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To what degree this surreptitious program has contributed to putting children and families out on the street during one of the worst economic slumps since the ’30s should be on a Congressional short list for investigation. HUD’s demand for confidentiality from all bidders and announcement of winning bids to parties known only as “the winning bidder” deserves its own investigation in terms of obfuscating the public’s right to know and the ability of the press to properly fulfill its function in a free society.

Despite three days of emails and phone calls to HUD officials, they have refused to provide the names of the winning bidders or the firms that teamed as co-bidders with the winning party.

That a taxpayer-supported Federal agency conducts a competitive bid program of over $2 billion and then refuses to announce the names of the winning bidders is beyond contempt for the American people. If the Obama administration does not quickly purge this Bush mindset from these Federal agencies, he is inviting a massive backlash in the midterm elections.

The HUD program was benignly called Accelerated Claims Disposition (ACD) and was said to be a pilot program. A pilot program might suggest to those uninformed in the ways of the new Wall Street occupation of America a modest spending outlay; a go slow approach. In this case, from 2002 to 2005, HUD transferred in excess of $2.4 billion of defaulted mortgages insured by its sibling, the FHA, into the hands of Citigroup, Lehman Brothers and Bear Stearns while providing the firms with wide latitude to foreclose, restructure or sell off in bundles to investors. HUD retained a minority interest of 30 to 40 percent in each joint venture. Citigroup was awarded the 2002 and 2004 joint ventures; Lehman Brothers the 2003; Bear Stearns the 2005. I obtained this information by reconciling the aliases used by these firms in foreclosures of HUD properties to the addresses of the corporate parents. I further confirmed the information by checking the official records at multiple Secretaries of State offices where the firms must register their subsidiaries to do business within the state.

While this was clearly not a win-win for families in financial distress, two other red flags come to mind. The 2006 HUD report notes that to be eligible for this program, loans had to be four full payments past due (five full payments past due for the 2005 Bear Stearns deal). But to securitize the loans, the Wall Street firms had to bring the loans into performing status, that is, up to date in their payments. The question arises as to whether the investors in the securitizations were advised that these were heretofore defaulted HUD loans. One might be forgiven for pondering that as a material fact required in a prospectus since there is much data available showing that loans once in default tend to redefault. Some of these investors might unknowingly be you and your family members. The loans could be sitting right now in public employee pension funds, mutual funds held in 401(k)s, etc.

full story:

http://counterpunch.org/martens10052009.html

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