WASHINGTON — When Pam Patenaude was nominated by President Trump as the No. 2 at the Department of Housing and Urban Development, she was supposed to help make up for the inexperience of the leader of the agency, the retired neurosurgeon Ben Carson.
But four months later, Patenaude’s nomination remains in limbo, as does that of Paul Compton, the pick to be the department’s general counsel.
That has left HUD facing a leadership crisis, with other key roles like the head of the Federal Housing Administration and Ginnie Mae going unfilled by the Trump administration.
"If you are a defender of the mission of HUD, you are going to want HUD to have a No. 2 chief operating officer like Pam as deputy secretary and a general counsel in place so you can give Secretary Carson more staff and more capacity to run the agency," said Bill Killmer, senior vice president for legislative and political affairs at the Mortgage Bankers Association.
While other agencies have also been hamstrung with senior jobs unfilled, the problem is particularly acute at HUD because Carson acknowledges he lacks prior experience. It has left key decisions, including whether to lower Federal Housing Administration premiums, unresolved for long stretches of time while Carson waits for his senior staff to arrive.
It’s not clear why the Senate has not acted on Patenaude, a former HUD assistant secretary who is now president of the J. Ronald Terwilliger Foundation for Housing America’s Families. Her nomination was approved by the Senate Banking Committee in April. Democrats lack the ability to filibuster nominees, but by Senate tradition, a single lawmaker can sometimes place a hold on a nominee.
Some industry observers pointed to Sens. Elizabeth Warren, D-Mass., and Robert Menendez, D-N.J., as likely holding Patenaude up. Democrats objected to her after she defended President Trump’s budget request to slash funding for HUD. (Congress appears to have ignored Trump’s request, with the appropriations panels in both chambers approving bills that would fund HUD at its current level.)
A spokesperson for Warren did not return calls seeking comment; a spokesman for Menendez said the New Jersey Democrat was not involved.
"While the senator has certainly expressed concerns about the president’s fiscal year 2018 budget request, he does not have a hold on the nominees," the spokesman said.
Edward Mills, a financial policy analyst and managing director at FBR Capital Markets, said the delay in filling crucial housing positions is a "reflection of how far we have come since the financial crisis." The housing market has stabilized and "it shows that housing is not the priority it used to be," Mills said.
To be sure, some officials have been confirmed to jobs at HUD. The Senate voted Aug. 3 to approve more than 70 nominees for various government agencies, including Anna Maria Farias as HUD assistant secretary for Office of Fair Housing and Equal Opportunity and Neal Rackleff as the assistant secretary for the Office of Community Planning and Development.
"We finally have two of our four Senate-confirmed folks on board. ... Still, it would be nice to have our deputy and our general counsel aboard," a HUD spokesman said, referring to Patenaude and Compton.
But other top jobs aren’t even in the pipeline. Brian Montgomery, who previously served as FHA commissioner under President George W. Bush, is widely expected to be nominated again for the job. David Kittle, a former chairman of the Mortgage Bankers Association, is said to be Trump’s pick for Ginnie Mae.
Despite months of speculation, however, they have not been officially announced. “It is hard to understand why Montgomery and Kittle are being held up," said a source, who spoke on condition of anonymity.
Killmer said that with every new administration, "the clearance process has become more intense and laborious and takes more time. Each nomination has a different rhythm or tempo."
It appears to be taking longer for Montgomery go through the nomination clearance process because of his work in the private sector and possible conflicts of interest as a co-founder and managing director of the Collingwood Group, a mortgage consulting firm.
"I have been waiting for the FHA nomination," Mills at FBR Capital Markets said. "That will be one the most compelling things in relation to the direction where the Trump administration wants to go with its housing policy. It is unclear if the new administration wants to shrink FHA or expand it.”
If Montgomery is chosen, “there won’t be an aggressive reduction,” Mills said.
But the new FHA commissioner will be looking for redundancies between areas served by the FHA and those served by Fannie Mae and Freddie Mac. "And seeing if you can reduce that overlap," Mills said.
Also in the mix is the role of the FHA in any future housing finance system.
House Financial Services Committee Chairman Jeb Hensarling, R-Tex., has been trying to limit the activities of the government-sponsored enterprises and the FHA for several years.
Senate Banking Committee Chairman Mike Crapo, R-Idaho, meanwhile, has indicated recently that he wants GSE reform to "include consideration of FHA as well," Killmer said. "So it is not just a House thing."