DRG later defaulted on more than 100 loans on multifamily projects at a loss to the government of $500 million or more. Its right to make co-insurance loans was suspended last March by HUD and its operations are being investigated by a federal grand jury.
Hills, who is now the U.S. trade representative, has been summoned to testify before the committee next week. She will be questioned about the DRG case and her representation of a Florida real estate firm that received at least one grant for renovating buildings for the poor.
Meanwhile, current HUD Secretary Jack Kemp announced Friday that the federal government has filed a $2.5-million civil action against a former HUD closing agent in Texas, charging that she diverted HUD money into her personal bank account for the purchase of real estate, cars and guns.
Fund Diversion Charged
The suit charges that Reba Louise Lovell, 36, and her Arlington, Tex., company, KenLo Inc., "wrongfully diverted" more than $2.5 million in proceeds that they had received on behalf of HUD for the sale of 55 houses. Last month, Lovell was indicted by a federal grand jury on similar charges.
The Justice Department has been investigating the behavior of dozens of outside escrow agents who handled paper work and fund transfers in the sale of property the government had seized in foreclosures of federally guaranteed mortgages.
The most notorious case involves Marilyn Louise Harrell, an escrow agent dubbed "Robin HUD," who said she diverted as much as $5.5 million in HUD funds and contended that she gave the money to the poor.