NEW YORK Phil Angelides, the former chairman of a federal commission set up to look into the causes of the financial crisis, has stepped down from a group seeking to turn a profit by investing in distressed mortgages.
Reuters reported a month ago that Angelides was heading a firm called Mortgage Resolution Partners, which had touted its political connections as part of its "secret formula" for negotiating deals to buy distressed mortgages. (link.reuters.com/vyx56s)
Angelides' involvement with the firm had drawn scrutiny on Capitol Hill, where one congressman recently sent a letter warning about potential political influence peddling.
A representative for Angelides told Reuters on Monday the former California state treasurer stepped down as executive chairman of the upstart firm on January 27. The representative did not give any reason for the move.
In a fundraising letter sent earlier this year to prospective investors, Mortgage Resolution Partners talked about the political connections of Angelides and several other members of the firm. The start-up was focused on buying distressed mortgages in California and was seeking to raise about $6 million to study the feasibility of its plan.
In an emailed statement, the representative for Angelides said the former chairman of the Financial Crisis Inquiry Commission "has returned to his business and civic commitments."
Angelides, according to the statement, "continues to support the mission of stemming the tidal wave of foreclosures and any efforts, including those of MRP, which help homeowners."
Shortly after Reuters reported on Mortgage Resolution Partners, an official with the House Oversight and Government Reform Committee began seeking a copy of the fundraising letter, a source familiar with the situation told Reuters.
On February 10, Representative Patrick McHenry, chairman of a House Oversight and Government Reform subcommittee on the Troubled Asset Relief Program, sent a letter to Shaun Donovan, the Obama administration's secretary of Housing and Urban Development on the subject. McHenry asked him for details about steps that are being taken to guard against "cronyism or conflicts" in the recently announced $26 billion mortgage settlement with the nation's biggest banks.
In the letter, McHenry, a Republican from North Carolina, noted the investor letter sent by Mortgage Resolution Partners. (here)
"It is essential that the distribution of Settlement funds be free from the sort of political influence peddling that Mr. Angelides and his colleagues are apparently planning," McHenry wrote, giving Donovan until February 24 to provide information about steps being taken to make sure the settlement is "well managed."
A spokesman for McHenry said the subcommittee's request for information has not changed even though Angelides is no longer involved with Mortgage Resolution Partners.
Angelides had tried to follow the lead of other hedge funds, private equity firms and other deep-pocketed investors, which are looking to scoop up foreclosed homes and earn money by renting them out. The Federal Housing Finance Agency recently received proposals from hundreds of investment groups interested in acquiring and renting out single-family homes federal agencies have foreclosed on.
(Reporting By Matthew Goldstein and Jennifer Ablan; Editing by Claudia Parsons)