[Senate Hearing 117-]
[From the U.S. Government Publishing Office]


 
  TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES 
                  APPROPRIATIONS FOR FISCAL YEAR 2023

                              ----------                              


                        WEDNESDAY, MAY 12, 2022

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:30 a.m. in Room SD-192, Dirksen 
Senate Office Building, Hon. Brian Schatz (chairman) presiding.
    Present: Senators Schatz, Murray, Coons, Van Hollen, 
Collins, and Braun.

              DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

STATEMENT OF HON. MARCIA FUDGE, SECRETARY

               OPENING STATEMENT OF SENATOR BRIAN SCHATZ

    Senator Schatz. Good morning. This hearing will come to 
order.
    Welcome, Secretary Fudge. It is a pleasure to have you 
before the subcommittee to testify on the President's fiscal 
year 2023 Budget Request for the Department of Housing and 
Urban Development.
    The President's $72 billion Budget Request for HUD 
represents a $6.2 billion, or 9.5 percent increase from the 
recently enacted Omnibus, but due to historically low vacancy 
rates, and rents rising by more than 15 percent in some places, 
more than half of that increase is needed to simply maintain 
the housing rental assistance HUD currently provides.
    Around the country, in rural, suburban, and urban 
communities alike, families are struggling to find decent homes 
that they can afford, and this problem is not new, but a result 
of insufficient supply over many decades.
    For many years we simply have not built enough housing; too 
often efforts to build housing are constrained by local zoning 
and land-use regulations. These rules often allow for a flawed 
public engagement process that gives an outsized voice to a 
select few who can afford to take time off from work in order 
to dictate what gets built, and more often, what doesn't get 
built.
    Neighbors who block new development may tell you that they 
are for housing, in concept, just not in their backyard. And 
given the crisis at hand, it is time that we realize that the 
character of the neighborhood isn't all that matters, and that 
some of the arguments against more housing come from the Jim 
Crow Era of racist exclusion. We can and must do more to 
overcome these barriers.
    The national challenge is rightfully mostly handled at the 
state and local level, but the Federal government also has a 
role. In my Home State of Hawaii representative Troy Hashimoto 
successfully led the effort in the State Legislature to 
establish a working group to review zoning, regulatory, and 
statutory barriers to affordable housing development that will 
inform future legislation.
    Many other states are taking similar initiatives, from 
Minnesota to California. Here in Congress, we should support 
states' efforts to increase the supply of housing, and I am 
encouraged by proposals in the administration's budget to 
provide funding for communities that update their land use and 
zoning regulations to allow for more multi-family housing 
opportunities.
    While vouchers help to relieve rent burdens for the most 
vulnerable, they will only be useful if there is housing stock 
to absorb them. The fiscal year 2022 Omnibus helped to strike 
that balance between supply and demand, with a record funding 
for the HOME Program, and new incremental vouchers.
    The Omnibus also reauthorized the Violence Against Women 
Act, which included protections to help survivors to find safe 
housing, but during the debate on that legislation, it became 
clear that the lack of guidance and oversight from HUD on 
emergency transfers is a real problem, and one that we hope you 
will help us to address.
    In addition to serving vulnerable renters, we also need to 
have a better understanding of how institutional investors are 
changing the landscape of home ownership opportunities. We have 
heard many stories about the negative effects of the 
institutional investor owners, including unaffordable home 
prices and rents, deteriorating conditions, and families who 
simply can't compete against well-funded corporations in 
purchasing homes.
    Congress and the Administration need to keep an eye on this 
trend to ensure that the housing market remains open and fair 
for everybody.
    Finally, we appreciate your support for the authorization 
of the CDBG Disaster Recovery Program. These flexible funds are 
critical to rebuilding, but the funds take far too long to 
reach the people who need the dollars the most. Permanent 
authorization is key to reducing unnecessary delays, and 
helping families to get back on their feet after a disaster.
    As Chair, I intend to push harder to advance these efforts 
within the available resources. And I look forward to working 
with the Department on all of these items.
    Secretary Fudge, I look forward to your testimony, and our 
ongoing dialogue and partnership on these matters.
    Vice Chair Collins, I look forward to reviewing this budget 
with you. And turn to you for your opening statement.

                 STATEMENT OF SENATOR SUSAN M. COLLINS

    Senator Collins. Thank you. I am pleased to join Chairman 
Schatz, in welcoming Secretary Fudge back to the subcommittee 
this morning, to discuss the Department of Housing and Urban 
Development's fiscal year 2023 Budget Request. The fiscal year 
2022 Omnibus included 65.7 billion for HUD which was offset, in 
part, by nearly $12 billion in Federal Housing Authority and 
Ginnie Mae receipts.
    These funds provide rental assistance for seniors, and low-
income families, enable formerly homeless veterans, and youth, 
as well, as survivors of domestic violence to have safe and 
secure housing, support critical investments in our communities 
that help to create jobs, reduce lead paint hazards for 
children, a particular interest in my state where we have old 
housing stock, and so much more.
    The administration's request for HUD is a substantial 
increase of more than 6 billion above current levels. Of this 
increase 3.7 billion is for the increased cost of simply 
maintaining current rental assistance. The administration's 
request also assumes that FHA and Ginnie Mae receipts, which 
help offset the cost of the T-HUD Bill, will be $1 billion less 
than fiscal year 2022.
    Given the increased renewal costs and lower receipt levels, 
it is prudent for our subcommittee to take into account the 
pipeline of existing funding when reviewing the 
administration's request. Two years after passage of the CARES 
Act nearly half of the $12.4 billion provided to HUD is still 
unspent. A year after the American Rescue Plan, HUD has only 
expended 6 percent of the 10.8 billion it was provided.
    I am concerned that HUD, and many of its grantees, appeared 
to lack the capacity to manage and oversee the influx of 
funding provided over the last 2 years regardless of how well-
intentioned they are. And the funding itself has been well 
intentioned, the lack of affordable housing, as the chairman 
has pointed out, is a crisis in many parts of our country, with 
no state having a truly adequate supply.
    The very people who make our communities work, the police 
officers, the firefighters, the school teachers, the nurses, as 
well as those in the service and hospitality sectors, often 
find that they can no longer afford to live in the communities 
that they serve. That certainly is the case in parts of Maine.
    The solution to such housing challenges takes careful 
thought and coordination. The need for that approach is 
evident, not just in the billions of unspent funding, but also 
in the number of unissued vouchers. HUD data indicate that PHAs 
already have the funding available to lease 200,000 additional 
vouchers above what are currently leased, these funded but 
unused vouchers make it clear that simply appropriating more 
vouchers will not address the affordable housing needs of the 
country if vouchers are not or cannot be leased.
    The supply of rental housing across the country is 
insufficient, the backlog of already provided funding, can help 
address this need, as can better coordination with tax credit 
programs, and the streamlining, or elimination of burdensome 
and unnecessary building regulations.
    I would urge the Department to invest more time in finding 
ways to expedite the administration of grants and improve its 
programs. One such example is HUD's determination of fair 
market rents, from Portland, Maine, to Portland, Oregon, the 
committee has heard from public housing authorities concerned 
that HUD's fair market rent calculations do not reflect the 
increased rental prices they are experiencing in their 
communities.
    That results in households being unable to afford the 
limited housing options that are available even if they do have 
a voucher in hand.
    Additionally most of HUD's programs are operating with long 
expired authorizations, these expirations do not prevent the 
committee from funding programs; however, without program 
modernizations that come through reauthorization, the 
effectiveness of these programs can be diminished.
    Core programs with long-standing expired authorizations 
include the very important CDBG Program, home led-based paint 
hazard reduction, public housing, Section 8 vouchers, housing 
for the elderly, and homeless assistance grants. I hope the 
Department will work with the authorizing committee to produce 
transformational changes to better serve our communities and 
vulnerable households.
    Having expressed some concerns let me also briefly note 
areas of shared interest and support. I am pleased to see the 
continued investment in the Community Development Block Grant 
Program, which provides flexible funding for critical 
investments and worthwhile projects in communities across 
Maine, and the rest of the country.
    In addition to CDBG, the request continues robust 
investments in reducing the health hazards of exposure to lead 
paint, particularly to young children. The request also 
includes funding for the aging-in-place home modification 
grants; and the Youth Homeless Demonstration programs which I 
worked to establish in previous years, prior to the current 
change in chairmanship.
    Finally, I am pleased to see that the request includes 
sufficient funding for renewing existing rental assistance.
    Madam Secretary, I once again welcome you to this hearing. 
And I very much look forward to hearing from you.
    Thank you, Mr. Chairman.
    Senator Schatz. Thank you Vice Chair.
    Secretary, please proceed with your testimony.

                 SUMMARY STATEMENT OF HON. MARCIA FUDGE

    Secretary Fudge. Thank you very much, Mr. Chairman.
    Chairman Schatz, Ranking Member Collins, and distinguished 
members of the subcommittee, thank you for the opportunity to 
testify today, in support of President Biden's 2023 Budget for 
the Department of Housing and Urban Development.
    Senator Schatz. Secretary, could you speak a little closer 
to the microphone? Thank you.
    Secretary Fudge. HUD's mission is central to achieving the 
President's vision to build a better America, to ensure that 
every person has a shot to get ahead, to address long-standing 
systemic challenges, to expand on the historic progress our 
country has made over the last year, and to deliver the agenda 
the President laid out in his State of the Union Address.
    To build a better America, to reduce the deficit, reduce 
costs for families, and grow the economy from the bottom up and 
the middle out. Since day one the President has viewed housing 
as critical to addressing our Nation's most urgent challenges.
    Throughout the pandemic HUD put in place emergency relief 
measures that kept homeowners and renters in their homes. The 
emergency housing vouchers that have helped over 20,000 
formerly homeless households find a place to live since July, 
and almost 30,000 more have been issued vouchers and are 
seeking housing.
    Public housing authorities have issued more than 53,000 
emergency housing vouchers, and over 20,000 have been utilized, 
while the pandemic emergency may be behind us, the crisis in 
housing it exposed remains. This budget will help provide 
security and stability for the American people, advance 
opportunity and equity, on behalf of marginalized communities, 
and address the existential threats posed by natural disasters 
and climate change.
    The 2023 President's Budget requests $71.9 billion for HUD, 
which is around $11 billion more than the 2022 annualized 
continuing resolution. We cannot put off the critical 
investments this budget makes in the American people, 
investments that will help lay a stronger foundation for shared 
growth and prosperity for generations to come.
    At HUD we understand that our homes represent more than 
four walls and a roof. Where we live determines the kinds of 
jobs we get, how healthy we are, and where our children go to 
school. The President's budget understands that too, that is 
why the budget provides $32 billion for the Housing Choice 
Voucher Program, which would accommodate approximately 200,000 
new vouchers. That would allow individuals and families across 
the country to move off long waiting lists, and into safe 
decent housing.
    The budget addresses the nation's homelessness crisis head 
on by providing $3.6 billion to provide housing and services to 
those experiencing homelessness which is an increase of about 
$576 million.
    The budget works to ensure that the supply of housing meets 
demand. It provides $2 billion for the Home Investment 
Partnerships Program, an anchor of the Nation's affordable 
housing system; and $15 billion for project-based rental 
assistance, and housing for people with disabilities, and older 
Americans, and $180 million for the development of new units 
for those groups.
    The President's budget advances energy efficiency, and 
prepares our existing home infrastructure for the impacts of 
climate change. This budget builds on the administration's 
commitment to investing in rural communities, it makes crucial 
investments in our public housing supply, and supports the 
removal of dangerous health hazards from our homes. The 
President's budget also recognizes that to meet the needs of 
our communities, we need an appropriate level of staffing at 
HUD.
    HUD's mission is to create strong, sustainable, inclusive 
communities, and quality affordable homes for all, every day, 
folks across our agency work to improve our citizens' quality 
of life through housing.
    The budget delivers on these promises, and I am pleased to 
share this request with the subcommittee.
    Thank you. And I look forward to your questions.
    [The statement follows:]
                Prepared Statement of Hon. Marcia Fudge
    Chairman Schatz, Ranking Member Collins, and distinguished Members 
of the Subcommittee. Thank you for the opportunity to testify today in 
support of President Biden's 2023 Budget for the Department of Housing 
and Urban Development (HUD). The support of this Subcommittee is 
critical to ensuring that every American has a roof over their head and 
can live in communities that are strong and resilient.
    HUD's mission is central to achieving the President's vision to 
build a better America--to ensure that every person has a shot to get 
ahead, to address longstanding systemic challenges, including racial 
injustice, rising inequality, and the climate crisis, to expand on the 
historic progress our country has made over the last year and deliver 
the agenda he laid out in his State of the Union address-- to build a 
better America, reduce the deficit, reduce costs for families, and grow 
the economy from the bottom up and middle out.
    This Budget tells the American people that the President, and our 
agency, view housing as critical to addressing our nation's most urgent 
challenges. This Budget will help us provide security and stability for 
those who live on the outskirts of hope, advance opportunity and equity 
on behalf of marginalized communities, and meet the existential threats 
posed by natural disasters and climate change.
                     president biden's 2023 budget
    The 2023 President's Budget requests $71.9 billion for HUD, 
approximately $11.6 billion more than the 2022 annualized continuing 
resolution (CR) level. The Budget outlines an ambitious agenda to 
address challenges our nation faces, from climate change and housing 
discrimination to housing shortages and homelessness.
    The Budget makes critical investments in the American people that 
will help lay a stronger foundation for shared growth and prosperity 
for generations to come. For HUD and those it serves, the Budget 
provides:

  --$32.1 billion for the Housing Choice Voucher Program;

  --$3.6 billion to provide housing and services to individuals and 
        families experiencing homelessness;

  --$1.1 billion in targeted climate resilience and energy efficiency 
        improvements in public housing, tribal housing, and other 
        assisted housing;

  --$400 million to remove dangerous health hazards from homes, 
        including mitigating threats from fire, lead, carbon monoxide, 
        and radon;

  --$86 million for Fair Housing programs to redress discriminatory 
        housing practices; and

  --$2.2 billion for Management and Administration expenses.

    The President's 2023 Budget supports authorizing the Community 
Development Block Grant-Disaster Recovery (CDBG-DR) program in line 
with the four guiding principles outlined in the Budget. For more than 
twenty years, the Congress has appropriated emergency supplemental 
funds to HUD in response to major disasters to address the long-term 
disaster recovery needs of States, territories, local governments, and 
Tribes. Authorization would improve the transparency and predictability 
of CDBG-DR funds for impacted communities.
    At HUD, we understand that our homes represent more than four walls 
and a roof. A good home can serve as a platform for economic 
opportunity, good health, and strong families. How can a person hold 
down a job or take care of their health or children if they do not have 
a bed, shower, or stove?
    To further HUD's mission through this Budget, I have outlined five 
priorities:

  --Support Underserved Communities and Equitable Community Development

  --Increase Supply and Availability of Accessible, Affordable Housing

  --Promote Homeownership Opportunities and Wealth-Building

  --Advance Sustainable Communities, Climate Resilience, and 
        Environmental Justice

  --Strengthen HUD's Internal Capacity to Deliver Its Mission

  support underserved communities and equitable community development
    The Budget fortifies support for underserved communities and 
supports equitable community development for all people. To quickly 
house more people experiencing housing insecurity, the Budget provides 
$32.1 billion for the Housing Choice Voucher Program, which 
accommodates 200,000 new vouchers, giving individuals and families 
across the country the opportunity to move off incredibly long 
waitlists and into safe, decent housing. In addition, families will be 
supported by the proposed $491 million in mobility services that will 
help them move to affordable homes in neighborhoods with greater 
opportunities.
    The Budget provides $8.8 billion for the Public Housing Fund, which 
provides grants to Public Housing Authorities to operate, maintain, and 
make capital improvements for the approximately 1.7 million residents 
of public housing. The Budget also addresses the nation's homelessness 
crisis, providing $3.576 billion, an increase of $576 million, for 
Homeless Assistance Grants. Additionally, the Budget provides $3.8 
billion for the Community Development Block Grant (CDBG) Program, 
including $195 million in targeted resources to remove barriers and 
revitalize 100 of the most historically underserved neighborhoods in 
the United States, and $86 million for fair housing programs for 
targeted and coordinated enforcement, education, and outreach.
          increase supply of and access to affordable housing
    In 1970, this nation had a surplus of 300,000 affordable housing 
units. Today, there's a shortage of millions of units. For every 100 
extremely low-income renters, there are only 37 rentals available. The 
Budget works to ensure that housing demand will be matched by adequate 
production of new homes and equitable access to housing opportunities 
for all people. Additionally, the Budget provides $2 billion for the 
HOME Investment Partnerships (HOME) Program, which has long served as 
an anchor of the nation's affordable housing system. The Budget 
proposes $15 billion to fully fund renewals and amendments in Project- 
Based Rental Assistance, Housing for Persons with Disabilities, and 
Housing for the Elderly Programs, along with $180 million for new 
development of approximately 2,000 new units of Section 202 Housing for 
the Elderly and Section 811 Housing for People with Disabilities. The 
Budget proposes Ginnie Mae be given authority to securitize affordable 
multifamily housing loans made by Housing Finance Agencies (HFAs) and 
insured under the Federal Housing Administration's (FHA) Section 542(c) 
Risk-Sharing program. It requests $35 billion for the Housing Supply 
Fund, a new mandatory program providing grants to State and local 
housing finance agencies and their partners to invest in strategies to 
increase the supply of affordable and accessible housing.
        promote homeownership opportunities and wealth-building
    The President's Budget promotes homeownership opportunities, 
equitable access to credit for home purchases and improvements, and 
wealth-building in underserved communities. It provides $15 million of 
credit subsidy through FHA for a Home Equity Accelerator Loan (HEAL) 
Pilot that would test new loan products designed to lower barriers to 
homeownership for first-generation and/or low-wealth first-time 
homebuyers. Additionally, the Budget provides a new $100 million set-
aside under the HOME Program for the First HOME Downpayment Assistance 
initiative that would provide funding to States and insular areas to 
better support sustainable homeownership for first-generation and/or 
low-wealth first-time homebuyers.
advance sustainable communities, climate resilience, and environmental 
                                justice
    The Budget advances sustainable communities by strengthening 
climate resilience and energy efficiency, promoting environmental 
justice, and recognizing housing's role as essential to health. It 
provides $1.1 billion in targeted climate resilience and energy 
efficiency improvements in public housing, Tribal housing, multifamily-
assisted housing, and other assisted housing. In addition, it provides 
$400 million to remove dangerous health hazards from homes, including 
mitigating threats from fire, lead, carbon monoxide, and radon. It 
provides $250 million to help communities develop and implement locally 
driven comprehensive neighborhood plans to transform underserved 
neighborhoods. The Budget also supports Ginnie Mae's continued 
Environmental, Social, and Governance disclosure efforts, which are 
intended to drive new liquidity to more environmentally sustainable 
products by meeting growing investor demand.
       strengthen hud's internal capacity to deliver its mission
    The Budget builds on HUD's efforts to restore staffing to levels 
that can adequately and successfully deliver HUD's services. This 
Administration is committed to recruiting and retaining the human 
capital needed to properly monitor compliance on properties, loans, 
grants, and public housing authorities, as well as tackling the 
systemic issues inside the Department that occurred over the previous 
two decades as the result of the steady decline in staffing. Using 
workforce succession strategies, the Department intends to ensure that 
additional staffing results in the right people allocated to the right 
jobs, providing the biggest impact toward achieving HUD's priorities.
    The 2023 Budget requests $1.8 billion toward salaries and expenses 
(S&E), $306 million more than the annualized CR level for 2022, which, 
in combination with carryover of 2022 funding, will support 8,326 full-
time equivalent (FTE) employees. The 2023 Budget will support staffing 
gains made in 2021, those projected for 2022, and additional increases 
in 2023. These critical resources will enable the Department to more 
effectively and efficiently serve households and communities across the 
country. The 2023 Budget funds initiatives that will improve the 
customer experience of HUD's programs so that program interactions are 
easier and more effective and efficient for HUD customers. This 
customer experience work directly supports the President's Management 
Agenda, meets mandates in the Executive Order on Transforming Federal 
Customer Experience and Service Delivery to Rebuild Trust in 
Government, and increases HUD compliance with: the 21st Century 
Integrated Digital Experience Act (IDEA), 2018; Plain Writing Act, 
2010; Rehabilitation Act, Section 508, 1973; and Paperwork Reduction 
Act (PRA). Designing customer experiences intentionally, with the needs 
of the customer at the forefront of decisionmaking, can help HUD to: 1) 
better deliver on its mission; 2) serve greater proportions of targeted 
populations more effectively and equitably; 3) build trust; 4) improve 
customer satisfaction; and 5) lower operational costs. The Budget also 
proposes $382 million for the IT Fund and includes $12 million within 
the S&E topline to fund IT device expenditures through the Working 
Capital Fund. The Budget continues to invest in much needed 
modernization of HUD's IT systems, infrastructure, and cybersecurity. 
The Budget request fully supports our critical IT systems and 
applications, all of which play a vital role in enabling HUD to meet 
its mission and administrative functions. The technology resources 
support grantees and partners in their efforts to promote affordable 
rental housing, provide access to homeownership opportunities, create 
healthier home environments, and reduce homelessness.
    In summary, HUD's proposed Budget allocates budget authority across 
programs and for staffing and other management and administrative 
expenses. Most of the budget authority funds programs to help 
vulnerable, low-income households-- many who are older adults or 
persons with disabilities--pay their rent. The Office of Public and 
Indian Housing (PIH), the Office of Housing, and the Office of 
Community Planning and Development (CPD) administer these programs.
    HUD's mission is to create strong, sustainable, inclusive 
communities and quality affordable homes for all. HUD is actively 
strengthening the housing market to bolster the economy and protect 
consumers. We are helping meet the need for quality affordable rental 
homes through our programs. We work to improve our citizens' quality of 
life through housing as a platform. And we are building inclusive and 
sustainable communities free from discrimination, while transforming 
the way HUD does business. The Budget delivers on these promises, and I 
am pleased to share this request with the Subcommittee.
    Chairman Schatz, Ranking Member Collins, and distinguished Members 
of the Subcommittee, I look forward to working with you. Thank you for 
the opportunity to appear before you today to discuss my priorities for 
the Department and how the President's 2023 Budget will serve our most 
vulnerable citizens, increase the resilience of our communities, and 
tackle the challenges facing our nation.

    Senator Schatz. Thank you Secretary. I am going to try to 
get three or four topics into my first round. In the context of 
the next appropriations bill, and talking about trying to 
incentivize communities to reduce barriers for housing, do you 
think that we could establish some incentives under HOME, or 
CDBG, both or either? How do you think we ought to do that, and 
think about that?
    Secretary Fudge. I mean I think we need to look at all 
options because what we are finding is that some of these 
zoning and planning commission rules have been around for a 
hundred years. We are in an environment in which the lack of 
affordable housing is a crisis, and so we have to take a look 
at every possibility. But yes, to your question, yes, we need 
to take a look at that.
    Senator Schatz. Thank you. I want to talk to you about 
appraisal bias. I know that there has been a convening on this 
topic, and I think we should probably start at the beginning, 
because I am not sure that everybody knows what it is, why it 
is a problem, and perhaps what we can do about it. So let us 
start with what is appraisal bias, why is it a problem, and 
what can be done?
    Secretary Fudge. Well, to the President's credit he asked 
me last year to chair Taskforce on appraisal bias, because what 
we know is that as we talk about the racial wealth gap a large 
portion of it is the undervaluation of properties in Black and 
Brown communities. We have done a report which was issued last 
month which shows very clearly that we could put a huge dent in 
the wealth gap if we would just value properties in certain 
communities properly.
    We know that we have a system that, right now, appraisal 
is--95 percent White males, who are not even familiar with the 
communities that they are evaluating, the data that goes into 
alternative valuations is not appropriate because the data is 
skewed.
    We believe strongly that if we can address this problem, we 
can also address how--valuations on people's homes. You know, 
people can't get homes because the valuations are low, 
people's--and I am just going to use myself, and I will stop 
with this.
    I live two doors from an all-White community. I live in an 
all-Black community. My house is larger than the house two 
doors from me, my lot is larger than the house two doors for 
me, but my house is valued at $25,000 less than the house two 
doors from me.
    And so once we can start to address, and just own up to the 
fact that we are continuing to discriminate and redline in our 
housing efforts, then I think that we can make sure that we can 
start to deal with the racial wealth gap.
    Senator Schatz. Thank you very much. I want to follow up, 
because I do think some of this is on the private sector, there 
is not--you know, we have limited tools, but I also think that 
appraisers are not walking around thinking that they are, you 
know, perpetuating institutional racism.
    On the other hand, if they are the ones saying, well, that 
is a bad neighborhood, and that is a good neighborhood, there 
you are. There is the legacy of redlining, and Jim Crow, and 
everything shameful in our history as it relates to housing and 
communities.
    So I want to follow up with you on this. It is not clear to 
me what we can do, but at least to shine a light on it. Go 
ahead.
    Secretary Fudge. Well, one thing is that we have started to 
interact with the subcommittee on appraisals, we have talked to 
the actual organization that authorizes appraisals, and they 
know. They now have admitted they have a problem. They are 
working with us. And so we are excited about what the path 
forward is going to be. We are making a difference.
    Senator Schatz. Well, let us know how we can help.
    Secretary Fudge. Thank you.
    Senator Schatz. Voucher utilization; I just met with a 
bunch of mayors yesterday who asked us for more vouchers, and I 
am of two minds, right. I want as many vouchers out there as 
possible, but if we are just pushing out vouchers, and we don't 
have the throughput, either there is a--there is a supply 
problem, or we don't have a throughput, a capacity problem at 
the local level, or even at the HUD level, then we can declare 
victory and say we--you know, we pushed out a million vouchers, 
but if they are not actually getting into people's hands and 
housing people, then what is the point.
    And so I want to be reassured that if we provide additional 
resources for housing vouchers, that we are actually getting 
vouchers into the hands of people who need them, as opposed to 
just, you know, the committee declaring victory, and having a 
bullet point on our press release.
    Secretary Fudge. I think it is a combination of the two, 
Senator. Clearly we do have a supply issue in many communities, 
but what we also know is that when we push the vouchers out 
when there is an opportunity, we want people to be able to 
access those vouchers right away.
    The waiting lists are years in some communities, just for 
public housing in Section 8. And so we want to be sure that the 
vouchers are available, but yes, there is a supply problem. I 
am not going to even try to sugarcoat it. A lot of the vouchers 
aren't being used because there is no place to take them. 
People are not--and we are dealing with landlords who know that 
they can get more by not being Section 8 anymore. So we are 
losing people who are already in the pipeline.
    So like I said, I am not going to try to make it something 
that it is not, that is a part of the problem as well.
    Senator Schatz. Thank you very much.
    Vice Chair Collins.
    Senator Collins. Thank you Mr. Chairman.
    Secretary Fudge, let me start with a thank you to you. I 
brought to your attention a problem that we are having in 
Bangor, Maine, where I live, where the unsheltered population 
has grown enormously in the past 2 years. Part of this is due 
to COVID, but part of it is to mental health challenges, and to 
a growing substance abuse, particularly in opioid and fentanyl 
epidemic in my state.
    I want to thank you for agreeing to send your program 
people, and your regional people to Bangor to meet with city 
officials to see what we can do to better help the city, as it 
is being overwhelmed, in trying to assist this homeless 
population. So thank you.
    I know that in addition to your role as Secretary of HUD 
that you do serve as chair of the United States Interagency 
Council on Homelessness. And one of the biggest challenges that 
I see, when we are dealing with more chronic homelessness, or 
even shorter term homelessness, is a disconnect between housing 
and the wraparound services that go to the root causes of why 
the person is homeless.
    A lot of times that is a substance abuse, or a mental 
health challenge. What is the Council doing to improve the 
partnership between housing and service resource providers?
    Secretary Fudge. We have a strategic plan that is going to 
be brought to us sometime next month. We are prepared--at least 
in my opinion, we have addressed what the problem is. And I do 
believe we have some solutions. When you think about the fact 
that already we have cut in half the number of veterans who are 
sleeping on the streets.
    We know now that a large number of people who are on the 
streets are senior citizens, and families with children; so we 
at least know the populations we need to address, and we are 
working across government agencies to be sure that we can 
address it. So we are having input from HHS, we have input from 
other agencies that are going to be able to assist us with the 
problem.
    But I think when the strategic plan comes out you will be 
pleased at the fact that we have looked at all of government, 
and what we can do to make the situation better, and provide 
the services timely.
    Senator Collins. Thank you. I hope we can keep in touch on 
that issue.
    Secretary Fudge. Absolutely.
    Senator Collins. Which I care a great deal about. I wanted 
to follow up on an exchange that you and the Chairman had about 
the unused vouchers, and the fact that landlords are getting 
out of the Section 8 Program, and so there is no place, as you 
put it, to take the vouchers. One of the problems is HUD's 
process for determining fair market rents they simply--the 
process simply does not reflect the reality of housing markets 
in communities across this Nation.
    And this is something we have heard about from public 
housing authorities, literally, all over the country. I want to 
give you an example. In Bath, Maine, the HUD fair market rents 
are 38 to 46 percent below market rents.
    Now Bath Iron Works, which is one of our largest private 
employers in Maine, has been recruiting people to come work for 
the company which builds naval destroyers. And they are finding 
that they can't keep them, in part, because they can't find 
affordable housing despite the good wages paid by the shipyard.
    And HUD has allowed public housing authorities to request a 
waiver to increase their payment standards which is the maximum 
subsidy value of the voucher, to 120 percent of the fair market 
rent, without the burdensome and time-consuming review by HUD. 
But again, using Bath, Maine, as an example, even those higher 
subsidy caps are still 26 to 35 percent below market rents.
    So what is HUD doing to better align fair market rents with 
the actual market conditions that the public housing 
authorities and renters are experiencing?
    Secretary Fudge. Thank you Senator. In order to really do 
this the right way, HUD is really going to be required to issue 
a Federal Register Notice, we have to have public comment in 
order to change the formula the way it should be. We make 
little adjustments as you have suggested, but in order to do it 
the way that is needed is we are going to have to do that.
    So in August we are going to be publishing a new fair 
market rate formula. So you will see that happening in August, 
because you are right, and it is happening across the country, 
but we need to do it the right way, not just make little fixes, 
or Band-Aids, we need to actually go and put it out for public 
comment, and do it the proper way.
    Senator Collins. I hope you will consult with the public 
housing authorities, which I think have a very good handle on 
this problem.
    The Chairman has generously said that I could ask another 
question beyond my time, so I will one more before yielding 
back to him.
    I do want to go to the issue I raised in my opening 
statement, and that is the unexpended funds. I know a lot of 
these funds have been obligated, but they are sitting in 
Treasury accounts, they are not getting down to the grantees, 
to the people that we are trying to help.
    The CARES Act was enacted more than 2 years ago, on March 
27th, 2020, as an emergency response to COVID, and yet as of 
last week, almost half of those funds remain unexpended. The 
American Rescue Plan was enacted over a year ago, and only 6 
percent of those funds have been expended, including only $1 
million of the 5 billion provided through the HOME Program.
    And of the emergency vouchers, there were 70,000 of them 
provided by ARP, more that--only fewer than 20,000 of the 
70,000 have been released. What is the problem here? Why isn't 
this money, which was passed on an emergency basis, getting to 
the grantees, and more important, to assist the people it is 
intended to help?
    Secretary Fudge. Well, I think there were a number of 
problems. And you are absolutely right, the money has been 
obligated. But this is the major problem, many of these 
communities did not have the capacity themselves, nor did some 
of our partners on the ground, have the capacity to stand up 
these new programs, and to get the resources out quickly.
    In addition to the fact that, thanks to Congress, they 
received an awful lot of money all at one time. So they were 
trying to, in their own minds, use the money that they needed 
to use first. So CARES and Recovery money are two- and five-
year plans, so that is why you don't see the money in their 
hands but it is obligated because they have finally realized 
that it is time to put in place whatever their plans are going 
to be.
    But more importantly, I agree with you 100 percent, so 
every governor and every mayor I speak to, I say to them, you 
need to access these resources now. And they will say, well, we 
have got plans, we have obligated. But I am with you. And I say 
to them: This is a matter of sincere urgency, and you need to 
act as though it is urgent.
    But a lot of it, was just they couldn't do it. They just 
didn't have the people, the capacity to stand up the programs. 
And now that they are, I think you are going to see the 
resources moving out much faster. That is why they are now 
obligated, I think you will see them leaving Treasury fairly 
soon.
    Senator Collins. Thank you, Mr. Chairman.
    Senator Schatz. Senator Braun.
    Senator Braun. Thank you, Mr. Chair.
    Good to see you, Madam Secretary.
    Secretary Fudge. Good to see you, too, sir.
    Senator Braun. So I have been a big believer in buy 
American where we can, actually was able to get something 
written into the Infrastructure Bill that would request that, 
and the only way that you don't do it, is if you would request 
a waiver. So disappointed that it now looks like a waiver has 
been requested from Buy American when it comes to the HUD 
projects, and steel, and so forth, that might be used, meaning 
that we might have to default to, you know, buying it when it 
is made here, you know, from China or other places. So why did 
you request the waiver when there was plenty of time to prepare 
for it? And I would just like to know the simple answer, 
please.
    Secretary Fudge. Certainly. Part of it is just the supply. 
We just don't have it. Let us say, steel, we just don't have 
enough of it, so we can't just stop and do nothing as we wait 
for steel to be produced here in an amount that we need. And so 
there will be times where, in order to continue to do our work 
that we will need resources from outside of the United States.
    I support it 100 percent, build back, built in America, I 
am big on that, and my staff knows that I am. But there are 
times.
    Senator Braun. So you know, there are other agencies, EPA, 
USDA that, you know, have those same guidelines, and they have 
been able to wrestle through it. And I know we have got supply 
chain issues, but to me when we looked into it, it looked like 
it was more a question of just not being ready to do it, not 
that it wasn't there in our own supply chain. You are telling 
me that you can't find this steel anywhere within our own 
economy?
    Secretary Fudge. Not enough of it. You ask the 
manufacturing, housing people they will say: There is no 
plastic. You ask, they don't--EPA, and these other people, 
don't do the same work we do. So it is kind of like comparing 
apples and alligators. They don't build houses, we build 
houses, we make sure that the supply--I mean we don't build 
houses obviously--but we make sure that the supply is 
available, and so they are using very different kinds of 
material.
    I promise you, Senator, in any event that we can use 
American-made products, I want to use them, and I instructed 
our staff to do that.
    Senator Braun. So then it would be interesting to know to 
date and going forward, because you are telling me that you are 
going to use it if you can, and that you probably are using 
some already.
    Secretary Fudge. Oh, yes, we are.
    Senator Braun. It would nice to know what percentage.
    Secretary Fudge. Okay.
    Senator Braun. I think that would make a big difference. If 
it is just a small amount that we have to find elsewhere, if it 
is 100 percent, that is a different issue; or if it is a small 
percentage, I think that is a different issue. I will wait to 
hear back.
    Secretary Fudge. Absolutely. I will make sure you get the 
numbers.
    Senator Braun. When it comes to, your request calls for, I 
think, 35 billion for the Housing Supply Fund, a new mandatory 
program that provides grants to state and local housing 
agencies; is that correct?
    Secretary Fudge. Yes.
    Senator Braun. So ``mandatory'' means that it is going to 
happen regardless, it is similar to other mandatory spending 
programs, like Medicare, Medicaid, Social Security; I know 
these programs do good work. Do you think it needs to be 
mandatory in the sense that that means we kind of make it easy 
to repeat each year? We don't do budgets anymore. I am on the 
Budget Committee, and sadly that is a useless appendage, in the 
sense that we just don't use it as a tool.
    I don't think we have done one in close to 10 years, and 
when we are structurally running $1.5 trillion deficits when 
the President has put a blueprint out there that takes us from 
30 trillion in debt to 45 trillion in debt. Meaning, over the 
next 10 years--and that is understated--because it has got low 
interest rates, and a low level of inflation built into the 
projections.
    Do you think this needs to be mandatory spending, because 
to me it is just a crutch? It is a way that throughout 
government we don't look at the programs that are driving these 
structural deficits. Now HUD, you know, becomes part of it. 
Where does it end? Is all of government spending going to be 
mandatory simply because it means you have got to pass a law to 
offset it?
    That to me looks like it is part and parcel of what is 
wrong. Even though yours is a smaller amount, compared to those 
other programs, I highlight it because it is another example of 
where we are getting away from, how most other places work, and 
do it sustainably.
    Secretary Fudge. Well, let me just say this to you, 
Senator. I clearly understand your concern, but we are talking 
about the need in this country for four million housing units. 
We are talking about a crisis in housing, so when we have a 
crisis we try to address it.
    This is a program that is going to have to go out 10 years. 
We can't build 500,000 houses in 1 year. We cannot build a 
million houses in 1 year. So it is a ten-year program, and that 
is the only reason that it is a mandatory program, because of 
the length that it needs to be.
    We have to address the fact that we are woefully short on 
supply of housing in this Nation. It is a crisis. And so I just 
appreciate the fact that the President was willing to sit back 
and listen to the fact that we need to start doing something 
now, because we have not invested in housing for a very long 
time as a Nation. And it is a ten-year program, and that is 
why.
    Senator Braun. Thank you for the answers. And I would just 
point this out, that if you extrapolate what we are doing into 
the future, all the programs that do have merit are in peril, 
because you cannot run the biggest business in the world by 
borrowing what we use annually, now 30 percent of it, from our 
kids and grandkids.
    It will fail. At some point we have got to find out 
something that we need less of. And prioritize the things that 
we know we need. Thank you.
    Senator Schatz. Senator Coons.
    Senator Coons. Thank you, Chairman Schatz; Ranking Member 
Collins. And Madam Secretary, great to be with you again; it 
still brings a smile to my face to say Madam Secretary.
    Secretary Fudge. Yes.
    Senator Coons. I have a chance to work with you on housing. 
I am encouraged by the priorities the President set in this 
year's fiscal year 2023 budget, as you have well articulated 
them.
    An area of concern to me, to you, and I rankly hope to all 
of us, is the lack of supply of affordable housing, and the 
incredibly long waitlists. One of the things that as a county 
executive I knew, through our housing authority, was that we 
had folks who have been waiting on waitlists for years, and who 
were not able to find any reasonable path to access affordable 
housing.
    I have a bipartisan bill with Senator Cramer, the Choice in 
Affordable Housing, a bill that would provide incentives to 
private landlords to encourage them to come in and participate 
in a Section 8 Program.
    I wondered if you had a chance to review that, had a chance 
to--have the opportunity to give me any input on your view of 
its potential positive impact, and what else we might be doing 
to help expand the supply of landlords and housing available 
for those with portable vouchers.
    Secretary Fudge. Our team is looking at it. I think 
conceptually it sounds great, but we are looking at it. So I 
can't give you an answer today, Senator, but as soon as we take 
a better look at it I will get right back to your office.
    Senator Coons. I will be in touch. I would appreciate your 
active engagement given your, I think, deep experience and real 
credibility in this important area.
    Homelessness is something I have long been concerned about. 
I worked for the National Coalition for the Homeless early in 
my career, and one of the things that struck me was the amount 
of youth homelessness. It is driven by a number of factors, one 
of them is youth aging out of foster care, there are others, we 
have rapidly increasing mental health challenges among younger 
Americans, addiction challenges, and so while at the same time 
we need to provide inputs in the housing supply, we also need 
to have some programs that are specifically targeted to meet 
the needs of identified communities.
    And in this instance I will talk about youth aging out of 
foster care. How are you helping address these particularly 
pressing problems?
    I was encouraged to hear the President's budget includes 
$3.2 billion for programs related to combating homelessness. At 
the end of the day the best answer to homelessness is housing, 
along with wraparound and supportive services. What does the 
Administration and the Department got planned for this fiscal 
year in terms of homelessness demonstration programs?
    Secretary Fudge. Well, as you know, you just mentioned the 
Youth Homelessness Demonstration Program, and we just, in the 
last couple of weeks, had a webinar with those that we know are 
affected by, and work within that area, to talk about the 
things that we can do to assist youth. We also know that there 
has been a 44 percent increase in interventions, so we have 
kept young people who, otherwise, may have been on the streets, 
in housing because we have been more proactive than we have 
been reactive.
    We have got 77 communities now that do have a Youth 
Homelessness Demonstration Program, and so we feel, as we can 
continue to ramp that up, that we will be more effective. But 
we think that that is the best program we have right now. As 
well as though working with the foster care system, because we 
know that about a fourth of people, young people who come out 
of foster care, within a few months are going to be on the 
streets. And so we are working with them as well.
    Senator Coons. West End Neighborhood House in Wilmington, 
my hometown, has done a great job at demonstrating the value of 
support and housing availability for youth aging out--of 
homelessness, I would love to work with you on making sure that 
their engagement in this area gets recognized appropriately.
    For many years I took advantage of HOME dollars as a county 
executive, and county council president, we were able to invest 
in all sorts of effective, localized investments to address 
housing problems for seniors, for those who had disabilities, 
for returning veterans, a wide range of needs; my understanding 
is this year's HOME budget request is about $2 billion.
    Secretary Fudge. Correct.
    Senator Coons. Tell me, if you could, about any changes in 
the HOME Program, ways that I could be a more effective partner 
and advocate with you. I think it is, in many ways, one of the 
most important foundations of the Federal, state, local 
partnership around the provision of housing with funding that 
is flexible enough to meet local needs, but not so flexible as 
to be diverted from our core goal, which is the provision of 
safe, sanitary, healthy, and affordable housing.
    Secretary Fudge. Well, you just said the word ``flexible''.
    Senator Coons. Yes ma'am.
    Secretary Fudge. And that is what communities are looking 
for is more flexibility, so when you take the CDBG which has 
some flexibility as well, and you combine that with the home 
resources, communities, at this point, are feeling good about 
their possibilities, and the opportunities.
    And so we made sure that there are enough resources there 
to at least, over the next few years, build about 500,000 new 
housing units. So we are, we are asking communities to work 
with us, and basically to tell us how are you going to use 
these resources, and how many units do you think that you can 
build through our House America programs.
    So we are we are trying to pin down some of the mayors, we 
have got about 80 of them right now, surprisingly, 80 different 
mayors, governors, et cetera, who have bought into this and 
said, okay, this is how many units we are going to build. We 
are going to get these many homeless people off the street. I 
think it is a great idea, and we are holding them to it, and 
they are kind of enjoying it actually.
    Senator Coons. Well, if the Mayor of Wilmington, Delaware, 
is not among them, I would be surprised. I would be happy to 
help persuade him that this is a great initiative. He is a good 
mayor, and investing a lot of effort and energy in housing, an 
area that he knows a great deal about, and has worked hard in.
    Thank you for your leadership, Madam Secretary. I look 
forward to working with you, and look forward to getting this 
budget request approved.
    Secretary Fudge. Thank you very much.
    Senator Coons. Senator Mr. Chairman.
    Senator Schatz. Senator Murray.
    Senator Murray. Thank you very much Mr. Chairman.
    Thank you, Secretary Fudge, for being here with us today, 
and for all of your work at HUD. No matter where I am in my 
state, whether it is Seattle, Spokane, small community, large 
community, suburbs, housing is the number one topic people are 
so concerned about. So I am delighted to work with you to see 
that we can really make sure we are boosting the funding for 
some really important bipartisan programs.
    Homelessness, actually, in my state was a crisis before the 
pandemic, and it is something I am really focused on, whatever 
we can get passed in the budget to help people keep a roof over 
their head, I am all in.
    I have spoken with a lot of people who have been able to 
get back on their feet after being un-housed because of the 
funding from the American Rescue Plan, whether it was emergency 
housing vouchers, direct payments. That has been critical. But 
I think one of the most significant ways that we can tackle 
this crisis is by providing the resources and coordination that 
state and local authorities need to help people on the ground, 
and embrace the Housing First model, which we know is a really 
successful intervention.
    Can you talk a little bit about how this funding request 
that you have would address homelessness in our communities, 
and the urgency of this crisis?
    Secretary Fudge. Absolutely. Thank you very much, Senator, 
for the question. In this budget there is an additional almost 
$600 million in homelessness assistance grants, so that we are 
dealing with people who are on the ground every day. So that is 
number one.
    Secondly, we have also requested more vouchers, and we have 
requested just more money for homelessness in general, just 
like the 10 billion that came out of the Rescue package, we 
have additional resources in this package just for 
homelessness. But I would also say that the U.S. Interagency 
Council on Homelessness has put in place what we are calling a 
``House America'' Plan that I was just talking with the senator 
about.
    Senator Murray. Right.
    Secretary Fudge. Where we are asking communities, and your 
state, and your city has already signed up to be a part of it. 
With the resources that we have from the Rescue Plan how are 
they going to use those to assist us in getting homeless people 
off the street? And what number of homeless people are they 
committing to us that they are getting off the street?
    Seattle was a leader in it, so we are excited about the 
fact that many other communities have come in, and agreed to do 
the same. But there are significant resources in addition to 
this almost $600 million in the President's budget to deal 
solely with homelessness.
    Senator Murray. Okay. And the supply of affordable housing 
is really a critical part of this puzzle. It is not rocket 
science, we need more housing, and we need more affordable 
housing, so we have got to help our communities build it. I 
know that we have got $35 billion in your budget request a new 
Housing Supply Fund that provides grants to state and local 
housing. Can you talk a little bit about how that will be 
helpful?
    Secretary Fudge. Well, there are a couple of things that we 
are doing. We are already working through state housing finance 
agencies, through what we are calling the Federal Financing 
Bank, which is getting resources from Treasury to go to the 
state housing finance agencies to make lending money for low-
income and moderate-income housing, affordable for builders.
    So we know that we are already starting to address it, 
because part of the problem is, nobody builds it because it is 
not, it is not profitable. So we can make it profitable by 
making the money, basically, almost free. And that is really 
kind of what is happening.
    We are also increasing Housing Trust Fund, which of course 
is for the lowest. We are also increasing raising the cap on 
low-income housing tax credits. So there is a combination of 
things that we are doing, to make low-income and moderate-
income housing worth building.
    We are also, through this plan, through the President's 
mandatory plan, looking at a path to building at least 500,000 
new homes, and we do believe that we can do it with the 
resources that are in the President's mandatory, but supply 
plan. We have looked at it, we feel good about it, and as I 
have traveled the country we have talked with the home 
builders, we have talked with everyone that we can think of. I 
mean even down to the people who supply Home Depot, Lowe's, 
whoever it may be, and they all believe that through the 
combination of these various resources that we can, in fact, 
build 500,000 new homes.
    Senator Murray. Okay. And I think we have to pair those 
efforts with additional tenant-based vouchers, so people with 
the lowest incomes can afford that safe housing.
    And before my time is up, Mr. Chairman, I just want to 
mention to you an issue regarding the most recent Notice of 
Funding Opportunity for the HUD-VASH Program. I am really 
concerned that a couple technical changes made in the fiscal 
year '21 funding round created some unintentional penalties for 
PHAs who are working with their communities to project-based 
HUD-VASH vouchers, and stable and supportive environments.
    I certainly support and agree with the goal of efficient 
voucher utilization, but I am concerned that changes are 
blocking proven leaders when it comes to the VASH management, 
like King County Housing Authority in my state, who are 
operating in extremely limited housing markets. And I hope we 
can work together on this--in the upcoming funding cycle so 
that we can make sure that they can continue to do what they 
have been doing.
    Secretary Fudge. We have heard the concerns, Senator, and 
we are talking as well to King County, and others, to get the 
feedback to see if the changes, how they are going to be 
affected by the changes. So we are in communication.
    Senator Murray. Okay. Thank you very much. Thank you, Mr. 
Chairman.
    Secretary Fudge. Thank you.
    Senator Schatz. Vice Chair Collins.
    Senator Collins. Thank you Mr. Chairman.
    Madam Secretary, cybersecurity continues to be an important 
issue, and we all know the life-changing effects that a hack 
can have on our everyday Americans. Excuse me.
    This can be particularly financially devastating for 
families that fall victim to housing-related cyberattacks.
    Mr. Chairman Senator, let me take----
    Senator Schatz. Senator Collins is going to drink some 
water.
    And I will turn it over to Senator Van Hollen.
    Senator Van Hollen. All right. Well, I hope Senator Collins 
feels better. Thank you, Mr. Chairman.
    And Madam Secretary, it is great to be with you.
    Secretary Fudge. Good to see you.
    Senator Van Hollen. And let me just pick up on a point that 
Senator Murray made, about the Housing First model, you have 
been working with the VA to implement that model, and very 
successfully. And I just want to underscore my support for 
moving in that direction.
    As you know, today only one in four applicants for that 
housing is able to receive it. So we do need to expand the 
resources, and I was very pleased to see the President's budget 
include $1.6 billion for a 200,000 voucher expansion, the 
Housing Choice Voucher Program which is, I think, the largest 1 
year increase since the program was authorized. This is 
desperately needed.
    I was also excited to see the 445 million for the cost-
effective housing mobility strategies, to assist families with 
young children. This has been a bipartisan effort. I have 
worked with Senator Young for some time. We implemented a pilot 
program a little while back, successful.
    Can you just talk about the research that shows the harmful 
long-term impacts on kids who live in concentrated poverty 
without access to opportunity.
    Secretary Fudge. I mean, certainly. And I don't know where 
to begin. We are talking about health care, we are talking 
about the quality of education, and we are talking about the 
quality of the jobs that they can get, we are talking about 
institutional, and I am using that word purposely, ``poverty''.
    When we don't address the issues that we need to be 
addressing now it becomes a way of life that they never can 
seem to get out from under; so I mean, I don't even know where 
to begin to talk about how devastating it can be without these 
resources.
    Senator Van Hollen. Well, this is a way to work--accelerate 
the effort to break out of the legacy of redlining and other, 
you know, vestiges of segregation that we have seen in many 
cities around the country.
    Secretary Fudge. Well, what we do is we isolate poverty.
    Senator Van Hollen. That is right.
    Secretary Fudge. And we isolate communities of color, so I 
mean, yes it is redlining, yes it is of any number of things, 
but when you look at it, is we have just not given people a 
fair shot at even trying to make it, so.
    Senator Van Hollen. Yeah. Madam Secretary, I know you are 
committed to implementing this program and I hope the committee 
will strongly support the request in this area. I know, you 
know, we have to deal with budget constraints, but I will say 
one area where I would like to see an increase, and we are 
working with the chairman and the ranking member in the area of 
senior housing.
    The 202 program; if you look at our State of Maryland, not 
too far from here, in Largo, the wait for housing, for senior 
housing is at least 2 years long, it would be even longer 
except for the fact that some of the seniors who have been in 
that waiting list have passed away, so this is a desperate 
situation around the country.
    And I hope that we will support an increase beyond what is 
in the President's budget. I think the President had a $100 
million increase there. A number of us are pushing for a $600 
million increase to increase the number of units available to 
around 6,000 because--I know that you have seen this in your 
travels around the country, and of course as a former Member of 
Congress.
    Can you just talk to the desperate situation many seniors 
are facing? We are talking about individuals who have immediate 
income of $15,000 a year trying to make ends meet. They can't 
find an affordable place to live. So if you could talk about 
the Section 202 program?
    Secretary Fudge. Well, let me just say, Senator, that when 
we talk about a crisis in housing, seniors is a huge crisis, 
because of the fixed income, because of the fact that there is 
not enough senior housing. But I would say to you that I have 
been talking with people even from other nations about how we 
address seniors.
    Seniors who are looking to age-in-place, and not be on the 
street, because we do know one of the fastest growing groups of 
people that are homeless today is senior citizens.
    Senator Van Hollen. Yes.
    Secretary Fudge. And so we want to make sure that we can, 
not only use 202 resources, but encourage communities to use 
CDBG dollars as well, and to be able to leverage their 
resources through 108 loans. We know that there are a number of 
things that we can do to increase senior housing, we just need 
to give the kind of assistance and education to communities 
that can help them.
    Whether it be allowing them to build ADUs on their 
property, whether it be allowed, whether we will be able to 
turn some of these mobile homes, and manufacturing home, parks, 
we are looking at how we do manufacturing homes in a larger way 
that can assist senior citizens.
    We are doing everything we can think of, but I think the 
biggest issue is making sure that people, communities, local, 
and state governments understand the resources available to 
them. I don't disagree we need more money, but I think that 
there are some opportunities there that no one has taken 
advantage of at this point.
    Senator Van Hollen. Thank you, Madam Secretary. Thank you 
Mr. Chairman.
    Senator Schatz. Senator Collins.
    Senator Collins. Thank you very much. Let me resume my 
question. I am very concerned that cyber crime is starting to 
soar in the area of housing, and it can be absolutely 
devastating for families that fall victim. According to the 
2021 FBI Internet Crime Report, real estate and rental wire--
cyber crime resulted in more than $350 million in victim 
losses. And that ranks it as fifth in the types of fraud 
attacks that are tracked by the FBI. It is up substantially 
from 137 million in 2020 in victim losses.
    Madam Secretary, the budget requests approximately $66 
million for the Office of Housing Counselors. Some of these 
funds go towards scam awareness and prevention training for 
housing counselors, so that they can better educate prospective 
home buyers, new, first-time home buyers and renters. Given 
that the data suggest that this threat is soaring, is there 
more that HUD could be doing, and to help protect Americans 
from these scams.
    Secretary Fudge. Well, I think it is a huge problem, as you 
suggest. And so what we are looking at is how we can 
incorporate information about cyber fraud into our housing 
counseling. So that they have that information before they even 
get into a home as we are going through the process, so we get 
it early on. So we are looking at how to do that. And I think 
that that will be very helpful.
    Senator Collins. Thank you. I think it would also, when I 
was the chair of the Aging Committee, we held a lot of hearings 
on scams, and at that point housing scams were not on our 
agenda as being in the top five. If you look now they have 
surpassed lottery, and sweepstakes, and inheritance scams, and 
many others. So this is a growing area, and I think we need to 
really increase public awareness, or a lot of people will find 
that what they thought were down payments for a home are 
disappearing because of cyber crime.
    Secretary Fudge. Right, agreed.
    Senator Collins. The other issue that I wanted to mention 
to you are the service coordinators under the Section 202 
program that help link seniors with supportive services 
provided by community agencies. The Department funds these 
coordinators through a combination of direct grants and budget-
based rents.
    However, GAO has identified that since 2016, which I 
realize is well before your tenure, but it shows this has been 
going on for a long time, HUD has been unable to provide an 
accurate count of the number of service coordinators that it 
funds.
    I must say I don't understand that. We discussed this issue 
last year, and you advised that HUD was putting a plan in place 
to quickly address GAO's recommendations, yet when we checked 
with GAO, we were told that there has been very little progress 
made toward having an accurate count of the number of service 
coordinators funded by HUD. What is HUD doing, specifically, to 
address these open GAO recommendations from 2016?
    Secretary Fudge. Let me first say that I take full 
responsibility for us not getting those, that information. I 
meet with GAO, with the Inspector General, I meet with all 
these people on a regular basis, and so we do everything we can 
to try to be in compliance and this one obviously slipped 
through the cracks. And I take full responsibility for it, and 
we will just make sure that an urgent matter for us going 
forward.
    Senator Collins. Thank you very much. Thank you Mr. 
Chairman.
    Senator Schatz. Secretary, thank you for that answer. I am 
not sure I have ever heard something so blunt from a Cabinet 
Secretary, and it is really refreshing. But I have to say that, 
you know, members come in--after they ask you a question, come 
in and say she is great. So on a bipartisan basis; you have got 
a lot of support on this committee. That doesn't mean we always 
agree with you, but we are very appreciative of your service.
    Can you talk to me a little bit about how we can make 
emergency transfers in housing for victims of domestic violence 
a little bit smoother, and easier, and what your plan is for 
that?
    Secretary Fudge. Well, we recently changed the way that we 
look at--well, we hired a person that specifically addresses 
this issue. We have a person that specifically addresses 
domestic violence, sexual violence, et cetera. She has hit the 
ground running, and she is doing extremely well. But it takes 
some time to start to change things.
    We know that we have started to talk to our Public Housing 
Agencies (PHAs), and we have talked to our landlords to make 
clear to them it is a priority. We also are tracking it in-
house, so I am not sure exactly where we are going to end up 
with it, and how we are going to make it a lot easier, but we 
are looking at it, we have elevated it to the top of our 
priority list. And once we get a better answer, certainly, I 
will get it to you.
    Senator Schatz. Okay.
    Secretary Fudge. But we do know it is a major problem, 
especially coming out of COVID.
    Senator Schatz. Sure. And with the housing supply 
constrained it is going to be a challenge, and then the fact 
that the public housing authorities, you know, have a fair 
amount of autonomy it gets tricky.
    Secretary Fudge. That is true.
    Senator Schatz. So I want to make sure we don't just sort 
of make policy, and you assign a person to it, and nothing 
happens at the--on the ground. So this is going to take some 
work.
    Secretary Fudge. It is.
    Senator Schatz. And on this one. And you are--a former 
mayor, you know strategy is execution. So declaring that it 
should be easy, is not the same as making it easy, and that is 
going to take some, I think, sustained effort.
    Secretary Fudge. Well, it is. And the good thing is with 
the reauthorization of VAWA I think it is going to be easier 
for us, because we can basically say, look, this is the law, 
and we expect you to follow it. These are the things that we 
expect from our partners. We are issuing guidance now, and we 
have been, and we just believe that with the new $5 million 
that we have in this budget for training, that we should be 
able to make some impact on our communities and our partners.
    Senator Schatz. Thank you very much. Final question: Are 
you short staffed?
    Secretary Fudge. Absolutely. Yes. I mean, I know I sing the 
same tune every time I come, but this is this year is the first 
year that we have actually gained more employees than we have 
lost. We started out short-handed, and with attrition, with the 
fact that it takes us almost 6 months to onboard employees, 
which we are trying to work through, I still have yet to figure 
out why it takes that long to hire somebody. But we are working 
through it.
    But again, this is the very first year we have gained more 
than we have lost. And so we cannot do the work we need to do 
unless we have, not just bodies, but skilled bodies, people who 
are in the right place to do the right work. So I can't impress 
upon you enough how important it is.
    Senator Schatz. Yeah. I agree. You know I come from the 
not-for-profit sector and I was always frustrated at the extent 
to which funders, government funders, you know, charitable 
funders, we are always looking at trying to squeeze the 
administrative overhead costs to as low of a dollar amount as 
possible. And that sort of makes sense in the abstract because 
you get to say, you know, 90 percent of your dollars go 
directly to services.
    But, you know, in the real world you need accountants, and 
oversight, and managers, and leaders, and case managers, and 
IT, otherwise nothing works. And so I don't want you--I 
understand the politics of appropriating money to just FTEs, 
right?
    It is nothing anybody gets to put in their campaign 
commercial, that they sufficiently staffed HUD. But if we need 
to--if we need to do more in that space I don't want you to be 
shy about it.
    Secretary Fudge. Well, I would say that if there is 
anything that frustrates me, and a lot of things do, I think at 
times, but this is the most frustrating. I come from being a 
mayor, from being in Congress; I don't expect it to take 
forever to do something. So I know I drive my staff absolutely 
crazy, because I ask them all the time: Why does it take so 
long? Half of this is because we just don't have people to do 
all of the things that need to be done.
    Senator Schatz. Thank you very much, Secretary Fudge. I 
want to thank you for coming today, and for your ongoing 
partnership with both sides of the aisle on this committee, and 
across the Senate.

                     ADDITIONAL COMMITTEE QUESTIONS

    The hearing record will remain open until Friday, May 20th 
to allow members to submit additional questions for the record.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]
              Questions Submitted by Senator Brian Schatz
    Question. The American Rescue Plan (ARP) provided $5 billion in 
targeted funds under the HOME program to address affordable housing 
needs for households that are experiencing homelessness, at risk of 
homelessness, survivors of domestic violence, and veterans. As of May 
26, 2022, none of the funds have been expended by grantees other than 
for technical assistance.
    What are the challenges facing communities trying to spend HOME-ARP 
funds?
    Answer. Although it is based on the foundation of the HOME Program, 
HOME-ARP is a very different program. Eligibility for HOME-ARP 
assistance is based on qualification in one of four ``qualifying 
populations'' instead of income. HOME-ARP includes two eligible 
activities--acquisition and development of non-congregate shelter and 
provision of supportive services--that are not permitted in the HOME 
Program. Moreover, HUD used its waiver and alternative requirement 
authority to provide numerous flexibilities for HOME-ARP that are not 
permitted in regular HOME (e.g., operating cost assistance for rental 
housing, master leasing, sponsor-based rental assistance). Communities 
are carefully considering how best to use this flexible, one-time 
funding.
    Before using HOME-ARP funds for projects or activities, a 
participating jurisdiction must develop an allocation plan for its 
grant and submit it to HUD for approval. A participating jurisdiction's 
allocation plan must outline how it will use its HOME-ARP funds to 
assist qualifying populations with this unique funding source based on 
consultation with a broad range of housing, homeless, domestic 
violence, and fair housing groups and on comments received during the 
required public participation process. Most participating jurisdictions 
are still in the process of developing their plans, including the 
consultation and public participation processes. HUD has developed a 
wide range of training, tools, and templates to assist participating 
jurisdictions in developing their allocation plans. HUD is also 
offering direct technical assistance to participating jurisdictions 
that require help in developing allocation plans.
    Based on plans received to date, most participating jurisdictions 
intend to use their HOME-ARP funds for development of rental housing or 
non-congregate shelter. Development activities can take several years 
to go from the planning stage to completion. Please note that HOME-ARP 
grant funds are available for expenditure until 2030.
    Question. HUD plays an important role in financing housing 
development through FHA mortgage insurance and Ginnie Mae 
securitization of those mortgages.
    How does the budget request help communities gain access financing 
for affordable housing production?
    Answer. FHA mortgage insurance and Ginnie Mae securities together 
enable capital for housing supply to reach communities across America. 
HUD has designed its FHA underwriting criteria to be compatible with 
Low Income Housing Tax Credit (LIHTC) requirements to further encourage 
pairing of FHA mortgage insurance with LIHTC financing for affordable 
housing production, and a key provision of the 2023 Budget request 
expands community access to affordable housing financing by authorizing 
Ginnie Mae securitization of HFA Risk-Share loans.
    The 2023 Budget requests $900 billion in commitment authority 
(which does not score) for Ginnie Mae and $35 billion in commitment 
authority for FHA Multifamily/Healthcare. The budget also requests 
$42.4 million to cover Ginnie Mae personnel compensation and benefits, 
and a portion of the Office of Housing's $488 million request for 
salaries and expenses would cover the personnel needed to produce new 
insured mortgage loans and to monitor the properties once the loans are 
in portfolio. Both components of the 2023 Budget request are integral 
to achieve the Department's goal to help communities gain access to 
affordable housing.

  --Commitment Authority: Commitment authority 1) enables FHA to issue 
        mortgage insurance which encourages mortgagees to lend to 
        borrowers and in communities that they may not otherwise serve 
        and for affordable housing projects that might not otherwise 
        qualify, and 2) enables Ginnie Mae to make affordable housing a 
        reality for millions of low- and moderate-income households 
        across America by channeling global capital into the nation's 
        housing markets. Specifically, the Ginnie Mae guarantee allows 
        mortgage lenders (or Issuers) to obtain a better price for 
        their MBS in the secondary mortgage market and increases total 
        funding available for lenders to meet the credit access and 
        housing needs of Americans across the single-family, 
        multifamily, manufactured housing, and reverse mortgage 
        segments of the market.

    Ginnie Mae sells Commitment Authority to Issuers, which represents 
        the total amount of new commitments MBS Issuers expect to issue 
        under the Ginnie Mae guarantee.

    Driven largely by the decline in interest rates and the resulting 
        increase in refinance activity, both FHA and Ginnie Mae 
        experienced record growth in 2020 and 2021. We expect 
        continuous growth in the Ginnie Mae portfolio in 2022 and 2023 
        ($886 billion estimated commitment authority sales for 2023), 
        as MBS issuance exceeds liquidations. The $900 billion and $35 
        billion requests in the fiscal year 2023 budget will enable 
        Ginnie Mae and FHA to keep pace with market and Issuer demands 
        and ensure liquidity to lenders and capital markets.

  --Personnel Salaries and Expenses: The requests directly support the 
        Department's goal to enhance our workforce and internal 
        capability so that our platform can continue to provide low-
        cost liquidity for the benefit of borrowers and renters nation-
        wide. The funding request will enable Ginnie Mae to uphold 
        current responsibilities (i.e., continuity of operations), 
        manage evolving housing finance market risk, as well as further 
        invest in the MBS program, which includes implementing several 
        MBS initiatives focused on a more equitable housing finance 
        system (e.g., Title 1 enhancement, CDFI liquidity, ESG). These 
        activities are necessary to effectively promote a more 
        accessible and inclusive housing finance system. The $42.4 
        million budget request in fiscal year 2023 will enable Ginnie 
        Mae to continue serving its key public policy of providing a 
        strong secondary market outlet for affordable housing 
        production.

    Similarly, the request for FHA Multifamily supports ongoing 
        production of new loans and asset management of loans in the 
        portfolio. It would further support the overall goal of housing 
        safety and quality, particularly to prevent and remedy 
        distressed properties. The negative effects of distressed 
        properties fall disproportionately on disadvantaged 
        communities.

    Question. For the first time, the President's budget request 
explicitly supports a permanent authorization of the CDBG-DR program. 
It does not endorse a specific bill, but it includes four policy 
principles for the authorization: (1) Advance equity; (2) Prioritize 
and integrate resilience; (3) Efficacy, efficiency, and transparency; 
and (4) Build capacity.
    How do you think a permanent authorization of the CDBG-DR program 
will improve a community's ability to respond and recover from major 
natural disasters?
    Answer. For more than 20 years, Congress has appropriated 
supplemental CDBG-DR to assist communities in long-term disaster 
recovery. The current practice of requiring Congress to make these 
funds available only in response to specific disasters leads to 
significant delays in how long it takes for these critical resources to 
arrive in a community. Each appropriation of CDBG-DR funds requires HUD 
to establish new requirements for the use of the funds. Permanent 
authorization of CDBG-DR would allow HUD to promulgate rules that 
establish the requirements for all CDBG-DR grants going forward, 
including the formula used for the allocation of funds. CDBG-DR 
authorization would increase certainty among state and local 
governments as well as the public, with respect to the requirements 
associated with assistance. Permanent authorization would allow 
communities to better plan for the use of prospective CDBG-DR funds 
prior to a disaster, which would speed up the delivery of assistance. 
This would be particularly beneficial to communities that have not 
previously received CDBG-DR funds and communities that were underserved 
or distressed prior to a disaster. The U.S. Government Accountability 
Office, HUD's Office of the Inspector General, many state and local 
governments, and other organizations that work with communities to help 
them recover, have all noted the benefits of creating a permanently 
authorized program that prioritizes the recovery needs of low- and 
moderate-income people.
    The Department's $83 billion CDBG-DR portfolio is comprised of 64 
grantees who administer 160 CDBG-DR grants. HUD's Disaster Recovery and 
Special Issues Division implements the CDBG-DR funds and is comprised 
of 66 permanent and ``term'' (temporary) employees. In the supplemental 
appropriations of CDBG-DR funds, Congress has provided HUD with funds 
to support the administration of the grants, which in turn has allowed 
the Department to hire temporary employees. Permanent authorization of 
CDBG-DR and inclusion of CDBG-DR recovery funds and funding for 
permanent staff in the annual HUD budget would allow the Department to 
build its own long-term capacity to effectively oversee the use of the 
funds and to support the timely delivery of assistance to communities.
    Question. The President's budget request for Project Based Rental 
Assistance includes a five-year extension of the Mark-to-Market (M2M) 
program, which is set to expire on September 30, 2022. In addition, the 
budget request includes new funding to make rent adjustments to Mark-
to-Market properties based on the cost of maintaining the property and 
covering mortgage payments, rather than an annual OCAF?
    How was the M2M program helped to preserve affordable housing? Why 
is it important Congress extends it?
    Answer. Congress created the Mark-to-Market (M2M) program in 1997 
for properties with FHA-insured loans and Section 8 subsidies. Its 
purpose was to reduce Section 8 costs while preserving the 
affordability and availability of low-income rental housing. This was 
accomplished by reducing the property rents to market level while, when 
necessary, simultaneously reducing property debt levels and owner costs 
through the debt restructuring management tools authorized by the 
legislation. As of 2022, 1,861 properties covering 147,345 units have 
been fully restructured and preserved through the M2M program.
    There are two key justifications for an extension. First, the M2M 
program's authority to reduce existing FHA-insured debt when a Project-
Based Section 8 property has its rents reduced to market is critical to 
meeting the program's goals and protecting FHA's insurance fund. In 
addition to the fully restructured transactions, a significant number 
of owners had previously elected to adjust their rents without a 
corresponding adjustment in their FHA-insured debt. These partial 
restructurings served to save HUD money with respect to the Section 8 
budget, but without the cost of restructuring the FHA-insured debt. The 
owners of these properties retain the right under the statute to 
request the FHA-insured debt restructuring if needed. Without the M2M 
program, if the need arises, these properties would be financially 
``upside down,'' with a debt burden greater than their ability to pay. 
This creates a greater risk of default on the FHA-insured mortgage debt 
and also risks the owner's ability to meet the operational and 
maintenance needs of these Section 8 properties. There are 908 
properties that restructured the Section 8 rents without restructuring 
the FHA-insured debt and there remain approximately 388 properties 
(31,235 units) that may be eligible for debt restructuring under the 
M2M program with Section 8 contracts expiring through 2027, and others 
with expiration dates after the proposed extension date. These deeply 
affordable units are at risk of opting-out of the Section 8 program at 
contract expiration if the M2M program is not able to restructure the 
existing FHA-insured mortgage debt and preserve the assets for the long 
term.
    Second, the M2M authority provides structure around certain asset 
management functions. Most significant among them for purposes of 
affordable housing preservation is HUD's authority to assign or forgive 
HUD-held debt to a Qualified Nonprofit Purchaser (``QNP''), which is 
available both at the time of the M2M restructure and at the time of a 
subsequent recapitalization event. The ability to assign HUD-held debt 
has allowed non-profit, preservation-oriented purchasers of Section 8 
properties to compete with profit-motivated owners in acquiring and 
preserving these assets as affordable housing for the long term. These 
QNP transactions often result in new longer-term affordability 
restrictions being placed on the properties. HUD has been able to 
facilitate large recapitalization transactions while supporting 
mission-driven owners that preserve these assets. Approximately 848 
properties (63,268 units) have previously been restructured under the 
M2M program and are eligible for QNP assignments of debt to support 
preservation transactions.

                                 ______
                                 

            Questions Submitted by Senator Dianne Feinstein
    Question. Those experiencing homelessness often struggle to obtain 
or maintain the required personal documents--such as birth 
certificates, photo identification, and Social Security information--in 
order to apply for Federal assistance benefits like the Supplemental 
Nutrition Assistance Program, Social Security Disability Insurance, and 
Medicaid. Anyone would struggle to navigate this onerous process, and 
adding layers of paperwork with different requirements to receive 
benefits adds an unnecessary burden on our Nation's most vulnerable. A 
person's lack of personal identification can make it more challenging 
to secure a job, find housing, open a bank account, stay in shelters, 
and access Federal benefits.
    Secretary Fudge, what steps can your Department take to alleviate 
some of these burdens and ensure that homeless individuals and families 
have access to critical benefits? How can the Federal government work 
with local governments and service providers to ensure that homeless 
individuals can successfully navigate the application process for 
Federal benefits?
    Answer. We strongly agree that we need to center those we are 
serving in our policies. One example of how we are alleviating burdens 
on people experiencing homelessness is our work to evaluate our data 
collection process. As we are updating our data collection 
requirements, we have invited people who have experienced homelessness 
to comment and help us understand what changes are needed to ease the 
burden on those seeking our assistance. We are also working with 
communities to improve coordinated entry practices to minimize 
documentation requirements to ensure that access to homeless assistance 
is as streamlined as possible. Additionally, we are incorporating 
equity considerations into our policies. This is helping us evaluate 
potential biases in our approaches and helping ensure we address the 
systemic racial discrimination that often leads to homelessness.
    Question. The Housing and Community Development Act of 1974 
established the Community Development Block Grant (CDBG) program. 
However, it placed a cap of 15 percent on how much of these funds could 
be used for public services. As you know, public services include 
services for people experiencing homelessness, homelessness prevention, 
services for youth, seniors, and people with disabilities, and job 
training and employment services. My staff have heard from cities how 
the current public services cap has limited their ability to use CDBG 
funds in a way that makes the most sense and actually meets the needs 
of communities, particularly those that want to address housing 
challenges.
    Secretary Fudge, the current CDBG public services cap is preventing 
communities from providing more stable housing opportunities and 
addressing homelessness effectively. What is your Department's position 
on waiving the CDBG public services cap?
    Answer. The existing 15 percent public services cap encourages 
grantees to spend CDBG funds in a balanced manner, providing assistance 
for activities that address immediate public service needs while also 
investing in bricks-and-mortar and physical infrastructure activities 
that further long-term community planning goals. While grantees may 
have demands for public services funding that exceed 15 percent of 
their annual grant amount, HUD believes that the cap promotes a 
multifaceted approach to community development shaped by each grantees' 
local needs and objectives. In addition, other block grant programs 
(for example, HHS's Community Services Block Grant and Social Services 
Block Grant) already provide significant Federal funding for local 
public services.
    When necessary to deliver on exceptional policy and programmatic 
goals, HUD has waived this cap. For example, we recently did so to 
facilitate the HUD pilot Recovery Housing Program. HUD determined that 
the cap would inhibit the nature of the services that Congress intended 
the SUPPORT for Patients and Communities Act to allow grantees to 
provide. HUD also acknowledges the overwhelming and immediate demand 
for public services spending that prompted Congress to waive the cap 
for CDBG CARES Act funding, which provided CDBG funds to prevent, 
prepare for, and respond to coronavirus.

                                 ______
                                 

              Questions Submitted to Senator Patrick Leahy
       regulations under the home investment partnership program
    Question. In fiscal year 2022, Congress appropriated the highest 
level of funding for the HOME Investment Partnership in the past 
decade. This funding is a flexible option to increase the affordable 
housing supply, but many housing practitioners are finding current HOME 
regulations overly burdensome to use for homeownership. In particular, 
requirements that the nonprofit must meet the definitions of both 
``community land trusts'' and ``community housing development 
organizations,'' as well as the fact that the funds must come from the 
CHDO set-aside, pose significant regulatory problems. Closing the 
nation's homeownership gap is essential to closing its wealth gap, and 
that cannot be achieved if grantees are discouraged from using HOME 
funding due to burdensome regulations.
    How is HUD planning to clarify regulations for the HOME program to 
address these concerns, and does HUD plan to engage stakeholders when 
considering regulatory and guidance changes?''
    Answer. As part of the President's Housing Supply Action Plan, the 
Department is examining the HOME statute and regulations to identify 
potential modifications to simplify both the rental housing and 
homeownership components of the program. Because the HOME statute 
contains many explicit program requirements, the potential effect of 
regulatory changes alone would likely be modest. However, HUD is in the 
process of identifying potential changes to both the HOME statute and 
regulations, and as reflected in HUD's spring regulatory agenda, HUD 
will issue a proposed HOME program regulation for public comment.
    With respect to community land trusts, some stakeholder groups 
misunderstand the existing HOME Program requirements. Community Land 
Trusts are not required to meet the community housing development 
organization (CHDO) definition to access regular HOME funding. However, 
by statute, a community land trust that wishes to access funds from the 
15 percent CHDO set-aside must meet the CHDO definition like any other 
nonprofit organization, except that a community land trust is presumed 
to meet the CHDO governing board requirements.

                                 ______
                                 

              Questions Submitted by Senator John Boozman
    Question. The pandemic has accelerated the need for certain types 
of commercial real estate to be repurposed. Some retail real estate 
analysts project that 25 percent of the nearly 1,200 enclosed malls 
around the U.S. will close in the next several years. Others point to 
the need to right size the amount of office space or conference hotel 
rooms. All the while, the need for affordable and workforce housing 
opportunities continues to grow, especially in rural America.
    Has HUD considered what its role could be in encouraging adaptive 
reuse to repurpose existing built spaces to create new opportunities 
for housing, healthcare and other community needs?
    Answer. HUD's Office of Policy Development and Research has 
proposed research into commercial to residential conversions as a 
priority use in its 2023 funding request. This research effort would 
invite the academic and research community to examine factors that 
affect the feasibility of commercial-to-residential conversions (for 
both market-rate and affordable units), including providing a detailed 
examination of factors related to the design, building technology, 
regulatory, market, and cost considerations, and profiling successful 
commercial-to-residential conversions. Of particular interest are 
repurposing large shopping malls that are no longer economically viable 
and vacant office space. In addition to exploring costs associated with 
developing these spaces and existing Federal programs that could 
facilitate conversions, the research would analyze actual and projected 
economic activity and municipal revenue to provide an actionable 
template for communities considering these changes.
    To the extent that such adaptive reuse projects accord with FHA 
Multifamily and Healthcare program policies, FHA is supportive of 
innovative efforts to increase the supply of affordable rental housing 
and quality healthcare facilities.
    Communities can and do use CDBG funds and Section 108 loan 
guarantees in a variety of ways to fund adaptive reuse projects. 
Eligible CDBG and Section 108 activities that may support adaptive 
reuse include acquisition, rehabilitation, preservation, and selective 
restoration of publicly or privately owned properties for residential, 
commercial, or public improvement purposes. Grantees may also provide 
economic development assistance to for-profit businesses, which can 
then carry out activities to convert existing real property to another 
use. While communities usually do not use CDBG and Section 108 funds as 
primary sources of funding for large-scale redevelopment projects, they 
do serve as critical gap financing.
    An example of HUD supporting an adaptive reuse project can be found 
in Texarkana, Texas. Using Section 108, the City of Texarkana assisted 
a private developer to redevelop the historic Hotel Grim. The 
redeveloped property includes 98 housing units (20 affordable) and 
approximately 5,000 square feet of commercial space on the first level. 
This project used financing from multiple Federal agencies.
    Question. The lack of housing supply in the US is one of HUD's 
greatest challenges and is contributing to record home price 
appreciation and decreased affordability, all while the FHA single 
family portfolio's serious delinquent rate is 6 percent as of March 
2022, compared to 1 percent for the GSEs.
    Do you think now is the appropriate time to implement changes to 
FHA's pricing? Are you concerned that a rate cut will increase demand 
and worsen affordability issues? If so, how will you address that?
    Answer. We are seeking to take a prudent and judicious approach 
with regard to Mortgage Insurance Premium pricing. This includes 
consideration of a range of factors, including but not limited to 
things like current housing market and economic conditions, mortgage 
affordability and the interest rate environment, budgetary implications 
and any tradeoffs within the appropriations process, and FHA's role 
within the broader housing finance system.
    Question. I understand that HUD is considering changes to FHA 
pricing and that FHFA Acting Director Thompson is conducting a 
``holistic review'' of pricing at the GSEs.
    Is HUD coordinating with the FHFA to ensure any FHA price cut 
doesn't create market distortion and arbitrarily tilt the scales in 
favor of one market over the other? Will you commit to implementing 
policies that promote a level playing field and do not advantage the 
FHA government-insured market over the conventional mortgage market?
    Answer. FHA's primary role in the mortgage market is to provide 
access to homeownership for those not adequately served by the private 
market. As a result, FHA's market share fluctuates based upon market 
conditions and pricing in the conventional market. FHA does not target 
specific loan volumes or market shares. That said, FHA continually 
monitors changes in the marketplace and seeks to ensure that it does 
not face either adverse selection or an outsized role in the nation's 
housing finance system.
    As previously noted, we are seeking to take a prudent and judicious 
approach to Mortgage Insurance Premium pricing that takes into account 
a host of relevant factors, including current housing market and 
economic conditions and FHA's role within the broader housing finance 
system. As part of that process, FHA is in regular contact with FHFA 
and will, as appropriate, keep FHFA and other parties apprised of its 
plans.
    Question. Small-dollar mortgages can help with housing 
affordability issues, specifically in rural communities. Borrowers for 
these mortgages present a certain level of risk, and lenders prefer 
this risk is partially covered via mortgage insurance.
    Will you commit to conducting a review of FHA single-family 
mortgage insurance policies, practices, and products to identify any 
barriers or impediments to supporting, facilitating, and making 
available mortgage insurance for mortgages having an original principal 
obligation of $200,000 or less?
    Answer. In response to The House of Representatives Committee 
Report 116--452, accompanying the Departments of Transportation, and 
Housing and Urban Development, and Related Agencies Appropriations 
Bill, 2021, HUD is conducting a review of FHA's single-family mortgage 
insurance policies, practices, and products to (1) identify barriers or 
impediments to supporting, facilitating, and making available mortgage 
insurance for mortgage loans having an original principal obligation of 
$70,000 or less, (2) identify administrative actions that HUD could 
take to remove barriers and impediments, and (3) describe the effect of 
such actions on the solvency of the Mutual Mortgage Insurance Fund (MMI 
Fund). We expect to publish this report very soon and would be pleased 
to discuss its findings with members of the Committee.
    Question. I believe increased funding for HUD should be prioritized 
and allocated towards fully supporting the multi-year FHA Catalyst 
project's needs in 2023. FHA Catalyst is a major project intended to 
modernize FHA's IT infrastructure and to provide cloud-based platforms 
to reduce costs, risk, and fraud, and bring FHA in line with current 
industry practices and includes a single portal for lenders to interact 
with FHA for the full loan life cycle, with loan components already in 
production.
    Will you commit to sustained executive-level attention to advancing 
and completing FHA Catalyst?
    Answer. HUD remains committed to the successful advancement of FHA 
Catalyst, and to improving HUD's ability to address FHA's business 
needs through IT modernization. To achieve this objective, the Office 
of Housing, the Office of the Chief Information Officer, and the Office 
of the Chief Procurement Officer are collaborating on process 
improvements that will strengthen executive oversight and improve 
decisionmaking processes for FHA Catalyst. FHA Catalyst will continue 
to enjoy executive level support, attention, and leadership in pursuit 
of comprehensive IT modernization for FHA.
    Question. Over the last 16 months, including at your confirmation 
hearing, you have spoken of the critical importance downpayment 
assistance plays in narrowing the homeownership gap between white and 
minority families. At the same time, HUD quietly announced in January 
2022 that it was pursuing rulemaking that could limit the reach of 
these vital programs. In my home state, the Arkansas Development 
Finance Authority operates a program that gives low-to-moderate income 
families and individuals up to $15,000 in downpayment assistance and 
closing assistance. A separate program provides up to $10,000 in 
assistance that is fully forgivable after 5 years.
    When does HUD expect to release proposed rulemaking on downpayment 
assistance and what changes is HUD considering? How will HUD work to 
ensure the program doesn't unnecessarily restrict homebuyers access to 
such vital assistance?
    Answer. Downpayment assistance is a crucial means of accessing 
homeownership for low- and moderate-income and first-time homebuyers. 
Therefore, HUD and FHA remain deeply committed to ensuring that down 
payment assistance programs such as those operated by housing finance 
authorities and other partners continue to make homeownership possible 
for qualified homebuyers. As you noted, FHA intends to conduct 
rulemaking to provide needed clarity with regard to certain 
requirements issuing from the Housing and Economic Recovery Act (HERA) 
of 2008 that restrict provision of down payment assistance funds by a 
``prohibited source.'' FHA hopes to provide this clarity while still 
enabling broad access to this critical assistance.
    Question. First-time homebuyers, millennials, and minorities 
represent the largest underserved market segment for new home 
purchases, yet they continue to face barriers to homeownership as 
mortgage lenders sometimes find their product mix does not match the 
needs of this population, many of whom face challenges in saving for a 
down payment or recovering from economic hardship. Many government 
housing agencies offer down- payment assistance programs making 
homeownership more attainable, while others offer multifamily rental 
housing for low- and moderate-income households using Federal budget 
allocations. However, these types of programs are limited due to 
financing and funding constraints. I believe public and private sector 
participants should focus on promoting existing responsible, 
alternative financial products that enable more first-time and lower-
income rental populations to bridge into sustainable homeownership. 
Access to single-family mortgage financing is available for nonprofits, 
Indian tribes and, in some cases, governmental agencies. These programs 
are currently offered through USDA and FHA. A number of local 
government housing agencies in recent years have been working through 
public-private partnerships to utilize FHA single-family financing to 
enable borrowers to bridge from renting to homeownership via own-option 
and lease-purchase products. While initial results for such programs 
are promising, unfortunately adoption of such programs has been limited 
due to modest barriers at HUD, FHA and USDA.
    Are there any administrative and/or statutory clarifications that 
HUD can take in order to accelerate the expansion of these types of 
programs and help address the affordability crisis? Are there any 
changes HUD can make to the FHA Single-Family Housing Handbook and 
program administration that would simplify the process for registering 
government housing agencies as mortgagors for the purposes of FHA 
insurance eligibility?
    Answer. FHA agrees that nonprofit and government entity utilization 
of its mortgage insurance programs as mortgagors could offer useful 
financing options for a variety of neighborhood stabilization, 
homeownership, and rental strategies. Toward that end, FHA has met and 
is working with interested nonprofit organizations and prospective 
lenders to identify opportunities to better leverage FHA's single 
family mortgage insurance programs for these purposes. Additionally, we 
are reviewing approval processes for nonprofits seeking eligibility as 
mortgagors to streamline and simplify the process for these important 
community partners.

                                 ______
                                 

           Questions Submitted by Senator Shelly Moore Capito
    Question. The rising cost of housing is a major contributor to 
inflation, with demand far outpacing supply. Home prices rose by 18.8 
percent last year and rent went up by 17.6 percent. There simply are 
not enough starter homes available for first time homebuyers, and 
rental vacancies are at record lows.
    What is HUD doing to increase the housing supply so that low-income 
homebuyers and renters can afford a place to live?
    Answer. In May, the Biden-Harris Administration released a Housing 
Supply Action Plan with the goal of easing the burden of housing costs 
for American families. Specific HUD actions included within the 
Administration's plan include supporting production and availability of 
manufactured housing, updating HOME regulations to increase program 
effectiveness, providing reduced interest rate loans to state and local 
housing finance agencies via the Federal Financing Bank's Risk Sharing 
Program, supporting affordable housing in Indian County, directing the 
sale of mortgage notes to owner-occupants and mission-driven entities 
instead of large investors, and encouraging the use of CDBG for local 
acquisition and sales to families.
    HUD also launched the Our Way Home initiative, which will uplift 
the actions that communities and HUD grantees are taking to create more 
affordable homes with tools and resources that can help preserve and 
produce safe, accessible, and affordable housing. Community outreach 
also provides an opportunity for HUD to get feedback and ideas for 
improvements on our programs from our partners and the people we serve.
    Question. As HUD considers changes to FHA pricing, are you 
concerned about further driving up demand, and therefore home prices, 
in the face of severely limited supply?
    Answer. We are seeking to take a prudent and judicious approach 
with regard to Mortgage Insurance Premium pricing. This includes 
consideration of a range of factors, including but not limited to 
things like current housing market and economic conditions, mortgage 
affordability and the interest rate environment, budgetary implications 
and any tradeoffs within the appropriations process, and FHA's role 
within the broader housing finance system.
    Question. Additionally, HUD's HOME Investment Partnerships program 
is HUD's primary program for building more affordable for-sale and 
rental housing, but the program's regulations are overly burdensome and 
HOME's formula allocations in West Virginia are miniscule when compared 
to what Congress funds the program at. In fiscal year 21, West Virginia 
received $7.6 million out of a $1.3 billion appropriation. That is less 
than 0.6 percent of the total allocations.
    Is HUD considering streamlining its rules so that states and local 
governments can do more with their HOME dollars? Will HUD commit to 
working with West Virginia's Housing Development Fund on ways to make 
the program more efficient?
    Answer. As part of the President's Housing Supply Action Plan, the 
Department is examining the HOME statute and regulations to identify 
potential modifications to simplify both the rental housing and 
homeownership components of the program. Because the HOME statute 
contains many explicit program requirements, substantial changes to the 
program would require legislative changes and the effect of only 
regulatory changes would likely be modest. However, HUD will work with 
grantee groups and other stakeholders, including West Virginia's 
Housing Development Fund, to identify changes to both the HOME statute 
and regulations that would modernize and streamline the program. HUD 
will develop and issue a proposed HOME program regulation for public 
comment.
    Question. Broadly speaking, it is important for HUD to work with 
the other Federal housing agencies and one particular area where this 
would be most beneficial is coordinating with the FHFA to develop and 
implement a specific understanding as to the appropriate roles for FHA 
and the GSEs in the housing finance system.
    What steps is HUD taking to work in concert with the FHFA to ensure 
there is a consistent Federal housing policy and that borrowers have 
access to mortgage options in the conventional and FHA-insured markets?
    Answer. FHA pays close attention to the policy developments at FHFA 
and other agencies that play a role in housing finance. Both principals 
and staff communicate regularly on a range of topics. At a staff level, 
FHA is a regular participant in the Joint Federal Housing Agency 
working group, which brings together representatives from FHA, VA, 
USDA, GNMA, FHFA and CFPB to share updates on policy development or 
industry trends across all agencies. This coordination helps to foster 
consistency in the industry while supporting each agency in carrying 
out their particular mission.
    Question. I am pleased that I was able to use the Economic 
Development Initiatives account to support from very promising projects 
in West Virginia such as $1.1 million for Upgrades to Hazel's House of 
Hope in Morgantown--a community shelter and treatment facility--And I 
look forward to doing so in fiscal year 23. I appreciate the 
flexibility that this account offers.
    I have heard from multiple requestors in the state that they still 
don't have guidance after being included in the omnibus package. What 
is the delay from the department? And do you have a timeline for when 
they will receive funding for these economic development projects?
    Answer. HUD has been working diligently to administer the Economic 
Development Initiatives. The Department has worked with the 
Appropriations Committee to collect the grantee contact information.
    HUD has distributed communications to the grantees providing 
preliminary information including crosscutting requirements and an 
estimated timeline. HUD issued guidance to grantees in July 2022, 
through a Letter of Invitation (LOI). The LOI outlines the grant award 
requirements and required information needed from grantees to execute 
grant agreements. Once HUD receives and verifies this information, HUD 
will send grant agreements for signature. Grantees will be able to 
access their grant funds once the project narrative and budget have 
been verified and an environmental review has been completed and 
approved by HUD. We will update you on the progress of the 
administration of this funding.

                                 ______
                                 

               Questions Submitted by Senator John Hoeven
    Question. In Fargo, North Dakota, the City and the Fargo Public 
Housing Authority are working to secure funding to demolish and 
redevelop the Herschel Lashkowitz tower, a public housing building that 
was built over 50 years ago by the Federal government, and has 200 
residential units, making it the largest residential building in North 
Dakota. The building is badly outdated and needs to be replaced.
    The Fargo Public Housing Authority has worked closely with HUD to 
relocate the tenants of the building, and today the building sits 
empty, ready to be demolished. The demolition project is estimated to 
cost $5.5 million, $2.8 million of which is for asbestos mitigation and 
clean-up.
    The EPA has a Brownfields Clean-up Grant program that could help 
provide funding for the asbestos mitigation and clean-up costs at the 
Lashkowitz tower. Prior to this year, the EPA Brownfields cleanup 
grants were limited to a maximum award of $500,000. However, Congress 
recently increased the statutory maximum grant award amount for these 
grants to $5 million--potentially making this grant program attractive 
to the City of Fargo as it looks to move this project forward.
    Unfortunately, it has come to my attention that the EPA is 
intending to award the fiscal year 23 Brownfields cleanup grants well 
below the authorized maximum of $5 million. Rather, the EPA anticipates 
implementing a $500,000 to $1 million award cap.
    Would you be willing to speak with your colleagues at the EPA about 
the redevelopment of the Lashkowitz Tower, and discuss how funding 
Brownfields cleanup grants at the congressionally intended cap amount 
could assist with this important project for the Fargo community?
    Answer. The Special Applications Center (SAC) within PIH has 
approved the demolition of the Lashkowitz Tower. PIH has also issued 
tenant protection vouchers (TPV) to allow residents to relocate to 
housing of their choice. SAC is aware that Fargo Public Housing 
Authority has been working to find the funding for the demolition. PIH 
agrees that meeting with EPA to discuss the demolition/redevelopment 
and cleanup grants to ensure coordination and collaboration would be 
helpful and is willing to participate in such a discussion.
    This might include how to combine EPA's Brownfields cleanup grants 
with other HUD resources that address remediation and demolition, such 
as CDBG and Section 108. CPD's programs have been used extensively by 
communities for these types of Brownfields projects.
    Question. In fiscal years 2021 and 2022, this subcommittee 
requested a briefing on HUD's efforts to engage interagency partners 
and counseling agencies on efforts to educate consumers on real estate 
wire fraud. Recent reports indicate this problem continues to grow. 
Given the continuing economic challenges that make it more difficult 
for families to make ends meet and to achieve homeownership, one wire 
fraud incident could devastate a family's financial security and put 
homeownership out of reach.
    When can the committee expect this briefing? Are there any efforts 
underway to reach consumers and industry directly that Members of 
Congress and the Committee could help support and promote?
    Answer. HUD recognizes the importance of educating consumers on 
real estate wire fraud. HUD's Office of Housing Counseling has worked 
closely with external partners, including the Federal Trade Commission 
and the American Land Title Association, to educate housing counselors 
on types of fraud, how to identify and avoid fraud, and the latest 
trends in wire and title fraud, as well as providing counselors with 
client resources and processes for reporting fraud. In addition, HUD 
provides alerts, information, and articles on a variety of frauds, 
including wire fraud, on its web resources for housing counselors. We 
would be happy to brief the Committee on this work at its convenience.
    Question. Can HUD advise more immediately on any specific efforts 
and progress made to date?
    Answer. HUD is working with the American Land Title Association 
(ALTA) to help train counselors on title-related topics. By training 
HUD-certified housing counselors and others on title topics, they can 
be better prepared to advise consumers on the title process in their 
state as well as understand how to safely complete daunting real estate 
tractions tasks like wire transfers and how to avoid wire fraud.
    On June 7, 2022, HUD met with the Senior Vice President of Public 
Affairs and Chief Advocacy Officer for ALTA and his training team. HUD 
is scheduling regular production meetings with ALTA. ALTA shared 
training content they have already developed, and HUD is reviewing the 
information to adapt to housing counselor training. ALTA training 
content shared includes:

1. Protect Your Money Home Closing 101: This is ALTA's consumer-facing 
    website that contains videos, checklists, infographics, and other 
    resources.

2. ALTA--Information Security: This is ALTA's member-facing information 
    for businesses that might face wire fraud actions.

3. ALTA Members Protect Against Wire Transfer Fraud: Additional videos 
    on wire fraud.

    HUD has tasked ICF (HUD's technical assistance training grantee) 
with a work order assignment to assist in producing title-related 
training content.

    HUD's first coproduction was a webinar on title/wire fraud on July 
26, 2022, and HUD is planning ``Title Policy 101'' for housing 
counselors on September 27, 2022. HUD is also interested in other 
title-related training webinars in the fall and beyond. HUD is looking 
at increasing title-related training content on the HUD Exchange 
website.

                                 ______
                                 

               Questions Submitted by Senator Mike Braun
    Question. Shelter makes up nearly a third of the basket for CPI 
inflation\1\. Housing prices are up across the country by 17 percent in 
just 1 year. Just last month, the National Low Income Housing Coalition 
(NLIHC) noted that we have a national shortage of 7 million affordable 
homes.\2\ That's a supply side problem. Simultaneously, you are 
requesting massive program increases to the demand side, including 
rental assistance and vouchers.
---------------------------------------------------------------------------
    \1\ https://www.whitehouse.gov/cea/written-materials/2021/09/09/
housing-prices-and-inflation/
    \2\ https://nlihc.org/resource/nlihc-releases-gap-shortage-
affordable-homes
---------------------------------------------------------------------------
    Given how much HUD spends on housing programs every year, not to 
mention other agencies, do you think the Federal government might 
actually be a contributor to the inflationary side of housing prices?
    Answer. Unlike the rental space, HUD does not have any spending 
programs of consequence that primarily subsidize homeownership. FHA is 
self-financing, and the homeowner mortgage insurance fees are high 
enough to generate revenue for the government. Average FHA loan amounts 
and the purchases they finance also are below average in most markets. 
On the rental side, FHA multi-family mortgage insurance programs are 
designed to add to the housing supply and help keep rents lower.
    Further, there are more than 43.5 million occupied rental units in 
the United States. Of these, 2.3 million, or 5.3 percent, are occupied 
by voucher tenants. The rent paid by families with vouchers is based on 
the Fair Market Rent, which is set at the 40th percentile of rents paid 
by recent movers, meaning 60 percent of recent-mover renters paid more 
than the Fair Market Rent for their units. Given the relatively small 
number of voucher tenants compared to the overall market, and the 
limits of any individual voucher tenant's resources, it is unlikely 
that vouchers are contributing in any meaningful way to general rent 
inflation.
    Question. According to the Office of Management and Budget (OMB), 
there is about $3.5387 billion in unobligated Tenant-Based Rental 
Assistance from COVID packages as of April 21, 2022. The President's 
Budget requests $32.130 billion for Tenant-Based Rental Assistance, an 
increase from $25,777 from fiscal year 2022.\3\
---------------------------------------------------------------------------
    \3\ https://www.hud.gov/budget
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    Do you think the current request is warranted given the outstanding 
unobligated balance for rental assistance? Would you consider 
subtracting that balance out of your open request?
    Answer. Yes, the current TBRA request is necessary. The funds 
provided by the American Rescue Plan (ARP) for Emergency Housing 
Vouchers (EHVs) are a separate pool of funding from the regular Housing 
Choice Voucher program. When Congress passed the ARP, it designated 
these EHVs to continue to be renewed out of the amount appropriated in 
the American Rescue Plan until the program ends in 2030. The initial 
funding for the approximately 70,000 Emergency Housing Vouchers (EHVs) 
funded through the ARP is almost complete.
    Once all EHV vouchers are issued, for the unobligated balance of 
$3.5 billion, HUD will provide renewal funding for EHVs on a calendar 
basis moving forward after that, beginning in calendar year 2023, and 
systematically obligate renewal funds in accordance with the ARP 
requirements. The Department will also utilize its reallocation 
authority as well to effectively manage the ARP dollars and both de-
obligate and re-obligate funds during the program lifecycle. As stated 
in PIH Notice 2021-15, Section 16, the $5 billion in ARP funds 
appropriated for EHV must be obligated by September 30, 2030.
    Question. The CARES Act provided for $17.4 billion to the 
Department of Housing and Urban Development (HUD) for existing programs 
including rent assistance, public housing, housing grants and vouchers, 
and assistance to minority and disadvantaged communities.\4\ The 
Consolidated Appropriations Act of 2021 and American Rescue Plan Act of 
2021 provided $25 billion and $21.55 billion for Emergency Rental 
Assistance.\5\
---------------------------------------------------------------------------
    \4\ https://www.americanactionforum.org/insight/the-cares-act-and-
housing-assistance-a-users-guide/
    \5\ https://home.treasury.gov/policy-issues/coronavirus/assistance-
for-state-local-and-tribal-governments/emergency-rental-assistance-
program
---------------------------------------------------------------------------
    To expedite payments, Treasury introduced flexibilities--for 
example, allowing renters to self-attest their eligibility instead of 
providing documentation when applying for funds.\6\ GAO's COVID-19 
report from this January says that significant improvements are needed 
to overseeing relief funds, specifically for emergency rental 
assistance.\7\ There has been waste/abuse in this program, including a 
contractor in New York bragging about 38 percent margins, from $115 
million in fees, while rental assistance fund ran dry in that 
community.\8\
---------------------------------------------------------------------------
    \6\ https://home.treasury.gov/news/press-releases/jy0709
    \7\ https://www.gao.gov/products/gao-22-105291
    \8\ https://www.washingtonpost.com/business/2022/01/25/guidehous-
ceo-newyork-evictions/
---------------------------------------------------------------------------
    Do you think rental assistance could have been delivered faster and 
more efficiently? If Congress could do it over again, how would you 
distribute billions of dollars to ensure that those who are most in 
needs, are able to get access to funds to keep them in their homes?
    Answer. Treasury's Emergency Rental Assistance (ERA) program was a 
first-of-its-kind program that, despite not having a national 
infrastructure when enacted, has been able to obligate over $30 billion 
to over 5.5 million vulnerable households thus far. The availability of 
ERA contributed to a historically low eviction filing rate in the 
months following the Supreme Court's decision to strike down the 
eviction moratorium, and the eviction filing rate has remained below 
historical averages in the months since, despite fast-rising rents. 
Limited evidence, based on external surveys, showed that Treasury's 
movement to allow fact-specific proxies and self-attestation helped ERA 
programs that adopted those measures to spend a greater share of their 
resources in summer 2021.
    External surveys of ERA administrators cited technology, staff 
capacity, and non-responsiveness of tenants and landlords as common 
challenges in implementing the program. Technical assistance was a 
critical solution to overcoming these challenges. HUD and Treasury 
entered into an inter-agency agreement that enabled HUD technical 
assistance providers to work with 45 grantees to streamline ERA 
application processes, address programmatic barriers (e.g., staffing 
capacity, policies, and procedures), interpret Treasury ERA guidance, 
program marketing and marketing, and strengthen programs to facilitate 
a seamless transition to ERA 2 funding.
    HUD recently issued a NOFO to conduct an impact evaluation of the 
ERA program. This NOFO will likely be awarded in the Fall.
    Question. In 2016, the Center on Budget and Policy Priorities 
(CBPP), a left-leaning think tank, wrote a paper that stated that 
consolidating rental assistance administration would increase 
efficiency and expand opportunity. They believe Public Housing 
Authorities (PHAs) would work better if they not only formed a 
consortium but truly merged and had a single funding contract with HUD.
    Do you believe policy like this would be helpful to HUD in 
administering rental housing assistance? Why or why not?
    Answer. HUD agrees that consolidating PHAs in some communities 
could improve program efficiency and remove barriers for families 
seeking to use their housing vouchers in other PHA jurisdictions. In 
developing the notice to implement the Community Choice Demonstration 
(formerly known as the HCV Mobility Demonstration), HUD considered 
allowing PHAs to form consortia under a single funding contract. 
However, the idea presents significant legal challenges that HUD was 
unable to overcome for that notice. HUD is continuing to explore 
options for facilitating consolidations where there is interest among 
PHAs.
    Question. Can you name one housing program administered by HUD that 
you think should be eliminated, consolidated, or reformed? How would 
you go about doing that and how can Congress help?
    Answer. Yes. The President's 2023 Budget supports authorizing the 
Community Development Block Grant-Disaster Recovery (CDBG-DR) program, 
consistent with the principles included in the President's 2023 Budget 
Request.
    For more than twenty years, Congress has appropriated more than $80 
billion in supplemental emergency funding for CDBG-DR on an ad hoc 
basis in response to major disasters to address the unmet long term 
disaster recovery needs of States, territories, local governments, and 
Tribes. Congress has generally directed grantees to use CDBG-DR funds 
for disaster relief, long-term recovery, restoration of infrastructure 
and housing, economic revitalization, and mitigation in the most 
impacted and distressed areas resulting from a qualifying major 
disaster.
    The U.S. Government Accountability Office, HUD's Office of the 
Inspector General, many CDBG-DR grantees, and other organizations that 
work with communities to help them recover, have all noted the benefits 
of creating a permanently authorized CDBG-DR program. Permanent 
authorization of CDBG-DR would improve the transparency and 
predictability of CDBG-DR funds made available to impacted communities. 
Permanent authorization would also require HUD to establish consistent 
regulatory requirements for CDBG-DR across all future disasters, 
eliminating the current practice of establishing new requirements in 
response to each supplemental appropriation of CDBG-DR funds.
    Question. Low-income, first-time-homebuyers, and other vulnerable 
populations depend on FHA's Title I programs to finance their purchase 
of a manufactured home and achieve the American dream of homeownership. 
Approximately 76 percent of new manufactured homes are titled as 
personal property, which can be financed through the FHA Title I 
program. Because these regulations have not been updated in years, this 
program has become obsolete. In fiscal year 2021, FHA insured a total 
of 5 Title I manufactured homes. This must be remedied to expand access 
to this affordable homeownership.
    Last fall, HUD made some changes to the FHA insurance program for 
personal property loans for manufactured housing. In fiscal year 2021, 
FHA insured a total of 5 loans under this program. Have the changes you 
made last year helped to improve access to this financing thus far? Are 
there other changes you expect to make, such as increasing the loan 
limits for these loans?
    Answer. FHA has not seen any change in participation in the Title I 
Manufactured Housing (MH) loan insurance program. This continues to be 
driven in part by the program's insufficient loan limits that render 
the program unusable for the purchase of most new manufactured homes. 
FHA is actively working to propose regulations to index the Title I MH 
loan limits under existing authority to better accord with current 
manufactured housing unit prices. FHA is also seeking additional 
statutory authority to allow further flexibility in establishing Title 
I loan limit indexing, which the Department believes is necessary to 
maximize the usefulness of the Title I product for MH homebuyers.
    Question. In August 2021, the Department of Energy issued a 
proposed rule which ties energy efficiency standards for manufactured 
homes to the 2021 International Energy Conservation Code (IECC). Under 
the proposal, the purchase price of a home will increase from $3,914 to 
$5,289 for most homes, based on DOE's projections, which do not include 
the costs of testing or compliance (which will be addressed in a 
separate rulemaking at a later date). These increased costs will have a 
significant impact on the average manufactured home buyer, whose median 
income is $34,800.
    I understand that DOE was required by statute to consult with HUD 
in drafting these--did HUD provide DOE with detailed estimates of the 
average increases in mortgage costs for a typical homebuyer because of 
the standards--or the projected number of potential homebuyers that 
will no longer qualify for a mortgage because of a higher debt to 
income ratio. What steps will HUD be undertaking when this rule is 
finalized to ensure it does not hamper the construction of manufactured 
homes at a time when affordable housing is in such high demand?
    Answer. DOE consulted HUD throughout the process and HUD provided 
extensive comments to DOE prior to the finalization of the energy 
conservation standards for manufactured housing. This feedback, 
submitted via agency-to-agency communication through the interagency 
review process administered by OMB, included cost projections and other 
comments on the impact of the new rule on affordability. Manufactured 
Housing is a critically important source of affordable housing for low- 
and moderate-income homeowners and renters, and ensuring this housing 
remains affordable is a goal of the Department, taking into account 
both upfront and ongoing operational costs and savings enabled by lower 
utility bills.
    HUD is now in the process of incorporating DOE's energy rule with 
our Manufactured Housing standards. HUD's goal is to align as closely 
as possible with DOE's standards to help streamline the regulatory 
oversight process, thereby mitigating confusion and cost impacts to 
consumers and the industry. HUD is developing draft recommendations for 
consideration by the Manufactured Housing Consensus Committee, and we 
will follow our consultation and rulemaking process requirements, 
including affordability considerations, as we work expeditiously to 
finalize our new standards.

                          SUBCOMMITTEE RECESS

    Senator Schatz. This hearing is now adjourned.
    Secretary Fudge. Thank you so much.
    Senator Schatz. [Whereupon, at 10:35 a.m., Wednesday, May 
12th, the hearing was adjourned, and the subcommittee was 
recessed, to reconvene at a time subject to the call of the 
Chair.]