HUD

Executives and board members in financial services are increasingly held accountable for the actions of their firms. Among their many responsibilities, they are required in particular to be engaged in their company’s efforts to adhere to the letter and spirit of laws that seek to ensure consumer protection.

As the regulatory landscape facing executives in the financial services industry has grown increasingly complex – and integral to their enterprises and their firms’ reputations – so too has the need to demonstrate and document the actions taken by their firms.

Gate House Chairman and Partner Brian Montgomery recently outlined the challenges facing executives in a piece for HousingWire. As he argued, even with the best of intentions, there are often inconsistencies and conflicting interpretations of what firms need or ought to do — and what executives need or ought to in order to stay apprised of their firm’s efforts.  One thing we know it that it will require vigilance and a lot of hard work to get it right.

Recognizing the important need in C-suites and executive board rooms, Gate House Strategies has launched a new subsidiary, Gate House Compliance, LLC, to provide fair lending and compliance management services. The firm, comprised of veterans in financial services and specialists in fair lending and consumer protection law and regulation (and support from CrossCheck Compliance’s deep bench of experts), will advise and support compliance regimes across multiple asset classes, including mortgage, student loan, credit card, and other secured and unsecured credit products.

The addition of Gate House Compliance is a timely and critical expansion of the firm’s ability to serve the growing needs of the industry. After careful examination, clients can choose services that complement their current compliance program, or on a subscription basis, they may utilize Gate House Compliance 365, a comprehensive system of ongoing support of fundamental services and a coordinated, dynamic approach to the management of regulatory risk.

The important policy goals our country require executives to be engaged. They need experience, perspective, and insight in order to do what is right and, and – when the path is made unclear by conflicting policies or interpretations – what is prudent for business.

The goal for Gate House Compliance is to put executives and firms ahead of the curve and ahead of the scrutiny that characterizes the current environment and road ahead. Vigilance and a team of experts with a steady hand will be a must.

Gate House Partner and Chairman Brian Montgomery shared his perspective on the regulatory landscape facing executives in the financial service industry — the need to act responsibly with respect to fair lending laws and to understand the complexity of it all – in a piece for Housing Wire.

“[M]ultiple agencies pursuing the same general goals sometimes creates inconsistencies or conflicting interpretations of policy, making it difficult for financial institutions to navigate uncharted waters, even with the best of intentions.” Montgomery wrote.

Montgomery, who served as Deputy Secretary of HUD and FHA Commissioner twice, emphasized the risks, particularly in the areas of lending and loan servicing: “Recent regulatory actions have targeted marketing practices, credit allocation and product offerings,” he said, with top executives more often being held accountable for their “company policies, procedures, operations, and culture.”

With risk to the firm not only financially but reputationally, the need to “identify gaps that may exist in their knowledge and experience and structure management teams accordingly” is paramount if they are to demonstrate to overseers that they possess a comprehensive approach to their compliance obligations.

Private industry participants have their work cut out for them as they go about the critical work of upholding the letter and spirit of our country’s fair lending laws, Montgomery said. Both private firms and government must work together at times, with private industry willing to serve as partners to government and the government for their part providing “transparency, open dialogue and technology improvements” to make our system work.

In their recent article for Reverse Mortgage Daily, Gate House Founding Partners Brian Montgomery, Keith Becker and Dror Oppenheimer discuss the implications of the first positive capital ratio for the HECM program in six years.

The Gate House team, who worked together at the Federal Housing Administration managing the HECM program, provided their unique perspective and explained that important policy changes, and most certainly strong home price appreciation, have contributed to the substantial improvement in the HECM capital ratio.

Nevertheless, they argued, the results do not “provide a reason for complacency or assurance of future (positive) results” and therefore continued vigilance to ensure the program “is not continuously subsidized by the premiums … in the forward book, will be vital for the HECM program to continue to serve its mission.”

Montgomery is the only person to have served as FHA Commissioner twice under three presidents. Becker served as the Deputy Assistant Secretary and Chief Risk Officer for FHA. Oppenheimer served as a Senior Advisor to the Commissioner of FHA.

In their recent article for Reverse Mortgage Daily, Gate House Partners Keith Becker, Dror Oppenheimer, and Michael Marshall discuss the pressures in the housing finance market relative to reverse or home equity conversion mortgages (HECMs), suggesting action is needed to avoid further failures of Ginnie Mae HECM servicers and issuers.

If reverse servicers and “issuers”  are a liquidity lifeline soon, the authors opined, “there could be additional failures, with Ginnie Mae and possibly, taxpayers holding the bag. Further harm can be avoided if Ginnie Mae provides support and the Federal Housing Administration (FHA) makes some critical changes to its HECM rulebook.”

Gate House illuminates the challengers facing HECM servicers and issuers as a result of both the rapidly rising interest rate environment and esoteric HUD policies that differ from the GSEs, for example, the fact that Ginnie Mae issuers are required to fund the buyout of “due and payable” loans, often for a period of two to three years, and advance tax and insurance payments when the loans are bought out of pools.

Gate House Vice Chairman Hunter Kurtz joined @ConsultQuadel President and  @Forbes_Books contributor Katie Goar for her podcast series “Change Makers with Katie Goar, Finding the right solutions for the affordable housing community” to share his insights on affordable housing through the lens of his experience in public housing and community development. Based on his experience as former HUD Public & Indian Housing Assistant Secretary, his career serving in other significant roles at HUD and Michigan state government in Detroit, and his current work with Gate House Strategies, in Part 1 of the series, Hunter discusses his career path in affordable housing, specific challenges and solutions to solving current supply constraints in affordable housing including through programs like “Faircloth to RAD” (the Rental Assistance Demonstration program), the importance of graduating renters on public assistance into market rate units, combatting veteran homelessness through programs like the HUD-VASH program, and what it will take generally to improve the shortage of affordable housing in America.

In Part 2 of the series, Hunter discusses the work of Gate House’s new subsidiary, Gate House Digital, including our colleague Dain Ehring’s perspective on the emergence of Artificial Intelligence in mortgage lending, the receipt of the “Sammies Award” by his former HUD colleague’s for their mutual work preventing homelessness of foster youth aging out of the program, his work with public housing authorities and the success of PHAs during the height of the Covid pandemic, and being part of “the rebirth of a great American city,” Detroit, where he resides today.

Gate House Vice Chairman Hunter Kurtz, when he served as Assistant Secretary for Public and Indian Housing (PIH) at HUD, had led a team of staff who were determined to address a critical challenge for a vulnerable population in America, our nation’s youth who age out of foster care and are at risk of homelessness.

The HUD PIH team designed a new program, the Foster Youth to Independence Initiative (“FYI Initiative”) which now provides rental assistance and other supportive services to these individuals.

In his recent article for HousingWire, Kurtz congratulates his former colleagues for receiving the prestigious “Sammies” Award in recognition of their innovative approach and execution of the FYI Initiative.

Kurtz applauds the work of his former colleagues as well as the many families of the Foster Youth program who volunteer to make a tremendous difference in the lives of at-risk youth. They are “un-sung heroes” in our national life, Kurtz says.

The FYI Initiative has now issued over 1,000 housing choice vouchers for former foster youth. Without support, an estimated 25% of youth aging out of foster care experience homelessness within four years.

In their recent article for Reverse Mortgage Daily, Gate House Founding Partners Brian Montgomery, Keith Becker and Dror Oppenheimer discuss the implications of the first positive capital ratio for the HECM program in six years.

The Gate House team, who worked together at the Federal Housing Administration managing the HECM program, provided their unique perspective and explained that important policy changes, and most certainly strong home price appreciation, have contributed to the substantial improvement in the HECM capital ratio.

Nevertheless, they argued, the results do not “provide a reason for complacency or assurance of future (positive) results” and therefore continued vigilance to ensure the program “is not continuously subsidized by the premiums … in the forward book, will be vital for the HECM program to continue to serve its mission.”

Montgomery is the only person to have served as FHA Commissioner twice under three presidents. Becker served as the Deputy Assistant Secretary and Chief Risk Officer for FHA. Oppenheimer served as a Senior Advisor to the Commissioner of FHA.

Gate House Chairman Brian Montgomery and CEO Keith Becker recently opined in the M Report on the favorable condition of the FHA Mutual Mortgage Insurance Fund.

In their article, Montgomery and Becker argue that FHA must be prepared to weather adverse events in the future similar to the wake of the Financial Crisis in 2008 or the COVID-19 pandemic. As pressure mounts to reduce mortgage insurance premiums (MIP), continued commitment to FHA’s countercyclical role would dictate caution. FHA must work, they wrote, “to put itself in a position to best serve low- to moderate-income borrowers who will be most affected should private markets constrict (which history has shown sometimes do).”

In urging caution on mortgage insurance premiums, they cite the Annual Report’s acknowledgment that the assumptions underlying the financial position of the fund can “change materially and quickly with changes in both actual and projected home values.”

Montgomery and Becker caution that unintended effects of MIP changes could occur, and FHA would be wise to keep available “all options that help to expand opportunities for low- to moderate-income homebuyers by deploying some of the excess capital into new programs, products, or underwriting policies.”

Gate House Vice Chairman Hunter Kurtz moderated a panel for the Bipartisan Policy Center (BPC) forum on the critical need to address homelessness amidst our nation’s veterans.

“America’s Call to Duty: Ending Veterans’ Homelessness” was hosted by the BPC’s J. Ronald Terwilliger Center for Housing Policy. The panel featured Rep. Mike Levin (D-CA) Chairman, Economic Opportunity Subcommittee, House Committee on Veterans Affairs; Philip Mangano, President and CEO, The American Round Table to Abolish Homelessness; Rosanne Haggerty, President and CEO, Community Solutions; John Kuhn, National Director, Supportive Services for Veteran Families, U.S. Department of Veterans Affairs; and Kathryn Monet, Chief Executive Office, National Coalition for Homeless Veterans.

During the forum, the experts discussed the unique challenges facing our veterans population, the lessons learned during the COVID-19 pandemic, and strategies that have proven effective in combating veterans homelessness.  While there has been tremendous success throughout the country reducing veterans homelessness in recent years, removing tens of thousands from the streets, significant work remains to demonstrate our nation’s commitment to our veterans and to ensure those who have served our country and defended our freedom are stably housed.