Politics

Feds Ignored Flint Water Crisis While Approving Millions For Mortgages There

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Mark Tapscott Executive Editor, Chief of Investigative Group
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Federal officials approved mortgages worth more than $11 million for Flint, Michigan homes bought after it was discovered the city’s drinking water contained dangerous levels of lead and copper, according to a government watchdog.

At least 144 such mortgages were issued that collectively obligated federal taxpayers to guarantee unpaid balances of $11.2 million. An estimated 65 percent of them — 11 of 17 reviewed — were for homes that were not inspected to assure access to safe drinking water, according to the Department of Housing and Urban Development Inspector General.

The Michigan city gained nationwide notoriety on Oct. 1, 2015, when local officials declared a public health emergency due to excessive levels of lead and copper. Federal regulations require that properties approved for government-backed mortgage insurance have access to “a continuing and sufficient supply of safe and potable water.”

Subsequent investigations tracked the unsafe lead and copper levels to the city government’s decision on April 25, 2014 to switch its water source to the Flint River. Federal officials approved more than 600 mortgages for Flint area properties after the switch. The 144 mortgages at the heart of the IG investigation were issued after the public health emergency declaration.

It was not until four months after the declaration that HUD officials reminded lenders of their obligation to document access to safe drinking water supplies for mortgages with federally guaranteed insurance. Even then, HUD officials failed to verify on a case-by-case basis that the safe drinking water access regulation had been satisfied by lenders. (RELATED: Flint Water Pipe Fix Nearly Doubles In Price — Michigan Governor In None Too Happy)

“The issues identified represent an ongoing safety concern for homeowners and household members,” the IG said. “HUD and homeowners also face an increased risk of loss if property values decrease due to the water safety issues, and homeowners may not have sufficient resources needed to attain and maintain safe water.”

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