During testimony before the House Financial Services Committee on Tuesday, Housing and Urban Development Secretary Ben Carson appeared to be stumped by basic real-estate and housing market terms, at one point seemingly believing that a congresswoman was referring to cookies.
Already struggling to answer Rep. Katie Porter’s (D-CA) questions surrounding Federal Housing Administration (FHA) mortgages—the former California mortgage-settlement official had to walk him through the basic concepts of his own department’s policies—the retired neurosurgeon was then asked about issues surrounding the high rate of foreclosures on FHA-insured homes.
After Carson laconically said he hadn’t had any discussions on the issue of FHA’s servicing of mortgages but he’d “look it up,” Porter pressed him on the “disparity in REO rates” for FHA mortgages.
REO stands for “real estate owned” and references properties in possession of lenders following a foreclosure. Regarding FHA loans, after the property is seized from the homeowner and the title is transferred to HUD, the home is then put up for sale.
“Do you know what an REO is?” Porter asked.
“Oreo?” a confused Carson replied.
“REO,” Porter reiterated. “No, not an Oreo. An R-E-O.”
“Real estate?” the former Republican presidential candidate guessed, prompting Porter to ask him what the “O” meant.
“E-organization,” he said, causing the Democratic congresswoman to give up and hand him the definition of a basic housing term.
“That’s what happens when a property goes to foreclosure,” she added. “We call it an REO. And FHA loans have much higher REOs—that means they go to foreclosure rather than loss-mitigation or to non-foreclosure alternatives such as short sales—than comparable loans at the GSEs.”
She went on to ask Carson why there were more foreclosures among FHA loans than conventional mortgages, causing Carson to respond that he’d be happy to have her “work with the people who do that.”
Porter, meanwhile, explained that was her job before she got into Congress and how it was her job to ask those at HUD, including the head of that department, about such a problem.