World Trade Center records folder, 2001

NYC 9/11 Public Portal Document

,A Blueprint For New Beginnings -- 22. Department of Housing and Urban Development Page 3 of 5

increases and other cost increases to operate public housing. The Public Housing Drug Elimination program is terminated because the program was found to have limited impact, the same activities are eligible under the Public Housing Operating and Capital programs, and regulatory tools such as eviction are more effective at reducing drug activity in public housing. Program funds will be redirected to other drug prevention efforts.

The Rural Housing and Economic Development program, which began in 1999, is terminated because it duplicates several programs, including CDBG and those of the Department of Agriculture.

A new Federal Housing Administration hybrid adjustable-rate mortgage will work with proposed tax incentives for savings and proposed tax credits for rehabilitation and construction of homes to expand homeownership, increase housing affordability, and strengthen established neighborhoods. The premiums for some specialized FHA programs (e.g., condominium, rehabilitation, and multifamily loans) are to be increased so that all single-family FHA borrowers pay the same premiums and so that these programs operate without the need for subsidy.

Potential Reforms

Oversight of Local Housing Providers: Housing assistance is delivered through thousands of local intermediaries Opublic housing agencies and private property owners. Weak oversight of these local agents has reduced the quality of housing services and increased costs, reducing the numbers of households that can be aided. HUD will improve its management rating instruments, making them more outcome-oriented rather than process-oriented and making other revisions as recommended by the National Academy of Public Administration and HUD's Inspector General. Using the improved instruments, HUD will act against intermediaries who violate the terms of their contract with HUD as demonstrated by failing scores on these instruments. Non-performing intermediaries will automatically be subject to appropriate remedial action, including termination and reassignment of contractual obligations.

Overpayments in HUD's Rental Assistance Programs: HUD overpays hundreds of millions of dollars in low-income rent subsidies because tenants' incomes are underreported and rents are improperly calculated or not fully collected. Latest estimates show substantial overpayment of subsidies in HUD's rental assistance programs, including public housing and Section 8 rental assistance programs. HUD will undertake reforms to correct these errors, including steps to ensure that local agencies and landlords can correctly calculate rent owed based on program rules, full implementation of HUD's existing authority to match tenant- reported incomes with IRS records, and steps to ensure that local housing agencies report tenant characteristics for all assisted households.

FHA Fraud Reduction and Improved Program Controls: Inadequate information systems have weakened FHA's ability to monitor lenders that use its guarantees and contributed to HUD's failure to obtain a clean opinion from its auditors in 1999. A fraudulent scheme known as "property-flipping" recently highlighted internal weaknesses in FHA's single-family systems and controls. To combat the scheme last year, FHA implemented emergency foreclosure moratoria to protect borrowers in areas where property flipping was prevalent. FHA will strengthen the integrity of internal systems and controls to eliminate the need for foreclosure moratoria or other emergency responses. Actions will include improving the loan origination process and providing better monitoring of lenders and appraisers.

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http://www.whitehouse.gov/news/usbudget/blueprintlbud22.html 9/26/2001

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