[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]







                   THE FUTURE OF HOUSING IN AMERICA:
                     OVERSIGHT OF THE DEPARTMENT OF
                     HOUSING AND URBAN DEVELOPMENT

=======================================================================

                                HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 11, 2015

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 114-30
                           
                           
                           
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    JEB HENSARLING, Texas, Chairman

PATRICK T. McHENRY, North Carolina,  MAXINE WATERS, California, Ranking 
    Vice Chairman                        Member
PETER T. KING, New York              CAROLYN B. MALONEY, New York
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             BRAD SHERMAN, California
SCOTT GARRETT, New Jersey            GREGORY W. MEEKS, New York
RANDY NEUGEBAUER, Texas              MICHAEL E. CAPUANO, Massachusetts
STEVAN PEARCE, New Mexico            RUBEN HINOJOSA, Texas
BILL POSEY, Florida                  WM. LACY CLAY, Missouri
MICHAEL G. FITZPATRICK,              STEPHEN F. LYNCH, Massachusetts
    Pennsylvania                     DAVID SCOTT, Georgia
LYNN A. WESTMORELAND, Georgia        AL GREEN, Texas
BLAINE LUETKEMEYER, Missouri         EMANUEL CLEAVER, Missouri
BILL HUIZENGA, Michigan              GWEN MOORE, Wisconsin
SEAN P. DUFFY, Wisconsin             KEITH ELLISON, Minnesota
ROBERT HURT, Virginia                ED PERLMUTTER, Colorado
STEVE STIVERS, Ohio                  JAMES A. HIMES, Connecticut
STEPHEN LEE FINCHER, Tennessee       JOHN C. CARNEY, Jr., Delaware
MARLIN A. STUTZMAN, Indiana          TERRI A. SEWELL, Alabama
MICK MULVANEY, South Carolina        BILL FOSTER, Illinois
RANDY HULTGREN, Illinois             DANIEL T. KILDEE, Michigan
DENNIS A. ROSS, Florida              PATRICK MURPHY, Florida
ROBERT PITTENGER, North Carolina     JOHN K. DELANEY, Maryland
ANN WAGNER, Missouri                 KYRSTEN SINEMA, Arizona
ANDY BARR, Kentucky                  JOYCE BEATTY, Ohio
KEITH J. ROTHFUS, Pennsylvania       DENNY HECK, Washington
LUKE MESSER, Indiana                 JUAN VARGAS, California
DAVID SCHWEIKERT, Arizona
FRANK GUINTA, New Hampshire
SCOTT TIPTON, Colorado
ROGER WILLIAMS, Texas
BRUCE POLIQUIN, Maine
MIA LOVE, Utah
FRENCH HILL, Arkansas
TOM EMMER, Minnesota

                     Shannon McGahn, Staff Director
                    James H. Clinger, Chief Counsel
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 11, 2015................................................     1
Appendix:
    June 11, 2015................................................    59

                               WITNESSES
                        Thursday, June 11, 2015

Castro, Hon. Julian, Secretary, U.S. Department of Housing and 
  Urban Development..............................................     5

                                APPENDIX

Prepared statements:
    Hinojosa, Hon. Ruben.........................................    60
    Castro, Hon. Julian..........................................    62

              Additional Material Submitted for the Record

Poliquin, Hon. Bruce:
    HUD Office of Inspector General report entitled, ``Office of 
      Public and Indian Housing, Washington DC, Monitoring of the 
      Community Service and Self-Sufficiency Requirement,'' dated 
      February 13, 2015..........................................    74
Castro, Hon. Julian:
    Written responses to questions for the record submitted by 
      Representative Waters......................................    99
    Written responses to questions for the record submitted by 
      Representative Murphy......................................   101
    Written responses to questions for the record submitted by 
      Representative Hinojosa....................................   102
    Written responses to questions for the record submitted by 
      Representative King........................................   106
    Written responses to questions for the record submitted by 
      Representative Poliquin....................................   111
    Written responses to questions for the record submitted by 
      Representative Royce.......................................   114
    Written responses to questions for the record submitted by 
      Representative Ross........................................   116
    Written responses to questions for the record submitted by 
      Representative Stutzman....................................   120
    Written responses to questions for the record submitted by 
      Representative Garrett.....................................   121
 
                   THE FUTURE OF HOUSING IN AMERICA:
                     OVERSIGHT OF THE DEPARTMENT OF
                     HOUSING AND URBAN DEVELOPMENT

                              ----------                              


                        Thursday, June 11, 2015

             U.S. House of Representatives,
                   Committee on Financial Services,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:07 a.m., in 
room 2128, Rayburn House Office Building, Hon. Jeb Hensarling 
[chairman of the committee] presiding.
    Members present: Representatives Hensarling, King, Royce, 
Lucas, Garrett, Neugebauer, Pearce, Posey, Fitzpatrick, 
Luetkemeyer, Huizenga, Duffy, Hurt, Stivers, Stutzman, 
Mulvaney, Hultgren, Pittenger, Wagner, Barr, Rothfus, Messer, 
Schweikert, Guinta, Tipton, Williams, Poliquin, Love, Hill, 
Emmer; Waters, Maloney, Velazquez, Sherman, Meeks, Capuano, 
Hinojosa, Clay, Lynch, Scott, Green, Cleaver, Perlmutter, 
Himes, Sewell, Kildee, Murphy, Delaney, Beatty, and Heck.
    Chairman Hensarling. The Committee on Financial Services 
will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    Today's hearing is entitled, ``The Future of Housing in 
America: Oversight of the Department of Housing and Urban 
Development.''
    I now recognize myself for 3 minutes to give an opening 
statement.
    As we approach the 50th anniversary of the founding of the 
Department of Housing and Urban Development, one can't help but 
be struck by President Johnson's boldness as he launched the 
Great Society with these words: ``We have declared 
unconditional war on poverty. Our objective is total victory.''
    HUD was established 1 year later, in 1965, to become the 
war's main weapon for combating poverty, rebuilding our cities, 
and making housing more affordable for all.
    Yet by nearly every official measure, poverty and its 
consequences are as bad as they were 50 years ago. The poverty 
rate today is essentially unchanged from when HUD was founded. 
Millions more Americans fall below the poverty line today, 
including an unbelievable one out of five children. This is 
shameful.
    HUD states that its mission is to ``create quality, 
affordable homes for all.'' Yet according to inflation-adjusted 
figures from the Census Bureau, since HUD was established, the 
median price of new homes has doubled and median rents have 
gone up by more than one-third. In other words, it is not just 
the poor who find the cost of housing soaring beyond their 
means; it is almost everyone. This is unacceptable.
    To make matters worse, to achieve this unenviable record, 
HUD has already spent $1.6 trillion in its history and is 
asking for a 9 percent budget increase--$1.6 trillion is more 
than $13,000 for every household in America. It is equivalent 
to the cost of feeding a family of 4 for an entire year.
    Meanwhile, one of the greatest threats to our poor 
continues to spin out of control--namely, the national debt 
clock. Given the Obama economy of the last 6 years, clearly, 
taxpayer rental subsidies for the poor are needed. But it is 
also an open question whether housing vouchers and public 
housing projects, HUD's mainstay, are a long-term solution or 
are simply helping to create a permanent underclass.
    For whatever good HUD does, it clearly has not won the war 
on poverty. Only economic growth and equal opportunity can do 
that. In other words, the greatest housing program in America 
remains a good career path and a growing economy, not a HUD 
program.
    If we truly care about the least of these among us, we can 
no longer measure success by the number of dollars appropriated 
to HUD. That should be obvious. Instead, success must be 
measured by the number of our fellow citizens who rise from 
lives of poverty and dependency to lives of hope, self-
sufficiency, and pride. That is true success.
    It is time to bring a new focus and new ideas on how to 
best help the poor in our society. On this purpose, which is a 
moral purpose, there should be no debate.
    I have been encouraged to hear our witness, Secretary 
Castro, state that he believes in an ``evidence-based 
management style,'' directed to the goal of ``giving every 
person new opportunities to thrive.'' To give these 
opportunities, again, it is time to think anew, not to 
reflexively add 9 percent to programs that have failed, again 
in the words of President Johnson, to ``not only relieve the 
symptoms of poverty but to cure it and, above all, prevent 
it.''
    I now yield 3 minutes to the ranking member for an opening 
statement.
    Ms. Waters. Thank you, Mr. Chairman.
    And welcome back, Secretary Castro.
    Today, we gather to discuss the future of housing in 
America. But, frankly, if left to my Republican colleagues, 
that future looks very bleak for many of our most vulnerable 
populations.
    Mr. Secretary, HUD remains a critical part of our Nation's 
social safety net, and it is essential to ensuring that 
families have a stable roof over their heads. But, as we will 
see here today, my colleagues have no interest in strengthening 
our national housing system. Their priorities--that is, on the 
opposite side of the aisle--are clearly reflected in the 
recently passed HUD funding bill, which drives investment in 
this agency down to historic lows, undercutting programs which 
help families reach housing stability.
    HUD provides critical rental and homeless assistance for 
our country's most vulnerable populations, makes important 
investments in local community development and affordable 
housing initiatives, and helps millions of families achieve the 
American Dream of homeownership, all while ensuring fairness 
for historically disadvantaged communities.
    Safe, decent, and affordable housing is critical to 
ensuring that our young people are healthy and successful. 
Studies have shown that children who lack stable housing often 
fall behind their peers in school.
    And, today, HUD is more important than ever. In the wake of 
the foreclosure crisis, our Nation is facing a significant 
affordable rental housing shortage. Although private capital 
has an important role to play on this front, it cannot be 
leveraged without reliable Federal funding.
    To truly address the acute need for affordable rental 
housing and the epidemic of homelessness, it is absolutely 
critical that we fully fund and expand the housing and homeless 
assistance programs that have been so successful at HUD.
    This year marks the 50th anniversary of the establishment 
of HUD. And as I think about the next 50 years of housing in 
America, I believe that if we are truly serious about ending 
poverty and uplifting all communities, we must reinvest in HUD.
    Mr. Secretary, I believe that these same principles also 
underlie your vision for the future of housing in America, and 
I look forward to hearing your testimony today.
    Thank you, and I yield back the balance of my time.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from Missouri, Mr. Luetkemeyer, chairman of our Housing and 
Insurance Subcommittee, for 2 minutes.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    And welcome, Mr. Secretary. It is good to see you again. 
I'm glad you are here with us today.
    Mr. Secretary, I want to start by thanking you for 
traveling to Jefferson City a few weeks ago to meet with me, as 
well as area housing advocates and industry representatives. 
The common theme in those meetings was the dire need for 
regulatory relief. That was particularly true in the 
conversations we had with public housing officials.
    I think Allen Pollock, the long-time executive director of 
the Jefferson City Public Housing Authority, best described the 
current state of play when he said that the funding situation 
isn't changing and that you, Mr. Secretary, need to take the 
initiative to reduce unnecessary burdens so that people can do 
their jobs with the resources they have been given.
    In the last 2 weeks, I have visited sites run by two 
different public housing authorities, and just last week Mr. 
Cleaver and I held a roundtable with advocates and industry 
representatives to talk about the immense challenges facing 
low-income housing organizations.
    When it comes to public and low-income housing, the status 
quo isn't acceptable. Anyone who says there isn't a need for 
reform or changes at HUD isn't listening to the advocates, the 
administrators, or the residents of public housing.
    Mr. Secretary, you have been on the job for nearly a year 
now, and the most significant action you have taken at this 
point seems to be a cut of one-quarter of the revenue for the 
Federal Housing Administration, a move, as I stressed with your 
staff earlier this week, that I believe continues to jeopardize 
homeowners and taxpayers. I have yet to see the changes 
necessary to build a stronger housing system for the American 
people. I know that you and I had some discussions, and you 
have some ideas, and I am looking forward to hearing about 
those ideas as the committee continues moves forward on this.
    But again, I welcome you, and I look forward to your 
testimony and to talking with you here shortly.
    Thank you. I yield back, Mr. Chairman.
    Chairman Hensarling. The gentleman yields back the balance 
of his time.
    The Chair now recognizes another gentleman from Missouri, 
Mr. Cleaver, the ranking member of our Housing and Insurance 
Subcommittee.
    Mr. Cleaver. Thank you, Mr. Chairman, Ranking Member 
Waters, and members of the committee.
    Mr. Secretary, good morning.
    The Secretary visited the Fifth Congressional District of 
Missouri not long ago. He actually visited both the other side 
of our State with Mr. Luetkemeyer and then came to the better 
side of the State and spent time in Kansas City.
    And so we are here today with the hearing entitled, ``The 
Future of Housing in America: Oversight of the Department of 
Housing and Urban Development.'' I think it is always important 
to look to the future, and hopefully this hearing will deal 
with the future more than the past, otherwise we are like 
somebody trying to drive a car looking through the rearview 
mirror. I think we have to go to the future, and figure out the 
things that we can do that would be important.
    But if we look at the past, I think it is important for us 
to think about the fact that when the economy teetered on the 
brink of cataclysmic collapse in 2008, the housing market was 
decimated, some families had lost generations of wealth, and 
unemployment skyrocketed. Home sales ground to a halt.
    And in the 7 years since, our economy has slowly improved. 
Last week, in their monthly report, the Bureau of Labor 
Statistics announced that the economy added 280,000 new jobs in 
the 63rd consecutive month of private sector job creation. 
Private-sector employment rose by 262,000. HUD's April 2, 2015, 
housing scorecard cited the National Association of REALTORS 
stating that sales of existing homes, including single-family 
homes, townhomes, and condominiums, rose 6.1 percent from 
February to a pace of 5.19 million, the best since September 
2013.
    So I think there are some things that certainly we can do 
better, but I am very pleased, Mr. Secretary, that HUD is, in 
fact, doing a lot of things well.
    I yield back, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    At this time, it is my pleasure to welcome the Honorable 
Julian Castro back to our committee.
    The Secretary was sworn in as the 16th HUD Secretary on 
July 28, 2014. He has been introduced before, and needs no 
further introduction.
    At the Secretary's request, before I recognize him to give 
an oral summary of his written testimony, the Secretary has 
asked to be yielded a minute in order to offer a statement of 
honor on behalf of a HUD colleague who passed away this week.
    So for that purpose, Mr. Secretary, you are recognized at 
this time.
    Secretary Castro. Thank you very much, Chairman Hensarling, 
Ranking Members Waters, and members of the committee. Thank you 
for inviting me to appear before you today and for giving me a 
bit of extra time to talk about one of our HUD family who 
passed away earlier this week, our Chief Financial Officer, 
Brad Huther.
    Brad really set the gold standard during his career for 
public service over a career that spanned 3 decades. He was a 
leader whose intellect allowed him to master complex subject 
matter and policy, and whose integrity made him a champion for 
everyday folks, who often count on effective government the 
most.
    After a decorated economic development career that included 
time at the U.S. Department of Commerce, and the World 
Intellectual Property Organization, Brad came out of retirement 
in 2014 to join us at HUD. And although he was only with us for 
a short time, he made large contributions to our Department and 
to its work on behalf of the American people.
    He was an administrator's administrator, a man of 
integrity, someone whom all of us respected and had confidence 
in. And his passing is an incredible loss for the field to 
which he contributed so much over his career.
    And, Mr. Chairman, I just wanted to say that our thoughts 
and prayers at HUD are with Mr. Huther's family, and I wanted 
to acknowledge him in front of this committee because I know he 
had the opportunity to work with many of you, as well.
    Chairman Hensarling. Mr. Secretary, on behalf of the House 
Financial Services family, we issue our sincere condolences to 
your colleagues as part of the HUD family on the gentleman's 
passing.
    At this time, Mr. Secretary, I will recognize you for an 
oral summary of your written testimony. Please know that your 
complete written statement will be made a part of the record. 
Again, welcome, and you are now recognized for your testimony.

   STATEMENT OF THE HONORABLE JULIAN CASTRO, SECRETARY, U.S. 
          DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

    Secretary Castro. Thank you again.
    Mr. Chairman, we gather today at a very special moment for 
HUD. This year marks our 50th anniversary.
    I think all of us would agree that much has changed since 
1965, but one thing hasn't: the important role that quality 
housing and strong communities play in the lives of the 
American people. Where a person lives often shapes how they 
live, the jobs that are available to them, the education that 
their children receive, and the overall quality of life that 
they enjoy.
    That is why all of us at HUD come to work every day knowing 
that we can make a difference for others. And I am proud to say 
we are making an impact in a number of ways.
    For example, HUD, along with our Federal and local 
partners, continues to make progress toward achieving the goals 
of President Obama's Opening Doors initiative to prevent and 
end homelessness. From 2010 to 2014, we have seen a 21 percent 
drop in chronic homelessness and a 33 percent drop in veteran 
homelessness. And we will keep working until we reach that day 
when every person who needs housing can find it in our great 
Nation.
    We also continue to make important strides in helping 
families of all income levels secure a decent place to call 
home. One example is our innovative Rental Assistance 
Demonstration, which has helped communities leverage nearly $1 
billion in private market construction investments to address 
long overdue repairs to public housing. And with an additional 
$5 billion coming down the pipeline, it is clear that we are 
going to help ensure that public housing is quality housing for 
years to come.
    We are also helping more responsible families achieve their 
dreams of homeownership through our Federal Housing 
Administration (FHA). FHA served as a stabilizing force during 
the housing crisis and has provided access to credit for 
generations of underserved borrowers.
    We built on this legacy earlier this year by making 
responsible homeownership more affordable by lowering our 
annual mortgage insurance premium half a percentage point to 
encourage another 250,000 new borrowers to enter the market 
over the next 3 years, all while continuing to strengthen FHA's 
financial health.
    HUD is making a tremendous difference across-the-board, and 
we all must continue working to do more. In fact, under HUD's 
current budget, we are able to serve only one out of every four 
people who are eligible for our assistance. That is why we are 
examining our own operations to see how we can deliver results 
faster and more effectively to those whom we serve.
    I have charged HUD's Deputy Secretary, Nani Coloretti, with 
making operational efficiency her top priority, and she has hit 
the ground running. The Deputy Secretary has spent her first 6 
months leading an operational and management review that we 
call ``Deep Dives.'' With many of these findings in hand, we 
are now taking action to improve how we do business to build on 
what is working and to adjust what needs improvement.
    One area of focus is our procurement process, which can 
take over 9 months to complete from beginning to end. These 
delays are unacceptable, which is why we have embarked on an 
effort to transform this process and reduce procurement days by 
30 percent.
    In addition, by October 1st, we aim to reduce or resolve 10 
out of the 11 material weaknesses outlined in our Fiscal Year 
2014 annual financial review. We are also using shared service 
providers to minimize our unnecessary back-office functions so 
that we can better serve our Nation's families and communities.
    At the end of the day, we know that our work isn't about 
program names or statistics or charts; it is about people. No 
matter what side of the aisle you are on, I am sure that we can 
all agree on one thing: that our Nation is at its best when 
every person has an opportunity to thrive. And the work that 
HUD does gives folks the opportunity to thrive.
    Working with our partners, we have given this opportunity 
to those experiencing homelessness who wanted a fresh start; to 
veterans who needed a little support adjusting to life after 
service; to older Americans, who deserve to live in comfort and 
dignity; and to families who are looking to buy their first 
home, put down roots, and build wealth for themselves and their 
children. And we continue to look for new ways to extend these 
opportunities to all Americans.
    Our partnership with Congress is essential to this work, 
and we look forward to working with you to secure funding that 
invests in proven housing initiatives to build a better and 
stronger HUD and to help more families achieve their own 
dreams. Through the strength of our partnerships, the power of 
our policy ideas, and our hard work, I am confident that we can 
ensure that the doors of opportunity are available to Americans 
today, tomorrow, and for the next 50 years.
    Thank you very much.
    [The prepared statement of Secretary Castro can be found on 
page 62 of the appendix.]
    Chairman Hensarling. Thank you, Mr. Secretary.
    The Chair now yields himself 5 minutes for questions.
    Mr. Secretary, I am sure you are aware that this year 
doesn't just mark the 50th anniversary of HUD; it also 
represents the 50th anniversary of the Moynihan Report, which 
many historians actually believe provided the impetus for the 
creation of HUD in the first place.
    Recently, the Urban Institute published a report entitled, 
``The Moynihan Report Revisited.'' Are you familiar with the 
report, or have you had an opportunity to read it?
    Secretary Castro. I have not had an opportunity to read the 
entire report, no. I did see some press about it, yes.
    Chairman Hensarling. Well, Mr. Secretary, in that report, 
after alluding to the alarming statistics of 50 years ago in 
the original report, it goes on to say about those statistics 
that, ``They have grown worse, not only for blacks, but for 
whites and Hispanics as well.''
    You weren't even born when HUD was first created, but after 
50 years, regarding $1.6 trillion, your requested 9 percent 
increase, specifically, what is the statistical evidence that 
HUD has made progress in achieving its original goal of 
eliminating poverty?
    Secretary Castro. Yes. Thank you very much for that. Let me 
give you two examples, Chairman Hensarling. Thank you for 
bringing up that report.
    Let me begin by saying that I see it differently. I do 
believe that we have made tremendous progress in the lives of 
Americans because of the investments that HUD has made. In 
fact, if we need proof of that, we can look at some of the 
committee members here who grew up in public housing, and who 
have been very clear that the fact they grew up and had a place 
to live, in public housing, is one of the reasons that they 
were able to achieve success--
    Chairman Hensarling. Mr. Secretary, I am aware of the 
stories, and they are certainly inspirations to us all. But the 
statistics I see show that poverty is essentially unchanged 
after 50 years. So, let's just start off with the statistical 
evidence.
    Secretary Castro. Yes. So let me--
    Chairman Hensarling. Do we have statistical evidence that 
HUD has actually played a role in eliminating poverty?
    Secretary Castro. Yes. I will give you a couple of 
examples.
    One of the examples I mentioned in my opening statement is 
veteran homelessness. We have seen a 33 percent reduction in 
veteran homelessness, and a large part of that is because of 
HUD-VASH vouchers that have been funded by this Congress. And 
the President has led that effort to effectively end veteran 
homelessness.
    Another example--
    Chairman Hensarling. Over what time period, Mr. Secretary?
    Secretary Castro. We have seen a 33 percent reduction in 
veteran homelessness between 2010 and 2014.
    Another example is our Jobs-Plus initiative. There has been 
research done on Jobs-Plus that has shown that individuals who 
went through Jobs-Plus--which Congress has also funded in the 
past and for which we are requesting a significant increase 
because of its effectiveness--tend to earn 14 percent more than 
individuals who do not and that--
    Chairman Hensarling. So why is the poverty level 
essentially unchanged in 50 years?
    Secretary Castro. Mr. Chairman, I believe that the answer 
to that is much larger than HUD and its programs. Not only 
that--
    Chairman Hensarling. Let me ask you this, then, Mr. 
Secretary, in the limited time that I have. You and I have had 
private conversations, and, again, I have been encouraged by 
many things that you and I have spoken about, but I am still 
somewhat unclear, at the end of the day, as Secretary, how do 
you measure success at HUD? How is success measured? How do you 
define it, and how do you measure it?
    Secretary Castro. We measure success in several ways. You 
and I have had conversations about how we need to continue to 
get better about not just measuring input, how much investment 
we make, but also measuring outcomes.
    One outcome is the fact that somebody has a roof over their 
head. That makes a tremendous difference in their life. We have 
seen that, for instance, through Housing First, which tries to 
give veterans housing first so that they can stabilize 
themselves and then address other issues to get on the right 
track in life.
    However, I believe that we need to continue to measure, 
when we invest in things like Jobs-Plus, Family Self-
Sufficiency, and the Resident Opportunities and Self-
Sufficiency (ROSS) program, the extent to which those 
individuals who go through those programs go on and get good 
job training and get a job, the extent to which they get a good 
education, and that they are able to move up and out.
    Chairman Hensarling. Mr. Secretary, my time is winding 
down. Let me ask you three specific questions.
    Number one, in tracking people's right to rise, their 
ability to succeed, does HUD currently have any way of tracking 
when an individual leaves the assistance of one PHA and moves 
to another? Does HUD have any way to track that?
    Secretary Castro. HUD does track who is on the rolls of--
    Chairman Hensarling. But do you have a way of tracking if 
someone leaves one PHA and goes to another?
    Secretary Castro. I believe that we do have the opportunity 
to track that, Mr. Chairman.
    Chairman Hensarling. Okay. I would like to have you share 
that with this committee, because--
    Secretary Castro. Sure.
    Chairman Hensarling. --I haven't seen those statistics.
    Do you have a way of tracking when someone leaves a PHA and 
becomes homeless?
    Secretary Castro. When someone leaves a housing authority 
and becomes homeless?
    Chairman Hensarling. Do we have any way of knowing, if 
someone leaves a HUD program, whether or not they become 
homeless?
    Secretary Castro. I believe that we have a way to track 
within a continuum of care how many individuals are homeless. 
As to whether that person was--
    Chairman Hensarling. If you would share that with the 
committee, because I haven't seen that.
    And then last but not least, since I am already way over my 
time, is there any way that HUD today can track when people 
become self-sufficient and stay that way, say, 3 years or 5 
years later?
    Secretary Castro. Yes. I--
    Chairman Hensarling. Do you have any way to track that?
    Secretary Castro. --would be glad to share with you the 
evidence that we do have on that. Sure.
    Chairman Hensarling. So you can track that?
    Secretary Castro. We have done some tracking of self-
sufficiency, particularly--
    Chairman Hensarling. For individuals.
    Secretary Castro. --particularly on the Family Self-
Sufficiency Program.
    Chairman Hensarling. Mr. Secretary, I haven't seen it, so I 
look forward to receiving it.
    I am way over my time.
    Secretary Castro. Sure.
    Chairman Hensarling. I now yield to the ranking member for 
5 minutes.
    Ms. Waters. Thank you very much, Mr. Secretary. We are 
delighted that you are here with us this morning. And we thank 
you for the way that you have come into your position and the 
leadership that you have provided thus far.
    And I am very pleased to hear from Members on both sides of 
the aisle how generous you have been in visiting--
    Secretary Castro. Sure.
    Ms. Waters. --their communities and how you have been so 
very, very helpful.
    I think I want to ask you a little bit about the rental 
housing and homeownership crisis that we have.
    In the current rental housing crisis, rent is taking a 
larger share of income, and families are facing greater 
challenges in saving for a downpayment and being able to own a 
home. This could have serious negative consequences for the 
housing market.
    Just this week, again, the Urban Institute released a major 
study which predicts that the homeownership rate will continue 
to decline through 2030 and that a major rental surge is upon 
us--a surge that we are truly not prepared to meet. The 
homeownership rate will decrease for nearly all age groups, and 
African-Americans will fall further behind all racial groups in 
homeownership.
    What is your vision for how we solve this problem? And how 
can HUD, given the proper resources, enable more families in 
this country to own a home or affordably rent one?
    Secretary Castro. Yes. Thank you very much for the 
question, Ranking Member Waters.
    You are correct that what we see out there in the United 
States right now is an affordable housing rental crisis. A good 
example of this, a good demonstration of this was in our latest 
``Worst Case Housing Needs'' assessment. What that found was 
that there are 7.7 million low-income households who either are 
paying 50 percent or more of their income in rent, are living 
in substandard housing, or both of those things. And those 
families, by the way, are families who are not on any 
government assistance right now.
    Another report was released last week by the Low Income 
Housing Coalition that was fascinating in what it found. It 
said that in no decent-sized city in the United States could 
you afford a two-bedroom apartment, a decent two-bedroom 
apartment, working minimum wage full-time, and that in the vast 
majority of communities, you couldn't even afford a one-bedroom 
apartment.
    So what is HUD doing about that? That is why we have 
requested additional Section 8 vouchers, for instance, because 
we lost 67,000 Section 8 vouchers through sequestration. It is 
why we seek to stretch our resources as far as we can through 
initiatives like the Rental Assistance Demonstration (RAD). It 
is why we believe in properly funding both capital and 
operating for public housing and why we look to be innovative 
in communities with initiatives like Choice Neighborhoods and 
Promise Zones.
    We want to take a holistic approach to making more 
affordable housing opportunities possible for Americans. And, 
as I mentioned early on, right now we are only serving one out 
of every four people who qualify for HUD services. So we see 
that there is a tremendous need out there, and we want to do 
something about it.
    Ms. Waters. I thank you very much.
    In the National Housing Trust Fund, we have a deficit of 
over 7 million affordable available units. And we all know that 
Barney Frank worked very hard--I worked with him--to get the 
National Housing Trust Fund.
    We don't seem to have much support from our friends on the 
opposite side of the aisle. We must find ways to fully 
capitalize the Trust Fund and defend against Republican attacks 
to abolish the program, including the latest attack in the 
House funding bill.
    Can you speak to this issue quickly?
    Secretary Castro. Yes.
    I was glad to see Director Watt flip the switch on the 
National Housing Trust Fund. This is particularly important and 
will be a powerful tool in creating more affordable housing 
opportunities because it focuses on extremely-low-income 
individuals. These are individuals who are making 30 percent or 
less than area median income. Sheila Crowley testified recently 
in front of Chairman Luetkemeyer that that is the segment of 
the population where we see the biggest gap in terms of 
affordable housing opportunities.
    And so we are disappointed in the Transportation, Housing, 
and Urban Development's (THUD's) recommendation that this be 
essentially wiped away and that HOME take its place. Those two 
programs have separate identities.
    Ms. Waters. Thank you so very much.
    I yield back the balance of my time.
    Chairman Hensarling. The gentlelady yields back.
    The Chair now recognizes the gentleman from Missouri, Mr. 
Luetkemeyer, chairman of our Housing and Insurance 
Subcommittee.
    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    And, again, welcome, Secretary Castro. And, again, thank 
you for stopping by our district, the jewel of the Midwest and 
the most important area in Missouri, contrary to my good friend 
from Kansas City's comment.
    But, again, I am just kind of curious. We had a meeting 
last week, the ranking member and I, with a bunch of industry 
and housing officials. And they came up with a lot of different 
concerns, but the same message that we heard in Jefferson City 
that day, and the same message I heard again last week: 
Regulation is strangling their ability to deliver services.
    Let me just give you an example of some of the things that 
they were talking about here. I see one of the advocates here 
this morning, and I will give you a couple of his ideas.
    Number one, recognize that you don't have the same amount 
of funds that you would like to have, and figure out how you 
can use what you have more efficiently. If the Moving to Work 
(MTW) program works, expand it. If regulation is costing too 
much money, figure out how to minimize it. Raise the minimum 
rent.
    Another one we talked about was flexibility. Flexibility is 
going to be very important for them to be able to utilize the 
assets they have and to be able to serve the people they are 
supposed to serve.
    Another comment they had was that there is an inconsistency 
between regions of HUD's offices, especially with regard to 
transportation issues. It is hard for one area to look at 
another area and see that they are getting to do something and 
that you are not, and that is a problem within your agency.
    I know in our discussions, you were trying to look for some 
ways to improve services, and these are some suggestions we 
have. So I guess my question to you is, are they something that 
you could work on with us?
    Secretary Castro. Absolutely.
    Let me say I also enjoyed the opportunity to visit 
Jefferson City and to hear from folks in the real estate 
industry and also some of the advocates, including PHA 
representatives. It was very insightful to hear particularly 
the concerns of a smaller PHA.
    And let me say unequivocally that, as I mentioned that day 
to you personally, we are ready to work with you and with the 
entire committee and with Congress on some of these issues.
    I will give you an example of that. One of the things that 
was mentioned was this issue of the administrative burden 
related to income verification. Why do we require income 
verification every year for certain residents who are making 
the same income, basically, year after year? That is a good 
question, because 56 percent of our households who are HUD-
assisted are elderly or disabled. So we are supportive of a 
change to that, which would only require income verification 
every 3 years for folks where at least 90 percent of their 
income is fixed-income sources.
    And with regard to MTW and the other issues that you 
mentioned, we are working on that. In this budget, for 
instance, we have proposed an increase of 15 MTW agencies that 
would have greater flexibility. And we are willing to look at 
these other issues, as well.
    Mr. Luetkemeyer. Thank you for that. And we look forward to 
working with you on those issues.
    You made a comment a minute ago that there were 67,000 HUD 
vouchers that you said were cut out of the budget. In my 
discussions with a lot of the individuals in the industry, they 
made it seem like there were about 200,000 that went unused. Is 
that true? That they--
    Secretary Castro. I am not familiar with that--
    Mr. Luetkemeyer. --were not able to access them because 
they didn't have the funds or administrative opportunities or 
there were restrictions. Somehow, they couldn't utilize all of 
them.
    Secretary Castro. That may have been true some time ago. 
However, what we saw when we went through sequestration is that 
folks out there, PHAs actually had to pull vouchers back. 
Instead of letting them out on the street, they had to inform 
families, no, no, you can't use that voucher.
    Mr. Luetkemeyer. Well, I am--
    Secretary Castro. So we are trying to get back to where we 
were before.
    Mr. Luetkemeyer. These are people who are on the ground who 
are using these, and they are saying there are a lot of them 
that are left unused because of the problems that they have to 
deal with--the restrictions, the lack of flexibility, the 
whatever it is that is causing them not to be able to that.
    So I think it is something that you need to take a look at, 
because if we have them going unused, we need to--throwing a 
figure out, the 67,000, because of sequestration is not going 
to fly.
    Next, we had a long discussion with a group of your folks 
with regard to the income that was cut back in January. And, 
again, it really concerns me because according to your 
quarterly report, which I have right here, you are continuing 
to take in or lend to a group of folks who are probably more 
problematic, from the standpoint of you now are going to the 
640 to 679 credit scores, which is fine, but by doing that, 
they expose you to more risk. More risk means more possible 
loss.
    And if you look at the losses, I really have some problems 
here with some of the loss information in the report. In one 
place, it says you have lost $7.5 billion over the first half 
of the year, which means you are going to lose $15 billion this 
year. In another place, it says that your loss ratio will 
probably go down, which is great, but that number doesn't jibe 
with this other one. So I am kind of concerned about that.
    But I think the bottom line is there seems to be a 
continued problem, in my mind, with regard to the ability of 
income to cover the expenses. And we are going to watch it very 
carefully. I hope that this all works out.
    Thank you, Mr. Chairman. I yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Missouri, Mr. 
Cleaver, the ranking member of our Housing and Insurance 
Subcommittee, for 5 minutes.
    Mr. Cleaver. Thank you, Mr. Chairman.
    Mr. Secretary, I don't know how we are going to be able to 
erase this stereotype or the misinformation that seems to be 
eternally out here in the world, that people who live in public 
housing move in and their goal is to stay for an entire 
lifetime. The facts don't match the stereotype. If you have 
children living in a multi-family property, the average stay is 
about 5.14 years. That is about the time that my family lived 
in public housing. And that is just so dramatically different 
than what people seem to want to believe and how it is 
perpetuated.
    Do you have any ideas for how we can erase that 
misinformation that seems to be all over the country? And I 
think there is always some resentment from those of us who--in 
my case, I saw my father work three jobs to save enough money 
to buy a lot to get a house. And other families were doing the 
same thing. But I don't know how we get that out.
    So my father, who is 92--and if this is on C-SPAN, he is 
probably watching. So thanks for everything, Daddy.
    But I don't know--it is an insult to him and a lot of other 
people. How can we erase this?
    Secretary Castro. Yes. It is a great question. And let me 
say, as well, as I enjoyed visiting with Chairman Luetkemeyer 
in his district, I also enjoyed visiting with you in your 
district, Ranking Member Cleaver.
    You ask a great question. And what we see every day is 
that, whether it is in public housing or folks receiving a 
Section 8 voucher, we see folks who want to work hard and want 
to get on the track to a better life. And we understand that 
our investment in public housing and in HUD-assisted housing is 
a way to get them on that track.
    I reject the notion that somehow folks who are living in 
public housing are lazy or that it creates a culture of 
dependency. The fact is that 56 percent of the households that 
we serve are headed by someone who is elderly or disabled to 
begin with. And, of the rest, a significant number of the folks 
are under the age of 18; they are children.
    Of the folks who are working age, a decent number of those 
folks are working. And if they are not working, then they are 
required to do some sort of community service or be in school 
or go through job training. So, this is very much an 
opportunity for folks to get onto the track of a better life 
that they want to get on.
    Mr. Cleaver. Thank you. And I agree, obviously, with 
everything you have said. It is so frustrating to hear to the 
contrary.
    Let's talk about FHA for just a moment, because FHA plays a 
major role for first-time home buyers. And FHA has helped 
almost half-a-million people get into homes since 2014, and 
about one-half of them are brown and black Americans.
    Do you believe that FHA, as we talk about the future, is 
one of the agencies that absolutely must be preserved so that 
we can continue to provide this kind of assistance to first-
time home buyers as well as others?
    Secretary Castro. FHA plays an invaluable role in creating 
upward mobility in our Nation for people of all income levels. 
It has been the primary vehicle for first-time home buyers to 
get into a home, people of all different backgrounds. As you 
mentioned, for the African-American and Latino communities 
today, about 50 percent of those home buyers have an FHA-
insured loan.
    Over the last couple of years, we have seen the Mutual 
Mortgage Insurance Fund rise in value by $21 billion. It is on 
the right path.
    So, yes, we need to do everything that we can to continue 
to strengthen FHA and ensure that it is there to provide that 
opportunity for folks to reach the American Dream.
    Mr. Cleaver. Thank you.
    It may be also important to realize that those individuals 
qualified for the loan, that they were not just--
    Secretary Castro. Sure. And I know there are a few seconds 
left. We have to distinguish between the issue of affordability 
and access.
    What we did was that we lowered the mortgage insurance 
premium, so we made it more affordable. That did not in any way 
change who qualifies for a loan. We still have, historically, a 
fairly high average credit score for FHA-insured loans of 677. 
The average credit score out there is 687, to give you a sense 
of the closeness of those numbers.
    Mr. Cleaver. Thank you, Mr. Secretary.
    I yield back, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from New Jersey, Mr. 
Garrett, chairman of our Capital Markets Subcommittee.
    Mr. Garrett. Thank you, Mr. Chairman.
    Mr. Secretary, something we can agree on is that the Fair 
Housing Act makes it unlawful to refuse to sell or rent a 
dwelling to any person because of race, color, religion, sex, 
or national origin. And that is the law, as it should be.
    However, HUD's Disparate Impact Rule allows you, the 
government, to allege discriminatory practices based not on 
intent, but solely on statistical outcomes, and not, as I say, 
on any discriminatory intent or disparate treatment.
    As a result of that, the cost of litigation is strangling 
the market, and the availability of credit is thereby cut back 
on lending to potential homeowners--the very same potential 
homeowners that we hear you say that we are trying to help. 
Therefore, what it does is to reduce the supply of new 
affordable housing, as builders basically back away from the 
projects that are vulnerable to litigation from you. We are 
basically punishing the people that we are trying to help.
    Let's take a look at your agency. In the 2014 FHA annual 
report to Congress regarding the financial status of the Mutual 
Mortgage Insurance Fund, it says that FHA indicated that its 
single-family endorsements for that year were, what, 61 
percent, as you put in your report, to Whites, 17 percent to 
Hispanics, and 10 percent to Blacks.
    Statistically, is that not disparate impact? Statistically, 
is that not your agency discriminating? Are you doing anything 
about that?
    First of all, is that disparate impact?
    Secretary Castro. I reject that premise. Thank you, 
Congressman, for the question, but--
    Mr. Garrett. Then, let me just ask--
    Secretary Castro. --I think it is misguided.
    Mr. Garrett. Not the premise--
    Secretary Castro. And I think you know what I am talking 
about.
    Mr. Garrett. Let me ask you, is that a disparate impact--
    Secretary Castro. That is not at all the way that disparate 
impact has been analyzed or used. As you know, this is in 
litigation. And I will say that I believe in disparate-impact 
analysis and that, if we look at the legal rationale for that 
and how that actually plays out--
    Mr. Garrett. Let me just ask you--
    Secretary Castro. --I have confidence in the way that it 
has been used.
    Mr. Garrett. Let me just ask you, is a 40 percent disparate 
impact, disparate impact? The population of the Black community 
is around 13.5 to 14 percent. You are lending or endorsing to 
only 10 percent.
    Secretary Castro. This issue would never come up in that 
context. You are taking it completely out of context.
    Mr. Garrett. No. Well--
    Secretary Castro. It would never come up in that context. 
And that is not the context that it is being litigated about 
either.
    Mr. Garrett. No. That is because you are litigating against 
lenders and the like, or people in the housing industry. I am 
asking about what you are doing. Is what you are doing 
disparate impact? Should we use disparate impact theory against 
you? And if it is fair against them, is it not fair against 
you?
    Secretary Castro. What we need to do--
    Mr. Garrett. Yes.
    Secretary Castro. --is to preserve disparate-impact 
analysis because it is important to determining where there is 
a discriminatory impact and where other tools can be utilized 
to have a better impact.
    Mr. Garrett. So what is--
    Secretary Castro. In fact--
    Mr. Garrett. --a disparate impact? What percentage off is a 
disparate impact?
    Secretary Castro. I reject that notion, Congressman. These 
are issues that are applied in very fact-specific cases.
    Mr. Garrett. So what are the--
    Secretary Castro. And I reject the notion of a hypothetical 
that would never come up in the first place to try and analyze 
such a serious topic.
    Mr. Garrett. So you cannot define for us what percentages 
are disparate impact even though your agency brings those 
lawsuits?
    Mr. Castro. You know very well that the definition of what 
a disparate impact is changes in different scenarios, in 
different industries, and as that is applied to different 
cases.
    Mr. Garrett. Exactly. And isn't that the exact problem?
    Secretary Castro. No. I think that is part of the strength 
of the tool--
    Mr. Garrett. No, it isn't.
    Secretary Castro. --that it is not a one-size-fits-all 
tool. It is a very sensitive tool--
    Mr. Garrett. So what you are saying--
    Secretary Castro. --in analyzing the context of individual 
cases.
    Mr. Garrett. So what you are saying is, if I am a lender or 
a builder, a homebuilder, I don't know what your charge against 
me is going to be because, as you just stated right now, it 
changes from circumstance to circumstance.
    Secretary Castro. Not at all.
    Mr. Garrett. There is no clear definition of what disparate 
impact is--
    Secretary Castro. Not at all. In fact, disparate-impact law 
and the burden-shifting that happens if it is litigated 
actually gives the defendant an opportunity to show that there 
is a legitimate business reason for why those statistics are 
the way they are. And then, when they demonstrate that, it 
forces the plaintiff to actually have to come back and show 
that, no, you should be doing it a different way that would be 
more effective and have not so much of a disparate impact.
    So the burden-shifting--
    Mr. Garrett. But by your own testimony--
    Secretary Castro. --the burden-shifting that is involved 
there actually protects the defendant.
    Mr. Garrett. The defendant, only after he has been brought 
to court, hired attorneys, gone through the expense of this, 
and having to put a defense on something that you have just 
told me and told this hearing that you do not have a definition 
of what it really means. So--
    Secretary Castro. That is not true. As a lawyer, there are 
plenty of lawsuits that are thrown out summarily, and so I am 
not sure what you are talking about. There are plenty of the 
lawsuits that are thrown out summarily, dismissed.
    Mr. Garrett. Only after the defense has to defend the 
charge of disparate impact that you have just told this hearing 
there is no--
    Secretary Castro. I would just encourage you to look at--
    Mr. Garrett. --definition to it.
    Secretary Castro. Just look at the track record of 
disparate impact. And it has had a good track record in terms 
of its usage.
    Mr. Garrett. What I see is disparate impact apparently by 
your very own agency, and I--
    Ms. Waters. Regular order, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentlelady from New York, Mrs. 
Maloney, ranking member of our Capital Markets Subcommittee.
    Mrs. Maloney. Thank you so much, Ranking Member Waters and 
Chairman Hensarling, for this important hearing.
    And I thank you, and HUD, for all you do for affordable 
housing in America.
    Two programs that I am constantly asked about are Section 8 
and the Section 202 program, which does so much to provide 
housing for seniors. And, according to your own study, seniors 
with low incomes are the most likely to pay more than they can 
afford for their housing than any other sector in our society.
    This program is very important not only to New York but, I 
would say, the whole country. And I am concerned that we don't 
have enough funding to meet the rising demands for affordable 
senior housing. The capital advance, the new construction, I 
understand, has been frozen, has very little in it. And, 
according to the AARP, for every Section 202 unit that becomes 
available, there are well over 10 seniors on a waiting list.
    So can you describe what HUD is doing to meet the demand, 
the rising demand for affordable housing for seniors under the 
Section 202 program?
    Secretary Castro. Thank you very much, Representative. I do 
appreciate the chance to speak to this, particularly because as 
much fuss is made over the idea of these millennials and young 
people, and cities are chasing these millennials, we all know 
that the fastest growing segment of the population is actually 
our Baby Boomers, who are turning 65, who are elderly, and who 
are spread out in every single community out there and are a 
focus of the Section 202 program.
    We are requesting an additional investment in Section 202, 
particularly for a demonstration project, in this budget. This 
demonstration project would allow us to show the linkage 
between our investment in housing for the elderly and a 
reduction in healthcare costs. Because we believe that it is 
important to show that does exist, and hopefully that will 
inform policy in the future, because by spending a little bit 
for housing and supportive services on one end, you can 
actually save money in the healthcare system on the other. That 
is the hypothesis.
    But more broadly, as I mentioned a few moments ago, 56 
percent of the households that we serve are actually headed by 
someone who is elderly or who is disabled. And that goes across 
HUD-assisted housing. So our service to elderly Americans is by 
no means limited to Section 202; it is also public housing, it 
is Section 8, project rental assistance. And it is part of the 
reason that we are requesting greater levels of voucher and 
funding for our traditional housing programs.
    Mrs. Maloney. Thank you.
    The other HUD programs that I am interested in supporting 
additional support for are Section 3, the earned-income 
disregard in public housing, and the Family Self-Sufficiency 
Program. These are important tools for the Department and local 
housing providers to help families earn more income and achieve 
more economic mobility.
    Can you talk about the importance of these programs and 
policies and how we can work with you and the Administration to 
strengthen and expand them?
    Secretary Castro. I can.
    We want the folks that we serve--whether it is Section 8 
vouchers or in public housing--who are working age, to be able 
to have gainful employment and eventually not need our public 
assistance. I agree with folks on that point. And one tool that 
we can use is Section 3.
    Section 3 says that, when an investment is made--let's say 
there is construction that a PHA does--that the contractors 
make best efforts to hire low-income individuals in that area, 
including public housing residents. So this gives folks an 
opportunity to get a good job, to be able to provide better for 
their families, and hopefully to use that to move up and out 
eventually.
    Recently, we promulgated a new rule on this to give 
communities stronger guidance on the use of Section 3.
    This is about investing in economic opportunity for low-
income individuals. And we look forward to working with you, 
the committee, and Congress to ensure that we can make the most 
of Section 3. Because the fact is, frankly, that the track 
record is checkered for housing authorities out there in how 
much they have utilized Section 3, and we want there to be 
consistency in the utilization of Section 3.
    Mrs. Maloney. My time has expired. Thank you.
    Chairman Hensarling. The gentlelady yields back.
    The Chair now recognizes the gentleman from Texas, Mr. 
Neugebauer, chairman of our Financial Institutions 
Subcommittee.
    Mr. Neugebauer. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for being here.
    Twenty years ago this month, President Clinton announced 
the National Homeownership Strategy. And he said, ``I want to 
say this one more time: Our homeownership strategy will not 
cost the taxpayers one extra cent. It will not require 
legislation. And it will not add more Federal programs to a 
growing Federal bureaucracy.'' I think we can all agree that 
vision didn't turn out that way.
    If you recall, back in February you and I had a 
conversation about the fact that you were about to lower your 
guarantee fee by 50 basis points, and the fact that you were 
still not meeting the federally-mandated reserve ratio for the 
fund at FHA. And I think, back then, the number was .41 
percent. The mandate is 2 percent.
    I wondered if you could tell us today, Mr. Secretary, what 
is the current status?
    Secretary Castro. Yes. Thank you very much, Representative, 
for the question.
    I cannot give you that information because that won't be 
available until the next annual report. As you know, that is 
done by an independent actuary, and so we do not do that 
analysis. That analysis is done by a neutral third party. We 
expect to have that 2015 report in November of this year.
    Mr. Neugebauer. Mr. Secretary, I want to make sure I 
understand that. So you don't know until the end of the period 
how you are doing?
    Mr. Secretary, you were the mayor of San Antonio. And I can 
imagine the director of finance, if you asked him, how are our 
sales tax receipts coming in line with our projected budget, 
and he says, I won't be able to tell you that for a year, would 
that be an appropriate answer?
    Secretary Castro. What I would say is that you all can 
change that. That is set by Congress, not by me.
    Mr. Neugebauer. But, internally--
    Secretary Castro. If you want to change it, go ahead and 
change it.
    Mr. Neugebauer. Internally, I would think that you would 
have people monitoring--
    Secretary Castro. Let's be clear about that.
    Mr. Neugebauer. --the progress of the fund.
    Secretary Castro. As Mr. Luetkemeyer said, we do put out a 
quarterly report, and Mr. Luetkemeyer, to his credit, asked my 
staff to go and review the quarterly report with him. We would 
be glad to do that with you.
    However, to your question as to whether I have an update on 
that capital reserve ratio, the answer is no, because Congress 
has an independent actuary that does this once a year for us.
    Mr. Neugebauer. Let me ask you another question. Are the 
premium revenues that you projected to meet the standard--
because I believe what you told me in February is that by the 
end of 2015, you would be at 2 percent. So you don't have any 
idea whether you are going to be at 2 percent at the end of the 
year?
    Secretary Castro. Again, just to correct the record, what I 
said when I was here on February 11th was that we expected that 
in 2 years, within 2 years, that we would reach the 2 percent 
capital reserve. That is what I said in February.
    Mr. Neugebauer. I think the problem that a lot of us have 
is that you are running an organization that has a $42 billion 
budget, has a trillion-dollar-plus contingent liability, and we 
don't have the ability to track progress other than on an 
annual basis? I don't know--
    Secretary Castro. That is not true at all. In fact, we 
provided to Chairman Luetkemeyer our quarterly report. We do 
track several statistics. However, you asked specifically about 
that capital reserve ratio.
    Mr. Neugebauer. Then, let me ask about the revenues. Are 
the revenues on track to meet that goal?
    Secretary Castro. The answer to that is that they are 
encouraging so far. Let me give you a precise example.
    Mr. Neugebauer. I don't want to know whether they are 
encouraging or not. I want to know, are they on track to--are 
you going to meet the 2 percent at the end of the year?
    Secretary Castro. They are encouraging right now.
    Mr. Neugebauer. Yes. Well, ``encouraging'' is not the--
    Secretary Castro. So I will give you an example of why I 
say that. Okay?
    When you look at March of 2014 versus March of 2015, for 
instance, there were 8,000 more borrowers through FHA-insured 
loans. That is just a month-to-month comparison. We have seen, 
as the quarterly report indicated, a significant uptick in 
refinancing.
    So you have to understand that this thing took effect on 
January 26th. With the limited early data that we have, we 
believe that we are on track. However, we will not get an 
official number on this, the assessment, until around the 
Thanksgiving timeframe when that independent actuary gives us 
the report.
    Mr. Neugebauer. I think the thing that is troubling is, a 
lot of my colleagues on the other side of the aisle talk about 
a safety net, and to me a safety net is something that is 
provided to keep you from failing or falling or hurting 
yourself. And so the safety net that we have today is made out 
of string, and I think you would agree that if I had a safety 
net, I would rather have one made out of rope. And when you 
have $1 trillion of the taxpayers on the hook and you only have 
0.41 percent equity, the taxpayers are at risk.
    Secretary Castro. Yes. That is apples and oranges. You are 
conflating two things. I don't think that is the way it works.
    Mr. Neugebauer. I'm sorry, Mr. Secretary, how is that 
apples and oranges?
    Secretary Castro. The capital reserve ratio is not a simple 
ratio of how much money we have to pay claims. We have more 
than enough to handle the claims, the losses, that we have in 
front of us.
    Mr. Neugebauer. It is the economic present value of your 
liability.
    Ms. Waters. Regular order, Mr. Chairman.
    Chairman Hensarling. The Chair can see the clock.
    The Chair now recognizes the gentlelady from New York, Ms. 
Velazquez.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Mr. Secretary, this hearing could not come at a better 
time, as the House unfortunately just passed the Fiscal Year 
2016 THUD spending bill, which, if enacted, will severely 
underfund virtually every HUD program and jeopardize the 
housing stability of vulnerable Americans.
    The shortage of affordable rental housing is a huge problem 
in New York, and a new analysis released this week brought the 
severity of the problem home. Between 2002 and 2014, rents in 
New York City rose by 32 percent citywide, even after the 
effects of inflation were removed.
    My question is, Mr. Secretary, what will happen to working 
families if we do not have public housing? For example, in New 
York City we have 615,000 people who live in public housing and 
Section 8. These are hard-working people, and if we don't 
provide those types of resources, where will they go?
    I don't suffer from multiple personalities. I understand 
that if we want to tackle the issue of poverty, it takes 
investment; that if we want to tackle the issue of homelessness 
among veterans, it takes the role of the Federal Government.
    And by the way, I am proud to report that in New York City, 
the number of homeless veterans in New York dropped by 40 
percent last year and declined 75 percent since 2012. Why? 
Because of vouchers and homeless assistance grants and because 
the City is also pooling resources. That is what it takes.
    And so we want to tackle the issue of poverty in our 
country, and then we ask what is it that HUD can show to 
demonstrate the effectiveness of the agency? It takes 
investment and the understanding that for the last 20 years 
there is one issue that has really impacted Americans. They are 
working harder. They are working two and three jobs. But there 
is one thing, and that is wage stagnation. While the 1 percent 
is doing extremely well, the rest, 99 percent, are working 
harder and getting less.
    So, Mr. Secretary, if the THUD funding bill that passed the 
House is enacted, how will this impact HUD's efforts to address 
the affordable housing crisis?
    Secretary Castro. If the THUD bill becomes law it will 
seriously injure, seriously damage our ability to meet the 
needs out there. As it is, as I mentioned earlier, we only 
serve one in four people right now who qualify for HUD 
services. And a couple of weeks ago, Chairman Luetkemeyer had 
at his subcommittee a group of individuals to discuss public-
private partnerships, which I think is a very fruitful 
discussion that ought to be had.
    It was very clear in that testimony, whether it was the 
nonprofit sector, public sector, or private sector, that said: 
If HUD doesn't do these things, who else is going to do them? 
There is no private market to serve people who are extremely-
low-income, and those are the vast majority of the people that 
we serve.
    And so whether it is traditional public housing or Section 
8 vouchers or project-based rental assistance, we need to make 
an investment. If we don't, what it means is more people out on 
the street, more mothers with children who are homeless or 
doubling up, more veterans who don't have the chance to have a 
place to call home. Those are the human consequences of the 
budgetary decisions that are on the table.
    Ms. Velazquez. So, Mr. Secretary, I would like to ask you 
about Section 3. I have been working on Section 3 for many, 
many years. When Secretary Donovan was there, I introduced 
legislation, and I am happy to see that some of the provisions 
that were contained in my legislation are being reflected in 
the rule that you are putting out. But if there is a tool that 
could empower residents in public housing, it is Section 3. 
Without the proper oversight and without the proper training 
and investment, it is not going to work.
    Secretary Castro. Thank you for that.
    Chairman Hensarling. The time of the gentlelady has 
expired.
    The Chair now recognizes the gentleman from Michigan, Mr. 
Huizenga, chairman of our Monetary Policy and Trade 
Subcommittee.
    Mr. Huizenga. Secretary Castro, I have a different line of 
questioning, but something that my colleague from Missouri, Mr. 
Cleaver, had brought up about the short time versus long time 
for a lifetime myth that exists with people who are utilizing 
HUD and housing through you, he threw out a statistic of 5.4 
years for families with teens. I don't know if that is accurate 
or where he got that. Are you familiar with that statistic at 
all?
    Secretary Castro. Yes, that sounds about right, in the 5-
year range. I think, and I guess Ranking Member Cleaver is not 
here right now, however, what he was probably referring to is 
for working-age individuals. Recall that for the majority of 
folks that we serve, these households who are elderly or 
disabled, our goal is not to just get them in and out. So they 
do have a longer period of average stay. But that sounds 
correct.
    Mr. Huizenga. I think that is completely different. But 
earlier, at the beginning, the chairman was asking you 
specifically about, and you couldn't answer, whether we are 
tracking people from one PHA, as they exit that, presumably 
within that 5-year timeframe, to what happens to them. Where do 
they go next? Do they go to another public housing authority? 
Do they maybe move to another State? What do they do? And you 
couldn't provide that matrix.
    Secretary Castro. Well, no, I said that we will get the 
information we have on that. Do I believe right now that we are 
tracking that as well as we would like to? The answer to that 
is no.
    Mr. Huizenga. Okay. It seems if we can dial it down to 5.4 
years, you ought to be able to figure out how you are going to 
make sure that people are utilizing that service.
    Shifting to what is more of my concern, how do we make sure 
that we have an opportunity economy that eliminates poverty and 
breaks that cycle that may exist?
    I was a former licensed REALTOR. I started my career in 
that. Some of my proudest moments that I was involved in 
weren't with my big sales. My first listing was a two-family 
house in Holland, Michigan, that was very transitional, a 
Hispanic family on top who shared a one-bedroom apartment--in 
fact, Luis and Alaya are still friends today--and helping them 
transition into buying their own place.
    One that I talked about in this committee before is someone 
else who still remains a friend, Jill, whose husband had left 
the family, and she moved from a trailer park into her first 
home, and I was able to help explain to her kids why and how 
important that was. And literally sitting here 20 years later, 
I am getting emotional and choked up because that really is why 
you exist. You don't exist to just make sure that we are taking 
care of people temporarily. You exist to make sure that we are 
taking care of people long-term. And I don't mean getting into 
your system and staying in your system. What is the 
opportunity?
    And I am afraid that as I am looking at this report, it 
seems that the solution typically has been to just simply throw 
more money at it. And it is not only about subsidizing the 
market, I would hope, with Section 8 or other things, it is how 
do we make sure that, as my colleague was starting to address, 
the people who are providing that, who are building it, have 
some assurance and have some understanding of what the ground 
rules are, what the guideposts are, so that they are not going 
to get sued, and they are not going to have these questions as 
they linger over there. That, to me, is vital.
    In this remaining minute, on page 8 and page 9 of your 
testimony, I wanted to highlight a couple of things. One of 
them, start with this, the evidence-based Jobs-Plus program, 
``a proven model for increasing public housing residents' 
employment and earnings.'' I am curious, are you tracking that, 
and can you please share that, provide the matrix on that as 
well? Because I am curious, is this just Web-based, is this 
physical presence that people are having from HUD? Explain 
this, because it is $100 million that you are putting into 
this. That can provide a whole lot of housing temporarily.
    Secretary Castro. Thank you very much for that question, 
Representative. And let me say that I agree with you on the 
premise that for folks who are working age, and this is what 
the law requires, that if they are not working, that they be 
either doing community service or job training or pursuing an 
education.
    So we want folks to basically be on a path to self-
sufficiency. Jobs-Plus does track. We do have numbers, and we 
would be glad to provide them, on how we are doing. However, 
one of the things that I have said is that with this 
opportunity agenda, HUD needs to get better at measuring the 
outcomes there. So I would love to work with the committee on 
how we can do that.
    Mr. Huizenga. Amen to that. I know my time has expired, but 
I hope that you will get much, much better at that and provide 
that to the committee.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair recognizes the gentleman from Texas, Mr. 
Hinojosa.
    Mr. Hinojosa. Thank you, Mr. Chairman, and thank you, 
Ranking Member Waters. I ask unanimous consent that my opening 
statement and my questions be made a part of the record. I am 
late for opening a meeting, and I must leave.
    Chairman Hensarling. Without objection, it is so ordered.
    In that case, the Chair recognizes the gentleman from New 
York, Mr. Meeks, for 5 minutes.
    Mr. Meeks. Thank you, Ranking Member Waters, and Chairman 
Hensarling.
    Mr. Secretary, first let me just identify myself as a proud 
product of public housing, and my whole family, all of whom are 
doing fairly well now. I don't know how well we would have been 
done or how my parents would have been able to do what they did 
without public housing.
    And then, when I think about my friends, some who are now 
attorneys and doctors and engineers and pharmacists, all 
products of public housing. But had it not been for that 
assistance so that they could move forward, I don't know 
whether any of us would be in the positions that we are in.
    So I personally know the critical need and the significant 
importance of public housing, giving individuals an 
opportunity, giving families an opportunity to come together 
and to be successful in life. And I can't think of a greater 
investment that we as a country can make, especially when we 
are talking about and oftentimes when we are campaigning, the 
average, everyday person, and the poor person, and making sure 
that they have a quality of life, there is nothing better than 
making sure they have a decent roof over their head so a child 
can get an education in a place where that they can grow and 
become productive members of society.
    In New York, I am concerned, because when I look at the 
budgets and the funding packages that the Republican Party is 
putting forward, where I see that it fails to restore funds 
lost to sequestration and revokes critically needed investments 
in the National Housing Trust Fund and it shortchanges several 
rental assistance programs for very low-income households, I 
get concerned about what is going on in New York a little bit.
    Because recently our Mayor de Blasio released a new 
ambitious plan to revamp New York City's Housing Authority and 
to bring it back into a stable financial footing and to rebuild 
and expand and preserve public and affordable housing. And the 
plan is highly dependent on converting thousands of units to a 
project-based Section 8, and is therefore highly dependent on 
HUD subsidies through the Rental Assistance Demonstration 
program (RAD).
    So as we move, and currently Section 8 accounts for roughly 
two-thirds of your budget, and as more public housing moves 
into Section 8 through RAD, I am just wondering how is HUD 
coping with such increased demands from communities across the 
country, and how can cities like my City of New York plan for 
the future with the uncertainty around increased Federal 
assistance to preserve affordable housing stocks?
    Secretary Castro. You are correct that we do need a certain 
level of confidence in that investment. RAD has been one way 
that we have tried to stretch resources, by doing exactly what 
folks have suggested, that we engage with the private sector, 
in this case so that they can renovate those public housing 
units. Because the fact is, we have a $26 billion backlog in 
renovation needs in public housing, and we lose 10,000 units 
every year to disrepair, and in New York you see that in 
spades.
    So that is why we are requesting a couple of things in this 
budget, including $50 million for that RAD program. We are also 
requesting additional resources in terms of salary and expenses 
because the cap was lifted in Fiscal Year 2015 to $185,000. We 
want to ensure that we can meet that demand. By the way, we 
already have applications for RAD that are around $180,000, so 
it is a successful effort at getting interest, public-private 
sector collaboration.
    And on top of that, what we see with RAD is that for every 
$1 of public money that we spend, we leverage $19 of private 
investment. But we need to do it right, and we need to make 
sure that those resources are there that undergird it, which 
are public resources, that we treat tenants right, and that it 
still is fundamentally public housing, even though you have 
this public-private partnership.
    Mr. Meeks. And so I guess what my nervousness is, because I 
am not sure what these budgets are looking like and I am not 
sure that everybody is on the same priority level, so as you 
move forward, I am worried about the underpinning of the public 
sector continuing what it needs to match the private sector, 
because if we get into these scenarios and then we lose the 
subsidies to keep them affordable, what happens to public 
housing? So can you tell me?
    Secretary Castro. I agree with you that if we are not 
careful, then the public sector won't even have the strength to 
engage the private sector so that we can fruitfully renovate or 
create new housing. That was a point that was made in the 
subcommittee hearing, that the private sector needs the public 
sector to do affordable housing.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Wisconsin, Mr. 
Duffy, chairman of our Oversight and Investigations 
Subcommittee.
    Mr. Duffy. Thank you, Mr. Chairman.
    And thank you for being here, Secretary Castro.
    I just want to make a note that homelessness doesn't just 
exist in urban America. It also exists in rural America, in 
places like my district, rural Wisconsin. For the last 2 years 
we have held a homelessness and hunger summit trying to bring 
in the stakeholders from across our rural community, trying to 
figure out how we can address this problem more effectively, 
trying to figure out where the bright spots are of what small 
agencies, what they do to more effectively tap into resources 
in their community, how they can more effectively tap into 
government resources.
    And so it is a problem that we think we have to address, 
and my comments are in no way trying to undermine the problem 
of homelessness across the country. I would note, though, that 
I do hear a lot about the rules and regulations, especially for 
small providers in our community. And, listen, if you are a 
one- or two-person organization, it becomes incredibly 
difficult for them to navigate the rules and regulations.
    But I want to move beyond that. You are asking for more 
money, a 9 percent increase, or that is in the President's 
budget. Why do you need more money when we have improved the 
homelessness in America? Why do you need more public housing 
money? Why do you need more Section 8 housing money when we 
have had improvements in the economy and in the space?
    Secretary Castro. The fact is that, for instance, let's 
take our vouchers. Through sequestration, we lost 67,000 
vouchers. What we see out there is that we are only able to 
serve one out of every four people who need us.
    Mr. Duffy. But have we had an improvement in the space, 
with those who are homeless?
    Secretary Castro. On homelessness, we have seen an 
improvement over the last. And why was that?
    Mr. Duffy. But you are asking for more money, though.
    Secretary Castro. And the reason for that was that we 
dedicated more resources to it. HUD-VASH vouchers. To the 
committee's credit, Congress' credit, and the President's 
leadership, the main reason that we have seen a reduction in 
veteran homelessness is because we have actually invested in 
ending veterans' homelessness.
    Mr. Duffy. I appreciate your comments on veterans, and that 
is a nice number.
    Secretary Castro. Okay. Then, let's talk about folks who 
live in rural areas or tribal communities.
    Mr. Duffy. Let's talk about it as a whole then. What 
success have you had of getting people not just into the system 
of public housing and Section 8, but out of the system?
    And it goes back to the questions that the chairman asked 
and Mr. Huizenga asked, that you come and ask for more money, 
but you can't sit there today and say, listen, you guys, this 
is what we are doing, we are bringing people in, they need 
help, we all want to help them.
    Secretary Castro. That is not true. I gave you an example 
earlier.
    Mr. Duffy. No, no, hold on, let me finish. But here are the 
facts and the numbers of how we have moved people out of the 
space of public assistance and into self-sufficiency. But if 
you don't track people, you don't know if the numbers that you 
give us are people who go from assistance to sustainability 
themselves or to another public housing authority. You can't 
actually give us the right numbers, and you are asking for more 
money.
    Secretary Castro. I gave an example earlier. A good example 
of that is Jobs-Plus.
    Mr. Duffy. I don't want examples. I am looking at numbers.
    Secretary Castro. A good example of what we have seen is 
that through our Jobs-Plus initiative--
    Mr. Duffy. Let's talk about Jobs-Plus. Is the 9 percent 
increase asked for by the President going to the programs that 
you say work, like Jobs-Plus?
    Secretary Castro. What we are requesting is that we are 
going in Jobs-Plus--
    Mr. Duffy. Across-the-board.
    Secretary Castro. --we are going from $15 million to $100 
million. That is what the request is.
    Mr. Duffy. That is not my question. Mr. Secretary, hold on 
a second.
    Secretary Castro. If your question is, is the only thing we 
are requesting Jobs-Plus? Of course not.
    Mr. Duffy. So if you have programs that work, Jobs-Plus--I 
am not arguing your stats on that--why aren't you saying, 
Congress, listen, let's talk about programs that work, that 
will take people off assistance and into sustainability?
    Secretary Castro. That is what I am talking about.
    Mr. Duffy. No, it is not. You are giving me a small 
section. The funding that is asked for is funding across-the-
board, not to be driven into Jobs-Plus, not to programs that 
actually move people to sustainability. It gets back to your 
original point. I think you judge success by how much money we 
spend. That is how you judge success.
    Secretary Castro. No, I don't. No, that is not true. The 
other day I was in--
    Mr. Duffy. Tell me the number.
    Secretary Castro. The other day I was--
    Mr. Duffy. Hold on. This is my time.
    Secretary Castro. When I was in--
    Mr. Duffy. Tell me the number with regard to people--
    Secretary Castro. --there was a group of veterans--
    Chairman Hensarling. Mr. Secretary, the time belongs to the 
gentleman from Wisconsin. Please add 10 seconds to the clock.
    Mr. Duffy. If that is not how you judge your success, tell 
me the percentage of people who go into Section 8 public 
housing and then actually move out into self-sustainability. 
What does that look like?
    Secretary Castro. As I said earlier, we would love to get 
you the information we have on that.
    Mr. Duffy. You don't have that number. So you can't--
    Secretary Castro. What I do know is that we have a waiting 
list of 189,000 folks in public housing.
    Mr. Duffy. My time. If you were judging success by getting 
people off assistance and into self-sustainability, you would 
be here today telling us those numbers. But you can't tell us 
because this is not how you judge success in your agency. That 
is part of the problem.
    Secretary Castro. Representative, I just did tell you some 
of that.
    Mr. Duffy. You didn't give a number, so you don't even know 
it.
    Secretary Castro. I did.
    Mr. Duffy. What was the number?
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from California, Mr. 
Sherman.
    Mr. Sherman. Mr. Secretary, I want to recognize with you 
that Section 8 and other housing programs are successful in 
every one of our districts, that a housing program has to 
chiefly be evaluated based on whether it provides housing. And 
getting people off the street and in housing is a good thing. 
Whether they then get a well-paying job is a little bit outside 
your Department.
    And I look forward to working with the last gentleman to 
defeat fast track so that we can get the high-paying jobs that 
will lead not only to successful housing programs, but 
successful economic futures for those you benefit.
    But I think it is wrong for us to say we are going to cut 
back on Section 8 until you give us perfect numbers and until 
you establish that providing housing means somebody gets a 
good-paying job too. I will give you time to comment.
    Secretary Castro. What I said that one outcome is, an 
important outcome is that somebody has a roof over their head. 
That is what the Department of Housing is for; we are first and 
foremost about housing.
    However, to the second question, do I believe that we 
should also make investments--and we are making some 
investments--that seek to get folks to a stronger track so that 
they can achieve the American dream? Of course I do. And should 
we look at the outcomes of that? Yes, we should, and I think we 
can work together on that. But to say that it doesn't count at 
all that somebody has a roof over their head is just 
ridiculous.
    Mr. Sherman. Well said. And I now want to move to FHA and a 
couple of technical areas, where FHA has a rule or a policy 
that clashes with another Federal rule and hope that FHA moves 
in the direction of the other Federal rule.
    The first example of this is with property subject to 
transfer fees. Now, 99 percent of transfer fees are terrible. I 
thank you at FHA for working to prohibit them. FHFA, which of 
course oversees Fannie Mae and Freddie Mac, has done a slightly 
more nuanced job. Instead of prohibiting all of them, they have 
only prohibited the 99 percent that are bad. The 1 percent that 
are helpful are those that benefit the property, that are key 
to the business plan of homeowners associations and fund 
homeowners associations by a reasonable amount when the 
property is transferred.
    So I wonder whether you would look at a technical tweak to 
the FHA regulations and see whether the FHFA's very similar 
regulations, but a little bit more nuanced, might be better for 
both similar Federal programs?
    Secretary Castro. Thank you very much for that question. 
Let me just very briefly say that at FHA our primary concern, 
of course, is to ensure that responsible borrowers can access 
credit. We also want to continue to play that countercyclical 
role that FHA has historically played. And on top of that, we 
are interested, where it makes sense in policy that encourages 
neighborhood stability, for instance, and we are looking at 
matching FHFA on this issue that you brought up. And so we 
would love to follow up with you and your staff on that and 
give you an update on what we are up to.
    Mr. Sherman. Good. It is similar agencies trying to carry 
out the same policy, and they ought to have identical or very 
close to identical rules. And in this one case, your sister 
agency has a more sophisticated rule.
    Federal statute generally requires that you have to stop 
paying mortgage insurance once you have a 78 percent situation. 
You have a situation where borrowers have to keep paying FHA 
forever unless they refinance.
    Now, if they had to pay forever, I would say: Well, maybe 
you need the money. But if you are not going to get the money, 
they are just going to refinance, then I would say that is a--I 
have been through some refinancings. It is a lot of paperwork. 
And then it would be easier for borrowers if they are trying to 
compare FHA insurance with private insurance, if you were 
offering the same product; that is to say, something that is 
cancelled at 78 percent.
    Will you take a look at that?
    Secretary Castro. We are always, of course, looking at how 
we can be sensitive to the conditions out there. As you know, 
this life-of-loan issue came to pass during the last few years 
where there was a need to do everything that we could to ensure 
that we built up our reserves. And we want to do what is 
prudent. We are always willing to look at this issue.
    Mr. Sherman. Thank you.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from New York, Mr. 
King.
    Mr. King. Thank you, Mr. Chairman.
    Good morning, Mr. Secretary. I regret that I was not here 
for your opening statement. I was actually across the hall. 
There was a hearing being held on the reauthorization of the 9/
11 Health Care Act, so I was there. But I want to thank you for 
being here today.
    Generally when I ask a question it is not written out, but 
this one I am going to read as it is written because there are 
a lot of specifics involved. It regards Westchester County in 
New York, which is not in my district, but it is pretty 
adjacent to it, and the implications of what is going on in 
Westchester could well impact my district. So I would like to 
ask the question. To the extent you can answer it today, fine. 
To the extent you have to get back to me in writing, I would 
greatly appreciate that.
    I understand that in 2009, HUD reached an out-of-court 
settlement with Westchester County settling a 2006 civil 
lawsuit alleging that the county failed to consider race as an 
impediment to fair and affordable housing in filing its 
Analysis of Impediments document, which is filed with HUD when 
seeking CDBG block grants.
    It is my understanding from talking to Westchester County 
officials, including the county executive, Mr. Astorino, and I 
would say at this stage I don't see this as being a partisan 
issue because the original settlement was with the Democratic 
county executive, it is now being implemented by a Republican 
county executive. So I don't see this as being a partisan 
issue.
    But from talking to the county executive, he believes that 
the county is ahead of schedule in implementation of the 
settlement terms: 469 of the 750 required public housing units 
have been financed; 424 have building permits; and so far the 
county has spent $37 million and leveraged another $112 million 
from other sources, and at least $51.6 million was agreed upon 
in the settlement terms. So, they have $37 million and $112 
million. Yet, the county believes that HUD is not recognizing 
this progress.
    In response to a HUD request, the county included in its 
Analysis of Impediments (AI) an examination of all of its 853 
local zoning districts for evidence of exclusionary practices 
based on race and ethnicity and found none. Since then, it has 
made seven more such analyses, each time including 
consideration of more data as requested by HUD. The most recent 
AI was more than 700 pages, and each time the county has found 
no evidence of exclusionary practices, a conclusion that has 
been supported by an independent authority. HUD, however, has 
disagreed with the county and in 2011 began cutting off housing 
grants, which is, I believe, more than $20 million to date.
    Two questions: Can you say why HUD has summarily rejected 
each of the 8 Analyses of Impediments submitted by Westchester 
County in the past 6 years to fulfill the settlement 
requirements, and also all CDBG entitlement grantees, such as 
Westchester County, must certify that they are ``affirmatively 
furthering fair housing,'' and in order to meet this 
obligation, grantees must conduct these analyses. What is the 
average length of an AI document and how often are they 
rejected, and what criteria does HUD use to determine whether 
or not an AI is acceptable?
    And as I said, this case as it goes forward could have 
implications in my district and other districts in the region. 
So, any testimony you can give today will be appreciated.
    Secretary Castro. I appreciate very much the opportunity to 
just address this briefly. I would love to get back to you and 
your staff with the specifics on Westchester.
    Let me begin by saying that, of course, we take the issue 
of fair housing very seriously. Under the Fair Housing Act of 
1968, it requires that the Secretary affirmatively further fair 
housing. As you know, Congressman, this issue of Westchester 
has been with us for a while and there has been a tremendous 
amount of work that HUD staff has done in conjunction with the 
local community to try and resolve these issues.
    What I have told my staff is that, of course, there is a 
time when we are punitive, and this is one of those cases 
historically that developed and went into litigation, but we 
often seek what I call mission-driven flexibility to work with 
communities to meet the goals of the programs but also to 
ensure that they can undertake feasible actions to get into 
compliance.
    Having said that, I would like to be able to get back with 
you on the specifics and an update on where we are at with 
regard to Westchester, because I do know that my staff has been 
working hard on that.
    Mr. King. And, again, I don't reside in Westchester, but I 
do know the officials up there, and they believe they are 
attempting to comply in good faith. They don't feel that HUD is 
acknowledging that. I am not getting in the middle of this, but 
again, I think it is important that we can set some parameters, 
because I do know there are other pending actions in the region 
which could have an impact on my district, and again, on all 
the people in the region.
    And you are right, fair housing is essential. On the other 
hand, local governments have to try to comply. And again, this 
is very expensive, and again, it can be complicated. So 
whatever you can get back to me on it, I would truly appreciate 
it.
    Thank you for your testimony this morning.
    Chairman Hensarling. The time of the gentleman has expired. 
At the request of the Secretary, the committee will stand in 
recess for 5 minutes.
    [recess]
    Chairman Hensarling. The committee will come to order. The 
Chair now recognizes the gentleman from Massachusetts, Mr. 
Capuano.
    Mr. Capuano. Thank you, Mr. Chairman.
    Welcome back, Mr. Secretary.
    Mr. Secretary, I know we have mentioned the FHA. I want to 
be clear, and if I am correct, as I understand it, not a single 
penny of general fund taxpayer dollars has been spent to help 
the FHA. Is that correct?
    Secretary Castro. That is right
    Mr. Capuano. Okay. As I understand it--and by the way, 
happy birthday, 50 years old and all that--in those 50 years, 
as I read it, there have been 5 Republican Presidents serving 
28 of those 50 years. Did any of those 5 Republican 
Presidents--Mr. Nixon, Mr. Ford, Mr. Reagan, Mr. Bush, and Mr. 
Bush--shut down HUD?
    Secretary Castro. No, of course not
    Mr. Capuano. Did any of them admit defeat in HUD's mission?
    Secretary Castro. No.
    Mr. Capuano. But today we are hearing that HUD is a failed 
agency and we should probably close it down. I guess that would 
come to a surprise to Mr. Reagan and others.
    Prior to HUD, were there any programs anywhere to help 
seniors find decent, affordable housing?
    Secretary Castro. No. With the advent of HUD, that really 
led to the assistance of the elderly.
    Mr. Capuano. So without HUD, there would be not less, but 
none; there would be no senior housing programs in this country 
whatsoever?
    Secretary Castro. That is right. The answer is, if not HUD, 
then no one.
    Mr. Capuano. Then no one.
    I have heard a lot of criticism today, and I actually think 
I have heard some fair questions and fair comments. But of the 
criticism, I believe in giving elected officials what they want 
whenever possible, and I have heard several elected officials 
today publicly state that they think that HUD's programs are 
failing. So therefore, if they have a failing program, why 
would they want your money?
    I actually think you are doing a pretty good job, and I 
would suggest that you give those officials exactly what they 
want, which is nothing, and send your money into my district, 
because I think you are doing a great job. And I am not saying 
that out of anything other than respect for the opinion of 
others. And I hope, as a former mayor, you would appreciate 
that approach.
    I guess now I want to move on to something else, and I 
apologize, but our time is limited here, as you know. I do want 
to pick a little scab. The Distressed Asset Stabilization 
Program (DASP), my least favorite program that HUD participates 
in, not because I don't like the program, I know some of it is 
necessary, but because I don't like the focus. And I guess my 
concern is that basically we have been selling these houses in 
batches to the richest people in the world. And that is okay, 
not a problem, except for me, I thought part of HUD's mission 
was to actually create strong, sustainable, inclusive 
communities and quality, affordable homes for all.
    With that mission, I always ask myself, who is in the best 
position to know what that means in a given community? So I 
looked up the last, I guess it is not the last one, but the 
November 2014 DASP sale, and on that there was some housing, 
some foreclosed housing, in a county I actually never heard of 
before, but maybe you are familiar with, Bexar County.
    Secretary Castro. Sure. This is the county that includes 
San Antonio.
    Mr. Capuano. That is what I read--42 properties in this 
batch averaging $106,560 on their foreclosure loans, and it was 
sold to a company called AMIP Management, LLC. I looked them 
up, and they are a subsidiary of American Homes that has 
headquarters in Agoura Hills, California, which is kind of 
wedged in between Thousand Oaks and Simi Valley.
    And I am just wondering, do you really think that somebody 
in a nice, beautiful building in Agoura Hills knows better what 
to do with 42 foreclosed properties in San Antonio than, say, 
maybe the mayor of San Antonio, or maybe a person named Walter 
Martinez, who runs the San Antonio Community Development 
Council (CDC) with headquarters on El Paso Ave, or somebody 
named Oscar Ramirez, who runs the Avenida Guadalupe Association 
with headquarters on Guadalupe Avenue?
    Which do you think is in a better position to know what is 
probably in the best interest of the people of San Antonio, 
those people or somebody in Agoura Hills, California?
    Secretary Castro. It is a point well taken, Congressman, 
and I want to thank you for your advocacy on this, and because 
of your advocacy, the advocacy of others, and also nonprofits 
who have made this very point, that part of our responsibility 
really is to understand the effect that these policies have on 
neighborhoods.
    So we believe that DASP has been a powerful tool to help 
stave off foreclosure in some instances. We would love to get 
back with you on the changes we have made to it to improve it.
    Mr. Capuano. Thank you.
    Thank you, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired. 
On behalf of the Secretary's Texas ears and my Texas ears, and 
for the sake of the Members north of the Mason Dixon, it is 
pronounced ``Bexar'' County.
    Mr. Capuano. We need to have an elocution lesson here. 
There is an ``X'' in there somewhere.
    Chairman Hensarling. Not for a Texan.
    Mr. Capuano. And I am happy to give you elocution lessons.
    Chairman Hensarling. The Chair now recognizes the gentleman 
from California, Mr. Royce, chairman of the House Foreign 
Affairs Committee.
    Mr. Royce. Thank you, Mr. Chairman.
    Mr. Secretary, it is good to see you again. Let me ask you 
about a line of questioning here where I think you and I may be 
in concurrence.
    Last week, we both had an opportunity to talk a little bit 
about a subject I publicly endorsed moving forward with: some 
building block housing finance reforms. These reforms would 
increase private sector participation in the secondary housing 
market and decrease taxpayer exposure to future losses and 
would over time limit the disruption in the market. And I 
wanted to get your take on this.
    The things we discussed at that forum were an increase in 
private sector credit risk sharing by the GSEs, including a 
timeline to ramp up the offerings; the creation of a truly 
common securitization platform which allows for issuance of 
mortgage-backed securities other than the GSE; and the 
development of a common residential mortgage-backed security by 
Fannie Mae and Freddie Mac.
    And I thought I would just give you the floor right now to 
discuss how this might bring private sector capital back into 
the market and how we might work together to achieve these 
goals as kind of a building block.
    Secretary Castro. Congressman Royce, I of course appreciate 
your efforts on this issue of housing finance reform. Housing 
finance reform has been a long and winding road, I think it is 
fair to say. But the Administration is supportive of housing 
finance reform, and, in fact, I think there is agreement on 
some of these issues.
    The President has made it very clear that he does have an 
interest, I think like all Americans do, in taking taxpayers 
off the hook in the event, God forbid, that we did experience 
the same kind of housing crisis that we just went through. I 
agree that we can find ways to introduce more private capital 
into the market. My hope is that in there we will find a way to 
ensure that people of modest means who are responsible are able 
to get access to credit.
    And so with respect to proposed legislation, I think there 
are some common principles that are the foundation to build on, 
and we will look forward to working with you on that.
    Mr. Royce. The question that I was going to try to drive to 
was the idea that GSEs increasing their risk-sharing activities 
in the form of volume of offerings and percentage of risk 
sharing, that would be a big step to bring private capital in. 
Certainly the common securitization platform, that idea you are 
familiar with, and making that available for the private sector 
to come in as well, I think would be helpful, and I was trying 
to listen.
    Secretary Castro. Yes. I am very willing to have 
conversations about that and build on legislation. We are 
hopeful. Of course, the ball is in Congress' court.
    Mr. Royce. Let me then go to another question, Mr. 
Secretary, which concerns a headline I saw: ``Banks cede FHA 
market share to thinly capitalized nonbanks.'' So we do have a 
situation where the FHA market share for large banks has 
recently been cut in half, from 61 percent to 33 percent, and I 
know that is a concern. Nonbanks have increased now. They were 
24 percent. Now, several years later, they are 51 percent.
    Is this troubling? And do you think legal uncertainty maybe 
is part of the problem in terms of getting the traditional 
lenders more involved here? What about the need for a greater 
certainty around the rep and warranty framework here? Have you 
been looking at that as a way of maybe bringing capital back 
in?
    Secretary Castro. The answer to that is yes, we are looking 
at that. We believe it makes sense to take reasonable steps to 
create more business certainty for lenders. I know this is 
something that Director Watt at FHFA has worked on, and is 
working on now. That is something that we are working on with 
something we have called Blueprint for Access to Credit. We 
hear from lenders about the uncertainty that does exist 
regarding potential liability, and so we are working on that. 
And we look forward to being able to create, I hope, greater 
certainty that will help open up the credit box reasonably for 
responsible Americans to get access to credit.
    Mr. Royce. One of the CEOs that I know was interviewed on 
this said, ``If you want to stick with a program of putting 
back anytime, anywhere, whatever, that is fine, we are just not 
going to make these loans, and there are going to be a whole 
bunch of Americans who are underserved in the mortgage 
market.'' I think that is the part of this that is concerning. 
There have been some ideas put forward in terms of how to 
adjust this and handle it. But given the percentage of erosion 
here in market share, and especially the fact that it is thinly 
capitalized nonbanks that are coming in, I think it needs to be 
addressed.
    So, thank you.
    Thank you, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Massachusetts, 
Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman. And I want to thank 
Ranking Member Waters as well.
    And thank you, Mr. Secretary, for helping the committee 
with its work. It is good to see you again.
    Mr. Secretary, I am one of those Members of Congress that 
you referred to who grew up in public housing, like Mr. Meeks 
of New York. I grew up in the Old Colony housing project in 
South Boston, with five sisters. It has been described as one 
of the poorest predominantly White census tracts in the Nation. 
And we considered ourselves very, very fortunate to have a 
home, to have that home.
    And listening to this debate here today about the question 
that was posed earlier--does HUD's affordable housing program 
work?--I guess from listening to the debate, if your family has 
not struggled, no explanation is possible, but if you have 
actually lived in public housing, no explanation is necessary; 
you understand what that means.
    We talked a little earlier, I have had an opportunity in 
the last couple of weeks, we cut a ribbon on one of my big 
veterans' housing projects that is coming up. We just broke 
ground, it is the New England Center for Homeless Veterans. And 
it is going to provide 38 new permanent supportive housing 
units for veterans, including a dedicated floor just for women 
veterans. We have a lot of them. It is going to renovate 59 
existing supportive housing units for veterans. And then it is 
going to create 165 new units. So it has everything--if you 
have substance abuse problems, if you have psychiatric 
problems, we have the whole city together.
    And I want to give credit to Mayor Walsh, Marty Walsh, who 
is part of this, and also Governor Baker, who is a Republican, 
but we worked together on this. There are at least a dozen 
different agencies, City, State, and Federal, that have 
combined on that project. And I have another project that is an 
old police station in my home neighborhood of South Boston 
where they are converting this old police station to single 
occupancy units for veterans.
    So like most communities, we love our veterans, and we want 
to make sure that their service is remembered, is respected, 
and is rewarded. But I have to say that it has really been a 
collaboration of a bunch of different projects in trying to 
figure out all the different aspects of what HUD is doing on 
behalf of our veterans.
    And I was wondering, you alluded to it a couple of times in 
earlier questions, but can you drill down and explain what the 
Obama Administration is doing, what HUD is doing on veterans' 
housing in this country today and what your most successful 
models have been in creating that housing?
    Secretary Castro. I am glad to do that. This is a real 
American success story because President Obama in 2010 became 
the first President to say that we are not just going to reduce 
homelessness; we are going to end it, starting with veteran 
homelessness. And what we have seen since that time, from 2010 
to 2013, is a 33 percent reduction in veteran homelessness 
through collaboration with Congress that funded HUD-VASH 
vouchers.
    So you asked, what works, why are we here? Strong 
coordination between HUD, the VA, and providers out there on 
the ground to quickly get veterans into housing, and the 
adoption of smart policies like Housing First.
    Housing First basically says we are not going to make our 
veterans jump through hoops, stay a certain number of nights in 
a shelter or transitional living; we are going to get them into 
permanent housing right away. Because the research is 
compelling that if you get someone into permanent housing with 
supportive services, that is a real stabilizing influence on 
their lives. So they can address then if there is some other 
issue in their life, perhaps if there is an addiction issue or 
there is a mental health issue or other issues. Having that 
housing is the key to being able to stabilize and address those 
issues.
    And what we are seeing now is communities like New Orleans, 
which announced about a month-and-a-half ago that they have 
effectively eliminated veteran homelessness. I joined 
Congressman Green the other day in Houston. Houston has put in 
place the system to get to functional zero. So this is a real 
success story that we need to continue to support.
    Mr. Lynch. That is great.
    In closing, I only have 10 seconds left, I just want to say 
that we have 2.5 million sons and daughters of America who have 
served since the first Gulf War, so this is something we are 
really going to have to focus on. A lot of them have done 
multiple tours of duty. So obviously, they need some help. 
Thank you.
    I yield back, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Pennsylvania, 
Mr. Fitzpatrick, chairman of our Terrorism Financing Task 
Force.
    Mr. Fitzpatrick. Thank you, Mr. Chairman.
    And thank you, Mr. Secretary, for the time spent with the 
committee here today.
    I just want to stay on this issue of veteran housing and 
homelessness among veterans for a moment. You said in your 
opening statement that you have reduced homelessness among 
veterans by 33 percent, and that is not an insignificant 
number. And I think together we should celebrate that a little 
bit, recognizing as well that there is still a lot of work to 
be done, because that means of that subset population of 
veterans in this country, who have served this country, 67 
percent of them are still without homes.
    And you mentioned that President Obama has made this 
commitment to end veterans' homelessness. One veteran who is 
homeless is one too many.
    I remember in November of 2009--I was a private citizen 
back then--in my home in Levittown, Bucks County, Pennsylvania, 
watching the news, and it was being reported that General 
Shinseki, who was then the Secretary of the VA, had articulated 
this commitment. And he actually put a timeframe on it, he said 
that in 5 years--this was November 2009--the goal was to end 
veteran homelessness in the United States.
    And my thought at that point in time was that was a pretty 
aggressive goal, and I love aggressive goals, but I had some 
concerns about how we were going to get there as a Nation. And 
in my community--Levittown is a town that was built for 
veterans returning from World War II and the Korea-era 
veterans, one of whom is my father--many never would have had 
that opportunity to own a home had it not been for the VA and 
for that commitment. But tucked between the City of 
Philadelphia and the City of Trenton, New Jersey, as it is, 
housing prices skyrocketed. It was built in the shadow of a 
steel mill. And so many of that population found themselves 
over time to be sort of what is described as house-rich and 
cash-poor. And so, housing prices have gone through the roof. 
So in addressing this issue in my community, housing costs are 
very expensive.
    And then my second concern is that homelessness is but a 
symptom, I believe, of other problems like substance abuse, and 
behavioral health issues such as PTSD and TBI, as these 
veterans are coming back.
    There is a community right next to my hometown called 
Bensalem. This gets to the issue of bringing in private sector 
solutions. They proposed a 60-unit-or-so veteran housing 
project. The mayor of Bensalem, Joe DiGirolamo, has committed 
to donate the land. There are private developers involved. And 
there is an opportunity for us in our community to work with 
HUD so that you could be the last dollar into the project 
rather than the first dollar and let the private sector lead. 
So I just would like the opportunity to work with you and your 
Under Secretaries on that.
    But I want to get to another Bucks County issue, because I 
think this is an issue in housing authorities that other 
congressional districts and Members of Congress are dealing 
with, and this has to do with a recapture of sweeping of 
accounts that occurred a couple of years ago, probably before 
you were appointed Secretary. Housing authorities across the 
country received a letter where Washington wanted to recapture 
or reclaim reserves in their accounts back to Washington to 
redistribute for other programs.
    And the Bucks County Housing Authority, of which I am very 
proud, and which does a good job, which manages its housing 
well, and which had built up significant reserves and uses 
those reserves to build new projects to get individuals in the 
projects on the road to self-sufficiency, received this letter, 
and they were going to lose millions of dollars that they were 
prepared to reinvest in the community.
    The housing authority just to the south of us, the City of 
Philadelphia, is well known for the problems that they had. 
They really had no reserves, they had mismanaged their 
authority, they settled lawsuits unrelated to housing, and paid 
millions and millions in legal fees.
    And so the message that was sent by HUD was that if you are 
a well-run housing authority and you have built up cash 
reserves getting prepared to reinvest in your community, you 
will be penalized, and the mismanaged housing authorities in 
this country were really not penalized in that case because 
they were going to get the dollars redistributed.
    I was just wondering if you could comment on what message 
you think that sends to the housing authorities in many of our 
congressional districts that are working hard, trying to do a 
good job in managing and reinvesting in their community so we 
can get to ending things like veterans' homelessness in this 
country. What message does that send?
    Secretary Castro. On the first issue, I look forward to 
working with you on the issue of veteran homelessness.
    On the second issue, we want our public housing authorities 
to succeed. And so you are right this does predate me a little 
bit. However, it was the subject, I believe, of an IG audit, 
and that money is being held by HUD, but will belong, does 
belong to the PHAs. We want them to have the resources they 
need to be successful, and we will look forward to working with 
you and others--
    Mr. Fitzpatrick. I appreciate it, but the PHAs could have 
reinvested in the communities which were well-managed housing 
authorities. So, I would just ask you to consider that.
    Thank you, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Texas, Mr. 
Green, ranking member of our Oversight and Investigations 
Subcommittee.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Chairman, as I have sat here this morning, I have 
literally had tears well in my eyes as I have heard some of 
what has been said regarding people who are in need of help. 
And, Mr. Chairman, I want the record to reflect that ``I,'' 
personal pronoun, will not sit silently by while the tools that 
are needed to fight invidious discrimination and help those who 
are in desperate need of assistance are eliminated.
    These tools have been hard won and hard fought for. We 
cannot allow the evisceration of the Fair Housing Initiative 
Program, the decimation of the Housing Trust Fund, and we 
cannot allow disparate impact to be eliminated. These tools 
have been recognized by courts, and they have made a 
difference.
    And I applaud you for standing up and standing your ground 
this morning. Somebody has to take a stand. I applaud you and 
all of my colleagues who are doing so.
    Mr. Chairman, Mr. Secretary more specifically, under 
disparate impact, statistical analysis alone will not bring a 
victory to the plaintiff. The plaintiff has a further 
obligation to go on and show that there is a less 
discriminatory alternative, and absent that, the plaintiff will 
not prevail.
    Disparate impact is not a theory. It is a standard that 11 
circuit courts have approved. And it bears a methodology by 
which one who is accused improperly can defend and win.
    The Fair Housing Initiative Program is the most efficacious 
way that we know of to present empirical evidence of invidious 
discrimination. It has proven to be the best way. If there is 
another way, I defy someone to show me, other than a person 
just confessing that I am a person who discriminates, which 
rarely happens, which is why you have the disparate impact 
standard, because people don't confess. They have facially 
neutral policies, but in application it is invidious 
discrimination. And we cannot allow what we have fought hard 
for over the decades to just simply evaporate because some 
people don't understand.
    I know what invidious discrimination is like. I have been 
to colored water fountains. I have had to sit in the back of 
the bus. I have had to sit in the balcony of the movies. So I 
know what I am talking about. I know what it smells like. I 
have gone to those filthy fountains. I know what it looks like. 
I have had the Klan protest because of my protestations.
    So I am going to make a stand, and I want to make it very 
known that we cannot allow poor people to go without advocacy 
in the Congress of the United States of America.
    Now, who is helped by the Federal rental assistance 
program? The elderly with children, the elderly themselves, the 
disabled with children, disabled adults. More than 50 percent 
of the people on Federal assistance are disabled, elderly, and 
children. Are we saying that America no longer wants to help 
the disabled, the elderly, and the children? Have we gotten to 
a point now where we have to cut through the bones all the way 
to the elderly, all the way to the disabled? Is this the 
America that we have fought hard to create?
    I stand with you, and I promise you, especially those who 
are listening who don't have the advocacy that you need in 
Congress, that there are some among us who will not sit 
silently by. We will not acquiesce. We will not give our 
consent. We will fight.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Virginia, Mr. 
Hurt.
    Mr. Hurt. Thank you, Mr. Chairman.
    And thank you, Secretary Castro, for being here.
    I am interested to hear some of the comments that we have 
heard from our colleagues on the other side of the aisle, the 
accusations that there are people on our side who want to shut 
down and end HUD, folks who believe that there is anything but 
full support for the Fair Housing Act.
    And so it interests me to hear that, because I don't think 
that is what I have heard, and I don't think that anybody, 
certainly that I represent in Virginia's Fifth District, a 
rural district, believes that. I think the people that I 
represent believe that there should be a safety net and that 
HUD plays a very important role in providing that.
    I think that we also recognize, and the people that I 
represent recognize, that we need to have Federal programs that 
work, that are efficient. I know that you believe that as well. 
We need them to be efficient, not only to serve those who need 
the assistance, but we also need to serve those who pay the 
bills, and that is the taxpayer.
    So that is the perspective I bring to this. I am concerned 
about folks that I represent who live in rural Virginia. And I 
guess one of the things that I would like to ask you about 
relates to the role of HUD and its housing programs and housing 
assistance as it relates to the Rural Housing Service with the 
USDA.
    I noted in your testimony, and I think that we all know, 
that in 1965 when HUD was created, it was really primarily 
geared, and maybe it is safe to say continues to be primarily 
geared, towards urban areas. Would you agree that is true, and 
how would you say that has changed in the last 50 years?
    Secretary Castro. I would say that, certainly, we do a lot 
of work in cities of significant size. However, you could just 
as easily say that we are the housing and community development 
department, because we do a lot of work in rural areas and 
tribal communities. So by no means are the investments that we 
make limited to our urban areas.
    Mr. Hurt. With that said, there was a GAO report in 2012 
which confirmed that, and said that there is indeed a 
tremendous amount of work that HUD does in rural areas.
    And I guess my question is, if you are interested in trying 
to make sure that we are most effectively using the tax dollars 
and the leverage of the Federal Government to provide the most 
for the--most effectively, I guess my question is, are there 
opportunities where we can see reform and consolidation between 
the Rural Housing Service at the USDA and HUD programs?
    Secretary Castro. We are always willing to talk about the 
potential for efficiencies.
    I know that this question about potential consolidation 
between FHA and the Rural Housing Service has been discussed 
recently, and this is not the first time that it has been 
discussed. Just one note of caution there. These are two 
programs that are distinct. They have different underwriting 
approaches, and other standards that are different.
    I would say that while HUD certainly does a robust amount 
of work in rural communities, there is no question that the 
USDA has much greater reach in our rural communities than HUD 
does.
    Mr. Hurt. So how can you say that there is not a 
duplication of effort and--
    Secretary Castro. I think they are complementary. As I 
said, they do have different--RHS and FHA do have different 
approaches on underwriting and other things. We would love to 
get you and your staff a follow-up on that analysis.
    All of that is to say that we are willing to explore what 
is possible, but I think at the end of the day, this 
conversation should be had as part of a larger conversation 
about housing finance reform.
    Mr. Hurt. But Mr. Secretary, our Housing and Insurance 
Subcommittee held a hearing on this in May. The Director, Mr. 
Hernandez, did not seem to be very open to consolidation at 
all.
    And I guess my question is, based on the 2014 agreement or 
organizational charter for the Joint Federal Housing Agencies 
Charter, which I assume you are familiar with, what has been 
done? Have you met with anybody at the USDA or with Mr. 
Hernandez to figure out how we can consolidate these efforts 
between the USDA, HUD's efforts, and the VA's efforts?
    Secretary Castro. Yes, it is a great question. I know that 
my staff has had conversations in the past with the Rural 
Housing Service. Of course, we can get you the details of those 
conversations and--
    Mr. Hurt. I would like to see them, because this is 
something that has been an issue since 2011, when the President 
started out on this course. So I would like to have some 
feedback.
    Secretary Castro. Great.
    Mr. Hurt. Thank you very much, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Missouri, Mr. 
Clay, ranking member of our Financial Institutions 
Subcommittee.
    Mr. Clay. Thank you, Mr. Chairman. And thank you for 
conducting this hearing and inviting Secretary Castro back.
    Welcome, Secretary Castro. And before I ask any questions, 
let me just personally thank you for your visits that you have 
made to St. Louis in May, to the State of Missouri. We hosted 
you a couple of weeks ago in Ferguson, Missouri, and I 
appreciate the attention that you have given that community, 
especially with our newly minted Promise Zone designation.
    Today, it is an unfortunate reality that a child's ZIP Code 
has huge implications for life outcomes, including access to 
quality education, health care, and transportation.
    HUD is currently working to finalize a proposed rule 
regarding the Fair Housing Act's requirement that all 
recipients of Federal housing funds take steps to affirmatively 
further fair housing. Can you explain how this rule will help 
ensure greater equality for our children in the future?
    Secretary Castro. I would be glad to.
    This is really a piece of unfinished business from the 1968 
Fair Housing Act. The Fair Housing Act requires that the 
Secretary take steps to affirmatively further fair housing, and 
that our grantees affirmatively further fair housing. The 
challenge has been that the Federal Government has never 
provided precise guidance, sufficient precise guidance to 
communities on how they ought to do that. We also, 
historically, have not really given them the tools to do that.
    So we are closing in on a rule, a new affirmatively 
furthering fair housing rule. Part of that is an Assessment of 
Fair Housing Tool that they will be able to use to understand 
what the fair housing challenges in those communities are. And 
I can tell you, as a former mayor, a former local elected 
official, and former council member, I wish that I had had that 
kind of tool when I was on the city council or as mayor of San 
Antonio because, as a policymaker, it would have helped to 
understand what more we could do.
    They will file an assessment of fair housing with their 
consolidated plans every 5 years.
    And we are looking forward to their rolling this out. This 
is still in the rulemaking process, so I won't go into the 
specifics of it, but we are excited about the possibility of 
this improving the fair housing landscape in the United States.
    Mr. Clay. Thank you for that response, and for your efforts 
in that area.
    Studies show that Federal rental assistance helps families 
stay out of poverty, achieve stability, and ultimately leads to 
better life outcomes, particularly for children. Can you 
elaborate on the positive impacts that HUD's rental assistance 
programs have on our most vulnerable households across the 
country?
    Secretary Castro. It is tremendous. The impact that we have 
provides stability for young people. It provides comfort and 
dignity, as was mentioned, to the 56 percent of households that 
are headed by someone who is elderly or disabled. It gives 
individuals who are working age the chance to get on a stronger 
path to prosperity. In fact, 43 percent of our working-age 
adults in HUD-assisted housing do, in fact, work.
    So the rental assistance that we give is, in and of itself, 
successful in putting a roof over folks' head, giving them 
stability, and putting them on a path to the kind of prosperity 
that they want to work for.
    Mr. Clay. And how does the Brooke Rule that caps tenants' 
rent at 30 percent of income help families maintain housing 
affordability while still having enough room in their budgets 
for other basic necessities?
    Secretary Castro. What that rule ensures is that--of 
course, they have a responsibility to pay 30 percent of their 
income in rent so they have skin in the game, they are putting 
something forward. At the same time, it does shield them, to 
some extent, from increases in rents.
    What we see out there is that the rents are going through 
the roof in many communities, and this is impacting everybody. 
The fact is that so many households today are paying 50 percent 
or more of their income in rent. As I mentioned earlier, 7.7 
million low-income households who don't receive any government 
assistance are paying at least 50 percent of their income in 
rent.
    Mr. Clay. Thank you for your responses.
    I yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Ohio, Mr. 
Stivers.
    Mr. Stivers. Thank you, Mr. Chairman.
    I am glad you are here, Mr. Secretary. And thanks for your 
call last week offering to work with me on a lot of issues for 
which we share a passion.
    I want to read from HUD's mission statement and then ask 
you about four areas really quickly. And this is a summary of 
your mission statement. It talks about how you want to work to 
strengthen the housing market, you want to utilize housing as a 
platform to improve the quality of life, to build inclusive and 
sustainable communities free from discrimination, and to 
transform the way HUD does business.
    That is my summary of your mission, so I hope you believe 
that is an accurate summary, but it is excerpts from your 
mission.
    Secretary Castro. Sure.
    Mr. Stivers. And I would like to talk to you about four 
areas: first, Moving to Work, which you have already talked a 
little bit about; second, a ``homeless youth'' definition, 
which you and I have talked about individually; third, housing 
finance, especially involving condominium rules; and fourth, 
the Fair Housing Initiative, if we could.
    I would like to start with Moving to Work. It is, frankly, 
an easy one. It is a bipartisan issue. We all care about it. I 
believe it is a flexible and holistic program that does indeed 
use housing to build people's quality of life and transform 
lives.
    So I guess I just want to get you on the record as saying 
you are going to work with us on this bipartisan bill that 
hopefully will expand the program and allow it to be used to 
help a holistic program that actually looks not just at the 
housing needs but the total needs of the residents and makes it 
a little more flexible for the agencies administering it.
    Secretary Castro. We absolutely are.
    Mr. Stivers. Okay.
    Secretary Castro. We are looking to do what we can to 
ensure that we--
    Mr. Stivers. I will take ``yes'' as an answer.
    Secretary Castro. --have a strong MTW. And--
    Mr. Stivers. Great. Perfect.
    Secretary Castro. --of course, our budget proposes 15 more.
    Mr. Stivers. Great. Thank you.
    Second, on the homeless youth, you may be aware that the 
2014 Annual Homeless Assessment Report to Congress actually 
said that homelessness among families declined by 8 percent 
between 2007 and 2014, yet the numbers reported through our 
Department of Education said that they went up 85 percent since 
the 2007 school year.
    So that is a big disparity, and it really has to do with 
the fact that the HUD definition leaves out homeless children. 
And I guess my question is--and I don't want this to be a 
loaded question, but it kind of is--how are we going to solve 
the problem of homeless youth if we don't count them correctly?
    Secretary Castro. I believe that we are counting them, and 
I believe--first of all, I look forward to working with you. We 
had a good conversation about this issue.
    Mr. Stivers. Yes.
    Secretary Castro. As you know, we have some concerns about 
this legislation. One of those concerns is that it injures 
HUD's--in fact, may take away entirely HUD's flexibility to 
prioritize or emphasize--
    Mr. Stivers. And we want to work with you to make sure you 
can emphasize--the whole point is you have to count people 
before you can help people. If you don't know they are 
homeless--and so the HUD definition, excluding whole categories 
of homeless folks who are under 18, I just want to work with 
you--
    Secretary Castro. Although I would say--
    Mr. Stivers. --and give you the flexibility, but it is 
really important that we count them, and your definition 
excludes them.
    Secretary Castro. I would say there is more overlap than 
has been commonly given credit for. But let's work together on 
it.
    Mr. Stivers. And there is some disparity in the report. So 
I just would love to work with you to help solve that, because 
we can't help those people until we count them. They count, in 
my opinion, and I want you to help count them. So I appreciate 
your willingness to work on that.
    Third, with regard to condominiums, you may know that the 
process with regard to FHA funding for condominiums really is 
complicated. And if FHA would simply move to risk-based pricing 
for condominiums only--I am not asking you to do it everywhere.
    You have had the ability to do risk-based pricing since 
before I got to Congress. Clearly, condominiums have a higher 
risk than single-family homes. I will stipulate that. If you 
would move to that model, you could move away from a model that 
excludes so many condos. In fact, only about between 10 to 20 
percent of condos are eligible for FHA financing.
    We have to fix that, because it is an affordable way for 
some people to get housing. It is a big way that a lot of urban 
people get housing. And to exclude FHA from them is a real 
travesty. I would love to work with you on that, too.
    And I do want to quickly get to the Fair Housing 
Initiative, if we can. Did you, by any chance, since you have 
been at HUD--I know that you came long after it happened, but 
did you happen to look at your IG's report that was issued in 
2013? Have you had a chance to see this?
    Secretary Castro. Yes. I am familiar with this report. I 
think you are--
    Mr. Stivers. I appreciate it.
    Secretary Castro. --talking about this one that I brought 
with me.
    Mr. Stivers. Great. Have you implemented the 
recommendations?
    Secretary Castro. We have implemented those 
recommendations. And we have issued a directive emphasizing the 
need for onsite monitoring. And our Office of Fair Housing and 
Equal Opportunity (FHEO) has implemented a tracking system, as 
well. So--
    Mr. Stivers. That is great.
    And I know I am out of time, but, really quickly, can you 
also tell us, have you updated your conflict-of-interest 
standards? Because they are really low, and they don't include 
having board members who actually compete against the folks who 
are subjected to these lawsuits.
    Secretary Castro. I look forward to following up with you.
    Mr. Stivers. Let's talk about it. I'm sorry. I am out of 
time.
    Chairman Hensarling. The gentleman is correct; he is out of 
time.
    The Chair now recognizes the gentleman from North Carolina, 
Mr. Pittenger.
    Mr. Pittenger. Thank you, Mr. Chairman.
    Mr. Secretary, it is good to be with you.
    Mr. Secretary, I am a businessman. I served in the North 
Carolina Senate. I led an effort for efficiencies and 
restructuring our government and looking for abuse, looking for 
fraud, looking for waste. I worked with a Democrat legislature, 
and came up with a billion-and-a-half dollars of savings. None 
of those amounts were contested by anyone. I worked with the 
speaker addressing what we could do to consolidate our health 
and human services department. I worked on Medicaid fraud, 
which was pervasive throughout our government and, as such, 
around the country, about 20 percent of it.
    I think the pushback that maybe you sense from this side of 
the aisle today is wanting a recognition that there is a 
concern for some abuse.
    You referenced several times that the individuals that you 
serve come from the very poor or the disabled. Disability 
insurance has increased in the last decade from $88 billion to 
$145 billion. That is a lot of money. That is a lot of people. 
It seems that a lot of folks have been able to gain access to 
that.
    I have worked with our secretary of health and human 
services in North Carolina on addressing food stamps. There are 
very few eligibility requirements. I have been on the phone 
with our majority leader and our staff trying to create 
eligibility requirements and incentives to address it.
    I think the overall concern is the abuse of the system and 
what is being done. You have made a clear, compelling statement 
of a great American success story and addressing the needs of 
veterans and their homelessness. I think what we are looking 
for is that great American success story in creating 
accountability inside the system and looking for real metrics, 
looking for what you are doing to make sure that only those who 
really need assistance are getting it.
    If you have 56 percent of your folks that you are servicing 
from--and a good portion of those from the disabled, and you 
have enormous access to disability, where does that fall in 
line, in terms of people being able to access not just 
disability but then be able to get Federal housing?
    So all of this is of real concern to all of us who want a 
fiscally accountable government. I really reject the statements 
that were made to imply that there is some type of racial 
concern here. I have been involved in Federal housing in my 
community for 25 years. You can talk to civic leaders, pastors, 
African-American pastors, with whom I have worked with very 
closely. I understand the need, and I am responsive to that 
need.
    But, at the same time, I represent individuals who want a 
fiscally accountable government. And we don't see a 
demonstrated effort in so many ways of how that is being 
manifest.
    And I would really appreciate your response to those 
concerns.
    Secretary Castro. I appreciate the question and the 
concern.
    Early on in my tenure, we set out a vision for HUD. And one 
important part of that vision was to create a more accountable 
and transparent Department.
    So one of the first things I did was that I co-authored a 
letter, a joint letter with our IG that went out to all of our 
employees, telling them that folks ought to cooperate with IG 
investigations and reviews. We have gotten our departmental 
enforcement center to work closely with our IG. We work with 
our IG to implement the recommendations on audits and reports 
so that we improve performance out there.
    We are looking at ways that we can improve monitoring of 
our grantees. One challenge, for instance, is that we have over 
8,000 grantees--
    Mr. Pittenger. Mr. Secretary, if you don't mind, could I 
interrupt you? I don't have much time left.
    Would you agree with me that there is abuse in the system?
    Secretary Castro. That abuse happens in the system 
sometimes?
    Mr. Pittenger. Yes.
    Secretary Castro. I agree with you on that.
    Mr. Pittenger. Good. I think that is what we want, is a--if 
you want to come back to us with real, measured results, not 
what you have given to your staff and what to look for, but 
measured results on what you have done to bring accountability 
inside your system, that would really demonstrate to us that we 
are putting our tax dollars where they really belong.
    We care deeply about those in the safety net who need our 
help. We care deeply, though, as well, about the American 
taxpayer and how they are being exploited time and again.
    Secretary Castro. I share that concern, and we would love 
to follow up with you.
    Mr. Pittenger. Thank you very much.
    Chairman Hensarling. The time of the gentleman--
    Mr. Pittenger. I yield back.
    Chairman Hensarling. --has expired.
    The Chair now recognizes the gentleman from Arizona, Mr. 
Schweikert.
    Mr. Schweikert. Thank you, Mr. Chairman.
    Mr. Secretary, a couple of quick questions just to sort of 
build the box.
    What do you think the thing is you do or the Department 
does best, where you do it efficiently, you actually affect 
people's lives, and the cost, the dollar outcome, as you 
measure it, is something you are proud of?
    Secretary Castro. There are several things that fit that 
category.
    Mr. Schweikert. No. Just--
    Secretary Castro. I think it is fair to say the thing that 
many of us are proudest of is this progress that we have made 
working with the VA and others on veteran homelessness.
    Mr. Schweikert. Okay. So your veterans' homeless program.
    Secretary Castro. Yes.
    Mr. Schweikert. What is the thing that most concerns you, 
where the dollar per life affected or helped and changed is 
unacceptable to you? What is that?
    Secretary Castro. What is your question?
    Mr. Schweikert. Same thing, it is just the opposite, the 
mirror image of the first question. What in the dozens and 
dozens and dozens of programs and initiatives you are 
managing--and, look, you have inherited much of this--of the 
dollars spent, it is unacceptable to you, the quality, the 
outcome in affecting and helping people's lives?
    Secretary Castro. I think it is fair to say that every day 
I read the clippings from around the country, and I see one of 
the grantees that is not spending money the way they ought to--
    Mr. Schweikert. No, no. I beg of you, I don't want to go 
the anecdotal direction. I almost want this to be sort of your 
math-brain side saying, as the manager of a multi-billion-
dollar agency, what program is unacceptable to you that the 
dollars being spent on the numbers of lives you are actually 
helping?
    Secretary Castro. I don't believe that there is a program 
that HUD has--
    Mr. Schweikert. So, no program--
    Secretary Castro. I guess what you are calling is basically 
a useless program.
    Mr. Schweikert. No, no, no. On the contrary. We all--
    Secretary Castro. I disagree with that.
    Mr. Schweikert. We all have those that, either the way they 
are designed, the efficiencies--I am sure you ran into that as 
mayor, by--
    Secretary Castro. Is your question what program we need to 
improve in terms of its efficiency?
    Mr. Schweikert. Or restructure. Because you just told me 
you are very proud of your homeless veterans' program. So, 
obviously, you came up with a methodology and mechanics there 
that you thought was effective per dollar.
    Secretary Castro. Yes.
    Mr. Schweikert. But on the flip side, you can't tell me 
anything--
    Secretary Castro. No, no, no.
    Mr. Schweikert. --out of all the programs--
    Secretary Castro. If your question is what program or 
programs can we improve the efficiency on, what programs 
concern me about the efficiency on--
    Mr. Schweikert. If you had to target right now where it was 
time for a technology revolution, cost revolution, delivery 
revolution in what you do, to use that money to affect people's 
lives, what is that program that it is time to have that 
management revolution that you--
    Secretary Castro. Oh, there are many. I will give you an 
example.
    Mr. Schweikert. Give me the number one.
    Secretary Castro. One of them that I think we can make more 
progress on is CDBG. I am told by my folks who administer this 
that a lot of the work on CDBG is centered around essentially 
just routine paperwork. And we need--
    Mr. Schweikert. So what is the technology you can bring to 
that to bring that revolution about so the dollars per lives 
affected is acceptable to you?
    Secretary Castro. This is why we are requesting IT 
upgrades, so that we can improve our IT system to enhance 
monitoring and cut down on the amount of time that our people 
have to spend doing paperwork--
    Mr. Schweikert. So those IT upgrades--
    Secretary Castro. --so they can be more effective.
    Mr. Schweikert. --should provide the efficiencies that 
ultimately will cover those costs? And that is a program where 
you are going to--
    Secretary Castro. That is one example.
    Mr. Schweikert. --be able to help more people's lives and 
accomplish it through the efficiencies and pay for it through 
those efficiencies?
    Secretary Castro. Yes, but your characterization, I think, 
is off about that it is one program. It is not one program.
    Mr. Schweikert. You do initiatives at the program level.
    Secretary Castro. Sure. Yes, there is no question, 
Congressman, there are efficiencies that we have yet to achieve 
that we need to achieve. I think my message is it is going to 
take us improving the systems. That often takes an investment. 
And we need that investment from you.
    Mr. Schweikert. You actually have a misnomer there, because 
if you take a look at the rest of the world, particularly in 
the private sector, the adoption of technologies and 
efficiencies is supposed to save money and allow you to help 
more--
    Secretary Castro. Congressman--
    Mr. Schweikert. No. Let me finish.
    Secretary Castro. --if you would just invest--
    Mr. Schweikert. Let--
    Secretary Castro. --as much in my program--
    Mr. Schweikert. Mr. Secretary--
    Secretary Castro. --as you did in this room--
    Mr. Schweikert. Mr. Secretary, let me finish.
    Secretary Castro. --with this carpet with gold insignia--
    Mr. Schweikert. Mr. Secretary--
    Secretary Castro. --and this kind of--
    Mr. Schweikert. Mr. Secretary, let me--
    Secretary Castro. --wonderful Taj Mahal--
    Mr. Schweikert. Come on.
    Secretary Castro. --I think that--
    Mr. Schweikert. Hey.
    Secretary Castro. --we could make the kind of improvements 
that we need to make.
    Chairman Hensarling. Mr. Secretary, the time belongs--
    Mr. Schweikert. You have shocked--
    Chairman Hensarling. --to the gentleman from Arizona.
    Mr. Schweikert. --me with that rudeness. I am--
    Secretary Castro. That is the fact.
    Mr. Schweikert. Shall we try again, Mr. Secretary? Come on. 
You are better than this. You are much better than this. And 
your brother is one of my favorite people here.
    So, as we try to help you, policy-wise, to find those 
efficiencies where you believe you can have the most impact--
through your testimony and statement, you keep repeating over 
and over investment, investment, investment. But then, in the 
same breath, you tell me that these technology dollars are 
going to provide you efficiencies. Why aren't you also telling 
us these efficiencies are going to pay for these technology 
investments?
    And, with that, Mr. Chairman, I yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Pennsylvania, 
Mr. Rothfus.
    Mr. Rothfus. Thank you, Mr. Chairman.
    Welcome, Mr. Secretary, and thank you for joining us today.
    I would like to talk a little bit about HUD's Continuum of 
Care Program, which I understand is set up to engage local 
communities in providing transitional housing and services to 
individuals and families.
    Your staff has been talking with my office and a 
constituent provider in my district about some challenges with 
HUD regulations they have run into as a single-sex provider. 
This provider does great work in the north hills of Pittsburgh 
helping women with children avoid homelessness. Most of the 
women there have been in poverty. Many are domestic violence 
survivors, and many have experienced mental health or substance 
abuse issues. Despite that, the outcomes achieved have been 
tremendous, with more than 80 percent of clients increasing 
income and education levels and finding permanent housing.
    Each of these figures exceed HUD requirements. However, the 
regulations as they currently stand prevent this provider from 
continuing to serve females with children. And I can't imagine 
that they are the only ones experiencing this issue.
    In thinking through some of these issues, I question 
whether it makes sense for every program to be all things for 
all people. This provider serves a unique population that seems 
like a key tenet of the program is, again, to empower folks on 
the ground to tailor programs to meet the specific needs of 
their community. It can't be one-size-fits-all.
    Instead, could services under the Continuum of Care Program 
for different genders be provided at different locations if 
that is what the community deems to be the most appropriate?
    Secretary Castro. Yes. Thank you for the question, 
Congressman. You know, of course, that I am not familiar with 
this particular case. I am glad that my staff has been working 
with your staff on it and would love to follow up with you on 
it personally.
    We always strive to allow local communities to meet their 
own needs, and sometimes it becomes a challenge when those 
local needs clash with other dictates. However, we would like 
to work with you and with the community to see what is possible 
on that.
    Mr. Rothfus. So would you agree that you can work with 
different genders, depending on the context of the situation? 
For example, if you have a residence that has been helping with 
domestic abuse survivors, that maybe there should be a 
particular sensitivity there to the residence?
    Secretary Castro. Yes, I would agree with you that that 
does exist in different places. Sure.
    Mr. Rothfus. And should Washington, D.C., come down and 
say, no, no, you can't do that, you have to open up the 
program, when you have a specific population there who--
    Secretary Castro. Again, I don't want to speak to the 
specific case. I am not familiar with the details of this 
particular case.
    However, in general, what we like to do is, as I mentioned 
earlier, have mission-driven flexibility so that we can meet 
the mission that HUD has, working with local communities, and 
effectively serving those people that our programs are meant to 
serve.
    Mr. Rothfus. Do you know whether there are waivers in a 
program, for example, that HUD would be able to grant?
    Secretary Castro. In many of our programs, there are 
waivers. And under certain circumstances, we have granted 
waivers on a whole number of things in order to meet the 
fundamental goal of that program.
    Mr. Rothfus. We would like to--
    Secretary Castro. Sure.
    Mr. Rothfus. --follow up with you and ask you to consider 
any waivers that would be appropriate to help this very 
vulnerable population.
    In meeting with the housing authorities and affordable 
housing providers throughout my district, there is some concern 
and frustration with regulations that are burdensome and 
require a level of compliance effort that diverts resources 
away from actually providing housing.
    Can you tell me how often HUD is doing a retrospective 
review of regulations?
    Secretary Castro. That is a good question.
    A few years ago, the President asked each of the 
Departments to look at all of their regulations and to 
eliminate at least 5 percent--that was the goal--of those 
regulations. In that time, roughly over the last 3 or 4 years, 
HUD has eliminated--I believe the last thing I saw was 11 
percent of those regulations. And we would be glad to get your 
staff a follow-up on which regulations those have been.
    We share a goal, I think. And we heard this from 
Congressman Luetkemeyer and others. We hear very loudly and 
clearly at PHAs, at nonprofits and other grantees that, ``Hey, 
HUD, can you get better about streamlining some of these 
administrative burdens?'' Where we can do that, mark my words, 
we are going to--
    Mr. Rothfus. Is there any formalized ongoing review of 
existing regulations so that every 2 years--
    Secretary Castro. Oh, sure. There is. There is a 
streamlining rule that is in development, and--
    Mr. Rothfus. The rule is in development right now?
    Secretary Castro. The rule is in development.
    Mr. Rothfus. When can we see that?
    Secretary Castro. The proposed rule was issued in January 
of 2015, and our goal is to issue that rule in the summer of 
2015, so this summer.
    Mr. Rothfus. Thank you, Mr. Chairman. I yield back.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentlelady from Utah, Mrs. 
Love.
    Mrs. Love. Hello, Mr. Secretary. How are you doing?
    Secretary Castro. I am doing well.
    Mrs. Love. Okay.
    I just came in, so I don't know all of the questions that 
were asked, but I want you to know that I am hoping that we 
have a good, civil, back-and-forth so we can get some 
information. Good? Yes?
    Secretary Castro. Yes. Sure.
    Mrs. Love. Okay. Great.
    I have just finished reading an article in The Hill and I 
understand that the Administration, the Obama Administration, 
is moving forward with regulations designed to help diversify 
America's neighborhoods.
    You are pushing forward with that, right?
    Secretary Castro. I wouldn't characterize it that way, in 
terms of diversifying America's neighborhoods. I think you are 
talking about the affirmatively fair housing?
    Mrs. Love. Okay. Well--
    Secretary Castro. Furthering fair housing?
    Mrs. Love. --I am actually looking specifically at a HUD 
rule that is coming out that is dedicated to diversifying 
neighborhoods in the attempt to try and end some areas that you 
think are segregated, for instance.
    Secretary Castro. Well, yes. We just had a conversation 
about this, the rule on affirmatively furthering fair housing.
    Mrs. Love. Okay.
    So I just want to know some quick examples that you have 
where the Federal Government has actually been able to 
diversify areas or end poverty in local areas where the local 
municipalities could not do that.
    Secretary Castro. Yes. That is not the way that I am 
thinking about it. That is not the way we are thinking about 
it. The way we are thinking about it--
    Mrs. Love. How are you thinking about it?
    Secretary Castro. Yes. So the way we are thinking about it 
is--and I used to be a mayor. I know you used to be a mayor.
    Mrs. Love. Yes. That is why I am asking you on--I know 
that, as a mayor, you wouldn't want the Federal Government 
coming in and telling you what to do with your zoning laws or 
with your rules, because you have more skin in the game, you 
have more of an incentive to take care of the people who live 
in your areas. You are the boots on the ground. And so that is 
why I am trying to figure out where you think this would be a 
good idea.
    Secretary Castro. Yes. So the linchpin--and I am going to 
be careful about what I say about the rule, because it is in 
rulemaking right now. And so we don't want to prejudge all of 
the contents of the rule.
    However, I think it is fair to say that the goal is to 
ensure that local communities have the tools to assess the 
landscape of housing in their area and where the investments 
are, where affordable housing opportunities are--
    Mrs. Love. Okay.
    Secretary Castro. --to understand what some of the 
challenges are--
    Mrs. Love. So you think that they don't have the tools 
right now, and you need to provide the tools that they need to 
landscape their area to have more data for their area?
    Secretary Castro. I believe that through this rule, they 
will be able to get, through what we call an Assessment of Fair 
Housing Tool--
    Mrs. Love. Do you feel like you didn't have the right type 
of tools to make the right types of decisions in your area?
    Secretary Castro. Oh, yes, I said earlier that I wished 
that I had had this tool when I was major. It would have been 
fantastic, as a policymaker. It truly would have helped us, I 
think, to understand how we could ensure that throughout the 
community, people at least have the opportunity for upward 
mobility. So I am convinced that it is going to be a fantastic 
tool.
    Mrs. Love. I have a limited amount of time, so before we go 
on, can I get a commitment from you that you are not going to 
do anything that preempts what the municipalities are doing in 
their areas, that you are not going to go in and make any 
zoning laws or any rules that are going to preempt what cities 
are going to do when--
    Secretary Castro. Yes, I have seen some of the talk about 
that, Congresswoman. This is not about changing--
    Mrs. Love. Yes?
    Secretary Castro. That is right.
    Mrs. Love. Okay.
    Secretary Castro. This is not about changing zoning laws, 
planning laws, anything like that.
    Mrs. Love. Okay.
    Saratoga Springs, Utah, the City that I was mayor of, was 
named one of the best cities for livability and affordability.
    Secretary Castro. Okay.
    Mrs. Love. And it wasn't because we put pockets in areas of 
affordable housing. It wasn't because we said there are people 
who cannot afford specific housing so we are going to make sure 
that we do that. It is because we actually lowered the price. 
We lowered taxes. We made sure that our taxes paid for public 
safety, police, and fire. And we gave people the opportunity to 
use their own money in order for them to be able to pick 
affordable housing in their own neighborhoods, neighborhoods of 
their own choosing, so that their kids can go to schools of 
their choosing.
    One of the things that I am really concerned about--I just 
put up an article on Facebook that talked about Utah going from 
1,932 chronically homeless to 178 homeless. That is remarkable, 
that a State can actually do that.
    Secretary Castro. Yes.
    Mrs. Love. And they have their own housing problems--
    Secretary Castro. They did it with a lot of our money, so I 
agree.
    Mrs. Love. No, no, no. Listen. But they actually did that, 
because that was their decision.
    Secretary Castro. With our money.
    Mrs. Love. They came in--
    Secretary Castro. Sure.
    Mrs. Love. They came in--what do mean, ``our money?'' It is 
the taxpayer dollars. You think that--
    Secretary Castro. Yes. Our--
    Mrs. Love. --this money belongs to you?
    Secretary Castro. --taxpayer money helped fund HUD-VASH--
    Mrs. Love. This money does not belong to you. It belongs to 
the people.
    Secretary Castro. --and other initiatives. I am proud it. I 
am proud of what Utah has done.
    Mrs. Love. It belongs to the people.
    Secretary Castro. I celebrate with you.
    Mrs. Love. So what I am saying is that you should take note 
from what we are doing. Why not follow what Utah is doing so 
that we can actually end hopelessness?
    Every program that we have aimed at poverty should be aimed 
at making poverty temporary, not tolerable.
    Thank you.
    Chairman Hensarling. The time of the gentlelady has 
expired.
    The Chair wishes to advise all Members that in order to 
accommodate the Secretary's schedule, the Chair intends to 
recognize three more Members: the gentleman from Colorado; the 
gentleman from Arkansas; and the gentleman from Kentucky. To 
those who are monitoring the hearing in their offices, you are 
a day late and a dollar short.
    At this time, we will recognize the gentleman from 
Colorado, Mr. Perlmutter.
    Mr. Perlmutter. Thank you, Mr. Chairman.
    Mr. Secretary, it is good to see you.
    Secretary Castro. Good to see you.
    Mr. Perlmutter. I would like to talk about some of the 
sustainability, energy-saving measures that the Department has 
undertaken with local governments, with local public housing 
authorities.
    I know in Colorado your agency has worked very closely with 
a number of our local governments and local housing authorities 
to really make sure that the residents have very well-built 
units and complexes that are very efficient in their operation.
    So if you could just talk to us a little bit about what the 
agency is doing nationwide and any specific examples that you 
want to raise.
    Secretary Castro. Yes. And I want to say how much I 
appreciate, Representative, the chance that I got to get out to 
Denver not too long ago. And, in fact, the Denver Housing 
Authority is a good example of this. I had the chance to visit 
North Lincoln Homes. And at North Lincoln Homes, they have 
installed 10,400 solar panels on those buildings.
    And what we want is we want folks to have a roof over their 
heads, we want them to live in a safe environment, and we want 
them to do it in a healthy environment as well. And we have a 
win-win here, because it is healthier, it is better for the 
environment, and they are saving money in terms of energy 
savings.
    Mr. Perlmutter. And I just want to--for the record, 
Colorado is the fittest State in the Nation too. So just--Utah 
has a lot of--
    Secretary Castro. I won't challenge you on that.
    Mr. Perlmutter. --nice things about it--
    Secretary Castro. I think you are probably right.
    Mr. Perlmutter. --but I want to talk about Colorado for a 
second, and I appreciate your doing that.
    Secretary Castro. Yes.
    So we are doing just a whole bunch of work on this. Those 
buildings were part of what is called our Better Buildings 
Challenge. And the Better Buildings Challenge includes a push 
to get multifamily-building owners to agree to improve their 
energy efficiency by 20 percent over the next decade. And 
already we have gotten about 89 multifamily partners that 
represent about 400 million square feet of space and serve 
400,000 people. So that is one significant advancement we have 
made.
    There are also other big communities like New York, through 
its housing authority, NYCHA, that is working to do green-
energy retrofits. And we worked with them to make it 
economically feasible, in conjunction with the private sector, 
so that they are going to have renovated and more 
environmentally sound, green-energy units there in New York. 
And we just think that this is a victory all the way around.
    Mr. Perlmutter. And I have seen instances where your 
Department has worked with other Departments within the Federal 
Government, whether it is Education or Transportation or 
Energy, to make sure that new complexes, new housing units are 
near transit so it is easy for the residents to get from one 
place to another.
    Can you comment on that?
    Secretary Castro. I am confident that one of the lasting 
legacies of the Obama Administration is that it has broken 
through the silos. Sustainable Communities is a good example of 
this, which was HUD, DOT, and EPA working together and asking 
local communities to do the same thing. Because we know, if we 
are going to lift up the quality of life for people, it is not 
just about housing; it is also about access to transit, it is 
about a good school, it is about the opportunity for a good 
job. So how do all of us work together across those silos so 
that folks have a holistic opportunity to rise.
    And Denver is a good example of this, whether it is in the 
investment in transit that connects to some of the housing 
there or environmental investments that have been made. The 
Promise Zones that we recently announced the second round of 
are another good example of this. We want to ensure that we are 
making an overall, holistic impact on quality of life and 
economic opportunity.
    Mr. Perlmutter. Is there anything that I haven't touched on 
that you would like to talk about?
    Secretary Castro. Oh, there are a million things we would 
love to talk about, but we are very proud of so much of the 
investments that are made. We are also mindful, as folks, I 
know, on this side of the aisle have said, that we can continue 
to work on efficiency and accountability, and we will do that.
    Mr. Perlmutter. With that, Mr. Chairman, I will yield back.
    Chairman Hensarling. The gentleman yields back his time.
    The Chair now recognizes the gentleman from Arkansas, Mr. 
Hill.
    Mr. Hill. Thank you, Mr. Chairman.
    And thank you, Ranking Member Waters.
    Secretary Castro, it is good to have you before the 
committee today.
    I had the pleasure of being in the great State of Texas 
over the weekend, and I had dinner in Austin at the LBJ 
Library. And I was thinking quite a bit at that dinner about 
would the President, this many years later, be happy or sad 
about the performance of the Great Society programs, since we 
really haven't gotten poverty, as a percentage of the 
population, down since his time. And I know we have spent 
trillions trying to do so.
    But I do welcome you back to the committee.
    I have met with my public housing authority twice in Little 
Rock, Arkansas, and one thing that came up consistently was 
HUD's bureaucratic delays in disposition of properties. I was 
informed that it can take up to literally a year through your 
Chicago disposition office to take a property that has been 
sold, take it off the books. And, therefore, we can't redevelop 
new units without putting that cash to work, can't do a real 
estate closing.
    That seemed like a really long time to me. I wondered what 
you consider a good benchmark for that disposition process.
    Secretary Castro. Yes. I believe it is fair to say that, 
according to the history of the property and the size of it, 
that you see a range. However, I agree with you that we 
certainly should endeavor to do it in a way that is as swift as 
possible.
    And while I am not familiar with the particular case of the 
Little Rock Housing Authority, I would be glad to follow up 
with you and with your staff so that we can figure out, with 
regard to that, how do we improve that situation and then, more 
broadly, give you an answer on what our average is. It may well 
be that that is an aberration.
    Mr. Hill. No. Well, yes, my question is not case-specific, 
it is prospective.
    Secretary Castro. Yes.
    Mr. Hill. But I have seen it in a couple of instances now, 
and I encourage you to set a benchmark that is substantially 
better than that.
    You talked a lot about your success with veteran 
homelessness today. We appreciate that. But in preparing for 
the hearing, I was really shocked when I read a CRS memo that 
suggests that, of the $45 billion in new discretionary 
appropriations provided for HUD's programs and activities for 
Fiscal Year 2015, $43 billion, so some 95 percent, basically 
all of it, is--nearly all of that funding is apparently 
disbursed by automatic or computer-driven funding. And so, it 
is basically on autopilot that it goes out.
    They say it is allocated by formula; 95 percent of HUD's 
appropriations are allocated by formula. So I assume CDBG or 
public housing payment or whatever that might be, which means 
that HUD doesn't have a lot of managerial input.
    And this is a real change I have noticed since coming back 
to Washington, that our Cabinet Secretaries don't have a lot of 
control about mixing programs or changing personnel. We see it 
at the Veterans Administration all the time. I know you have 
been frustrated by it. Whether you chose to mention that here 
or not is your business.
    But it appears to me that--how many more houses could we 
build or how many more lives could we change if we had a 
reduction in the 7,800 employees that you have? If 95 percent 
of your spending is driven by a formula, do you really need 
that big of a head count?
    Secretary Castro. Well, we--
    Mr. Hill. And could we reduce that head count? What do you 
think about that?
    Secretary Castro. We are always looking for efficiency, but 
let me give you another stat. In January of 1981, we had 16,500 
employees at HUD, and today, by the last count that I saw, we 
had 7,810.
    Mr. Hill. Yes, well, you also spent a lot less money then, 
too. You were spending probably $10 billion in 1983 in HUD.
    Secretary Castro. What I am saying is we are having to do 
more with less people.
    But I think you and I can agree on this: that we are always 
looking for ways, through the use of technology, through just 
doing things smarter, that we can become more efficient.
    Mr. Hill. But does that number shock you, 95 percent? Does 
that surprise you, that CRS says that 95 percent of your 
spending is all based essentially on a standing formula that 
flows out to your--
    Secretary Castro. Does it surprise me? I might want to 
double-check that percentage. It doesn't surprise me that a lot 
of our programs are essentially formula-funded. However, there 
are also a number of them that are competitive-funded, as well.
    But it is either formulaic or competitive. There is not 
much discretionary power that is given over--
    Mr. Hill. So what do--
    Secretary Castro. --to the Cabinet Secretary.
    Mr. Hill. --what do the nearly 8,000 people do in that 
instance, then?
    Secretary Castro. Oh, they essentially administer these 
programs. We have had a lot of talk about how we can ensure 
more accountability. They are our front line in ensuring that 
accountability.
    Mr. Hill. But if you just had a good Inspector General and 
get Congress to agree to a big IT upgrade, wouldn't that--if 
you are going to have that much automated spending, wouldn't 
that be the way to handle it?
    In other words, where do they get to innovate? Where do 
they get to add value?
    Secretary Castro. Well, no, that is why I do think that we 
need the investment in IT, so that we can achieve some of that. 
I agree with you on that.
    Mr. Hill. I yield back, Mr. Chairman.
    Chairman Hensarling. The time of the gentleman has expired.
    The Chair now recognizes the gentleman from Kentucky, Mr. 
Barr.
    Mr. Barr. Thank you, Mr. Chairman.
    And, Mr. Secretary, thank you for your patience. We are 
winding up the hearing here, and I appreciate your time here 
today.
    The Congressional Research Service, as you probably know, 
reports that HUD has spent since its origination in 1965 
approximately $1.65 trillion on its programs over the course of 
these 50 years. And yet, since 1965, the percentage of prime-
age male workers in the workforce has declined from over 90 
percent to only about 77 percent today. Also, the official 
poverty rate, as has been discussed, has remained essentially 
flat.
    In 1965, 7 percent of American children were born outside 
of marriage. Today, that number is over 40 percent. That 
matters, of course, because single-parent families are 4 times 
more likely than married-couple families to lack self-
sufficiency and to persist in poverty.
    And finally, since 1965, since the advent of your 
Department, the number of single-parent families in official 
poverty has more than tripled.
    So we have talked about this quite a bit today, but how do 
you personally define success in the mission of the Department 
of Housing and Urban Development?
    Secretary Castro. We have addressed this, Congressman. I 
define success in several ways.
    First of all, somebody having a roof over their head, a 
veteran who served our country having a roof over his or her 
head is success.
    Mr. Barr. Can I stop you right there? I agree with you. 
Putting--
    Secretary Castro. Well, then, we agree on that.
    Mr. Barr. But I want to elaborate here a little bit.
    Secretary Castro. Sure.
    Mr. Barr. Putting a roof over someone's head is success, 
certainly, in keeping that individual out of homelessness--
    Secretary Castro. For the Department of Housing.
    Mr. Barr. Sure. But wouldn't you define success with higher 
expectations, that the aspiration of your agency shouldn't just 
be putting a person who is homeless into shelter or putting a 
roof over their head, but instead putting a person in a 
position where they themselves are putting a roof over their 
head? Isn't that the expectation that we would want? Isn't that 
what the American taxpayers expect in terms of the return on 
their investment?
    Secretary Castro. What they expect is that the Department 
of Housing will provide safe, quality, affordable housing 
first. And then we also, of course, want to work to ensure that 
people also have the stability to get onto the path that they 
want in life. But let's not suggest that the fact that they 
have a roof over their head doesn't count for anything.
    Mr. Barr. Oh, it certainly counts. I just think that our 
aspirations need to be much higher. Our expectations are far 
too low. The expectation should be that success is measured not 
just in how many people we are moving into dependency on the 
Department--
    Secretary Castro. I wouldn't call it dependency.
    Mr. Barr. --but how many people we are moving--
    Secretary Castro. I would disagree with that.
    Mr. Barr. --how many people we are moving out--
    Secretary Castro. There is no evidence--
    Mr. Barr. --of dependence on--
    Secretary Castro. --to suggest dependency.
    Mr. Barr. I think we just went over a few statistics on 
that, but--
    Secretary Castro. What is the evidence on that?
    Mr. Barr. Since my time is expiring, Mr. Secretary, let's 
talk about your stated testimony, which I appreciate, that you 
are always looking for ways to become more efficient, you are 
always working on efficiency and accountability, and that you 
have assigned your Deputy Secretary to lead an operational and 
management review, the Deep Dives, to deliver more efficiency.
    Let me give an example of where I think the Department 
could deliver on that commitment. In Kentucky, I have heard 
from many of my constituents who are grantees of Continuum of 
Care, which is supposed to take care of our homeless 
population. In one city in Kentucky with a homeless rate that 
is average, they are getting about $8 million. In a similar 
city with the same homelessness rate, they are getting about 
one-eighth of that money.
    And for those constituents in that underserved community, 
what they tell me is that HUD has been capricious in 
prohibiting unused funds from being redirected. So, in other 
words, in the city with the large number of Continuum of Care 
funds, the grantee is supposed to by statute have 24 months to 
expend all those funds, or those funds will be recaptured.
    But the statute also says that the Secretary shall 
reallocate the funds for another homeless assistance and 
prevention project that meets the requirements of this part to 
be carried out, if possible and appropriate, in the same 
geographic area as that area served through the original grant. 
But I have heard from my constituents that the request to move 
the unexpended funds from one grantee in one Kentucky county to 
another less than an hour away has been denied.
    So my question to you is, what do you define as a 
geographic area? And why can't we take unspent funds in one 
area and reallocate those to another area where there is an 
equal and chronic need?
    Secretary Castro. That is a great question. In fact, it is 
a great question because this is one of the things that we 
would like to work on, especially in smaller communities, to 
allow them to be able to share resources, whether it is on 
overhead or direct provision of services. So, let's work on 
that.
    Mr. Barr. Mr. Secretary, I appreciate your offer. I want to 
work with you on that to, again, help you make good on your 
commitment to make these dollars go further for the American 
taxpayer.
    Thank you. I yield back.
    Secretary Castro. Thank you.
    Chairman Hensarling. The time of the gentleman has expired.
    I would like to thank the Secretary for his testimony 
today.
    [applause]
    The committee will come to order.
    The Chair notes that some Members may have additional 
questions for this witness, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to this witness and to place his responses in the record. Also, 
without objection, Members will have 5 legislative days to 
submit extraneous materials to the Chair for inclusion in the 
record.
    This hearing stands adjourned.
    [Whereupon, at 1:06 p.m., the committee was adjourned.]

                            A P P E N D I X



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