is $59 billion still missing from your Agency, namely HUD[*],
and who has the $59 billion?
Even before you
took office, HUD was cited by Congress for being financially
'high risk', open to massive fraud and waste. Indeed HUD's
own Inspector General testified in 2000 (just prior to your
arrival), that HUD could not account for $59.6 billion in
the prior year, or more than 50% of its mortgage guarantees
in that year. You
made little or no effort to investigate, recover the money,
or to hold the appropriate staff and government contractors
responsible. This has serious ramifications for the citizens
of a democracy, as well as for anyone dependent on US financial
Links on the Missing $59 Billion:
is the US Deptartment of Housing & Urban Development
$59 billion missing
Where is the money, Mel?
in a single year HUD could not account for $59.6 billion,
and made 242 "adjustments" to fill in the gaps!
- Who is reaping the greatest revenues
and profits from HUD?
Please state who is profiting the
most from these dealings directly:
- Who are the top 10 mortgage banking
originators of FHA mortgage insurance?
- Who are the top 10 Wall Street dealers
in Ginnie Mae securities?
- Who are the top 10 managers of Section
8 housing and other private housing subsidized and financed
- Who are the top 10 buyers and managers
of FHA foreclosed properties?
- Who are the top 10 developers and owners
of Hope 6 public housing deals?
- Who are the top 10 homebuilders in
the country whose business depends on HUD regulation and FHA
financing, either to purchase their homes or the homes of their
- Who are the top 10 syndicators of low
income housing tax credits?
- Who are the top 10 government contractors
running FHA, Ginnie Mae and HUD internal operations?
- Who are the top 10 banks that serve
as HUD, FHA, and Ginnie Mae depositories and trustees?
- Who are the top 10 law, accounting,
and lobbying firms providing services related to HUD real estate,
mortgage and securities transactions and regulation?
related to HUD Profiteering:
US Department of Housing & Urban Development
- Mr. Martinez directed HUD since January 24, 2001, resigning
December 2003 to run for US Senator in the state of Florida.
Federal Housing Administration - the
mortgage insurance operation within HUD
National Mortgage Association (Ginnie Mae) - the mortgage
securities operation within HUD; a wholly owned government corporation
providing liquidity to low-to moderate-income and first-time
homebuyers at the rate of about $125 billion a year; Ginnie
Mae mortgage backed securities are guaranteed by the US government.
Bankers Association - note that Mortgage bankers consistently
provide 80 to 85 percent of all FHA and VA home loans.
Association of Home Builders - lobbies on behalf of the
building industry, which includes "monitoring and improving
the housing finance system."
Association of Realtors - one of the most powerful lobbying
groups in the nation, and the nation's largest contributor of
direct contributions to federal candidates.
National Multi Housing Council - a leading
national advocate for the conventional apartment industry, including
policy and finance, tax, technology, property management,
environmental issues and building codes.
State Housing Finance
Agencies (HFAs) - state and local auhorities that administer
federally authorized housing programs, including mortgage bonds,
housing tax credits, block grants, and Section 8 contracts and
Mortgage News - excellent research resource (subscriber
Eye Map - breakdown of top federal contract and grant awards
by state, including for Florida.
is reaping the greatest HUD-related
profits on Wall Street?
Please state who is profiting the
most from these dealings indirectly:
- Who are the top 25 private and institutional
investors in the stock of the companies, REITs, and banks described
in (4) above,
and in the mortgage backed and tax-exempt bonds and tax syndications
- What is the impact on the value of their
stock and bond portfolios from these companies' success as a
result of their profits from HUD?
related to HUD
Profiteering on Wall Street:
Market Association - (formerly the Public Securities Association
(PSA)) is the trade association representing the largest securities
markets in the world -- the $17 trillion debt markets.
- excellent source for credit ratings, research and risk analysis;
tracks more than $30 trillion of debt.
& Poor's - provider of independent investment data,
valuation, analysis and opinions; tracks $1.5 trillion in investors'
Online - provides business, financial and competitive information
derived from SEC data (i.e. SEC Exposure documents, see Annual
Proxies for Large Investor, Board and Senior Management Disclosure).
Who's who in campaign funding and HUD
Please state who else is profiting
indirectly from these dealings:
- How do the top companies, banks, and
investors making money at HUD compare to the lists of campaign
donors to your campaign, to the Republican Party, to President
George W. Bush, and to the soft dollar organizations that support
The war on "narco dollars"
Cooked books and back-door privatization
Under your leadership
at HUD you were the top executive responsible for ensuring
that US mortgage markets and the US homebuilding industry
are free of "narco dollars" -- i.e. not used for
money laundering and financial fraud, including the laundering
of the profits of narcotics trafficking:
- What is the impact on the value
of US mortgage company and homebuilding stocks from the
$500 billion - $1 trillion of US money laundering annually?
- How would you assess your performance
at HUD in preventing such money laundering?
- How would you assess your performance
with respect to the Florida market, given the size of
narcotics trafficking revenues and profits in Florida?
Links on "Narco
Soprano's mob world, HUD exists to facilitate embezzlement,
theft, and extortion... fiction, or reality TV?
Central Los Angeles
(click for larger image
In fiscal years 1998 and 1999, HUD
had undocumentable adjustments of $17 billion and $59 billion,
and refused to finish its audit in fiscal 1999. Audits for fiscal
2000 and 2001 fail to disclose the amount of undocumentable adjustments
made to balance HUD's books. Contractors who had been paid hundreds
of millions of dollars to provide the computer systems that were
blamed for losing track of this money were not fired.
HUD has mysteriously operated its defaulted
mortgage portfolios at much lower recovery rates than are possible,
thus transferring FHA financial resources to private interests
in the billions of dollars annually. At the same time it has used
elevated recovery rates for purposes of issuing new originations.
Given HUD's 'high risk' financial atmosphere, with the FHA specifically
cited on the GAO's hotlist of top management concerns governmentwide,
the the opportunity for fraud is staggering.
- Where is this money going, and who is
getting it -- i.e. who is benefitting the most from HUD's failures
at financial management?
- What is the potential revenue, profits
and stock market capital gains that could be generated from
$17 billion and $59 billion, as well as several billion a year
in back-door privitizations on FHA's defaulted mortgage and
foreclosed property portfolio?
on HUD "Cooked
Books" and "Piratization":
HUD is responsible for regulatory
oversight of the mortgage government sponsored enterprises, Fannie
Mae and Freddie Mac. Freddie Mac is currently under criminal investigation
by the Department of Justice related to "cooked books."
- Please explain how Freddie Mac could
have been cooking the books if its regulator was doing its job.
on Lax Regulation:
Availability of HUD financial data
It appears that HUD's sensitive financial
and demographic data can be accessed inappropriately by predatory
enterprises, whereas citizens cannot even access routine financial
data that is supposed to be made public.
- Which companies and banks listed in
(1) above have access to confidential government data subject
to the Privacy Act as a result of their roles with FHA, Ginnie
Mae and HUD?
- What steps are taken to insure that
this data is not shared with their investors and Wall Street?
- What is the value of such data for purposes
of insider trading and market rigging?
- Why does HUD refuse to make its contract
budget publicly available and accessible?
- Why are HUD's financials and portfolio
not publicly accessible on a place based basis?
- Why has HUD taken drastics steps to
suppress efforts to provide open citizen access to its software
tools and databases on HUD's portfolio?
on HUD IT Contractors:
is the Collateral?, by Chris Sanders, Sanders Research Associates,
the Money Trail, MetroActive, September 5, 2002
Real Deal: Hitting On HUD, Scoop Media, August 12, 2002
- Dyncorp: high
level connections to Enron, engaged in underage sex-slave trafficking
DynCorp & the Economics of Lawlessness, Scoop Media,
Tricks, Inc.: The DynCorp-Government Connection, Uri Dowbenko,
- AMS: under a $206 million
HUD contract, AMS installed the HUDCAPS system which was blamed
for HUD's financial fiasco
Lawsuit Adds to AMS Woes, Washington Technology, July 2001
- Lockheed: had a $526
million computer services contract at HUD 1990-2003, ending
when contract expired
drawing up IT overhaul, Federal Computer Week, July 4, 2001
($526 million to Lockheed 1990-2003)
awards contract for $860m IT makeover, Govt Computer News,
Aug 25, 2003 (EDS 2003-2013)
Selects Team ... to support Single Family National Servicing
Center, RGII Technologies, October 20, 2003
US Mortgage Bubble
HUD is responsible for the health
of the US mortgage market. HUD runs a large mortgage insurance
operation called the Federal Housing Administration (FHA), and
a mortgage securities operation called the Government National
Mortgage Association (Ginnie Mae). HUD also regulates the government
sponsored mortgage enterprises Fannie Mae and Freddie Mac (currently
under investigation), which effectively underwrite the mortgage
market. Anyone can purchase a home loan guarantee that is issued
by the FHA and backed by the US Treasury, regardless of their
circumstances. If or when they default on their mortgage, their
bank submits a claim to the FHA for payment. The FHA is then expected
to recover as much of the loss as possible by either selling off
the defaulted loan, or foreclosing on the home. To the untrained
eye this appears legitimate, since there is theoretically a home
purchased in the bargain that serves as collateral.
However, in recent years the rate
of growth for home mortgages issued vs. homes purchased has increased
by more than 400.0% vs. 2.5% respectively. This means a significant
volume of mortgages is being mysteriously issued with no
collateral, creating a virtual mortgage bubble. At the
same time, HUD is only recovering roughly 35% on defaulted loans,
after cancelling a successful loan sales program that was recovering
70%. In short, the mortgage market is at risk.
- Please describe the expansion of Ginnie
Mae authorities and powers under your leadership at HUD. As
a Republican, please explain why you would promote government
agencies competing with healthy private markets and socializing
a significant amount of private markets into government.
- How does increasing the debt load of
minorities, first time homebuyers, and low income people help
them achieve the American dream? Wouldn't they be better off
with improved skills and competitive access to equity capital
to start businesses? Which is more helpful to such communities
-- more mortgage debt, or less narcotics trafficking and HUD
fraud (including intentionally high default rate policies combined
with low recovery rate resolutions)?
- What is the total number of Hope 6 units
under development during your leadership at HUD? What is the
total amount of FHA insurance, low income housing tax credits
and tax exempt bonds used to develop these units? How does this
flow relate to the US mortgage bubble and stock market. Who
were the developers of the two Hope 6 projects at the Orlando
Housing Authority, where you served as Chairman? Where else
are they the developers?
- There are allegations of significant
overissuance of tax-exempt single family mortgage bonds using
FHA insurance by the Arkansas Development Finance Agency as
part of schemes to launder and leverage the state share of profits
from the arms and narcotics trafficking at Mena Arkansas during
Iran Contra. Has this pattern of overissuance been a concern
with Florida state and local housing agencies?
- What is the relationship between the
US mortgage bubble and the "strong dollar policy"?
on the Mortgage Bubble:
HUD spend $100-250,000 per unit
to construct public housing apartments when single family housing
can be purchased and repaired in the same neighborhood for $50-100,000?
And why are felons allowed to develop and manage Hope VI housing
can be evicted for having a felony record?
Links related to Hope VI Housing Program:
Dream Downpayment Act authorizes grants which will help minorities
buy homes – will it be the same minorities who were denied
votes in 2000?
Links on the American
Dream Downpayment Act:
The American Dream Down Payment Act, H.R. 1276, was introduced
by Rep. Katherine Harris (R-FL) (Co-Chair with Mel Martinez
of the Bush Florida Campaign 2000 and Florida Secretary of State
whose office purged the rolls of approximately 57,000 minority
Florida voters in 2000), and approved in the House of Representatives
by a voice vote on Wednesday, October 1, 2003:
Why do you apply opposite standards of personal responsibility
– i.e. evicting tenants in HUD housing when their children
use drugs, vs. supporting Bush Iran Contra colleagues who deal
in or protect hard narcotics trafficking to children?
Secretary of HUD you were entrusted with over $100 billion per
year in appropriations and loan guarantees, and were responsible
for HUD's performance both financially and ethically. Yet it appears
that HUD and its big contractors were exempted from the most basic
standards of performance, integrity, and accountability, whereas
innocent people were held to impossible standards and made to
suffer severe consequences for not living up to them.
billion in undocumented adjustments was reported missing from
HUD just before you assumed office (see UnAnswered
Question #1 above), yet you made no discernable effort
to clean up the fiscal mess left by the Democrats – you
did not demand a complete audit, rigorously investigate, recover
the money, or even hold the responsible contractors accountable;
under your leadership HUD refused to disclose its undocumented
adjustments for subsequent audits, and remains on the GAO's financial
"high risk" list, while the FHA (part of HUD) is still on the
GAO's top 10 "management challenges." HUD is cooking its books
by manipulating recovery rate
assumptions and refusing to report undocumented adjustments, and
Freddie Mac is under investigation for cooking its books.
Links on Lax
HUD and Freddie Mac Accountability:
Fannie Escape Action on Hill -- for Now Effort Stalls
to Impose New Regulatory System on Giant Mortgage Buyers,
By David S. Hilzenrath, Washington Post, November 17, 2003
HUD's Financial Fiasco, by Kelly O'Meara, Insight Magazine,
Financial Woes Continue, by Kelly O'Meara, Insight Magazine,
April 18, 2003
Management Challenges and Program Risks, Government Accounting
Office (GAO), January 2001
reference High Risk Areas chart (page 31/33) "HUD
single family..." which falls
under the FHA within HUD
- HUD Audits:
Re: the "clean" audit opinion filed by HUD
for FY2000, most federal
agencies "have only been able to obtain unqualified audit
opinions through heroic efforts, which include using extensive
ad hoc procedures and making billions of dollars in adjustments
to derive numbers as of a single point in time -- the end of
the fiscal year. [...] cannot dependably and routinely produce
annual financial statements and other information needed to
manage day-to-day operations. [...] do not comply substantially
with federal accounting standards or financial systems and other
requirements." (page 16/18).
Riches, by Kelly O'Meara, Insight Magazine, October 2001
Risk' Finance at the Federal Level, by Kelly O'Meara, Insight
Magazine, August 2003
your leadership HUD evicted Pearlie Rucker along with her grandchildren
and great-grandchild when her mentally disabled daughter was caught
with drugs several blocks from home; yet George Bush's family
was not evicted from public housing (the White House) when his
daughters were caught attempting to obtain alcohol illegally,
nor was Jeb Bush's family evicted from public housing (the Governor's
mansion) when his daughter was convicted of a drug crime -- she
was instead mercifully sent to rehab and then allowed to return
home in spite of violating the terms of rehab .
Links on Pearlie
Rucker and the Bush Daughter:
Pearlie Rucker lived with her grandchildren and great-grandchildren
in public housing; her daughter was stopped blocks away from
the site for drunkennes.
When searched they found drugs on her person; no drugs
were found in Pearlie's home.
Perlie and her
entire family were
evicted. On the other
hand, Jeb Bush's daughter was arrested for drug fraud,
sent to rehab treatment, broke terms of rehab twice and spent
a few days in jail, then was released home
to her parents (home
being another form of public housing, the governor's mansion).
Jeb and his wife and
daughter were not evicted.
Strike for the Poor and How Many for the Rest of Us?, Legal
Archives summary with
link to full article
Urges U.S. Supreme Court To Protect The Rights Of Low-Income
Tenants, AARP, January 22, 2002
Court Upholds Zero Tolerance in Public Housing, Drug War
Chronicle, March 29, 2002
Legal documents and analysis, National Housing Law Project
on "Rucker" to see links to specific
Bush's daughter charged with prescription fraud, USA Today,
Bush's Daughter Out Of Rehab, CBS News, Aug. 8, 2003
your leadership HUD refused to pay the $2 million owed to Hamilton
Securities for financial services rendered which saved HUD and
the taxpayers over $2 billion in defaulted loan sales, and you
continued to support the legal persecution of Catherine Austin
Fitts, president of Hamilton and former Assistant Secretary of
Housing under Bush I.
Links on HUD
Contractor Hamilton Securities:
Ervin & Associates and the US Government shut down Hamilton
Securities after Hamilton saved HUD $2 billion under a $2 million
contract and developed software for citizens to learn about
HUD spending by place; they seized the software, bankrupted
the company, took it to trial eight years and 18 audits later,
and never produced any evidence of wrongdoing.
yet, under your leadership HUD has maintained enormous contracts
involving access to HUD's most sensitive data with large defense
contractors, including AMS (paid hundreds of
millions of dollars for installing HUD's faulty accounting system
"HUDCAPS," which the HUD Inspector General identified
as the primary reason that tens of billions went missing) and
Dyncorp (implicated through federal contracts
in Eastern Europe in human slave trafficking and pedopholia).
Links on Criminal
Activities of HUD Contractors AMS and Dyncorp:
Disgrace, By Kelly Patricia O'Meara, Insight Magazine, Jan.
Tricks, Inc.: The DynCorp-Government Connection, Uri Dowbenko,
Does It Take to Lose a Contract?, by Kelly O'Meara, Feb.
Real Deal: Hitting On HUD, Scoop Media, August 12, 2002