Mar.HUD Secretary Shaun Donovan Defends HUD ‘s FY2013 Budget Request
At a House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies hearing on March 21, members examined the Department of Housing and Urban Development’s (HUD) fiscal year 2013 (FY2013) budget request, presented by HUD Secretary Shaun Donovan. The hearing was sparsely attended and mainly focused on housing issues related to each member’s district.
In his opening remarks, Chairman Tom Latham (R-Iowa) criticized the ways in which HUD formulated its budget, specifically highlighting the use of the Federal Housing Administration’s (FHA) receipts in determining HUDs net spending level. He also expressed concern about renewals, pointing out that “for every dollar increase in public housing, you [HUD] have to cut $5 from other HUD programs.” Additionally Latham questioned the intent of the Obama administration’s 75 basis point increase on FHA mortgage premiums, citing recent reports by the Congressional Budget Office that the FHA’s premium increases will cost FHA borrowers more than $1 billion while doing “nothing” to drive more people to the private market.
“The only reason I could think of for the increase is to replenish your reserve fund and to use these receipts to pay for increased government spending,” he said, “and I think we would all agree that this is not the best way to budget.”
Donovan’s opening statement largely mirrored his, and Carol Galante’s, testimony before the Senate Appropriations Subcommittee three weeks ago. He said HUD’s FY2013 budget is $44.8 billion, an increase of more than $1.4 billion from FY2012. Of this, $9.4 billion is offset from projected FHA and Ginnie Mae receipts, leaving a net budget authority of $35.4 billion, or 7.3 percent below FY2012’s enacted level of $38.2 billion, he said, adding that as a result of the Mortgage Settlement Agreement, the FHA will receive over $900 million compensation for losses associated with loans originated outside of FHA requirements.
“The budget reflects the reality that we cannot create an economy built to last without taking responsibility for our deficit,” Donovan said, “and we are making investments to improve the infrastructure and technological systems critical to reforming the government to be leaner, more transparent, and ready for the 21st century.”
Donovan said HUD’s budget will be used to accomplish five goals: 1) Strengthen the nation’s housing market to bolster the economy and protect consumers by utilizing the $400 billion in loan guarantee authority of the Mutual Mortgage Insurance Fund (MMI Fund) and the $25 billion in loan guarantee authority for the General and Special Risk Insurance Fund (GI-SRI Fund) requested in the FY2013 budget, and continuing its loan modification efforts; 2) Meet the need for quality, affordable rental homes – 83 percent of HUD’s total FY2013 budget authority requested will provide rental assistance to over 5.4 million residents of HUD-subsidized housing, including public housing and HUD grants to homeless assistance programs; 3) Utilize housing as a platform for improving quality of life by providing homeless assistance grants, providing the elderly and disabled with housing services, and funding several veterans assistance programs; 4) Build inclusive sustainable communities free from discrimination through the Community Development Block Program, Choice Neighborhoods, the HOME Investment Partnership Program, and the Public Housing Capital Fund; and 5) Transform the way HUD does business through HUD’s Transformation Initiative, which coalesces fragmented HUD departments, provides for major evaluations of “key programs,” and allows HUD to update its 30-year-old technology and information management systems.
In closing, Donovan said HUD had to make “hard choices” when formulating its budget, but believes it can continue to provide the support the housing market needs while transforming how HUD operates.
Question and Answer
Latham asked Donovan when he expects the FHA to receive its portion of the Mortgage Service Settlement funds and the likelihood of receiving the funds due to objections to the settlement by affected investors. Donovan said there is a “very low” probability of the FHA not receiving its share of the Mortgage Servicer Settlement, which they expect to receive no later than May 1, 2012.
Rep. Steven LaTourette (R-Ohio) discussed his new legislation, H.R. 4210, the Restore Our Neighborhoods Act of 2012, that provides $4 billion for states and established land banks to issue 30-year demolition bonds to “demolish vacant, foreclosed and abandoned homes across the country.” He said the bill was a response to the restrictions on the use of Neighborhood Stabilization Program’s (NSP) funds for demolition, and asked Donovan whether he supported the intent of the legislation. Donovan said FHA has been granting waivers that allow municipalities to use a greater proportion of NSP funds for demolition, and noted that the administration’s Project REBUILD initiative addresses the issue of vacant or abandoned homes. However, Donovan pledged to work with LaTourette on his bill.
Reps. Mario Diaz-Balart (R-Fla.) and Charlie Dent (R-Pa.) expressed concern about the new formula used to calculate Community Block Development Grant (CBDG) dispersals. Donovan said the changes to the formula were “statutorily required” due to the updated census data. However, Donovan said the formula contains “several outdated elements” that have not “kept pace” with the situations that are occurring on the ground.
For testimony and a webcast of the hearing, please click here.
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At a House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies hearing on March 21, members examined the Department of Housing and Urban Development’s (HUD) fiscal year 2013 (FY2013) budget request, presented by HUD Secretary Shaun Donovan. The hearing was sparsely attended and mainly focused on housing issues related to each member’s district.
In his opening remarks, Chairman Tom Latham (R-Iowa) criticized the ways in which HUD formulated its budget, specifically highlighting the use of the Federal Housing Administration’s (FHA) receipts in determining HUDs net spending level. He also expressed concern about renewals, pointing out that “for every dollar increase in public housing, you [HUD] have to cut $5 from other HUD programs.” Additionally Latham questioned the intent of the Obama administration’s 75 basis point increase on FHA mortgage premiums, citing recent reports by the Congressional Budget Office that the FHA’s premium increases will cost FHA borrowers more than $1 billion while doing “nothing” to drive more people to the private market.
“The only reason I could think of for the increase is to replenish your reserve fund and to use these receipts to pay for increased government spending,” he said, “and I think we would all agree that this is not the best way to budget.”
Donovan’s opening statement largely mirrored his, and Carol Galante’s, testimony before the Senate Appropriations Subcommittee three weeks ago. He said HUD’s FY2013 budget is $44.8 billion, an increase of more than $1.4 billion from FY2012. Of this, $9.4 billion is offset from projected FHA and Ginnie Mae receipts, leaving a net budget authority of $35.4 billion, or 7.3 percent below FY2012’s enacted level of $38.2 billion, he said, adding that as a result of the Mortgage Settlement Agreement, the FHA will receive over $900 million compensation for losses associated with loans originated outside of FHA requirements.
“The budget reflects the reality that we cannot create an economy built to last without taking responsibility for our deficit,” Donovan said, “and we are making investments to improve the infrastructure and technological systems critical to reforming the government to be leaner, more transparent, and ready for the 21st century.”
Donovan said HUD’s budget will be used to accomplish five goals: 1) Strengthen the nation’s housing market to bolster the economy and protect consumers by utilizing the $400 billion in loan guarantee authority of the Mutual Mortgage Insurance Fund (MMI Fund) and the $25 billion in loan guarantee authority for the General and Special Risk Insurance Fund (GI-SRI Fund) requested in the FY2013 budget, and continuing its loan modification efforts; 2) Meet the need for quality, affordable rental homes – 83 percent of HUD’s total FY2013 budget authority requested will provide rental assistance to over 5.4 million residents of HUD-subsidized housing, including public housing and HUD grants to homeless assistance programs; 3) Utilize housing as a platform for improving quality of life by providing homeless assistance grants, providing the elderly and disabled with housing services, and funding several veterans assistance programs; 4) Build inclusive sustainable communities free from discrimination through the Community Development Block Program, Choice Neighborhoods, the HOME Investment Partnership Program, and the Public Housing Capital Fund; and 5) Transform the way HUD does business through HUD’s Transformation Initiative, which coalesces fragmented HUD departments, provides for major evaluations of “key programs,” and allows HUD to update its 30-year-old technology and information management systems.
In closing, Donovan said HUD had to make “hard choices” when formulating its budget, but believes it can continue to provide the support the housing market needs while transforming how HUD operates.
Question and Answer
Latham asked Donovan when he expects the FHA to receive its portion of the Mortgage Service Settlement funds and the likelihood of receiving the funds due to objections to the settlement by affected investors. Donovan said there is a “very low” probability of the FHA not receiving its share of the Mortgage Servicer Settlement, which they expect to receive no later than May 1, 2012.
Rep. Steven LaTourette (R-Ohio) discussed his new legislation, H.R. 4210, the Restore Our Neighborhoods Act of 2012, that provides $4 billion for states and established land banks to issue 30-year demolition bonds to “demolish vacant, foreclosed and abandoned homes across the country.” He said the bill was a response to the restrictions on the use of Neighborhood Stabilization Program’s (NSP) funds for demolition, and asked Donovan whether he supported the intent of the legislation. Donovan said FHA has been granting waivers that allow municipalities to use a greater proportion of NSP funds for demolition, and noted that the administration’s Project REBUILD initiative addresses the issue of vacant or abandoned homes. However, Donovan pledged to work with LaTourette on his bill.
Reps. Mario Diaz-Balart (R-Fla.) and Charlie Dent (R-Pa.) expressed concern about the new formula used to calculate Community Block Development Grant (CBDG) dispersals. Donovan said the changes to the formula were “statutorily required” due to the updated census data. However, Donovan said the formula contains “several outdated elements” that have not “kept pace” with the situations that are occurring on the ground.
For testimony and a webcast of the hearing, please click here.