[Senate Hearing 117-]
[From the U.S. Government Publishing Office]
TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
APPROPRIATIONS FOR FISCAL YEAR 2023
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WEDNESDAY, MAY 12, 2022
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 9:30 a.m. in Room SD-192, Dirksen
Senate Office Building, Hon. Brian Schatz (chairman) presiding.
Present: Senators Schatz, Murray, Coons, Van Hollen,
Collins, and Braun.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
STATEMENT OF HON. MARCIA FUDGE, SECRETARY
OPENING STATEMENT OF SENATOR BRIAN SCHATZ
Senator Schatz. Good morning. This hearing will come to
order.
Welcome, Secretary Fudge. It is a pleasure to have you
before the subcommittee to testify on the President's fiscal
year 2023 Budget Request for the Department of Housing and
Urban Development.
The President's $72 billion Budget Request for HUD
represents a $6.2 billion, or 9.5 percent increase from the
recently enacted Omnibus, but due to historically low vacancy
rates, and rents rising by more than 15 percent in some places,
more than half of that increase is needed to simply maintain
the housing rental assistance HUD currently provides.
Around the country, in rural, suburban, and urban
communities alike, families are struggling to find decent homes
that they can afford, and this problem is not new, but a result
of insufficient supply over many decades.
For many years we simply have not built enough housing; too
often efforts to build housing are constrained by local zoning
and land-use regulations. These rules often allow for a flawed
public engagement process that gives an outsized voice to a
select few who can afford to take time off from work in order
to dictate what gets built, and more often, what doesn't get
built.
Neighbors who block new development may tell you that they
are for housing, in concept, just not in their backyard. And
given the crisis at hand, it is time that we realize that the
character of the neighborhood isn't all that matters, and that
some of the arguments against more housing come from the Jim
Crow Era of racist exclusion. We can and must do more to
overcome these barriers.
The national challenge is rightfully mostly handled at the
state and local level, but the Federal government also has a
role. In my Home State of Hawaii representative Troy Hashimoto
successfully led the effort in the State Legislature to
establish a working group to review zoning, regulatory, and
statutory barriers to affordable housing development that will
inform future legislation.
Many other states are taking similar initiatives, from
Minnesota to California. Here in Congress, we should support
states' efforts to increase the supply of housing, and I am
encouraged by proposals in the administration's budget to
provide funding for communities that update their land use and
zoning regulations to allow for more multi-family housing
opportunities.
While vouchers help to relieve rent burdens for the most
vulnerable, they will only be useful if there is housing stock
to absorb them. The fiscal year 2022 Omnibus helped to strike
that balance between supply and demand, with a record funding
for the HOME Program, and new incremental vouchers.
The Omnibus also reauthorized the Violence Against Women
Act, which included protections to help survivors to find safe
housing, but during the debate on that legislation, it became
clear that the lack of guidance and oversight from HUD on
emergency transfers is a real problem, and one that we hope you
will help us to address.
In addition to serving vulnerable renters, we also need to
have a better understanding of how institutional investors are
changing the landscape of home ownership opportunities. We have
heard many stories about the negative effects of the
institutional investor owners, including unaffordable home
prices and rents, deteriorating conditions, and families who
simply can't compete against well-funded corporations in
purchasing homes.
Congress and the Administration need to keep an eye on this
trend to ensure that the housing market remains open and fair
for everybody.
Finally, we appreciate your support for the authorization
of the CDBG Disaster Recovery Program. These flexible funds are
critical to rebuilding, but the funds take far too long to
reach the people who need the dollars the most. Permanent
authorization is key to reducing unnecessary delays, and
helping families to get back on their feet after a disaster.
As Chair, I intend to push harder to advance these efforts
within the available resources. And I look forward to working
with the Department on all of these items.
Secretary Fudge, I look forward to your testimony, and our
ongoing dialogue and partnership on these matters.
Vice Chair Collins, I look forward to reviewing this budget
with you. And turn to you for your opening statement.
STATEMENT OF SENATOR SUSAN M. COLLINS
Senator Collins. Thank you. I am pleased to join Chairman
Schatz, in welcoming Secretary Fudge back to the subcommittee
this morning, to discuss the Department of Housing and Urban
Development's fiscal year 2023 Budget Request. The fiscal year
2022 Omnibus included 65.7 billion for HUD which was offset, in
part, by nearly $12 billion in Federal Housing Authority and
Ginnie Mae receipts.
These funds provide rental assistance for seniors, and low-
income families, enable formerly homeless veterans, and youth,
as well, as survivors of domestic violence to have safe and
secure housing, support critical investments in our communities
that help to create jobs, reduce lead paint hazards for
children, a particular interest in my state where we have old
housing stock, and so much more.
The administration's request for HUD is a substantial
increase of more than 6 billion above current levels. Of this
increase 3.7 billion is for the increased cost of simply
maintaining current rental assistance. The administration's
request also assumes that FHA and Ginnie Mae receipts, which
help offset the cost of the T-HUD Bill, will be $1 billion less
than fiscal year 2022.
Given the increased renewal costs and lower receipt levels,
it is prudent for our subcommittee to take into account the
pipeline of existing funding when reviewing the
administration's request. Two years after passage of the CARES
Act nearly half of the $12.4 billion provided to HUD is still
unspent. A year after the American Rescue Plan, HUD has only
expended 6 percent of the 10.8 billion it was provided.
I am concerned that HUD, and many of its grantees, appeared
to lack the capacity to manage and oversee the influx of
funding provided over the last 2 years regardless of how well-
intentioned they are. And the funding itself has been well
intentioned, the lack of affordable housing, as the chairman
has pointed out, is a crisis in many parts of our country, with
no state having a truly adequate supply.
The very people who make our communities work, the police
officers, the firefighters, the school teachers, the nurses, as
well as those in the service and hospitality sectors, often
find that they can no longer afford to live in the communities
that they serve. That certainly is the case in parts of Maine.
The solution to such housing challenges takes careful
thought and coordination. The need for that approach is
evident, not just in the billions of unspent funding, but also
in the number of unissued vouchers. HUD data indicate that PHAs
already have the funding available to lease 200,000 additional
vouchers above what are currently leased, these funded but
unused vouchers make it clear that simply appropriating more
vouchers will not address the affordable housing needs of the
country if vouchers are not or cannot be leased.
The supply of rental housing across the country is
insufficient, the backlog of already provided funding, can help
address this need, as can better coordination with tax credit
programs, and the streamlining, or elimination of burdensome
and unnecessary building regulations.
I would urge the Department to invest more time in finding
ways to expedite the administration of grants and improve its
programs. One such example is HUD's determination of fair
market rents, from Portland, Maine, to Portland, Oregon, the
committee has heard from public housing authorities concerned
that HUD's fair market rent calculations do not reflect the
increased rental prices they are experiencing in their
communities.
That results in households being unable to afford the
limited housing options that are available even if they do have
a voucher in hand.
Additionally most of HUD's programs are operating with long
expired authorizations, these expirations do not prevent the
committee from funding programs; however, without program
modernizations that come through reauthorization, the
effectiveness of these programs can be diminished.
Core programs with long-standing expired authorizations
include the very important CDBG Program, home led-based paint
hazard reduction, public housing, Section 8 vouchers, housing
for the elderly, and homeless assistance grants. I hope the
Department will work with the authorizing committee to produce
transformational changes to better serve our communities and
vulnerable households.
Having expressed some concerns let me also briefly note
areas of shared interest and support. I am pleased to see the
continued investment in the Community Development Block Grant
Program, which provides flexible funding for critical
investments and worthwhile projects in communities across
Maine, and the rest of the country.
In addition to CDBG, the request continues robust
investments in reducing the health hazards of exposure to lead
paint, particularly to young children. The request also
includes funding for the aging-in-place home modification
grants; and the Youth Homeless Demonstration programs which I
worked to establish in previous years, prior to the current
change in chairmanship.
Finally, I am pleased to see that the request includes
sufficient funding for renewing existing rental assistance.
Madam Secretary, I once again welcome you to this hearing.
And I very much look forward to hearing from you.
Thank you, Mr. Chairman.
Senator Schatz. Thank you Vice Chair.
Secretary, please proceed with your testimony.
SUMMARY STATEMENT OF HON. MARCIA FUDGE
Secretary Fudge. Thank you very much, Mr. Chairman.
Chairman Schatz, Ranking Member Collins, and distinguished
members of the subcommittee, thank you for the opportunity to
testify today, in support of President Biden's 2023 Budget for
the Department of Housing and Urban Development.
Senator Schatz. Secretary, could you speak a little closer
to the microphone? Thank you.
Secretary Fudge. HUD's mission is central to achieving the
President's vision to build a better America, to ensure that
every person has a shot to get ahead, to address long-standing
systemic challenges, to expand on the historic progress our
country has made over the last year, and to deliver the agenda
the President laid out in his State of the Union Address.
To build a better America, to reduce the deficit, reduce
costs for families, and grow the economy from the bottom up and
the middle out. Since day one the President has viewed housing
as critical to addressing our Nation's most urgent challenges.
Throughout the pandemic HUD put in place emergency relief
measures that kept homeowners and renters in their homes. The
emergency housing vouchers that have helped over 20,000
formerly homeless households find a place to live since July,
and almost 30,000 more have been issued vouchers and are
seeking housing.
Public housing authorities have issued more than 53,000
emergency housing vouchers, and over 20,000 have been utilized,
while the pandemic emergency may be behind us, the crisis in
housing it exposed remains. This budget will help provide
security and stability for the American people, advance
opportunity and equity, on behalf of marginalized communities,
and address the existential threats posed by natural disasters
and climate change.
The 2023 President's Budget requests $71.9 billion for HUD,
which is around $11 billion more than the 2022 annualized
continuing resolution. We cannot put off the critical
investments this budget makes in the American people,
investments that will help lay a stronger foundation for shared
growth and prosperity for generations to come.
At HUD we understand that our homes represent more than
four walls and a roof. Where we live determines the kinds of
jobs we get, how healthy we are, and where our children go to
school. The President's budget understands that too, that is
why the budget provides $32 billion for the Housing Choice
Voucher Program, which would accommodate approximately 200,000
new vouchers. That would allow individuals and families across
the country to move off long waiting lists, and into safe
decent housing.
The budget addresses the nation's homelessness crisis head
on by providing $3.6 billion to provide housing and services to
those experiencing homelessness which is an increase of about
$576 million.
The budget works to ensure that the supply of housing meets
demand. It provides $2 billion for the Home Investment
Partnerships Program, an anchor of the Nation's affordable
housing system; and $15 billion for project-based rental
assistance, and housing for people with disabilities, and older
Americans, and $180 million for the development of new units
for those groups.
The President's budget advances energy efficiency, and
prepares our existing home infrastructure for the impacts of
climate change. This budget builds on the administration's
commitment to investing in rural communities, it makes crucial
investments in our public housing supply, and supports the
removal of dangerous health hazards from our homes. The
President's budget also recognizes that to meet the needs of
our communities, we need an appropriate level of staffing at
HUD.
HUD's mission is to create strong, sustainable, inclusive
communities, and quality affordable homes for all, every day,
folks across our agency work to improve our citizens' quality
of life through housing.
The budget delivers on these promises, and I am pleased to
share this request with the subcommittee.
Thank you. And I look forward to your questions.
[The statement follows:]
Prepared Statement of Hon. Marcia Fudge
Chairman Schatz, Ranking Member Collins, and distinguished Members
of the Subcommittee. Thank you for the opportunity to testify today in
support of President Biden's 2023 Budget for the Department of Housing
and Urban Development (HUD). The support of this Subcommittee is
critical to ensuring that every American has a roof over their head and
can live in communities that are strong and resilient.
HUD's mission is central to achieving the President's vision to
build a better America--to ensure that every person has a shot to get
ahead, to address longstanding systemic challenges, including racial
injustice, rising inequality, and the climate crisis, to expand on the
historic progress our country has made over the last year and deliver
the agenda he laid out in his State of the Union address-- to build a
better America, reduce the deficit, reduce costs for families, and grow
the economy from the bottom up and middle out.
This Budget tells the American people that the President, and our
agency, view housing as critical to addressing our nation's most urgent
challenges. This Budget will help us provide security and stability for
those who live on the outskirts of hope, advance opportunity and equity
on behalf of marginalized communities, and meet the existential threats
posed by natural disasters and climate change.
president biden's 2023 budget
The 2023 President's Budget requests $71.9 billion for HUD,
approximately $11.6 billion more than the 2022 annualized continuing
resolution (CR) level. The Budget outlines an ambitious agenda to
address challenges our nation faces, from climate change and housing
discrimination to housing shortages and homelessness.
The Budget makes critical investments in the American people that
will help lay a stronger foundation for shared growth and prosperity
for generations to come. For HUD and those it serves, the Budget
provides:
--$32.1 billion for the Housing Choice Voucher Program;
--$3.6 billion to provide housing and services to individuals and
families experiencing homelessness;
--$1.1 billion in targeted climate resilience and energy efficiency
improvements in public housing, tribal housing, and other
assisted housing;
--$400 million to remove dangerous health hazards from homes,
including mitigating threats from fire, lead, carbon monoxide,
and radon;
--$86 million for Fair Housing programs to redress discriminatory
housing practices; and
--$2.2 billion for Management and Administration expenses.
The President's 2023 Budget supports authorizing the Community
Development Block Grant-Disaster Recovery (CDBG-DR) program in line
with the four guiding principles outlined in the Budget. For more than
twenty years, the Congress has appropriated emergency supplemental
funds to HUD in response to major disasters to address the long-term
disaster recovery needs of States, territories, local governments, and
Tribes. Authorization would improve the transparency and predictability
of CDBG-DR funds for impacted communities.
At HUD, we understand that our homes represent more than four walls
and a roof. A good home can serve as a platform for economic
opportunity, good health, and strong families. How can a person hold
down a job or take care of their health or children if they do not have
a bed, shower, or stove?
To further HUD's mission through this Budget, I have outlined five
priorities:
--Support Underserved Communities and Equitable Community Development
--Increase Supply and Availability of Accessible, Affordable Housing
--Promote Homeownership Opportunities and Wealth-Building
--Advance Sustainable Communities, Climate Resilience, and
Environmental Justice
--Strengthen HUD's Internal Capacity to Deliver Its Mission
support underserved communities and equitable community development
The Budget fortifies support for underserved communities and
supports equitable community development for all people. To quickly
house more people experiencing housing insecurity, the Budget provides
$32.1 billion for the Housing Choice Voucher Program, which
accommodates 200,000 new vouchers, giving individuals and families
across the country the opportunity to move off incredibly long
waitlists and into safe, decent housing. In addition, families will be
supported by the proposed $491 million in mobility services that will
help them move to affordable homes in neighborhoods with greater
opportunities.
The Budget provides $8.8 billion for the Public Housing Fund, which
provides grants to Public Housing Authorities to operate, maintain, and
make capital improvements for the approximately 1.7 million residents
of public housing. The Budget also addresses the nation's homelessness
crisis, providing $3.576 billion, an increase of $576 million, for
Homeless Assistance Grants. Additionally, the Budget provides $3.8
billion for the Community Development Block Grant (CDBG) Program,
including $195 million in targeted resources to remove barriers and
revitalize 100 of the most historically underserved neighborhoods in
the United States, and $86 million for fair housing programs for
targeted and coordinated enforcement, education, and outreach.
increase supply of and access to affordable housing
In 1970, this nation had a surplus of 300,000 affordable housing
units. Today, there's a shortage of millions of units. For every 100
extremely low-income renters, there are only 37 rentals available. The
Budget works to ensure that housing demand will be matched by adequate
production of new homes and equitable access to housing opportunities
for all people. Additionally, the Budget provides $2 billion for the
HOME Investment Partnerships (HOME) Program, which has long served as
an anchor of the nation's affordable housing system. The Budget
proposes $15 billion to fully fund renewals and amendments in Project-
Based Rental Assistance, Housing for Persons with Disabilities, and
Housing for the Elderly Programs, along with $180 million for new
development of approximately 2,000 new units of Section 202 Housing for
the Elderly and Section 811 Housing for People with Disabilities. The
Budget proposes Ginnie Mae be given authority to securitize affordable
multifamily housing loans made by Housing Finance Agencies (HFAs) and
insured under the Federal Housing Administration's (FHA) Section 542(c)
Risk-Sharing program. It requests $35 billion for the Housing Supply
Fund, a new mandatory program providing grants to State and local
housing finance agencies and their partners to invest in strategies to
increase the supply of affordable and accessible housing.
promote homeownership opportunities and wealth-building
The President's Budget promotes homeownership opportunities,
equitable access to credit for home purchases and improvements, and
wealth-building in underserved communities. It provides $15 million of
credit subsidy through FHA for a Home Equity Accelerator Loan (HEAL)
Pilot that would test new loan products designed to lower barriers to
homeownership for first-generation and/or low-wealth first-time
homebuyers. Additionally, the Budget provides a new $100 million set-
aside under the HOME Program for the First HOME Downpayment Assistance
initiative that would provide funding to States and insular areas to
better support sustainable homeownership for first-generation and/or
low-wealth first-time homebuyers.
advance sustainable communities, climate resilience, and environmental
justice
The Budget advances sustainable communities by strengthening
climate resilience and energy efficiency, promoting environmental
justice, and recognizing housing's role as essential to health. It
provides $1.1 billion in targeted climate resilience and energy
efficiency improvements in public housing, Tribal housing, multifamily-
assisted housing, and other assisted housing. In addition, it provides
$400 million to remove dangerous health hazards from homes, including
mitigating threats from fire, lead, carbon monoxide, and radon. It
provides $250 million to help communities develop and implement locally
driven comprehensive neighborhood plans to transform underserved
neighborhoods. The Budget also supports Ginnie Mae's continued
Environmental, Social, and Governance disclosure efforts, which are
intended to drive new liquidity to more environmentally sustainable
products by meeting growing investor demand.
strengthen hud's internal capacity to deliver its mission
The Budget builds on HUD's efforts to restore staffing to levels
that can adequately and successfully deliver HUD's services. This
Administration is committed to recruiting and retaining the human
capital needed to properly monitor compliance on properties, loans,
grants, and public housing authorities, as well as tackling the
systemic issues inside the Department that occurred over the previous
two decades as the result of the steady decline in staffing. Using
workforce succession strategies, the Department intends to ensure that
additional staffing results in the right people allocated to the right
jobs, providing the biggest impact toward achieving HUD's priorities.
The 2023 Budget requests $1.8 billion toward salaries and expenses
(S&E), $306 million more than the annualized CR level for 2022, which,
in combination with carryover of 2022 funding, will support 8,326 full-
time equivalent (FTE) employees. The 2023 Budget will support staffing
gains made in 2021, those projected for 2022, and additional increases
in 2023. These critical resources will enable the Department to more
effectively and efficiently serve households and communities across the
country. The 2023 Budget funds initiatives that will improve the
customer experience of HUD's programs so that program interactions are
easier and more effective and efficient for HUD customers. This
customer experience work directly supports the President's Management
Agenda, meets mandates in the Executive Order on Transforming Federal
Customer Experience and Service Delivery to Rebuild Trust in
Government, and increases HUD compliance with: the 21st Century
Integrated Digital Experience Act (IDEA), 2018; Plain Writing Act,
2010; Rehabilitation Act, Section 508, 1973; and Paperwork Reduction
Act (PRA). Designing customer experiences intentionally, with the needs
of the customer at the forefront of decisionmaking, can help HUD to: 1)
better deliver on its mission; 2) serve greater proportions of targeted
populations more effectively and equitably; 3) build trust; 4) improve
customer satisfaction; and 5) lower operational costs. The Budget also
proposes $382 million for the IT Fund and includes $12 million within
the S&E topline to fund IT device expenditures through the Working
Capital Fund. The Budget continues to invest in much needed
modernization of HUD's IT systems, infrastructure, and cybersecurity.
The Budget request fully supports our critical IT systems and
applications, all of which play a vital role in enabling HUD to meet
its mission and administrative functions. The technology resources
support grantees and partners in their efforts to promote affordable
rental housing, provide access to homeownership opportunities, create
healthier home environments, and reduce homelessness.
In summary, HUD's proposed Budget allocates budget authority across
programs and for staffing and other management and administrative
expenses. Most of the budget authority funds programs to help
vulnerable, low-income households-- many who are older adults or
persons with disabilities--pay their rent. The Office of Public and
Indian Housing (PIH), the Office of Housing, and the Office of
Community Planning and Development (CPD) administer these programs.
HUD's mission is to create strong, sustainable, inclusive
communities and quality affordable homes for all. HUD is actively
strengthening the housing market to bolster the economy and protect
consumers. We are helping meet the need for quality affordable rental
homes through our programs. We work to improve our citizens' quality of
life through housing as a platform. And we are building inclusive and
sustainable communities free from discrimination, while transforming
the way HUD does business. The Budget delivers on these promises, and I
am pleased to share this request with the Subcommittee.
Chairman Schatz, Ranking Member Collins, and distinguished Members
of the Subcommittee, I look forward to working with you. Thank you for
the opportunity to appear before you today to discuss my priorities for
the Department and how the President's 2023 Budget will serve our most
vulnerable citizens, increase the resilience of our communities, and
tackle the challenges facing our nation.
Senator Schatz. Thank you Secretary. I am going to try to
get three or four topics into my first round. In the context of
the next appropriations bill, and talking about trying to
incentivize communities to reduce barriers for housing, do you
think that we could establish some incentives under HOME, or
CDBG, both or either? How do you think we ought to do that, and
think about that?
Secretary Fudge. I mean I think we need to look at all
options because what we are finding is that some of these
zoning and planning commission rules have been around for a
hundred years. We are in an environment in which the lack of
affordable housing is a crisis, and so we have to take a look
at every possibility. But yes, to your question, yes, we need
to take a look at that.
Senator Schatz. Thank you. I want to talk to you about
appraisal bias. I know that there has been a convening on this
topic, and I think we should probably start at the beginning,
because I am not sure that everybody knows what it is, why it
is a problem, and perhaps what we can do about it. So let us
start with what is appraisal bias, why is it a problem, and
what can be done?
Secretary Fudge. Well, to the President's credit he asked
me last year to chair Taskforce on appraisal bias, because what
we know is that as we talk about the racial wealth gap a large
portion of it is the undervaluation of properties in Black and
Brown communities. We have done a report which was issued last
month which shows very clearly that we could put a huge dent in
the wealth gap if we would just value properties in certain
communities properly.
We know that we have a system that, right now, appraisal
is--95 percent White males, who are not even familiar with the
communities that they are evaluating, the data that goes into
alternative valuations is not appropriate because the data is
skewed.
We believe strongly that if we can address this problem, we
can also address how--valuations on people's homes. You know,
people can't get homes because the valuations are low,
people's--and I am just going to use myself, and I will stop
with this.
I live two doors from an all-White community. I live in an
all-Black community. My house is larger than the house two
doors from me, my lot is larger than the house two doors for
me, but my house is valued at $25,000 less than the house two
doors from me.
And so once we can start to address, and just own up to the
fact that we are continuing to discriminate and redline in our
housing efforts, then I think that we can make sure that we can
start to deal with the racial wealth gap.
Senator Schatz. Thank you very much. I want to follow up,
because I do think some of this is on the private sector, there
is not--you know, we have limited tools, but I also think that
appraisers are not walking around thinking that they are, you
know, perpetuating institutional racism.
On the other hand, if they are the ones saying, well, that
is a bad neighborhood, and that is a good neighborhood, there
you are. There is the legacy of redlining, and Jim Crow, and
everything shameful in our history as it relates to housing and
communities.
So I want to follow up with you on this. It is not clear to
me what we can do, but at least to shine a light on it. Go
ahead.
Secretary Fudge. Well, one thing is that we have started to
interact with the subcommittee on appraisals, we have talked to
the actual organization that authorizes appraisals, and they
know. They now have admitted they have a problem. They are
working with us. And so we are excited about what the path
forward is going to be. We are making a difference.
Senator Schatz. Well, let us know how we can help.
Secretary Fudge. Thank you.
Senator Schatz. Voucher utilization; I just met with a
bunch of mayors yesterday who asked us for more vouchers, and I
am of two minds, right. I want as many vouchers out there as
possible, but if we are just pushing out vouchers, and we don't
have the throughput, either there is a--there is a supply
problem, or we don't have a throughput, a capacity problem at
the local level, or even at the HUD level, then we can declare
victory and say we--you know, we pushed out a million vouchers,
but if they are not actually getting into people's hands and
housing people, then what is the point.
And so I want to be reassured that if we provide additional
resources for housing vouchers, that we are actually getting
vouchers into the hands of people who need them, as opposed to
just, you know, the committee declaring victory, and having a
bullet point on our press release.
Secretary Fudge. I think it is a combination of the two,
Senator. Clearly we do have a supply issue in many communities,
but what we also know is that when we push the vouchers out
when there is an opportunity, we want people to be able to
access those vouchers right away.
The waiting lists are years in some communities, just for
public housing in Section 8. And so we want to be sure that the
vouchers are available, but yes, there is a supply problem. I
am not going to even try to sugarcoat it. A lot of the vouchers
aren't being used because there is no place to take them.
People are not--and we are dealing with landlords who know that
they can get more by not being Section 8 anymore. So we are
losing people who are already in the pipeline.
So like I said, I am not going to try to make it something
that it is not, that is a part of the problem as well.
Senator Schatz. Thank you very much.
Vice Chair Collins.
Senator Collins. Thank you Mr. Chairman.
Secretary Fudge, let me start with a thank you to you. I
brought to your attention a problem that we are having in
Bangor, Maine, where I live, where the unsheltered population
has grown enormously in the past 2 years. Part of this is due
to COVID, but part of it is to mental health challenges, and to
a growing substance abuse, particularly in opioid and fentanyl
epidemic in my state.
I want to thank you for agreeing to send your program
people, and your regional people to Bangor to meet with city
officials to see what we can do to better help the city, as it
is being overwhelmed, in trying to assist this homeless
population. So thank you.
I know that in addition to your role as Secretary of HUD
that you do serve as chair of the United States Interagency
Council on Homelessness. And one of the biggest challenges that
I see, when we are dealing with more chronic homelessness, or
even shorter term homelessness, is a disconnect between housing
and the wraparound services that go to the root causes of why
the person is homeless.
A lot of times that is a substance abuse, or a mental
health challenge. What is the Council doing to improve the
partnership between housing and service resource providers?
Secretary Fudge. We have a strategic plan that is going to
be brought to us sometime next month. We are prepared--at least
in my opinion, we have addressed what the problem is. And I do
believe we have some solutions. When you think about the fact
that already we have cut in half the number of veterans who are
sleeping on the streets.
We know now that a large number of people who are on the
streets are senior citizens, and families with children; so we
at least know the populations we need to address, and we are
working across government agencies to be sure that we can
address it. So we are having input from HHS, we have input from
other agencies that are going to be able to assist us with the
problem.
But I think when the strategic plan comes out you will be
pleased at the fact that we have looked at all of government,
and what we can do to make the situation better, and provide
the services timely.
Senator Collins. Thank you. I hope we can keep in touch on
that issue.
Secretary Fudge. Absolutely.
Senator Collins. Which I care a great deal about. I wanted
to follow up on an exchange that you and the Chairman had about
the unused vouchers, and the fact that landlords are getting
out of the Section 8 Program, and so there is no place, as you
put it, to take the vouchers. One of the problems is HUD's
process for determining fair market rents they simply--the
process simply does not reflect the reality of housing markets
in communities across this Nation.
And this is something we have heard about from public
housing authorities, literally, all over the country. I want to
give you an example. In Bath, Maine, the HUD fair market rents
are 38 to 46 percent below market rents.
Now Bath Iron Works, which is one of our largest private
employers in Maine, has been recruiting people to come work for
the company which builds naval destroyers. And they are finding
that they can't keep them, in part, because they can't find
affordable housing despite the good wages paid by the shipyard.
And HUD has allowed public housing authorities to request a
waiver to increase their payment standards which is the maximum
subsidy value of the voucher, to 120 percent of the fair market
rent, without the burdensome and time-consuming review by HUD.
But again, using Bath, Maine, as an example, even those higher
subsidy caps are still 26 to 35 percent below market rents.
So what is HUD doing to better align fair market rents with
the actual market conditions that the public housing
authorities and renters are experiencing?
Secretary Fudge. Thank you Senator. In order to really do
this the right way, HUD is really going to be required to issue
a Federal Register Notice, we have to have public comment in
order to change the formula the way it should be. We make
little adjustments as you have suggested, but in order to do it
the way that is needed is we are going to have to do that.
So in August we are going to be publishing a new fair
market rate formula. So you will see that happening in August,
because you are right, and it is happening across the country,
but we need to do it the right way, not just make little fixes,
or Band-Aids, we need to actually go and put it out for public
comment, and do it the proper way.
Senator Collins. I hope you will consult with the public
housing authorities, which I think have a very good handle on
this problem.
The Chairman has generously said that I could ask another
question beyond my time, so I will one more before yielding
back to him.
I do want to go to the issue I raised in my opening
statement, and that is the unexpended funds. I know a lot of
these funds have been obligated, but they are sitting in
Treasury accounts, they are not getting down to the grantees,
to the people that we are trying to help.
The CARES Act was enacted more than 2 years ago, on March
27th, 2020, as an emergency response to COVID, and yet as of
last week, almost half of those funds remain unexpended. The
American Rescue Plan was enacted over a year ago, and only 6
percent of those funds have been expended, including only $1
million of the 5 billion provided through the HOME Program.
And of the emergency vouchers, there were 70,000 of them
provided by ARP, more that--only fewer than 20,000 of the
70,000 have been released. What is the problem here? Why isn't
this money, which was passed on an emergency basis, getting to
the grantees, and more important, to assist the people it is
intended to help?
Secretary Fudge. Well, I think there were a number of
problems. And you are absolutely right, the money has been
obligated. But this is the major problem, many of these
communities did not have the capacity themselves, nor did some
of our partners on the ground, have the capacity to stand up
these new programs, and to get the resources out quickly.
In addition to the fact that, thanks to Congress, they
received an awful lot of money all at one time. So they were
trying to, in their own minds, use the money that they needed
to use first. So CARES and Recovery money are two- and five-
year plans, so that is why you don't see the money in their
hands but it is obligated because they have finally realized
that it is time to put in place whatever their plans are going
to be.
But more importantly, I agree with you 100 percent, so
every governor and every mayor I speak to, I say to them, you
need to access these resources now. And they will say, well, we
have got plans, we have obligated. But I am with you. And I say
to them: This is a matter of sincere urgency, and you need to
act as though it is urgent.
But a lot of it, was just they couldn't do it. They just
didn't have the people, the capacity to stand up the programs.
And now that they are, I think you are going to see the
resources moving out much faster. That is why they are now
obligated, I think you will see them leaving Treasury fairly
soon.
Senator Collins. Thank you, Mr. Chairman.
Senator Schatz. Senator Braun.
Senator Braun. Thank you, Mr. Chair.
Good to see you, Madam Secretary.
Secretary Fudge. Good to see you, too, sir.
Senator Braun. So I have been a big believer in buy
American where we can, actually was able to get something
written into the Infrastructure Bill that would request that,
and the only way that you don't do it, is if you would request
a waiver. So disappointed that it now looks like a waiver has
been requested from Buy American when it comes to the HUD
projects, and steel, and so forth, that might be used, meaning
that we might have to default to, you know, buying it when it
is made here, you know, from China or other places. So why did
you request the waiver when there was plenty of time to prepare
for it? And I would just like to know the simple answer,
please.
Secretary Fudge. Certainly. Part of it is just the supply.
We just don't have it. Let us say, steel, we just don't have
enough of it, so we can't just stop and do nothing as we wait
for steel to be produced here in an amount that we need. And so
there will be times where, in order to continue to do our work
that we will need resources from outside of the United States.
I support it 100 percent, build back, built in America, I
am big on that, and my staff knows that I am. But there are
times.
Senator Braun. So you know, there are other agencies, EPA,
USDA that, you know, have those same guidelines, and they have
been able to wrestle through it. And I know we have got supply
chain issues, but to me when we looked into it, it looked like
it was more a question of just not being ready to do it, not
that it wasn't there in our own supply chain. You are telling
me that you can't find this steel anywhere within our own
economy?
Secretary Fudge. Not enough of it. You ask the
manufacturing, housing people they will say: There is no
plastic. You ask, they don't--EPA, and these other people,
don't do the same work we do. So it is kind of like comparing
apples and alligators. They don't build houses, we build
houses, we make sure that the supply--I mean we don't build
houses obviously--but we make sure that the supply is
available, and so they are using very different kinds of
material.
I promise you, Senator, in any event that we can use
American-made products, I want to use them, and I instructed
our staff to do that.
Senator Braun. So then it would be interesting to know to
date and going forward, because you are telling me that you are
going to use it if you can, and that you probably are using
some already.
Secretary Fudge. Oh, yes, we are.
Senator Braun. It would nice to know what percentage.
Secretary Fudge. Okay.
Senator Braun. I think that would make a big difference. If
it is just a small amount that we have to find elsewhere, if it
is 100 percent, that is a different issue; or if it is a small
percentage, I think that is a different issue. I will wait to
hear back.
Secretary Fudge. Absolutely. I will make sure you get the
numbers.
Senator Braun. When it comes to, your request calls for, I
think, 35 billion for the Housing Supply Fund, a new mandatory
program that provides grants to state and local housing
agencies; is that correct?
Secretary Fudge. Yes.
Senator Braun. So ``mandatory'' means that it is going to
happen regardless, it is similar to other mandatory spending
programs, like Medicare, Medicaid, Social Security; I know
these programs do good work. Do you think it needs to be
mandatory in the sense that that means we kind of make it easy
to repeat each year? We don't do budgets anymore. I am on the
Budget Committee, and sadly that is a useless appendage, in the
sense that we just don't use it as a tool.
I don't think we have done one in close to 10 years, and
when we are structurally running $1.5 trillion deficits when
the President has put a blueprint out there that takes us from
30 trillion in debt to 45 trillion in debt. Meaning, over the
next 10 years--and that is understated--because it has got low
interest rates, and a low level of inflation built into the
projections.
Do you think this needs to be mandatory spending, because
to me it is just a crutch? It is a way that throughout
government we don't look at the programs that are driving these
structural deficits. Now HUD, you know, becomes part of it.
Where does it end? Is all of government spending going to be
mandatory simply because it means you have got to pass a law to
offset it?
That to me looks like it is part and parcel of what is
wrong. Even though yours is a smaller amount, compared to those
other programs, I highlight it because it is another example of
where we are getting away from, how most other places work, and
do it sustainably.
Secretary Fudge. Well, let me just say this to you,
Senator. I clearly understand your concern, but we are talking
about the need in this country for four million housing units.
We are talking about a crisis in housing, so when we have a
crisis we try to address it.
This is a program that is going to have to go out 10 years.
We can't build 500,000 houses in 1 year. We cannot build a
million houses in 1 year. So it is a ten-year program, and that
is the only reason that it is a mandatory program, because of
the length that it needs to be.
We have to address the fact that we are woefully short on
supply of housing in this Nation. It is a crisis. And so I just
appreciate the fact that the President was willing to sit back
and listen to the fact that we need to start doing something
now, because we have not invested in housing for a very long
time as a Nation. And it is a ten-year program, and that is
why.
Senator Braun. Thank you for the answers. And I would just
point this out, that if you extrapolate what we are doing into
the future, all the programs that do have merit are in peril,
because you cannot run the biggest business in the world by
borrowing what we use annually, now 30 percent of it, from our
kids and grandkids.
It will fail. At some point we have got to find out
something that we need less of. And prioritize the things that
we know we need. Thank you.
Senator Schatz. Senator Coons.
Senator Coons. Thank you, Chairman Schatz; Ranking Member
Collins. And Madam Secretary, great to be with you again; it
still brings a smile to my face to say Madam Secretary.
Secretary Fudge. Yes.
Senator Coons. I have a chance to work with you on housing.
I am encouraged by the priorities the President set in this
year's fiscal year 2023 budget, as you have well articulated
them.
An area of concern to me, to you, and I rankly hope to all
of us, is the lack of supply of affordable housing, and the
incredibly long waitlists. One of the things that as a county
executive I knew, through our housing authority, was that we
had folks who have been waiting on waitlists for years, and who
were not able to find any reasonable path to access affordable
housing.
I have a bipartisan bill with Senator Cramer, the Choice in
Affordable Housing, a bill that would provide incentives to
private landlords to encourage them to come in and participate
in a Section 8 Program.
I wondered if you had a chance to review that, had a chance
to--have the opportunity to give me any input on your view of
its potential positive impact, and what else we might be doing
to help expand the supply of landlords and housing available
for those with portable vouchers.
Secretary Fudge. Our team is looking at it. I think
conceptually it sounds great, but we are looking at it. So I
can't give you an answer today, Senator, but as soon as we take
a better look at it I will get right back to your office.
Senator Coons. I will be in touch. I would appreciate your
active engagement given your, I think, deep experience and real
credibility in this important area.
Homelessness is something I have long been concerned about.
I worked for the National Coalition for the Homeless early in
my career, and one of the things that struck me was the amount
of youth homelessness. It is driven by a number of factors, one
of them is youth aging out of foster care, there are others, we
have rapidly increasing mental health challenges among younger
Americans, addiction challenges, and so while at the same time
we need to provide inputs in the housing supply, we also need
to have some programs that are specifically targeted to meet
the needs of identified communities.
And in this instance I will talk about youth aging out of
foster care. How are you helping address these particularly
pressing problems?
I was encouraged to hear the President's budget includes
$3.2 billion for programs related to combating homelessness. At
the end of the day the best answer to homelessness is housing,
along with wraparound and supportive services. What does the
Administration and the Department got planned for this fiscal
year in terms of homelessness demonstration programs?
Secretary Fudge. Well, as you know, you just mentioned the
Youth Homelessness Demonstration Program, and we just, in the
last couple of weeks, had a webinar with those that we know are
affected by, and work within that area, to talk about the
things that we can do to assist youth. We also know that there
has been a 44 percent increase in interventions, so we have
kept young people who, otherwise, may have been on the streets,
in housing because we have been more proactive than we have
been reactive.
We have got 77 communities now that do have a Youth
Homelessness Demonstration Program, and so we feel, as we can
continue to ramp that up, that we will be more effective. But
we think that that is the best program we have right now. As
well as though working with the foster care system, because we
know that about a fourth of people, young people who come out
of foster care, within a few months are going to be on the
streets. And so we are working with them as well.
Senator Coons. West End Neighborhood House in Wilmington,
my hometown, has done a great job at demonstrating the value of
support and housing availability for youth aging out--of
homelessness, I would love to work with you on making sure that
their engagement in this area gets recognized appropriately.
For many years I took advantage of HOME dollars as a county
executive, and county council president, we were able to invest
in all sorts of effective, localized investments to address
housing problems for seniors, for those who had disabilities,
for returning veterans, a wide range of needs; my understanding
is this year's HOME budget request is about $2 billion.
Secretary Fudge. Correct.
Senator Coons. Tell me, if you could, about any changes in
the HOME Program, ways that I could be a more effective partner
and advocate with you. I think it is, in many ways, one of the
most important foundations of the Federal, state, local
partnership around the provision of housing with funding that
is flexible enough to meet local needs, but not so flexible as
to be diverted from our core goal, which is the provision of
safe, sanitary, healthy, and affordable housing.
Secretary Fudge. Well, you just said the word ``flexible''.
Senator Coons. Yes ma'am.
Secretary Fudge. And that is what communities are looking
for is more flexibility, so when you take the CDBG which has
some flexibility as well, and you combine that with the home
resources, communities, at this point, are feeling good about
their possibilities, and the opportunities.
And so we made sure that there are enough resources there
to at least, over the next few years, build about 500,000 new
housing units. So we are, we are asking communities to work
with us, and basically to tell us how are you going to use
these resources, and how many units do you think that you can
build through our House America programs.
So we are we are trying to pin down some of the mayors, we
have got about 80 of them right now, surprisingly, 80 different
mayors, governors, et cetera, who have bought into this and
said, okay, this is how many units we are going to build. We
are going to get these many homeless people off the street. I
think it is a great idea, and we are holding them to it, and
they are kind of enjoying it actually.
Senator Coons. Well, if the Mayor of Wilmington, Delaware,
is not among them, I would be surprised. I would be happy to
help persuade him that this is a great initiative. He is a good
mayor, and investing a lot of effort and energy in housing, an
area that he knows a great deal about, and has worked hard in.
Thank you for your leadership, Madam Secretary. I look
forward to working with you, and look forward to getting this
budget request approved.
Secretary Fudge. Thank you very much.
Senator Coons. Senator Mr. Chairman.
Senator Schatz. Senator Murray.
Senator Murray. Thank you very much Mr. Chairman.
Thank you, Secretary Fudge, for being here with us today,
and for all of your work at HUD. No matter where I am in my
state, whether it is Seattle, Spokane, small community, large
community, suburbs, housing is the number one topic people are
so concerned about. So I am delighted to work with you to see
that we can really make sure we are boosting the funding for
some really important bipartisan programs.
Homelessness, actually, in my state was a crisis before the
pandemic, and it is something I am really focused on, whatever
we can get passed in the budget to help people keep a roof over
their head, I am all in.
I have spoken with a lot of people who have been able to
get back on their feet after being un-housed because of the
funding from the American Rescue Plan, whether it was emergency
housing vouchers, direct payments. That has been critical. But
I think one of the most significant ways that we can tackle
this crisis is by providing the resources and coordination that
state and local authorities need to help people on the ground,
and embrace the Housing First model, which we know is a really
successful intervention.
Can you talk a little bit about how this funding request
that you have would address homelessness in our communities,
and the urgency of this crisis?
Secretary Fudge. Absolutely. Thank you very much, Senator,
for the question. In this budget there is an additional almost
$600 million in homelessness assistance grants, so that we are
dealing with people who are on the ground every day. So that is
number one.
Secondly, we have also requested more vouchers, and we have
requested just more money for homelessness in general, just
like the 10 billion that came out of the Rescue package, we
have additional resources in this package just for
homelessness. But I would also say that the U.S. Interagency
Council on Homelessness has put in place what we are calling a
``House America'' Plan that I was just talking with the senator
about.
Senator Murray. Right.
Secretary Fudge. Where we are asking communities, and your
state, and your city has already signed up to be a part of it.
With the resources that we have from the Rescue Plan how are
they going to use those to assist us in getting homeless people
off the street? And what number of homeless people are they
committing to us that they are getting off the street?
Seattle was a leader in it, so we are excited about the
fact that many other communities have come in, and agreed to do
the same. But there are significant resources in addition to
this almost $600 million in the President's budget to deal
solely with homelessness.
Senator Murray. Okay. And the supply of affordable housing
is really a critical part of this puzzle. It is not rocket
science, we need more housing, and we need more affordable
housing, so we have got to help our communities build it. I
know that we have got $35 billion in your budget request a new
Housing Supply Fund that provides grants to state and local
housing. Can you talk a little bit about how that will be
helpful?
Secretary Fudge. Well, there are a couple of things that we
are doing. We are already working through state housing finance
agencies, through what we are calling the Federal Financing
Bank, which is getting resources from Treasury to go to the
state housing finance agencies to make lending money for low-
income and moderate-income housing, affordable for builders.
So we know that we are already starting to address it,
because part of the problem is, nobody builds it because it is
not, it is not profitable. So we can make it profitable by
making the money, basically, almost free. And that is really
kind of what is happening.
We are also increasing Housing Trust Fund, which of course
is for the lowest. We are also increasing raising the cap on
low-income housing tax credits. So there is a combination of
things that we are doing, to make low-income and moderate-
income housing worth building.
We are also, through this plan, through the President's
mandatory plan, looking at a path to building at least 500,000
new homes, and we do believe that we can do it with the
resources that are in the President's mandatory, but supply
plan. We have looked at it, we feel good about it, and as I
have traveled the country we have talked with the home
builders, we have talked with everyone that we can think of. I
mean even down to the people who supply Home Depot, Lowe's,
whoever it may be, and they all believe that through the
combination of these various resources that we can, in fact,
build 500,000 new homes.
Senator Murray. Okay. And I think we have to pair those
efforts with additional tenant-based vouchers, so people with
the lowest incomes can afford that safe housing.
And before my time is up, Mr. Chairman, I just want to
mention to you an issue regarding the most recent Notice of
Funding Opportunity for the HUD-VASH Program. I am really
concerned that a couple technical changes made in the fiscal
year '21 funding round created some unintentional penalties for
PHAs who are working with their communities to project-based
HUD-VASH vouchers, and stable and supportive environments.
I certainly support and agree with the goal of efficient
voucher utilization, but I am concerned that changes are
blocking proven leaders when it comes to the VASH management,
like King County Housing Authority in my state, who are
operating in extremely limited housing markets. And I hope we
can work together on this--in the upcoming funding cycle so
that we can make sure that they can continue to do what they
have been doing.
Secretary Fudge. We have heard the concerns, Senator, and
we are talking as well to King County, and others, to get the
feedback to see if the changes, how they are going to be
affected by the changes. So we are in communication.
Senator Murray. Okay. Thank you very much. Thank you, Mr.
Chairman.
Secretary Fudge. Thank you.
Senator Schatz. Vice Chair Collins.
Senator Collins. Thank you Mr. Chairman.
Madam Secretary, cybersecurity continues to be an important
issue, and we all know the life-changing effects that a hack
can have on our everyday Americans. Excuse me.
This can be particularly financially devastating for
families that fall victim to housing-related cyberattacks.
Mr. Chairman Senator, let me take----
Senator Schatz. Senator Collins is going to drink some
water.
And I will turn it over to Senator Van Hollen.
Senator Van Hollen. All right. Well, I hope Senator Collins
feels better. Thank you, Mr. Chairman.
And Madam Secretary, it is great to be with you.
Secretary Fudge. Good to see you.
Senator Van Hollen. And let me just pick up on a point that
Senator Murray made, about the Housing First model, you have
been working with the VA to implement that model, and very
successfully. And I just want to underscore my support for
moving in that direction.
As you know, today only one in four applicants for that
housing is able to receive it. So we do need to expand the
resources, and I was very pleased to see the President's budget
include $1.6 billion for a 200,000 voucher expansion, the
Housing Choice Voucher Program which is, I think, the largest 1
year increase since the program was authorized. This is
desperately needed.
I was also excited to see the 445 million for the cost-
effective housing mobility strategies, to assist families with
young children. This has been a bipartisan effort. I have
worked with Senator Young for some time. We implemented a pilot
program a little while back, successful.
Can you just talk about the research that shows the harmful
long-term impacts on kids who live in concentrated poverty
without access to opportunity.
Secretary Fudge. I mean, certainly. And I don't know where
to begin. We are talking about health care, we are talking
about the quality of education, and we are talking about the
quality of the jobs that they can get, we are talking about
institutional, and I am using that word purposely, ``poverty''.
When we don't address the issues that we need to be
addressing now it becomes a way of life that they never can
seem to get out from under; so I mean, I don't even know where
to begin to talk about how devastating it can be without these
resources.
Senator Van Hollen. Well, this is a way to work--accelerate
the effort to break out of the legacy of redlining and other,
you know, vestiges of segregation that we have seen in many
cities around the country.
Secretary Fudge. Well, what we do is we isolate poverty.
Senator Van Hollen. That is right.
Secretary Fudge. And we isolate communities of color, so I
mean, yes it is redlining, yes it is of any number of things,
but when you look at it, is we have just not given people a
fair shot at even trying to make it, so.
Senator Van Hollen. Yeah. Madam Secretary, I know you are
committed to implementing this program and I hope the committee
will strongly support the request in this area. I know, you
know, we have to deal with budget constraints, but I will say
one area where I would like to see an increase, and we are
working with the chairman and the ranking member in the area of
senior housing.
The 202 program; if you look at our State of Maryland, not
too far from here, in Largo, the wait for housing, for senior
housing is at least 2 years long, it would be even longer
except for the fact that some of the seniors who have been in
that waiting list have passed away, so this is a desperate
situation around the country.
And I hope that we will support an increase beyond what is
in the President's budget. I think the President had a $100
million increase there. A number of us are pushing for a $600
million increase to increase the number of units available to
around 6,000 because--I know that you have seen this in your
travels around the country, and of course as a former Member of
Congress.
Can you just talk to the desperate situation many seniors
are facing? We are talking about individuals who have immediate
income of $15,000 a year trying to make ends meet. They can't
find an affordable place to live. So if you could talk about
the Section 202 program?
Secretary Fudge. Well, let me just say, Senator, that when
we talk about a crisis in housing, seniors is a huge crisis,
because of the fixed income, because of the fact that there is
not enough senior housing. But I would say to you that I have
been talking with people even from other nations about how we
address seniors.
Seniors who are looking to age-in-place, and not be on the
street, because we do know one of the fastest growing groups of
people that are homeless today is senior citizens.
Senator Van Hollen. Yes.
Secretary Fudge. And so we want to make sure that we can,
not only use 202 resources, but encourage communities to use
CDBG dollars as well, and to be able to leverage their
resources through 108 loans. We know that there are a number of
things that we can do to increase senior housing, we just need
to give the kind of assistance and education to communities
that can help them.
Whether it be allowing them to build ADUs on their
property, whether it be allowed, whether we will be able to
turn some of these mobile homes, and manufacturing home, parks,
we are looking at how we do manufacturing homes in a larger way
that can assist senior citizens.
We are doing everything we can think of, but I think the
biggest issue is making sure that people, communities, local,
and state governments understand the resources available to
them. I don't disagree we need more money, but I think that
there are some opportunities there that no one has taken
advantage of at this point.
Senator Van Hollen. Thank you, Madam Secretary. Thank you
Mr. Chairman.
Senator Schatz. Senator Collins.
Senator Collins. Thank you very much. Let me resume my
question. I am very concerned that cyber crime is starting to
soar in the area of housing, and it can be absolutely
devastating for families that fall victim. According to the
2021 FBI Internet Crime Report, real estate and rental wire--
cyber crime resulted in more than $350 million in victim
losses. And that ranks it as fifth in the types of fraud
attacks that are tracked by the FBI. It is up substantially
from 137 million in 2020 in victim losses.
Madam Secretary, the budget requests approximately $66
million for the Office of Housing Counselors. Some of these
funds go towards scam awareness and prevention training for
housing counselors, so that they can better educate prospective
home buyers, new, first-time home buyers and renters. Given
that the data suggest that this threat is soaring, is there
more that HUD could be doing, and to help protect Americans
from these scams.
Secretary Fudge. Well, I think it is a huge problem, as you
suggest. And so what we are looking at is how we can
incorporate information about cyber fraud into our housing
counseling. So that they have that information before they even
get into a home as we are going through the process, so we get
it early on. So we are looking at how to do that. And I think
that that will be very helpful.
Senator Collins. Thank you. I think it would also, when I
was the chair of the Aging Committee, we held a lot of hearings
on scams, and at that point housing scams were not on our
agenda as being in the top five. If you look now they have
surpassed lottery, and sweepstakes, and inheritance scams, and
many others. So this is a growing area, and I think we need to
really increase public awareness, or a lot of people will find
that what they thought were down payments for a home are
disappearing because of cyber crime.
Secretary Fudge. Right, agreed.
Senator Collins. The other issue that I wanted to mention
to you are the service coordinators under the Section 202
program that help link seniors with supportive services
provided by community agencies. The Department funds these
coordinators through a combination of direct grants and budget-
based rents.
However, GAO has identified that since 2016, which I
realize is well before your tenure, but it shows this has been
going on for a long time, HUD has been unable to provide an
accurate count of the number of service coordinators that it
funds.
I must say I don't understand that. We discussed this issue
last year, and you advised that HUD was putting a plan in place
to quickly address GAO's recommendations, yet when we checked
with GAO, we were told that there has been very little progress
made toward having an accurate count of the number of service
coordinators funded by HUD. What is HUD doing, specifically, to
address these open GAO recommendations from 2016?
Secretary Fudge. Let me first say that I take full
responsibility for us not getting those, that information. I
meet with GAO, with the Inspector General, I meet with all
these people on a regular basis, and so we do everything we can
to try to be in compliance and this one obviously slipped
through the cracks. And I take full responsibility for it, and
we will just make sure that an urgent matter for us going
forward.
Senator Collins. Thank you very much. Thank you Mr.
Chairman.
Senator Schatz. Secretary, thank you for that answer. I am
not sure I have ever heard something so blunt from a Cabinet
Secretary, and it is really refreshing. But I have to say that,
you know, members come in--after they ask you a question, come
in and say she is great. So on a bipartisan basis; you have got
a lot of support on this committee. That doesn't mean we always
agree with you, but we are very appreciative of your service.
Can you talk to me a little bit about how we can make
emergency transfers in housing for victims of domestic violence
a little bit smoother, and easier, and what your plan is for
that?
Secretary Fudge. Well, we recently changed the way that we
look at--well, we hired a person that specifically addresses
this issue. We have a person that specifically addresses
domestic violence, sexual violence, et cetera. She has hit the
ground running, and she is doing extremely well. But it takes
some time to start to change things.
We know that we have started to talk to our Public Housing
Agencies (PHAs), and we have talked to our landlords to make
clear to them it is a priority. We also are tracking it in-
house, so I am not sure exactly where we are going to end up
with it, and how we are going to make it a lot easier, but we
are looking at it, we have elevated it to the top of our
priority list. And once we get a better answer, certainly, I
will get it to you.
Senator Schatz. Okay.
Secretary Fudge. But we do know it is a major problem,
especially coming out of COVID.
Senator Schatz. Sure. And with the housing supply
constrained it is going to be a challenge, and then the fact
that the public housing authorities, you know, have a fair
amount of autonomy it gets tricky.
Secretary Fudge. That is true.
Senator Schatz. So I want to make sure we don't just sort
of make policy, and you assign a person to it, and nothing
happens at the--on the ground. So this is going to take some
work.
Secretary Fudge. It is.
Senator Schatz. And on this one. And you are--a former
mayor, you know strategy is execution. So declaring that it
should be easy, is not the same as making it easy, and that is
going to take some, I think, sustained effort.
Secretary Fudge. Well, it is. And the good thing is with
the reauthorization of VAWA I think it is going to be easier
for us, because we can basically say, look, this is the law,
and we expect you to follow it. These are the things that we
expect from our partners. We are issuing guidance now, and we
have been, and we just believe that with the new $5 million
that we have in this budget for training, that we should be
able to make some impact on our communities and our partners.
Senator Schatz. Thank you very much. Final question: Are
you short staffed?
Secretary Fudge. Absolutely. Yes. I mean, I know I sing the
same tune every time I come, but this is this year is the first
year that we have actually gained more employees than we have
lost. We started out short-handed, and with attrition, with the
fact that it takes us almost 6 months to onboard employees,
which we are trying to work through, I still have yet to figure
out why it takes that long to hire somebody. But we are working
through it.
But again, this is the very first year we have gained more
than we have lost. And so we cannot do the work we need to do
unless we have, not just bodies, but skilled bodies, people who
are in the right place to do the right work. So I can't impress
upon you enough how important it is.
Senator Schatz. Yeah. I agree. You know I come from the
not-for-profit sector and I was always frustrated at the extent
to which funders, government funders, you know, charitable
funders, we are always looking at trying to squeeze the
administrative overhead costs to as low of a dollar amount as
possible. And that sort of makes sense in the abstract because
you get to say, you know, 90 percent of your dollars go
directly to services.
But, you know, in the real world you need accountants, and
oversight, and managers, and leaders, and case managers, and
IT, otherwise nothing works. And so I don't want you--I
understand the politics of appropriating money to just FTEs,
right?
It is nothing anybody gets to put in their campaign
commercial, that they sufficiently staffed HUD. But if we need
to--if we need to do more in that space I don't want you to be
shy about it.
Secretary Fudge. Well, I would say that if there is
anything that frustrates me, and a lot of things do, I think at
times, but this is the most frustrating. I come from being a
mayor, from being in Congress; I don't expect it to take
forever to do something. So I know I drive my staff absolutely
crazy, because I ask them all the time: Why does it take so
long? Half of this is because we just don't have people to do
all of the things that need to be done.
Senator Schatz. Thank you very much, Secretary Fudge. I
want to thank you for coming today, and for your ongoing
partnership with both sides of the aisle on this committee, and
across the Senate.
ADDITIONAL COMMITTEE QUESTIONS
The hearing record will remain open until Friday, May 20th
to allow members to submit additional questions for the record.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Questions Submitted by Senator Brian Schatz
Question. The American Rescue Plan (ARP) provided $5 billion in
targeted funds under the HOME program to address affordable housing
needs for households that are experiencing homelessness, at risk of
homelessness, survivors of domestic violence, and veterans. As of May
26, 2022, none of the funds have been expended by grantees other than
for technical assistance.
What are the challenges facing communities trying to spend HOME-ARP
funds?
Answer. Although it is based on the foundation of the HOME Program,
HOME-ARP is a very different program. Eligibility for HOME-ARP
assistance is based on qualification in one of four ``qualifying
populations'' instead of income. HOME-ARP includes two eligible
activities--acquisition and development of non-congregate shelter and
provision of supportive services--that are not permitted in the HOME
Program. Moreover, HUD used its waiver and alternative requirement
authority to provide numerous flexibilities for HOME-ARP that are not
permitted in regular HOME (e.g., operating cost assistance for rental
housing, master leasing, sponsor-based rental assistance). Communities
are carefully considering how best to use this flexible, one-time
funding.
Before using HOME-ARP funds for projects or activities, a
participating jurisdiction must develop an allocation plan for its
grant and submit it to HUD for approval. A participating jurisdiction's
allocation plan must outline how it will use its HOME-ARP funds to
assist qualifying populations with this unique funding source based on
consultation with a broad range of housing, homeless, domestic
violence, and fair housing groups and on comments received during the
required public participation process. Most participating jurisdictions
are still in the process of developing their plans, including the
consultation and public participation processes. HUD has developed a
wide range of training, tools, and templates to assist participating
jurisdictions in developing their allocation plans. HUD is also
offering direct technical assistance to participating jurisdictions
that require help in developing allocation plans.
Based on plans received to date, most participating jurisdictions
intend to use their HOME-ARP funds for development of rental housing or
non-congregate shelter. Development activities can take several years
to go from the planning stage to completion. Please note that HOME-ARP
grant funds are available for expenditure until 2030.
Question. HUD plays an important role in financing housing
development through FHA mortgage insurance and Ginnie Mae
securitization of those mortgages.
How does the budget request help communities gain access financing
for affordable housing production?
Answer. FHA mortgage insurance and Ginnie Mae securities together
enable capital for housing supply to reach communities across America.
HUD has designed its FHA underwriting criteria to be compatible with
Low Income Housing Tax Credit (LIHTC) requirements to further encourage
pairing of FHA mortgage insurance with LIHTC financing for affordable
housing production, and a key provision of the 2023 Budget request
expands community access to affordable housing financing by authorizing
Ginnie Mae securitization of HFA Risk-Share loans.
The 2023 Budget requests $900 billion in commitment authority
(which does not score) for Ginnie Mae and $35 billion in commitment
authority for FHA Multifamily/Healthcare. The budget also requests
$42.4 million to cover Ginnie Mae personnel compensation and benefits,
and a portion of the Office of Housing's $488 million request for
salaries and expenses would cover the personnel needed to produce new
insured mortgage loans and to monitor the properties once the loans are
in portfolio. Both components of the 2023 Budget request are integral
to achieve the Department's goal to help communities gain access to
affordable housing.
--Commitment Authority: Commitment authority 1) enables FHA to issue
mortgage insurance which encourages mortgagees to lend to
borrowers and in communities that they may not otherwise serve
and for affordable housing projects that might not otherwise
qualify, and 2) enables Ginnie Mae to make affordable housing a
reality for millions of low- and moderate-income households
across America by channeling global capital into the nation's
housing markets. Specifically, the Ginnie Mae guarantee allows
mortgage lenders (or Issuers) to obtain a better price for
their MBS in the secondary mortgage market and increases total
funding available for lenders to meet the credit access and
housing needs of Americans across the single-family,
multifamily, manufactured housing, and reverse mortgage
segments of the market.
Ginnie Mae sells Commitment Authority to Issuers, which represents
the total amount of new commitments MBS Issuers expect to issue
under the Ginnie Mae guarantee.
Driven largely by the decline in interest rates and the resulting
increase in refinance activity, both FHA and Ginnie Mae
experienced record growth in 2020 and 2021. We expect
continuous growth in the Ginnie Mae portfolio in 2022 and 2023
($886 billion estimated commitment authority sales for 2023),
as MBS issuance exceeds liquidations. The $900 billion and $35
billion requests in the fiscal year 2023 budget will enable
Ginnie Mae and FHA to keep pace with market and Issuer demands
and ensure liquidity to lenders and capital markets.
--Personnel Salaries and Expenses: The requests directly support the
Department's goal to enhance our workforce and internal
capability so that our platform can continue to provide low-
cost liquidity for the benefit of borrowers and renters nation-
wide. The funding request will enable Ginnie Mae to uphold
current responsibilities (i.e., continuity of operations),
manage evolving housing finance market risk, as well as further
invest in the MBS program, which includes implementing several
MBS initiatives focused on a more equitable housing finance
system (e.g., Title 1 enhancement, CDFI liquidity, ESG). These
activities are necessary to effectively promote a more
accessible and inclusive housing finance system. The $42.4
million budget request in fiscal year 2023 will enable Ginnie
Mae to continue serving its key public policy of providing a
strong secondary market outlet for affordable housing
production.
Similarly, the request for FHA Multifamily supports ongoing
production of new loans and asset management of loans in the
portfolio. It would further support the overall goal of housing
safety and quality, particularly to prevent and remedy
distressed properties. The negative effects of distressed
properties fall disproportionately on disadvantaged
communities.
Question. For the first time, the President's budget request
explicitly supports a permanent authorization of the CDBG-DR program.
It does not endorse a specific bill, but it includes four policy
principles for the authorization: (1) Advance equity; (2) Prioritize
and integrate resilience; (3) Efficacy, efficiency, and transparency;
and (4) Build capacity.
How do you think a permanent authorization of the CDBG-DR program
will improve a community's ability to respond and recover from major
natural disasters?
Answer. For more than 20 years, Congress has appropriated
supplemental CDBG-DR to assist communities in long-term disaster
recovery. The current practice of requiring Congress to make these
funds available only in response to specific disasters leads to
significant delays in how long it takes for these critical resources to
arrive in a community. Each appropriation of CDBG-DR funds requires HUD
to establish new requirements for the use of the funds. Permanent
authorization of CDBG-DR would allow HUD to promulgate rules that
establish the requirements for all CDBG-DR grants going forward,
including the formula used for the allocation of funds. CDBG-DR
authorization would increase certainty among state and local
governments as well as the public, with respect to the requirements
associated with assistance. Permanent authorization would allow
communities to better plan for the use of prospective CDBG-DR funds
prior to a disaster, which would speed up the delivery of assistance.
This would be particularly beneficial to communities that have not
previously received CDBG-DR funds and communities that were underserved
or distressed prior to a disaster. The U.S. Government Accountability
Office, HUD's Office of the Inspector General, many state and local
governments, and other organizations that work with communities to help
them recover, have all noted the benefits of creating a permanently
authorized program that prioritizes the recovery needs of low- and
moderate-income people.
The Department's $83 billion CDBG-DR portfolio is comprised of 64
grantees who administer 160 CDBG-DR grants. HUD's Disaster Recovery and
Special Issues Division implements the CDBG-DR funds and is comprised
of 66 permanent and ``term'' (temporary) employees. In the supplemental
appropriations of CDBG-DR funds, Congress has provided HUD with funds
to support the administration of the grants, which in turn has allowed
the Department to hire temporary employees. Permanent authorization of
CDBG-DR and inclusion of CDBG-DR recovery funds and funding for
permanent staff in the annual HUD budget would allow the Department to
build its own long-term capacity to effectively oversee the use of the
funds and to support the timely delivery of assistance to communities.
Question. The President's budget request for Project Based Rental
Assistance includes a five-year extension of the Mark-to-Market (M2M)
program, which is set to expire on September 30, 2022. In addition, the
budget request includes new funding to make rent adjustments to Mark-
to-Market properties based on the cost of maintaining the property and
covering mortgage payments, rather than an annual OCAF?
How was the M2M program helped to preserve affordable housing? Why
is it important Congress extends it?
Answer. Congress created the Mark-to-Market (M2M) program in 1997
for properties with FHA-insured loans and Section 8 subsidies. Its
purpose was to reduce Section 8 costs while preserving the
affordability and availability of low-income rental housing. This was
accomplished by reducing the property rents to market level while, when
necessary, simultaneously reducing property debt levels and owner costs
through the debt restructuring management tools authorized by the
legislation. As of 2022, 1,861 properties covering 147,345 units have
been fully restructured and preserved through the M2M program.
There are two key justifications for an extension. First, the M2M
program's authority to reduce existing FHA-insured debt when a Project-
Based Section 8 property has its rents reduced to market is critical to
meeting the program's goals and protecting FHA's insurance fund. In
addition to the fully restructured transactions, a significant number
of owners had previously elected to adjust their rents without a
corresponding adjustment in their FHA-insured debt. These partial
restructurings served to save HUD money with respect to the Section 8
budget, but without the cost of restructuring the FHA-insured debt. The
owners of these properties retain the right under the statute to
request the FHA-insured debt restructuring if needed. Without the M2M
program, if the need arises, these properties would be financially
``upside down,'' with a debt burden greater than their ability to pay.
This creates a greater risk of default on the FHA-insured mortgage debt
and also risks the owner's ability to meet the operational and
maintenance needs of these Section 8 properties. There are 908
properties that restructured the Section 8 rents without restructuring
the FHA-insured debt and there remain approximately 388 properties
(31,235 units) that may be eligible for debt restructuring under the
M2M program with Section 8 contracts expiring through 2027, and others
with expiration dates after the proposed extension date. These deeply
affordable units are at risk of opting-out of the Section 8 program at
contract expiration if the M2M program is not able to restructure the
existing FHA-insured mortgage debt and preserve the assets for the long
term.
Second, the M2M authority provides structure around certain asset
management functions. Most significant among them for purposes of
affordable housing preservation is HUD's authority to assign or forgive
HUD-held debt to a Qualified Nonprofit Purchaser (``QNP''), which is
available both at the time of the M2M restructure and at the time of a
subsequent recapitalization event. The ability to assign HUD-held debt
has allowed non-profit, preservation-oriented purchasers of Section 8
properties to compete with profit-motivated owners in acquiring and
preserving these assets as affordable housing for the long term. These
QNP transactions often result in new longer-term affordability
restrictions being placed on the properties. HUD has been able to
facilitate large recapitalization transactions while supporting
mission-driven owners that preserve these assets. Approximately 848
properties (63,268 units) have previously been restructured under the
M2M program and are eligible for QNP assignments of debt to support
preservation transactions.
______
Questions Submitted by Senator Dianne Feinstein
Question. Those experiencing homelessness often struggle to obtain
or maintain the required personal documents--such as birth
certificates, photo identification, and Social Security information--in
order to apply for Federal assistance benefits like the Supplemental
Nutrition Assistance Program, Social Security Disability Insurance, and
Medicaid. Anyone would struggle to navigate this onerous process, and
adding layers of paperwork with different requirements to receive
benefits adds an unnecessary burden on our Nation's most vulnerable. A
person's lack of personal identification can make it more challenging
to secure a job, find housing, open a bank account, stay in shelters,
and access Federal benefits.
Secretary Fudge, what steps can your Department take to alleviate
some of these burdens and ensure that homeless individuals and families
have access to critical benefits? How can the Federal government work
with local governments and service providers to ensure that homeless
individuals can successfully navigate the application process for
Federal benefits?
Answer. We strongly agree that we need to center those we are
serving in our policies. One example of how we are alleviating burdens
on people experiencing homelessness is our work to evaluate our data
collection process. As we are updating our data collection
requirements, we have invited people who have experienced homelessness
to comment and help us understand what changes are needed to ease the
burden on those seeking our assistance. We are also working with
communities to improve coordinated entry practices to minimize
documentation requirements to ensure that access to homeless assistance
is as streamlined as possible. Additionally, we are incorporating
equity considerations into our policies. This is helping us evaluate
potential biases in our approaches and helping ensure we address the
systemic racial discrimination that often leads to homelessness.
Question. The Housing and Community Development Act of 1974
established the Community Development Block Grant (CDBG) program.
However, it placed a cap of 15 percent on how much of these funds could
be used for public services. As you know, public services include
services for people experiencing homelessness, homelessness prevention,
services for youth, seniors, and people with disabilities, and job
training and employment services. My staff have heard from cities how
the current public services cap has limited their ability to use CDBG
funds in a way that makes the most sense and actually meets the needs
of communities, particularly those that want to address housing
challenges.
Secretary Fudge, the current CDBG public services cap is preventing
communities from providing more stable housing opportunities and
addressing homelessness effectively. What is your Department's position
on waiving the CDBG public services cap?
Answer. The existing 15 percent public services cap encourages
grantees to spend CDBG funds in a balanced manner, providing assistance
for activities that address immediate public service needs while also
investing in bricks-and-mortar and physical infrastructure activities
that further long-term community planning goals. While grantees may
have demands for public services funding that exceed 15 percent of
their annual grant amount, HUD believes that the cap promotes a
multifaceted approach to community development shaped by each grantees'
local needs and objectives. In addition, other block grant programs
(for example, HHS's Community Services Block Grant and Social Services
Block Grant) already provide significant Federal funding for local
public services.
When necessary to deliver on exceptional policy and programmatic
goals, HUD has waived this cap. For example, we recently did so to
facilitate the HUD pilot Recovery Housing Program. HUD determined that
the cap would inhibit the nature of the services that Congress intended
the SUPPORT for Patients and Communities Act to allow grantees to
provide. HUD also acknowledges the overwhelming and immediate demand
for public services spending that prompted Congress to waive the cap
for CDBG CARES Act funding, which provided CDBG funds to prevent,
prepare for, and respond to coronavirus.
______
Questions Submitted to Senator Patrick Leahy
regulations under the home investment partnership program
Question. In fiscal year 2022, Congress appropriated the highest
level of funding for the HOME Investment Partnership in the past
decade. This funding is a flexible option to increase the affordable
housing supply, but many housing practitioners are finding current HOME
regulations overly burdensome to use for homeownership. In particular,
requirements that the nonprofit must meet the definitions of both
``community land trusts'' and ``community housing development
organizations,'' as well as the fact that the funds must come from the
CHDO set-aside, pose significant regulatory problems. Closing the
nation's homeownership gap is essential to closing its wealth gap, and
that cannot be achieved if grantees are discouraged from using HOME
funding due to burdensome regulations.
How is HUD planning to clarify regulations for the HOME program to
address these concerns, and does HUD plan to engage stakeholders when
considering regulatory and guidance changes?''
Answer. As part of the President's Housing Supply Action Plan, the
Department is examining the HOME statute and regulations to identify
potential modifications to simplify both the rental housing and
homeownership components of the program. Because the HOME statute
contains many explicit program requirements, the potential effect of
regulatory changes alone would likely be modest. However, HUD is in the
process of identifying potential changes to both the HOME statute and
regulations, and as reflected in HUD's spring regulatory agenda, HUD
will issue a proposed HOME program regulation for public comment.
With respect to community land trusts, some stakeholder groups
misunderstand the existing HOME Program requirements. Community Land
Trusts are not required to meet the community housing development
organization (CHDO) definition to access regular HOME funding. However,
by statute, a community land trust that wishes to access funds from the
15 percent CHDO set-aside must meet the CHDO definition like any other
nonprofit organization, except that a community land trust is presumed
to meet the CHDO governing board requirements.
______
Questions Submitted by Senator John Boozman
Question. The pandemic has accelerated the need for certain types
of commercial real estate to be repurposed. Some retail real estate
analysts project that 25 percent of the nearly 1,200 enclosed malls
around the U.S. will close in the next several years. Others point to
the need to right size the amount of office space or conference hotel
rooms. All the while, the need for affordable and workforce housing
opportunities continues to grow, especially in rural America.
Has HUD considered what its role could be in encouraging adaptive
reuse to repurpose existing built spaces to create new opportunities
for housing, healthcare and other community needs?
Answer. HUD's Office of Policy Development and Research has
proposed research into commercial to residential conversions as a
priority use in its 2023 funding request. This research effort would
invite the academic and research community to examine factors that
affect the feasibility of commercial-to-residential conversions (for
both market-rate and affordable units), including providing a detailed
examination of factors related to the design, building technology,
regulatory, market, and cost considerations, and profiling successful
commercial-to-residential conversions. Of particular interest are
repurposing large shopping malls that are no longer economically viable
and vacant office space. In addition to exploring costs associated with
developing these spaces and existing Federal programs that could
facilitate conversions, the research would analyze actual and projected
economic activity and municipal revenue to provide an actionable
template for communities considering these changes.
To the extent that such adaptive reuse projects accord with FHA
Multifamily and Healthcare program policies, FHA is supportive of
innovative efforts to increase the supply of affordable rental housing
and quality healthcare facilities.
Communities can and do use CDBG funds and Section 108 loan
guarantees in a variety of ways to fund adaptive reuse projects.
Eligible CDBG and Section 108 activities that may support adaptive
reuse include acquisition, rehabilitation, preservation, and selective
restoration of publicly or privately owned properties for residential,
commercial, or public improvement purposes. Grantees may also provide
economic development assistance to for-profit businesses, which can
then carry out activities to convert existing real property to another
use. While communities usually do not use CDBG and Section 108 funds as
primary sources of funding for large-scale redevelopment projects, they
do serve as critical gap financing.
An example of HUD supporting an adaptive reuse project can be found
in Texarkana, Texas. Using Section 108, the City of Texarkana assisted
a private developer to redevelop the historic Hotel Grim. The
redeveloped property includes 98 housing units (20 affordable) and
approximately 5,000 square feet of commercial space on the first level.
This project used financing from multiple Federal agencies.
Question. The lack of housing supply in the US is one of HUD's
greatest challenges and is contributing to record home price
appreciation and decreased affordability, all while the FHA single
family portfolio's serious delinquent rate is 6 percent as of March
2022, compared to 1 percent for the GSEs.
Do you think now is the appropriate time to implement changes to
FHA's pricing? Are you concerned that a rate cut will increase demand
and worsen affordability issues? If so, how will you address that?
Answer. We are seeking to take a prudent and judicious approach
with regard to Mortgage Insurance Premium pricing. This includes
consideration of a range of factors, including but not limited to
things like current housing market and economic conditions, mortgage
affordability and the interest rate environment, budgetary implications
and any tradeoffs within the appropriations process, and FHA's role
within the broader housing finance system.
Question. I understand that HUD is considering changes to FHA
pricing and that FHFA Acting Director Thompson is conducting a
``holistic review'' of pricing at the GSEs.
Is HUD coordinating with the FHFA to ensure any FHA price cut
doesn't create market distortion and arbitrarily tilt the scales in
favor of one market over the other? Will you commit to implementing
policies that promote a level playing field and do not advantage the
FHA government-insured market over the conventional mortgage market?
Answer. FHA's primary role in the mortgage market is to provide
access to homeownership for those not adequately served by the private
market. As a result, FHA's market share fluctuates based upon market
conditions and pricing in the conventional market. FHA does not target
specific loan volumes or market shares. That said, FHA continually
monitors changes in the marketplace and seeks to ensure that it does
not face either adverse selection or an outsized role in the nation's
housing finance system.
As previously noted, we are seeking to take a prudent and judicious
approach to Mortgage Insurance Premium pricing that takes into account
a host of relevant factors, including current housing market and
economic conditions and FHA's role within the broader housing finance
system. As part of that process, FHA is in regular contact with FHFA
and will, as appropriate, keep FHFA and other parties apprised of its
plans.
Question. Small-dollar mortgages can help with housing
affordability issues, specifically in rural communities. Borrowers for
these mortgages present a certain level of risk, and lenders prefer
this risk is partially covered via mortgage insurance.
Will you commit to conducting a review of FHA single-family
mortgage insurance policies, practices, and products to identify any
barriers or impediments to supporting, facilitating, and making
available mortgage insurance for mortgages having an original principal
obligation of $200,000 or less?
Answer. In response to The House of Representatives Committee
Report 116--452, accompanying the Departments of Transportation, and
Housing and Urban Development, and Related Agencies Appropriations
Bill, 2021, HUD is conducting a review of FHA's single-family mortgage
insurance policies, practices, and products to (1) identify barriers or
impediments to supporting, facilitating, and making available mortgage
insurance for mortgage loans having an original principal obligation of
$70,000 or less, (2) identify administrative actions that HUD could
take to remove barriers and impediments, and (3) describe the effect of
such actions on the solvency of the Mutual Mortgage Insurance Fund (MMI
Fund). We expect to publish this report very soon and would be pleased
to discuss its findings with members of the Committee.
Question. I believe increased funding for HUD should be prioritized
and allocated towards fully supporting the multi-year FHA Catalyst
project's needs in 2023. FHA Catalyst is a major project intended to
modernize FHA's IT infrastructure and to provide cloud-based platforms
to reduce costs, risk, and fraud, and bring FHA in line with current
industry practices and includes a single portal for lenders to interact
with FHA for the full loan life cycle, with loan components already in
production.
Will you commit to sustained executive-level attention to advancing
and completing FHA Catalyst?
Answer. HUD remains committed to the successful advancement of FHA
Catalyst, and to improving HUD's ability to address FHA's business
needs through IT modernization. To achieve this objective, the Office
of Housing, the Office of the Chief Information Officer, and the Office
of the Chief Procurement Officer are collaborating on process
improvements that will strengthen executive oversight and improve
decisionmaking processes for FHA Catalyst. FHA Catalyst will continue
to enjoy executive level support, attention, and leadership in pursuit
of comprehensive IT modernization for FHA.
Question. Over the last 16 months, including at your confirmation
hearing, you have spoken of the critical importance downpayment
assistance plays in narrowing the homeownership gap between white and
minority families. At the same time, HUD quietly announced in January
2022 that it was pursuing rulemaking that could limit the reach of
these vital programs. In my home state, the Arkansas Development
Finance Authority operates a program that gives low-to-moderate income
families and individuals up to $15,000 in downpayment assistance and
closing assistance. A separate program provides up to $10,000 in
assistance that is fully forgivable after 5 years.
When does HUD expect to release proposed rulemaking on downpayment
assistance and what changes is HUD considering? How will HUD work to
ensure the program doesn't unnecessarily restrict homebuyers access to
such vital assistance?
Answer. Downpayment assistance is a crucial means of accessing
homeownership for low- and moderate-income and first-time homebuyers.
Therefore, HUD and FHA remain deeply committed to ensuring that down
payment assistance programs such as those operated by housing finance
authorities and other partners continue to make homeownership possible
for qualified homebuyers. As you noted, FHA intends to conduct
rulemaking to provide needed clarity with regard to certain
requirements issuing from the Housing and Economic Recovery Act (HERA)
of 2008 that restrict provision of down payment assistance funds by a
``prohibited source.'' FHA hopes to provide this clarity while still
enabling broad access to this critical assistance.
Question. First-time homebuyers, millennials, and minorities
represent the largest underserved market segment for new home
purchases, yet they continue to face barriers to homeownership as
mortgage lenders sometimes find their product mix does not match the
needs of this population, many of whom face challenges in saving for a
down payment or recovering from economic hardship. Many government
housing agencies offer down- payment assistance programs making
homeownership more attainable, while others offer multifamily rental
housing for low- and moderate-income households using Federal budget
allocations. However, these types of programs are limited due to
financing and funding constraints. I believe public and private sector
participants should focus on promoting existing responsible,
alternative financial products that enable more first-time and lower-
income rental populations to bridge into sustainable homeownership.
Access to single-family mortgage financing is available for nonprofits,
Indian tribes and, in some cases, governmental agencies. These programs
are currently offered through USDA and FHA. A number of local
government housing agencies in recent years have been working through
public-private partnerships to utilize FHA single-family financing to
enable borrowers to bridge from renting to homeownership via own-option
and lease-purchase products. While initial results for such programs
are promising, unfortunately adoption of such programs has been limited
due to modest barriers at HUD, FHA and USDA.
Are there any administrative and/or statutory clarifications that
HUD can take in order to accelerate the expansion of these types of
programs and help address the affordability crisis? Are there any
changes HUD can make to the FHA Single-Family Housing Handbook and
program administration that would simplify the process for registering
government housing agencies as mortgagors for the purposes of FHA
insurance eligibility?
Answer. FHA agrees that nonprofit and government entity utilization
of its mortgage insurance programs as mortgagors could offer useful
financing options for a variety of neighborhood stabilization,
homeownership, and rental strategies. Toward that end, FHA has met and
is working with interested nonprofit organizations and prospective
lenders to identify opportunities to better leverage FHA's single
family mortgage insurance programs for these purposes. Additionally, we
are reviewing approval processes for nonprofits seeking eligibility as
mortgagors to streamline and simplify the process for these important
community partners.
______
Questions Submitted by Senator Shelly Moore Capito
Question. The rising cost of housing is a major contributor to
inflation, with demand far outpacing supply. Home prices rose by 18.8
percent last year and rent went up by 17.6 percent. There simply are
not enough starter homes available for first time homebuyers, and
rental vacancies are at record lows.
What is HUD doing to increase the housing supply so that low-income
homebuyers and renters can afford a place to live?
Answer. In May, the Biden-Harris Administration released a Housing
Supply Action Plan with the goal of easing the burden of housing costs
for American families. Specific HUD actions included within the
Administration's plan include supporting production and availability of
manufactured housing, updating HOME regulations to increase program
effectiveness, providing reduced interest rate loans to state and local
housing finance agencies via the Federal Financing Bank's Risk Sharing
Program, supporting affordable housing in Indian County, directing the
sale of mortgage notes to owner-occupants and mission-driven entities
instead of large investors, and encouraging the use of CDBG for local
acquisition and sales to families.
HUD also launched the Our Way Home initiative, which will uplift
the actions that communities and HUD grantees are taking to create more
affordable homes with tools and resources that can help preserve and
produce safe, accessible, and affordable housing. Community outreach
also provides an opportunity for HUD to get feedback and ideas for
improvements on our programs from our partners and the people we serve.
Question. As HUD considers changes to FHA pricing, are you
concerned about further driving up demand, and therefore home prices,
in the face of severely limited supply?
Answer. We are seeking to take a prudent and judicious approach
with regard to Mortgage Insurance Premium pricing. This includes
consideration of a range of factors, including but not limited to
things like current housing market and economic conditions, mortgage
affordability and the interest rate environment, budgetary implications
and any tradeoffs within the appropriations process, and FHA's role
within the broader housing finance system.
Question. Additionally, HUD's HOME Investment Partnerships program
is HUD's primary program for building more affordable for-sale and
rental housing, but the program's regulations are overly burdensome and
HOME's formula allocations in West Virginia are miniscule when compared
to what Congress funds the program at. In fiscal year 21, West Virginia
received $7.6 million out of a $1.3 billion appropriation. That is less
than 0.6 percent of the total allocations.
Is HUD considering streamlining its rules so that states and local
governments can do more with their HOME dollars? Will HUD commit to
working with West Virginia's Housing Development Fund on ways to make
the program more efficient?
Answer. As part of the President's Housing Supply Action Plan, the
Department is examining the HOME statute and regulations to identify
potential modifications to simplify both the rental housing and
homeownership components of the program. Because the HOME statute
contains many explicit program requirements, substantial changes to the
program would require legislative changes and the effect of only
regulatory changes would likely be modest. However, HUD will work with
grantee groups and other stakeholders, including West Virginia's
Housing Development Fund, to identify changes to both the HOME statute
and regulations that would modernize and streamline the program. HUD
will develop and issue a proposed HOME program regulation for public
comment.
Question. Broadly speaking, it is important for HUD to work with
the other Federal housing agencies and one particular area where this
would be most beneficial is coordinating with the FHFA to develop and
implement a specific understanding as to the appropriate roles for FHA
and the GSEs in the housing finance system.
What steps is HUD taking to work in concert with the FHFA to ensure
there is a consistent Federal housing policy and that borrowers have
access to mortgage options in the conventional and FHA-insured markets?
Answer. FHA pays close attention to the policy developments at FHFA
and other agencies that play a role in housing finance. Both principals
and staff communicate regularly on a range of topics. At a staff level,
FHA is a regular participant in the Joint Federal Housing Agency
working group, which brings together representatives from FHA, VA,
USDA, GNMA, FHFA and CFPB to share updates on policy development or
industry trends across all agencies. This coordination helps to foster
consistency in the industry while supporting each agency in carrying
out their particular mission.
Question. I am pleased that I was able to use the Economic
Development Initiatives account to support from very promising projects
in West Virginia such as $1.1 million for Upgrades to Hazel's House of
Hope in Morgantown--a community shelter and treatment facility--And I
look forward to doing so in fiscal year 23. I appreciate the
flexibility that this account offers.
I have heard from multiple requestors in the state that they still
don't have guidance after being included in the omnibus package. What
is the delay from the department? And do you have a timeline for when
they will receive funding for these economic development projects?
Answer. HUD has been working diligently to administer the Economic
Development Initiatives. The Department has worked with the
Appropriations Committee to collect the grantee contact information.
HUD has distributed communications to the grantees providing
preliminary information including crosscutting requirements and an
estimated timeline. HUD issued guidance to grantees in July 2022,
through a Letter of Invitation (LOI). The LOI outlines the grant award
requirements and required information needed from grantees to execute
grant agreements. Once HUD receives and verifies this information, HUD
will send grant agreements for signature. Grantees will be able to
access their grant funds once the project narrative and budget have
been verified and an environmental review has been completed and
approved by HUD. We will update you on the progress of the
administration of this funding.
______
Questions Submitted by Senator John Hoeven
Question. In Fargo, North Dakota, the City and the Fargo Public
Housing Authority are working to secure funding to demolish and
redevelop the Herschel Lashkowitz tower, a public housing building that
was built over 50 years ago by the Federal government, and has 200
residential units, making it the largest residential building in North
Dakota. The building is badly outdated and needs to be replaced.
The Fargo Public Housing Authority has worked closely with HUD to
relocate the tenants of the building, and today the building sits
empty, ready to be demolished. The demolition project is estimated to
cost $5.5 million, $2.8 million of which is for asbestos mitigation and
clean-up.
The EPA has a Brownfields Clean-up Grant program that could help
provide funding for the asbestos mitigation and clean-up costs at the
Lashkowitz tower. Prior to this year, the EPA Brownfields cleanup
grants were limited to a maximum award of $500,000. However, Congress
recently increased the statutory maximum grant award amount for these
grants to $5 million--potentially making this grant program attractive
to the City of Fargo as it looks to move this project forward.
Unfortunately, it has come to my attention that the EPA is
intending to award the fiscal year 23 Brownfields cleanup grants well
below the authorized maximum of $5 million. Rather, the EPA anticipates
implementing a $500,000 to $1 million award cap.
Would you be willing to speak with your colleagues at the EPA about
the redevelopment of the Lashkowitz Tower, and discuss how funding
Brownfields cleanup grants at the congressionally intended cap amount
could assist with this important project for the Fargo community?
Answer. The Special Applications Center (SAC) within PIH has
approved the demolition of the Lashkowitz Tower. PIH has also issued
tenant protection vouchers (TPV) to allow residents to relocate to
housing of their choice. SAC is aware that Fargo Public Housing
Authority has been working to find the funding for the demolition. PIH
agrees that meeting with EPA to discuss the demolition/redevelopment
and cleanup grants to ensure coordination and collaboration would be
helpful and is willing to participate in such a discussion.
This might include how to combine EPA's Brownfields cleanup grants
with other HUD resources that address remediation and demolition, such
as CDBG and Section 108. CPD's programs have been used extensively by
communities for these types of Brownfields projects.
Question. In fiscal years 2021 and 2022, this subcommittee
requested a briefing on HUD's efforts to engage interagency partners
and counseling agencies on efforts to educate consumers on real estate
wire fraud. Recent reports indicate this problem continues to grow.
Given the continuing economic challenges that make it more difficult
for families to make ends meet and to achieve homeownership, one wire
fraud incident could devastate a family's financial security and put
homeownership out of reach.
When can the committee expect this briefing? Are there any efforts
underway to reach consumers and industry directly that Members of
Congress and the Committee could help support and promote?
Answer. HUD recognizes the importance of educating consumers on
real estate wire fraud. HUD's Office of Housing Counseling has worked
closely with external partners, including the Federal Trade Commission
and the American Land Title Association, to educate housing counselors
on types of fraud, how to identify and avoid fraud, and the latest
trends in wire and title fraud, as well as providing counselors with
client resources and processes for reporting fraud. In addition, HUD
provides alerts, information, and articles on a variety of frauds,
including wire fraud, on its web resources for housing counselors. We
would be happy to brief the Committee on this work at its convenience.
Question. Can HUD advise more immediately on any specific efforts
and progress made to date?
Answer. HUD is working with the American Land Title Association
(ALTA) to help train counselors on title-related topics. By training
HUD-certified housing counselors and others on title topics, they can
be better prepared to advise consumers on the title process in their
state as well as understand how to safely complete daunting real estate
tractions tasks like wire transfers and how to avoid wire fraud.
On June 7, 2022, HUD met with the Senior Vice President of Public
Affairs and Chief Advocacy Officer for ALTA and his training team. HUD
is scheduling regular production meetings with ALTA. ALTA shared
training content they have already developed, and HUD is reviewing the
information to adapt to housing counselor training. ALTA training
content shared includes:
1. Protect Your Money Home Closing 101: This is ALTA's consumer-facing
website that contains videos, checklists, infographics, and other
resources.
2. ALTA--Information Security: This is ALTA's member-facing information
for businesses that might face wire fraud actions.
3. ALTA Members Protect Against Wire Transfer Fraud: Additional videos
on wire fraud.
HUD has tasked ICF (HUD's technical assistance training grantee)
with a work order assignment to assist in producing title-related
training content.
HUD's first coproduction was a webinar on title/wire fraud on July
26, 2022, and HUD is planning ``Title Policy 101'' for housing
counselors on September 27, 2022. HUD is also interested in other
title-related training webinars in the fall and beyond. HUD is looking
at increasing title-related training content on the HUD Exchange
website.
______
Questions Submitted by Senator Mike Braun
Question. Shelter makes up nearly a third of the basket for CPI
inflation\1\. Housing prices are up across the country by 17 percent in
just 1 year. Just last month, the National Low Income Housing Coalition
(NLIHC) noted that we have a national shortage of 7 million affordable
homes.\2\ That's a supply side problem. Simultaneously, you are
requesting massive program increases to the demand side, including
rental assistance and vouchers.
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\1\ https://www.whitehouse.gov/cea/written-materials/2021/09/09/
housing-prices-and-inflation/
\2\ https://nlihc.org/resource/nlihc-releases-gap-shortage-
affordable-homes
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Given how much HUD spends on housing programs every year, not to
mention other agencies, do you think the Federal government might
actually be a contributor to the inflationary side of housing prices?
Answer. Unlike the rental space, HUD does not have any spending
programs of consequence that primarily subsidize homeownership. FHA is
self-financing, and the homeowner mortgage insurance fees are high
enough to generate revenue for the government. Average FHA loan amounts
and the purchases they finance also are below average in most markets.
On the rental side, FHA multi-family mortgage insurance programs are
designed to add to the housing supply and help keep rents lower.
Further, there are more than 43.5 million occupied rental units in
the United States. Of these, 2.3 million, or 5.3 percent, are occupied
by voucher tenants. The rent paid by families with vouchers is based on
the Fair Market Rent, which is set at the 40th percentile of rents paid
by recent movers, meaning 60 percent of recent-mover renters paid more
than the Fair Market Rent for their units. Given the relatively small
number of voucher tenants compared to the overall market, and the
limits of any individual voucher tenant's resources, it is unlikely
that vouchers are contributing in any meaningful way to general rent
inflation.
Question. According to the Office of Management and Budget (OMB),
there is about $3.5387 billion in unobligated Tenant-Based Rental
Assistance from COVID packages as of April 21, 2022. The President's
Budget requests $32.130 billion for Tenant-Based Rental Assistance, an
increase from $25,777 from fiscal year 2022.\3\
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\3\ https://www.hud.gov/budget
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Do you think the current request is warranted given the outstanding
unobligated balance for rental assistance? Would you consider
subtracting that balance out of your open request?
Answer. Yes, the current TBRA request is necessary. The funds
provided by the American Rescue Plan (ARP) for Emergency Housing
Vouchers (EHVs) are a separate pool of funding from the regular Housing
Choice Voucher program. When Congress passed the ARP, it designated
these EHVs to continue to be renewed out of the amount appropriated in
the American Rescue Plan until the program ends in 2030. The initial
funding for the approximately 70,000 Emergency Housing Vouchers (EHVs)
funded through the ARP is almost complete.
Once all EHV vouchers are issued, for the unobligated balance of
$3.5 billion, HUD will provide renewal funding for EHVs on a calendar
basis moving forward after that, beginning in calendar year 2023, and
systematically obligate renewal funds in accordance with the ARP
requirements. The Department will also utilize its reallocation
authority as well to effectively manage the ARP dollars and both de-
obligate and re-obligate funds during the program lifecycle. As stated
in PIH Notice 2021-15, Section 16, the $5 billion in ARP funds
appropriated for EHV must be obligated by September 30, 2030.
Question. The CARES Act provided for $17.4 billion to the
Department of Housing and Urban Development (HUD) for existing programs
including rent assistance, public housing, housing grants and vouchers,
and assistance to minority and disadvantaged communities.\4\ The
Consolidated Appropriations Act of 2021 and American Rescue Plan Act of
2021 provided $25 billion and $21.55 billion for Emergency Rental
Assistance.\5\
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\4\ https://www.americanactionforum.org/insight/the-cares-act-and-
housing-assistance-a-users-guide/
\5\ https://home.treasury.gov/policy-issues/coronavirus/assistance-
for-state-local-and-tribal-governments/emergency-rental-assistance-
program
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To expedite payments, Treasury introduced flexibilities--for
example, allowing renters to self-attest their eligibility instead of
providing documentation when applying for funds.\6\ GAO's COVID-19
report from this January says that significant improvements are needed
to overseeing relief funds, specifically for emergency rental
assistance.\7\ There has been waste/abuse in this program, including a
contractor in New York bragging about 38 percent margins, from $115
million in fees, while rental assistance fund ran dry in that
community.\8\
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\6\ https://home.treasury.gov/news/press-releases/jy0709
\7\ https://www.gao.gov/products/gao-22-105291
\8\ https://www.washingtonpost.com/business/2022/01/25/guidehous-
ceo-newyork-evictions/
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Do you think rental assistance could have been delivered faster and
more efficiently? If Congress could do it over again, how would you
distribute billions of dollars to ensure that those who are most in
needs, are able to get access to funds to keep them in their homes?
Answer. Treasury's Emergency Rental Assistance (ERA) program was a
first-of-its-kind program that, despite not having a national
infrastructure when enacted, has been able to obligate over $30 billion
to over 5.5 million vulnerable households thus far. The availability of
ERA contributed to a historically low eviction filing rate in the
months following the Supreme Court's decision to strike down the
eviction moratorium, and the eviction filing rate has remained below
historical averages in the months since, despite fast-rising rents.
Limited evidence, based on external surveys, showed that Treasury's
movement to allow fact-specific proxies and self-attestation helped ERA
programs that adopted those measures to spend a greater share of their
resources in summer 2021.
External surveys of ERA administrators cited technology, staff
capacity, and non-responsiveness of tenants and landlords as common
challenges in implementing the program. Technical assistance was a
critical solution to overcoming these challenges. HUD and Treasury
entered into an inter-agency agreement that enabled HUD technical
assistance providers to work with 45 grantees to streamline ERA
application processes, address programmatic barriers (e.g., staffing
capacity, policies, and procedures), interpret Treasury ERA guidance,
program marketing and marketing, and strengthen programs to facilitate
a seamless transition to ERA 2 funding.
HUD recently issued a NOFO to conduct an impact evaluation of the
ERA program. This NOFO will likely be awarded in the Fall.
Question. In 2016, the Center on Budget and Policy Priorities
(CBPP), a left-leaning think tank, wrote a paper that stated that
consolidating rental assistance administration would increase
efficiency and expand opportunity. They believe Public Housing
Authorities (PHAs) would work better if they not only formed a
consortium but truly merged and had a single funding contract with HUD.
Do you believe policy like this would be helpful to HUD in
administering rental housing assistance? Why or why not?
Answer. HUD agrees that consolidating PHAs in some communities
could improve program efficiency and remove barriers for families
seeking to use their housing vouchers in other PHA jurisdictions. In
developing the notice to implement the Community Choice Demonstration
(formerly known as the HCV Mobility Demonstration), HUD considered
allowing PHAs to form consortia under a single funding contract.
However, the idea presents significant legal challenges that HUD was
unable to overcome for that notice. HUD is continuing to explore
options for facilitating consolidations where there is interest among
PHAs.
Question. Can you name one housing program administered by HUD that
you think should be eliminated, consolidated, or reformed? How would
you go about doing that and how can Congress help?
Answer. Yes. The President's 2023 Budget supports authorizing the
Community Development Block Grant-Disaster Recovery (CDBG-DR) program,
consistent with the principles included in the President's 2023 Budget
Request.
For more than twenty years, Congress has appropriated more than $80
billion in supplemental emergency funding for CDBG-DR on an ad hoc
basis in response to major disasters to address the unmet long term
disaster recovery needs of States, territories, local governments, and
Tribes. Congress has generally directed grantees to use CDBG-DR funds
for disaster relief, long-term recovery, restoration of infrastructure
and housing, economic revitalization, and mitigation in the most
impacted and distressed areas resulting from a qualifying major
disaster.
The U.S. Government Accountability Office, HUD's Office of the
Inspector General, many CDBG-DR grantees, and other organizations that
work with communities to help them recover, have all noted the benefits
of creating a permanently authorized CDBG-DR program. Permanent
authorization of CDBG-DR would improve the transparency and
predictability of CDBG-DR funds made available to impacted communities.
Permanent authorization would also require HUD to establish consistent
regulatory requirements for CDBG-DR across all future disasters,
eliminating the current practice of establishing new requirements in
response to each supplemental appropriation of CDBG-DR funds.
Question. Low-income, first-time-homebuyers, and other vulnerable
populations depend on FHA's Title I programs to finance their purchase
of a manufactured home and achieve the American dream of homeownership.
Approximately 76 percent of new manufactured homes are titled as
personal property, which can be financed through the FHA Title I
program. Because these regulations have not been updated in years, this
program has become obsolete. In fiscal year 2021, FHA insured a total
of 5 Title I manufactured homes. This must be remedied to expand access
to this affordable homeownership.
Last fall, HUD made some changes to the FHA insurance program for
personal property loans for manufactured housing. In fiscal year 2021,
FHA insured a total of 5 loans under this program. Have the changes you
made last year helped to improve access to this financing thus far? Are
there other changes you expect to make, such as increasing the loan
limits for these loans?
Answer. FHA has not seen any change in participation in the Title I
Manufactured Housing (MH) loan insurance program. This continues to be
driven in part by the program's insufficient loan limits that render
the program unusable for the purchase of most new manufactured homes.
FHA is actively working to propose regulations to index the Title I MH
loan limits under existing authority to better accord with current
manufactured housing unit prices. FHA is also seeking additional
statutory authority to allow further flexibility in establishing Title
I loan limit indexing, which the Department believes is necessary to
maximize the usefulness of the Title I product for MH homebuyers.
Question. In August 2021, the Department of Energy issued a
proposed rule which ties energy efficiency standards for manufactured
homes to the 2021 International Energy Conservation Code (IECC). Under
the proposal, the purchase price of a home will increase from $3,914 to
$5,289 for most homes, based on DOE's projections, which do not include
the costs of testing or compliance (which will be addressed in a
separate rulemaking at a later date). These increased costs will have a
significant impact on the average manufactured home buyer, whose median
income is $34,800.
I understand that DOE was required by statute to consult with HUD
in drafting these--did HUD provide DOE with detailed estimates of the
average increases in mortgage costs for a typical homebuyer because of
the standards--or the projected number of potential homebuyers that
will no longer qualify for a mortgage because of a higher debt to
income ratio. What steps will HUD be undertaking when this rule is
finalized to ensure it does not hamper the construction of manufactured
homes at a time when affordable housing is in such high demand?
Answer. DOE consulted HUD throughout the process and HUD provided
extensive comments to DOE prior to the finalization of the energy
conservation standards for manufactured housing. This feedback,
submitted via agency-to-agency communication through the interagency
review process administered by OMB, included cost projections and other
comments on the impact of the new rule on affordability. Manufactured
Housing is a critically important source of affordable housing for low-
and moderate-income homeowners and renters, and ensuring this housing
remains affordable is a goal of the Department, taking into account
both upfront and ongoing operational costs and savings enabled by lower
utility bills.
HUD is now in the process of incorporating DOE's energy rule with
our Manufactured Housing standards. HUD's goal is to align as closely
as possible with DOE's standards to help streamline the regulatory
oversight process, thereby mitigating confusion and cost impacts to
consumers and the industry. HUD is developing draft recommendations for
consideration by the Manufactured Housing Consensus Committee, and we
will follow our consultation and rulemaking process requirements,
including affordability considerations, as we work expeditiously to
finalize our new standards.
SUBCOMMITTEE RECESS
Senator Schatz. This hearing is now adjourned.
Secretary Fudge. Thank you so much.
Senator Schatz. [Whereupon, at 10:35 a.m., Wednesday, May
12th, the hearing was adjourned, and the subcommittee was
recessed, to reconvene at a time subject to the call of the
Chair.]