FHA is making progress on False Claims Act concerns: Carson

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WASHINGTON — The Department of Housing and Urban Development's efforts with the Justice Department to address lenders' fears of being sued under the False Claims Act are having a positive impact, Secretary Ben Carson said Tuesday.

"I think some in the lending community are recognizing that and starting to come back" to the Federal Housing Administration program, Carson said before a House Appropriations subcommittee.

At the hearing focused on HUD's budget, where Carson faced tough questioning over lavish spending by Carson and his wife to decorate his office, the secretary also weighed in on FHA participation, the state of the housing agency's technology infrastructure and funding for the Community Development Block program.

Carson said overly rigid False Claims Act enforcement had forced lenders to suffer financially for what were just minor errors.

"Immaterial mistakes were putting lenders in great financial jeopardy," Carson testified. But he stressed that the FHA will not "condone those bad actors that take advantage of people."

Carson also pressed House appropriators to allow lenders to charge a $25 fee on single-family loans to pay for upgrades to the FHA's "archaic technology" platform.

"We have to get the IT systems of FHA up to par," Carson said. There is a four-year sunset on the fee and it represents "only a fraction of what is needed to maintain the system."

But House members expressed concern about HUD's proposal to eliminate funding for the Community Development Block Grant program and replace it with the Opportunity Zone program recently passed by Congress as part of the tax reform bill.

The Community Development Block Grant program provided nearly $4 billion in funding in fiscal year 2017 to support local affordable housing programs.

"The CDG program does so much good for our communities," said Rep. Nita Lowey, D-N.Y.

Carson agreed but said the two programs complement each other.

"We do have a way to take care of the good things that CDBG does and that is through the Opportunity Zone program which will bring in up to $2.2 trillion in money to substitute for that program," he said.

Rep. David Price, D-N.C., noted that the HUD budget eliminates a lot of funding for public housing and rental assistance programs.

"We don’t see any request for funding for new Section 8 vouchers program," Price said. "So what am I missing here? I'm trying to follow the money," he added.

HUD is "moving away from the whole concept of public housing quite frankly" and "changing it to communities that are holistic and well-developed," Carson said in response. "And that is going to be one of the primary purposes of the Opportunity Zones."

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False Claims Act CDFIs Mortgages Ben Carson FHA HUD