing an affordable housing crisis, and we cannot 

just build our way out of it. Today, only a quarter of those who are 

eligible for housing assistance actually receive it. We must find 

ways to graduate residents from public housing and put them on 

a path to achieving greater economic mobility and self-sufficiency, 

which allows us to serve others that need our assistance. This is 

a priority of Secretary Carson, one in which I wholly and enthusiastically support. 

If confirmed, I look forward to building on the successes of our 

current programs while working with the Secretary to implement 

new and innovate ways to achieve HUD’s mission. 

While I have spent some time discussing public housing programs, I would also like to let the Committee know that, if confirmed, I will also focus on the Native American programs that are 

such an integral part of the work that HUD does in the Office of 

Public and Indian Housing. 

I had the opportunity to travel to Indian Country with Secretary 

Carson earlier this year in my current capacity and appreciate and 

understand the needs of our tribal partners. Please know that I 

will continue to work with our tribal partners—and I want to 

stress the ‘‘with our tribal partners’’—to ensure safe, decent, and 

affordable housing for these communities. 

If confirmed, I look forward to working with the Members of this 

Committee to help improve the lives of those Americans who rely 

on programs managed by the Office of Public and Indian Housing. 

Thank you again for your consideration of my nomination, and 

I look forward to your questions. 

Senator BROWN. Thank you, Mr. Kurtz. 

Ms. Tufts, welcome, and feel free to introduce whomever you 

want. Thank you. 

STATEMENT OF SUZANNE ISRAEL TUFTS, OF NEW YORK, TO 

BE ASSISTANT SECRETARY FOR ADMINISTRATION, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Ms. TUFTS. Thank you, Ranking Member Brown, Mr. Chairman, 

and distinguished Members of the Committee. It is a great privilege to appear before you this morning. I am deeply honored that 

President Trump has nominated me to serve under Secretary Carson as the Assistant Secretary for Administration at the United 

States Department of Housing and Urban Development. 

I would like to introduce my husband of 35 years, Bob Tufts, and 

our wonderful daughter, Abby, no relation to his Abby. I also would 

9 

like to thank my extended family, friends, my former colleagues for 

their love and support. 

One does not receive an opportunity like this without years of 

help from many people, and that is certainly the case for me. 

There are two people who could not be here today, but without 

whose courage and life experiences, I would not be the person I am 

or have the passion for public service that I do—my late parents, 

Abraham and Henriette Israel. Born in Europe, they were living in 

Antwerp when, on the morning of May 10th, 1940, they awoke to 

enemy aircraft overhead and an invasion forcing them to flee. For 

the next 10 years, until they came to the United States, they were 

homeless and lived wherever they could find a roof over their 

heads—in barns, in the back yards in the open air of peasants in 

the countryside who gave them shelter, and even one night sleeping under the pews of a church in France. As the only child of Holocaust survivors, making a difference and working in mission-based 

endeavors has been a guiding force in my life. 

However, I have long believed that passion does not produce results without having an administrative and human resources support infrastructure. 

I bring to bear three categories of skills and experience that I believe will help HUD improve its operations: first, experience in 

turnaround management and leadership development, particularly 

in mission-based organizations; second, experience in the field 

which makes me sensitive to HUD’s ultimate customers; and third, 

experience as an outside-the-box creative thinker, someone who has 

strong analytical skills and the ability to both plan and implement 

with energy and enthusiasm. 

I gained these skills and experiences across many silos, including 

law, management, consulting, recruiting, and training. I served as 

the Regional Director at Region II of ACTION, currently the Corporation for National Service, where I not only worked with HUD 

on a variety of tenant empowerment, literacy, and microenterprise 

programs, but where I led the region in improving its service delivery. 

I have also served as the president and CEO of the American 

Women’s Economic Development Corporation where I led the turnaround of a beloved but beleaguered organization. Our team succeeded in eliminating the organization’s 10-year-old debt while 

privatizing funding and improving the organization’s services, including online training. We spearheaded a nationally recognized 

entrepreneurship program for women living in the New York City 

Housing Authority in which 65 percent of program participants 

achieved financial independence and business success. 

But I believe AWED’s most significant service was rendered after 

the 9/11 attacks, where within 72 hours, AWED provided emergency business relief and other services for our students, faculty, 

and alumni located in the Ground Zero area, efforts that earned 

the organization bipartisan recognition. 

My parents were able to make a wonderful life in this country, 

a life that started with a stable, affordable rental home in a safe, 

secure neighborhood, a home or rather an apartment which in time 

my husband and I as a young married couple were able to purchase 

and to raise our daughter. I can think of little that would be more 

10 

meaningful than to help others find the same path to a better life 

for themselves and their families that my parents did. 

If confirmed, I will work hard to ensure that HUD’s administrative and human resources services are best directed to fulfill its important mission. 

Mr. Chairman, distinguished Members of this Committee, thank 

you again very much for your consideration of my nomination. I am 

honored, and I welcome your questions. 

Chairman CRAPO [presiding]. Thank you very much, Ms. Tufts. 

I apologize to the witnesses. I had to step out for a minute. There 

is an important markup going on that I may have to step out again 

for, but I deeply appreciate your participation here. 

I am going to yield my question period to Senator Corker. 

Senator CORKER. Well, thank you, sir. You missed some outstanding testimony. 

Thank you all—— 

Chairman CRAPO. I will review it. 

Senator CORKER. Thank you all for being here. We appreciate 

your desire to serve publicly and to help our Nation, and obviously, 

the areas you are serving, will be serving in, are very, very important to all of us. 

I am going to focus my comments to Mr. Montgomery. We welcome you back, and thank you for your willingness to do this. 

We have been struggling for years, maybe 9, to deal with some 

of the housing finance issues that our Nation is dealing with. I 

know you are very familiar with those, and I am hopeful that our 

Committee under Chairman Crapo’s leadership—I know it is his 

desire and Sherrod Brown—our Ranking Member’s desire to actually deal with the Fannie and Freddie components of housing finance reform, overseeing about $5 trillion in assets, and I hope 

that soon we are going to be able to do so on a bipartisan basis. 

Where we are today is probably not sustainable for the long haul, 

and it is long overdue. We have got an opportunity, I think, to do 

something very constructive. 

But part of that is when you look at housing finance reform, you 

have to look at FHA. If you squeeze the toothpaste, you know it 

comes out in another place, and really the two likely, probably, and 

actually should be dealt with together. Would you agree with that? 

Mr. MONTGOMERY. Absolutely, Senator. I do not think you can 

discuss what you do with the GSEs without pulling the FHA into 

that discussion as well. 

Senator CORKER. If I remember correctly—and I have been 

around here a long time, just a little under 11 years—I think you 

came in at a time to help us when we had some crises to deal with. 

Maybe I am wrong. I think that is right; is that correct? 

Mr. MONTGOMERY. Yes, Senator. I was confirmed in June of 

2005, so I was there during the housing collapse and certainly 

when the recovery was taking hold. 

Senator CORKER. Yeah. So I think you probably have some notions of some of the reforms that might be helpful at FHA itself. 

I wonder if you might just speak to some of the things that you 

would like to see us take on here. 

Mr. MONTGOMERY. Certainly. Thank you. 

11 

Establishing what the role of FHA should be, I think we have 

learned it has been an amazing agency that stepped in, in times 

of economic downturns, whether it was in the ’80s during the oilpatch States. We certainly saw the role that FHA played after the 

housing market collapsed. 

This Committee and the House provided higher loan limits. They 

increased, obviously, the minimum cash investment, concerned 

about certainly the FHA Insurance Fund. 

But going forward, first off, it is not a level playing field. If you 

are looking at the GSEs, again, they have made overwhelming investments in technology. Good for them. But FHA, again, their systems are—one of them, the CHUM system was just sort of the 

backbone of everything FHA does. I believe it runs on a Wang 

mainframe. That technology is at least 30, 40 years old. 

You also have the False Claims Act, which has run a lot of the 

larger banks away from the FHA program. I am not saying you 

should look the other way when there is fraud or misrepresentation, but I hope we have a serious discussion about whether or not 

the False Claims Act is the right tool going forward. 

So I think you have to get them on a level playing field, and then 

do you want FHA—we need to look at the premiums. Are they 

where they should be? The cash investment, is it appropriate? 

Should it be just for first-time homebuyers? Again, there is a lot 

of questions. 

As a private citizen, I have some opinions. If confirmed, I will obviously look forward to discussing those with this Committee. 

Senator CORKER. And that would be—thank you for the input 

you just gave, and I know you probably want to be confirmed and 

then speak more fully about those. And I hope you are confirmed, 

and I think you will be. 

So working with us, though, to work through the components 

that ought to be at the FHA and the components that ought to be 

at the GSEs, that would be interesting to you and something you 

would like to see happen for the good of our country? 

Mr. MONTGOMERY. I never thought in October of 2008 when I 

was in this position that 9 years in the future, we would still be 

in conservatorship, but here we are. 

I mean, there are some deadlines, obviously, facing more of the 

GSEs, next year their operating budgets when they are swept down 

to zero. The GSE patch on the Qualified Mortgage Rule, I believe 

expires in 2021, and they are supposed to have plans in place in 

2019. So there are some deadlines coming that I think will require 

some action. 

Senator CORKER. Well, listen, thank you, and thanks to all three 

of you for your agreement to serve in these capacities, and I look 

forward to working with you. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you. 

Senator BROWN. Thank you, Mr. Montgomery. 

In previous testimony before this Committee, you stressed the 

importance of stable FHA-insured mortgages, and you said—and I 

will quote—‘‘While low initial monthly payments may have seemed 

like a good thing at the time, the reset rates on some interest-only 

loans are substantial, and many families have been and will conVerDate Nov 24 2008 15:30 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 L:\HEARINGS 2017\10-26 NOMINATIONS\HEARING\102617.TXT JASON
12 

tinue to be unable to keep pace when the payments increase,’’ unquote. 

Answer this, if you would. How does FHA underwriting differ 

from the underwriting on the interest-only or adjustable-rate mortgages offered by lenders leading up to the crisis, and why do those 

differences matter? 

Mr. MONTGOMERY. Well, they matter a fair amount. The hallmark of FHA has been their underwriting. Certainly, the technology improvements would help that, but every FHA loan is fully 

underwriting, as outlined in the FHA handbook. We did not see 

that during the housing boom on too many loans. The interest-only 

loan had previously been used more by higher-income borrowers. 

We saw it, in my opinion, abused during the housing boom, and 

again, I think the difference between those, too, is pretty profound. 

Senator BROWN. And had incredible consequences. 

Mr. MONTGOMERY. It absolutely had incredible consequences. 

Senator BROWN. Yeah. 

Let me ask you something else. Thank you for talking about your 

work 10 years ago and what happened and what we need to be 

cautious about. You spent the past 8 years, Mr. Montgomery, helping companies, including some of the largest banks and reverse 

mortgage lenders push back against HUD enforcement actions and 

avoid penalties. You have also served and continue to serve on the 

board of directors for large private companies, at least one of which 

has lobbied us recently as this year on the role of FHA. 

Your employer, the Collingwood Group—you and your employer 

both have been highly critical of FHA oversight. You have called 

FHA enforcement of its lending policies using the False Claims Act 

a, quote, ‘‘drone strike,’’ unquote, of sorts against FHA lenders with 

devastating results. Your Collingwood Group cofounders referred to 

mortgage reforms enacted in response to the 2008 crisis as a regulatory jihad. 

If confirmed, how can we be certain that your work over the past 

8 years will not influence your oversight of lenders and your vision 

for the FHA programs? 

Mr. MONTGOMERY. Well, thank you for your question. Just to be 

clear, I have not questioned FHA’s role, enforcement role. The 

problem has been the Justice Department has stepped right in 

front of the FHA and, quite frankly, in many instances pushed 

them aside, in many instances did not really much care about their 

opinion. The FHA staff had one opinion about whether or not a 

particular loan had some issues with it, but the Justice Department stepped in and used the False Claims Act. And that is what 

I was referring to, which has been around since the Civil War, to 

punish contractors selling diseased beef or diseased horses, rather, 

to the Union soldiers. 

We took exception to how it was used 150 years later to go after 

FHA lenders, which in my instance was many times for clerical errors. Our firm was involved in some of those cases, doing loan file 

reviews, and many times took exception to what the Government 

was asserting. 

I want to be very clear here. FHA has a role in enforcement. 

What we saw happen was the Justice Department stepped right in 

front of them and quite frankly ran the biggest banks, some of 

13 

which who had been FHA lenders for 50, 60, 70 years—they no 

longer offer the product, and I do not think that is good for a lot 

of lower-income first-time homebuyers who have a banking relationship with that entity, who want to take out an FHA loan, and 

are told today, ‘‘We cannot help you.’’ 

Senator BROWN. I appreciate you have agreed to divest yourself 

of all financial conflicts, if confirmed, but will you recuse yourself 

from any issue involving Collingwood’s clients or the companies for 

which you served on the board? 

Mr. MONTGOMERY. Yes, sir. All that is spelled out in my ethics 

agreement, and I will certainly live by everything that is required 

of me, absolutely. 

Senator BROWN. Thank you. 

Mr. Kurtz, you spoke passionately about the importance of housing for low-income folks in this country, and you mentioned only 

one out of four has affordable, relatively affordable safe housing. 

The Administration’s budget proposed large cuts to programs you 

would administer. These include deep cuts to public housing capital 

and operating funds and eliminating of Choice Neighborhood 

grants. 

How do you think these cuts would affect HUD’s mission of providing safety and affordable housing to current and future residents? Public housing, I know you are going to say public–private 

partnerships. That is sort of always the answer, but can you have 

public–private partnerships? That is a second part of this question, 

really. Can you have public–private partnerships without a major 

infusion of public involvement and public dollars? 

Mr. KURTZ. The budget was an attempt to begin a conversation 

about reforming public housing. We are at a stage where I think 

if we all sat down and created a system to house individuals, lowerincome individuals, this is really not the system that we would create, and there really needs to be an attempt to reform it, so it is 

sustainable for the future and sustainable for the individuals living 

in those homes currently. 

Senator BROWN. But you honestly think you can—with that kind 

of—the severity and the depth of those budget cuts, we, of course, 

want a new—we want a conversation. We want to look at this 

anew. We want fresh eyes. That is part of the reason I voted for— 

I voted to confirm Secretary Carson, that and his knowledge of lead 

and how lead content affects brain development, and it is far too 

common in low-income homes, low-income people’s homes. 

But how do you—you have that conversation, but how can you 

do this with this kind of a budget when there just are not the dollars available for these public–private partnerships? 

Mr. KURTZ. I mean, in any situation where you are looking for 

funding, it is something that we dealt with in Detroit all the time. 

You have got to—you just have to be creative in the ways that you 

find what works. I always refer to it as sort of cooking a coup. You 

put a little bit of this in and a little bit of that in. It is all the different pieces. 

So, in some cases, you might not have as much of one, but you 

find other resources and other ways, whether they are on the local 

level or the State level, to try to make up for that difference. 

14 

Senator BROWN. Well, it helps to have some vegetables and meat 

to actually put in the soup, so fair enough. 

[Laughter.] 

Chairman CRAPO. Thank you. 

Ms. Tufts, could you just tell me what your top two or three priorities would be in your new role? 

Ms. TUFTS. Thank you, Mr. Chairman. 

My overall priority is to reimagine the way HUD works, to deliver timely and effective services to our employees, our partners, 

ultimately our customers. 

Within that, there I really see three, three priorities. First is to 

fix our human resource processes so that we can recruit, develop, 

and maintain a highly engaged, high-performing, and very diverse 

workforce; second, to improve our administrative service so they 

can operate more effectively and intersect more effectively not only 

with our human resources but across our program officers, such as 

those represented by the gentlemen here. The third would be—and 

this is something I am particularly interested in as well—is to look 

at and improve and find creative ways to deal with our physical 

footprint, which is not only in need of serious refurbishment, as are 

indeed many of the housing authorities out in the field, but where 

I am intrigued and I think there may be some great opportunities 

for cost savings. So it is really those three: improve HR, improve 

administrative services, and creatively look at our physical footprint. 

Chairman CRAPO. Thank you. 

And, Mr. Kurtz, HUD’s Rental Assistance Demonstration program, or RAD, has emerged in recent years as a great opportunity 

to utilize public–private partnerships to convert outdated and dilapidated public housing into units that are more livable, safer, and 

are no longer on the Government’s balance sheet. Based on your 

experience, should Congress continue to pursue expansions to the 

RAD program? 

Mr. KURTZ. I believe so. Yes, sir. 

Chairman CRAPO. All right. Thank you. 

And, Mr. Montgomery, first of all, I want to follow up on Senator 

Corker’s comments. I agree with him that housing reform is badly 

in need, and it is one of our high priorities. And I appreciate your 

comments about the fact that the FHA needs to play a role in that 

as we address the entirety of our needs in housing reform. 

I have a question to you, however, with regard to litigation. Over 

the past couple of weeks, Secretary Carson has indicated that the 

FHA plans to work with the Department of Justice to clamp down 

on the number of False Claims Act litigation claims brought 

against FHA lenders for what are often harmless or immaterial 

processing errors. Can you speak to the importance of this issue, 

and what steps do you plan to take with FHA to address that problem? 

Mr. MONTGOMERY. Absolutely, Senator. Thank you. 

I—again, just to be clear on this point, fraud and misrepresentation has no place in FHA lending, the Quality Assurance Division 

staff at FHA do a tremendous job in that respect. 

But when you have many times administrative or clerical errors 

in the manufacture of a loan file—in one case, for example, there 

15 

was missing GIF letters. We saw that fairly often. And 7, 8, 9, 10 

years later, the borrower defaults because he or she lost their job, 

you know, change in economic status, if you will. And the Justice 

Department comes back and says, ‘‘Where is the GIF letter?’’ and 

they said, ‘‘Well, the loan went to default because the person lost 

their job.’’ And they said, ‘‘Well, you said that this was accurate, 

that it was complete, and there is no GIF letter.’’ Again, that is a 

violation of FHA rules, but I do not think it is treble damages plus 

civil, mental—civil money penalties, which is in many cases what 

happened. At last count, there were some $5 billion in settlements. There 

is, you know, at least in reading public stories, one lender is currently fighting it. A lot of the banks that settled were also subject 

to the FIRREA statutes. I am assuming because of that, many of 

them decided to settle. 

But again, they have all been around the FHA program. They 

probably ask themselves: How do you reserve for the unknown 

times three? And the path to home ownership goes through banks. 

It goes through credit unions. It goes through mortgage lenders. 

You absolutely have to have them. But if the goal post keeps getting moved on them, I completely understand why they have left 

the FHA program, but I think they should come back. I think all 

they want is some certainty, ‘‘If I follow your rules, you are not 

going to come back 7, 8, 9, 10 years later and say, ‘You did not do 

this perfectly. Why is this missing or that missing?’ ’’ And we have 

seen what has happened as a result of that. 

Chairman CRAPO. All right. Thank you. 

And just finally, in my last 30 seconds, back to housing reform. 

As I indicated, housing reform continues to be a top priority for us, 

this Congress, and as we examine these opportunities as to how to 

deal with Fannie and Freddie and terminate the conservatorship 

and how to deal with the FHA, I would just like your commitment 

to work with us and our staff on this to help us to get to the answer and to get there quickly. 

Mr. MONTGOMERY. If confirmed, I will absolutely provide whatever assistance I can. Thank you. 

Chairman CRAPO. Thank you. 

Senator Tester. 

Senator TESTER. Yeah. Thank you, Mr. Chairman and Ranking 

Member Brown. 

I want to go back to the affordable housing programs. Both Mr. 

Montgomery and Mr. Kurtz spoke about the need for affordable 

housing programs. I am sure you have taken a look at the Trump 

budget, which would eliminate home funding, Housing Trust Fund, 

CDBG funding. 

To put this from a Montana perspective—and it is has to make 

blank statements, but I think I could make a pretty solid statement 

that any community over 8,000 people in Montana needs affordable 

housing. And it stopped the ability for economic development. It 

has stopped the ability to hiring new people so existing businesses 

can expand. It stops the ability to recruit new businesses to a town. 

So the question becomes—you guys said all the right things, and 

by the way, this budget, I would say came from President Trump 

but was shepherded by Dr. Carson. And he said some things—and 

16 

I voted for his confirmation too, but he said some things since his 

confirmation that makes me wonder if his heart is really in housing or if it is in education. For example, when he came to Montana 

and talked to the Indian tribes—and we were glad to have you 

there, Mr. Kurtz—housing was not even talked about. It was 

talked about education. 

And so the question becomes how do you guys—because I think 

both of you want to see an effective affordable housing program. 

How do you do that when potentially the two guys above you are 

not really bought into it? 

Mr. MONTGOMERY. I could go first. Well, thank you for your question. 

As a private citizen, obviously I was not involved in the development of that budget. 

Senator TESTER. No, no. 

Mr. MONTGOMERY. But I can speak previously when I served in 

this capacity. I can very much assure this Committee had a lot of 

input into the budget, and there were some things throughout the 

budget-making process back then I did not agree with, particularly 

cuts to 202 and 811—— 

Senator TESTER. Right. 

Mr. MONTGOMERY. ——which I fought vociferously for. And if 

confirmed, I will do that again. 

Senator TESTER. And so the question really becomes—is what 

happens if your boss comes down and says, ‘‘You know what?’’—I 

am talking about Dr. Carson or even the President comes down 

and says, ‘‘You know what? We do not want you to invest any 

money in affordable housing,’’ because that is what that budget 

says. What do you do? 

Mr. MONTGOMERY. Well, I will tell this Committee that I will 

make sure—I will advocate my position strenuously, but at some 

point, if you do not get what you need, you just have to go forward 

and do what you can. 

Senator TESTER. Mr. Kurtz, do you want to respond to that too? 

Mr. KURTZ. Sure. Working with Secretary Carson in my current 

position, I do believe that he is an advocate of housing. He is—you 

know, it is a subject of conversations always, what we deal with on 

a day-in-and-day-out basis. 

But at the same time, he does see that there is—you know, I 

think it comes from his medical background. You cannot just look 

at the one symptom. You have to look at the patient as a whole, 

is how he likes to describe it, and working to not just provide housing, but the wraparound services that we need to provide to ensure 

that we can graduate people out of public housing. 

You know, it goes back to the comments I was making on that 

we are only housing a quarter of the people eligible. 

Senator TESTER. I gotcha, but here is the problem in the communities that I talked about in Montana. There is no housing. There 

is no affordable housing. None, zero, nada. People want to buy it. 

They cannot buy it because, quite frankly, there is none. 

And so the real question is if we are going to have economic development, if in fact we are going to move the economy forward, 

a lot of these communities—and they are small communities by 

U.S. standards—need help. It is not going to happen without the 

17 

Federal Government providing some sort of assurances that they 

can move forward. 

So the question becomes—I hear what you are saying, but I 

think this is a different issue. I think this is affordable housing. 

There are customers there for it if you can get it built, and quite 

frankly, these programs, if in fact they end up zeroed out, are not 

going to address that issue of affordable housing. 

Mr. KURTZ. I mean, it—one of the other questions I was answering earlier, you know, in my experience in the city of Detroit, we 

never—there was never enough resources. We were always having 

to come up with new ways to come up with resources. 

Senator TESTER. I gotcha. 

Mr. KURTZ. And, you know, public–private partnerships, creative 

opportunities with nonprofits, these were things we were always 

trying to develop and use. 

Senator TESTER. I just do not—and I will just tell you, in this 

budget the President put forward—and it is why I think that you 

guys need to push back hard, and I heard Mr. Montgomery say he 

would, and I hope you will, too, Mr. Kurtz—that you are not going 

to get blood out of a turnip. It really is going to require somebody 

that advocates and knows what they are doing. 

In Indian housing—and I appreciate you being in Montana, Mr. 

Kurtz, but very quickly—and this is not—however you answer this 

does not matter. I just want to know. Have you had a chance to 

take—you were dealing with large land-based tribes in Montana. 

Have you had a chance to visit some of the tribes across the country to see what their housing needs are? 

Mr. KURTZ. I have not, and if confirmed, it is something I want 

to do. 

Senator TESTER. We would be more than happy to try to help you 

with that in Montana if we can set up connections for you. 

Thank you, Mr. Chairman. 

Mr. KURTZ. Appreciate it. 

Chairman CRAPO. Thank you. 

Senator Kennedy. 

Senator KENNEDY. Thank you, Mr. Chairman. 

Congratulations to all three of you. 

I would like you to help me figure out a problem. In Louisiana, 

we, of course, have an affordable housing program, as does every 

State, and we use Federal tax credits. And there is public–private 

partnership that I think has worked beautifully, in my judgment, 

but it is not perfect. And here is one of the problems I see in my 

State and in other States. 

And let me preface my explanation, the problem, by saying here 

is my goal—to take hard-earned taxpayer dollars and get as many 

people as we can who need help into decent, comfortable, affordable 

housing. 

Here is the problem. Many State housing boards that administer 

these credits, they want to help those of our citizens, as do we all, 

who are less fortunate than we are, and in doing so, the standards 

for the housing become higher and higher and higher. In other 

words, they make private developers compete for the credits. Are 

you following me so far? 

18 

And a lot of the private developers, in order to get support from 

the local housing boards, add things like granite countertops, a lot 

of amenities that are wonderful to have, but they cost money. They 

use up credits. We have seen projects in Louisiana on occasion at 2-, 3-, $400 a 

square foot for affordable housing, and I am sitting there doing the 

math. And I am figuring, well, let us see. We can help 10 people 

with $400 a square foot. How many people could we help at $200 

a square foot? Now, $200 a square foot is not as nice as $400 a 

square foot, but it is not chopped liver. How do we solve this problem? 

I am not faulting anyone, but my interest is helping as—stretching those dollars and helping as many people as we can, and we 

can help a lot more if we would be a little reasonable. 

I would like your thoughts on that, starting down—let me start 

with this nominee first. 

Ms. TUFTS. Senator, thank you. 

I am going to—I am focusing mostly within HUD on a similar 

kind of thing, which is the administrative services and the physical 

plant and how do we have places like the Weaver Building, which 

is historical and has all sorts of regulations around it and yet has 

fallen so far down, and it is really a morale crusher, to be frank, 

in terms of the quality of what we can deliver as far as the workforce. 

And yet, hopefully, I will be confirmed and I will be digging into 

the budget to see what is there available and what is the right 

level of excellence and of morale and workplace excellence that 

does not exceed and does not have the taxpayers in your State saying, ‘‘Why are you spending all this money on people in Washington?’’ 

So I hear you exactly in terms of what the tension is, but I think 

I am going to take the easy way out, sir, and defer to my colleagues 

who are in the program offices and who know about the funding 

and the regulations. 

Mr. KURTZ. You know, I am obviously a fan of just building as 

much affordable housing as possible. You know, we—as I mentioned earlier, we are only—— 

Senator KENNEDY. Keep going. 

Mr. KURTZ. We are only housing a quarter of the individuals that 

are eligible for public—or affordable housing, and, you know, anything we can do to expand the amount of affordable housing available is a good thing. 

Mr. MONTGOMERY. I am not familiar, Senator, obviously with 

Louisiana. I will be. 

But in terms of a tool, the Low-Income Housing Tax Credit has 

received broad bipartisan support. I understand there is a bill to 

actually increase the tax credit 50 percent. It works very well with 

FHA programs, certainly with the multifamily programs, the subsidy layering requirements, and obviously with the Rental Assistance Demonstration program. 

I agree we should be able to stretch those dollars and try to develop as much housing as possible. 

Senator KENNEDY. I support the credits, but they did not just fall 

from heaven. 

19 

Mr. MONTGOMERY. Absolutely. 

Senator KENNEDY. We thank heaven for them, but they came out 

of people’s pockets, taxpayers. And I sure would like your help in 

stretching those dollars. 

Mr. MONTGOMERY. Absolutely. 

Senator KENNEDY. Thank you, Mr. Chairman. 

Chairman CRAPO. Thank you. 

Senator Cortez Masto. 

Senator CORTEZ MASTO. Thank you, Mr. Chairman. 

Welcome. Thank you all for your willingness to serve and then 

serve again, and welcome to your families, beautiful families, and 

very impressed they have all been sitting there very quietly and 

listening to this exciting conversation. 

Let me just start with Mr. Montgomery. I want to jump back to 

some of the conversation that I have heard with respect to FHA 

and False Claims, and the reason I ask is because I need a little 

bit more clarification. I am hoping you can help me. 

So when I was Attorney General in Nevada, 48 of my colleagues 

and I settled a $25 billion lawsuit with the Nation’s largest banks 

to address their egregious behavior related to mortgage servicing, 

robo-signing, and foreclosure abuses. That settlement included 

nearly $1 billion being returned to the taxpayers for fraud upon the 

FHA under a False Claims case. 

Are you saying that that particular settlement, there were clerical errors that should have been in there that should have not 

been undertaken under the False Claims Act by DOJ? 

Mr. MONTGOMERY. So just to make sure I understand the question, the State Attorney General settlement, I think was right and 

proper. There were certainly a lot of abuses that, by the way, the 

FHA had no role in. 

Senator CORTEZ MASTO. OK. So thank you, because I am trying 

to understand what you identify as a clerical error. 

So also, I also know that some of the biggest banks that have 

been driven out of FHA lending did not engage in clerical errors 

and loans sold to FHA. For example, I also am aware of the settlement the U.S. Government had in the New York settlement with 

Wells Fargo that alleged systemically lacks underwriting standards 

and compensation systems that incented churn over quality. Also, 

Wells Fargo failed to self-report bad loans sold to HUD and uncovered in internal quality assurance reviews. Are you saying those 

are not clerical errors, those are severe that should have been 

brought under False Claims? 

Mr. MONTGOMERY. Just to be clear, when there are material errors, certainly, there has been misrepresentation. Those are not administrative clerical errors. 

Senator CORTEZ MASTO. So the one example that you cited, that 

there was a GIF letter missing, are you telling me that that was 

the one area, that was the one piece of evidence, a GIF letter was 

missing, and that particular bank then was charged under the 

False Claims Act and found guilty because of that missing GIF letter? 

Mr. MONTGOMERY. Well, we many times saw that. The Government would assert that would be a material error. 

20 

Senator CORTEZ MASTO. Is that the only? Is that the only material, or were there others? 

Mr. MONTGOMERY. No, there might be slight errors in computation, computing, rather, income. 

Again, my issue is not that those are not errors that the lenders 

should certainly fess up to, pay a penalty or whatever. My only 

concern was the use of the False Claims Act as a tool to go after 

them, that, quite frankly, a lot of them—again, these were loans 

that had been paid on for years, and because there was no GIF letter 8 years ago, if the loan goes to default because the person loses 

their job, the Justice Department came back and said, ‘‘Where is 

the GIF letter?’’ To me, there is no connection between the two. 

Senator CORTEZ MASTO. No. And I guess maybe we can—I can 

explore this a little bit further with you. A False Claims action was 

brought just because of a missing GIF letter, or there were other 

areas that they—— 

Mr. MONTGOMERY. Oh, certainly, there were other areas. 

Senator CORTEZ MASTO. OK. That is what I thought. 

So I understand from a Bloomberg article that Secretary Carson 

said the FHA and Justice Department are working to clarify the 

rules so banks will not have to fear retaliation, and the changes 

would let lenders avoid penalties for immaterial errors. 

Are you going to be involved in identifying those rules and working with DOJ? 

Mr. MONTGOMERY. Well, certainly, if I am confirmed, I would 

hope that I have input into that process. 

Senator CORTEZ MASTO. Have you had conversations with Secretary Carson now or previously particularly in this instance when 

he spoke to the Mortgage Bankers Association? 

Mr. MONTGOMERY. I did not speak to him before he talked to the 

Mortgage Bankers—— 

Senator CORTEZ MASTO. You have not had any conversations 

with him regarding this particular position? 

Mr. MONTGOMERY. Oh. I spoke to him—I believe it was in late 

December. 

Senator CORTEZ MASTO. OK. I absolutely have concerns about 

what you identify as a clerical error and what you are looking at 

because, listen, as Attorney General, False Claims Act came 

through my office. I was the only one that could allow them, and 

I can count on one hand how many times we went False Claims 

Act. And I have worked with the DOJ. The only time this is 

brought is because there is egregious activity, not clerical errors 

that may be in part of it, but there is egregious activity going on. 

And so I am very curious to see how you guys are going to drill 

down on this and would like to work with you to understand what 

you identify as a clerical error. 

So I would appreciate working with you on that. 

Mr. MONTGOMERY. Absolutely, Senator, I will do that. Thank 

you. 

Senator CORTEZ MASTO. Thank you. 

Mr. Kurtz, Nevada, like everyone else I am hearing, has affordable housing problems, and we need help. The Trump budget cuts 

are not going to help any of us, as you have heard. 

21 

And I know my time is running out. I am going to submit for the 

record to you some concerns I have with not only affordable housing, the cost, and helping us in our communities, but what you can 

do to really be an advocate for more funding that is needed. 

So I appreciate your willingness to work, and I hope you are willing to work with all of us to address these needs as well. 

I know my time is up. The rest of my questions, I will submit 

on the record. Thank you. 

Chairman CRAPO. Thank you, Senator. 

Senator SCHATZ. Thank you, Mr. Chairman. 

Thank you to all of you for your willingness to serve, and thanks 

to all the families. I appreciate your willingness to let them serve. 

Mr. Montgomery, in your testimony, you discussed FHA’s role in 

addressing the housing supply crisis. This issue is acute for lowincome households across the country, but in Hawaii, all but the 

highest-income households are affected. What specific steps should 

FHA take to spur rental housing construction, and what barriers 

does the Office of Housing face in creating more housing opportunities? 

Mr. MONTGOMERY. Thanks for your question. 

Obviously, you have heard me in my opening statement reference 

the worst-case housing need, 8.3 million families currently not receiving assistance, paying more than half of their income in rent. 

That number is too high. There are not a lot of tools FHA currently 

has to develop new housing. 

As I referenced the tax credit earlier, in my opinion, I think that 

program needs to be increased because it is absolutely a great tool 

that works well with the FHA programs, and we have to hold onto 

what we have. Preservation is a key tool, and when some of these 

use agreements expire, many owners in the case of project-based 

rental assistance have the opportunity to opt out. And I think we 

need to make sure we provide incentives so that they do not do 

that. 

We already do not have enough affordable rental housing, and as 

the home ownership rate went down and the inventory obviously 

fell, that put pressure—or rather the market-rate units that were 

being developed, no one was building much affordable housing during that time, and it has manifested itself in higher rents as well 

for everyone. So the two definitely go hand in hand. 

Senator SCHATZ. Do you want to talk about the Multifamily for 

Tomorrow Transformation effort at HUD in terms of how well it is 

going and if you plan to continue it? 

Mr. MONTGOMERY. Well, the Rental Assistance Demonstration 

program is certainly a big of that—a big component of that. The 

previous Administration should be commended—and Congress for 

working with them on it and certainly in raising the cap as well. 

There is a $26 billion infrastructure hole on a lot of the Nation’s 

public housing, and I think the RAD program goes a long way to 

help filling that. 

I do want to make sure I add, though, that tenant protections are 

certainly important in that. The tenants need to make sure that 

they are well informed of what is going on and that they have a 

voice in that process as well. 

22 

Senator SCHATZ. Do you plan to continue the Multifamily for Tomorrow Transformation effort at HUD? 

Mr. MONTGOMERY. Yes. That is my current plan. 

Senator SCHATZ. OK. That is your current plan. 

Mr. MONTGOMERY. Well, I am a private citizen. 

Senator SCHATZ. Sure. 

Mr. MONTGOMERY. Absolutely. Once I get in there, obviously 

there is a lot of programs to look at, but I absolutely will do whatever I can to help increase the supply of affordable housing. 

Senator SCHATZ. Thank you. 

Mr. Kurtz, thank you for your willingness to serve earlier this 

year. 

HUD released a report detailing the housing needs of Native Hawaiians. The report indicated the affordable housing crisis is particularly acute among Native Hawaiian. The report—which I would 

like with the Chairman’s permission to submit for the record—— 

Chairman CRAPO. Without objection. 

Senator SCHATZ. ——also states that the Federal Government 

has a unique Federal trust responsibility to Native Americans, including American Indians, Alaska Natives, and Native Hawaiians 

[https://www.huduser.gov/portal/publications/housing-needs-native-hawaiians.html]. 

Given the existence of that special legal responsibility, what 

steps do you plan on taking to improve housing outcomes for Native Hawaiians, Alaska Natives, and Native Americans? 

Mr. KURTZ. Specifically to the Native Hawaiian programs, I 

know there is a bit of a backlog in the funding that they have, and 

it is very reminiscent of my time in the city of Detroit. We were 

a housing department with a lot of funding—or expenditure issues 

in trying to spend the funds. 

I am a big believer in having both the field office and technical 

assistance provided to those folks to try to remove barriers that 

they may be facing. It has to be a team effort, and if confirmed, 

I hope to work to try to address those issues. 

Senator SCHATZ. Thank you. 

My last question is for Mr. Montgomery. One of the first acts of 

this Administration was to stop a reduction in a mortgage insurance premium. I understand you do not want to speak to the specifics of the MIP rate. I would like to understand your position on 

the goal of the premium, generally the MIP. 

The Mortgage Insurance Fund capital ratio is now well above the 

statutorily mandated levels, and the current premium will continue 

to strengthen the fund’s capital position. So do you think that the 

goal of MIP should be to provide the fund with adequate capital reserves to provide a profit for FHA or to influence consumer behavior? 

Mr. MONTGOMERY. Well, I am certainly familiar with the premium reduction. The capital ratio is going to be released in a few 

weeks. I do not know what it is going to be. I suspect it will continue its upward trend, but the last actuary review, I think it was 

about 2.36 percent. As a comparison, when I was Commissioner, it 

averaged almost 5.6 percent during my tenure. 

And the totality, I think, as I mentioned before, we need to look 

at the FHA program from an LTV perspective, from loan limits, 

23 

and absolutely from a premium perspective. There should be flexibility on the up-front, on the annual loan limits, whatever—to me, 

it is part of an overall discussion. But I think there needs to be— 

at the proper levels, we make sure we protect taxpayers. 

Senator SCHATZ. Thank you. 

Chairman CRAPO. Thank you. 

Senator WARREN. Thank you, Mr. Chairman. 

So, Mr. Montgomery, you have been nominated to run the FHA, 

and FHA provides taxpayer-backed mortgage insurance, helps millions of Americans buy homes they might not otherwise be able to 

afford, and unless it is managed well, though, of course, the FHA 

can expose taxpayers to risk of billions of dollars in losses, so very 

important position here. 

You have run FHA before, and now you want to go back and do 

it again. And I want to pick up on Senator Brown’s question about 

what you have been doing since then. Your bio says you served as 

Commissioner of FHA from 2005 until mid-2009. What month did 

you leave? 

Mr. MONTGOMERY. If memory serves correct, I think I left on 

July 2nd, 2009, a Friday. 

Senator WARREN. OK. I think Bloomberg thinks it is July 15th, 

2009, but does that sound about right? 

Mr. MONTGOMERY. It was early July. 

Senator WARREN. OK. 

Mr. MONTGOMERY. It was not quite 6 months. 

Senator WARREN. And what month did you officially start a new 

company called Collingwood Group? 

Mr. MONTGOMERY. It was about a month later. 

Senator WARREN. About a month later. 

So 1 month after leaving FHA, you founded and became vice 

chairman of this new company, and according to the Bloomberg 

story, your company was, quote, ‘‘known in the housing finance industry as a specialist in helping firms navigate FHA-related penalties and lawsuits.’’ 

Now, Wells Fargo was a client of yours; is that right? 

Mr. MONTGOMERY. Yes, Wells Fargo was. 

Senator WARREN. Uh-huh. And in 2016, Wells Fargo paid $1.2 

billion for defrauding FHA, and as part of the settlement, Wells 

Fargo admitted that it had, quote, ‘‘certified to the Department of 

Housing and Urban Development, HUD, during the period from 

May 2001 through December 2008 that certain residential home 

mortgage loans were eligible for FHA insurance when, in fact, they 

were not, resulting in the Government having to pay FHA insurance claims when some of those loans defaulted.’’ 

Now, your company was known for helping firms navigate FHA 

penalties. Your company had Wells as a client. So did your company advise Wells in conjunction with the 2016 settlement with 

FHA? 

Mr. MONTGOMERY. So that is a lot of questions, Senator, but just 

to back up for a second, the Collingwood Group existed before I 

joined the Collingwood Group. We just renamed the name of the 

company that it was. 

Senator WARREN. So you do not call yourself a founder. 

24 

Let me just get to the question, though. My time will run short. 

Did your company advise Wells in conjunction with the 2016 billion-dollar settlement with the FHA? 

Mr. MONTGOMERY. So our firm was involved in helping the law 

firm that was representing Wells Fargo. I personally was not involved. 

Senator WARREN. So I just want to make sure I have this right. 

You were the head of the FHA when Wells Fargo submitted thousands of fraudulent mortgages to FHA and cost the Government 

millions of dollars, and then soon after leaving FHA, you join this 

company making money advising Wells Fargo on how to pay back 

the Government as little as possible for defrauding the agency that 

you ran. 

Now, let me ask another one. Mr. Montgomery, was U.S. Bank 

also a client of yours? 

Mr. MONTGOMERY. So, by the way, there is about 5-year gap in 

there between me leaving and us doing work for Wells Fargo. 

Again, I was not involved in that case. 

Senator WARREN. But you did not pick up Wells Fargo as a client 

until 2016? Is that what you are trying to say? 

Mr. MONTGOMERY. I am just guessing it was about 5 years later, 

but again, I personally was not involved in that case, myself—— 

Senator WARREN. But the period of time it settled is the period 

of time that involves when you were the head of the FHA. 

Mr. MONTGOMERY. I would have to go back and read the settlement, but again, I was not involved in that. 

Senator WARREN. You can read the settlement. We know when 

you were the head of the FHA, and we know that the Wells Fargo 

settlement covers the period that you were the head of the FHA. 

So I am asking if U.S. Bank was also a client if yours. 

Mr. MONTGOMERY. U.S. Bank was, but that had nothing to do 

with the False Claims Act. 

Senator WARREN. Well, I am not asking about False Claims. I am 

asking about what happened while you were running the FHA program because in 2014, U.S. Bank paid $200 million for defrauding 

FHA, and in its settlement, it admitted, quote, ‘‘from 2006 to 2001,’’ 

it repeatedly certified of FHA insurance mortgage loans that did 

not meet HUD underwriting requirements. 

Did your company advise U.S. Bank in conjunction with this settlement? 

Mr. MONTGOMERY. I believe we helped look at loan files, as I 

mentioned to you yesterday. The Government asserts material 

weaknesses. A lot of what we did was look at loan files, which they 

have a right to defend themselves. 

Senator WARREN. Well, they certainly do have a right to defend 

themselves, and somebody built a business defending them to help 

them defend themselves. 

I would just like to ask. I know I am out of time. I would like 

to ask you to provide the Committee with a list of the clients that 

your company advised on FHA-related penalties and settlements 

during the time that you were heading up the FHA and the time 

that you were with this company. 

You know, I have seen some amazing cases of spinning through 

the revolving door, but this one really might take the cake. This 

25 

is someone who has run an agency that puts taxpayer money on 

the line, and while there, evidently does not do enough to stop big 

banks form submitting fraudulent mortgages, cost the Government 

millions and millions of dollars, then waltzes right out the door and 

makes money advising those same banks about how to pay back 

the Government as little as possible for the frauds committed on 

his watch. And now we are talking about going back and doing it 

all over again. 

Mr. Montgomery may have the best of intentions, but we can 

never expect the American people to trust Washington if this kind 

of revolving door continues. 

So I hope that we will reject this nomination. 

Thank you, Mr. Chairman. 

Mr. MONTGOMERY. I would like to respond to that, if I could. 

Senator WARREN. Please do. 

It is the Chairman’s time. 

Mr. MONTGOMERY. Let me just—— 

Senator WARREN. But if he responds, will I have time to respond? 

Mr. MONTGOMERY. I am prepared to discuss this topic all day, 

Senator, if you like. 

Senator WARREN. So am I. 

Mr. MONTGOMERY. Just let me be very, very clear. The Government assets one thing in the False Claims Act cases that there is 

X number of files that, you know, claims were paid on. They extrapolate that number across the entire book of business, by the 

way. 

These clients and their law firms asked us to come in there and 

said, ‘‘Is what the Government asserting correct?’’ Again, they have 

a right to defend themselves and to respond. 

In many cases, the Government was not wrong, and the Government knew they were not wrong. In one instance, the Government 

said $400 million in damages. We went and did the loan file reviews, and guess what? It was more like $125 million. Sure, they 

paid $125 million settlement, but that is a long way from $400 million. 

Again, I just want to be clear. They have a right to say, ‘‘Government, you were not correct in this instance,’’ and they said, ‘‘You 

are right.’’ And that is why they paid a much smaller settlement. 

Chairman CRAPO. Senator Warren, you can have the last word, 

but please be brief. 

Senator WARREN. I will be brief because I think somehow we 

may be talking past each other. 

Mr. MONTGOMERY. I hope we are not. 

Senator WARREN. My concern is that you were the head of the 

FHA. It was your responsibility to see to it that standards were set 

so that these banks did not file false claims, and then as soon as 

you leave the FHA, you go to a business whose job it is to make 

sure that these banks, who have broken the law, pay as small a 

penalty as possible. And now you want to come back to the FHA 

and run it again. This is the classic revolving door. In fact, it is 

worse than the classic. It is the revolving door at its worst, and the 

American people cannot have confidence in our Government so long 

as the revolving door is spinning like this. That people work in 

26 

Government and then go make a profit off the times they worked 

in Government, this just is not right. 

Thank you, Mr. Chairman. 

Chairman CRAPO. Senator Warner. 

Mr. MONTGOMERY. I just think we should do what is fair, and 

that is all we were trying to do, Senator. 

Chairman CRAPO. Senator Warner. 

Senator WARNER. Thank you, Mr. Chairman. 

Mr. Montgomery, where have all these—but, Mr. Montgomery, as 

somebody who wants to give you a fair shot, I want to make sure 

I get all this information as well, so I can—— 

Mr. MONTGOMERY. Thank you, Senator. 

Senator WARNER. ——do my own independent review. 

I want to start with just making a comment that a number of 

us on this Committee on both sides of the aisle have felt for a long 

time that one of the last remaining places in terms of a need for 

financial reform is housing finance and have spent, as I have—with 

my friend, the Senator from Massachusetts, and the Chairman and 

the Ranking Member, you know, I know more about housing finance than I ever wanted to know. But I still do believe that we 

are—that the current status of the GSEs being in conservatorship 

is not the long-term solution. It is my hope still that this Committee in a bipartisan way will take on housing finance reform, 

that we will do it in a way that allows competition in the private 

market and in a way that allows risk—appropriate risk transfers 

to those first dollar losses, and whether that is 4 percent, 6 percent, 8 percent, 10 percent, those are all fair items to debate. 

But also that we have a program that has a clearly identifiable 

strip or fee that would help support low-income first-time homebuyers, renters, and others because clearly access to housing in 

this country—and I know you all share this view that it is extraordinarily important. 

So again, I am hopeful we are going to make some progress, and 

should you be confirmed, Mr. Montgomery, would look forward to 

input and trying to work through this issue. 

Let me move from some of the subject matter that Senator Warren was talking about to something that is a bit more mundane but 

is an area that I think is in desperate need of review should you 

be confirmed, and that is the fact that the IT systems at FHA— 

or many of them, I think, are still running cobalt. It appears to me 

that the efficiency of FHA is seriously undermined by the lack of 

having a modern IT system. 

I often point to the fact that if the Federal Government spends 

$88 billion on IT, 75 percent of which is mostly just on patches 

rather than ever junking some of our legacy systems. 

I would like you to talk about where IT reform would fit should 

you be confirmed, and unfortunately, because of some of the rules 

around FHA funding, it feels to me like we do not provide FHA 

with an adequate revenue stream to make the kind of repairs to 

their IT system that would bring them into the 21st century, that 

would actually then perhaps allow particularly more low-income 

and first-time homebuyers be able to access FHA services. 

So if you could speak to that, I would appreciate it. 

Mr. MONTGOMERY. Absolutely. 

27 

In my previously capacity as Commissioner, I used to joke that 

we need to bring FHA technology into the late ’90s. I think that 

is still the case, by the way, bring it in the late ’90s. 

In fairness to the previous Administration, they actually created 

a system around what is called Defect Taxonomy and rolled out the 

Loan Review System after several years. They should be commended for that effort, but there is much more areas where FHA 

needs help. 

CHUMs, which is the backbone I mentioned before, I believe 

runs on a Wang mainframe. 

The CAIVRS system is antiquated. The ability to properly do 

asset management around the single-family inventory is an old system. 

As I referenced before, I had the opportunity to hear some of 

things Fannie Mae has done around the Day 1 Certainty program. 

Good for them, but my guess, they are probably 25 years ahead of 

where the FHA is today from a technology perspective. It is one of 

the most critical issues. 

Senator WARNER. Say that—say that last sentence again. You 

are saying Fannie Mae is about 25 years behind FHA, or FHA is 

behind? 

Mr. MONTGOMERY. No, I am guessing Fannie Mae, based on 

what I have seen, is 15, 25 years ahead—— 

Senator WARNER. Yes, that is what I thought. 

Mr. MONTGOMERY. ——of where the FHA is. 

Senator WARNER. Right. 

Mr. MONTGOMERY. And again, by the way, good. Good for them. 

I am glad they are modernizing their technology, but if you want 

FHA to be a part of the housing finance system in America, they 

need the proper tools. 

Senator WARNER. And also, when we get into these areas 

around—litigation around False Claims Act and trying to make 

sure that the Government is protected, I would argue that outdated 

old technologies can sometimes lead to some of these mistakes, and 

that upgrading that technology could bring more transparency on 

both sides. How do you get the funding stream to do that? 

Mr. MONTGOMERY. Well, I just want to respond real quick to 

what you said. Absolutely, it can give you more visibility if it is a 

data-centric architecture. It would give the Inspector General more 

visibility, for example, in a real-time perspective. 

FHA and Ginnie Mae generate billions in receipts that are currently scored against the HUD’s top-line budget. I believe the last 

budget is somewhere between $7 and $9 billion. It would be nice 

if they could keep some of that for themselves, FHA and Ginnie 

Mae, to modernize the systems because they are critically behind 

where the GSEs are today. It is—— 

Senator WARNER. Now, would that require—— 

Mr. MONTGOMERY. ——a completely an unlevel playing field. 

Senator WARNER. I know I am going—just one last question on 

this, but since my colleagues went over, is that—and let me show 

my ignorance here. Would that require a legislative change, or 

could that be done actually from a commissioner level? 

Mr. MONTGOMERY. Senator, I believe it will require a legislative 

change. 

28 

Senator WARNER. That is what I thought as well. That is what 

I thought as well. 

But my hope would be, Mr. Chairman and Senator Brown, that— 

not sexy, this issue, but when you have got these old outdated IT 

systems in an area where, frankly, we can improve efficiency, we 

could provide better service to FHA’s customers, there may be another ability to use this data in obviously privacy-protected ways, 

that, frankly, there is an enormous, enormous asset there that we 

are not taking advantage of. And I would hope that we could find 

some commonality on getting the agency the revenues they need to 

make the upgrades. They are way overdue. 

Chairman CRAPO. Good points. 

Senator WARNER. Thank you, Mr. Chairman. 

Mr. MONTGOMERY. Thank you, Senator. 

Chairman CRAPO. Thank you, Senator Warner. 

And that concludes the questioning. I once again thank our witnesses for your willingness to serve and for being here today for 

this hearing. 

I would like to inform you that you will probably receive additional questions from the Senators. I advise the Senators that those 

questions must be submitted by the end of business on Wednesday, 

November 1st, and then we would ask our nominees to respond to 

those questions by the following Monday, November 6th. 

And once again, thank all of you for being here today, and that 

concludes our business. 

This hearing is adjourned. 

[Whereupon, at 11:22 a.m., the hearing was adjourned.] 

[Prepared statements, biographical sketches of nominees, responses to written questions, and additional material supplied for 

the record follow:] 

29 

PREPARED STATEMENT OF BRIAN D. MONTGOMERY 

TO BE ASSISTANT SECRETARY FOR HOUSING, FEDERAL HOUSING COMMISSIONER, 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

OCTOBER 26, 2017 

Thank you Chairman Crapo, Ranking Member Brown, and Members of the Committee, I am honored to appear before you today and to once again be considered 

to serve as HUD’s Assistant Secretary for Housing and Federal Housing Commissioner. 

I am grateful to President Trump and Secretary Carson for their confidence in 

my abilities to serve in such an important position. 

If I could, I’d like to take a moment to introduce my wife Katy and my daughter 

Emily and son Thomas, and thank them for being here with me today. 

Mr. Chairman, I was humbled by the confidence this Committee placed in me 12 

years ago and sincerely hope I earned your trust while serving as FHA Commissioner from 2005 to 2009 including 6 months into the Obama administration. 

Some of my Republican friends and colleagues still ask why I agreed to serve in 

a Democratic Administration and my answer has always been the same: ‘‘they asked 

for my help.’’ It was that simple. 

Now when I’m asked why I would want to return to HUD, the answer is just as 

simple: ‘‘I believe I can make a positive difference.’’ 

Public service is an honor, one I take seriously, and if confirmed, I will again do 

my best to further equal access to affordable rental and home ownership opportunities, and seek solutions to restore vitality to the housing market. 

During my tenure at HUD, I’m proud of the work we did to preserve FHA as a 

viable option for homebuyers. Working collaboratively with this Committee, we were 

able to pass the Housing and Economic Recovery Act of 2008, or HERA. 

That legislation placed FHA on sounder financial footing by kicking out the sellerfunded downpayment schemes that were hurting borrowers and decimating the 

FHA Insurance Fund of more than $15 billion in losses according to the FHA Actuarial Review contractor. 

We were also able to expand home ownership opportunities by giving borrowers, 

especially minorities and first-time homebuyers, a safer option that the subprime 

loans that were so prevalent at the time. 

FHA played no role in the housing boom or collapse, but it was FHA that stepped 

in and provided more than $1 trillion in mortgage liquidity that helped more than 

8 million families purchase or retain their homes between 2008 and 2012. 

I’m extremely proud of the effort of the FHA staff who also further proved the 

critical role FHA plays during housing downturns. 

Putting an exclamation point on FHA’s storied role, a well-known economist said 

in 2011: ‘‘if FHA lending had not expanded after private mortgage lending collapsed, 

the housing market would have cratered, taking the economy with it.’’ 

Nearly 10 years after the housing collapse, there is still much more that needs 

to be done. The home ownership rate today is roughly the same as it was in 1968, 

and there is a profound lack of affordable rental housing in too many communities. 

In fact, HUD’s latest ‘‘Worst Case Housing Need’’ report released in August 2017 

indicated that in 2015 more than 8.3 million lower income renter households not 

receiving housing assistance paid more than half their income in rent. 

And while the housing market continues to recover, far too many credit-worthy 

borrowers—many of them prospective first-time homebuyers including minorities 

and young families—are being left out. 

The Urban Institute has estimated that more than 6 million more mortgages 

would have been made between 2009 and 2015 if credit standards had been similar 

to the reasonable ones in place in 2001, well before the housing boom. 

One reason for the tight credit environment is that lenders remain hyper-sensitive 

about defaults and claims out of fear of heavy-handed enforcement actions. To be 

clear, fraud and misrepresentation have no place in any industry much less the one 

that represents the largest investment most families will ever make, but I wonder 

if we haven’t gone too far. 

We must do a better job of providing regulatory clarity to mortgage lenders. It’s 

time we treat them more like business partners than adversaries. 

Another key part of FHA’s mission is supporting safe and affordable rental housing. During my previous tenure as FHA Commissioner, we made unprecedented 

changes to leverage private capital with Federal resources in order to increase the 

supply of quality rental housing for people with limited incomes. 

I was pleased to see Secretary Donovan and his team continue to support this important objective and greatly expand it. But, as rental housing cost burdens grow 

30 

and worst-case housing needs remain unmet, clearly there is more work that needs 

to be done. 

I also believe the role of nonprofit housing organizations who are at the forefront 

of developing housing solutions could be better utilized. 

Another high priority, if I’m confirmed, will be to address FHA’s outdated IT systems. 

While the GSEs have spent millions of dollars upgrading their technology, FHA 

is still looking for loose change under the sofa cushions. That has to end. 

FHA and Ginnie Mae generate billions in receipts and I strongly believe must 

make investments to fund IT improvements. 

Doing so will help reduce the financial risk to taxpayers and ensure that FHA 

can operate on a stable platform for years to come. 

Finally, I want to give you my pledge that we will do everything we can to help 

the people impacted by the hurricanes that ravaged my home State of Texas, as well 

as Florida, Puerto Rico, the Virgin Islands, and the recent wildfires in northern 

California. 

I’m no stranger to disaster recovery, having experienced first-hand the rebuilding 

process following Hurricanes Katrina and Rita. I know the HUD staff continues to 

work hard to help those displaced or otherwise impacted by the recent barrage of 

natural disasters. 

I’d like to thank the Committee for your time today, and consideration of my nomination to serve as FHA Commissioner. I look forward to your questions. 

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46 

PREPARED STATEMENT OF ROBERT HUNTER KURTZ 

TO BE ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, DEPARTMENT OF

HOUSING AND URBAN DEVELOPMENT

OCTOBER 26, 2017 

Thank you, Chairman Crapo, Ranking Member Brown, and Members of the Committee. I am humbled and honored to appear before you today as you consider my 

nomination to serve as the Assistant Secretary for Public and Indian Housing at the 

U.S. Department of Housing and Urban Development. I want to extend my sincere 

thanks and gratitude to Secretary Carson for recommending me for this position 

and President Trump for nominating me. 

Joining me today are my wife Abby, my two boys Liam and Henry, my parents, 

Bob and Candy, as well as my brother Chase, my sister-in-law Autumn and their 

son Harvey. Additionally, I want to thank my friends from HUD who are here today 

and watching this hearing, both career and political employees. 

Having served at the Department as a political appointee in the Bush administration, a career civil servant during the Obama administration, and now again as an 

appointee in the Trump administration, I believe I bring a unique background and 

diverse perspective to the position for which I am nominated today. Additionally, I 

worked for the City of Detroit, where I interacted with many of HUD’s programs. 

I am a ‘‘houser’’ at heart, a practitioner of HUD programs and a true believer in 

the mission of the Department. I have seen firsthand what we can do with HUD’s 

programs, but I have also had the opportunity to help craft rules and regulations 

that I have then had to implement at the local level. And I can affirm that what 

I thought was a good idea in my chair in Washington, made a lot less sense when 

sitting in my seat in Detroit. 

My time with the City of Detroit, in many ways, was inspirational. I was blessed 

to work with an incredible team to help turn around a housing department considered among the worst performing in the Nation. In conjunction with the Mayor’s office, private sector developers, and the City’s Housing Commission, we developed 

and produced safe and affordable housing for the City and its residents. While the 

renaissance that is now taking place in the City of Detroit is something of which 

I am extremely proud, the real reward for me is seeing the joy on the faces of individuals that we were able to help. They will always be a reminder of what we do 

in public housing and public service on a day to day basis: we help people. 

One of the fundamental lessons I learned in working with the City was not only 

the impact of the policies we create at HUD and in Washington, but that a onesize-fits-all approach to creating more sustainable, affordable housing does not work. 

The issues Detroit faces are different than those faced by Seattle, Boise, and Tribal 

Lands. We should give serious thought to allowing Public Housing Authorities more 

control of how they manage their portfolios and how to find unique ways to address 

their own housing needs. The people who know best are the local officials managing 

the local PHAs, and we should provide them with the tools they need to address 

their own unique issues. If confirmed this will be a major goal of mine, and I look 

forward to working with you to make it a reality. 

The Nation is facing an affordable housing crisis and we cannot just build our 

way out of it. Today, only a quarter of those who are eligible for housing assistance 

actually receive it. We must find ways to graduate residents from public housing 

and put them on a path to achieving greater economic mobility and self-sufficiency, 

which allows us to serve others who need our assistance. This is a priority of Secretary Carson—one in which I wholly and enthusiastically support. If confirmed, I 

look forward to building on the successes of our current programs while working 

with the Secretary to implement new and innovate ways to achieve HUD’s mission. 

While I have spent some time discussing public housing programs, I would also 

like to let the Committee know that, if confirmed, I would also focus on the Native 

American programs that are such an integral part of the work that is done in 

HUD’s Office of Public and Indian Housing. I had the opportunity to travel to Indian country with Secretary Carson earlier this year in my current capacity, and 

appreciate and understand the needs of our tribal partners. Please know that I am 

committed to working with our tribal partners to ensure safe, decent and affordable 

housing for these communities. 

If confirmed, I look forward to working with the Members of this Committee to 

help improve the lives of those Americans who rely on the programs managed by 

the Office of Public and Indian Housing. 

Thank you again for your consideration of my nomination. I look forward to your 

questions. 

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PREPARED STATEMENT OF SUZANNE ISRAEL TUFTS 

TO BE ASSISTANT SECRETARY FOR ADMINISTRATION, DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT

OCTOBER 26, 2017 

Chairman Crapo, Ranking Member Brown, and distinguished Members of the 

Committee, it is a great privilege to appear before you this morning. I am deeply 

honored that President Trump has nominated me to serve under Secretary Carson 

as the Assistant Secretary for Administration at the Department of Housing and 

Urban Development. 

I would like to introduce my husband of 35 years, Bob Tufts, and our daughter, 

Abigail. I also would like to thank my extended family, friends and former colleagues for their love and support. One does not receive opportunities like this without years of help from many people, and that is certainly the case for me. 

There are two people who could not be here today, but without whose courage and 

life experience I would not be the person I am, nor have the passion for public service that I do—my late parents, Abraham and Henriette Israel. Born in Europe, they 

were living in Antwerp when, on the morning of May 10, 1940, they awoke to an 

invasion of enemy planes overhead forcing them to flee. 

For the next 10 years, until they came to the United States, they were homeless 

and lived wherever they could find a roof over their heads; even, one night, sleeping 

under the pews of a church in France. 

As the only child of Holocaust survivors, making a difference and working in mission-based endeavors has been a guiding force in my life. However, I have long believed that passion will not produce results without strong administrative and 

human resources support. I bring to bear three categories of skills and experience 

that I believe will help HUD improve its operations and services: 

1. Experience in turnaround management and leadership development within 

mission-based organizations; 

2. Experience in the field which makes me sensitive to HUD’s ultimate customers; and, 

3. Experience as an outside-the-box, creative thinker, with strong analytical skills 

and the ability to both plan and implement with energy and enthusiasm. 

I gained these skills and experiences across many silos, including practicing law 

and spending over 20 years in management and consulting. I served as Regional Director, Region II of ACTION (the current Corporation for National Service) where 

I worked with HUD on a variety of tenant empowerment, literacy, health care and 

microenterprise programs and led the Region in improving its service delivery. 

I have also served as the President and CEO of the American Women’s Economic 

Development Corporation where I led the turnaround of this beloved but beleaguered organization. Our team succeeded in eliminating the organization’s 10-yearold debt while improving its services including curriculum and online training. We 

spearheaded a nationally recognized entrepreneurship training program for women 

living in the New York City Housing Authority in which 65 percent of program participants achieved financial independence and business success. 

But I believe AWED’s most significant service was rendered after the 9/11 attacks. Within 72 hours of the attacks AWED provided emergency personal and business relief services for our students, faculty and alumni located around Ground 

Zero, as well as throughout the City; efforts that earned the organization bipartisan 

recognition. 

My parents were able to make a wonderful life in this country; a life that started 

with a stable, affordable home in a safe, secure neighborhood. I can think of little 

that would be more meaningful than to help others find the same path to a better 

life for themselves and their families that my parents did. If confirmed, I will work 

hard to ensure that HUD’s administrative and human resources services are best 

directed to fulfill its important mission. 

Mr. Chairman, distinguished Members of this Committee, thank you again for 

your consideration of my nomination. I welcome your questions. 

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RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM BRIAN D. MONTGOMERY 

Q.1. Mr. Montgomery and Mr. Kurtz, the rental assistance programs you administer affect many families, seniors, and individuals with disabilities. 

If confirmed, will you commit to meeting with assisted families 

and organizations that advocate on behalf of HUD program participants and low-income families? 

A.1. Yes, while serving as FHA Commissioner, my staff and I consistently met with resident advocacy organizations such as the National Alliance of HUD Tenants, ADAPT, the National Low-Income 

Housing Coalition, LeadingAge, National Housing Trust, National 

Leased Housing Association, and others to discuss ways to better 

address the needs of residents living in apartments subsidized with 

Section 8 Project Based Rental Assistance, Section 202 Supportive 

Housing for the Elderly, and Section 811 Supportive Housing for 

Persons with Disabilities, as well as affordable housing financed 

with FHA-insured mortgages. I will continue to do so if confirmed. 

Q.2. Do you support dialogue between HUD staff and organized 

tenant groups to assist HUD in its oversight of housing programs? 

A.2. Yes, this sort of dialogue is essential in helping HUD administer its programs. Communication between HUD staff, leadership, 

and tenant advocacy groups is key to maximizing program delivery 

and efficiency. I always found that dialogue between the Office of 

Multifamily Programs Asset Management and Portfolio Oversight 

staff and tenant organizations reaped great insight into issues 

needing attention and often led the way to resolution. 

Q.3. Mr. Montgomery, from your prospective, who are FHA’s customers? Who is FHA designed to serve? 

A.3. FHA’s customers are extremely low-, very low-, low- and moderate-income renters (including seniors and people with disabilities), low- to moderate-income first-time homebuyers and homeowners (or those seeking to refinance), FHA-approved single- and 

multifamily lenders and servicers, private apartment owners, and 

others utilizing FHA subsidies and/or financing to meet our Nation’s housing needs. 

Q.4. Mr. Montgomery, if you plan to recuse yourself from matters 

involving Collingwood’s clients not just the clients you worked for 

or the companies for which you served on the board, will you be 

able to perform the duties of FHA Commissioner? 

A.4. My ethics agreement with HUD and the Office of Government 

Ethics spells out the limited circumstances under which I would be 

required to recuse myself. It will not interfere with my ability to 

perform the duties of FHA Commissioner. 

Q.5. How would you delegate your responsibilities if you were unable to consider a specific matter? 

A.5. In the event I need to recuse myself from a matter, I would 

delegate my authority to the General Deputy Assistant Secretary 

in the Office of Housing, Ms. Dana Wade. 

Q.6. In recent years, many cities have seen a wave of population 

growth and investment that have led to greater economic activity, 

66 

1See ‘‘America’s Rental Housing: Expanding Options for Diverse and Growing Demand, Key 

Facts’’, p. 4, Harvard Joint Center for Housing Studies, December 9, 2015, available at http:// 

jchs.harvard.edu/americas-rental-housing. 

tighter rental housing markets, and rising rental housing costs. As 

a result, many lower-income families and businesses who endured 

challenging decades in their communities are finding themselves 

priced out of their long-time neighborhoods just when additional 

economic opportunities are opening up. Loss of housing in urban 

neighborhoods can push residents away from access to jobs, transit, 

and local support networks such as hospitals and child care. In 

many of these neighborhoods, federally assisted housing may be 

coming to the end of long-term affordability contracts or at risk of 

loss due to physical deterioration. HUD estimates that we are losing 10,000 units of public housing every year due to physical obsolescence. By 2025, nearly 2.2 million units of HUD-assisted and 

Low Income Housing Tax Credit-supported housing will reach the 

end of their affordability periods. 1

Do you believe that HUD should help preserve housing and economic opportunities for lower-income families in neighborhoods experiencing economic growth and rising rental costs? 

A.6. HUD, as part of its mission, should strive to preserve housing 

opportunity for individuals and families with limited incomes. The 

objective of HUD’s Office of Recapitalization and Assisted Housing 

Oversight Division is to preserve quality affordable housing 

through refinancing and/or rehabilitating existing affordable housing, and renewing expiring rental assistance contracts. While serving as FHA Commissioner, I made significant changes to FHA protocols to actively increase preservation efforts by better leveraging 

FHA resources through increased utilization of low-income housing 

tax credits (LIHTCs) and private activity bond financing. 

Q.7. If so, what role do you think the programs of the Office of 

Housing should play in preserving these opportunities? 

A.7. The Office of Housing’s role in preserving its portfolio of 

22,000 privately owned multifamily properties and more than 1.4 

million assisted rental units is central to HUD’s overall efforts to 

preserve the affordable housing stock. Working with private apartment owners and nonprofit organizations, especially in high-cost 

areas, to promote the renewal of expiring Section 8 Project Based 

Rental Assistance contracts and facilitating the refinancing of 

FHA-insured and uninsured multifamily properties continue to be 

the most impactful methods for the Office of Housing to support 

preservation. 

Q.8. Very-low income people with disabilities have great difficulty 

in finding and paying for suitable affordable housing with access to 

appropriate features and services. Over 1 million very low-income, 

non-elderly persons with disabilities pay over half of their incomes 

for housing, and approximately 2 million more people—including 

those with developmental disabilities—are living in more restrictive, institutional environments than they would choose or are living with an aging caregiver. Rent on a modest 1 bedroom apartment at HUD’s estimated national fair market rent would consume 

all of the income of a person relying upon Supplemental Security 

Income (SSI). 

67 

What do you view as the Office of Housing’s role in meeting the 

housing needs of low-income individuals with disabilities? 

A.8. I strongly support the Section 811 program. Section 811 plays 

a key role providing expanded housing choice for extremely low-, 

very low, and low-income renters with disabilities who cannot find 

affordable housing. While serving as FHA Commissioner, I spearheaded program changes to leverage Section 811 rental assistance 

funds in housing tax credit and bond financed transactions to expand the supply of affordable housing for people with disabilities. 

This concept materialized and, currently under this program, State 

housing finance agencies that have entered into partnerships with 

State health and human services and Medicaid agencies can apply 

for Section 811 Project Rental Assistance for new or existing affordable housing developments funded by LIHTC, HOME, or other 

sources of funds. It provides stable housing for nearly 30,000 

households, improving their quality of life while also reducing 

health care costs. If confirmed, you have my assurance that I will 

continue to advocate for this important program. 

Q.9. Across America, seniors are struggling to pay for their housing 

costs. We know that very low income seniors who pay more than 

half of their incomes for housing also spend much less than their 

peers on health care, food, transportation and retirement savings. 

We also know that affordable housing can be a tremendous, costsaving platform for the provision of services to seniors—services 

that help seniors remain healthy, address health challenges, and 

age in place. 

Yet, only one-third of seniors eligible for HUD rental assistance 

programs get to use them, resulting in the housing cost burdens 

and associated lower spending on health, food, and transportation. 

These shut-out seniors also miss out on the health benefits that 

come with access to a service coordinator in their apartment buildings, from living in appropriately accessible homes that HUD-assisted housing provides, and living in a community that guards 

against social isolation. 

What is more, as you know, recent studies from both the Bipartisan Policy Center and Harvard’s Joint Center for Housing Studies 

have documented a coming wave of housing needs for America’s 

senior citizens. These needs will include: additional affordable rental housing, housing and community adaptations necessary to help 

seniors age in place; integrating health and supportive services into 

housing; and improving technologies such as telemedicine. To meet 

these challenges, the Bipartisan Policy Center has recommended a 

combination of continued investment in affordable rental housing, 

home modification programs, and coordination between health care 

and housing providers to improve health outcomes and lower costs. 

If confirmed, what will you do to meet the housing challenges of 

an aging America? 

A.9. I’m a strong supporter of HUD’s work to provide stable housing for vulnerable seniors and to help them remain safely in their 

homes as they age. Affordable and stable housing with supportive 

services allows seniors to live independently, but with a higher 

level of overall security. 

68 

Understanding the need for supportive housing for this vulnerable population, I will continue to support the traditional Service 

Coordinator program. This program provides for the employment of 

Service Coordinators in insured and assisted Multifamily Housing 

developments that are designed for seniors and persons with disabilities. Of the 12,000 Multifamily assisted properties, more than 

4,000 have service coordinators that are either project-based or 

grant funded. 

I also support the Administration’s request to expand the Rental 

Assistance Demonstration to enable the conversion of Section 202 

Project Rental Assistance Contract to long-term Section 8 Project 

Based Rental Assistance contracts. This will provide much-needed 

recapitalization opportunities to preserve existing affordable senior 

housing. 

And finally, I have always been a supporter of the Home Equity 

Conversion Mortgage (HECM) program, which allows seniors to 

age in place by tapping the equity in the home. This is an important option for seniors that we need to ensure remains financially 

viable. 

Q.10. Will you take actions to increase the supply of affordable, accessible rental housing for lower-income seniors? 

A.10. Yes, through the increased promotion of FHA’s multifamily 

mortgage products as credit enhancement on new construction 

transactions utilizing housing tax credit and/or bond financing on 

senior developments. Most State housing finance agencies have 

senior set asides and/or additional points for the new construction 

of accessible senior housing with services. FHA multifamily mortgage insurance products, service coordinator funding, and rental 

assistance programs all work well in facilitating new construction 

development. 

Q.11. Will you take actions to help seniors modify their homes in 

order to help them age in place? 

A.11. Yes, having a good understanding of the cost associated with 

housing one senior in a Section 202 property for 1 year, the cost 

efficiency realized through aging in place options is clear. 

Q.12. How would you foster collaboration with health care providers to meet the needs of America’s seniors? 

A.12. FHA’s health care programs (under Section 232 and 242 of 

the National Housing Act) are administered by the Office of 

Healthcare Programs. FHA staff collaborate regularly with health 

care providers, independent living, nursing home and assisted living facility owners to discover ways to further meet the housing 

and health care needs of America’s seniors. 

Section 232 mortgage insurance covers assisted living facilities, 

skilled nursing facilities, and board and care homes that provide 

essential residential care services to senior citizens. The Section 

242 program provides mortgage insurance to acute-care hospitals 

that provide critical health care services to communities nationwide. These important programs work in partnership with lenders 

and health care providers across America to ensure that essential 

services, affordability, and access to health care are maintained for 

69 

seniors, and also collaborate with other Federal and State agencies 

to maximize safety and ensure quality of care. 

Additionally, the Section 202 program applicants for funding 

often have existing long-term partnerships with State health and 

human services and Medicaid agencies to provide a more comprehensive approach to addressing the housing, supportive services 

and health care needs for seniors. 

If confirmed, I would continue to support, manage, and develop 

the FHA health care portfolio and promote the use of other existing 

mortgage insurance programs to expand affordable senior housing 

opportunities, affordable health care (facility) financing, and comprehensive supportive services. 

Q.13. Do you support service coordination as a strategy for improving outcomes for seniors? 

A.13. Yes, to reiterate, FHA has several options for financing senior housing development or rehabilitation, but addressing supportive service needs, as identified by State and local agencies, provides a far more comprehensive approach for success and subsequently a better outcome for seniors. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR SHELBY 

FROM BRIAN D. MONTGOMERY 

Q.1. Mr. Montgomery, I have long been a supporter of a cost benefit analysis on all regulations because I believe that the Government must ensure that the cost of implementing a regulation does 

not outweigh its intended benefits. Can you commit to ensuring 

that a cost-benefit analysis will be conducted on regulations that 

are considered under the FHA? 

A.1. I very much share your view that new regulations need to undergo a vigorous cost-benefit analysis. The President has made this 

a priority as well and I want to assure you that, if I’m confirmed, 

we will conduct a cost-benefit analysis on new regulations. 

Q.2. Mr. Montgomery, will you ensure that the intended impact of 

FHA rules are consistent with the spirit and purpose of their underlying statute, and that they do not intrude into appropriate 

State regulation or law? 

A.2. Yes, I think that is very important. We want to make sure 

FHA is complying with the law as well as congressional intent, and 

we need to have a healthy respect for its impact on States. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT 

FROM BRIAN D. MONTGOMERY 

Q.1. There’s no doubt that the FHA’s mission of promoting home 

ownership is an important one. That said, I am mindful that it’s 

taxpayers who were forced to bailout the FHA with $1.7 billion 

when it dipped in the red during 2013. 

On the other hand, private mortgage insurers cover roughly 36 

percent of the market, which is behind the FHA’s share, and don’t 

need taxpayers to cover their losses. 

70 

Fannie and Freddie are currently offloading their risk to reinsurance markets and mortgage insurers. If expanded, these initiatives 

will prevent future taxpayer bailouts. 

Please answer the following with specificity: 

Would you implement a similar program at FHA? 

A.1. I would certainly be open to exploring greater risk sharing 

within the FHA program. However, it’s important to keep in mind 

that many borrowers served by FHA would not be served, or would 

be served at much higher cost, by private capital. FHA would have 

to carefully assess if private sector pricing for FHA credit risk 

would truly strengthen the financial condition of the Mutual Mortgage Insurance Fund—and whether or not FHA’s outdated technology can effectively operate such a program. 

Q.2. Can you do it alone or must Congress act? 

A.2. My understanding is FHA has certain statutory authority for 

off-loading risk. These authorities would need further legal review 

to understand exactly what kind of program and what size could 

be entertained without additional authorities. Furthermore, because the GSEs and FHA operate different business models, any 

risk sharing initiative must be carefully reviewed to make sure it 

works for FHA. 

Q.3. Do you favor a more precise statutory definition of FHA’s mission? 

A.3. As Congress considers the future of the housing finance system in the context of reform, consideration of the proper role and 

mission of FHA within the system is necessary, including the vital 

role FHA plays with State and local Housing Finance Authorities. 

The mission of FHA should be aligned to the role Congress wishes 

it to play going forward. 

Q.4. Manufactured housing is an affordable housing option for 

more than 22 million working families. 

It’s particularly important in my State, where 20.3 percent of all 

homes are prefabricated. 

Please answer the following with specificity: 

What’s your view on HUD’s regulations governing manufactured 

housing? 

Does the current framework ensure affordability and access? 

A.4. Manufactured housing is an incredibly important source of 

housing for millions of Americans and the only form of non-subsidized housing HUD directly regulates. The President’s Executive 

Order #13777 charged all Federal agencies with re-examining their 

rules and reducing the regulatory burden on the American public. 

We need to make sure FHA’s manufactured housing rules undergo 

a rigorous cost-benefit analysis to ensure we are balancing important product safety considerations with affordability and access. If 

confirmed, you have my commitment this will be a priority. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR PERDUE 

FROM BRIAN D. MONTGOMERY 

Q.1. During your previous tenure as FHA commissioner, you 

chaired the Mortgagee Review Board. Can you describe the adminVerDate Nov 24 2008 15:30 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00074 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-26 NOMINATIONS\HEARING\102617.TXT JASON
71 

istrative actions you took against FHA lenders that failed to comply with program requirements? 

A.1. During my prior tenure as FHA commissioner, during which 

I chaired the Mortgagee Review Board, we took aggressive action 

against FHA lenders that committed fraud or otherwise failed to 

comply with important program requirements. As I stated during 

my confirmation hearing, there is simply no place for fraud within 

FHA. After all, we are talking about the single biggest investment 

most Americans will make during their lives, and there are important taxpayer protections to consider as well. 

In total, we brought cases against 38 lenders in 2005 (some of 

which were prior to my confirmation), 21 in 2006, 18 in 2007, 95 

in 2008, and 593 in 2009. (It’s important to note that the spike during those last 2 years was a direct result of a determination by 

HUD’s Administrative Law Judge that lenders who do not comply 

with annual recertification requirements must have a decision rendered by the MRB, rather than by a decision of the Lender Activities Office Director via a delegation of authority from the Board.) 

Of note, in 2006, we settled an estimated $41 million case with 

AMRO for possible violations of the False Claims Act, Program 

Fraud Civil Remedies Act, and HUD mortgage lending requirements. The Government found that during the period January 2000 

to April 2003, two of AMRO’s underwriters authorized AMRO’s employees to sign the underwriters’ names to the Addendum to the 

Uniform Residential Loan Application. The application contains 

language that certifies the underwriters reviewed and underwrote 

loans that the underwriters did not personally review or underwrite. On December 30, 2005, HUD executed a settlement agreement with AMRO where the lender agreed to pay the U.S. Government $16.85 million for making false certifications to HUD on 

28,097 FHA-insured loans. AMRO also agreed to not submit insurance claims on 783 defaulted loans, for an additional estimated 

savings to the Government of $24.35 million. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR KENNEDY 

FROM BRIAN D. MONTGOMERY 

Q.1. Mr. Montgomery, in January 2015, HUD reduced premiums 

and caused FHA to absorb many borrowers that could have been 

otherwise served by the private sector, increasing the market share 

for Government-backed lending. 

Is it your belief that the FHA should be implementing arbitrary 

premium reductions to gain market share and increase American 

taxpayers’ exposure to mortgage credit risk? 

A.1. FHA premiums should never be set arbitrarily. During my 

prior tenure as FHA Commissioner, we worked closely with OMB 

to set mortgage insurance premiums in an actuarily sound manner—at levels that carefully balanced FHA’s dual responsibility of 

promoting home ownership for first-time and low-and moderate-income borrowers while also protecting the Mutual Insurance Fund 

and ultimately the taxpayers who stand behind it. If I am confirmed to lead FHA again, I certainly would want to take a fresh 

look at mortgage insurance premiums. I know FHA will be releasVerDate Nov 24 2008 15:30 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00075 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-26 NOMINATIONS\HEARING\102617.TXT JASON
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1 American Enterprise Institute (AEI) International Center on Housing Risk, ‘‘The 2015 Cut 

in FHA’s Mortgage Insurance Premium: Did It Work as Intended?’’ December 27, 2016. Available at: https://www.housingrisk.org/wp-content/uploads/2017/09/FHA-Premium-Cut-Briefing-FINAL.pdf. 

ing its annual actuarial report later this month and I think that 

will help inform any future decision on premiums. 

Q.2. Mr. Montgomery, analysis 1 from the American Enterprise Institute (AEI) shows that almost half of the buyers that benefited 

from FHA’s January 2015 premium reduction were poached from 

other markets, such as the GSEs, which have some amounts of private capital standing in a first loss position. Another third of the 

180,000 buyers would have entered the markets regardless of the 

lower premiums because of an improving economy. Numerous highlevel HUD officials from previous Administrations, including 

former FHA Commissioner Carol Galante, have supported the notion that private capital should play a leading role in insuring low 

downpayment loans. 

What is your vision for how FHA can complement, but not crowd 

out private capital in the mortgage insurance market? 

A.2. Private capital should always play the leading role in a vibrant housing finance system and we are continuing to see private 

capital return, albeit slowly. While there will naturally be some 

overlap between the types of borrowers served by FHA and those 

served largely through private capital, I’ve never viewed them as 

being in direct competition. The key, as I noted in my above answer, is to set premiums and other policies in a way that allows 

FHA fulfill its mission while minimizing any encroachment into 

segments of the market that are best served by private capital. 

Mr. Montgomery, the fiscal year 2016 annual report for the Mutual Mortgage Insurance Fund (MMIF) was the first actuarial report in nearly a decade to show that the FHA’s single-family program complied with the 2 percent statutory minimum capital requirement. Despite being below the statutory minimum for close to 

a decade and receiving a $1.7 billion taxpayer bailout in 2013, FHA 

suffered no consequences and, in fact, continued to expand its footprint in the housing market. 

Q.3. Do you think that, as it would be for any other financial institution, that there should be ramifications for when FHA fails to 

meet this minimum capital requirement? 

A.3. It is vitally important that FHA maintain its capital ratio 

above the congressionally mandated level of 2 percent and that failure to meet that level be subject to strong congressional oversight. 

Further ramifications should be considered carefully, especially if 

they limit FHA’s ability to provide liquidity and maintain the Nation’s housing market during times of significant economic stress. 

Q.4. Do you agree that it is time to make FHA more financially resilient by increasing its capital requirements to be more in line 

with its private market counterparts? 

A.4. Congress may well wish to consider higher capital requirements for FHA as it explores broader housing finance reform. I 

urge that any such consideration carefully balance the ability of 

FHA to fulfill its mission to provide affordable mortgage finance 

73 

with protecting taxpayers. A countercyclical framework that builds 

capital in good times to cushion the fund in times of stress also 

merits consideration. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR MENENDEZ FROM BRIAN D. MONTGOMERY 

Q.1. In January, you said ‘‘[e]xcessive enforcement actions, coupled 

with State and Federal regulatory reforms, have discouraged mortgage lenders from making any loans that fall outside of the strict 

boundaries set by CFPB regulations.’’ Please explain what you 

meant. 

A.1. There’s no doubt in my mind that new rules were necessary 

to prevent the type of lending that led to the financial crisis. I just 

wonder if maybe we haven’t gone too far in the opposite direction. 

The Urban Institute calculated that 5.2 million more loans would 

have been made between 2009 and 2014 if we were using the reasonable underwriting standards in place back in 2001. In her 

paper, Laurie Goodman wrote ‘‘The factors contributing to the tight 

credit box are complex, ranging from the issue of lender overlays 

due to repurchase risk, to the high costs of servicing delinquent 

loans, to fears of litigation by the Department of Justice, the HUD 

Inspector General, or State Attorneys General.’’ That’s all I meant 

by the quote you referenced. 

Q.2. In your opinion, what role should the Federal Housing Administration play in identifying and investigating cases in which lenders submit false claims for FHA mortgage insurance? 

A.2. When I chaired the Mortgagee Review Board as FHA Commissioner, we took aggressive action against FHA lenders that committed fraud or otherwise failed to comply with important program 

requirements. As I stated during my confirmation hearing, there is 

simply no place for fraud within FHA. After all, we are talking 

about the single biggest investment most Americans will make in 

their lives, and there are important taxpayer protections to consider as well. 

In total, we brought cases against 38 lenders in 2005 (some of 

which were prior to my confirmation), 21 in 2006, 18 in 2007, 95 

in 2008, and 593 in 2009. (It’s important to note that the spike during those last 2 years was a direct result of a determination by 

HUD’s Administrative Law Judge that lenders who do not comply 

with annual recertification requirements must have a decision rendered by the MRB, rather than by a decision of the Lender Activities Office Director via a delegation of authority from the Board.) 

Of note, in 2006, the FHA settled an estimated $41 million case 

with AMRO for possible violations of the False Claims Act, Program Fraud Civil Remedies Act, and HUD mortgage lending requirements. The Government found that during the period January 

2000 to April 2003, two of AMRO’s underwriters authorized 

AMRO’s employees to sign the underwriters’ names to the Addendum to the Uniform Residential Loan Application. The application 

contains language that certifies the underwriters reviewed and 

underwrote loans that the underwriters did not personally review 

or underwrite. On December 30, 2005, HUD executed a settlement 

74 

agreement with AMRO where the lender agreed to pay the U.S. 

Government $16.85 million for making false certifications to HUD 

on 28,097 FHA-insured loans. AMRO also agreed to not submit insurance claims on 783 defaulted loans, for an additional estimated 

savings to the Government of $24.35 million. 

From the January 2006 HUD News Release: Brian Montgomery, 

HUD’s Assistant Secretary for Housing–Federal Housing Commissioner said, ‘‘As much as we intend to aggressively expand the FHA 

program to help even more families realize their American Dream 

and become homeowners, we will not do so at the expense of the 

financial soundness, integrity or reputation of the Federal Housing 

Administration. This settlement is evidence that we will take immediate action if our participating lenders, however large or small, 

fail to follow our underwriting requirements.’’ 

Q.3. During your nomination hearing, in response to a question 

from Senator Corker, you said ‘‘I am not saying you should look the 

other way when there is fraud or misrepresentation, but I hope we 

have a serious discussion about whether or not the False Claims 

Act is the right tool going forward.’’ Please explain what you meant 

by this comment. 

A.3. What I was referring to in my response to Senator Corker was 

the important work currently underway at FHA to finalize what is 

known as Defect Taxonomy. This is an area I want to focus on if 

confirmed because I believe if FHA is able to provide FHA-approved lenders with clearer ‘‘rules of the road’’ for what constitutes 

a material violation of program requirements, they will hopefully 

be able to originate better, safer mortgages. I’d like to see us focus 

more on protecting borrowers on the front end instead of waiting 

until they are harmed and turning to the False Claims Act to extract penalties. 

Q.4. If confirmed as FHA Commissioner, please outline any steps 

you would take with regard to the HUD’s role in enforcement actions under the False Claims Act. 

A.4. My understanding is that HUD and Justice Department staff 

have already been discussing the use of the False Claims Act going 

forward and whether a 150-year-old statute is the proper enforcement tool. An FHA representative should be an active participant 

in these discussions. 

Q.5. During your nomination hearing, in response to a question 

from Senator Corker, you raised the question of whether FHA insurance should be restricted to first-time homebuyers. Of the number of FHA endorsements in fiscal year 2016, 30 percent were refinances that helped borrowers reduce their housing costs and approximately 18 percent of purchase loans were for non-first-time 

homebuyers. Do you support restricting FHA endorsements to firsttime homebuyers? 

A.5. I do not. In fact, I think restricting FHA lending to first-time 

homebuyers would greatly limit FHA’s ability to help lower-income 

borrowers purchase or refinance a home. In my response to Senator 

Corker, I was simply listing some of the recommendations that 

were recently put forward in a CBO study that offered options for 

75 

managing FHA’s risk. I was by no means endorsing this particular 

policy. 

Q.6. If confirmed, do you plan to revisit the current Administration’s decision to reverse the annual mortgage insurance premium 

reduction announced by the previous Administration? 

A.6. If confirmed, I certainly would want to take a fresh look at 

mortgage insurance premiums but speaking from experience it is 

a lengthy process that also involves OMB. I know FHA will be releasing its annual actuarial report later this month and I think 

that will help inform any future decision on premiums. 

Q.7. As a result of the Office of Multifamily Housing’s Multifamily 

for Tomorrow Transformation, nearly all of the multifamily asset 

management positions located in Newark, New Jersey have been 

relocated to New York. As a result, I have heard repeated complaints by owners in New Jersey since the consolidation began. 

Will you commit to retaining a sufficient number of multifamily 

asset managers in the HUD Newark office to properly serve the 

owners and residents of federally assisted housing in my home 

State of New Jersey? 

A.7. I’m certainly sensitive to your concerns given the sheer volume 

of multifamily housing in the State of New Jersey. I have heard 

differing reports from the field—both that the Multifamily Transformation has achieved positive results, but also that it’s been disruptive in some parts of the country. If confirmed, I’d like to take 

a closer look at how we can be better meeting New Jersey’s needs. 

Q.8. Do you support initiatives that pair housing counseling with 

a mortgage insurance premium incentives, including but not limited to the Federal Housing Administration’s Homeowners Armed 

with Knowledge Program? 

A.8. See below. 

Q.9. If confirmed as FHA Commissioner, what ideas or initiatives 

would you pursue to expand access to housing counseling? 

A.9. I think housing counseling is absolutely critical. During my 

prior tenure as FHA Commissioner, I sat through a counseling session and was able to see the value first hand. I also served on the 

board of NeighborWorks America during my entire tenure. If confirmed, I’d like to take a fresh look at ways we can incentivize 

housing counseling as a tool to provide homeowners and potential 

borrowers with information to (1) make independent financial decisions and (2) maximize the level of success of FHA borrowers. 

Q.10. In New Jersey, 70 percent of extremely low-income senior 

households pay more than half of their income for housing. Nationally, only one in every three seniors eligible for HUD rental assistance programs get to use them, resulting in severe housing cost 

burdens and associated with limited spending ability on other necessities. With baby boomers retiring, the number of senior renters 

is projected to soar between now and 2035, as will the number of 

cost-burdened seniors. 

What specific policy steps do you plan to take to expand opportunities that provide affordable, sustainable, and dignified housing 

76 

that will allow our Nation’s low-income elderly to maintain independence and age in place? 

A.10. I’m a strong supporter of HUD’s work to provide stable housing for vulnerable seniors and to help them to remain safely in 

their homes as they age. Stable housing provides financial security, 

physical security, social connections, and enables delivery of longterm community based supportive services. I also recognize that to 

support vulnerable residents, housing providers must possess the 

skills and resources to enable residents to remain safely in their 

home, regardless of cognitive impairment, limited mobility, or loss 

of functionality. 

Understanding the need for supportive housing for this vulnerable population, I will continue to support the traditional Service 

Coordinator program. This program provides for the employment of 

Service Coordinators in insured and assisted Multifamily Housing 

developments that are designed for the elderly and persons with 

disabilities. Of the 12,000 Multifamily assisted properties, a little 

over 4,000 have a service coordinator that is either project-based or 

grant-funded. 

I also support the Administration’s request to expand the Rental 

Assistance Demonstration to enable conversation of Section 202 

Project Rental Assistance Contract to long-term Section 8 assistance. This will provide much-needed recapitalization opportunities 

to preserve existing affordable senior housing. 

And finally, I have always been a supporter of the Home Equity 

Conversion Mortgage (HECM) program, which allows seniors to 

age in place by tapping the equity in the home. This is an important option for seniors so we need to ensure it remains financially 

viable. 

Q.11. Will you commit to fighting attempts by the Administration 

to make cuts to the Section 202 program? 

A.11. I am a strong supporter of HUD’s role in providing stable 

housing to seniors. The Section 202 program is a central part of 

these efforts, having created nearly 400,000 homes for low-income 

seniors. Section 202 Project Rental Assistance Contracts also provide essential service coordination resources to help seniors remain 

in their homes as they age. If confirmed, you have my assurance 

that I will continue to advocate for this important program. 

Q.12. In 2010, Congress passed the Frank Melville Supportive 

Housing Investment Act to reform and modernize the HUD Section 

811 program, bipartisan legislation I was proud to author. The Section 811 Project-Based Rental Assistance program has been enormously successfully in helping States agencies develop integrated 

permanent supportive housing targeted to people with disabilities 

who would otherwise be living in high-cost institutional settings or 

worse, be homeless. Prior to passage of the bill, the per-unit cost 

of the program was $150,000. By contrast, the per-unit cost of the 

program now averages $30,000. 

What will you do to build on this record of success for the Section 

811 project-based rental assistance program? 

A.12. I very much appreciate your commitment to this program as 

well as the legislation you authored. The Section 811 Project Rental Assistance Demonstration is a promising new initiative to deVerDate Nov 24 2008 15:30 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00080 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-26 NOMINATIONS\HEARING\102617.TXT JASON
77 

liver integrated housing opportunities for people with disabilities. 

The lessons learned and the partnerships formed between State 

housing agencies, State health and human services agencies, and 

State Medicaid agencies, will pave the way for future efforts to provide integrated housing solutions, improving quality of life for residents at reduced cost to taxpayers. I’m looking forward to seeing 

the results of the ‘‘PRA Demo’’ so that we can develop further proposals to support integrated supportive housing and to foster effective State-level partnerships. 

Q.13. How do you plan to support the develop of permanent supportive housing units so that adults with disabilities can live 

amongst the community as opposed to in costly and isolated institutional settings? 

A.13. See above. 

Q.14. What strategies do you plan to undertake to address the 

challenge of assisting States to meet this enormous demand for affordable rental housing for non-elderly people with disabilities? 

A.14. See above. 

Q.15. Will you commit to fighting attempts by the Administration 

to make cuts to the Section 811 program? 

A.15. I strongly support the Section 811 program. Section 811 plays 

a key role assisting low-income renters with disabilities who cannot 

find affordable housing. Section 811 provides stable housing for 

nearly 30,000 households, improving their quality of life while also 

reducing health care costs. If confirmed, you have my assurance 

that I will continue to advocate for this important program. 

Q.16. The President’s budget request includes a general provision 

increasing tenant rent contributions from 30 percent to 35 percent 

of income. According to the Department’s own estimates, for households living in units receiving subsidies through the section 8 

project-based rental assistance program, this proposal would result 

in a nearly 22 percent tenant rent increase in the first year, and 

a 31 percent rent increase in subsequent years. In addition, the Department calculated that a staggering 64 percent of the population 

impacted by the proposed rent increases are elderly or disabled. 

Do you believe that tenant rent increases of 22 percent and 31 

percent are significant? 

A.16. See below. 

Q.17. In your opinion, how will the impacted elderly and disabled 

households—the vast majority of whom live on fixed incomes—be 

able to afford a 22 percent and ultimately 31 percent rent increase? 

A.17. See below. 

Q.18. Do you believe that a 22 percent rent increase, and ultimately a 31 percent rent increase, on the Nation’s lowest-income 

families, elderly, and persons with disabilities will increase housing 

instability? If not, please explain. 

A.18. The proposed increases in tenant contributions, averaging less than $90 per month for households affected by the proposed 

change in the income calculation, still leaves most households with 

a monthly subsidy in excess of $500 relative to market rents. In adVerDate Nov 24 2008 15:30 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00081 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-26 NOMINATIONS\HEARING\102617.TXT JASON
78 

dition, hardship exemptions will be available to assist households 

facing difficult situations. 

My understanding is the FY2018 budget proposals were a first 

step toward a holistic rental reform package for 2019. If I’m confirmed, I look forward to participating in the development of that 

legislative proposal and will work with Congress to ensure we are 

able to provide efficient and effective support to the most vulnerable families. 

Q.19. In my home State of New Jersey, New Jersey Community 

Capital (NJCC)—a nationally recognized Community Development 

Financial Institution—has been tremendously successful with the 

loans it has purchased through FHA’s Distressed Asset Stabilization Program (DASP), which allows FHA to sell defaulted mortgages to investors. NJCC is able to make modifications to reduce 

loan balances and lower monthly payments for homeowners that 

are behind on their mortgages, allowing them to avoid foreclosure 

and stay in their homes. And where modifications are not possible, 

NJCC has turned foreclosed homes into affordable rental housing 

or new affordable ownership opportunities. 

Will you commit to making improvements to DASP that allow 

community-oriented groups like New Jersey Community Capital to 

purchase more loans and therefore achieve better outcomes for 

more homeowners and communities? 

A.19. I know the DASP program has set aside pools for communityoriented organizations like NJCC. If confirmed, I want to see if we 

can find additional opportunities for groups like this to participate 

in the DASP program. This will be a priority for me. 

Q.20. Will you commit to strengthening the program’s loss mitigation, vacant property, and neighborhood stabilization standards so 

that we can ensure homeowners and neighborhoods are the beneficiaries of this program—not private equity firms and hedge 

funds? 

A.20. My understanding is that HUD strengthened DASP’s loss 

mitigation requirements, vacant property/neighborhood stabilization requirements, and enhanced nonprofit participation in 2016. If 

confirmed, I want to continue to evaluate and strengthen the program to ensure fair treatment of borrowers and encourage participation by nonprofit partners. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR DONNELLY FROM BRIAN D. MONTGOMERY 

Q.1. On November 1, FHA intends to implement a new program 

called E-Tool, which has been developed by the HUD Office of Multifamily Housing. My understanding is there are lingering concerns 

about the readiness of the tool and whether computer programming 

issues still exist. 

Mr. Montgomery, what is the status of E-tool and do you believe 

it is ready for implementation? What steps can HUD take to ensure a smooth and glitch-free roll-out? 

A.1. As you noted, it’s my understanding that FHA rolled out its 

E-Tool on November 1 and multifamily lenders are now using it to 

submit all new applications. As a strong proponent of updating 

79 

FHA’s antiquated technology, I applaud the effort to improve the 

application process for FHA lenders. If confirmed, will ask for an 

update on the E-Tool during my first week. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCHATZ 

FROM BRIAN D. MONTGOMERY 

Q.1. Over its history, FHA has been an essential tool for the construction and permanent financing and refinancing of apartments. 

While less than 10 percent of the outstanding multifamily mortgage debt, the role it serves as a source of capital for underserved 

segments of the rental market cannot be overstated. 

Why are FHA’s multifamily programs such a valuable source of 

capital? 

A.1. Over time FHA has proven an important resource to stabilizing the market by playing a countercyclical role during financial 

downturns when capital markets tighten, as it did again through 

the financial crisis beginning in 2008. FHA’s conservative approach, namely its long-term, fixed-interest rate, and fully amortizing debt, has proven a dependable source of capital for borrowers, lenders, and investors, especially in periods of capital tightening, and especially in otherwise underserved markets. 

Q.2. FHA’s multifamily programs largely performed well throughout the 2008 housing crisis and continue to do so today. 

Given these circumstances, do you support a robust FHA multifamily program? What changes can be made to encourage more 

multifamily construction to meet the housing shortage this country 

faces? 

A.2. I support a robust FHA multifamily program so that it can 

continue to finance the construction and preservation of affordable 

housing, and so that it can continue to play its critical, historic role 

of providing countercyclical capital to the market. If confirmed, I 

believe program changes can be made to encourage greater use of 

FHA financing for multifamily construction, including better aligning programs with the use of Low Income Housing Tax Credits. 

Pursuing this robust mission must always be balanced with risk 

mitigation to protect FHA from losses. 

Q.3. During the last Administration, HUD’s Office of Multifamily 

Programs underwent a significant restructuring with the goal of 

improving transactional and operational efficiency. 

What is the status of the transformation? Do you think the effort 

was successful? Are there any changes you plan to implement going 

forward? 

A.3. The Multifamily Transformation has been completed across 

the country. It’s something I want to be briefed on, if I’m confirmed. From what I’ve heard, the results have been mostly positive, but I’ve also heard of growing pains in some parts of the country and I want to make sure we are sensitive to those concerns and 

that they are addressed. Clearly there is more work that needs to 

be done, but overall it seems the results have been positive. 

80 

1 Joe Light, ‘‘Ben Carson Vows To Pull Back on Mortgage Penalties at HUD’’, Bloomberg. October 23, 2017. Available at: https://www.bloomberg.com/news/articles/2017-10-23/hud-secretary-carson-vows-to-pull-back-on-mortgage-penalties. 2https://archives.hud.gov/news/2006/pr06-002.cfm 

3 Ben Lane, ‘‘Collingwood Group Chairman Calls Out ‘Regulatory Jihad’ on Mortgage Lenders’’, HousingWire. April 8, 2016. Available at: https://www.housingwire.com/articles/36743- 

collingwood-group-chairman-calls-out-regulatory-jihad-on-mortgage-lenders. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR CORTEZ MASTO FROM BRIAN D. MONTGOMERY 

Q.1. Last week, Secretary Carson vowed to reduce penalties 

against lenders for failing to originate loans according to Federal 

Housing Administration (FHA) standards. 1 And in the past, in 

your role as a bank consultant, you have said that, ‘‘[t]he overreach 

of the False Claims Act by the Department of Justice has driven 

FHA’s top producing lenders out of the Nation’s flagship home buying program.’’ 

When you went into the private sector, you advocated for a lighttouch approach on banks for failing to meet FHA standards. But 

back in 2006, when you were FHA Commissioner, you said, ‘‘as 

much as we intend to aggressively expand the FHA program—we 

will not do so at the expense of the financial soundness, integrity 

or reputation of the FHA.’’ 2 You went on to announce a False 

Claims Act settlement with one misbehaving lender, saying, ‘‘we 

will take immediate action if our participating lenders, however 

large or small, fail to follow our underwriting requirements.’’ 

Given that you’ve changed your mind on this issue, what assurances can you provide that you’ll advocate for the interests of taxpayers if confirmed to FHA, and not your past—and potentially future—bank clients? 

A blog published by your firm called the new mortgage rules following the financial crisis a ‘‘regulatory jihad.’’ 3 These rules included a ban on dual-tracking homeowners, requirements to offer 

borrowers regular and clear monthly statements, and implementation of a fair review process for homeowners applying loan modifications. Do you think that this statement was fair? 

During your answers to questions at your confirmation hearing, 

you said that the Department of Justice pursued False Claims Act 

cases on the basis of ‘‘clerical errors.’’ Can you provide examples of 

the types of clerical errors that spurred such cases? To your knowledge, were any False Claims Act cases pursued solely on the basis 

of clerical errors? 

A.1. I want to be very clear that I have not changed my mind on 

the critical importance of strong enforcement. I aggressively pursued cases against FHA lenders that perpetrated fraud or otherwise violated program guidelines during my tenure as FHA Commissioner, and if confirmed, will prioritize enforcement again. You 

rightly noted this is in the best interests of taxpayers, but it’s also 

in the best interest of FHA borrowers, for most of whom a home 

will be the single largest investment they will make in their lives. 

Put simply, there’s no room for fraud or misrepresentation in FHA. 

During my time in the private sector, I never advocated for a 

‘‘light-touch approach.’’ Rather, our firm assisted clients when matters were brought to their attention usually by FHA staff. We later 

were asked to assist law firms assisting our clients when the False 

81 

Claim Act was used against them. Our team of former FHA staff 

would review the loan file documents and determine based on our 

experience whether or not the errors the Government asserted 

were material in nature actually were material. In our experience, 

many times they were not material errors. For example, an error 

we frequently found in our review of loan files identified by the Department of Justice included miscalculating income. However, 

when we re-calculated the correct income, the loan still met FHA 

guidelines for debt-to-income ratios. The finding was not material 

(especially in cases where the borrowers had been current for several years), but the Department of Justice would contend it was 

material because the initial calculation was wrong. 

We saw many cases in which the False Claims Act was used to 

hold a lender responsible for what were truly immaterial errors. 

You’re absolutely correct that there were material errors as well. 

I don’t think any case was ever brought solely on the basis of immaterial and administrative errors, but we saw numerous instances where minor errors were included in order to bolster a case 

and achieve a larger settlement. I thought that was the wrong way 

to go after lenders and ultimately it chased many of them out of 

the FHA program leaving borrowers with fewer choices—in particular, the large banks who exited the FHA program after decades 

of participation. 

Finally, with respect to the Nation’s largest depository banks, it’s 

worth noting they have all now settled their False Claims Act 

cases. 

With respect to the blog you brought to my attention, I want to 

make very clear this phrase was NOT made by me but rather a 

work colleague who certainly is entitled to his own opinion. That 

said, I would not have chosen those words. 

Q.2. Back in May, I wrote a letter with Senator Rubio to Secretary 

Carson, inquiring about a particular provision buried in the HUD 

budget that would seemingly diminish protections for surviving 

spouses with HUD-insured reverse mortgages following the death 

of their spouse. 

I appreciate that the Department responded to our letter, and 

emphasized that it was not your intention to reduce protections 

against eviction currently afforded to seniors. But I still haven’t 

been fully satisfied as to what the impact of this provision would 

be, if implemented. Some legal services attorneys my office has contacted in Nevada remain concerned. They believe that the language 

could give the Secretary more discretion not to transfer loans to 

surviving spouses upon the death of their partner. 

Can you commit to me that there will be absolutely no diminution in the protections afforded to surviving spouses in the reverse 

mortgage program under your watch? 

A.2. During my briefings prior to my confirmation hearing, HUD 

staff informed me that the Department recently implemented new 

regulations formally codifying its commitment to protections for eligible non-borrowing HECM spouses. I share your view that we 

need to maintain protections for non-borrowing spouses and, if confirmed, want to work with you further on this issue. 

82 

Q.3. Currently, it is not mandatory for servicers to provide loss 

mitigation to FHA reverse mortgage borrowers when they fall behind on property taxes and insurance. Will you commit to making 

this loss mitigation mandatory? 

A.3. I know FHA is committed to making loss mitigation options 

available to HECM servicers for borrowers who have fallen behind 

on their property taxes and insurance, but you are correct that 

these loss mitigation options are not mandatory. If confirmed, I 

would like to examine this issue more closely to fully understand 

how the requirement of loss mitigation for HECM borrowers might 

have financial implications to the MMI Fund. 

Q.4. Mr. Montgomery, you currently serve on the board of a private 

mortgage insurance company that stands to profit based on certain 

decisions you may make at FHA. While you will have to abide by 

Government recusal policies, of course this creates the appearance 

of a conflict of interest in your job, if confirmed. 

For the benefit of public transparency, do you intend to return 

to the board of a mortgage insurance company upon the expiration 

of your term at FHA? 

A.4. While I intend to return to the workforce in some capacity following my term as FHA Commissioner, if I’m confirmed, as far as 

I can foresee I have no plans and have made no arrangements to 

return to the board of a mortgage insurance company. Further, I 

believe my previous tenure as FHA Commissioner and later serving on the board of a private mortgage insurer provides me a 

unique and insightful view into the distinct roles each play in the 

mortgage marketplace. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM ROBERT HUNTER KURTZ 

Q.1. In July of 2016, Congress enacted the Housing Opportunity 

Through Modernization Act (HOTMA). This legislation was widely 

supported across the spectrum of housing groups. It would streamline programs and help communities create new housing opportunities for vulnerable populations. Yet HUD has not fully implemented this legislation. 

Can you tell me whether you will make HOTMA implementation 

a priority, if you are confirmed? 

A.1. If confirmed, I will make the implementation of HOTMA a priority for the Office of Public and Indian Housing (PIH). During Secretary Carson’s testimony in the House Financial Services Committee, he indicated that around 75 percent of necessary actions 

have been completed or are currently underway. However, there is 

still more work to be done and, if confirmed, I will commit to implementing the remaining HOTMA provisions and providing PHAs 

with clear guidance that will assist them in making changes to 

their program operations. 

Q.2. In your testimony, you say that you want to ‘‘find ways to 

graduate residents from public housing and put them on a path to 

achieving greater economic mobility and self-sufficiency.’’ Evicting 

someone from public housing would arguably put an individual ‘‘on 

a path to achieving greater economic mobility and self-sufficiency.’’ 

83 

Someone could argue that a person who is homeless is self-sufficient and economically mobile. 

Since I am sure that is not what you had in mind, please describe how you would define these terms. 

Please describe some of the ways that you have in mind of improving the lives of current residents so they may secure decent, 

safe, and affordable private housing. 

How will you measure the progress and success of your efforts? 

A.2. As a career houser, I would certainly disagree with anyone 

who believes that evictions are part of HUD’s mission and that 

homelessness equates to that person being ‘‘self-sufficient and economically mobile.’’ If confirmed, I will advocate for a holistic approach to assisted housing for families that extends beyond the 

brick and mortar and focuses on providing opportunities for families to achieve self-sufficiency. In support of this effort, HUD has 

two programs in particular that are administered by Public and Indian Housing that support this holistic approach: 

The Family Self Sufficiency (FSS) program provided $75 million 

to over 700 grantees last year, and in FY2016 provided services to 

over 70,000 households. In FSS, the head of household signs a contract of participation that maps out steps he/she will take to 

achieve self-sufficiency over the next 5 years. The FSS coordinator 

works with that family member to develop that contract, and connects him/her to services and jobs that will help him/her become 

economically self-sufficient. 

The Jobs Plus program, modeled after a successful evidencebased pilot in the 1990s, has awarded $63 million in grants to 24 

Public Housing Authorities over the past 3 years. Jobs Plus uses 

three strategies—intense job training and case management, rent 

incentives, and community support for work—at targeted public 

housing developments over 4 years. Grantees work with all ablebodied residents in that development and measure employment 

training, job placement, and retention. 

The Jobs Plus and FSS programs are just two examples of successful self-sufficiency initiatives for our assisted families. If confirmed, I will also join the effort to examine the Section 3 work requirements—revisiting the regulation and its implementation to 

ensure better outcomes for families and less red tape for PHAs. If 

confirmed, I will also work with Secretary Carson on his Envision 

Center initiative, to better develop the potential of HUD assisted 

families through public–private partnerships that would provide increased access to wrap-around services. 

Two ways to measure progress and success are measuring increases in income and increases in the number of positive exits 

(e.g., buying a home; renting a tax credit unit, etc.) from the public 

housing and HCV programs. 

Q.3. In no State in the Nation can a full-time minimum-wage 

worker afford to rent a two-bedroom home at HUD’s Fair Market 

Rent, and a one-bedroom home is affordable to such a worker in 

only 12 counties. According to the National Low Income Housing 

Coalition, six of the seven occupations expected to add the most 

jobs by 2024 have median wages that are less than the ‘‘housing 

wage’’ necessary to afford a one bedroom apartment. 

84 

Do you support an increase in the minimum wage in order to enable more workers to afford rent? 

A.3. The minimum wage is established by Congress in conjunction 

with the Department of Labor through the Fair Labor Standards 

Act. If confirmed, in my role as Assistant Secretary for Public and 

Indian Housing, I will work with tenant advocate groups such as 

the National Low-Income Housing Coalition to address the needs 

of the people HUD serves. While the minimum wage is set by the 

Department of Labor, my experience as a housing practitioner informs me that HUD can have an impact in this area by providing 

communities with the necessary tools to help them develop more 

affordable housing. 

Q.4. In your testimony before the Committee, you said that we 

should ‘‘not just provide housing, but the wraparound services that 

we need to provide to ensure that we can graduate people out of 

public housing.’’ 

What additional services would you provide for public and Indian 

housing residents, and, given the funding cuts in President 

Trump’s budget proposal, where will you find the Federal resources 

for these services without compromising HUD’s mission to house 

families? 

A.4. If confirmed, I will continue to support PIH’s work with other 

Federal agencies through partnerships targeting housing, health, 

education, and workforce development. I would work to strengthen 

the already-existing relationships between HUD and other Federal 

agencies, but also work on creating new partnerships to better coordinate our work in providing resources and programs for low-income communities. I will also work with Secretary Carson on his 

Envision Center initiative, to better develop the potential of HUD 

assisted families through public–private partnerships that would 

provide increased access to wrap-around services. 

Q.5. Mr. Montgomery and Mr. Kurtz, the rental assistance programs you administer affect many families, seniors, and individuals with disabilities. 

If confirmed, will you commit to meeting with assisted families 

and organizations that advocate on behalf of HUD program participants and low-income families? 

Do you support dialogue between HUD staff and organized tenant groups to assist HUD in its oversight of housing programs? 

A.5. If confirmed, I will make it a priority to get out into the communities PIH serves, and meet with resident groups and advocacy 

organizations. I plan to personally engage in dialogue and strengthen relationships with tenant groups and advocacy organizations. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR SCOTT 

FROM ROBERT HUNTER KURTZ 

Q.1. The Family Self-Sufficiency Program has enabled families in 

public housing to enroll in workforce training that allows them to 

pursue higher-paying employment opportunities. 

We are both housing folks and empowering them to reach for 

new economic opportunities. 

That’s a win-win. 

85 

Senators Reed and I have introduced the Family Self-Sufficiency 

Act to save HUD resources by consolidating redundant programs 

and broaden the supportive services under FSS to include financial 

literacy training and GED courses. 

It’s another win-win. 

Please answer the following with specificity: 

How can HUD better ‘‘treat the whole person’’ as Secretary Carson says? 

A.1. If confirmed, I will strongly advocate for a holistic approach 

to assisted housing families that extends beyond bricks and mortar 

and focuses on providing opportunities for families to achieve selfsufficiency. In support of this effort, HUD has two programs in particular that are administered by Public and Indian Housing that 

support this holistic approach: 

The Family Self Sufficiency (FSS) program provided $75 million 

to over 700 grantees last year, and in FY2016 provided services to 

over 70,000 households. In FSS, the head of household signs a contract of participation that maps out steps he/she will take to 

achieve self-sufficiency over the next 5 years. The FSS coordinator 

works with that family member to develop that contract, and connects those families to services and jobs that will help them become 

economically self-sufficient. 

The Jobs Plus program, modeled after a successful evidencebased pilot in the 1990s, has awarded $63 million in grants to 24 

Public Housing Authorities over the past 3 years. Jobs Plus uses 

three strategies—intense job training and case management, rent 

incentives, and community support for work—at targeted public 

housing developments over 4 years. Grantees work with all ablebodied residents in that development. 

Q.2. What are your ideas to do so? 

A.2. The Jobs Plus and FSS programs are just two examples of successful self-sufficiency initiatives for our assisted families. If confirmed, I will also join the effort to examine the Section 3 work requirements, revisiting the regulation and its implementation to ensure better outcomes for families and less red tape for PHAs. If 

confirmed, I will also work with Secretary Carson on his Envision 

Center initiative to better develop the potential of HUD assisted 

families through public–private partnerships that would provide increased access to wrap-around services. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR MENENDEZ FROM ROBERT HUNTER KURTZ 

Q.1. During your nomination hearing, when asked about your opinion on the budget, you said that you had experience working in 

areas with limited resources, such as Detroit. Many of the future 

funding issues we face at HUD, however, are products of the Administration’s creation, which has proposed to slash funding for 

public housing, tenant and property-based rental assistance, and 

various other programs. As the Assistant Secretary for Public and 

Indian Housing, your opinion on funding levels matters. Will you 

commit to advocating for increased funding for public housing and 

tenant-based rental assistance, among other programs? 

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A.1. I will always be an advocate for the families served by the office of Public and Indian Housing. In my time as a practitioner in 

Detroit, I saw firsthand how these resources are used and how public–private partnerships, and reducing regulatory burdens can 

serve the families that rely on HUD programs. I do believe the 

budget proposal is the beginning of an iterative process and, if confirmed, I will bring a housing practitioner’s perspective to deliberations on future budgets and pledge to use funds appropriated by 

Congress to the best of my abilities. 

Q.2. Are you willing to advocate for additional Federal resources to 

repair and renovate public housing developments? 

A.2. I recognize that the budget process is an iterative one, and, 

if confirmed, I look forward to bringing my perspective as a housing practitioner to future budget deliberations and pledge to use 

funds appropriated by Congress to the best of my abilities. The investment necessary to address the public housing capital fund 

backlog is overwhelming, at over $26 billion, and has grown steadily over the years regardless of funding levels. As a result, one vehicle that should be considered for expansion to address this backlog is the Rental Assistance Demonstration (RAD). To date, PHAs 

have generated over $4.5 billion in capital investment to improve 

or redevelop over 75,000 public housing units. Even at the highest 

appropriation levels seen in recent years, it would have taken these 

public housing authorities over 40 years to implement this amount 

of construction. 

Q.3. The President’s fiscal year 2018 budget request proposes 

elimination of the Choice Neighborhoods program. 

Do you support elimination of the Choice Neighborhoods program? 

A.3. HUD did not seek funds for the Choice Neighborhoods program in the President’s FY2018 Budget; however, HUD expects to 

make both Choice Planning and Implementation grants from the 

FY2017 Appropriations by February and July 2018, respectively. I 

do believe the budget proposal is the beginning of an iterative process and, if confirmed, I will bring a housing practitioner’s perspective to deliberations on future budgets and pledge to use funds appropriated by Congress to the best of my abilities. 

Q.4. If you do support the budget, please explain what alternative 

funding mechanisms will be provided to revitalize public and assisted housing and their surrounding communities? 

A.4. Regarding the capital fund which is used to revitalize public 

and assisted housing, I believe the budget recognizes that public 

housing is a partnership between Federal, State, and local governments. If confirmed, I am committed to using my experience at 

HUD and in Detroit to help our local partners leverage outside 

public and private investment in addition to Federal funds to meet 

the capital repair and modernization needs of public housing properties, with an eye towards long-term sustainability. I would also 

like to work with our housing authority partners to learn what 

flexibilities might allow them to better utilize funding to address 

local needs, while still protecting the residents we serve. One vehicle that should be considered for expansion to address this backlog 

87 

is the Rental Assistance Demonstration (RAD) program. To date, 

PHAs have generated over $4.5 billion in capital investment to improve or redevelop over 75,000 public housing units. Even at the 

highest appropriation levels seen in recent years, it would have 

taken these public housing authorities over 40 years to implement 

this amount of construction. 

Q.5. Do you support a 67 percent reduction to the Public Housing 

Capital Fund as proposed in the budget? If you do support the 

budget, please provide a detailed explanation of what funding 

sources public housing agencies can utilize to address the backlog 

of capital repairs estimated in 2010 to be at $26 billion and increasing each year. 

A.5. I was not part of the decision-making process as it relates to 

developing the President’s Fiscal Year 2018 Budget. I recognize 

that the budget process is an iterative one, and, if confirmed, I look 

forward to bringing my perspective as a housing practitioner to future budget deliberations and pledge to use funds appropriated by 

Congress to the best of my abilities. The investment necessary to 

address the capital fund backlog is overwhelming, at over $26 billion, and has grown steadily over the years regardless of funding 

levels. The capital needs of public housing can only be met by 

leveraging public and private funding—such as debt, low-income 

housing tax credit equity, bonds, city and State funding—with the 

available Federal funds. As a result, one vehicle that should be considered for expansion to address this backlog is the Rental Assistance Demonstration (RAD) program. To date, PHAs have generated 

over $4.5 billion in capital investment to improve or redevelop over 

75,000 public housing units. Even at the highest appropriation levels seen in recent years, it would have taken these public housing 

authorities over 40 years to implement this amount of construction. 

Also, if confirmed, I am committed to providing PHAs with as 

many ‘‘tools in the toolbox’’ as possible to empower them to make 

the best decisions in their communities. Some examples of these 

tools are the Operating Fund Financing Program, Capital Fund Financing Program, Voluntary Conversions, Section 30 (mortgaging) 

program, Operating and Capital Fund Flexibility, and Section 18 

Demolition/Disposition authorities. 

Q.6. Do you support a 12 percent reduction to the Public Housing 

Operating Fund as proposed in the budget? If you do support the 

budget, please describe how this proposed cut will impact public 

housing agencies’ ability to operate and maintain the country’s 1.1 

million public housing units. Please also describe how the proposed 

cut will impact the residents living in public housing units. 

A.6. I was not part of the decision-making process as it relates to 

developing the President’s Fiscal Year 2018 Budget. I recognize 

that the budget process is an iterative one, and, if confirmed, I look 

forward to bringing my perspective as a housing practitioner to future budget deliberations and pledge to use funds appropriated by 

Congress to the best of my abilities. The FY2018 budget does include two important proposals that would provide PHAs with much 

needed flexibilities to better serve their families within the public 

housing budgetary constraints. Under the first legislative proposal, 

HUD seeks broad authority to waive statutory and regulatory reVerDate Nov 24 2008 15:30 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00091 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-26 NOMINATIONS\HEARING\102617.TXT JASON
88 

quirements to provide PHAs with the flexibility to tailor and apply 

policies that address their individual needs and are acceptable 

within their local communities. The second legislative proposal extends 100 percent Operating and Capital fund flexibility to all 

PHAs (currently this only applies to small PHAs that have under 

250 units). This flexibility would enable PHAs to focus scarce resources on local priorities without being constrained by the statutory limitations of each fund. 

Q.7. Do you support a nearly 5 percent reduction to the Tenant 

Based Rental Assistance account as proposed in the budget? This 

proposed cut will result in elimination of approximately 250,000 

housing vouchers, nearly 8,000 of which are in New Jersey. If you 

do support the budget, how would you propose addressing the resulting increased housing instability and risk of homelessness? 

A.7. I recognize the importance of this program and, if confirmed, 

I will continue to advocate for the families served by the Tenant 

Based Rental Assistance program. I was not part of the decisionmaking process as it relates to developing the President’s Fiscal 

Year 2018 Budget. I recognize that the budget process is an 

iterative one, and, if confirmed, I look forward to bringing my perspective as a housing practitioner to future budget deliberations 

and pledge to use funds appropriated by Congress to the best of my 

abilities. The President’s FY2018 Budget for the Housing Choice 

Voucher program renewal funding provides cost savings, waiver 

and offset authority, and administrative flexibilities for public 

housing agencies to prevent the termination of families due to insufficient funding. Within the Office of Public and Indian Housing, 

there is a specialized Shortfall Prevention Team that works with 

PHAs that may experience financial difficulties and assists them in 

ensuring that they are taking appropriate cost savings measures 

and applying for shortfall prevention funds, if necessary. If confirmed, I will make sure that this team continues to operate effectively, working with our partner PHAs to prevent terminations and 

ensure proper management of program funds. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR HEITKAMP 

FROM ROBERT HUNTER KURTZ 

Q.1. I appreciated getting the chance to meet with you and discuss 

housing in Indian Country. As you know, there is a dearth of financing and collaboration of Government programs on tribal lands. 

In 2015, about a third of all lenders (about 2,000 institutions) originated a loan to a Native American or Alaska Natives, but only 

about 165 made a loan on trust lands. Lender involvement has also 

declined in HUD’s Section 184 guaranteed home loan program. 

How to you plan to address this lack of equity access in Indian 

Country? 

A.1. If confirmed, I will be committed to improving access to private mortgage capital in Indian Country. 

In January 2017, as part of the congressionally mandated Assessment of American Indian, Alaska Native, and Native Hawaiian 

Housing Needs, HUD published, Mortgage Lending on Tribal Land: 

A Report From the Assessment of American Indian, Alaska Native, 

89 

and Native Hawaiian Housing Needs. The report finds that HUD’s 

Indian Housing Loan Guarantee program, also known as the Section 184 program, successfully eliminates the functional market 

barrier to private lending presented by tribal trust land. The report 

also details several recommendations I am committed to pursuing 

to further increase lending to Native American families through efforts like enhanced agency coordination and regulatory improvements. 

Q.2. Additionally, more than 90 percent of Section 184 loans occur 

off trust land. 

How can HUD build the capacity of smaller community banks 

and streamline the process to increase the rate of lending on trust 

land? 

A.2. If confirmed, I pledge to work with the Bureau of Indian Affairs to streamline and improve the processing of certified Title 

Status Reports (TSRs) that are necessary to tribal trust land lending. In addition, I will support the continued investment in automation of HUD’s Indian Housing Loan Guarantee program, also 

known as the Section 184 program, processes that will increase 

lender participation, and improve the efficiency of program Administration. 

Q.3. HUD should take initiative to work with tribal authorities and 

other agencies to bring in other resources to complement and supplement NAHASDA funds. For example, the Department of Agriculture’s Rural Development Agency has excellent home ownership 

and repair programs that would be very beneficial on trust lands. 

Federal agencies need to work together to maximize support for 

Native Americans. 

How do you plan on working with USDA Rural Development in 

partnership to serve Indian Country? 

A.3. If confirmed, I pledge to meet with the Assistant to the Secretary for Rural Development within my first 30 days in office. Additionally, I will partner with tribes and tribally designated housing entities (TDHEs) to find and maximize all the resources that 

are available to Indian Country to support affordable housing development in a coordinated manner. 

Q.4. In my conversation with him during his confirmation process, 

Secretary Carson focused on the importance of a holistic approach 

to housing. In that vein, I believe HUD needs to take trauma into 

consideration when looking for housing solutions, especially for Native American populations. 

I sent a letter to Secretary Carson earlier this month asking him 

to fill me in on what HUD has been working on with respect to 

trauma, but would like to hear your thoughts on the intersection 

of trauma and housing, and the need for trauma-informed housing 

solutions. 

A.4. As a former practitioner of many HUD programs in the City 

of Detroit, I have found that providing flexibility for HUD’s local 

partners to address the needs of local populations, including those 

that have experienced trauma at any stage of life, is vital. If confirmed, I look forward to working with HUD’s local partners and 

90 

your office to ensure the needs of vulnerable populations are being 

met throughout all of PIH’s programs. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR DONNELLY FROM ROBERT HUNTER KURTZ 

Q.1. Mr. Kurtz, as nominee for Public Housing, you will oversee 

public housing authorities. As we learned in East Chicago, Indiana, 

where the lives of more than 300 families were upended and put 

at risk due to the presence of significant levels of lead and arsenic 

in the soil, contaminated housing units are dangerous to the health 

of residents. 

Mr. Kurtz, East Chicago was not an isolated incident. How do 

you plan to prepare and prevent similar crises from happening 

elsewhere? What steps can or should HUD take? 

A.1. As a housing practitioner in Detroit, I have been subject to 

monitoring and have monitored grantees during my time at the Department. I believe that is where the rubber meets the road. If confirmed, I will look for ways that PIH can improve its monitoring 

process as well as partner with other agencies, including the EPA. 

Q.2. Communities throughout Indiana have benefited from blight 

elimination funding, but the need remains significant. Abandoned 

and neglected buildings can often result in increased crime and distressed communities, demonstrating the need for blight elimination. I was troubled to see the proposed cuts to the CDBG program in the HUD budget. 

Mr. Kurtz, you have experience within this area at HUD. In addition to the importance of community planning and development, 

how can we help cities and towns combat housing blight if the 

CDBG program is eliminated? Do you oppose the elimination of the 

CDBG program? 

A.2. Combating housing blight is a critical issue and one that I had 

firsthand experience with during my time in Detroit. In Detroit, we 

found success by reprioritizing State and local funding, while 

incentivizing the sale of blighted properties. I was not part of the 

decision-making process as it related to developing the Fiscal Year 

2018 President’s Budget. In Detroit, I have seen CDBG resources 

deployed in an effective and efficient manner, however, and from 

my time in Washington, I am also aware of these funds being used 

for things far outside of HUD’s core mission. I do believe the budget proposal is the beginning of an iterative process and, if confirmed, I will bring a housing practitioner’s perspective to deliberations on future budgets and pledge to use funds appropriated by 

Congress to the best of my abilities. 

RESPONSES TO WRITTEN QUESTIONS OF 

SENATOR CORTEZ MASTO FROM ROBERT HUNTER KURTZ 

Q.1. The Trump administration’s budget proposal for fiscal year 

2018 proposed cutting the public housing capital fund by twothirds. If that budget was enacted, the capital budget would be just 

one third of the lowest level of funding ever enacted. 

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1https://www.washingtonpost.com/news/post-politics/wp/2017/04/03/carson-assures-advocates-that-white-house-will-include-housing-funding-in-infrastructure-bill/ 

?utmlterm=.281c64576bdc 

If enacted, tenants with leaky roofs would be ignored. Broken 

heating systems would go unrepaired. Faulty electrical wiring 

wouldn’t be replaced. 

As one example, the Reno Housing Authority recently shared 

with my office that one property under their management needs 

nearly $450,000 in essential sewer repairs. Their total capital fund 

budget is $915,000, to be dispersed among eight properties. And 

two other senior housing developments also need sewer system upgrades. 

Secretary Carson has said that under his watch ‘‘no one will be 

thrown out on the street.’’ 1 But if the Reno Housing Authority 

doesn’t have the money to fix these sewer lines, the units will become uninhabitable. No amount of ‘‘cutting red tape’’ can address 

substantial, prolonged funding cuts. 

How can the Administration justify a 68 percent cut to the fund 

dedicated to repairing public housing? Were you part of that decision in your role in Secretary’s front office? 

A.1. I was not part of the decision-making process as it relates to 

developing the President’s Fiscal Year 2018 Budget. I do believe 

the budget proposal is the beginning of an iterative process and, if 

confirmed, I will bring a housing practitioner’s perspective to deliberations on future budgets and pledge to use funds appropriated by 

Congress to the best of my abilities. 

Regarding the capital fund, I believe the budget recognizes that 

public housing is a partnership between Federal, State, and local 

governments. If confirmed, I am also committed to using my experience at HUD and in Detroit to help our local partners leverage 

outside public and private investment in addition to Federal funds 

to meet the capital repair and modernization needs of public housing properties, with an eye towards long-term sustainability. Finally, I would like to work with our housing authority partners to 

learn what flexibilities might allow them to better utilize funding 

to address local needs, while still protecting the residents we serve. 

Q.2. If confirmed, will you advocate for additional public housing 

capital funding? 

A.2. If confirmed, my top priority will be to advocate for the families participating in the Office of Public and Indian Housing (PIH) 

programs. I recognize that the budget process is an iterative one, 

and, if confirmed, I look forward to bringing my perspective as a 

housing practitioner to future budget deliberations and pledge to 

use funds appropriated by Congress to the best of my abilities. The 

investment necessary to address the capital fund backlog is overwhelming, at over $26 billion, and has grown steadily over the 

years regardless of funding levels. As a result, one vehicle that 

should be considered for expansion to address this backlog is the 

Rental Assistance Demonstration (RAD). To date, PHAs have generated over $4.5 billion in capital investment to improve or redevelop over 75,000 public housing units. Even at the highest appropriation levels seen in recent years, it would have taken these pubVerDate Nov 24 2008 15:30 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00095 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-26 NOMINATIONS\HEARING\102617.TXT JASON
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lic housing authorities over 40 years to implement this amount of 

construction. 

Q.3. There’s a $26 billion dollar backlog in needed public housing 

capital repairs. Secretary Carson has suggested addressing this by 

expanding the Rental Assistance Demonstration (RAD), which allows public housing authorities to borrow money from the private 

sector, and use their appropriations to service the debt now incurred on the public property. 

The problem with this approach is that this borrowing can’t work 

if the appropriations aren’t there in the first place. And beyond 

that, I’m not sure why we would want public housing to take on 

debt to fund repairs, rather than just pay for the repairs directly. 

How do you expect the RAD program to address the public housing capital repair backlog when the Administration is requesting 

deep cuts to appropriations? 

A.3. Direct Federal appropriations to the public housing accounts 

have been unable to address the capital backlog in the public housing inventory. The Rental Assistance Demonstration (RAD) is a 

critical preservation program that has allowed PHAs to secure lowincome housing tax credit investments, debt and other non-Federal 

funding to make needed capital repairs to these properties while 

protecting resident rights and ensuring ongoing public stewardship 

of the properties. To date, PHAs have generated over $4.5 billion 

in capital investment to improve or redevelop over 75,000 public 

housing units. Even at the highest appropriation levels seen in recent years, it would have taken these public housing authorities 

over 40 years to implement this amount of construction. This investment improves the condition of the housing now and makes a 

significant positive difference in residents’ quality of life. 

Q.4. How could a public housing authority service the repair-related debt with the funding levels the Administration’s budget suggests? 

A.4. When a property converts under RAD, it shifts its source of 

subsidy funding from the public housing account to the Section 8 

account. It is no longer reliant on public housing funding. Private 

financing sources are quite comfortable underwriting properties on 

the Section 8 platform. 

Q.5. On July 5th, I sent a letter along with 28 of my Senate colleagues regarding HUD’s decision to pull down from their website 

information that housing providers would be required to post about 

access to shelters without regard to sexual orientation or gender 

identity. 

During the Obama administration, HUD developed this information in consultation with homeless service providers and subject 

matter experts. The materials were designed to help housing operators comply with HUD nondiscrimination rules that protect 

LGBTQ individuals. 

I asked the nominee for Community Planning & Development at 

HUD, Neal Rackleff, for a response to my letter at his nomination 

hearing back in July, and he pledged to get me a response within 

two weeks. I have been patient in pushing HUD for a response, because I know Mr. Rackleff has been preoccupied with disaster reVerDate Nov 24 2008 15:30 Dec 15, 2017 Jkt 046629 PO 00000 Frm 00096 Fmt 6602 Sfmt 6602 L:\HEARINGS 2017\10-26 NOMINATIONS\HEARING\102617.TXT JASON
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covery. But it’s been three months now. While I know you won’t be 

responsible for the homelessness portfolio if confirmed, you have 

been in Secretary Carson’s front office. Will you pledge to immediately get me a response to this letter? 

A.5. While I have not been involved in this issue to date, if confirmed, I pledge to immediately discuss the progress of this response with Assistant Secretary Rackleff and will urge the Department’s relevant officials to complete this response in an expeditious 

manner. I also pledge, if confirmed, to work to protect all people 

being served by HUD’s Office of Public and Indian Housing. 

Q.6. The concept of ‘‘Brooke Rents’’ undergird our Nation’s housing 

programs, providing that tenants should not pay more than 30 percent of their income for rent and utilities. Brooke Rent levels are 

based on research suggesting that rent exceeding this level simply 

isn’t affordable for most low-income people, seniors and people with 

disabilities. The President’s proposed 2018 budget provides the 

HUD Secretary with the authority to increase a tenant’s rent contribution up to 35 percent. 

Do you agree with housing experts and advocates that Brooke 

Rents ought to be protected in all HUD programs? 

A.6. Please know that I will always be a staunch advocate for the 

families served by the Office of Public and Indian Housing. I 

learned through my experience in Detroit that giving flexibilities 

and control to local practitioners can deliver better results than 

mandates from D.C. If confirmed, I am committed to reviewing the 

rent calculation process to determine if some of its administrative 

burdens can be relieved, while maintaining adequate protections 

for our most vulnerable families. 

Q.7. While the Administration claims that hardship exemptions 

would be available to households, what little we do know about the 

implementation of hardship policies on the ground indicates that 

they are likely only to protect a few families. And HUD doesn’t collect or track data on how hardship exemptions are being enforced. 

So do you think current exemption policies to help vulnerable 

households are sufficient? What data do you have to support this 

opinion? 

A.7. If confirmed, one of my first actions will be to go through the 

same intake process as a public housing or Housing Choice Voucher family. Through that process, I will be able to get a better sense 

of whether the current hardship exemption process is adequate. I 

will also review any available data on the use of hardship exemptions to determine if any changes are necessary, and, if not enough 

data is available, I will work to improve collection and tracking. 

Currently, there is some data available from Moving to Work Agencies which can be used to analyze the effectiveness of the current 

hardship policies. 

RESPONSES TO WRITTEN QUESTIONS OF SENATOR BROWN 

FROM SUZANNE ISRAEL TUFTS 

Q.1. Can you share with us some of your top priorities if you are 

confirmed as the Assistant Secretary for Administration? 

94 

A.1. If confirmed, my overall approach will be to re-imagine the 

way HUD works so that HUD’s Administrative and Personnel divisions deliver timely and effective services to the Department’s employees, its partners and, ultimately, to its customers. 

I plan to be a reformative thinker, to implement change, and to 

create a culture of excellence and accountability. Specifically, my 

three top priority goals are: 

1. Improve HUD’s talent and human resource processes so that 

the Department can recruit and develop a high-performing, 

engaged, diverse workforce. 

2. Improve administrative services so that they operate more efficiently and intersect more effectively with human resources 

and with the Department’s program units both at HQ and in 

the field. 

3. Improve the Department’s physical footprint both at Headquarters and in the field, to achieve maximum space efficiency 

and cost savings. 

Q.2. HUD’s FY2017 Congressional Justifications stated that HUD 

possesses the highest percentage of any agency of career employees 

eligible to retire by 2019. HUD stated that ‘‘The retirement wave 

can cause a loss of leadership and institutional knowledge at all 

levels.’’ 

If confirmed, what would you do to ensure that HUD has the 

workforce it needs to deliver on its mission in the coming years, 

particularly in light of a possible wave of retirements? 

A.2. Making HUD an attractive place to work with a highly skilled, 

diverse, and engaged workforce is one of my top priorities. If confirmed, I plan to approach workforce planning by starting with the 

approach set forth by Secretary Carson in his testimony before the 

Committee: ‘‘listen and respect the career professionals. Engage 

them and utilize their advice and suggestions.’’ I believe we have 

a lot to learn from the career staff in addition to having a lot to 

bring to them. 

Specifically, my priority would be to help prepare HUD for short 

term, large numbers of retirements by instituting creative knowledge transfer strategies such as cross training, employee mentoring, and process documentation. Second, in keeping with workplace best practices, I would institute a rapid approach to workforce planning utilizing the best data and career employee insights 

and input. Third, I would bring my experience in the field to enhance our recruitment creativity so that HUD can rapidly and efficiently reach out to the widest range of talent including 

Millennials; Gen-Xers; diverse candidates; and those from underrepresented groups such as returning veterans, disabled individuals, Baby Boomers who want to on-ramp or who are mid-life career changers, pools of talent within the Federal arena such as 

Presidential Management Fellows, Peace Corps, and AmeriCorps 

‘‘graduates’’; and other talented individuals. 

Finally, if confirmed and perhaps most important for the long 

run, I will work actively along with all program units and senior 

leadership to make HUD a dynamic workplace both in Headquarters and in the Regions, so that it can retain the talent it has 

and attract top talent. 

95 

Q.3. A recent HUD Inspector General’s audit noted that HUD faces a significant potential litigation liability of between $55 million and 

$650 million for an arbitration known as the ‘‘Fair and Equitable 

Arbitration Remedy’’. This case has been going on over 10 years. 

If confirmed, will you commit to looking into this case and working towards expeditious resolution to the case, if appropriate? 

A.3. If confirmed, I commit to seeking guidance from the HUD Office of General Counsel and all other relevant HUD units to seek 

an expeditious resolution to this matter. 

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ADDITIONAL MATERIAL SUPPLIED FOR THE RECORD

LETTERS SUBMITTED IN SUPPORT OF THE NOMINATION OF BRIAN D. 

MONTGOMERY 


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