On May 25, the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity held a hearing, “Determining the Role of the Federal Housing Finance Administration, Rural Housing Services and Ginnie Mae.” One of the proposals contained within the draft bill under consideration, the FHA-Rural Regulatory Improvement Act of 2011, would move management of rural housing programs from the United States Department of Agriculture (USDA) to HUD.
The draft bill would create the position of Deputy Assistant Secretary for Rural Housing within HUD’s Office of Housing and transfer all responsibilities and resources of the Rural Housing Service (RHS) at USDA to the Secretary of HUD. The HUD Secretary would be required to submit a plan to Congress regarding the transfer of RHS functions to HUD, including any consolidation or streamlining of RHS because of the reorganization.
Peter Carey of Self-Help Enterprises testified on behalf of the Housing Assistance Council and the National Rural Housing Coalition and cited numerous concerns with the draft proposal to move RHS to HUD. “Such a move would not improve administration of the rural housing programs, would not help accomplish the mission Congress established them to deliver, and would make it more difficult for USDA to deliver its other rural development programs effectively,” Mr. Carey said. He also expressed concern over HUD’s lack of experience in serving rural communities. While “HUD’s programs can serve rural areas, they are not designed to” do so, Mr. Carey said.
Instead, Mr. Carey said, HUD’s structure is designed to serve urban communities. Mr. Carey testified that many of HUD’s programs, including the HOME Investment Partnership program, the Community Development Block Grant program and the Federal Housing Administration, spend a disproportionate amount of their funding on non-rural areas when compared to the number of people in these areas.
Mr. Carey also pointed to USDA’s system of local offices that provide easy access for persons seeking housing services and noted that, by comparison, HUD has far fewer regional offices. Lastly, Mr. Carey pointed to the integration of services available through USDA offices as a resource that would be lost if rural housing services were to be split from other resources targeted to rural areas.
Katherine Alitz, President of the Council for Affordable and Rural Housing, testified about specific provisions in the Administration’s FY12 budget proposal that would weaken RHS. Speaking about the proposed transfer of RHS to HUD, Ms. Alitz said, “CARH members continue to review the issue, as there are pros and cons.”
“The key is we must make sure that whatever the context, budget support remains with the program functions. There must also be opportunity not to lose the institutional memory built up by certain long term [Rural Development] employees,” Ms. Alitz said in her statement.
In a May 23 statement before the hearing, Subcommittee Chair Judy Biggert (R-IL), gave an overview of the draft bill. “The Rural Housing Service, under the discussion draft, would be moved to the Department of Housing and Urban Development where its mission to serve rural areas would be strengthened using the housing expertise and financial tools available in the Department,” Chair Biggert said.
View the draft legislative proposal: http://financialservices.house.gov/UploadedFiles/fha_rural.pdf
View Chair Biggert’s statement: http://financialservices.house.gov/News/DocumentSingle.aspx?DocumentID=242521