The Senate Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies (THUD) held a hearing on HUD’s FY13 budget request for the Federal Housing Administration (FHA) on March 8. Acting FHA Commissioner and Assistant Secretary for Housing Carol Galante was the sole witness before the Subcommittee.
Subcommittee Chair Patty Murray (D-WA) opened the hearing by discussing the work that still needs to be done to improve the housing market. Senator Murray said that she looked forward to discussing how FHA can be strengthened in order to support these needed improvements. She commented that the housing market decline has taught the “importance of having a balanced housing policy, with both homeownership and rental opportunities.”
In Ranking Member Susan Collins’s (R-ME) opening remarks, she criticized the Administration for not yet presenting a comprehensive plan to reinvigorate the housing market and reengage the private sector in lending.
Ms. Galante testified that the Administration’s accomplishments through FHA in the last three years have “laid the groundwork for economic recovery.” The HUD FY13 budget request, said Ms. Galante, will add $9.4 billion in FHA and Government National Mortgage Association (GNMA) receipts to offset HUD’s expenditures. Ms. Galante also noted that HUD anticipates an additional $1 billion in FHA revenue for FY13 based upon HUD’s recent settlement with mortgage lenders that was not included in the budget request. She said that HUD will continue to take similar steps with lenders and anticipates additional settlements will also result in revenue for FHA.
While FHA has had a significant stabilizing impact on the housing market, said Ms. Galante, there are still sectors of the housing market that need help, including small multifamily rental properties. HUD is now proposing to facilitate lending to these five- to 49-unit properties, which HUD says are at risk of disinvestment.
Ms. Galante also commented that HUD has significantly improved its process for distributing housing counseling funds. For FY12 funding, HUD issued its Notice of Funding Availability within days after Congress passed the HUD appropriations bill and HUD expects to award those grants next week, said Ms. Galante. The Administration’s budget request includes creating a new Office for Housing Counseling, which Ms. Galante said will improve administration and the impact of the funds HUD awards.
During questioning of Ms. Galante, Chair Murray commented on the increased demand for rental housing and the shortage of affordable housing. Chair Murray inquired about the Administration’s Request for Information on Real Estate Owned (REO) properties (see Memo, 3/2). Ms. Galante described the Fannie Mae REO pilot, saying that HUD is looking at the geographical distribution of units to ensure that there are a reasonable number of units that can be managed in a given area. Ms. Galante said that FHA is looking into a similar initiative for properties that are not yet REO. HUD is considering possibilities such as renting these properties or establishing lease-to-own agreements.
Ms. Galante’s testimony and Senator Murray’s opening statement are attached to this article.