House Appropriators Look at HUD Management

The House Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies (THUD) held a hearing on March 14 on HUD and Department of Transportation (DOT) management and oversight issues. Subcommittee Chair Tom Latham (R-IA) opened the hearing by welcoming the new Ranking Member, Representative Ed Pastor (D-AZ). Mr. Pastor said in his opening statement that he is looking forward to learning how progress can be made to address issues at HUD and DOT, “especially under the challenges of sequestration.”HUD Inspector General (IG) David Montoya testified that one concern of his office is that HUD does not have a modern financial system, despite having invested a significant amount of funding in IT upgrades. Mr. Montoya also said that HUD currently has inadequate internal controls and that this would affect its goal of providing affordable housing. He hopes that the necessary changes to internal controls would be addressed with new regulations. Mr. Montoya also said that HUD faces significant challenges in monitoring disaster recovery funds. Mr. Montoya said his office is concerned about HUD’s Moving to Work (MTW) demonstration and interest in expanding the demonstration. He said that reporting on the MTW program is not quantifiable or performance-oriented and HUD is thus unable to evaluate the program. He believes a demonstration program should be evaluated and he disagreed with HUD that the program should be expanded prior to evaluation. Mathew Scire of the Government Accountability Office (GAO) said that his office agrees with some of the IG’s concerns regarding the MTW demonstration. Mr. Scire also echoed concerns shared by Mr. Montoya regarding the Federal Housing Administration’s (FHA’s) Mutual Mortgage Insurance (MMI) fund. Both witnesses expressed concerns that the fund has not met its capital reserve ratio of 2% in any of the last four years. Mr. Scire said that HUD has announced steps to change the fund and that HUD adopted GAO’s suggestions. He said there is still more that HUD can do to improve FHA, and more that Congress can do to set expectations for FHA. This issue has been a recurring theme in both House and Senate hearings.Mr. Scire discussed his concern that Tenant-Based Rental Assistance program costs are increasing year to year. He discussed some of the options the GAO explored that could reduce program costs, including implementing a mandatory minimum rent of $75 for tenants and reducing frequency of inspections or evaluations. He said that some of the practices GAO examined are from MTW agencies, but that GAO is concerned about HUD’s MTW monitoring. Click here to read the GAO’s March 14 report, Department of Housing and Urban Development: Opportunities to Improve Management of Mortgage Insurance and Rental Assistance Programs, GAO-13-439T. Click here to read all witness testimony and Chair Latham’s opening statement.