WASHINGTON — Republican lawmakers put Department of Housing and Urban Development Secretary Julian Castro on the hot seat Wednesday, criticizing his decision to allow nonprofit community groups to bid on more nonperforming Federal Housing Administration loans.

HUD has sold 106,000 nonperforming loans — only 2,000 of which have been bought by nonprofit groups — but House Financial Services Committee Chairman Jeb Hensarling argued that a recent decision to expand such sales is a big mistake.

HUD "will offer lower-priced preferential bidding options to nonprofits and local governments or, as many of us believe more accurately, to known political allies," Hensarling said at a hearing Wednesday.

Democrats fired back by claiming the GOP lawmakers are more interested in ensuring hedge funds and Wall Street investors can monopolize sales than in helping borrowers stay in their homes.

So far, 98% of the FHA nonperforming loans have been sold to "private investors — the big boys on Wall Street," said Rep. Maxine Waters, D-Calif. This hearing is being held to "maximize Wall Street profits at the expense of struggling homeowners."

The hearing comes as Castro is rumored to be among Democratic presidential nominee Hillary Clinton's choices for vice president, raising the stakes on his testimony Wednesday. During the hearing, Castro insisted HUD was fulfilling its fiduciary duty to ensure the FHA receives the maximum return on sales.

"We have been very successful with regard to building up the FHA mutual insurance fund," Castro said. "In fact, through this [Distressed Asset Sales Program] we have returned $2.2 billion over and above what we would if we had gone the traditional route" of selling foreclosed properties.

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