Steve Preston, a 47-year-old University of Chicago MBA who currently heads up the Small Business Administration, has been nominated to succeed Alphonso Jackson as the Bush administration’s Secretary of Housing.
Preston’s time at the Department of Housing and Urban Development may be brief, as he can expect to be replaced after the next president takes the oath of office Jan. 20. His appointment follows Jackson’s resignation amid allegations that he used his position to help friends and thwart political opponents (see Inman News story).
In announcing Preston’s nomination, Bush called Jackson "a decent man, a dedicated man and … a compassionate man" who "worked tirelessly at HUD to help America’s homeowners."
Bush said HUD Deputy Secretary Roy Bernardi will serve as acting secretary until Preston is confirmed by the Senate, and asked lawmakers to "quickly consider Steve Preston and to ratify him on a timely basis."
Preston, who holds a master’s in business administration from the University of Chicago, is a former executive at The ServiceMaster Co., parent company of home warranty company American Home Shield. Home warranties are among the settlement services regulated by HUD through its enforcement of the Real Estate Settlement Services Procedures Act, or RESPA.
HUD has proposed changes to RESPA, including new disclosure forms that the department says will make it easier for consumers to comparison shop for mortgages and settlement services, which are opposed by some in the real estate industry. HUD estimates the new disclosures would help save consumers about $8.35 billion a year. The department is accepting comments on the proposed changes until May 13, and could implement the changes as early as November (see story).
According to a biography posted on the ServiceMaster company Web site, Preston served as the company’s chief financial officer before being named executive vice president, heading up the company’s information technology, strategic sourcing, and strategy and acquisitions efforts. He has also been senior vice president and treasurer of First Data Corp., and an investment banker at Lehman Brothers.
Preston was sworn in as the head of the Small Business Administration in July 2006. Bush credited him with revamping the SBA’s disaster assistance program, clearing the way for the distribution of more than $6 billion in loans to small businesses rebuilding after Hurricane Katrina.
Although there’s little overlap between the missions of the Small Business Administration and the Department of Housing and Urban Development, the SBA has weighed in on housing issues recently.
In an April 8 letter, lawyers in the Small Business Administration’s Office of Advocacy were critical of the Federal Reserve’s plans to amend Regulation Z, which governs implementation of the Truth in Lending Act, or TILA.
The proposed changes to Regulation Z would create new requirements for lenders making subprime alt-A and other "higher priced" mortgage loans, such as verifying a borrower’s ability to repay adjustable-rate mortgages after an interest-rate reset. The Fed also proposed some new requirements that would apply to all loans, including a stipulation that mortgage brokers be allowed to collect yield spread premiums only if they have first entered into a written agreement with the borrower (see story).
SBA lawyers said the Fed had not adequately analyzed the impact of the changes on small mortgage brokers and banks.
While SBA "understands the urgent nature of this proposal given the current state of the real estate market," the letter said, consumers would suffer if the changes to Regulation Z "forces businesses to exit the market."
The SBA encouraged the Fed "to give full consideration to all of the alternatives suggested by the industry and develop a less costly rule that would not result in such a negative impact on affected industries."
The Mortgage Bankers Association today issued a statement welcoming Preston’s nomination, saying that at the SBA, he "has demonstrated that he has a strong understanding of the role that the government can play in helping businesses succeed and build stronger communities."
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