Brian Montgomery has been selected to make his second tour as
head of the Federal Housing Administration (FHA).
In a move rumored since May, President Donald Trump has nominated Montgomery to the post of FHA commissioner. Montgomery held the job during the second term of the Bush administration, and also for six
months during the Obama transition.
Montgomery oversaw the FHA through the boom years of the housing
market and its bust. During the peak of subprime lending, he advocated for expanding access to the FHA loan program as a way to give lower-income borrowers an
alternative to risky private-label balloon and adjustable-rate loans. Ultimately, FHA greatly
expanded its share of mortgage lending after he left office and subprime loans
If confirmed, Montgomery also would gain the title of assistant secretary of Housing and Urban Development for the second time.
In a letter to the online news site Politico in November, Montgomery said that â€œexcessive enforcementâ€� on mortgage lenders is shutting out homebuyers with â€œperhaps a blemish or two on their credit score.â€�
“Understandably, the industry remains hyper-focused on originating low-risk loans with a difficult-to-achieve goal of zero underwriting defects,” he wrote. He further said “too many American workers continue to lose access to the wealth-accumulating tool of homeownership.”
Montgomeryâ€™s nomination drew praise from mortgage and housing trade groups.
â€œHis previous experience will serve him well in this position,â€� said David Stevens, a former FHA commissioner in the Obama Administration who is now president of the Mortgage Bankers Association. â€œI hope the Senate will move quickly to confirm Brian, and we look forward to working with himâ€¦â€�Â
the peak of the bubble in April 2006, Montgomery argued before Congress that FHAâ€™s
loan limits should be increased, the FHA mandatory downpayment requirement then
set at 3 percent should be eliminated, and FHA should adopt risk-based pricing
for its insurance that would increase the price of FHA insurance for riskier borrowers.
Some of these ideas, such as higher loan limits, were
adopted in the FHA Modernization Act of 2008. Others, such as eliminating the
downpayment, were not. The FHA downpayment was increased to 3.5 percent. FHA
briefly adopted risk-based pricing to reduce taxpayer exposure through
losses to the insurance fund, then soon was forced to abandon it after Congress placed a 12-month moratorium on risk-based pricing in the Housing and Economic Recovery Act of 2008. Â
Montgomery also opposed the creation of the National Housing Trust
Fund, a program created during the Obama Administration to fund rental projects
for very-low income people. He told Congress in 2007 that the trust would duplicate existing rental
housing programs and would likely divert funding from effective FHA programs, â€œrobbing Peter to pay Paul.â€� Trump Administration’s proposed budget eliminates the
serving with the FHA, Montgomery was a deputy assistant for Bush from 2001 to
2005. Since leaving the FHA, he has been vice chairman of the Collingwood
Group, a business advisory consulting firm that he co-founded.
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