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Lobbyist paid $15K to Waters’ husband
Bill would have benefited client
Question of the Day
Ms. Waters said she called the hearing because of her oversight responsibilities and because the issue had “potential implications for many people seeking homeownership.”
She said it was the owners of the Los Angeles hotel who asked Mr. Roos to include her husband in discussions with the city, and he accepted the contract nearly two years after her initial involvement with the issue of down-payment assistance.
Asked in writing whether there was a conflict of interest for her husband to receive a payment from a lobbyist for whom she was seeking favorable legislation for one of the lobbyist’s biggest clients, she said: “Ambassador Williams was hired for his stellar track record and knowledge of local government. Any suggestion to the contrary is unfounded and irresponsible.”
Mr. Williams, appointed by President Clinton as ambassador to the Bahamas from 1994 to 1998, did not return phone messages left for him after initially telling a reporter to call back later because he was traveling. He is president of the Williams Group, which provides consulting services to businesses.
Mr. Roos did not respond to e-mailed questions or repeated phone messages seeking comment.
Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington (CREW), a watchdog group, said Mr. Roos’ $15,000 payment to Mr. Williams created “an appearance problem.”
“It doesn’t violate any House rules, but members are supposed to avoid even the appearance of a conflict of interest,” she said, noting that Mr. Williams should not have taken money from a lobbyist his wife was helping.
“It seems unlikely that Mrs. Waters took any action because of the payment because she had been active on the issue for several years,” said Ms. Sloan, a former federal prosecutor. “It shows Mrs. Waters is a little tone-deaf on the appearance of conflict of interest.”
Nehemiah’s top executive, Scott Syphax, said he was not aware of Mr. Roos’ payment to Mr. Williams. He said Mr. Roos was hired to strengthen the company’s ties to the California congressional delegation and to solidify its relationship with Ms. Waters. Before Mr. Roos was hired in May 2007, Mr. Syphax said, he met with Ms. Waters and urged her to hold a hearing on the issue.
Ms. Waters called a hearing on the issue in June 2007 at which Mr. Syphax said the business of providing seller-funded down-payment assistance to low- and moderate-income homebuyers was facing “extinction.” A month earlier, the Department of Housing and Urban Development (HUD) published a proposed rule to ban such seller-funded assistance.
FHA had long required buyers to make at least a 3 percent down payment to qualify for low-interest financing. While FHA rules allowed relatives to provide buyers with the down payments, they barred sellers from giving the money.
In 1997, Nehemiah found a loophole around the ban by giving the down payment as a gift to the buyer and then collecting the amount as a donation plus a processing fee from the seller. Other nonprofit groups got involved and seller-financed loans mushroomed from less than about 2 percent of FHA loans in fiscal 2000 to nearly 38 percent in fiscal 2007, according to the Congressional Research Service.
At the hearing, Margaret Burns, then a top HUD official, testified that such loans had “a significant negative impact” on FHA’s business. She said loans based on seller-funded gifts performed “very poorly” and foreclosure rates were “more than twice those” of all other home-purchase loans insured by FHA.
In 2007, Ms. Waters and two other subcommittee members, Reps. Al Green, Texas Democrat, and Gary G. Miller, California Republican, sponsored an amendment to the HUD appropriations bill prohibiting the agency from spending funds to implement the rule. The amendment passed the House but not the Senate.
HUD also announced its final rule in 2007. Nehemiah responded with a lawsuit, and a federal judge delayed implementation. In 2008, the court kicked the rule back to HUD, and President Bush signed a housing bill prohibiting down-payment assistance programs. Ms. Waters, Mr. Green and Mr. Miller introduced bills to restore the program in July 2008 and January 2009, but neither became law.
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About the Author
By Andrew P. Napolitano
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