SUN INVESTIGATES U.S. housing official avoids conflict

The nation’s second-most-powerful housing official toured Baltimore this week and left with a good impression of a city that her boss, U.S. Housing Secretary Ben Carson, once called home and where her husband’s employer happens to have done housing business.

Pamela Hughes Patenaude, deputy secretary of the U.S. Department of Housing and Urban Development, arrived Monday to meet with her Baltimore staff, tour Port Covington and visit an East Baltimore rowhouse that the Green & Healthy Homes Initiative cleared of lead.

“They take a holistic approach to making a home healthy,” said Patenaude, after meeting the couple whose 2-year-old benefited from the lead abatement in the house.

She then traveled to City Hall for a lunch meeting with Mayor Catherine E. Pugh, who just last month stood with different HUD officials to announce a $30 million neighborhood-transformation grant for Perkins Homes.

What Patenaude did not know is that a block away from the Perkins site was a new apartment building called The Luther, for which her husband’s company, Dougherty Mortgage LLC, provided a nearly $2 million, Fannie Mae-backed mortgage, according to land records.

Fannie Mae is the government-sponsored mortgage company that supports the financing of billions of dollars in lending for affordable housing projects.

Jereon M. Brown, a HUD spokesman, said the deputy secretary “is not aware of any loans involving her husband’s firm.”

“There is no connection whatsoever to her visit and the firm that her husband works for and any of the properties that were visited,” said Brown, adding that the Choice Neighborhoods program is a competitive grant process and that selections are made by career HUD staff.

The mortgage for The Luther, 15 apartments in a converted former historic Lutheran church on Eastern Avenue, is minuscule for Dougherty Mortgage, a HUD-approved lender based in Minneapolis, Minn., that services more than $5 billion in loans, according to company reports.

Tim Larkin, a co-founder and senior vice president at Dougherty Mortgage, said the Minneapolis-based company does not allow Patenaude’s husband to work on any of its HUD-related transactions.

The national profile of the company and Patenaude’s HUD position demonstrate the perils and scrutiny public officials can face when government and private industry intersect on large development projects.

Concerns about the potential for conflicts of interest between Patenaude’s HUD position and her husband’s job were raised during her congressional confirmation hearing last year.

When asked how she would handle potential conflicts of interest related to her husband’s job at a “mortgage firm that deals with both HUD-backed and Government Sponsored Enterprise-backed multifamily and other mortgages,” the deputy secretary said she had disclosed his employment and would avoid “any actual or apparent conflicts of interest,” according to a transcript of the congressional hearing.

“I will not participate personally and substantially in any particular matter that to my knowledge has a direct and predictable effect on my husband's compensation and employment with Dougherty Mortgage LLC,” she said.

The deputy secretary told The Baltimore Sun that she also was invited by Weller Development to tour its Port Covington project.

Overall, Patenaude left the city impressed with the work of Pugh, Weller and Green & Healthy Homes Initiative.

“It looks like Baltimore is going to come back and come back strong,” she said.