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Mortgage-banking veteran Bott leads FHA foreclosure-prevention effort

By Dina ElBoghdady
Washington Post Staff Writer
Monday, March 29, 2010; A17

Vicki Bott hastily uprooted her husband, their three children, two dogs and a motor home from Austin to join the Federal Housing Administration six months ago and helped unveil the Obama administration's plan to revamp its faltering foreclosure-prevention efforts last week.

"The thought of being a part of the government, or even being in D.C. taking part in all this, was the furthest thought from my mind a year ago," said Bott, 45, who had never been to the White House until Friday's announcement. "Sometimes it's a little surreal."

As head of FHA's single-family housing programs, Bott is charged with rolling out a key part of the administration's initiative by putting in place policies that will enable lenders to refinance for some homeowners. A similar FHA program launched by the previous administration flopped, and the spotlight is now on the agency's new plan.

The new program attempts to mitigate one of the housing market's most vexing problems: "underwater" borrowers whose home values have plunged, wiping out their equity so that they owe more on their mortgages than their homes are worth.

A quarter of homeowners are in that predicament today, making them vulnerable to foreclosure because they cannot sell their homes or refinance their way out of trouble in case of a financial setback. The FHA plans to help some of these borrowers who are on time with their mortgages refinance if their lenders agree to cut the existing mortgage debt by at least 10 percent.

The task is daunting, Bott said, "but I'm not uncomfortable in this role."

The mortgage-industry veteran got her start as a branch manager trainee in 1987 at World Savings Bank, a California savings and loan, and has held high-level sales and management positions at Wells Fargo and Washington Mutual.

FHA Commissioner David H. Stevens, who had worked closely with Bott when they were at Wells Fargo this decade, plucked Bott out of the private sector to join the agency.

Bott hesitated at first. As the daughter of an Air Force helicopter pilot, she was used to constantly moving. But her children (ages 17, 15 and 12) and her husband, Frank, an elementary school teacher, already had relocated four times to accommodate her job changes. She came to her job interview in Washington undecided.

"But when I walked into Dave's office for the first time and looked out on the city and the Capitol, that's when I knew," Bott said. "I called my hubby from TGIF [a restaurant at Reagan National Airport] and I said: 'I want to do this.' "

At the time, Bott was a vice president of institutional risk at Wells Fargo. During her years there, she put in place systems that monitor the credit quality of borrowers and ensure that they receive proper disclosures when taking out loans.

Back then, during the housing boom, imposing more paperwork and rules on an eager sales force earned her "unpopular respect," Bott said.

"But if all the decisions I was making were well-accepted, that would have meant I was catering too much to sales desires when what I needed to do was lay out the steps that had to be taken so we didn't fall into a pothole," she said.

At FHA, which insures lenders it works with against losses if loans default, the mission is not markedly different. Bott's team of 900 employees approves lenders, monitors them, directs them on how to handle delinquent homeowners, sells these borrowers' homes if they lapse into foreclosure, and defines the FHA's lending requirements.

Another important lesson from her enforcement days, one that Bott said she has already incorporated in her role at FHA when dealing with lenders: "Never sugarcoat. You've got to tell people upfront what you are planning to do and what the implications are for them. They may not like it, but at least they're prepared for it."

Six months into her job, Bott is pleased that none of her children has once said: "I can't believe we moved here."

She is also excited, she said, to be affecting change at an institution that lenders, consumers and Congress care so deeply about. The FHA has played a key role in propping up the housing market since the mortgage market's meltdown.

Now if only she can get used to the public scrutiny that comes along with all that.

"The most interesting thing to me is being in the inside planning these policies and then seeing how it looks from the outside," Bott said. "It gives you a whole new perspective on things."

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