United States General Accounting Office GAO 3 Resources, Communi~, and Economic Development Division August 1997 Housing and community A;_ Development Issue Area Plm Fiscal Years 1996-98 As the investigative arm of the Congress and the nation’s auditor, the General Accounting Office is charged with following the federal dollar wherever it goes. Reflecting stringent standards of objectivity and independence, GAO'S audits, evaluations, and investigations promote a more efficient and cost-effective government; expose fraud, waste, abuse, and mismanagement in federal programs; help the Congress target budget reductions; assess financial information management; and alert the Congress to developing trends that may have significant fiscal or budgetary consequences. In fuhilhng its responsibilities, GAO performs original research and uses hundreds of databases or creates its own to compile and analyze information. To ensure that GAO'S resources are directed toward the most important issues facing the Congress, each of GAO'S 33 issue areas develops a strategic plan that describes its key issues and their significance; the objectives and focus of its work, and the planned major job starts. Each issue area relies heavily on input from congressional committees, agency officials, and subject-matter experts in developing its strategic plan. The Housing and Community Development Issue Area is responsible for auditing federal services whose value totals over $1 trillion. The federal government operates more than 300 programs, scattered among 28 agencies, that are med at providing decent, affordable housing and healthy, vibrant communities. Created in 1965 and staffed with about 10,500 employees, the Department of Housing and Urban Development (HUD) is the principal federal agency responsible for about 240 of the programs and activities dealing w&h housing and community development. Through its programs, HUDmakes housing affordable for about 3.9 million low-income tenants; provides $5 billion annually to over 4,000 communities; insures or guarantees mortgage financing for millions of homeowners through its $400 billion Federal Housing Administration ‘ (FHA)programs; and guarantees through the Governmental National Mortgage Assocation (GNMA), about $464 billion m mortgage-backed securities. In addition, services are provided through the Small Business Administration’s (SEA) $33 bilhon business loan portfolio to many of the nation’s 21 million small businesses; the Federal Emergency Management ’ Agency’s (FEMA)annual disaster assistance obligations of about $2 billion; the Department of Veterans Affaus’ (VA) $174 billion in guarantees on veterans’home loans; and the Department of Agriculture’s Rural Housing Service’s (RHS) $32 billion portfolio of direct and guaranteed home loans to Page 1 GAO/LAP-97-9 rural residents. Finally, in the secondary markets, Freddie Mac and Fannie Mae (government-sponsored enterprises for which HUD has oversight responsibilities) have significant national housing missions and oversee $1.3 trillion m securities and loans. GAO'S work in the Housing and Community Development Issue Area assists the Congress and federal agencies by assessing proposals to restructure agencies and programs, analyzing options to reduce costs, and evaluating the impact of those options on the delivery of services. Principal issues include *restructuring federal oversight of housing and community development agencies to improve service delivery, eliminate duplication, and produce long-term cost savings; *reducing the federal government’s financial risk in its programs to provide mortgage assistance; *fostering self-sufficiency among low-income people while meeting budgetary constraints; l promoung the economic and social development of commumtles; and *improving the cost-effectiveness of programs that promote small and minority-owned business development. In the pages that follow, we describe our key planned work on these important issues during our 3-year planning period (fiscal years 1996 through 1998). This year’s update to the plan contains some shght changes in emphasis to reflect current congressional interest and available resources. Also, because unanticipated events may significantly affect even the best of plans, our planning process allows for updating this plan to respond quickly to emerging issues. If you have any questions or suggestions about thrs plan, please call Stan J Cerwmskr, Associate Director, or me at (202) 512-7631. Judy A. England-Joseph Director Housing and Community Development Issues Page 2 GAO/UP-97-9 1’,’ ’Contents Foreword 4 Table I: Key Issues 6 Table II: Planned Major Work fs‘%, ,, , :“I-TableI: Key Issues Issue Significance Housing and community development agency management: The current focus on agency restructuring has affected HUD, SBA, How can federal housing and communrty development agencres and other agencies involved In housrng and communrty be restructured to better achreve intended goals, Improve development assistance These agencies are proposlng to service delivery, eliminate duplication, and produce long-term cost restructure their organizations and are developrng strategies for savings? measuring their performance and options to improve the delivery of federal services with significant cost savings GAO has designated HUD as a hrgh-risk area because of long-standing deficiencies in management, accounting, and information systems Mortgage financing: How can the federal government mrnimize FHA, VA, and RHS underwrite mortgage credit to purchase frnancral risks In mortgage assistance programs while meeting resrdentral and rental properties that are riskier than purchases affordable housing needs? made in the conventional market These programs support nearly $500 billron In outstanding mortgage loans In addition, HUD’s GNMA guarantees timely payment to Investors on $464 brlllon of securities backed by these mortgages These four agencies need to continue to limit their losses, improve delivery of home mortgage and rental housing assistance, and improve oversight Low-income housing: How can federal low-income housing Although real outlays for federal low-income housing assistance programs meet budgetary constraints while effectively serving have tnpled since 1977, only one-thrrd of eligrble households low-income people and promotrng self-sufficiency? receive such assistance Due to budget constrarnts, funds for low-income housing assrstance are not lrkely to increase substantially Therefore, polrcymakers must find more cost-effective methods to house low-Income people, including better ways for federal houslng programs to encourage self-suffrcrency among residents and to apply best management practices among housing providers Community development: What roles do HUD and other federal Over a dozen federal agencies provide community development agencies play in promoting the economic and social viability of assistance The Congress continues to debate whether to communities and their residents and what types of performance consolidate some of these programs into performance-based measures do these agencies use7 funds or block grants to improve their effectiveness and efficiency Consolidation must also factor in safeguards agatnst duplicate federal programs, the capability of states and localltres to meet communtty needs, and performance measures that ensure appropriate and effective use of funds Small and minority-owned business development: Do exrstrng Although several SBA programs are directed at establishing or programs meet clearly defined goals, what benefits have been preserving small and mrnority-owned businesses, only about 7 accrued, and what are the most cost-effective ways to deliver percent of all small business lending IS backed by SBA Federal services to these businesses7 purchasing requirements annually direct brllrons of dollars to support small business development Page 4 GAO/UP-9’7-9 Table I: Key Issues . Objectives Focus of work *Analyze the effects of agencres’ restructunng proposals l Agencies’and congressronal rernventron proposals affecting housrng and communrty development programs, Including the *Assess the alternatrves to restructure FHA impact on customers and the potential savings *Monitor agencles’ efforts to clanfy mrssrons, set goals, and l Implrcatrons of proposed changes to FHA’s role and operations measure performance toward those goals *Agencies’ actions to implement the Government Performance 4dentify and recommend spending reductions to decrease the and Results Act federal deficit l Potential savings In HUD’s budget aMonitor HUD’s actions to correct long-standing Department-wide management deficiencies *HUD’s tnrtratives to correct long-term management defrciencres and improve contracting practices *Analyze changes to mortgage financing and related programs to *Reducing losses and exposure through better management reduce the federal government’s exposure to losses and reserve requirements *Evaluate ways to improve controls over insured single-famrly *Reducing losses and improving controls over FHA home home improvement and rehabrlrtatron loans improvement and rehabilitation loans *Assess FHA’s capacrty to meet credit gaps in the multrfamrly *Reducing credit gaps through changes in FHA programs housing market *Reducing losses through improved lender approval and *Recommend ways to strengthen HUD programs armed at oversrght procedures approving and monitoring mortgage lenders *Identify ways to better manage and malntain urban and rural *Improvements in the federal oversight, regulatory framework, federally assisted public housing and multifamily properties and budgeting practices of assisted and public housing *Evaluate ways to improve the cost-effectiveness of housing aCost rmplrcatrons of project- and tenant-based housing assistance and its delivery mechanisms assistance *Evaluate options to reinvent houstng assistance delivery systems *Proposed reforms to improve delivery of housing assistance and encourage self-sufficiency and promote self-sufficiency *Identify potential impacts of welfare reform on public housing *Cost and operattonal rmplicatrons of welfare reform for housing authorities and their tenants authorities *Identify options to integrate social, economic, and housing *Integration of social, economic, and housrng programs programs to maximize delivery of services *Performance indicators used to assess implementation and *Identify performance rndicators used to rate community and results of local, state, and/or federal community and economic economic development programs and recommend other development programs Indicators to Improve oversight of these programs *Identify the most cost-effective ways to assist small and *Cost-effectiveness of current ways to deliver program services mrnonty-owned businesses and recommend cost-savings measures Page 5 GAO/LAP-9’7~9 Issue Planned major job starts Housing and community OReview HUD’s management reforms and their effectiveness in addressing long-standing deficiencies development agency *Assess FHA’s mission and how well its operations provide affordable housing management *Assess HUD, SBA, and FEMA’s progress in implementing the Government Performance and Results Act *Analyze HUD’s fiscal year 1999 budget request. *Evaluate HUD’s contracting policies and practices and contract admmistration * Mortgage financing *Evaluate the efficiency of HUD’s property management and disposition activities *Assess whether FHA’s home rehabilitation loan program IS financially self-sufficient *Assess housing price variations and their impact on the current 2-percent reserve that the single-family insurance program requires *Assess FHA’s controls over the use made by borrowers of Title I home improvement loan proceeds * aAnalyze credit gaps for financing affordable multifamily housing and the extent that FHA programs could be targeted to address these gaps *Assess FHA’s procedures for certifying and monitonng mortgage lenders and for sanctioning problem lenders Low-income housing *Assess the adequacy of HUD’s 20-year-old performance funding system that provides $2 8 billion in operating subsidies to public housing * *Evaluate HUD’s $2 5 billion Competitive Grant Program to modernize and rehabilitate public housing *Assess whether HUD and RHS are performing adequate oversight to ensure that replacement reserves are sufficiently funded to meet the long-term capital needs of Section 202 and Section 515 housing. *Assess the Implications of various poky alternatives to reducing Section 8 budgetary authority and outlays *Evaluate the cost implications of HUD’s Section 8 program and whether the program can be improved * *Assess HUD’s efforts to deliver housing assistance to the elderly with low and very low income * aAssess the results of HUD’s multifamily housing portfolio reengineenng program l Evaluate HUD’s efforts to administer and coordinate programs to help assisted housing tenants achieve economic indeoendence and self-sufflciencv *Assess the potential ripact of welfare reform on public housing authorities and therr tenants * Community development *Examine community development-related programs at 28 federal agencies to identify performance measures and potential opportunities for consolidation *Assess whether the effects of the many governmentwide community development programs can be usefully measured *Monitor Implementation of and expansion plans for the empowerment zone program Small and minority-owned *Identify major factors contributing to the costs (credit subsidies) of SBA’s largest loan guaranty business develooment Droarams *On-going assignment Page 6 GAMAP-97-9 The first copy of each GAO report and testimony is free. 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Housing and Community Development Issue Area Plan--Fiscal Years 1996-98
Published by the Government Accountability Office on 1997-08-01.
Below is a raw (and likely hideous) rendition of the original report. (PDF)