Housing-loan agency head is stepping down
The head of the state’s troubled housing loan agency is stepping down amid a controversy over a 27% pay raise that will sweeten her retirement income by thousands of dollars a year.
Theresa Parker leaves office a little more than a year after a decision to raise her pay -- now $175,000 -- prompted an internal investigation, complaints from Gov. Arnold Schwarzenegger’s chief of personnel and the resignation of one of her agency’s board members.
The controversy surrounding her Dec. 13 departure from the California Housing Finance Agency, a provider of home loans for the poor, adds to turmoil created by a worldwide financial crisis that has led to a quadrupling of foreclosures on the agency’s loans.
“This is not the time to be giving big raises and pensions, especially for an agency that finances home loans,” said state Sen. Alan Lowenthal (D-Long Beach), chairman of the Senate Committee on Transportation and Housing.
Parker, citing the board-ordered internal investigation as vindication because it found that no laws were broken, said she planned to retire when her term ends in December but the decision is not related to the pay-raise flap.
“They found nothing inappropriate with it,” she said of the investigation.
“My integrity is very important to me.”
The internal investigation found that pay raises for Parker and other agency executives -- including 43% increases, from $118,300 to $170,000, for two other managers -- were pushed by then-board chairman John Courson at the same time the agency was doing millions of dollars in business with his home-loan company.
The investigative report, by an outside law firm, said a perception of wrongdoing may be created if the executives and board members who do business with the agency play any role in setting the pay of the agency’s top managers.
The report recommended that the compensation process be changed so the executive director is not involved and board members who do business with CalHFA do not participate, “to avoid even the appearance of impropriety.”
Parker, the investigation found, “had direct involvement in certain aspects of the process” for raising her salary, including a role in initiating and designing the survey of comparable positions that was used by a compensation committee to justify an increase of 45%, from $138,000 to $200,000.
“My role was appropriate,” Parker said.
After Schwarzenegger’s office and Lowenthal raised concerns about the $200,000 pay level, the board scaled it back to $175,000. The sum is higher than that of the lieutenant governor, secretary of state and state treasurer.
Courson chaired the compensation committee, and his board approved the raise. At the time, Courson was CEO of the Folsom-based Central Pacific Mortgage Co., which had sold the housing agency 73 loans totaling $15.8 million. The agency often buys loans that private mortgage companies give low-income families, paying the lender up to 1.5% of the loan amount and taking over the financial risk.
Courson did not return calls for comment. But he said during one board meeting that the issue could have been handled better.
“We’ve thoroughly investigated all specific allegations and, while finding them legally groundless, did decide that we could and should make some specific improvements,” he said.
State personnel Director David A. Gilb raised questions in writing about giving a significant raise to someone nearing retirement, especially since pension payments are based partly on the highest salary earned.
When officials are given big pay increases just before retirement, it raises questions about whether the primary purpose is to hike pension benefits, he said.
“This practice, called ‘pension-spiking,’ is always portrayed negatively by the press and held up as an example of government excess at taxpayers’ expense,” he wrote to Schwarzenegger’s office.
He recommended that Parker not get a pension based on the higher salary until she had worked three years with that salary in place. The board rejected his proposal, making Parker eligible this year for the higher pension.
With the pay raise, her pension could be $25,000 a year more than it would have been otherwise.
The board’s action on Parker’s compensation pushed John Morris, a Los Angeles real estate manager and former vice president of the State Bar of California, to quit the board in frustration last month.
“I had huge problems with how CalHFA was governed,” he said.
“I felt that the spirit of the law was violated.”
Morris said he particularly holds Courson responsible.
“Clearly there were totally inappropriate acts on his part as it relates to his chairmanship of CalHFA,” Morris said. “If I was doing business with the agency, I would not have served as chairman of the compensation committee.”