Tags: HUD | Henriquez | housing | reform

Senate Banking Committee Holds Hearing on Housing Reform

By    |   Tuesday, 11 Dec 2012 03:13 PM

The Senate Banking Committee held a short hearing Tuesday on long-overdue reforms to the administration of federal housing programs. The witness was Sandra Henriquez, assistant secretary for public and Indian housing at the Department of Housing and Urban Development (HUD), whose jurisdiction covers Section 8, traditional public housing programs and Indian housing. The latter was not discussed, but it is extremely important to the home state of Chairman Tim Johnson, D-S.D. Only three senators participated in the hearing: Johnson, Sen. Jack Reed, D-RI, and Sen. Robert Menendez, D-N.J.

It should be noted at the outset that this hearing was not about the reform of housing finance involving the securitization of mortgages and the role of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. That issue continues to languish while the GSEs continue to dominate and re-entrench themselves, along with the troubled Federal Housing Administration (FHA) and one “too big to fail” bank, Wells Fargo. The longer Congress continues to do nothings, the more likely that these institutions will remain the dominant players, with ever more explicit banking by the federal government.

The hearing participants, including Henriquez, mentioned the increasing importance of public housing programs as the economy struggles, and they might also have pointed to the effect the large number of home foreclosures has in boosting the demand for affordable rental housing.

The federal government provides subsidized housing through state and local public housing authorities (PHAs) under both traditional housing project programs, as well as Section 8, which provides vouchers for eligible recipients to pay a subsidized rent based on local market rates. The same economic woes that are increasing the demand are also putting pressure on Congress to cut funding, and this, in turn, increases the relative burden of the costs of administering the PHAs.

Therefore, it is generally agreed, and has been for years, that the administration of these programs needs to be streamlined. The House has already passed legislation, and the Senate is likely to take up a counterpart bill in the next Congress (the House bill will have to be reconsidered, because it will expire when Congress adjourns for the year).

Henriquez outlined proposals around which there is “broad external consensus among policy experts and practitioners” that they would “streamline and simplify HUD’s rental assistance programs:”

1. Revising the threshold for medical deductions. Increasing this threshed from 3 percent to 10 percent is projected to save $150 million in the first year.

2. Consolidating the Family Self-Sufficiency program. This program is offered for both the Section 8 and public housing programs, and HUD proposes to extend the voucher program to multifamily projects.

3. Modifying the definition of extremely low income. This issue applies to the working poor in rural areas, and HUD contends that defining eligible families as the higher of the poverty level or at or below 30 percent of the area median would save $155 million for the voucher program in the first year.

4. Enacting a rent-policy demonstration. Under the Moving to Work (MTW) program, HUD is authorized to experiment with various policies to encourage self-sufficiency, and this proposal would extend this authority beyond the MTW agencies to all agencies.

5. Establishing a flat-rent floor. In order to align public housing flat rents more closely with market rents, HUD would establish the floor at 80 percent of the fair market rent, a change that is projected to save $400 million when fully implemented.

6. Changing the definition of a PHA to include consortia of PHAs. Thus, small PHAs would be allowed to establish consortia in order to cut administrative costs.

7. Authorizing biennial inspections. For high-performing landlords, inspections would be made every two years, rather than annually, in order to cut costs.

The overall philosophy expressed by Henriquez is for HUD and the PHAs to adopt management policies that are used in the private property-management business, while Menendez complained that it has taken many years for HUD and Congress to take action on which there is such broad agreement.

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The Senate Banking Committee held a short hearing Tuesday on long-overdue reforms to the administration of federal housing programs. The witness was Sandra Henriquez, assistant secretary for public and Indian housing at the Department of Housing and Urban Development.
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2012-13-11
Tuesday, 11 Dec 2012 03:13 PM
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