[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]


                      HUD OVERSIGHT: TESTIMONY OF
                       THE HUD INSPECTOR GENERAL

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

                                HEARING

                               BEFORE THE

                        SUBCOMMITTEE ON HOUSING
                             AND INSURANCE

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION
                               __________

                             JUNE 21, 2023
                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 118-34
                           
                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
                  
                              __________

                    U.S. GOVERNMENT PUBLISHING OFFICE
                    
53-200 PDF                WASHINGTON : 2023                
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

               PATRICK McHENRY, North Carolina, Chairman

FRANK D. LUCAS, Oklahoma             MAXINE WATERS, California, Ranking 
PETE SESSIONS, Texas                     Member
BILL POSEY, Florida                  NYDIA M. VELAZQUEZ, New York
BLAINE LUETKEMEYER, Missouri         BRAD SHERMAN, California
BILL HUIZENGA, Michigan              GREGORY W. MEEKS, New York
ANN WAGNER, Missouri                 DAVID SCOTT, Georgia
ANDY BARR, Kentucky                  STEPHEN F. LYNCH, Massachusetts
ROGER WILLIAMS, Texas                AL GREEN, Texas
FRENCH HILL, Arkansas                EMANUEL CLEAVER, Missouri
TOM EMMER, Minnesota                 JIM A. HIMES, Connecticut
BARRY LOUDERMILK, Georgia            BILL FOSTER, Illinois
ALEXANDER X. MOONEY, West Virginia   JOYCE BEATTY, Ohio
WARREN DAVIDSON, Ohio                JUAN VARGAS, California
JOHN ROSE, Tennessee                 JOSH GOTTHEIMER, New Jersey
BRYAN STEIL, Wisconsin               VICENTE GONZALEZ, Texas
WILLIAM TIMMONS, South Carolina      SEAN CASTEN, Illinois
RALPH NORMAN, South Carolina         AYANNA PRESSLEY, Massachusetts
DAN MEUSER, Pennsylvania             STEVEN HORSFORD, Nevada
SCOTT FITZGERALD, Wisconsin          RASHIDA TLAIB, Michigan
ANDREW GARBARINO, New York           RITCHIE TORRES, New York
YOUNG KIM, California                SYLVIA GARCIA, Texas
BYRON DONALDS, Florida               NIKEMA WILLIAMS, Georgia
MIKE FLOOD, Nebraska                 WILEY NICKEL, North Carolina
MIKE LAWLER, New York                BRITTANY PETTERSEN, Colorado
ZACH NUNN, Iowa
MONICA DE LA CRUZ, Texas
ERIN HOUCHIN, Indiana
ANDY OGLES, Tennessee

                     Matt Hoffmann, Staff Director
                 Subcommittee on Housing and Insurance

                    WARREN DAVIDSON, Ohio, Chairman

BILL POSEY, Florida                  EMANUEL CLEAVER, Missouri, Ranking 
BLAINE LUETKEMEYER, Missouri             Member
RALPH NORMAN, South Carolina         NYDIA M. VELAZQUEZ, New York
SCOTT FITZGERALD, Wisconsin          RASHIDA TLAIB, Michigan
ANDREW GARBARINO, New York           RITCHIE TORRES, New York
MIKE FLOOD, Nebraska                 AYANNA PRESSLEY, Massachusetts
MIKE LAWLER, New York                SYLVIA GARCIA, Texas
MONICA DE LA CRUZ, Texas             NIKEMA WILLIAMS, Georgia
ERIN HOUCHIN, Indiana                STEVEN HORSFORD, Nevada
                                     BRITTANY PETTERSEN, Colorado

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    June 21, 2023................................................     1
Appendix:
    June 21, 2023................................................    27

                               WITNESSES
                        Wednesday, June 21, 2023

Oliver Davis, Hon. Rae, Inspector General, U.S. Department of 
  Housing and Urban Development (HUD)............................     4

                                APPENDIX

Prepared statements:
    Oliver Davis, Hon. Rae.......................................    28

              Additional Material Submitted for the Record

McHenry, Hon. Patrick:
    Written responses to questions for the record submitted to 
      Hon. Rae Oliver Davis......................................    54

 
                      HUD OVERSIGHT: TESTIMONY OF
                       THE HUD INSPECTOR GENERAL

                              ----------                              


                        Wednesday, June 21, 2023

             U.S. House of Representatives,
                            Subcommittee on Housing
                                     and Insurance,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:22 p.m., in 
room 2128, Rayburn House Office Building, Hon. Warren Davidson 
[chairman of the subcommittee] presiding.
    Members present: Representatives Davidson, Luetkemeyer, 
Fitzgerald, Garbarino, Flood, Lawler, De La Cruz; Cleaver, 
Velazquez, Tlaib, Garcia, Williams of Georgia, and Pettersen.
    Ex officio present: Representative Waters.
    Chairman Davidson. The Subcommittee on Housing and 
Insurance will come to order.
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time.
    Today's hearing is entitled, ``HUD Oversight: Testimony of 
the HUD Inspector General.''
    I now recognize myself for 5 minutes to give an opening 
statement.
    Today, the subcommittee will hear from the Inspector 
General of the U.S. Department of Housing and Urban Development 
(HUD), the Honorable Rae Oliver Davis. We welcome your 
testimony today, and thank you for all your work to ensure that 
HUD operates more effectively for the people it serves and the 
taxpayers who fund its programs. Indeed, it is no small task to 
oversee an agency like HUD with a long-documented record of 
waste, fraud, abuse, and mismanagement.
    Most recently, the Office of Inspector General reported 
that it found $950 million in HUD funds that could be 
redirected, and recovered $49 million in overdue collections. 
Your office has also made numerous recommendations that, if 
executed, would save taxpayers tens of billions of dollars. In 
addition, Ms. Oliver Davis, your team pursued enforcement 
actions that resulted in 51 criminal convictions, 5 civil 
actions, 12 government debarment actions, and $28 million in 
restitution and judgments, and that's an impressive record. 
These actions saved taxpayers money and helped protect the very 
people HUD is supposed to be helping, which is why we have 
proposed legislation along with this hearing to make the IG's 
appearance before this committee an annual event.
    And the work of the Inspector General has only gotten 
tougher, more complicated, and even more essential in recent 
years. HUD's annual budget has grown from $44 billion in 2015 
to $75 billion today, a 70-percent increase. Further, as a 
result of the spending on natural disasters as well as COVID, 
HUD now manages over $100 billion in Federal grants. That is a 
staggering amount.
    And as you reported, Ms. Oliver Davis, HUD has had numerous 
challenges in overseeing grant money for programs like the 
Community Development Block Grant for Disaster Recovery, or 
CDBG-DR, as it is known. Community Development Block Grants for 
Disaster Recovery is now HUD's single-largest grant, and 
believe it or not, it is a program that has never been formally 
authorized by Congress. In fact, most of HUD's programs are 
funded each year but remain unauthorized. These include 
programs for the nation's most-vulnerable populations, such as 
public housing, Section 8, and health and safety programs. It 
is a problem that I believe this subcommittee must address to 
ensure that HUD receives proper oversight.
    A lapse in authorization is also a lapse by Congress in 
providing the scrutiny that HUD, of all agencies, needs. It is 
clear to me that we must take a closer look at HUD's management 
organization structure and the way it operates. Creating a 
smarter, better-run, and more-efficient HUD should be a goal we 
all share, which is why I have proposed setting up a new 
bipartisan independent commission to study what works and what 
does not work within HUD's current organization. And they would 
report back to Congress on how we can streamline HUD's 
operations to better get productivity and the actual outcomes 
that we see for the same kinds of dollars we are currently 
spending.
    Thankfully, however, we are able to hear from the Inspector 
General today, whose boots on the ground at HUD have done 
important work in highlighting some of the Agency's most-
serious deficiencies. Notably, Ms. Oliver Davis and her team 
have found a shocking abundance of health and safety concerns 
in HUD-assisted properties. For example, one report identified 
almost 33,000, ``life-threatening exigent health and safety 
issues in public housing.'' These homes should be safe for 
their residents. Another identified poor physical conditions in 
multifamily housing developments as well as the failure of HUD 
to flag these conditions. And yet another one reported 
inadequate oversight of the lead-based remediation in HUD 
properties, a particular problem for young children who are 
susceptible to the harmful effects of lead. This is 
particularly concerning as HUD's core mission as a Federal 
agency is to provide decent, safe, sanitary, and affordable 
housing.
    I expect that HUD will do everything in its power to 
immediately address these failures that the IG has identified, 
and it is, quite honestly, unacceptable if they do not do so 
because lives are indeed at stake. All of this only shines a 
light on why the testimony and the work of the HUD Inspector 
General is so critical.
    Ms. Oliver Davis, we look forward to hearing your remarks 
and working with you on ways to address these and other issues 
for what I would say is an agency with significant challenges. 
Thank you.
    And I now recognize the ranking member of the subcommittee, 
Mr. Cleaver, for his remarks.
    Mr. Cleaver. Thank you, Mr. Chairman. Before I get into my 
remarks, let me say that I do agree that maybe we should spend 
some time looking at programs, looking at those that work and 
those that can be improved, and the chairman and I have had 
this discussion. Housing is less affordable today than it has 
been in the last, well, forever. This is true for both rental 
housing and homeownership, and the lack of affordable housing 
has fueled a national crisis of housing and homelessness.
    HUD is on the forefront in trying to respond to the 
devastating impacts of this crisis through the pursuit of 
transforming housing and community building policies and 
programs with the mission of creating strong, sustainable, and 
inclusive communities, and quality affordable housing. The HUD 
Office of Inspector General plays an important role in 
advancing the integrity, efficiency, and effectiveness of these 
policies and programs.
    We are fortunate to have this perspective today from our 
Inspector General, the Honorable Rae Oliver Davis. And before I 
proceed any further, I want to take some time to just say I 
think your report is very valuable to us. But the memo that my 
Republican colleagues put forth looks at funding trends between 
Fiscal Years 2017 and 2023. First, rather than 5 years, this 
would be a period of 7 years. That is a small, but very 
important detail. Second, the increase from Fiscal Years 2017 
to 2023 in regular appropriations, not accounting for emergency 
funding, would be $20.4 billion. More than half of this 
increase was driven by increases in per-unit costs to renew 
existing subsidies, which are primarily driven by increasing 
rents in March of 2017, when average monthly cost of a voucher 
was $682 per month. In March 2023, it was $896 per month, 
according to HUD. That is a 30-percent increase in rent cost 
from 2017 to 2023.
    This cost increase is the result of inaction on the 
affordable housing crisis by Congress, including the inability 
to pass any of a number of bills that Democrats have put 
forward to lower costs. I am pleased that this week, under the 
leadership of Full Committee Ranking Member Maxine Waters, 
Congress has again seen the introduction of the Housing Crisis 
Response Act, the ending of homelessness through the Ending 
Homelessness Act, and the Downpayment Toward Equity Act. It is 
my continued hope that this committee can find bipartisan 
support on a housing bill of substance during this term.
    Another $2.98 billion of the increase in funding for HUD 
from Fiscal Year 2017 to Fiscal Year 2023 is attributable to 
congressional-directed spending, earmarks, whatever you want to 
call it, which were not funded in Fiscal Year 2017 but were 
funded at $2.98 billion in Fiscal Year 2023. These two factors, 
rental assistance costs and earmarks, account for most of the 
increased funding for HUD since Fiscal Year 2017, 65 percent of 
the increase, excluding emergency rental assistance.
    Despite increased funding at HUD, several challenges 
remain. In the period between 2012 and 2019, the number of 
full-time equivalent employees at HUD declined from 8,576 to 
6,837. This was a reduction of 20 percent and presented serious 
risks to HUD's ability to deliver on its mission. President 
Biden's Fiscal Year 2024 budget requests funding for 8,635 
full-time employees, which is still below the capacity of the 
Agency in 2012. As noted in testimony, a common theme in HUD 
OIG oversight findings has been that HUD does not have the 
capacity necessary to address the challenges it faces, and that 
the Department is underfunded and understaffed. And while the 
memo put out by my Republican colleagues points out that HUD 
had 985 outstanding recommendations open from OIG, we should 
also note that that number is down from 2,335 in 2027, a 
reduction of more than half.
    Mr. Chairman, I will forego the remainder of my comments 
and use them during the question-and-answer period. Thank you.
    Chairman Davidson. I thank the ranking member.
    Today, we welcome the testimony of HUD Inspector General 
Rae Oliver Davis. She was sworn in as the Inspector General for 
HUD on January 23, 2019. Previously, she served as the Acting 
Assistant Inspector General at HUD, and prior to that, as the 
Chief Investigative Counsel for the Office of the Special 
Inspector General for the Troubled Asset Relief Program. She 
earned her juris doctor degree from the University of Memphis. 
We thank her for taking the time to be here here.
    Inspector General Oliver Davis, you are now recognized for 
5 minutes to give your oral remarks. And without objection, 
your written statement will be made a part of the record.

STATEMENT OF THE HONORABLE RAE OLIVER DAVIS, INSPECTOR GENERAL, 
     U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD

    Ms. Oliver Davis. Good afternoon, Chairman Davidson, 
Ranking Member Cleaver, and members of the subcommittee. Thank 
you for inviting me to testify about my office's oversight of 
the U.S. Department of Housing and Urban Development.
    HUD plays a critical role in the American economy, 
providing billions of dollars for rental assistance, preventing 
homelessness, and recovering from disasters, as well as 
ensuring trillions of dollars from mortgage insurance and 
guaranteeing trillions of dollars in housing finance. The 
stakes are high for HUD and its 40,000 program participants if 
they do not deliver their significant economic and health 
impacts on communities and vulnerable families.
    The supply of affordable housing has reached unthinkable 
levels and many low-income families have been waiting for 
vouchers to help them find a home to rent. What is available 
has fallen into disrepair, exposing residents to health hazards 
like mold, infestations, lead-based paint, or collapsing 
structures. Communities ravaged by natural disasters have been 
waiting years for HUD funding to help them recover and build 
back stronger.
    HUD faces significant challenges in executing its programs, 
many of which are longstanding, because they are complex and 
the solutions are not easy. For example, there is a well-known 
backlog of deferred maintenance in America's public housing 
stock, which is the root cause of many physical condition 
problems in those buildings, and there is not enough funding 
available to fix these problems. HUD cannot control that, but 
it can control how it oversees public housing authorities 
through the inspection process, and HUD can control how it 
monitors the remedying of deficiencies found during 
inspections.
    We recently issued reports which found that HUD needs to do 
more to ensure that inspections happen timely and that those 
with historically-poor scores receive priority for inspections. 
We also found HUD's field offices need to be more consistent in 
their oversight of the housing authorities' handling of 
emergency health and safety findings and inspections. Oversight 
of housing authorities and other program participants is a 
major key to HUD success. HUD must ensure that they execute 
effectively, efficiently, and with integrity.
    HUD is also facing enterprise-level challenges. HUD 
staffing has decreased over the years, while its program 
responsibilities have grown. Many of its experts are retiring, 
which strains the support that it provides participants and 
threatens their customer experience. HUD has also been uniquely 
challenged in managing IT modernization and cybersecurity 
efforts, resulting in too many of its programs running on old 
systems that were not built for today's business world and are 
not optimized to gather the right information or to protect it.
    My office's approach is to focus on the spaces that HUD can 
and should control and help them to deliver the best they 
possibly can. Since becoming the HUD Inspector General, my goal 
has been to make a difference and our strategy is centered on 
that goal. Last year, we released our first Priority Open 
Recommendations Report highlighting the open recommendations 
that could have the greatest impact. This effort helped push 
HUD to bolster its oversight of assisted housing near 
contaminated sites, strengthen its hiring process, close gaps 
in the cybersecurity framework, and enhance its strategy for 
increasing utilization of vouchers.
    HUD deserves recognition for this significant progress, but 
there is more work to be done. Looking forward, areas of focus 
for my office are safety hazards in assisted housing and fraud 
risk management. We are attacking safety hazards in assisted 
housing at the community level by reviewing unit conditions and 
lead hazard management at housing authorities across the 
country. We have increased criminal investigations into bad 
actors in this space, targeting landlords, contractors, and 
inspectors who knowingly fail to follow environmental and 
safety requirements or who sexually assault or harass tenants.
    We have also recommended that HUD review fraud risk in each 
of its programs and enhance controls that prevent fraud. HUD's 
historical position has been that its grantees are primarily 
responsible for managing fraud risk. Our oversight has shown 
that many grantees struggle in this area, especially those 
responding to disasters, that are already challenged in 
building capacity and establishing strong internal controls. We 
have launched our own audits to review fraud risk and 
management practices at the Puerto Rico Department of Housing, 
which is currently overseeing $20 billion in HUD funding, as 
well as several entities that received pandemic emergency 
solution grants. Congress appropriated, overall, $4 billion for 
this program during the pandemic, which represents a 1,391-
percent increase in funding for these grantees.
    As we continue to fight fraud, waste, abuse, mismanagement, 
and misconduct in HUD's programs, we look forward to working 
with this committee to help HUD improve its delivery for 
Americans, and I look forward to answering your questions 
today.
    [The prepared statement of Inspector General Oliver Davis 
can be found on page 28 of the appendix.]
    Chairman Davidson. Thank you, Ms. Oliver Davis. We will now 
turn to Member questions. And I recognize myself for 5 minutes 
for questioning.
    Ms. Oliver Davis, as I noted in my opening remarks, almost 
every single HUD program is funded but technically 
unauthorized, which means that they are not receiving the 
proper scrutiny from Congress. Your office has conducted 
numerous audits, investigations, and other actions that further 
demonstrate a critical need for actual oversight.
    For example, in one of your reports published last month, 
you noted that HUD was in violation of the Payment Integrity 
Information Act of 2019 when they failed to report improper and 
unknown payment estimates for the Office of Public and Indian 
Housing's Tenant-Based Rental Assistance Program and the Office 
of Multifamily Housing's Project-Based Rental Assistance 
Program. From my position, it is frustrating, because Congress 
passed this law and HUD simply hasn't abided by it.
    There are other programs going on in D.C., and thankfully, 
the D.C. Inspector General uncovered an example that clearly 
has criminal implications, where the D.C. Public Housing 
Authority was forgiving rental payments, not collecting money 
that is owed to HUD, i.e., the American taxpayers, and then 
charging others in excess of the amounts owed, and it is not 
clear from anything I have read that HUD is actually taking 
action to do anything about it.
    So I applaud your work, Ms. Oliver Davis, for highlighting 
the problems like this that are going on, but I think that is 
the tip of the iceberg.
    When I think about the challenges of HUD, America broadly 
supports a social safety net, and HUD offers one of the most 
important ones--housing, a place of shelter and a core need for 
just human survival--and it doesn't do as good a job at it as 
we think they could, and I think that is bipartisan. A lot of 
people will say, if you have these concerns, Republicans simply 
want to cut spending. Well, that is not entirely true. We 
support the idea of a social safety net. And frankly, if 
Republicans are accusing Democrats, they will say that you just 
want more free stuff for more people, and that is not entirely 
true. They would just want people to not have the need in the 
first place, ideally, but there are needs and there are 
challenges.
    And that is why I hope that we can get one of the bills 
that we noticed for this hearing across the finish line, which 
would create a commission with two Republicans, and two 
Democrats, and give them a period of time to work together. And 
it takes off the table the scary things, that we are going to 
somehow cut funding, or that we are going to somehow launch 
more free stuff for more people and expand the scope of the 
programs.
    What would they do? My hope is, and I think the ranking 
member's hope is, that they would make the program better so 
that by the end of this 118th Congress, we could have passed a 
bill that not only addresses the authorizations for HUD that 
have lapsed, but it prioritizes the things that are most 
needed, that it maybe addresses benefit cliffs, maybe 
simplifies the role for the social worker who would sit down 
with someone in need of assistance, who would then look at a 
simple income and asset test versus a patchwork and what have 
you. Surely there are ways to make the system work better for 
the people that it is supposed to serve. Surely there are ways 
to manage the maintenance budget more effectively so that the 
houses are properly maintained.
    I had someone tell me that they believed that the New York 
City Housing Authority (NYCHA) could be run better as a literal 
commune because at least the people who lived there would fix 
the place. I don't know how that goes. We may have field 
hearings to kind of look at some of these situations around the 
country.
    But, Ms. Oliver Davis, when you look at what HUD does, what 
do you think they do best?
    Ms. Oliver Davis. Thank you for that question. You touched 
upon a number of topics that are quite important to my 
organization, our oversight. In terms of what HUD does well, 
that is something we are always striving to accomplish on our 
oversight is give credit where credit is due and make sure that 
we highlight places where HUD has made progress.
    I would note it is a vast mission. As I said in my opening 
statement, there are 40,000 program participants that help HUD 
carry out that mission, so it is not without its challenges. 
And especially when we look at capacity challenges, like we 
have been talking about, in terms of what HUD does well, I 
believe the ranking member flagged the closure of 
recommendations. We have worked very closely with HUD. We had 
over 2,000 outstanding recommendations when I became Inspector 
General, and that is something that HUD has worked very hard 
on. In addition, they are closing what I would call priority 
recommendations. We issued our first Top Priority 
Recommendations Report last year in order to focus the 
leadership on what is truly important.
    Chairman Davidson. Thank you, and I will have to get more 
information from you in writing for the record, since my time 
has expired.
    I now recognize the gentlewoman from New York, Ms. 
Velazquez, for 5 minutes.
    Ms. Velazquez. Thank you, Mr. Chairman, and I am happy to 
hear you saying that you support the safety net, and I believe 
you. But when we look at the Appropriations Committee, the 
Republicans on the Appropriations Committee approved an 
estimated $131-billion cut to the topline spending level for 
Fiscal Year 2024, effectively cutting next year's Federal 
spending to Fiscal Year 2022 levels. Under the Republican 
proposal, HUD programs will be cut by over $22 billion, more 
than a 25-percent cut from Fiscal Year 2023 levels. In a letter 
to Ranking Member DeLauro, HUD Secretary Fudge said that almost 
1 million tenant-based and project-based Section 8 participants 
will lose their assistance. HUD's public housing operating fund 
will face a 78-percent cut, and almost 100,000 people 
experiencing homelessness will lose their assistance.
    Inspector General Oliver Davis, your report on HUD's top 
management challenges highlights ensuring access to and the 
availability of affordable housing as a top challenge for the 
Department for Fiscal Year 2023, specifically citing preserving 
its aging housing stock as a significant concern. As you know, 
the public housing capital backlog is currently estimated at 
more than $70 billion. In your view, is there a correlation 
between this capital repair backlog and HUD's ability to meet 
this critical management challenge?
    Ms. Oliver Davis. I believe that there is certainly a 
crisis in public housing. The capital backlog, as you pointed 
out, is in the billions of dollars. Funding has not kept pace 
with the need there, so certainly that will affect conditions 
going forward. Funding cuts, as you mentioned, will be the 
responsibility of the Secretary, certainly, to prioritize and 
to figure out, frankly, what to do should those funding cuts 
come down the pike. My oversight is definitely focused on what 
can HUD do with what it has, certainly, and I think that is an 
area where HUD is struggling. It is struggling in its oversight 
of public housing and its program participants.
    Ms. Velazquez. So what you are saying is that if HUD was 
appropriated more money to address the deterioration of its 
public housing infrastructure, it could address this challenge?
    Ms. Oliver Davis. I don't think it would be reliant solely 
on HUD. Public housing authorities (PHAs) don't get their 
funding solely from HUD. So, there will be a lot of judgment 
calls down the road on how to address those capital needs as 
well as the health and safety concerns in those housing 
projects.
    Ms. Velazquez. Inspector General, your testimony also 
highlights decreasing utilization of the Section 8 Program as a 
top management challenge for HUD in Fiscal Year 2023, 
specifically stating that more than 191,000 authorized vouchers 
were unused and unfunded, but that HUD would need additional 
appropriations to utilize these vouchers. Could you explain 
this finding?
    Ms. Oliver Davis. We focused on voucher utilization because 
it is a key part of rental assistance. It is a key part in 
ensuring that we have affordable housing. Given the capital 
improvements and the aging public housing stock, the natural 
answer is to segue to the private sector and define rental 
assistance for individuals. So, we found that work to be very 
impactful in terms of the success of rental assistance.
    Our recommendation was that HUD look at optimizing the 
program, that they look at whether or not they had the 
legislative authority to reallocate funding from one section to 
another. There are some areas where vouchers are going unused 
and others where they simply don't have enough. HUD has since 
closed out that priority recommendation. They have issued 
guidance on optimizing the program. They have several things 
that they are exploring, and we will look for the 
implementation of that to see how it goes.
    Ms. Velazquez. Thank you for that answer. I just would like 
to say to my colleagues on the other side that it is unfair to 
starve a department of resources and then criticize it for not 
meeting its mission. I yield back.
    Chairman Davidson. The gentleman from Missouri, Mr. 
Luetkemeyer, who is also the Chair of our Subcommittee on 
National Security, is now recognized for 5 minutes.
    Mr. Luetkemeyer. Thank you, Mr. Chairman. And welcome, Ms. 
Oliver Davis, to our committee today, and thank you for the 
good work of your team.
    This hearing is probably one of the most important we have 
all year from the standpoint that hearing from you and reading 
your report enables us to do our job, which is to provide 
oversight over the HUD and its programs, and you are an 
integral part of that oversight. Thank you for what you do and 
for being here today. With that being said, did you do any sort 
of oversight or counting of noses on how many people actually 
show up for work every day at HUD?
    Ms. Oliver Davis. Congressman, we have not done any work on 
that. We did some work initially on HUD's capacity during the 
pandemic to go into full telework mode, but we have not done 
any sort of look into who is coming back into the office at 
this time, no.
    Mr. Luetkemeyer. Okay. Thank you. It is a really important 
question from the standpoint that we see a lot of agencies that 
still have way, way, way too many people working from home, and 
it really hurts the efficiency of the agencies. So, thank you 
for that.
    With regards to grant management, you talked a little bit 
about that, I think--in your testimony, you talk about HUD's 
challenges in overseeing over $100 billion in Federal grants, 
and that your office found that HUD had difficulty ensuring 
that grantee expenditures are eligible and supported, as well 
as requiring complete financial and performance information. 
You also found that HUD struggled with spending these funds in 
a timely fashion, a particular problem considering the billions 
of dollars in disaster grants that HUD is responsible for 
managing as part of the Community Development Block Grant 
Program. In your opinion, does HUD have the capacity and 
competence to effectively oversee such enormous levels of 
spending through these Federal grants?
    Ms. Oliver Davis. Congressman, I think HUD's capacity is 
quite limiting, and it is limiting----
    Mr. Luetkemeyer. Is quite what?
    Ms. Oliver Davis. I think HUD's capacity is quite limiting, 
and it is limiting throughout their portfolio. Whether we are 
talking about grants or we are talking about public housing or 
voucher assistance, frankly, it is one of the number-one----
    Mr. Luetkemeyer. When you say capacity to do this, they 
don't have the people with the capabilities of doing this, they 
don't have the training? What is the problem with their 
capacity to handle the problem?
    Ms. Oliver Davis. When we talk to external stakeholders 
about HUD's capacity, they say that the skills are concentrated 
in particular parts of HUD's workforce, some of whose employees 
are about ready to retire. We have recommendations about IT 
solutions that will require money. That is capacity. We have 
attrition of individuals that I think has already been 
discussed in the committee. They have attrition of 13 percent 
over 10 years at HUD. So, there is a shortage of capacity in 
terms of all of the oversight that we are talking about. I 
would call it the number-one management challenge, frankly.
    Mr. Luetkemeyer. That begs the question, if they don't have 
the capacity to do this and they are handling over $100 
billion, what should we do differently? Should we restrict 
their ability to do this, since they are not doing it? One of 
my questions here shortly is with regards to fraud risk 
management, if they can't do fraud risk management, we are just 
throwing money off a roof and hoping some of it lands in 
somebody's hands. Is that a fair characterization here?
    Ms. Oliver Davis. There has to be prioritization, 
certainly. HUD has to do the best it can with what it has. In 
terms of fraud risk management, there are some things that they 
can do that will not require additional bodies. Now please, 
keep in mind, I have not done a workforce assessment of HUD, 
but I can tell you, putting together a checklist at the program 
level of issues that a particular program has that makes it 
susceptible to fraud, that is something that can be easily 
accomplished, in my mind. It is something we are pushing the 
Department to do.
    Mr. Luetkemeyer. That brings up the question with regards 
to improper payments. It has been 9 years in a row now that we 
have seen HUD not be compliant with the Improper Payments Act. 
Is it going to turn around in the next 9 years? What do we need 
to do to get somebody to shake them by the shoulder and say, 
hey, things have to change?
    Ms. Oliver Davis. This is definitely a concern. We want HUD 
to be able to evaluate its programs, identify the risk from 
improper payments, get an estimate of improper payments, and 
then mitigate these things going forward. What it is going to 
take for the Tenant-Based Rental Assistance and the Project-
Based Rental Assistance, which is 40 percent of HUD's 
expenditures, is a technological solution. It is going to take 
them having a platform where they can take in tenant files, 
secure personally identifiable information (PII), and validate 
the information.
    Mr. Luetkemeyer. Ms. Oliver Davis, you have outlined to me 
here today that we don't have the management, the capacity to 
handle a $100-billion program here. So, how do we affect this 
program in a way that can be successful? If we are going to sit 
here and hope things change, hope is not a solution. That is 
not an effective strategy. Somebody is going to have to be 
answerable to this. There will have to be a shakeup someplace 
to go get things changed. Otherwise, nothing is going to happen 
except more money being wasted. Is that a fair assessment?
    Ms. Oliver Davis. I believe HUD has to focus. They have to 
have the modernization of their technology, and they have to 
focus on the improper payments, and they have to see fraud as a 
risk that----
    Mr. Luetkemeyer. Okay. So, what you are saying is we need 
change. Thank you. And thank you, Mr. Chairman.
    Chairman Davidson. The gentleman's time has expired. The 
gentlewoman from Michigan, Ms. Tlaib, is now recognized for 5 
minutes.
    Ms. Tlaib. Thank you so much, Mr. Chairman. And thank you, 
Inspector General Oliver Davis, for highlighting the outcome of 
not having capacity or the resources available for HUD to do 
its job or to be able to follow their mission. One of the 
things that you mentioned is mold. And you may have mentioned 
lead.
    I ask unanimous consent to submit for the record a July 
2020 news article entitled, ``Inkster Public Housing Exec Under 
Fire After Two Baby Deaths.'' The claim from the family, and 
there is an investigation going on, is that they were exposed 
to mold or to lead in that HUD home.
    Inspector General, the outcome of not having the capacity 
or the resources available for HUD to implement on the ground 
to protect the families who are in housing is very detrimental 
to the communities that I represent.
    You noted in your testimony that HUD has roughly 30 percent 
fewer employees than it did 10 years ago, and a common theme in 
your findings was that HUD does not have the capacity necessary 
to address the challenges it faces, even though we increasingly 
have seen the housing affordability crisis get worse every 
single year. Can you talk a little bit about the instances and 
what has resulted because of the lack of capacity that has 
prevented HUD from being able to effectively address the 
nation's housing challenges?
    Ms. Oliver Davis. Thank you for the question. I think that 
we are seeing capacity and a lack of capacity play out 
throughout HUD's portfolio, certainly in oversight. HUD has to 
rely on program participants to carry out its mission, whether 
we are talking about public housing, rental assistance, etc.. 
We are talking about grants, disaster relief, and they have to 
have oversight of those program participants, and they are 
really suffering in that respect.
    In terms of housing, we have quite a focus on unit 
conditions right now. I have launched an environmental 
initiative, looking at lead, looking at living conditions. I 
also have an initiative looking at sexual harassment in 
housing, but we have seen, quite frankly, failures time and 
time again and struggles with oversight in these areas. We have 
highlighted them in two recent reports that came out. We looked 
at the oversight of health and safety, corrective actions in 
public housing, and we found that HUD did not have a nationwide 
standard that they were rolling out to their field offices in 
order to hold people accountable for correcting these problems. 
They were not consistently tracking what we call emergency 
health and safety problems. And then, something that might not 
be deemed an emergency, they weren't tracking it at all.
    And we have problems with the inspection process. We have 
long since pointed out compromises in the Real Estate 
Assessment Center (REAC) inspection process, and recently we 
reviewed the timeliness, and they are really struggling in 
their timeliness. They are struggling with prioritizing the 
right properties to make sure they are reviewed, and that calls 
into question the annual inspections. All of the landlords have 
a requirement to do an annual inspection of their units, and 
the reason they have that requirement is because the REAC 
inspection has traditionally been a sample. HUD can't, and has 
never had the capacity to look at every unit, so we have to 
rely on the landlords to do that as well. So, all of this is 
being called into question.
    Ms. Tlaib. And some of the units, the majority of them, are 
under city housing commissions. How does that work? There is a 
city housing commission that oversees some of the operations in 
some of this housing. How are they interacting with HUD, 
according to your findings?
    Ms. Oliver Davis. I would be happy to talk with you, and, 
frankly, learn something about that from you, but what I know 
is that all of these program participants have to adhere to HUD 
standards. They have to produce housing that is safe, sanitary, 
and free of hazards, so that is something on which we are 
missing the mark.
    Ms. Tlaib. Also, for my colleagues to know, I read in, I 
think it might have been your report, that half of HUD's 
workforce is eligible for retirement in the next 5 years. Is 
that correct?
    Ms. Oliver Davis. I don't have that number in front of me. 
I did mention in my opening statement, though, that many are 
retirement-eligible. I think that is a government-wide problem, 
but it certainly will exacerbate HUD's capacity issue and, 
frankly, their expertise.
    Ms. Tlaib. According to the Congressional Research Service, 
from 2002 to 2019, HUD's regular non-emergency appropriations 
increased roughly 10 percent, adjusted to inflation, yet to 
take just one measure over the same nearly 2-decade period, the 
average sale price of a home has increased by 65 percent in the 
United States. How does your funding picture change if we zoom 
out to look at the past 2-plus decades? You can respond in 
writing for the record. Thank you.
    Ms. Oliver Davis. I may need clarification.
    Ms. Tlaib. Yes. I will submit the question to you in 
writing for the record.
    Ms. Oliver Davis. Thank you.
    Chairman Davidson. Thank you. The gentlewoman's time has 
expired. The gentleman from Wisconsin, Mr. Fitzgerald, is now 
recognized for 5 minutes.
    Mr. Fitzgerald. Inspector General Oliver Davis, thank you 
for being here today. I am concerned about GSEs taking market 
share from the Federal Housing Administration (FHA). It would 
obviously leave FHA with only the riskiest mortgages. And as we 
know, riskier mortgages need kind of commensurate controls to 
ensure that only eligible individuals receive FHA. Do you think 
there is a balance there or that enough is being done to 
protect taxpayers from these riskier mortgages at this point?
    Ms. Oliver Davis. FHA certainly has the distinction--its 
loans carry the full faith and credit of the government, so it 
is important that HUD does its best to manage risk against the 
mortgage insurance fund. It is the largest mortgage insurance 
fund in the world. We have looked at this issue with our audit 
work, and we have made some priority recommendations around 
this. We do see a remarkable amount of ineligible mortgages 
become approved for FHA insurance, and we have made some 
recommendations around flood insurance. We see individuals with 
delinquent tax debt. I think the number was $13 billion in 
loans that HUD insured with individuals who had delinquent tax 
debt. And for individuals with child support way up, an offset 
for child support as well. So this is definitely an issue, and 
it is something that we are hoping that HUD will shore up. Yes.
    Mr. Fitzgerald. The situation for the most part is that 
adults 25- to 35-years-old simply can't enter the housing 
market at this point, either because they can't get the 
downpayment, or because they are just being denied based on the 
level of income that they have. I know that HUD offers some low 
downpayment programs. If you look across-the-board of what HUD 
has available, are there certain things that you see as 
shortcomings right now or things that need to be changed to 
assist kind of this decade of adults who are completely unable 
to purchase a home at this point?
    Ms. Oliver Davis. I have those same adults in my family, 
and they are all talking to me about their struggles right now. 
Frankly, that would be something I believe the Secretary would 
be better suited to address in terms of what they are offering 
and how they are trying to reach individuals who are trying to 
accomplish homeownership at this time. I can't think of 
anything in the moment that I see as a real shortcoming. We are 
really looking at the rest of the fund. I am not aware of any 
programs that are causing risk right now outside of these 
eligibility issues to FHA.
    Mr. Fitzgerald. Yes. We talk about it kind of ad nauseam 
right now in Financial Services, because with everybody who 
comes before the committee, I try and raise a question, and I 
know other Members do as well, that obviously with 
homeownership being the cornerstone of building wealth in this 
country, if we continue to have these 25- to 35-year-olds who 
are being denied access to the market overall, there have to be 
some flexibilities built in.
    I guess what I would ask is, what is HUD's role in kind of 
encouraging more entry-level housing, and is this something you 
could work with financial institutions on as well, or how do 
you perceive this issue right now?
    Ms. Oliver Davis. I understand the concern. Our oversight 
hasn't touched that necessarily. We have been looking at the 
riskiest parts of HUD's portfolio and making recommendations 
there. I am not sure I am doing my best to answer your question 
here, but I think the Secretary would have some thoughts on how 
they can extend options for homeownership.
    Mr. Fitzgerald. Yes. In the minute I have left, there is 
kind of direct messaging that has been done to these 
individuals. It could be any of the social websites, it could 
be Instagram, or whatever it might be, where they specifically 
talk about the difference between a 35-year-old in 1995 
compared to a 35-year-old right now. The home they are trying 
to purchase is almost 4 times the price, and their ability to 
pay is not even close to being equal.
    I don't think anybody on the committee is trying to waive, 
and I certainly am not trying to waive any of the basic points 
that you would look at when you are trying to make a mortgage. 
But what we are trying to say is, I think that if there is a 
way to try and accommodate or to make changes to programs that 
would allow them the ability to get into the market--there are 
a lot of different programs obviously in the private sector, 
but certainly, FHA should be aware of this and should be 
working on it.
    Ms. De La Cruz. [presiding]. Thank you. The gentlewoman 
from Georgia, Ms. Williams, is now recognized for 5 minutes.
    Ms. Williams of Georgia. Thank you, and thank you, Ms. 
Oliver Davis, for coming before the committee today, and for 
upholding your responsibility to keep the Department of Housing 
and Urban Development accountable since you took office.
    It is disappointing to hear some of my colleagues on the 
other side of the aisle continue to complain about HUD programs 
and the management of the Agency, when nearly 2 years ago, in 
late October of 2021, we held a hearing to discuss the housing 
provisions of the Build Back Better Act. It was an opportunity 
to replace the dollar signs with faces, real people, to really 
see how much it will harm the people that we are sent here to 
represent. To not make these investments was devastating for a 
lot of people that I represent in Atlanta. To see the human 
impacts of the decisions that we make here in Washington should 
weigh heavily on all of us.
    At that time, 39 percent of all individuals experiencing 
homelessness in our country were Black. We are only 12 percent 
of the U.S. population but 39 percent of Americans experiencing 
homelessness are Black. Two years later, we are seeing the 
consequences of abandoning the housing-related provisions of 
the Build Back Better Act. As of last month, over 1.8 million 
people reported that they were at risk of eviction or 
foreclosure within the next 2 months. Nearly 54 percent are 
Black or Latino.
    I consistently remind everyone who is willing to listen 
that the City of Atlanta, the heart of my district, has the 
widest racial wealth gap in the nation. And I just heard one of 
my colleagues on the other side mention how homeownership is a 
way to build that generational wealth, and without 
homeownership, and the provisions, and the policies, and the 
opportunities provided by your Agency, that racial wealth gap 
only continues to widen in my home district.
    What I have heard and read is that it is only going to 
continue to be more desperate for the people I represent until 
the Republican Majority joins with House Democrats to put 
people over politics, and actually look at faces and people, 
and not just numbers and dollar signs. There is a shortage of 
nearly 14 million homes for families to rent or purchase. And 
as a member of this committee, I am dedicated to not only 
filling that shortage, but ensuring that HUD has all the tools 
in its toolbox to ensure that families of color are not bearing 
the brunt of this housing crisis.
    Ms. Oliver Davis, it is concerning to me that the 
Republican Majority is fighting tooth and nail to roll back 
spending to levels that pre-date current housing costs and 
inflation. But if you ask any relative or anyone looking to buy 
a home in Atlanta, housing costs are still sky high, and there 
is no rolling back on those costs in sight. Returning to Fiscal 
Year 2022 funding levels will result in funding cuts to HUD 
programs, less affordable housing, and more families losing 
their homes.
    Ms. Oliver Davis, could you provide an analysis of the 
impact these funding cuts may have on HUD programs, 
particularly in terms of HUD's ability to address housing needs 
and provide assistance to vulnerable populations?
    Ms. Oliver Davis. Thank you for the question. I think the 
HUD Secretary is best-positioned to talk about how cuts could 
actually impact the Department. Certainly, in my oversight, we 
look at how HUD can do better with what it has. Look, less is 
less, right? Less money is going to translate into less aid. It 
is going to translate into less capacity overall. But in terms 
of where that money goes, how it is spent, I would have very 
little input or impact into that, but I believe the Secretary 
would certainly be able to speak to that.
    Ms. Williams of Georgia. Thank you. It is critical that we 
understand that slashing agency budgets prevents public 
servants from doing their jobs and serving our constituents. 
Anyone here who has talked to their casework teams knows that a 
fully-staffed and properly-funded agency is going to be much 
easier for both staff and constituents to work with. So far 
this Congress, the Majority has both failed to convene serious 
housing-related hearings and neglected to include homelessness 
or affordable housing in their oversight plan. This lack of 
focus, coupled with the absence of viable legislation and 
solutions, raises concerns about the Committee Republicans' 
ability to effectively tackle the challenges of affordable 
housing and the unhoused.
    Ms. Oliver Davis, in light of this, do you believe that the 
ongoing and proposed cuts to HUD, along with the Committee 
Republicans' focus on program oversight investigations, 
hindered the potential for substantial progress in addressing 
our nation's affordable housing and homelessness crisis?
    Ms. Oliver Davis. I would feel presumptuous trying to opine 
on the intent of the subcommittee and the oversight actions 
that it is taking, I truly would, but I appreciate the 
engagement. I appreciate the question.
    Ms. Williams of Georgia. Thank you so much. I have many 
more questions, but I am out of time, so I will submit them for 
the record. I yield back.
    Ms. De La Cruz. Thank you. The gentleman from Nebraska, Mr. 
Flood, is now recognized for 5 minutes.
    Mr. Flood. Thank you, Madam Chairwoman. Following up on 
Representative Luetkemeyer's questioning, HUD recently 
submitted their congressional budget justification to the 
Appropriations Committee. That justification recommended a 
$101.834-billion budget from Congress for Fiscal Year 2024, an 
increase of 35 percent over their enacted level in Fiscal Year 
2023. Now, it is not uncommon for any and every Federal agency 
to advocate for more funding from Congress. However, in the 
case of HUD, we are talking about an agency that recently had 
the responsibility of doling out large amounts of COVID-related 
assistance, such as the Rental Assistance Program, and does not 
have a great track record of conducting strict oversight of the 
funds that it disburses.
    Inspector General Oliver Davis, can you summarize the 
results of your office's audit of HUD compliance with the 
Payment Integrity Information Act of 2019 and the Office of 
Management and Budget's (OMB's) guidance for reducing improper 
payments?
    Ms. Oliver Davis. Thank you. This has certainly been a 
focus of our oversight. And what we really are hoping for here 
with the Department and their compliance with this Act is that 
they can take a look at their portfolio, identify areas that 
are susceptible for what we call improper payments, give an 
estimate of what they think those improper payments are likely 
to be, and then take action going forward to mitigate against 
those.
    What we found is that in one of HUD's largest grant 
programs, Tenant-Based Rental Assistance and Project-Based 
Rental Assistance, which accounts for about, I believe it is 60 
percent of the expenditures, and I apologize if I am incorrect; 
I will correct it for the record. But I believe it is 60 
percent of HUD's expenditures, that they can't arrive at an 
estimate, so they are identifying it as being at risk, but they 
can't test the full cycle of the payment.
    And what that means is they can say what HUD is paying to 
landlords because that is the payment that we are talking 
about, the money that goes to the program participants, but 
they can't say what happens after that. So, we can't look at 
the money that goes to the tenants and the expenditures, and we 
can't say for certain if those are appropriate payments that 
are being made. And HUD doesn't have a reliable platform to 
collect that information, secure it, and test it, and then give 
us an estimate for it.
    That is really what we are talking about. It has been 6 
years in a row. The last time they had an estimate on that 
particular pool of funding was 2016, and I believe the estimate 
then was $1.6 billion, so it is significant. It is a 
significant thing that we just don't know.
    Mr. Flood. To be clear, HUD was noncompliant with a law 
passed by Congress that was focused on preventing and reducing 
improper payments. Specifically, the OIG's audit found that HUD 
did not report improper and unknown payment estimates for 2 HUD 
programs that make up more than $41 billion in spending in 
Fiscal Year 2022. In other words, HUD is a long, long way from 
having the kind of tools necessary to catch fraudsters reliably 
in programs that make up more than 60 percent of its budget.
    Inspector General Oliver Davis, can you please walk us 
through what the problems are with HUD's implementation of the 
Payment Integrity Information Act requirements?
    Ms. Oliver Davis. Certainly. In one respect, it is 
technology. They need a platform that will collect tenant 
files, and secure PII that is contained in those files. They 
normally would be able to manually check that information if 
they were to go onsite and look at the files. They didn't do 
that during the pandemic. They are in the process of 
modernizing the Enterprise Income Verification (EIV) System, so 
I am hopeful they will get something there, but frankly, it is 
a technology issue. They need the right platform there. They 
need the right platform, and they just, of course, place 
importance on this and make it a priority.
    Mr. Flood. Would this be resolved with more resources or 
prioritizing resources inside the Agency currently? What do you 
think the hurdle is here?
    Ms. Oliver Davis. I think there has been significant 
discussion between my office and the Chief Financial Officer's 
(CFO's) office on improper payments. I think they are headed in 
a direction to modernize that platform and achieve this. They 
have made progress. The year before, we didn't have an estimate 
that we consider reliable from the Hurricanes Harvey, Irma, and 
Maria part of the money, which was also significant, but they 
have cleared that up. They have made strides there, so I 
believe we are headed in the right direction. I am certainly 
hopeful. It is important.
    Mr. Flood. Let me just say this. I appreciate your work as 
the HUD Inspector General. It is imperative that we ensure that 
taxpayer dollars are spent wisely and in concert with the 
requirements laid out by Congress. We need to ensure that money 
is getting into the hands of those who need it, not fraudsters 
who seek to manipulate the system. With that, I yield back.
    Ms. De La Cruz. Thank you. The ranking member of the 
subcommittee, the gentleman from Missouri, Mr. Cleaver, is now 
recognized for 5 minutes.
    Mr. Cleaver. Thank you, Madam Chairwoman. And I thank you 
again, Inspector General Oliver Davis, for being here. HUD is 
always being put in a tough situation, and I will try to do 
this quickly. We have been dealing for almost a year with a 
growing problem all over this country, in the suburbs, in the 
urban centers, and that is the theft. And I know that you have 
put out an OIG fraud bulletin, which means that you recognized 
the issue.
    The first case I dealt with came from a couple in their 
early 70s in Independence, Missouri, a suburb of Kansas City. 
They lost their home. It was stolen. They had to go out and 
hire an attorney to try to get their home back. I have met with 
local police, FBI, I met with officials in Dallas who called 
when they saw that we were dealing with the problem. It is 
exploding all over the country, $350 million in the fraudulent 
taking of homes all over the country. It is growing. And when 
you add the likelihood that we are going to start having cyber 
title theft, there is some of that already going on, so it is 
just going to get worse.
    So, we are in a situation, HUD needs to deal with the 
issue, and we need to deal with it right now. I have a bill, 
the Good Documentation and Enforcement of Estate Deeds (Good 
DEED) Act, designed to try to create at least the awareness, 
but it is going to cost $10 million, whatever a year. And then, 
if you say to HUD, this is an important program, people are 
losing their homes, but you have to take the $10 million 
somewhere else. You are squeezing the water in the balloon. We 
are going to have a problem. And I have become really concerned 
about this as Black, White, suburbs, urban, New York, Los 
Angeles, Hollywood--people are losing their homes.
    I know you are aware of it, but I don't think your office 
can handle it. I know you are dealing with it in terms of 
awareness, but what can be done? My bill puts the 
responsibility on HUD, but then it costs money, and so we say, 
well, we can't do this because it costs money. But thousands of 
people are losing their homes.
    Ms. Oliver Davis. You mentioned our fraud bulletin, and we 
attempt to issue those when there is something that is just so 
important that we need the public to know about it immediately. 
As soon as we started hearing about that scam, we issued that 
bulletin. I haven't studied, frankly, what HUD can do about it. 
I would love to learn more about that. I appreciate hearing 
about all of the various examples that your constituents are 
suffering from; it is a terrible thing. It is something I would 
have to investigate a bit more, talk to my staff about, but I 
would love to talk to you about it more.
    Mr. Cleaver. Yes, I know more about it than I want to 
know----
    Ms. Oliver Davis. I'm sorry.
    Mr. Cleaver. Because I have sat with a police captain in 
Kansas City and just mentioned this--you stopped getting mail, 
and you are thinking, well, I am going to be mad at the U.S. 
Postal Service. And then, you find out you are not getting mail 
because somebody has taken your name and your address, and they 
are now in control of your life, and all of that. I get excited 
about it because I have sat down and had this discussion with 
people crying because they lost their homes, and HUD needs to 
deal with it. I would love to have a conversation with you.
    Ms. Oliver Davis. Yes. Absolutely. I would welcome that.
    Mr. Cleaver. I yield back, Madam Chairwoman.
    Ms. De La Cruz. Thank you. The gentlewoman from Colorado, 
Ms. Pettersen, is now recognized for 5 minutes.
    Ms. Pettersen. Thank you, Madam Chairwoman, and thank you, 
Ms. Oliver Davis, for being with us today. My 3-year-old son's 
name is, ``Davis,'' so I am a big fan of your name and also a 
huge fan of your work.
    I just want to thank you for the critical work that you and 
your team are doing every day to support our most-vulnerable 
people, to support those first-time homebuyers. One of the 
programs specifically is very important to me, because my mom 
was one of the lucky ones who was able to qualify through the 
Housing Voucher Program. And it is because of that program that 
my mom was able to stay housed. She would absolutely not be 
alive today without that support, and I can only imagine how 
much money your Agency is saving the U.S. every day at the 
local level because of keeping people housed. I can say that 
she was one of the lucky ones, but my dad, unfortunately, was 
one of the ones who was denied because the wait list was so 
long in Colorado.
    I was surprised to see in a report that you submitted in 
November of 2020, that the estimate was that 62 percent of the 
public housing agencies had unused vouchers. So, I would love 
to talk about what you are doing to make sure that you can 
increase the number of vouchers being utilized and what you are 
doing to make sure that it is more appealing or what we can do 
to make sure it is more appealing for private owners.
    Ms. Oliver Davis. Thank you for pointing out our work. The 
Housing Choice Voucher Program is certainly important in going 
towards solving the affordability crisis that we see in this 
country. In terms of landlords, we have certainly recognized in 
our work that landlords often don't participate in this 
program. It is a problem in that just because someone gets a 
voucher, it doesn't mean for certain that they are going to get 
a home. And often, they have to relocate and go elsewhere to 
find the home away from family, away from their source of 
income, or simply away from their community where they want to 
be. So, there are challenges. I believe HUD is working to study 
landlord incentives for participating in the program. That is 
what we have learned during our work.
    In terms of the Housing Choice Voucher Program, we made a 
priority recommendation to the Department that they look at the 
vouchers that are going unused. They have closed out that 
recommendation. They have issued guidance that should help PHAs 
optimize their program with very specific tools. This is a new 
development and it is something that will look for the 
implementation of, and we are very hopeful that it reaches 
people who need these vouchers.
    Ms. Pettersen. Great. Thank you very much for that. And I 
know that something that you have covered in your testimony, a 
common theme in the oversight findings has been that HUD does 
not have the capacity necessary to address the challenges that 
you face. We know that we continue to ask you to do more. The 
needs are so great, but you are understaffed and underfunded, 
and your IT is significantly outdated. What would it look like 
if we actually invested in the work that we are asking you to 
do, and how different would those outcomes be if we did what we 
needed to on our side?
    Ms. Oliver Davis. I will echo my comments about capacity. 
HUD's capacity is strange. We hear that from external 
stakeholders, both stakeholders that represent housing owners 
and developmental entities, as well as people who represent 
tenant groups. We are hearing this from all across HUD's 
portfolio. I know through my work that they have technology 
challenges, and that itself is a capacity challenge and will 
take funding and prioritization to fix. The Secretary is really 
the best person, I think, though, to sit and talk about an 
influx of funding and how it might help her, but I can 
certainly speak to that in the realms of the risk that we see 
in our work as the oversight entity, certainly.
    Ms. Pettersen. We have a little bit of time left. What 
programs are you most proud of, that you think our constituents 
should know about?
    Ms. Oliver Davis. I am certainly proud of the work that we 
are doing overseeing the programs. HUD has a very, very, very 
important mission. I know if the Secretary were sitting here, 
she would have many things to say about her pride in the 
programs and what they are doing for the country. I certainly 
have pride in our work. We are trying to make HUD the best it 
can possibly be with our oversight. That is our goal, that is 
our mission at the end of the day, so that is what I would say 
I am most proud of; the people of HUD OIG are serving the 
community very well these days. They are making a very good 
impact on HUD's programs.
    Ms. Pettersen. Thank you very much. I yield back.
    Ms. De La Cruz. Thank you. The ranking member of the Full 
Committee, the gentlewoman from California, Ms. Waters, is now 
recognized for 5 minutes.
    Ms. Waters. Thank you very much, and I am very pleased 
about this hearing today because there are so many unanswered 
questions about housing. The one thing that we do know is we 
need more housing. We are in a crisis in this country. And I 
would like to ask in terms of your responsibility, usually I 
think of your capacity that you are looking at what happens 
inside HUD, what the personnel is doing, et cetera. I want to 
know, how far does that extend? For example, if you discover 
that vouchers are not being used, do you go so far as to deal 
with the issues about why they are not being used?
    There are some communities that discriminate. They do not 
want Section 8 vouchers in their community. We have that 
problem in Los Angeles County. Does your investigation go that 
far as to say, yes, we have vouchers that are unused, but let 
me tell you what we know about what is happening in, say, San 
Bernardino County?
    Ms. Oliver Davis. Thank you for the question. We certainly 
look at the effectiveness of the program, so we look at how 
effective the program participants are in carrying out HUD's 
mission. If we see something that falls within our purview to 
actually open an investigation, we will certainly do so. If we 
see something that would be a fair housing violation, that 
would be something for the Department to look at in their 
capacity, we would refer that to the Department as well. We are 
looking for any kind of wrongdoing or abuse or waste that 
touches these programs.
    Ms. Waters. Oh, that is very good to know. Let me raise 
another question. Do you know how long a person has to utilize 
that voucher? Is there not a cutoff date for the length of time 
they are holding that voucher?
    Ms. Oliver Davis. That is a very good question. I don't 
know the specifics of that.
    Ms. Waters. I think there is a problem there in that after 
a certain length of time, I think the voucher is no good. 
Please check that out, because if that is the case, we need to 
understand those communities where the housing is not easily 
available. And they need to look and look and look to find a 
landlord who will take that voucher, and that may take more 
time. So, would you take a look at that also, please?
    Ms. Oliver Davis. I will look into that. I would love to 
talk to you more about that to see if that is a far-reaching 
program. If you are having experiences with that, hearing about 
that from your constituents, I would love to hear about that.
    Ms. Waters. In addition to that, I heard you allude to the 
landlords and that there are complaints about the local housing 
authorities and how they manage their responsibility working 
with HUD. And there are some complaints about whether or not 
they are required to do too much in order to get a person in. 
For example, if they find a vacant apartment, if the person 
finds it and the housing authority has a responsibility for 
putting it in its top shape as mandated by HUD, what is being 
done to shorten that length of time, but ensure that it is safe 
and it is secure? Do you have any idea about things like that?
    Ms. Oliver Davis. Can I ask for clarification? Are you 
speaking about when they initially do an inspection before a 
tenant moves in?
    Ms. Waters. Yes, absolutely.
    Ms. Oliver Davis. Okay. I am aware that is what is supposed 
to happen, that a unit should be inspected before a new tenant 
comes in. I am aware of overall challenges with the inspection 
process and we are now aware of challenges with annual 
inspections on the part of landlords. I can't speak to that 
particular issue in my work, but I would love to hear more 
about that if you are aware of shortcomings there.
    Ms. Waters. What I would like to know is whether there is a 
certain time that the housing authority must get that tenant 
ready, get that apartment ready for the tenants, or can they 
take 3 months to do it or 4 months? Do they have to do it in 30 
days, and if it is not being done, is that part of what you do? 
I am asking you a lot of questions beyond what I think I have 
always thought you were supposed to do, but maybe you know more 
about it. How far does it go?
    Ms. Oliver Davis. I think those are great questions. They 
are things that I would like to know more about, but I confess, 
I don't know if there is a standard length of time that they 
have to inspect before a tenant enters a unit. I don't know 
that. That may very well be reflected in our work somewhere and 
I would want to get back to you on that.
    Ms. Waters. Thank you. We have three or four things we need 
to talk about and delve into. Thank you, and I yield back the 
balance of my time.
    Ms. De La Cruz. Thank you. I now recognize myself for 5 
minutes.
    Thank you, Inspector General Oliver Davis, for appearing 
before us today. As the Representative for a district that is 
predominantly Hispanic, and which also includes one of the 
poorest counties in the entire nation, I am deeply concerned 
about the Department of Housing and Urban Department's ability 
to consistently and safely execute its public housing mandate. 
Inspector, with a simple yes or no, does HUD have the 
capability today to ensure, on a consistent basis, that its 
grant programs are not exposed to instances of waste, fraud, 
and abuse?
    Ms. Oliver Davis. You are giving me a tall order here. I 
think it would be difficult to always ensure that grants are 
free of fraud. To me, it seems like something that is very 
difficult to do regardless of capacity.
    Ms. De La Cruz. With that being asked, is there a better 
way to steward the dollars, the taxpayer dollars, that are 
being used right now in HUD?
    Ms. Oliver Davis. There are several recommendations that we 
have made, that we deem priority, that would certainly help in 
that respect. We have what we call slow spenders in the world 
of grants, in the world of disaster relief, and those are 
entities that take a longer time to spend the money. We find in 
our oversight work that the longer funds hang out there, the 
more susceptible to fraud they become.
    So, we have made a priority recommendation for the 
Department to work more closely with grantees, to ask them for 
projections on spending and to hold them accountable when they 
don't meet those, and to work with them to find out why in 
order to set a course for a better future for that grant and 
that grantee going forward. So, that is something that we could 
do. We could work closer with slow spenders.
    Fraud risk management is something that I can't speak 
enough about; it is a very important activity that we are 
urging the Department to undertake. It is something they need 
to be doing at the program level. So if we are talking about a 
grant, the people who administer that particular grant, the 
people who get that particular program off the ground, are best 
suited to talk about fraud in that program and to put anti-
fraud measures in place. And to do the testing, again, the 
improper payment testing is crucial. All of these things go 
hand in hand, so yes.
    Ms. De La Cruz. What I am hearing is that currently, there 
is no system in place to see what type of fraud is happening in 
the grant programs. Has there been a study done?
    Ms. Oliver Davis. A study on particular types of fraud? 
Yes. We at HUD OIG, along with the Pandemic Response 
Accountability Committee (PRAC), which I serve on, did a series 
of audit work looking at fraud in virtually every program that 
was touched by the CARES Act and the American Rescue Plan, and 
we put together a fraud risk inventory for all of these 
programs. We identified dozens of risk factors, sometimes 60 
fraud schemes, so we have, in fact, put that information out 
there. We have urged HUD to use it in its own assessments of 
its programs, so yes.
    Ms. De La Cruz. And have they used those suggestions?
    Ms. Oliver Davis. I believe we are making progress in that 
area. We have talked about it quite a bit. I know that CPD, in 
particular, has made some strategic hires of individuals who 
have some anti-fraud backgrounds. I know that the CFO is 
interested in getting fraud risk assessments off the ground, so 
we are working towards that. However, our recommendations 
remain open, so it remains to be seen.
    Ms. De La Cruz. When were these recommendations made?
    Ms. Oliver Davis. They were made during the pandemic. I am 
taxing my brain for the exact date of those, but it was during 
the pandemic.
    Ms. De La Cruz. So, a couple of years ago?
    Ms. Oliver Davis. Within the last couple of years, we did 
that work, yes.
    Ms. De La Cruz. It is very concerning to me that when you 
all have done an internal audit, you have found, as you said, 
several cases of fraud, however, it has taken 2 years and you 
are still just talking about it. It is time that we implement 
these measures so that we can look for dollars that are being 
wastefully spent and use them to people who really need those 
dollars. With that, I yield back.
    I now recognize the gentlewoman from Texas, Ms. Garcia, for 
5 minutes.
    Ms. Garcia. Thank you, Madam Chairwoman, and thank you, Ms. 
Oliver Davis, for being here today. I understand that you are 
the first one in 5 years to come down and visit with us, so I 
hope we are both learning from each other today.
    One of the things that really struck me from the report 
that you gave us was the number of outstanding or open 
unimplemented recommendations from OIG audits: 985. That sounds 
like a lot today. How old are these items? Are they all these 
that weren't found last year or the year before? Have you aged 
these and determined how far back we have had them on the 
books?
    Ms. Oliver Davis. We have aged these. I don't have those 
numbers off the top of my head. I will tell you that we have 
closed many recommendations in the last 4 years. We 
concentrated first and foremost on some of the older ones, so I 
suspect that we are dealing with more recent recommendations, 
but I would want to get back to you on that exactly on how old 
some of these are. There may be some aged ones----
    Ms. Garcia. Can you tell us how many, where findings are 
unopened since before January 2021?
    Ms. Oliver Davis. I wish I could. I don't have those 
numbers in front of me, but I will certainly get those to you.
    Ms. Garcia. How long have you been Inspector General at 
HUD?
    Ms. Oliver Davis. Since 2019.
    Ms. Garcia. Since 2019, so you are familiar with many of 
these then?
    Ms. Oliver Davis. I am, and some of these certainly pre-
date me, and they span Administrations and policy changes 
certainly, yes.
    Ms. Garcia. So, some of these audit findings are not just 
within the last 28 months of the current Administration? These 
are carryovers, in fact, from the prior Trump Administration?
    Ms. Oliver Davis. I would expect we have some beyond that.
    Ms. Garcia. Because, in fact, you have actually had some 
findings about the lack of attention to some of these issues 
with Secretary Carson before Secretary Fudge. And some of these 
were management alerts for unreasonable delays in HUD OIG 
access to the Department's information, which caused OIG 
oversight efforts to be diluted, to become stale, or worse, 
halted entirely. Is that still an existing challenge? Have you 
been able to correct that with the current Administration? Are 
you getting timely information? Do they have the staffing 
requirements to be able to implement these, or what seems to be 
the problem?
    Ms. Oliver Davis. I have asked my staff to keep me abreast 
of any issues we have regarding access or delays in getting 
electronically stored information, and I have not been made 
aware of any.
    Ms. Garcia. So, you currently don't have any challenges 
with dealing with Secretary Fudge?
    Ms. Oliver Davis. Secretary Fudge and I meet regularly. We 
issued a joint cooperation memo. I think we have a workable 
relationship, certainly.
    Ms. Garcia. Right. And what are your plans to be able to 
reduce this backlog?
    Ms. Oliver Davis. We work on this all the time, frankly. 
This is a concentrated effort between us and HUD leadership. We 
have a number of teams. The CIO's team works with our people. 
The CFO's team works with our people to reduce these 
outstanding recommendations. We have done our first Priority 
Recommendations Report last year in order to really focus 
leadership on the things that we think are the most important, 
the things that we think should rise to the top. So, that is 
how we will proceed going forward.
    Ms. Garcia. And what criteria do you use for deciding what 
rises to the top? Is it based on the savings that you could get 
from some implementation, or is it the efficiencies to the 
programs, or is it better oversight on the management, or give 
me a sense of what criteria you use to establish it? When I saw 
the number, again, 985, that is almost a thousand.
    Ms. Oliver Davis. It was much larger than that.
    Ms. Garcia. You can't tell me today how many you have done, 
so in my mind, it is still a thousand until I get that letter 
from you telling me, no, we have already closed another 300, 
but 985 is a hell of a lot.
    Ms. Oliver Davis. It is a lot, and I appreciate your 
interest in that. I appreciate your interest in our efforts to 
close those recommendations. With the top recommendations 
report, we are really doing risk assessments constantly. That 
is how we decide what work to look at, is the riskiest parts of 
HUD's portfolio, so our top recommendations span the portfolio. 
There are things like lead hazards. There are things like 
radon. Those are certainly of the utmost importance. Then, 
there are things with a bigger risk, fiscal impact. We 
discussed earlier the ineligible loans that receive HUD 
insurance. Sometimes, those were in the $13-billion range. So 
really, each one is different, but they are very impactful and 
of the high-risk areas in the portfolio.
    Ms. Garcia. Okay. My time is running out, but I look 
forward to your document showing me the aging of the 985 and 
how many were inherited in January 2021.
    Ms. Oliver Davis. Okay.
    Ms. Garcia. Thank you.
    Ms. De La Cruz. Thank you. The gentleman from New York, Mr. 
Lawler, is now recognized for 5 minutes.
    Mr. Lawler. Thank you, Madam Chairwoman. Inspector General, 
the New York City Housing Authority, known as NYCHA, has a long 
history of mismanagement and corruption, which has created 
unsafe and unacceptable living conditions for thousands of New 
York City residents. In 2021, the Brooklyn District Attorney 
charged nine NYCHA contractors with bribery as part of a 
kickback scheme. Your office recently participated in an 
investigation that led to the sentencing of two NYCHA 
superintendents for accepting bribes from contractors. It seems 
that every time you turn around, someone tied to NYCHA goes to 
jail for one form of corruption or another.
    Inspector General, in 2019, New York City formally 
committed to addressing the serious problems with living 
conditions in NYCHA Housing as part of an agreement with HUD, 
the EPA, and the Southern District of New York. In your 
opinion, have they fulfilled this commitment?
    Ms. Oliver Davis. You are referencing the monitor that was 
assigned to NYCHA. We have not reviewed the activity of the 
monitor. We keep an eye on NYCHA. We look at their reports as 
they come out. We have a----
    Mr. Lawler. I'm sorry. To whom does the monitor report?
    Ms. Oliver Davis. That is a good question. I don't want to 
get out too far on the issue with the monitor and be incorrect, 
so I would have to get back to you on that.
    Mr. Lawler. Okay. But when you say that you have not 
reviewed any of the actions of the monitor, did HUD not enter 
into an agreement with NYCHA with respect to improving the 
living conditions of its residents?
    Ms. Oliver Davis. I believe HUD is a party to the agreement 
with the monitor. We, as the oversight agency, are not a party 
to that agreement. And when I say we didn't look at the 
monitor, we do look at the reports that the monitor puts out, 
and we take NYCHA into concern when we are looking at our work. 
We learn from NYCHA, and we have several investigations 
involving NYCHA, as you pointed out.
    Mr. Lawler. Who administers the Federal funds that go to 
NYCHA?
    Ms. Oliver Davis. HUD does.
    Mr. Lawler. So, you are telling me that we continue to 
administer Federal funds, NYCHA was party to an agreement with 
HUD, with the Southern District of New York, with the EPA, on 
serious problems with living conditions, and we haven't done 
anything to talk to the monitor? We haven't done anything to 
provide oversight of the serious failures of NYCHA?
    Ms. Oliver Davis. I confess, Congressman, I have not spoken 
to the monitor. Perhaps, I should speak to the monitor.
    Mr. Lawler. I would strongly recommend that when you leave 
here today, you might want to pick up the phone.
    Ms. Oliver Davis. Okay. And I would be happy to speak with 
you about this and learn what you know about this.
    Mr. Lawler. Oh, I can tell you, last year being part of the 
New York State Assembly, I voted down the New York City Public 
Housing Preservation Trust because it was nothing more than a 
scam. New York City Public Housing was changing the way that it 
was getting funding as part of this scam. It was using tenant 
protection vouchers instead of Section 9 so they can get more 
money. And yet, you are telling me not only are we giving them 
more money now, but we are not providing any oversight?
    Ms. Oliver Davis. I believe the monitor is providing 
oversight. I can't speak to the quality of that oversight, 
frankly. I can't. I can tell you we do investigations----
    Mr. Lawler. Whose job is it to investigate the quality of 
that oversight?
    Ms. Oliver Davis. I am not certain to whom the monitor 
reports. I will do my best to find out.
    Mr. Lawler. That is just remarkable. So given that, based 
on your testimony, you have not had any conversations with the 
monitor. You are, frankly, unaware of what the monitor has been 
doing. Is that what you are testifying today?
    Ms. Oliver Davis. We speak to the Department. I speak to 
the Southern District of New York. We ask for updates 
periodically, and we read the reports that come out, and we 
also conduct our own independent investigations and activities 
at NYCHA.
    Mr. Lawler. Okay. What independent investigations have you 
recently conducted that would answer my original question, 
which is, has NYCHA fulfilled its commitment to improve the 
health and living standards for its residents?
    Ms. Oliver Davis. We conducted an investigation of a lead 
worker at NYCHA, who was a whistleblower who came forward, and 
we uncovered hundreds of inspections at NYCHA that did not live 
up to the Lead Safe Housing Rule. They were falsifying 
documents. They were getting out of visual inspections because 
of the falsification of those documents, and it caused me to 
start my entire initiative looking at health and safety issues 
and public housing.
    Mr. Lawler. And yet, what HUD is doing is giving NYCHA more 
money, despite its failures to improve the living conditions of 
its residents. It is shameful, and I would strongly encourage 
you as the Inspector General to meet with the monitor 
immediately.
    Ms. De La Cruz. The gentleman's time has expired. I would 
like to thank our witness for her testimony today.
    The Chair notes that some Members may have additional 
questions for this witness, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to this witness and to place her responses in the record. Also, 
without objection, Members will have 5 legislative days to 
submit extraneous materials to the Chair for inclusion in the 
record.
    This hearing is now adjourned.
    [Whereupon, at 3:46 p.m., the hearing was adjourned.]

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