[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
OVERSIGHT OF THE DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
MAY 20, 2004
__________
Printed for the use of the Committee on Financial Services
Serial No. 108-89
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96-527 WASHINGTON : 2004
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HOUSE COMMITTEE ON FINANCIAL SERVICES
MICHAEL G. OXLEY, Ohio, Chairman
JAMES A. LEACH, Iowa BARNEY FRANK, Massachusetts
DOUG BEREUTER, Nebraska PAUL E. KANJORSKI, Pennsylvania
RICHARD H. BAKER, Louisiana MAXINE WATERS, California
SPENCER BACHUS, Alabama CAROLYN B. MALONEY, New York
MICHAEL N. CASTLE, Delaware LUIS V. GUTIERREZ, Illinois
PETER T. KING, New York NYDIA M. VELAZQUEZ, New York
EDWARD R. ROYCE, California MELVIN L. WATT, North Carolina
FRANK D. LUCAS, Oklahoma GARY L. ACKERMAN, New York
ROBERT W. NEY, Ohio DARLENE HOOLEY, Oregon
SUE W. KELLY, New York, Vice Chair JULIA CARSON, Indiana
RON PAUL, Texas BRAD SHERMAN, California
PAUL E. GILLMOR, Ohio GREGORY W. MEEKS, New York
JIM RYUN, Kansas BARBARA LEE, California
STEVEN C. LaTOURETTE, Ohio JAY INSLEE, Washington
DONALD A. MANZULLO, Illinois DENNIS MOORE, Kansas
WALTER B. JONES, Jr., North MICHAEL E. CAPUANO, Massachusetts
Carolina HAROLD E. FORD, Jr., Tennessee
DOUG OSE, California RUBEN HINOJOSA, Texas
JUDY BIGGERT, Illinois KEN LUCAS, Kentucky
MARK GREEN, Wisconsin JOSEPH CROWLEY, New York
PATRICK J. TOOMEY, Pennsylvania WM. LACY CLAY, Missouri
CHRISTOPHER SHAYS, Connecticut STEVE ISRAEL, New York
JOHN B. SHADEGG, Arizona MIKE ROSS, Arkansas
VITO FOSSELLA, New York CAROLYN McCARTHY, New York
GARY G. MILLER, California JOE BACA, California
MELISSA A. HART, Pennsylvania JIM MATHESON, Utah
SHELLEY MOORE CAPITO, West Virginia STEPHEN F. LYNCH, Massachusetts
PATRICK J. TIBERI, Ohio BRAD MILLER, North Carolina
MARK R. KENNEDY, Minnesota RAHM EMANUEL, Illinois
TOM FEENEY, Florida DAVID SCOTT, Georgia
JEB HENSARLING, Texas ARTUR DAVIS, Alabama
SCOTT GARRETT, New Jersey CHRIS BELL, Texas
TIM MURPHY, Pennsylvania
GINNY BROWN-WAITE, Florida BERNARD SANDERS, Vermont
J. GRESHAM BARRETT, South Carolina
KATHERINE HARRIS, Florida
RICK RENZI, Arizona
Robert U. Foster, III, Staff Director
C O N T E N T S
----------
Page
Hearing held on:
May 20, 2004................................................. 1
Appendix:
May 20, 2004................................................. 61
WITNESSES
Thursday, May 20, 2004
Jackson, Hon. Alphonso, Secretary, Department of Housing and
Urban Development.............................................. 10
APPENDIX
Prepared statements:
Oxley, Hon. Michael G........................................ 62
Gillmor, Hon. Paul E......................................... 65
Harris, Hon. Katherine....................................... 66
Matheson, Hon. Jim........................................... 68
Ney, Hon. Robert W........................................... 70
Velazquez, Hon. Nydia M...................................... 73
Jackson, Hon. Alphonso....................................... 75
Additional Material Submitted for the Record
Frank, Hon. Barney:
National Association of Affordable Housing Lenders letter to
Assistant Secretary Liu, April 26, 2004.................... 93
National Conference of State legislatures letter to Senator
Sarbarnes, May 17, 2004.................................... 94
Section 8 Activity because of HUD's April 22 notice.......... 98
Section 8 Activity following HUD's May 18 Announcement of a
``Fix''.................................................... 102
Support letter for H.R. 4263 from various organizations, May
13, 2004................................................... 104
Wayne County Housing Authority letter, May 7, 2004........... 105
Watt, Hon. Melvin L.:
A Decade of Hope VI: Research Findings and Policy Challenges. 106
Jackson, Hon. Alphonso:
Written response to questions from Hon. Spencer Bachus....... 171
Written response to questions from Hon. Barney Frank......... 172
Written response to questions from Hon. Mark Green........... 174
Written response to questions from Hon. Katherine Harris..... 180
Written response to questions from Hon. Carolyn B. Maloney... 176
OVERSIGHT OF THE DEPARTMENT
OF HOUSING AND URBAN DEVELOPMENT
----------
Thursday, May 20, 2004
U.S. House of Representatives,
Committee on Financial Services,
Washington, D.C.
The committee met, pursuant to call, at 10:08 a.m., in Room
2128, Rayburn House Office Building, Hon. Michael Oxley
[chairman of the committee] presiding.
Present: Representatives Oxley, Baker, Royce, Ney, Kelly,
Green, Shays, Miller of California, Tiberi, Feeney, Hensarling,
Garrett, Barrett, Harris, Renzi, Frank, Waters, Sanders,
Maloney, Gutierrez, Velazquez, Watt, Carson, Meeks, Lee,
Inslee, Moore, Capuano, Hinojosa, Lucas of Kentucky, Clay,
Israel, Baca, Miller of North Carolina, Emanuel, Scott, Davis
and Bell.
The Chairman. [Presiding.] The committee will come to
order. The committee is meeting today to hear from the
Secretary of Housing and Urban Development on the operations of
the department and its budget request for fiscal year 2005.
Pursuant to rule 3(f)(2) of the rules of the Committee on
Financial Services for the 108th Congress, the Chair announces
that he will limit recognition for opening statements to the
Chair and Ranking Minority Member of the full committee and the
Chair and Ranking Minority Member of the Subcommittee on
Housing and Community Opportunity, or their respective
designees to a period not to exceed 16 minutes, evenly divided
between the majority and minority. Prepared statements of all
members will be included in the record.
The Chair recognizes himself for an opening statement.
Today, the Financial Services Committee welcomes the newly
confirmed Secretary of Housing and Urban Development, Alphonso
Jackson, on the occasion of his first time testifying as the
HUD Secretary. Secretary Jackson, congratulations on your
confirmation. We look forward to working with you to address
America's housing needs and to improve our nation's
communities.
The committee has jurisdiction over the budget for the
Department of Housing and Urban Development. The department
administers programs such as the Community Development Block
Grants, HOME, HOPE VI, public housing, section 8 voucher
programs, the Federal Housing Administration and the housing
goals for both Fannie and Freddie. Over the past few years,
this committee and the Administration have continued to seek
bipartisan ways to make existing housing programs work better.
In 2003, we enacted the American Dream Downpayment Act that
would benefit 45,000 new homeowners annually. The committee
enacted legislation to increase FHA multifamily loan limits,
which addresses the acute issue of affordable rental housing in
high-cost areas.
At a time when our homeownership rate is the highest ever
at 68 percent, President Bush has inspired us to make
homeownership happen for even more Americans. We must address
the lagging minority homeownership rates since less than 50
percent of African Americans and Hispanics are homeowners. The
zero downpayment legislation would allow zero downpayment loans
and financing of the settlement costs for an estimated 150,000
first-time homebuyers each year. I want to thank Congressman
Tiberi and Congressman Scott for introducing that legislation.
While ownership policy is the best avenue for strengthening
families and improving communities, part of American society is
not yet ready to pursue homeownership. There are several ways
to create new rental housing opportunities, however any new
approach is hampered by the potential hemorrhaging of the
section 8 rental housing subsidy program. Unless we take
dramatic steps to reform the section 8 voucher program, it
would eventually consume the entire HUD budget. Without
meaningful reform, the good work achieved by other housing
programs could be compromised.
Recently, articles have appeared in local newspapers
stating that the section 8 housing voucher program in some
communities is running out of money. I am concerned that
vouchers are being revoked and that tenants may have to leave
their homes. Equally troubling is the impact on conventional
lenders and rating agencies's decisions to finance assisted
housing. Members on both sides of the aisle are anxious to hear
from you about what steps are being taken to address this
situation.
This committee has been following GSE regulatory reform
efforts closely. Thanks to Subcommittee Chairman Baker's hard
work, over 100 witnesses have testified on these issues and
several policy goals have been achieved. The Senate Banking
Committee approved a bill that was not supported by the
Administration or the GSEs. We will be interested to know if
the Administration's perspective on GSE reform evolved since
the Senate activity. It seems the Administration does not want
a viable legislative product that could move through the House
and Senate, but would rather attempt to enforce discipline on
the GSEs through regulation. I am very interested in HUD's
efforts to improve its role in the oversight of the GSEs.
HUD has proposed several new affordable housing targets for
the GSEs and has eliminated the ability of the GSEs to receive
additional credits for certain projects. These new proposals
significantly raise the levels of affordable housing
transactions the GSEs must meet. The stated purpose of these
changes is to encourage Fannie and Freddie to be lenders in the
affordable housing field. I look forward to your analysis of
why these changes are needed and how these goals will be
achieved.
HUD is in the process of reviewing unusual transactions by
the GSEs to meet the previous affordable housing goals. This
committee is also looking at these transactions and examining
whether they were appropriate. I hope that we can work together
to ensure that the affordable housing goals are properly met.
I also want to bring to your attention an issue raised at
the Housing Subcommittee field hearing in Columbus, Ohio that
was chaired by Subcommittee Chairman Bob Ney. While the hearing
was primarily focused on affordable housing issues and the
section 8 program, there was a call from the majority of the
witnesses about the Community Development Block Grant Program.
Many believe the allocation formula is outdated and does not
account for the growth of cities. I understand that the
department has conducted a study of the CDBG formula. I am
hopeful that you will discuss whether the formula is in need of
a change either today or in writing at a later date.
I would be remiss not to mention reform of the real estate
settlement procedures act. I sent a letter in December to your
predecessor regarding the department's proposed rule, which was
later withdrawn. We all support the goal of simplifying the
homebuying process and making it less expensive for consumers.
I am hopeful that you will address the department's future
intent regarding the development of a new proposed rule.
Just before I conclude, I applaud the Administration for
continuing to work on its goal to end homelessness.
Representatives Renzi and Matheson have introduced the
Samaritan Initiative Act. This initiative combines HUD's
permanent housing funding with assistance from the Departments
of Health and Human Services and Veterans Affairs for services
like substance abuse treatment and primary care.
Mr. Secretary, thank you again for being here today. Again,
congratulations on your confirmation and we look forward to
your testimony.
I now recognize the Ranking Member, the gentleman from
Massachusetts, Mr. Frank.
[The prepared statement of Hon. Michael G. Oxley can be
found on page 62 in the appendix.]
Mr. Frank. Thank you, Mr. Chairman and Mr. Secretary.
We are in the midst of a serious crisis involving the
section 8 voucher program. I know that Assistant Secretary Liu
has said that a handful of the nation's housing agencies would
not have enough money, but either they cannot count or he
can't. I guess maybe I would suggest as a fundraising device we
display Assistant Secretary Liu's hands because they are
apparently an interesting phenomenon. They must have dozens and
dozens and dozens and dozens and dozens of digits, because I
have been besieged, as have other members, with concerns from
both parties. We have, and I would ask to put this into the
record, a resolution from the standing Committee on Economic
Development, Trade and Cultural Affairs, from the National
Conference of State Legislatures, in which they are strongly
critical of the department's section 8 program. ``Be it
resolved that the National Conference of State Legislatures
calls on HUD to withdraw the April 22 notice about section 8
and begin a consultation process.''
[The following information can be found on page 98 in the
appendix.]
I know that others have said, well, this is what the
appropriators have said, but of the two Chairs and two Ranking
Members on the Appropriations Committee, to my knowledge only
one has really said that he is in agreement with what HUD is
doing. Senator Mikulski, the Ranking Democrat, has been very
critical. Senator Bond, the Chairman in the Senate, has said he
thought that it was not being carried out in the right way.
Senator Sarbanes has been very critical, and I ask unanimous
consent to put all their statements in the record.
The Chairman. Without objection.
Mr. Frank. What we have is this: From Richard Nixon until a
few months ago, the section 8 program, the voucher program, was
one in which municipalities and States, whoever administered
it, housing authorities, were given money and guidelines to run
the program. If they kept within the guidelines, they were
reimbursed for their costs. And I believe since the program was
begun at the initiative of the Nixon Administration, the number
of people served by the voucher program has never dropped from
one year to the next. We have never gone back in terms of the
number. The level of increase has varied.
The municipalities have been told to do the right thing in
terms of how they administer it, but then having done that,
they got their costs. Last November, HUD worked with some of
the appropriators, bypassing entirely this authorizing
committee, and secured a fundamental change in this program,
section 8. For the first time, the program was capped and
housing authorities and others who administered it were not
given, we are now told, the authority to continue the number of
people who they had been serving, but had a limited amount of
money capped by last August's amount of money plus an inflation
factor, a very rigid one.
The way in which this was promulgated is very troubling.
HUD, which helped draft this legislation, probably drafted it,
did this on November 30. It was not in either bill, as I
recall. It was put in in conference. So HUD knew this from
November 30 on. The appropriations were not actually passed
until February. It was part of the overall bill. It was April
22 when this really quite new interpretation went to the
communities. There was a great deal of disruption and upset and
I ask unanimous consent to put in the record lists of dozens
and dozens of communities in 25 States which have felt
seriously disarranged by this.
[The following information can be found on page 104 in the
appendix.]
It is not simply the way in which it was done. It is the
consequence. Essentially communities were told on April 22 of
this year that retroactively they were going to have less money
for section 8 vouchers than they thought they were going to
have. The response of many of them was they would have to evict
people. We had a very serious problem with some of the most
vulnerable people in this society now being told that they
faced eviction. A great deal of chaos ensued.
Now, as I understand it, HUD recently, and I am going to
have to ask you to explain this to us because there is still a
great deal of uncertainty, ambiguity and confusion about this,
HUD is now telling people, well, they are going to redo the
formula in ways that while there will still be limits, it may
not in the best case require any evictions.
But communities continue to tell us, recent articles about
Houston, about other places, that they are going to be faced
with too little money to continue to serve the number of people
they are serving, so that even if evictions are avoided, and I
guess there have been a couple of evictions already and people
threatened with eviction, but even if evictions can be avoided,
which I hope, because that would be particularly cruel, housing
authorities are going to face the following choices.
Either they are going to have to, when people give up their
vouchers in the normal attrition, retire those vouchers from
circulation, so they will be serving fewer people, or they will
have to reduce the rents to landlords, greatly damaging this
program by making the responsible landlords less willing to
participate; or they will have to raise minimum rates on the
poorest people around; or, and I just got this from the city of
Fall River, they will have to go against one of the fundamental
purposes of this program. That is, they will have to find
cheaper apartments.
Fall River is suffering, they tell me, Fall River,
Massachusetts, because some of their section 8 certificate
holders, their voucher holders, have gone from the city of Fall
River to wealthier areas where the rents are higher, but
because they were not in those areas a year ago, they do not
get compensated for that. So Fall River is now telling people,
well, you cannot move out of the city elsewhere. The purpose of
de-concentration, of avoiding packing poor people is now being
undercut. The result of this is the most substantial damage to
the section 8 program, people not wanting to participate.
I will say in closing, Mr. Secretary, I am troubled because
reading some of your quotes on this, one, you referred to the
fact that we have a wartime budget, which confirms what some of
us fear, that the demands of Iraq and elsewhere are cutting
into important domestic needs. But secondly, you said in the
Dallas Morning News on April 14, quote, Mr. Jackson said he
sympathizes, but we have to restructure section 8. The poorest
recipients stay in the program five to eight years, tying up
vouchers that higher income people could shed more quickly. The
suggestion that one way to resolve this problem of housing the
poor is to house people who are less poor seems to me to go
directly contrary to what we ought to be doing.
I will be asking you for some specifics, but I am very
troubled that as a result of HUD's actions, pre-dating your
secretaryship, but continuing under it, we have this section 8
program which has been a major source of housing assistance now
major source of chaos and trouble and difficulty for tenants,
for landlords, for lenders and for municipal officials.
The Chairman. The gentleman's time has expired.
The Chair is pleased to recognize the Chairman of the
Housing Subcommittee, the gentleman from Ohio, Mr. Ney.
Mr. Ney. Thank you, Mr. Chairman.
I want to also welcome Secretary Alphonso Jackson to his
first authorizing hearing, and also Chairman Oxley for holding
this important hearing to examine both the programs and the
budgets specific to the Department of Housing and Urban
Development.
Last year through bipartisan cooperation, the committee and
the Administration were able to enact 11 bills into law that
today are making housing programs work better than they have,
again, on a bipartisan basis and through your leadership, Mr.
Chairman and Ranking Member, we have been able to do that.
Of those enacted, of course, last year the American Dream
Downpayment Act and the proposal to raise the FHA model family
loan limits are helping thousands of individuals and families
to realize the dream of homeownership. In an effort to continue
the goal to increase minority homeownership, on May 5 of this
year the Housing Subcommittee approved H.R. 3755, the FHA Zero
Downpayment Act. I want to commend our Ranking Member,
Congresswoman Maxine Waters of California for her leadership,
and members from both sides of the aisle working on this bill.
It was introduced by Congressman Tiberi and Congressman Scott
and would eliminate the downpayment requirements for certain
families and individuals who buy homes with FHA-insured
mortgages. It is a fiscally prudent bill and represents I think
another important step forward in helping all Americans achieve
the dream, and working with this committee and with the
Administration we have been able to move this bill along the
path.
While homeownership is a desired goal, for many Americans
and many in today's society they are not yet ready for one
reason or another to own their own home. It is therefore
prudent that we continue to pursue all alternatives to make
sure that affordable rental housing is also available. As you
know, the section 8 housing assistance program is the major
vehicle for providing rental assistance to low-income families
and individuals. Today, the section 8 program encompasses I
believe half of HUD's budget. The rising costs of providing
rental assistance is due in varying degree to expansion in the
program, the costs of renewing expiring long-term contracts,
and the rising costs in housing markets across the country.
The day of reckoning is coming fast. If we do not address
the increasing costs of this program, it will continue to
consume the HUD budget. I trust we can engage in a meaningful
dialogue with all of our colleagues, both sides of the aisle
and the Administration to find a solution to the escalating
costs of the section 8 program. Of course, that is going to
also have to involve the housing authorities and the advocacy
groups that deal with housing. Not a day goes by that I do not
talk to a constituent or a person who has a concern about the
problems inherent to the program.
I am anxious to hear from the Administration about their
latest proposal for a flexible voucher program which I know the
Secretary will be speaking about. I believe aspects of this
proposal have some merit, but it remains to be seen whether
this is the solution or not to the section 8 program.
Nevertheless, we have to find a solution and it has to be done
soon.
Before I close, I also want to turn my attention to a
proposed rule to raise Freddie's and Fannie's housing goals. It
is clear this is an issue that will have a profound impact on
America's housing policy and profound ramifications. In 1992,
Congress passed legislation establishing the existing housing
goal structure. In my estimation, these goals have been a
tremendous success story for the department, and more
importantly for the homebuying consumer and those renting
apartments in the United States. Recently, HUD proposed raising
the low-mod goal from 50 percent up to 57 percent by 2008.
I look forward to hearing from the Secretary this morning
on the rationale for the increase. I represent rural Ohio, as a
lot of people know, where the average loan purchased by Fannie
Mae and Freddie Mac is still around $100,000. My focus is to
make sure these companies fulfill their congressional mandate,
and that is important that they do fulfill their mandate to
serve as a liquidity source in markets at all times.
I intend to pay careful attention to this proposed HUD
rule, as I know everybody else will be, to make sure there is
no adverse impact on the well-functioning housing market in the
United States. I want these companies to serve more families
and they should. I also worry about a rule where companies are
on the point of forcing a potential credit allocation to the
low end of the market, and negatively affects middle-income and
also middle-class America.
So I do have some concerns. I have other items in here, Mr.
Chairman, so I will come to a conclusion, but if I could put
them in for the record without objection.
The Chairman. Without objection.
Mr. Ney. My concern is that this proposed rule could force
the GSEs to set higher interest rates for mortgage refinancing,
which is what we do not want.
In closing, let me say that the federal government,
consumers and the housing industry are linked by our mutual
goal of creating housing opportunity for Americans. We have
much to achieve together for the American people, and our best
hope of being successful is to work in close concert with each
other, guided by the same high standards and principles. I do
appreciate the Secretary being here today, and thank you for my
time, Mr. Chairman, and your work on this issue.
[The prepared statement of Hon. Robert W. Ney can be found
on page 70 in the appendix.]
The Chairman. The gentleman's time has expired.
The gentlelady, the Ranking Member of the Housing
Subcommittee, Ms. Waters.
Ms. Waters. Thank you very much, Mr. Chairman.
Good morning, Secretary Jackson. While I congratulate you
on your confirmation as HUD Secretary, I do not know whether
you should be happy or sad. You have been given control of an
agency with a disastrous proposed budget that takes us
backwards in so many important ways. A budget that, for
example, seeks $1.633 billion below the amount that HUD itself
projects is needed to renew all section 8 housing vouchers. If
enacted, your section 8 budget proposal will dislocate
households and force many public housing authorities to raise
rents and lower subsidies to needy seniors, persons with
disabilities, and families with children.
This funding level would result in 250,000 fewer vouchers
being funded if housing authorities choose to maintain the
current level of subsidy for those vouchers that they do
maintain. If housing authorities choose instead to maintain the
same number of vouchers currently authorized nationally, the
average section 8 tenant's rent would have to increase by an
average of about $850 per year. In Los Angeles, the city
housing authority would have to issue 5,336 fewer vouchers and
the county housing authority would have to issue 2,457 fewer
vouchers if they choose to make up the funding shortfall by
reducing the number of vouchers that they fund.
If they issued the same number of vouchers, the city of Los
Angeles would have to raise the average tenant's rent by $933
per year, and the county housing authority would have to raise
the average tenant's rent by $977 per year in order to absorb
the impact of the Bush Administration's proposed funding level.
Mr. Secretary, I would need at least an hour to talk to you
about all of the ways that this proposed budget fails to meet
America's pressing needs for housing, but let me try and
summarize some of my principal concerns. Hopefully, we can
cover more of the issues during the question period.
HUD's budget for CDBG block grants fails to keep pace with
inflation, and zeroes out funding for brownfields, empowerment
zones and CDBG section 108 loans, a program that is especially
important to me. I put a lot of time in on section 108, and the
city of Los Angeles has been able to use section 108 as have
cities in this country for economic development. I am really
concerned about that.
Your budget cuts public housing funding by $182 million,
rescinds $675 million in funds that could be used to preserve
affordable housing; zeroes out funding for HOPE VI and proposes
to let 50 housing authorities operate without statutory tenant
protections. It proposes a $35 million cut for lead paint
grants, and to zero out funding for rural housing and economic
development grants which received $25 million in funding year
2004.
I do not know how much you were involved in this budget,
but I know some of your reputation. I have met and talked with
you before, and I expect that you will provide the leadership
to correct what are many problems with this budget. This is a
very serious business. As I sit talking to you today, there are
1,500 households in Los Angeles who are not receiving
assistance, whose vouchers were cancelled by the city housing
authority because the vouchers that they waited so many years
to receive were not funded. This is just not acceptable. HUD
should be using its central reserve fund and taking whatever
other steps are required to ensure that these families receive
housing assistance.
Your proposal is to block grant section 8 funds to the
local PHAs, eliminate the guarantee that at least the same
number of units will continue to be served, and end the
targeting requirements that helped to ensure that section 8
vouchers are directed to those low-income residents with the
greatest needs. Again, it was mentioned on April 22 of this
year. HUD announced that it will no longer reimburse housing
agencies for their actual costs, but instead will renew
quarterly voucher funding based on an agency's per cost in
August, 2003, adjusted only by a regional housing inflation
factor.
It is completely improper and unacceptable for HUD not to
renew vouchers at payments high enough to keep pace with rent
increases. It is simply unconscionable for HUD to adopt
policies that will result in evictions, the non-renewal of
vouchers, or require greater contributions from low-income
section 8 tenants who really cannot afford it. HUD's contract
renewal policies must cover the true increases in housing costs
in Los Angeles and other communities. HUD must replenish PHA
reserves as the department has done in the past, as the
department has not only done in the past, but to cover
unanticipated cost increases. HUD should rescind the April 22
notice and return to policies that will protect those that
Congress intended to help through the section 8 program.
Finally, let me say a word about homeownership and GSEs.
Now, I know some people are going to take great exception to
this.
The Chairman. Could the gentlelady conclude please?
Ms. Waters. One additional minute.
The Chairman. Without objection.
Ms. Waters. In addition to this very difficult budget that
you have to deal with, there is a fight that is going on that
has been going on here with the GSEs. You all know and you
understand very well what the confrontation is with FM Watch
and the GSEs. It is about market share. There are any number of
ways that have been concocted by the Administration to try and
weaken the GSEs.
This business of increasing the goals for low-income
housing looked like it was a good thing when I first looked at
it. But now that I have examined it, and I was involved in 1994
in increasing those goals, and I believe in increasing the
goals and getting as much as we can, but when you take away the
points that the GSEs receive for reaching those goals, it makes
me wonder whether or not this is just another FM fight, or
whether or not you are really serious about this, Mr.
Secretary.
The purchase of these mortgages from Washington Mutual and
other places expands housing ownership opportunities. If you
are going to take away the points and redefine how they can
reach the goals, I am not sure that you are really serious
about expanding the goals and having them reach them. I want
you to think about that, and I certainly do not want you to be
used as a point person in this fight against the GSEs. Let the
markets work. Either these other financial institutions can
step up to the plate and do what they need to do, but coming to
government in so many ways to do this is totally unacceptable.
Thank you, and I yield back the balance of my time.
The Chairman. The gentlelady yields back.
The Chair recognizes the gentleman from Texas for the
purpose of introducing our witness.
Mr. Hensarling. Thank you, Mr. Chairman.
It is a great privilege and honor that I welcome my friend,
my fellow Texan and fellow Dallasite, Secretary Jackson, before
this committee. I want to congratulate him on his recent
confirmation. I want to share with the committee my belief and
the belief of many others that no one has brought more housing
experience to this position as has Secretary Jackson.
Specifically, he brings over 25 years of housing experience in
both the private and public sectors to this office. From 1989
to 1996, Secretary Jackson was the president and CEO of the
housing authority of the city of Dallas, which constantly
ranked as one of the best-managed large-city housing agencies
in the country during his tenure. He has served with
distinction on a number of national and State commissions,
including the National Commission on America's Urban Families
and the National Commission on Severely Distressed Public
Housing.
On a more personal background note, Secretary Jackson I
know grew up in a family of very modest means. He was the
youngest of 12 children, but through hard work, through
principle, through opportunity he has risen. He has managed not
only the Dallas housing agency, but also was the president of
the American Electric Power Company, a $13 billion utility
company in Texas. All of Dallas, all of Texas is proud of you,
sir. We welcome you to this committee and we look forward to
hearing your testimony and look forward to your principled
leadership at HUD.
Thank you, Mr. Chairman.
The Chairman. I thank the gentleman.
So we will turn now to Secretary Jackson. Mr. Secretary,
welcome to the committee and you may proceed.
STATEMENT OF HON. ALPHONSO JACKSON, SECRETARY OF HOUSING AND
URBAN DEVELOPMENT
Secretary Jackson. First, thank you, Congressman
Hensarling.
Chairman Oxley, Ranking Member Frank, distinguished members
of this committee, thank you very much for inviting me here
this morning. I am honored to discuss with you the fiscal year
2005 budget proposed by President Bush for the Department of
Housing and Urban Development.
Mr. Chairman, in order to reserve time for the possible
questions that I will be asked, I would like to focus my
opening statement on some key priorities that I think are very
important to discuss. I would like to ask you to allow me to
submit the full statement for the record.
The Chairman. Without objection.
Secretary Jackson. Thank you.
Before I start the testimony, I would like to say this
morning that I am concerned with some of the issues that were
raised. So in that effort, I think it is important for me to
first state that in an effort to be more effectively
implementing the provisions of the 2004 omnibus bill act, I
have directed Mr. Michael Liu, the Assistant Secretary for
Public and Indian Housing, to apply the full 2004 inflationary
factor, what HUD refers to as the annual adjustment factor, to
each housing authority agency's funding level of 2004. This
adjustment to the funding formula will be retroactive to
January 1, 2004 and will provide housing agencies more of their
funding up front, rather than late in 2004. Again, this is good
news for those agencies that have fiscal years ending in June
and even in September. All agencies were notified of this
funding calculation change on May 18 of this year.
The second piece of good news I want to announce is that
HUD is going to replenish the program reserve for approximately
500 housing agencies, depleting their reserves in 2003 and
qualifying for restoring of funding. HUD is using approximately
$150 million in carryover central fund money from 2000 for this
purpose. I want to be clear, HUD is not restoring 2004
reserves, but only 2003 reserves for legitimate costs incurred
in 2003. HUD will notify the agencies eligible for the 2003
reserves fund to date.
These two new actions by HUD, as well as additional
clarification of information already sent to the agencies this
week regarding their funding, will significantly improve the
financial situations for most, if not all, of the agencies. It
will enable them to manage their programs within the funding
amount provided by Congress for 2004 and provide the needed
assistance to their families that they serve.
The program funding within the $31 million HUD budget will
create new opportunities for those seeking affordable housing
and the American dream of homeownership, while generating
stability and prosperity in many communities in this country.
The key priorities it addresses are central to the President's
plan to help make America a more secure, more prosperous and
more hopeful country. Housing, of course, is vital to our
national prosperity and remains the linchpin of the economy
today.
The housing market generated robust activities through
2001's recession and today housing continues to fuel the
ongoing economic recovery of this country. Homeownership last
year reached an all-time high of 68.6 percent, and fourth
quarter 2003 statistics reveal that for the first time a
majority of minorities own their homes in this country, 50.3
percent. HUD's fiscal year 2005 budget will empower our
department to build on these successes as we seek to increase
homeownership, promote decent affordable housing free of
discrimination, encourage participation of faith-based and
community organization, and HUD's grant program and embrace the
highest standard of ethics, management and accountability.
Let me first discuss homeownership. In June 2002, President
Bush announced an aggressive plan to increase the number of
minority homeowners by 5.5 million by the end of this decade.
Today, more than 1.5 new minority homeowners have been created
in the United States since we initiated this proposal in 2002.
HUD is proposing several new and expanded initiatives to
continue increasing overall homeownership, while targeting
assistance to help minority families experience the economic
and social benefit of owning a home.
As a first step, HUD proposed to fund the American Dream
Downpayment initiative at $200 million in the coming fiscal
year. The Congress showed great leadership in enacting
President Bush's American Dream Downpayment proposal last year.
By fully funding the fiscal year 2005 initiative, we will help
40,000 families cross what has been represented as the single
biggest hurdle in homeownership, that is high downpayment and
closing costs.
The Administration is proposing legislation that would
create a new mortgage product targeted at first-time
homebuyers. That is the zero downpayment mortgage, which would
allow consumers to qualify for an FHA loan without having to
come up with cash for downpayment and settling costs. The zero
down proposal has generated a great deal of interest among the
industry and the consumers. We estimate that it will help
150,000 families a year purchase their first home.
It would be structured to assist the creditworthy, cash-
poor working individuals who have been excluded from purchasing
their first homes. Most of these families can afford monthly
payments, but because of the circumstances have simply not had
enough to save for the downpayment. HUD has designed this
program to minimize default and to protect the mutual mortgage
insurance fund. FHA has made a conservative financial
assumption regarding this program.
In order to cover the cost of the program, families who
qualify for the zero downpayment plan would be charged a
modestly higher insurance premium on their home loan. For
example, for a $100,000 mortgage, a zero downpayment borrower
would pay approximately $50 a month more than a regular FHA
borrower. There would be no net cost to the FHA mutual mortgage
insurance fund.
The President's budget projects that an additional $19
billion in mortgage commitment will generate revenues of about
$180 million the first year of this program. Borrowers would be
held to the same underwriting guidelines as those for FHA
standard 3 percent downpayment mortgages. They must meet the
same payment-to-income, debt-to-income ratio and the same
credit standards.
To further minimize the risk, the proposal for the zero
downpayment program includes a housing counseling requirement.
Specifically, participants would be required to satisfactorily
receive one-on-one housing counseling from HUD-approved housing
counseling agencies before they enter into a sales contract. I
want to thank Representative Tiberi for introducing the zero
downpayment legislation in the House, and I want to
congratulate Chairman Oxley for holding a successful bipartisan
full committee markup yesterday.
To promote the production of affordable single-family homes
in the area where such housing is scarce, the Administration is
proposing a tax credit of up to 50 percent of the cost of
constructing a new home or rehabilitating an existing home. Our
request of $65 million for the Self-Help Homeownership
Opportunity Program, as we call SHOP, would more than double
the funds SHOP received in 2004, to help produce 5,200 new
homes for very low-income families.
Along with boosting homeownership, HUD proposed a budget
that will continue to promote the production and accessibility
of affordable housing for families and individuals to rent in
this country. Three major rental programs collectively help
approximately 4.5 million households nationwide. Our major
program is the section 8 program, which provides both tenant-
based funding through the housing choice voucher program, and
project-based rental assistance through HUD's public housing
program. The Administration is proposing to reform the housing
choice voucher program to make it more effective, efficient and
able to meet the needs of low-income families that depend on
this program.
Today, the section 8 program lacks any incentive for
families to transition out of the program and begin to live
independent lives. In addition, the program is unsustainable at
the current growth level. Pre-voucher costs have increased at
an alarming rate of 23 percent in just the last two years. The
Administration's new flexible voucher program will serve at
least as many Americans at the 1.9 million families currently
serving through the housing choice voucher program.
More importantly, our proposed reform will help families
move out of assisted housing and into self-sufficiency. The
HOME program is a key initiative for addressing this shortage
of affordable housing in America. In fiscal year 2005, we are
proposing a total of $2.1 billion, which includes $200 million
for the American Dream Downpayment initiative to help expand
the nation's supply of affordable housing. Participating
jurisdictions have substantial discretion to determine how to
spend and use the funds.
HUD is committed to providing American cities as a viable
hub of commerce in making the communities better places to work
and to raise our families in. The fiscal year 2005 budget
provides States and localities with tools they can use to
improve their economic health and promote community
development. Perhaps the greatest strength of these economic
development tools, which include the highly successful
Community Development Block Grant Program, is the way in which
they encourage local decision making to address developmental
priorities.
Through our budget, HUD will strengthen its efforts to
protect the nation's most vulnerable, those individuals and
families who truly need government assistance. The HUD budget
for 2005 will benefit adults, children from low-income
families, the elderly, those with physical and mentally
handicapped disability, victims of predatory lending, families
living in housing contaminated by lead-based paint hazards, and
persons living with HIV-AIDS.
In the coming fiscal year, the Administration will continue
to work to meet the challenge of homelessness that confronts
many Americans. The President has made an unprecedented
Administration-wide commitment to eliminate chronic
homelessness. This commitment is reflected in the fiscal year
2005 budget request through proposals such as the Samaritan
initiative, which will provide additional options and services
to homeless people living in the streets.
Finally, Mr. Chairman, our budget creates new opportunities
to improve HUD's performance in its critical-need housing and
community development programs. I know that this subject is
particularly important to the committee. I can assure you that
we share your concerns. We continue to make progress. This will
remain the top priority in the years to come. I want to thank
each of you for supporting our efforts and we welcome your
guidance as we continue to move forward.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Alphonso Jackson can be
found on page 75 in the appendix.]
The Chairman. Thank you, Mr. Secretary.
Let me begin by asking about RESPA reform. We all share the
goal of simplifying the home buying process. I constantly
hearken back to when I was practicing law and involved in real
estate closings and the madness that occurred in that process,
and my clients not understanding what was going on. I know that
the RESPA reform effort was withdrawn. What plans, if any, do
you have of revisiting that issue? And could you give us a
timeline if that is the case?
Secretary Jackson. Surely. Thank you very much for the
question.
I made a decision after critically reviewing the proposal
and the process that had taken place. I asked at that point in
time that OMB return the RESPA proposal back to us. It was my
feeling, even though I cannot discuss the specifics with you,
it was my feeling and my belief that the proposal had not had
the necessary input, and a consensus that would be appropriate
to move it forward.
We have the staff at this point still reviewing it
internally. We have a meeting weekly discussing the RESPA
proposal. We expect that after having conversation with the
industry, with Congress, as I assured you, Mr. Chairman and
Chairman Allard, we will then look at the possibility of coming
back out with a new proposed rule after having input from you
and the industry. I have not set a timetable because still we
have not answered a number of questions that have been asked of
us by OMB.
We hope to have those questions answered probably in the
next 30 to 45 days, and at that point in time we will get in to
discuss with you and others your concerns that you have and
take those concerns into consideration. Then I will be in a
position to give you a timetable of when we expect to reissue
the rule.
The Chairman. I thank you, Mr. Secretary. I think you will
find some willing participants on this side in regard to a
solid RESPA reform effort, with input from the Congress. I
appreciate your openness and ability to work with us. We look
forward to that effort.
Let me ask you about the GSE programs. We have recently
received documents relating to HUD's examination of GSE
programs. The documents comment on proposed guidelines for some
programs and seek additional information on others. Is this an
effort by HUD to exercise its program approval authority over
the GSEs?
Secretary Jackson. Yes, it is. I think it is very unique
because we have been criticized over the years for not
exercising that program authority. I think the GSEs serve a
real functional purpose, but Mr. Chairman, the GSEs have an
implicit government guarantee. Their goals are to serve low-and
moderate-income people in this country. What I am about to say
to you today are not figures that we have invented. They are
figures that they have conveyed to us. They are not leading the
market. They are following the market. Our position is that
they should be the leaders of the market in addressing the
needs of low-and moderate-income people.
Today, I want to make it very clear because people have
said that this is a new effort. No, since Secretary Martinez
and I have been there, and I have been the Deputy Secretary and
the Chief Operating Officer, we have spoken on numerous
occasions with the heads of the GSEs and told them our concerns
about not leading the market, and what we expected out of them.
We still expect that. The difference is that as the Secretary,
I am going to make every effort to enforce it. We do not care,
nor do we have any desire to regulate this top-end of their
market. But what we are saying in essence is that we want you
to serve low-and moderate-income people in this country, which
your charter mandates that you do. That is the only thing we
asked them.
The Chairman. Some would say that the program approval
process may indeed stifle innovative products going to market.
How would you answer that?
Secretary Jackson. If their investments in derivatives have
not stifled them, I do not see how we are going to stifle them
asking them to serve low-and moderate-income people.
The Chairman. Do you think that HUD needs new tools to
review GSE programs? If so, what would they be?
Secretary Jackson. I think that the Administration has put
forward a proposal for regulating the GSEs. We are in full
support of that proposal. I think our responsibility is to set
the housing affordable goals to make sure that the GSE meets
those.
The Chairman. Are you referring to a legislative proposal
or an administrative proposal?
Secretary Jackson. Administrative, which was put forth this
year. We are very supportive of a strong regulator still today.
But our goal today is to make sure that the GSEs simply meet
their housing goals and their mandate to serve low-and
moderate-income persons. That is what I am most concerned about
today, and that is why we have been making every effort since I
have been here to work with the GSEs. It is very different
today because I guess I come with a very tremendous knowledge
and background with the GSEs, having been in housing for so
long. I do believe that they have the capability to meet those
goals without any reservations at all.
The Chairman. Thank you, Mr. Secretary.
The gentleman from Massachusetts.
Mr. Frank. Mr. Secretary, in my 24th year, I do not startle
easily, but you have accomplished that. I think I heard you say
that there was an implicit government guarantee of the GSEs.
One, I must tell you as a high government official, when you
say it, it is not implicit anymore. You just made it explicit.
But secondly, I do not think there is, and I understood it was
the policy of the Administration that there was not. Are you
now promulgating a new Administration policy, having said that
there is an implicit government guarantee?
Secretary Jackson. No, I am not. I am just repeating what
the GSE said to me when I was speaking to them, and I have met
them on a number of occasions.
Mr. Frank. They think there is an implicit government
guarantee? And you agree with that? You just stated it.
Secretary Jackson. No.
Mr. Frank. Mr. Secretary, you did not say you were quoting
them.
Secretary Jackson. Congressman, yes, I repeated exactly
what they said. I am not going to debate with you, Congressman.
Mr. Frank. Well, do you think there is an implicit
government guarantee?
Secretary Jackson. That is not for me to decide. I just
recounted what they said.
Mr. Frank. Excuse me, Mr. Secretary, it is for you to
decide. You are a high government official here. I think it is
very important for us to make clear that there is not. I think
you are adding to confusion here. You will not tell me that you
do not think there is an implicit government guarantee?
Secretary Jackson. I think my responsibility, Congressman,
is what I said to the Chairman. I am here to make sure that the
GSEs effectuate the affordable housing goals and that is what I
am here to speak about.
Mr. Frank. Let me say, Mr. Secretary, I am glad about that.
In fact, I was very critical. HUD delayed a year in
promulgating new goals. HUD had the right to promulgate new
goals that could have taken effect this year, and delayed. So I
am glad they are doing it. We are pushing for even more.
I want to get back to section 8. On the reserves, very
important, you said that you are going to provide $150 million,
is that accurate, to replenish reserves, and the authorities
will know as of today whether they are getting new reserves?
Secretary Jackson. Yes.
Mr. Frank. And where does the $150 million come from?
Secretary Jackson. The $150 million, if I remember right,
it came from carryover from 2003.
Mr. Frank. Did you just find it? When did you find out that
we had this carryover from 2003? Is it a carryover in section 8
funding?
Secretary Jackson. Yes, it is.
Mr. Frank. And how long have you known that you had the
section 8 funds?
Secretary Jackson. We have known it from the beginning, but
that is always----
Mr. Frank. Why did you wait until now?
Secretary Jackson. Every housing authority has a right at
the beginning of the year to make a request for replenishing,
when they spend 50 percent or more, and we answer that. A
number of authorities did not do it this year, but still we
felt it was imperative----
Mr. Frank. I am troubled that you waited so long. I am glad
that we are finally getting it.
Let me ask you now on the inflation-adjusted. You say what
you basically decided to do, you are sticking with the 2004
fiscal year formula, but basically the housing authorities are
going to get, am I correct, the same amount of money, but they
are going to get more of it early than they would otherwise
get?
Secretary Jackson. Yes.
Mr. Frank. What does that mean later? Are they going to run
out of money? Does that mean that they are going to have
trouble sustaining this, if you give them more money up front?
Let me put it to you this way. Do you believe that all of the
housing authorities that you deal with will be able with this
funding formula and the new reserves to maintain the current
level of section 8 certificate holders? That none of them will
have to cut back on the number of vouchers they offer?
Secretary Jackson. Surely. I do believe that. You asked a
very important question. One of the reasons that we are doing
it up front at this point, there are a number of housing
authorities, as with my housing authority when I was in Dallas,
that operate on a June-to-June schedule. This will help to
empower those----
Mr. Frank. I am glad you mentioned that.
Secretary Jackson. May I finish please?
Mr. Frank. Yes.
Secretary Jackson.--who operate on a September-to-September
schedule.
Mr. Frank. Okay. But I just want to make clear, you do not
believe now that any housing authority will have to either
freeze vouchers, regain them by attrition or cut rents, or do
any of that?
Secretary Jackson. No, because I just received a letter
from your housing authority in Boston who thanked us for making
sure that would not occur.
Mr. Frank. The city of Boston?
Secretary Jackson. Yes.
Mr. Frank. It is not mine. Mr. Capuano represents Boston.
You can talk to him.
[Laughter.]
The city of Fall River, on the other hand, is very
concerned, and I just heard from them. They have this problem
where by your formula, they are being penalized because people
who used to take vouchers in Fall River have now moved to more
expensive areas and the formula does not pay for it. So I have
to ask you this question. The language that is in the bill that
made some changes, HUD supports that language? Does HUD think
that is good language?
Secretary Jackson. I am not sure what you are asking me.
Mr. Frank. The language that was put in the bill, the
language that has been somewhat controversial. Does HUD think
that is good language? Do you want to keep that in the bill
next year?
Secretary Jackson. My position is this, I understand
clearly article I, section seven. It simply says that Congress
is the appropriator and the authorizer.
Mr. Frank. And HUD has no position on this, Mr. Secretary?
Secretary Jackson. May I finish?
Mr. Frank. No, not with that silliness.
Secretary Jackson. You asked me a question. Do you want we
to answer?
Mr. Frank. Yes, the question is, do you have a position on
the language?
Secretary Jackson. I carry out the mandate of Congress.
That is what HUD's responsibility is.
Mr. Frank. No, Mr. Secretary, you are not answering the
question. And that is just disingenuous. I am sorry. The fact
is that we all know what the Constitution is. You are trying to
run out the clock by quoting the Constitution and we all know
it. I asked you, does HUD have an opinion on this? The notion
that the Constitution somehow prevents you from expressing your
opinion is a dodge. What is HUD's opinion on the language? Do
you want to continue it next year? The Constitution, I promise
you, it is not unconstitutional for you to give your opinion. I
guarantee it. I will get Scalia in here to reassure you.
[Laughter.]
What is your opinion as the chief housing officer on the
desirability of including that language and continuing it?
Secretary Jackson. My opinion as the Secretary of Housing
and Urban Development is I am going to carry out the wishes of
Congress.
Mr. Frank. And you will not tell us what your wishes are?
Secretary Jackson. I am going to carry out the wishes of
Congress.
Mr. Frank. And you will not express an opinion on what the
policy ought to be?
Secretary Jackson. Well, my position is----
Mr. Frank. I am asking you what your position is.
Secretary Jackson. I guess, Congressman, I do not think my
position is really relevant at this point.
Mr. Frank. All right. I am sorry, Mr. Secretary. I have
another minute. You do not believe that the position of the
Secretary of HUD on matters of housing policy is relevant? What
do you do down there?
Secretary Jackson. No, I do not think it is relevant to
contradict the Congress. The Congress has said what it wanted
done.
Mr. Frank. Okay. Then let me ask you this, so you are
telling me now that HUD will express no position on this issue
when we take it up?
Secretary Jackson. I am going to carry out the mandate of
Congress.
Mr. Frank. Do you really think just repeating that mantra
when it is not relevant to the question is helpful, Mr.
Secretary? My question is, do you have an opinion? I know you
will carry out the mandate. The question is, do you think it is
an appropriate mandate? Do you think we should change it or
keep it going?
The Chairman. The gentleman's time has expired.
Mr. Frank. So has his patience.
The Chairman. The gentleman from Ohio, Mr. Ney?
Mr. Ney. Thank you.
Let me move on to vouchers for a second. On page six of
your testimony, you state that the current system fails to
support families making the transition from public assistance
to self-reliance and work, and doing so produces a number of
families that could have been helped for a given amount of
money. I am just wondering if you could elaborate a little bit
of your view of the mission of section 8, but also, what do we
envision people transitioning to? That is the real thrust of my
question.
Secretary Jackson. Congressman, if we go back to the
history of the section 8 program, we know the history of the
section 8 program has come in two phases. First, it was
basically section 23, which was supposed to help construct,
build, and we would support those private developers through a
section 8 project-based program. In the 1980s, we decided that
that program was absolutely too expensive so we said why don't
we go to a voucher program. We did go to a voucher program,
which in essence said, no longer are we going to be relegated
to charging 30 percent of the adjusted gross income. If a
family can afford to pay 40 percent or 50 percent, let's do it.
One of the mandates during that process, when we started
the voucher program, was that it was to be a transition program
between public housing and self-sufficiency. It was never
envisioned as the QHWRA proposal in 1998 did, that said it has
to be 30 percent or less of median in order for you to be
qualified.
So initially, the program was set up as a transitional
program. From my perspective, I think that it should be. I do
not think that the section 8 program should be a secondary or
substitute for the traditional public housing program, which in
my mind has perpetuated a system where people have lived in it
two or three generations. Does that mean that people are going
to be able to immediately move out of public housing? No, I am
not foolish enough to believe that. Does that mean that we
should not make every effort to help families who can afford to
move out of public housing or off of section 8 to do it, yes, I
believe we should.
See, I come with a very different perspective. I do not
come in dealing with public housing residents or low-income
people from a position of paternalistic and patronizing. I
believe that low-and moderate-income people are human beings
with the same sense of worth that I have and I should work with
them. I do not think, having run three major housing
authorities, I have never seen anybody who consistently and
constantly wants to stay in public housing or stay on the
certificate.
So my goal when running those authorities was to help them
move. Did we move all of them? No, but in the end I think we
have made enough progress. I think we should make that our
objective, the same as we have done with the American Dream
Downpayment Program to try to make homeownership a major
initiative. I think we should do the same thing when we are
talking about moving people from public housing through section
8. If we can avoid section 8, let's try to avoid it, but to
self-sufficiency.
Mr. Ney. Thank you. The other interesting thing for our
Subcommittee, we had hearings and we were in different spots,
Los Angeles and Columbus, Ohio and different areas, hearings
here, on the proposal that Secretary Martinez had, which was
the block granting. We did not get a lot of reactions from
Governors, obviously, on that issue. Now, we have this
proposal. I do not know what happens in quick session here or
with the authorizing and appropriations.
Who knows what is going to happen with this whole proposal.
But I do know either we add money, or if we do not add enough
money, then that section 8 pie still grows, and then it starts
to come down to taking money away, if there is limited amount
of money, from some of the homelessness programs and AIDS. Then
you have entities fighting each other.
So I know it is a balancing act in the amount of time that
is left this year, and the appropriations process, and I do not
know what all happens here again, or what makes it through the
system or not in the Congress this upcoming year. But I do
think at some point in time, we are going to have to get people
together for more than just a hearing, but people together on
all sides of this issue for, I do not want to say a debate, but
a reasonable civil dialogue back and forth until we can try to
see what is going to be happening to this, versus always trying
to do it at the appropriations process or the authorizing
process, every year for a 3-or 4-month period. Because it is
either add money, and if we are not going to add ``sufficient''
money for what people say the demand is out there in the
housing authorities, then that pie will continue to shrink the
programs, and get programs pitted against programs.
Thank you, Mr. Chairman.
The Chairman. The gentleman's time has expired.
The gentlelady from California, Ms. Waters?
Ms. Waters. Thank you very much.
Mr. Secretary, my staff took down your comments on the
changes that you are proposing for section 8 and how you
propose to deal with the crisis that we have now. We are going
to check with our housing authority to see what this is going
to do for those outstanding vouchers that we have. I am pleased
that you are moving forward to try and deal with this problem.
Let me ask you something about your overall budget. When
did the budget that you submitted to OMB change to this budget
that has now been proposed?
Secretary Jackson. I am not sure what you are asking.
Ms. Waters. HUD submitted a budget.
Secretary Jackson. This is our budget.
Ms. Waters. No, I am talking about the original budget to
OMB. When did it change?
Secretary Jackson. No, this is our budget.
Ms. Waters. This is the one you submitted to OMB?
Secretary Jackson. This is the budget that we worked with
OMB to formulate. In answering your question, I do not think
anyone is more concerned at serving the needs of low-and
moderate-income people in this country than I am. You might be,
but I guess I have run three housing authorities, so I am real
concerned.
Ms. Waters. No, you came from a family of 12. I came from a
family of 13.
[Laughter.]
One of those housing projects, my family lived in in St.
Louis.
Secretary Jackson. I never lived in one. Okay.
Ms. Waters. So you do not care more about this than I do.
Okay?
Secretary Jackson. All right. Well, we care almost equally,
then.
[Laughter.]
So I am very concerned, and I will defer to you that you
care more.
Ms. Waters. Okay. Well, let me just say this. I was trying
to find out, because I know that if you put together a budget,
you did better than this, and somebody messed with it. Somebody
changed it, but I am not going to keep on that.
You said you know a lot about GSEs. I am really concerned
about this, because again in 1994, I worked to increase the
goals and they have been increased over about three times since
1994. I am looking at what is happening now, and I am concerned
that you are taking away points and credits that should be
given to the GSEs, and that you are doing away with bonuses for
some of the most challenging housing projects. You are raising
the goals. I am trying to find out why you are doing this. Are
you familiar, for example, with the WOW program that the
Congressional Black Caucus is involved in?
Secretary Jackson. Yes.
Ms. Waters. Do they get points for that? Do the GSEs get
points for that?
Secretary Jackson. I cannot answer that. I have been with a
number of your colleagues in their cities promoting the WOW
program.
Ms. Waters. You know, it is heavily supported by the GSEs.
Also, do they get points for the $1.7 billion in low-income
housing tax credits?
Secretary Jackson. Yes, I think they do.
Ms. Waters. That is a question that we really do have to
resolve, because as I understand it, they will not.
What about the mortgage revenue bonds? I understand there
are about $6.2 billion in 2003 in mortgage revenue bonds. Do
they get credit for that?
Secretary Jackson. I will have to get back to you on that.
Ms. Waters. Okay. What do you know about the anti-predatory
lending guidelines that come out of Fannie Mae, for example?
Secretary Jackson. We work well with them on that.
Ms. Waters. Do you know that they do much better than some
of the institutions in FM Watch. We are concerned about some of
those institutions in FM Watch, who have some very, very
discouraging predatory lending practices.
What about manufactured houses? We have beat up on them
about manufactured housing. They are transforming manufactured
housing. Do they get credit for that?
Secretary Jackson. They have not really transformed
manufactured housing. That is not true.
Ms. Waters. Oh, yes, they are working with us.
Secretary Jackson. They might be working with you.
Ms. Waters. This effort was led by Mr. Benny Thompson of
the Congressional Black Caucus, working with Mr. Ney and
others.
Secretary Jackson. I think they are working with you, but
you said they had transformed. They have not. We have not
transformed manufactured housing.
Ms. Waters. Well, if they had, would they get credit for
it?
Secretary Jackson. Yes. And the same, as I said before, if
it qualifies as low-and moderate-income, we are not going to
hesitate to give them credit, Congresswoman.
Let me say this, because I think it is very, very
important. No one, especially at HUD, is trying to penalize the
GSEs. I can assure you of that. You asked about, is this new.
No. I only use their figures. Now, they report the figures to
us. We are not at liberty to discuss those figures publicly. If
the chairmen of each one of those GSEs would like for us to
submit those figures to you, then you would see what I am
saying today, they are not leading the market.
They are lagging behind the market. If you pay close
attention, just the other day the Chairman of one of the GSEs
specifically said that his organization was not doing or coming
close to doing what they should be doing for low-and moderate-
income people in this country and that he was restructuring it
to make sure that he addresses the needs that were raised by
HUD on the affordable housing efforts. Those are their words.
Ms. Waters. I do not know who said that, and I cannot
debate with you about figures and information that I am not
privy to or you say that I cannot have. Simply let me just say
this, I join with anybody who is interested in expanding low-
income housing opportunities. Let me must say that the no
downpayment, low downpayment, all of that, that is good stuff,
but it is a drop in the bucket.
Most of the folks who are poor are going to be renting and
they need some assistance and this is not enough. We do not
want people to believe that all of a sudden because we have
these very minimal programs that we are going to transfer
everybody into homeownership. We have to do everything that we
can. We cannot make it harder.
I do not know why when you look at these points or these
bonuses, or however you calculate this, that if one of these
GSEs buys a lot of paper, lots of paper from Washington Mutual
or anybody else, why they will not count. I mean, to the degree
that they can get rid of that paper, that expands homeownership
opportunities.
The Chairman. The gentlelady's time has expired.
Secretary Jackson. Congresswoman, that does not expand
homeownership, buying mortgages from Washington Mutual.
The Chairman. The gentleman from Wisconsin, Mr. Green.
Mr. Green. Thank you, Mr. Chairman.
Let me join with others in welcoming you, Mr. Secretary, to
the committee. We appreciate your time.
Secretary Jackson. Thank you.
Mr. Green. I do not get this opportunity very often, Mr.
Secretary, so if you will indulge me, I want to ask you a
couple of very specific questions that hopefully you can answer
or perhaps have someone get back to me with.
Mr. Secretary, your office I think is aware that in
Janesville, Wisconsin, which is in Congressman Ryan's
congressional district, the city council recently passed a
resolution to provide the Salvation Army with federal funds in
order to purchase an apartment building to use for transitional
housing for the homeless. It has since been reported,
unfortunately, that an amendment was added by the city council
which forbids any and all religious activity conducted by the
Salvation Army personnel related to this project. As far as I
know, there is nothing in federal regulations that would
preclude a faith-based organization from using federal dollars
for this type of project as long as any voluntary religious
activities are not paid for with the federal funds.
I do know that my colleague, Congressman Ryan, has been in
touch with folks in your office, and we are aware, both of us,
that you are crafting a response for the city. My question is,
I am wondering what the response might be. Do you know if your
office has been able to provide that yet?
Secretary Jackson. We have not sent the response back,
Congressman, but I can answer it this way. Your interpretation
of the regulation is absolutely clear. We will make that clear
to the city that as long as the prohibition is not to be able
to push any specific or one religion, but as long as it is
providing a service to persons within that respective
community, yes, it qualifies under our proposals and grants.
Mr. Green. Great. I appreciate that. Obviously, the sooner
we can get a formal written opinion, the better off. I agree
with your view, and obviously neither Congressman Ryan or
myself want to see this great project sidelined.
Secondly, as your office also knows and you have stated on
a number of occasions, the FHA Title I insurance program is in
need of reform. The program is very important to the
manufactured housing industry. I am concerned with some
developments that have recently been brought to my attention. I
am aware that HUD has contracted with Frontline Systems to
prepare a report on ways to reform the FHA title I program. I
also understand that Frontline submitted its report to HUD
almost a year ago. As you may know, the manufactured housing
industry has made a number of requests to try to see this
report. Apparently, so far all those requests have been denied.
I am anxious that this important information is not being
shared with the very folks who want to find ways to reform the
system and to stop the loss of lenders, which obviously is a
concern for all of us. This report has apparently now been
sitting in an in-box for almost a year, and there are lending
shortages that are going on in the manufactured home market
that I think are hurting the low-income borrowers that
obviously all of us want to serve. Can you give us some idea
when this report might be made public?
Secretary Jackson. Congressman and Mr. Chairman, if it is
okay, may I have Dr. Weicher, who is the Assistant Secretary of
Housing, answer this for me?
Mr. Weicher. Thank you, Mr. Secretary. I am John Weicher,
Assistant Secretary for Housing and FHA Commissioner and
responsible for the Title I program. We have been reviewing the
report. It made a number of recommendations on both the
manufactured housing program and the home improvement program.
They are both part of Title I. We have made a commitment to
provide that, to make that report public within the next 2 to 3
weeks. We have had conversations with folks on the Senate side
about this, and it will be out shortly.
Mr. Green. Great. I appreciate that. That is very helpful
indeed.
Next, I would like to talk briefly about the section 811
tenant-based funds. Mr. Secretary, as you know, several months
ago a group of us on this committee wrote to you regarding
HUD's implementation of the section 811 mainstream tenant-based
rental assistance program. In the letter, we raised a number of
issues related to the absence of any programmatic guidelines to
housing agencies and nonprofit grantees that receive these
funds.
In response to the letter, HUD has indicated that it has no
plans to issue any guidance to these agencies. I wanted to hear
from you your reasoning as to that, and I was hoping that you
would reconsider. I think these guidelines are extremely
important to grantees and others who are involved in the
section 811 mainstream tenant-based program.
Secretary Jackson. I wanted to make sure that I was
correct. I am sorry, Congressman. Since we provide those funds
to public housing agencies, and they utilize them under their
guidelines that they have set up. That is basically the way
that we have done basically with the section 8 program.
Mr. Green. Okay. Mr. Chairman, if I may have a chance to
submit further questions for the record.
The Chairman. Without objection.
Mr. Green. Thank you, Mr. Secretary.
Secretary Jackson. Thank you so much, Congressman.
The Chairman. The gentleman from Vermont, Mr. Sanders.
Mr. Sanders. Thank you, Mr. Chairman.
Secretary Jackson, thank you very much for being with us
this morning.
Secretary Jackson. Thank you.
Mr. Sanders. I must start off by saying that I regard it as
slightly disingenuous for anybody here to be suggesting in any
way that this Administration is serious in trying to deal with
what amounts to a major crisis in this country in terms of
affordable housing, a crisis that every American and certainly
the Bush Administration should be ashamed of. More than 14
million Americans are paying over 50 percent of their limited
incomes in housing; 3.5 million people in this country will
experience homelessness this year, including 1.3 million
children and 500,000 veterans. And people are suggesting that
we are serious about addressing the housing crisis?
We have a ``war'' budget, but we have hundreds of billions
of dollars for tax breaks for millionaires and billionaires
while children sleep out on the street and people with a
straight face tell us that we are addressing the housing
crisis.
The National Millennium Commission, which was chaired by a
former Republican Member of Congress, Susan Molinari, suggested
that we needed to build 150,000 affordable housing units every
year. Last year, I asked Secretary Martinez, who was sitting
where you are, how many affordable housing units HUD was going
to build. He said 5,000. We need 150,000, and we are building
5,000. Briefly, Mr. Secretary, how many affordable housing
units are you going to build this year?
Secretary Jackson. Let me say this to you, and I will
answer your question.
Mr. Sanders. I am asking you the question.
Secretary Jackson. Okay. I said I would answer your
question.
Mr. Sanders. Okay.
Secretary Jackson. If you will help us pass the single-
family housing tax affordable credit, we can build a lot of
houses. With that, I want you to understand that the greatest
barrier to affordable housing in this country is not the
federal government. It is state regulatory barriers.
Mr. Sanders. I have heard that speech 100 times.
Secretary Jackson. Whether you want to hear it or not, I am
just telling you.
Mr. Sanders. I have heard it. We have all heard it.
Thank you. My time, sir.
Now, if you want to build affordable housing, you could
support the legislation that I have introduced which has 212
bipartisan cosponsors; which would build 150,000 units of
housing every year, that is the National Affordable Housing
Trust Fund.
Let me go to another area, which has, by the way, support
of 5,000 organizations throughout this country. Yesterday, Mr.
Secretary, public housing authorities throughout my State of
Vermont contacted my office to express their outrage by a HUD
notice announcing the following cuts in section 8
administrative expenses retroactive to January 1 of this year.
We are a small state, not California; this is Vermont; a
$262,000 cut representing 14.4 percent of the section 8
administrative budget for the Vermont State Housing Authority;
$180,000 cut for the Burlington Housing Authority, 19 percent
of their budget; 17 percent for Winooski, 13 percent for
Montpelier; et cetera.
How are agencies supposed to administer programs when they
are experiencing draconic administrative cuts?
Secretary Jackson. I would say this, Congressman. We are
administering the pro-rata share of the money based on what
Congress has told us to do. I think that clearly your housing
authority will benefit in Vermont like all of the others. I
think I said that in the beginning of this hearing.
Mr. Sanders. You said about the voucher program.
Secretary Jackson. Right.
Mr. Sanders. I understand that. You did not say about the
administrative. What I am telling you is that the housing
authorities in Vermont have told us there are going to be cuts
by between 15 and 20 percent.
Secretary Jackson. Okay.
Mr. Sanders. This is not what Congress mandated.
Secretary Jackson. We are distributing the money on a pro-
rata basis that Congress mandated.
Mr. Sanders. That is not my understanding.
Secretary Jackson. Well, that is a fact.
Mr. Sanders. Can you justify to this committee how people
are supposed to do their jobs when they are getting up to a 19
percent cut in administrative allowances?
Secretary Jackson. I can tell you that is the money that we
have been allocated to pro-rata and that is what we are doing,
Congressman.
Mr. Frank. Would the gentleman yield?
Mr. Sanders. Yes, I would.
Mr. Frank. The gentleman is correct. What the Secretary
talked about was the voucher funding and the reserves, but not
administrative funding. So what the Secretary said earlier does
not respond to the gentleman's question.
Mr. Sanders. You did not answer my question, sir. Are you
telling us you are concerned about affordable housing and you
are cutting housing authority administrative capabilities by up
to 19 percent? I assume this is national. I am sure it is not
just Vermont.
Secretary Jackson. What I am saying to you is that we are
pro-rata-ing the money on the basis for the administrative fees
that have been allocated by Congress, and your housing
authority will receive their monies, too.
Mr. Sanders. Can you give the members of this committee any
assurances that you are going to look at that issue and you are
going to try to rectify what is potentially a disastrous
situation?
Secretary Jackson. Congressman, you have my word. I will be
happy to look at it. We are going to make every effort.
The Chairman. The gentleman's time has expired.
Mr. Sanders. Can I give you a call and you and I will chat
about this?
Secretary Jackson. You may, sir.
Mr. Sanders. Okay. Thank you very much.
The Chairman. The gentleman from Connecticut, Mr. Shays.
Mr. Shays. Thank you, Mr. Chairman. I am happy to swap my
time with my Chairman of the Capital Markets Subcommittee.
Mr. Baker. I thank the gentleman for his courtesy.
Mr. Secretary, I think you are doing an outstanding job. I
regret the treatment you have received to date in this
committee this morning because of your aggressive leadership in
making changes that really count.
Let me speak first to the GSE issue very quickly. GSEs are
underperforming the market and the way to get to this number is
to go look at what loans are held in portfolio. Those people
who are low-income with lack of resources would be those people
who would have low amounts of downpayment. They would be 95
percent to 100 percent of LTV ratios. When you look at the
GSEs's annual reports, which I have done, you find that less
than 5 percent in Fannie and less than 4 percent in Freddie are
typified by those types of loans. When you go to a commercial
bank, it averages 11 to 13 percent nationally.
Now, I am going to write the letter you asked for somebody
to write, to make full disclosure of how HUD views now the
conformity with those low-income housing goals which you
stipulated you do not have the authority to release without a
congressional request, because I think it is important for this
committee to have the facts, whether they want to understand
them or read them or not.
Now, some will say the GSEs do not have the authority to
initiate or originate loans. That is in fact the case, but they
have the black box by which they determine who is approved or
required to move into the secondary market, and you have to hit
a certain score. The reason why those banks have 13 percent of
those low-income loans in portfolios is because the GSEs will
not buy them.
So if they were innovative in leading the market instead of
worried about double-digit rates of return for their
shareholders and paying their executives, the top 20 which I
happen to know make in excess of $1 million in salaries and
benefits, we could help low-income people in this country by
making a meaningful departure and taking the subsidy, which is
valued by many at multi-billions of dollars for multi-years,
including Alan Greenspan, the President, the OCC, the FDIC,
anybody who has a ``C'' after their name who is a financial
regulator. They will tell you that this deal is running
sideways.
We are taking taxpayer guarantee, implicit-explicit, it
does not matter. You talk about removing the line of credit,
markets go crazy. Gary Gensler in the Clinton Administration
sat where you sat and said we ought to repeal line of credit.
In that day, the stock price went down. Did it affect the
interest rates on homeownership? Absolutely not. Did it hit the
executives in their pocket? Absolutely. Why are they squealing?
Because they are worried about losing their profit, not about
helping poor people get housing.
I have simply just had it. This argument is about not
protecting market share. It is about protecting the way a
corporate entity operates that makes profit at taxpayer
guarantee. There is nobody that can convince a rational person
that the explicit guarantee, the implicit guarantee, the
sideways guarantee, does not in fact result in that enterprise
making huge profit. If they were ever to lose money, is there a
doubt by anyone on this committee that the taxpayer would be
called on to pay off that?
Let me jump one quick second. You are doing some innovative
things. You have taken a look at a project down at Carville,
Louisiana which provides resources between Job Corps, the
National Guard and helping kids 16 to 18 years of age on the
streets who otherwise would not get educational opportunity, by
giving them a GED course in 5 months, giving them job training;
90 percent graduate or are fully employed.
It is a remarkable program, and I am asking, with the time
I have left, on page 12 of your testimony which I have read
thoroughly and I really appreciate. I think it is outstanding
testimony. The department will provide $55 million in funds to
support the resident opportunity and self-sufficiency program
for residents of public and Indian housing. The main purpose of
these funds is to provide a link between residents and services
that can help them achieve self-sufficiency.
We care about people. We do not want to house them in
public housing and leave them there without the tools necessary
to succeed in life. That $55 million is going to give people
job skills. What I hope you will be able to take a look at that
program, the youth challenge program down in Carville,
Louisiana, and replicate that wherever you think advisable.
I want to yield back my time to Mr. Shays for whatever use
he might care to make of it.
[Laughter.]
Secretary Jackson. Congressman Shays, may I say I have had
a chance to view the program and it is a phenomenal program. He
is taking persons who had no perspective of what was going to
happen to their lives and made them productive citizens. I
would hope that that would be replicated around this country in
every congressional district in this country. I think it is a
very excellent program, especially where you have a high
concentration of African Americans and Hispanics, the low-and
moderate-income person.
If you will notice, I never use the term ``poor'' because
``poor'' is a State of mind, not a condition. That is what it
is. I have a lot of wealthy friends who are poor. So I always
say low-and moderate-income people because I think we should
think about making them as middle-class as we can. I think that
the program that the Congressman is talking about is one of
those programs that is productive.
Mr. Shays. Thank you. With the 15 seconds I have left, I
just want to say that I wish that the other side of the aisle
had let you respond to the questions they asked, because they
are important questions. They ask you the questions, and then
they do not allow you the chance to respond. I just wish you
had that opportunity.
I will look forward to questioning you in my round.
Secretary Jackson. Thank you.
The Chairman. The gentleman's time has expired.
Mr. Frank. Mr. Chairman, can I just ask unanimous consent
that the pace at which Mr. Baker spoke be established as the
norm for the committee. I would feel a lot more comfortable.
[Laughter.]
The Chairman. Without objection.
Mr. Baker. Mr. Chairman, I have a further request. The pace
of speaking is one thing. The pace of understanding is entirely
something else.
[Laughter.]
Mr. Frank. There are limits to what you can accomplish by
unanimous consent.
[Laughter.]
The Chairman. I think we have proven that time and again.
The gentlelady from New York, Ms. Maloney.
Mrs. Maloney. Thank you. Welcome, Mr. Secretary.
I would like to be associated with the comments of Ranking
Member Frank on the overall section 8 program, the GSEs and
other factors. But I would like to question you primarily on
what this new formula, the devastating effect that it is having
in New York City. I would say that every housing authority
across the country, like New York City, is up in arms and their
challenges are probably very similar to New York City's.
Under this new formula, New York City alone will lose $55
million out of their current budget for section 8. There are
over 141,000 people on the waiting list for section 8, and 83
percent of them have incomes less than $16,000 a year. They are
no longer able to distribute vouchers available through
attrition, and it has truly caused chaos in the tenants lives.
I would say it has caused chaos in the private sector, those
people that are willing to finance and work with the city and
State and federal governments for affordable housing. They are
now wanting to run away from their commitments.
It has undermined the confidence in section 8 and one of
its goals to de-concentrate the poor, but not only section 8. I
am getting phone calls on section 202 saying, I no longer want
to go forward with my 202 program that may be treated like the
section 8 program, not funded and totally changed. This is a
very, very serious problem. I agree with my colleagues who say
you need a city, State and federal effort to build affordable
housing.
You came forward with two proposals today to try to be
helpful, but in all due respect it appears to be more of
spinning a problem than fixing a problem. In New York City, the
annual adjustment factor which you mentioned, they were already
counting on that. It seems that that was what they were
supposed to get anyway. The only concession to the PHAs was
basically nothing more than giving them their full year's
inflation factor, their annual adjustment factor, throughout
the year instead of making it at a graduated rate leading up to
the total AAF. So they tell me that that does not help them at
all with the $55 million gap.
Then the second item that you mentioned, Secretary Jackson,
that you would free up more of the 2003 central reserve funds
to be used to reimburse the public housing authorities that had
their own program reserves depleted in 2003. Well, that is New
York City and probably many more public housing authorities
across the country. But this money was always supposed to be
replenished from the city's own depleted reserves. So New York
City's public housing authority, your two new programs do not
help them at all with the $55 million gap that they are facing.
I understand from press report that there are eviction notices
going out across the country because of this new formula
change.
So my question to you is, what are you going to do for the
poor families in public housing in New York City and in other
places across the country to make up this tremendous cut in the
budget this year that is harmful? Then the next question is,
what in the world are you going to do next year? Are you going
to cut even more?
In all due respect, your answer that the problem with
building affordable housing is problematic regulation, we need
affordable housing, we need the federal government. We need the
continuation of one of the most successful programs for the
poor this country ever developed, from President Nixon to the
present. Every specialist will tell you it has been the most
successful program for the poor.
So this is a devastating change. But my question, your two
points will not help New York City's crisis at this point. I
predict it will not help other cities in the same position.
Secretary Jackson. First of all, I appreciate your
Statement, but I can tell you that there will not be an
alarming number of cities who are facing the crisis that you
just said. Secondly, it is important that we will address the
issue in New York City and we have begun to address the issues
in New York City. I think that we will reach conclusion on
those. But I think it is important to understand how you say we
are devastating the program. Until 1999, the program was
budget-based. You got a budget. You did not get units. When I
ran housing authorities, there was no unit-based authority.
That was after 1998.
So I got a pile of money and the money simply said that you
have to allocate your units based on whatever we give you. We
changed that and we have had an exponential growth in the
program since then. The question is, the program cannot keep
going at the rate that it is going. It is about 53 percent of
our budget today. If we continue to go to program, then I would
be facing you tomorrow with you saying to me, what are we going
to do about the homeless programs; what are we going to do
about HOME; what are we going to do about the CDB grants.
The Chairman. The gentlelady's time has expired.
The gentleman from New Jersey, Mr. Garrett.
Mr. Garrett. Greetings.
Secretary Jackson. Thank you.,
Mr. Garrett. Just a couple of questions on some of the
testimony that you have already given, some along the line from
both sides of the aisle. It is my understanding that with
regard to the rules that you have promulgated with regard to
GSEs, that because of the existing housing goals, there is
already in certain areas, not in every area of course, an over-
capacity of multi-family rental units that are currently left
vacant. It is suggested that these high vacancy rates are
basically an example of whenever the government becomes
involved in trying to allocate scarce resources from one
location to another, that you are going to have inefficiencies
in the system that is better left to the marketplace to derive.
So wouldn't it be better than to exacerbate this problem by
placing additional burden on the system by stepping back?
Secretary Jackson. No, because Congressman, if we do not
ask the GSEs to adhere to their missions, it is clear from the
past that they will not adhere to those missions. We believe
clearly what we are asking them to do is to, under the
congressional mandate, be the leader in providing low-and
moderate-income affordable units under the mandate. We are not
asking them to do anything differently. It was said a few
minutes ago that, well, they buy portfolios. Well, those
portfolios that they bought are already in use. They have not
expanded the base. We are asking them to address the issues the
congresswoman just said, the congresswoman from New York, to
provide more affordable housing. The only way we can do that is
say that we are not going to continually give you points for
something that is artificial and not realistic, but we want you
to lead the market.
They come back and say, well, this is going to put us in
jeopardy. I do not see how it is going to put them in jeopardy.
We are not talking about the high end of their market that they
do the secondary writing. We do not really care. We are just
saying, address the charter mandate, and if you do that we will
work with you. I do not think we are stifling. I am with you. I
do not think we should stifle the enterprise market, but I
think we should make them carry out their mandate.
Mr. Garrett. Let me go to the other end of the line then.
One of your opening comments, which drew some response, was the
implicit government guarantee. Earlier on in hearings that we
had last year, I guess it was, was discussion with regard to
the line of credit, which I guess I am always told as a
freshmen here, is just a small line of credit and one of the
expressions they use, it is only a day's impact of revenue as
far as the GSEs are concerned. So one of the questions in
earlier hearings at the time was, if it is such a de minimus
amount, why does that line of credit still exist? If you remove
that, would that obviate the whole question that seems to go
back on the other side of the aisle as far as whether there is
or is not an implicit line of credit there?
Secretary Jackson. I would think you would have the two
chairmen of the GSEs. I do not think I am at liberty to really
discuss that.
Mr. Garrett. I will do what the other side said, do you
have an opinion on it?
Secretary Jackson. I think they should answer that
question, Congressman, not me.
Mr. Garrett. Does he have an opinion on it?
[Laughter.]
Secretary Jackson. No.
Mr. Garrett. Okay.
Secretary Jackson. I did not want to say it, but I think it
is a good point to say it, as Dr. Weicher just said, as I told
the congressmen here in my talking initially when I came in
here with the GSEs, initially what was said to me about the
implicit, but the market also believes that there is an
implicit guarantee. I think you have heard it a number of times
in the last 5 or 6 months in different papers. Whether there is
or not, I think the people to answer that would be the GSEs.
Mr. Garrett. Okay. Let me go down a totally different road
on this. In the discussion of the burden that is placed by the
States, not by the Congress, not by the federal governments, as
far as the housing restrictions. Some make light of this, but I
certainly see it from the realtor community, from the building
community back in my home State in New Jersey, and I certainly
see it from not only the regulatory side of the equation, but
the entire taking side of the equation as well.
That is, we see it in our State right now, the whole taking
of private property, taking it off the lists entirely so you
just cannot build any housing, whether it is high priced
housing or even affordable housing even less, considering where
they are trying to do this. Is there anything that either you
are able to do or is there any suggestion that you may be able
to make to Congress that we are able to do on the federal level
vis-a-vis the States as far as this taking issue and also the
regulatory side, that we could step up to the plate to make
sure that there is land there and less restriction on the
costs?
Secretary Jackson. Before Secretary Martinez left, and I
followed, we both agreed that in order for us to be effective
in going to States in different locales to insist that they
begin to relieve developers of these regulatory barriers,
whether they are environmental, permit-wise or otherwise, is
that we have to first do it at HUD. We are cleaning up our own
process at this point.
If you take, for example, California, the Congresswoman is
leaving, before you leave, before you can even bring a house
out of the ground, you are looking at somewhere between
$105,000 and $115,000 with the regulatory barriers that you
face. It is about $96,000 in New Jersey. So if we can break
down those barriers with States, then I think we can make
inroads.
That is what we are doing with the single family affordable
housing tax credit. We are giving those incentives to
developers to go into the urban areas to develop and write-down
almost 50 percent of what it takes to get that house out of the
ground. But even if we do that, we are still going to have to
have flexibility from the States, from the cities, and say that
we are going to work with you to make sure that we can create
affordable housing, as the Congresswoman from New York said.
The Chairman. The gentleman's time has expired.
Mr. Garrett. Thank you.
The Chairman. The gentlelady from New York, Ms. Velazquez.
Ms. Velazquez. Thank you, Mr. Chairman.
Mr. Jackson, in your testimony you stated that ``HUD's
lead-based paint program is the central element of the
President's efforts to eradicate lead-based paint poisoning.''
You also stated that ``Funding for the lead-based paint will
increase to $139 million from $136 million requested by the
President for fiscal year 2004.'' When it comes to numbers that
are provided by the Administration, they always make me uneasy,
because I remember quite fresh the Medicare prescription bill
numbers that were provided to us. Isn't it true that the
program was funded at $174 million last year, so the
President's request is in fact a cut of more than 20 percent,
not an increase?
Secretary Jackson. I am sorry. Yes it was, but Congress
added the money to it. You all did.
Ms. Velazquez. I am sorry?
Secretary Jackson. You all added the money to it. It was
at, I think, $136 million or $136 million.,
Ms. Velazquez. $136 million.
Secretary Jackson. Yes, and you all added the extra money,
Congress did.
Ms. Velazquez. But if the President is so concerned about
protecting children in our nation, why didn't you request to at
least maintain current funding levels for these programs?
Secretary Jackson. That is because you all added the money
because you wanted us to do some demonstration programs and we
did.
Ms. Velazquez. Because of us, so do not come here and tell
us that the President's priority is to protect our children,
when the President's request is totally inadequate.
Secretary Jackson. That is from your perspective. I am
saying that we think it is quite adequate, and I think it
addresses what we are trying to do. I think that the programs
around the country, a number of cities and States, have given
us great accolades for addressing the lead problem.
I guess that, again, I appreciate your asking that question
because probably nobody has had to deal with lead more than I
have in two specific areas, both St. Louis and in Washington,
D.C. This Administration has funded the lead hazardous program
better than any Administration in the years that I ran public
housing. That is a fact.
Ms. Velazquez. Well, you come here and you say that you had
a request to increase funding, when in fact it was not. It
seems to me that there is a contradiction, sir, in the
Administration's demand to hold our schools accountable while
retreating on efforts to protect children from lead poisoning,
so that they can start school ready to learn.
Secretary Jackson. I agree with you wholeheartedly,
Congresswoman, and I am saying to you that----
Ms. Velazquez. Okay. Let me ask you another question about
the 203(k) scandal in New York, Harlem and Bushwick, one is
part of my district, where so many people lost their homes, and
now again you are going into the second round of selling those
properties. Can you tell me whether the agency is implementing
safeguards with these auctions to prevent a repeat of the
203(k) scandals?
Secretary Jackson. If it is okay, I would like Dr. Weicher
to answer it. I know the answer, but I think he can give you
more details.
Ms. Velazquez. Sir, what is your plan to ensure that these
families are not victimized one more time? We love to talk
about accountability, but you created that mess in New York, so
what are the safeguards that you are putting in place to
protect those families?
Mr. Weicher. Ms. Velazquez, let me start by saying that the
mess was created in 1998 and 1999 and 2000. We in this
Administration have been addressing that and cleaning it up. We
have been working with the City of New York, with HPD, in their
established programs and with developers that they have worked
with who know how to do the job of rehabilitating these
properties and who are ethical developers with solid
reputations, to make sure that the work is done and done
properly.
Ms. Velazquez. Sir, let me say this to you.
Mr. Weicher. Yes.
Ms. Velazquez. I have been writing to you. I have been
visiting with these tenants. I have been seeing these
properties, and you are not taking care of that situation back
in my district. It is a shame that either you or the City of
New York, because you cannot just say I am going to give it
back to the City of New York, and you just go ahead and do
whatever. No one is accountable. I write to you. You do not
deal with the issue. I write to HPD in New York. So you are
giving these properties to New York with no type of federal
regulations or anything. This is going to happen again.
The Chairman. The gentlelady's time has expired.
The gentlelady from Florida, Ms. Harris.
Ms. Harris. Thank you, Mr. Chairman.
Welcome, Mr. Secretary. I am pleased to see you here. Thank
you for taking the time to be with us today.
Secretary Jackson. Thank you.
Ms. Harris. As you know, I was honored to sponsor the
American Dream Downpayment Act last year that the President has
signed. As I travel the country, people are so anxious to begin
the opportunity of homeownership, including where I pick up my
dry-cleaning every single week on Capitol Hill. They say, when
can we start?
I understand you are in the process of crafting the
regulations, but can you give us an update as to when you
expect that people can begin this opportunity?
Secretary Jackson. We have allocated the money to a number
of cities. We hope that they will begin to disburse the money
immediately.
Ms. Harris. In the American Dream Downpayment Act, we also
reauthorized HOPE VI with more accountable standards and
allowing authorized Main Street programs throughout the country
to be able to access some of those funds for affordable housing
so our first responders can live in these small communities
near where they work. I was disappointed to see that those
funds were not allocated in the President's budget. Hopefully,
we will address that.
A second quick question, we are working in obviously a
tight fiscal environment, much accountability, many
efficiencies. I am a member in the freshman class, a co-founder
of the Washington Wastewatchers Club. There was at one point $7
billion that was identified by the HUD inspector general that
was not used for its intended purposes. What types of programs
do you have in place or are you planning to have in place to
fight the waste, fraud and abuse which is at taxpayers's
expense?
Secretary Jackson. I think that is a very honest question.
I must say that the Inspector General at HUD has been
absolutely phenomenal. We have not always agreed, but he has
kept HUD ethically true to the mission. Where there have been
problems, he has brought them to us and we have worked with
him. In the end, we might not have agreed from the HUD
perspective, but he had to make a report. I can tell you that
Ken Donohue, who is the Inspector General, has been absolutely
excellent. We have not had any serious problems at HUD the last
3 years.
We have tried to clear up those problems that we have had
each time we found them. It does not mean that some of the
problems we have had in the field or region have not been, I do
not want to say not serious, that is not the question. We have
had problems, but we have addressed them very quickly and
worked with the inspector general to clear them up. So please
excuse me for saying ``not serious.'' I think that anytime we
have fraud, waste and abuse, it is serious, but we have worked
with him.
Ms. Harris. Now to my real question, I want to turn you
attention to HUD's new proposed affordable housing goals for
the GSEs, the 57 percent of the loan purchases that are going
to be made to borrowers that are below the area median income.
I have a strong record of desperately caring about affordable
housing, but I am concerned that these goals may put the GSEs's
portfolio at risk. On the one hand we are constantly talking
about the concerns that we have for the safety and soundness of
these GSEs, and on the other hand I am concerned that we may be
setting these goals unrealistically high.
Secondly, if the targets and assumptions for these targets
that are established are not correct, would the GSEs be forced
to voluntarily lower their conforming loan purchase limits in
order to assure that they hit those targets? Because if that
were the case, I think it would be devastating in arenas such
as Florida, New York and California where the costs are much
higher.
Secretary Jackson. I think that is a very legitimate
question. But let me say this to you, Congresswoman, I think
asking them to address their mandate to serve low-and moderate-
income people is less risky than investing in derivatives. I
really do.
Secondly, it is amazing to me that when you ask them to
meet their mandate, they would say that it is going to affect
their ability to carry out their mission or lower their
abilities to make loans. That is their chartered mission, to
address the needs of low-and moderate-income people in America.
I would love to meet that mandate if I were doing as well as
some of their top executives are doing. I would love to address
the needs of low-and moderate-income people.
Ms. Harris. You are not concerned that it is going to put
their portfolios at risk at 57 percent?
Secretary Jackson. No, I do not. I can tell you honestly,
if I thought that, I would not do it. I do not want to
jeopardize any one of the two GSEs, because I think they serve
a very vital purpose for this country. I also think that it is
their responsibility to address the needs. As I said before you
came in, they keep talking about what they cannot do. They
report to us quarterly.
If we are wrong when we are saying they are not leading the
market that they should be leading, all I would ask the two
GSEs is give us permission to provide you with the data that
they provide us. If they give us permission, then you will see
they are not coming close to addressing the needs of low-and
moderate-income people in this country. All we are saying is to
do it.
The Chairman. The gentlelady's time has expired.
Ms. Harris. Thank you.
The Chairman. The old right-hander from North Carolina.
Mr. Watt. I assume that is me, Mr. Chairman.
[Laughter.]
The whole right-hander. I think that is the wrong
characterization. Do not take that from my time.
[Laughter.]
Welcome, Mr. Secretary and thank you for being here today.
Secretary Jackson. Thank you.
Mr. Watt. Mr. Chairman, may I start by asking unanimous
consent to submit for the record a report prepared by the Urban
Institute and the Brookings Institution entitled A Decade of
HOPE VI Research Findings and Policy Challenges.
[The following information can be found on page 106 in the
appendix.]
The Chairman. Without objection.
Mr. Watt. I get a lot of questions about the whole budget,
but I have spent a lot of time focusing on this HOPE VI issue.
I would like to focus my questions solely on that issue.
Back in 1989 or 1990, something called the National
Commission on Severely Distressed Public Housing did an
assessment of public housing to identify severely distressed
public housing units. It indicated that there were 86,000
severely distressed public housing units.
This report that I have just submitted for the record
indicates that approximately 19,000 public and market-rate
housing units have been generated under the HOPE VI program in
the last 10 years. Giving the benefit of the doubt, let's round
that to 20,000 units. What happened to the other 66,000
severely distressed housing units that were identified?
Secretary Jackson. Let me say this, because----
Mr. Watt. I don't want you to say. I just want you to
answer my question, Mr. Jackson.
Secretary Jackson. I think I should clarify.
Mr. Watt. I have a series of questions. I would like for
you to answer the questions. I have heard you give speeches. I
love to hear you speak. Today, I want you to answer my
questions.
Secretary Jackson. First of all, there are not 66,000.
There are about 126,000 that are unbuilt today.
Mr. Watt. Okay.
Secretary Jackson. What has happened to this is that we
have allocated the money to the housing authorities and the
housing authorities have spent most of the administrative fees,
but not spent on building the units. Secondly, what is
important here is this, that there have only been 26 successful
HOPE VI developments out of----
Mr. Watt. Is your answer that instead of 86,000 today,
after 10 years there are one-hundred-and-some thousand severely
distressed housing units?
Secretary Jackson. That is what we funded.
Mr. Watt. Okay. All right. The question is, how many
severely distressed housing units do we have today?
Secretary Jackson. That is very difficult to answer.
Mr. Watt. But the Administration apparently has concluded
that the mission of HOPE VI has been met, I mean, I am quoting
the President, and the gentleman behind you there, the last
time he testified, told me that the mission of HOPE VI has been
accomplished. I thought that mission was to replace those
86,000 starting off, and any that were added subsequently.
Secretary Jackson. The mission has been accomplished.
Mr. Watt. Okay. So you are saying there are no severely
distressed public housing units in the country?
Secretary Jackson. Not according to the initial 86,000. We
are well above that. Congressman, I think you have to
understand you are talking to the person who wrote the
legislation.
Mr. Watt. I do not care who I am talking to, Mr. Jackson. I
just want you to answer my question. I did not come here to
hear you give me a speech. I am trying to find out how many
severely distressed public housing units you have.
Secretary Jackson. There were 86,000 in 1989.
Mr. Watt. How many do we have today? That is the question I
am asking, Mr. Jackson.
Secretary Jackson. We funded more than 86,000.
Mr. Watt. I did not ask you how many you funded. I asked
you how many severely distressed public housing units do we
have in the country today.
Secretary Jackson. I will tell you, Congressman, we have,
according to what the HOPE VI program was set out to be, we
have none, if we said back in the study it was only 86,000.
Mr. Watt. So your testimony is that there are no severely
distressed housing units left in the country today. Is that
what your testimony, Mr. Jackson?
Secretary Jackson. I am not going to say that to you. I am
not going to say that.
Mr. Watt. Then please answer the question. How many
severely distressed public housing units do we have in the
country?
Secretary Jackson. You answered the question yourself. You
said there were 86,000 and I am telling you, we funded above
86,000.
Mr. Ney. [Presiding.] The time has expired.
The gentleman from Connecticut?
Mr. Shays. I am happy to pass a bit to hear my other
colleagues ask questions. So I reserve my time.
Mr. Watt. Would the gentleman yield me enough time to get
my question answered?
Mr. Ney. Does the gentleman yield?
Mr. Shays. No. I am not using my time now. I am reserving
my time, so ask another Republican.
Mr. Ney. That is fine, the gentleman does not yield.
Mr. Renzi?
Mr. Renzi. I thank the Chairman.
I want to let you know that Chairman Ney and Ranking Member
Waters were kind enough to come out to the Navajo Nation. I
appreciate your sending a representative out. I want to talk to
you about Native American housing which is severely depressed.
Secretary Jackson. That is true.
Mr. Watt. Oh, no. None of that exists anymore in this
country, apparently.
[Laughter.]
Mr. Ney. Is the gentleman requesting time or saying
something?
Mr. Watt. I have been requesting an answer for the last 5
minutes. I just have not gotten it.
Mr. Ney. The gentleman's time has expired.
Mr. Frank. The gentleman from North Carolina is just
severely distressed.
[Laughter.]
Mr. Watt. I am severely distressed, right.
[Laughter.]
You are absolutely right. I am severely distressed because
we cannot get an answer. I thought this was a hearing to get
the facts about what was going on.
Mr. Ney. All Members of Congress are distressed at this
point in time.
The gentleman, Mr. Renzi.
Mr. Renzi. Within section 184 of Title VI we have a
situation where we are looking at a rescission of funds as it
relates to programs that were supposed to be used extensively
by Native Americans. I am sure you are aware of it.
Secretary Jackson. Yes.
Mr. Renzi. We are coming up on that time where that money
is supposed to be going back. What are we doing to make sure we
do not lose that money? What are we doing to make sure that we,
next time the money is available, that we are fully able to
utilize it?
Secretary Jackson. I will ask Assistant Secretary Liu to
help me, but it is clear we put the money back in place,
because we realized that we had some serious problems, and I
would like to let him speak to it.
Mr. Renzi. Okay. I am not going to cut you off, but I had
your answer at my hearing. Go ahead.
Mr. Ney. Please state your name for the record.
Mr. Liu. Assistant Secretary Michael Liu of the Office of
Public and Indian Housing.
Mr. Renzi. Go ahead.
Mr. Liu. Congressman, I appreciate the time that we had a
few weeks ago in Arizona. We are aggressively working with the
Indian tribes to promote the section 184 program. We are having
regional workshops and summits to build capacity among the
tribes. We are expressing our concern with banks that are not
currently----
Mr. Renzi. I got it. I got it. I would appreciate it if you
would look at putting as many counselors, opening up offices. I
do not care what you have to do, but the idea that we are going
to rescind $54 million, okay, that we did not use, there are a
lot of conservative fiscal hawks around here who enjoy that on
my side, but the reason we are not using it is because we do
not have Native Americans who can even use the Internet to get
a mortgage.
Let me go into a situation we have over at BIA. I realize
it is not under your jurisdiction, but I want you to be made
aware of, there is a 113-year backlog at BIA on closing escrows
on trust land, not fee simple land, but trust land. So we give
sovereignty to the Native Americans. We then have to do the
research to close the title. We have 113 man-year backlog,
which means escrows are taking over 2 years. So even if we are
Native American and we can qualify for the loan, sir, even if
we can get through and get the 184 money, we still have 2 years
to close on our home. Okay? I just want to make you aware of it
that you have to help and you have to help put pressure on BIA
to get this, because it is unacceptable out there.
Ms. Waters said that the conditions are so deplorable in
the Navajo Nation that they are as bad as they are in South
Africa. Those are her words. We do not have to go and see third
world conditions. We can see it right here in America, up on
the Navajo.
One of the things I also wanted to ask you real quick
before I run out of time is, I think you have been kind enough
to reach out and look at the possibility that under title VI,
we are now looking at increasingly the guarantee, reducing it
to 80 percent coming off that 95 percent guarantee, are you
with me on this?
Mr. Liu. Yes.
Mr. Renzi. Okay. What is your position? What is your
opinion on the idea of us going back to 95 percent guarantee so
that we can have more private investments, better economic
development, more jobs and more people owning homes in Indian
Country? Are you willing? That is not a big stretch, is it?
Mr. Liu. Yes. Congressman, we think that is certainly an
issue that we will review and take back and work on.
Mr. Renzi. If Congress came out and legislatively moved it
back to 95 percent, would you oppose it?
Secretary Jackson. We are going to carry out what Congress
says.
Mr. Renzi. Thank you, Mr. Chairman.
Mr. Ney. The gentleman, Mr. Meeks?
Mr. Meeks. Thank you, Mr. Chairman.
We are working on a HOPE VI project, and I know that they
are talking about eliminating some of the money, time is
running out, the project is not finished. By the way, how many
distressed housing is still currently in the United States of
America? Severely distressed?
Secretary Jackson. I will say this, that the 1989 study
from the National Commission on Severely Distressed Housing
says that there were 86,000 units.
Mr. Meeks. In 2004, how many are there?
Secretary Jackson. I would say that we have funded under
the HOPE VI program to date 129,000 units.
Mr. Frank. Will the gentleman from New York yield?
Mr. Meeks. I yield.
Mr. Frank. Let me just point out, Mr. Secretary, that
assumes that even if you take that formulation, that no units
became severely distressed in the 15 intervening years. Using
the 1989 figure as the figure assumes that nothing became
severely distressed in the last 15 years. So even on its own
terms, it does not make sense.
Secretary Jackson. Well, we have done 136,000, so obviously
there have some that have been distressed. He asked me how many
there were. I said clearly, Congressman, there were 86,000 when
we began writing the legislation. To date, we have done
136,000. Of those 136,000, we have only had 25 of those HOPE VI
completed.
Mr. Meeks. Do you know if there are any severely distressed
housing in America today? Do you know? Yes or no?
Secretary Jackson. I am sure there is distressed housing in
America today.
Mr. Meeks. Do you have any idea approximately how many
there are?
Secretary Jackson. I can tell you that there are 136,000.
We funded that many.
Mr. Meeks. There were 136,000.
Secretary Jackson. There are 136,000, and of that
probably----
Mr. Meeks. So if there are 136,000 today, then the mission
has not been completed with reference to HOPE VI, because there
continues to be 136,000 severely distressed developments today.
Secretary Jackson. No. I do think the mission has been
completed, and I will tell you why I think it has been
completed. I suggested that the program be discontinued and I
will stick with that. That is because the program was started
to address the need to integrate people both socially and
economically into the fiber of this country.
We have had 25 of those completed in the last 12 years. We
have over $3.2 billion outstanding after allocating $5 billion.
My position is this, some of these cities have had the money 7
years, 8 years in the program. The HOPE VI have not been
completed, nor has it been started. I do not think we should
continue to fund the program that does not work.
Mr. Watt. Will the gentleman yield?
Does this reflect at all on HUD's oversight of HOPE VI? Or
you are just saying HUD does not have anything to do with this,
I guess.
Secretary Jackson. No, I do not think it does because I
have run housing authorities. You represent a city where you
had probably the most illustrious HOPE VI other than Dallas.
You had a person who made it work, and they did not have any
impediment. Other cities have not.
Mr. Watt. So the program does not work, then, because other
cities did not make it work. That is what you are saying. And
HUD did not oversee it to make the other cities make it work.
That is what you are saying. So therefore it ought to be
discontinued.
Secretary Jackson. Let me say this to you, I think your
analysis is correct.
Mr. Meeks. Taking back my time. Let me ask another
question. Let me go to New York City real quick with the time
that I have left. You know, and I guess you told my colleague
Carolyn Maloney that you will look into the $55 million
shortfall that New York City has. But do you know that, going
back to section 8, that right now that the HPD is not issuing
any section 8 vouchers anymore?
I have heard the conversation here today, the dialogue
about reducing the amount of money that goes into section 8.
That means that individuals who are now new people, we have
some young people who were in foster homes, who are now turning
18 years old, they are not eligible. They cannot obtain any
section 8 housing, any section 8 vouchers because there are
none, because of the shortfall in New York. Does HUD have any
suggestion what we do with those kinds of individuals, or do we
just allow them to be homeless?
Secretary Jackson. Until 1998 under the QHWRA Act, persons
like that took priority. That is not the case today. The law
was changed. Everyone has to rise on the list.
Mr. Meeks. So they should just be homeless.
Secretary Jackson. You asked the question. I am saying,
since 1998, you are asking us if we can do something about it,
that is something that Congress has to do something about. If
you want to change it.
Mr. Meeks. So that is not part of HUD's mission at all.
Secretary Jackson. Our mission is to implement any program
as you say so.
Mr. Meeks. Let me ask another quick question. You talk
about homeownership, and I believe in home ownership----
Mr. Ney. The time has expired.
The gentleman, Mr. Miller of California.
Mr. Miller. Thank you, Mr. Chairman.
Welcome, Mr. Jackson. It is good to have you here today.
Secretary Jackson. Thank you very much.
Mr. Miller. I have enjoyed working with HUD over the years.
RESPA is a huge issue for me. I have been in the development
industry for over 30 years, and I will agree with you that the
largest impediment to housing in this nation is state and local
regulatory barriers. If you add ESA to that, I will agree 100
percent with you.
You started your talk today off with your goal is to make
sure HUD meets their housing mandate. A lot of what we have
said today would be applicable, because HUD is responsible for
trying to build housing out there. But GSEs, Fannie Mae
particularly, their goal is not to build houses. They do not
build houses.
Secretary Jackson. That is correct.
Mr. Miller. They provide funding in the marketplace. In
that area, they are restricted on how much they can loan. We
call them conforming loan limits. As a matter of fact, I think
conforming loan limits need to be raised in high-cost areas. I
would really ask you to revisit this 57 percent mandate because
what we are effectively doing is saying in a marketplace such
as California, if you take a 57 percent mandate, of those loans
that are made 57 percent have to be below the median, that
means last year, for example, 49 percent of the loans made in
California could not have been made. I want to speak positively
about this, because this is very serious in California. The
current median home price in California is $428,000.
Secretary Jackson. That is correct.
Mr. Miller. Based on that 57 percent mandate, last year the
loan limits would have been nothing above $195,000. So what we
are doing, instead of trying to provide housing in this nation,
we are dealing with rationing the amount of funds available to
the marketplace. That really, really bothers me because I think
it creates a shortage of competition, because Fannie is going
to apply this based on the mandate placed upon them, and that
is 57 percent, when in areas like Barney Frank represents,
Maxine Waters, Barbara Lee's and mine in California, we are
going to wipe people out of the marketplace.
If we want to provide affordable housing, that is HUD's
oversight, but to take and limit the amount of money and
basically calling it credit allocation does not make sense. If
we had a limited pool of funds here that Fannie was dealing
with in a year, and they were having to take and reject
borrowers because they did not have the money. So we are trying
to make sure that more low-income people, medium-income people
receive the funds available through a GSE, if there were a
limited pool of money, it would make a tremendous amount of
sense to do what you are trying to do.
But there is no shortage of funds out there. Fannie is able
to make every loan requested upon them each year. So if that is
the fact and it has been proven to be, why in the world would
we go to Fannie and say, we want you to basically restrict the
amount of loans you make because we are going to require an
allocation of 57 percent to be below the median?
If you were talking today about HUD meeting their housing
goals, and there is an affordability crisis in this nation
beyond belief. You have section 8 and then between section 8
and what is available is a huge, huge difference in price. We
are unable to fill this price range of homes because of what
you said about state and local regulatory barriers and
restrictions placed upon property owners. But for us to go into
this 57 percent requirement on GSEs, it just seems like it is
going to have a drastic impact on the market out there. If I am
incorrect, please explain to me how it is incorrect.
Secretary Jackson. Sure. Congressman, what I would like to
do, because I think to give you a greater analysis of this
would entail taking some time.
Mr. Miller. I will take the time privately with you.
Secretary Jackson. Okay. I will be happy to do that,
because let me say this. The interpretation which you have
given is not our interpretation. We are saying that we are not
concerned with Fannie Mae or Freddie Mac, the high-end of the
market. We are saying that that end of the market that you
serve, we expect you to serve according to the three sub-
categories that we have given. I would like to just sit down
with you and go through it. I think that we can make it very
clear to you.
Mr. Miller. I think I understand what you are saying, but
the problem is you are dealing with an allocation and a
restriction of funding within the marketplace when there is no
shortage of funds. If there were a shortage of dollars and we
are trying to force money into a given sector of the
marketplace, then I would say okay, let's look at a formula.
But when there is no shortage of money, to falsely create a
percentage out there that has to be complied with by the
lenders to force money into an area that there is no shortage
of money in, means you are going to take money and restrict it
in another area. You cannot meet 57 percent, and yet provide
for those in the other area.
Mr. Ney. The time of the gentleman has expired.
Mr. Miller. I would love to talk to you privately.
Secretary Jackson. I think we can. Thanks.
Mr. Ney. The time has expired.
The gentlelady from California, Ms. Lee.
Ms. Lee. Thank you, Mr. Chairman.
First, Mr. Secretary, let me just say quite frankly I am
very amazed at some of the callous nature of your responses.
When I was out of the room, and I just want to clarify that you
said or did not say that being poor was not a condition, but a
State of mind. Is that an accurate statement that you made,
first of all, as the Secretary of HUD who is responsible for
providing a safety net for the poor?
Secretary Jackson. I do. I think ``poor'' is really a State
of mind, not a condition, because if that was the case, I would
not be sitting here.
Ms. Lee. Yes, oh boy. Mr. Secretary, do you know there are
over 3.5 million people who will experience homelessness. I
guess that is the reason that you guys are cutting the homeless
budget, the McKinney-Vento budget. I know there is $50 million
in this new Good Samaritan initiative and it is something you
are going to respond to, but that still does not get us to the
$128 million that we need every year to end chronic
homelessness. I assume that is why you seem to be just
dismantling programs for the homeless.
Secretary Jackson. We are not dismantling programs.
Ms. Lee. Well, cutting programs for the homeless.
Secretary Jackson. We have not cut. We have level-funded
all of the programs.
Ms. Lee. But don't you know that that is a cut?
Secretary Jackson. No.
Ms. Lee. Mr. Secretary, okay, you know, the second point.
In California, 12 percent of the black population is
unemployed; 7.9 percent of Latino population unemployed. The
average income, for instance, in some areas, $38,000 or $39,000
a year; average cost of a house, $400,000 to $450,000. Now, how
do your initiatives which you are focusing on in terms of
homeownership address these people who are barely surviving and
need you?
Secretary Jackson. I do not think necessarily that, if you
are talking about homeless people, it addresses that.
Ms. Lee. I am not talking about homeless. You answered on
the homeless issue. I understand it is a State of mind. You
clarified that in your budget.
Secretary Jackson. No, I did not say that about homeless
people.
Ms. Lee. I am talking about now the working poor, and
African Americans and Latinos in high-income areas where they
need HUD, they need a safety net, they need section 8, they
need low-income housing assistance, they need Shelter Plus,
they need HOPE VI, they need all of the programs that your
agency is supposed to be responsible for, and here you see
these numbers just in California alone.
Secretary Jackson. I am glad you asked that question,
Congresswoman, because I too agree with you when you are
talking about the working class, those who are 60 percent, but
above 30 percent of median. I think they should have
accessibility to the section 8 certificates and vouchers too,
but under the present configuration of the QHWRA rule of 1998,
they do not have it. So I am saying that if you agree with me,
I think we should move toward the flexible voucher program
which will address that issue.
Ms. Lee. I am talking about expanding this. I am talking
about not cutting. I am talking about your focus on
homeownership. How do you intend for these people to become
homeowners when in fact that is what your priorities are? That
is what I asked.
Secretary Jackson. I am saying to you that I do believe
that with the flexible voucher program, which we have used in
this country, we can move people toward homeownership because
they will not be on those vouchers and certificates for a long
time.
Ms. Lee. When the average cost of a house is $400,000 to
$450,000, how are you going to allow section 8 homeowners to
qualify for that kind of a house and handle the note with no
subsidies?
Secretary Jackson. I think your question, again, is valid.
I think there are two ways. First of all, I talked about the
single-family affordable housing tax credit, which will
basically help developers develop in areas like California, New
Hampshire, Vermont.
Ms. Lee. You will make the developers do affordable
housing?
Secretary Jackson. Do affordable housing. Second of all, if
we can get rid of many of the regulatory barriers that we have,
just in your State alone, as I said to the Congresswoman,
before a home comes out of the State of California, somewhere
between $104,000 and $115,000. If we can cut that in half, yes
we can create affordable housing for people to live in. But we
have to decide that this is what we want to do, and we have
made the decision through the single-family affordable housing
tax credit, and pushing States to get rid of the----
Ms. Lee. Then why don't you take $3 billion or $4 billion
out of the FHA reserves and do a production program and create
some real affordable housing that can be done overnight?
Secretary Jackson. Because those people who are paying
their mortgage every day to FHA, that reserve is to cover them
in case we have a catastrophe. I think that is what it should
be.
Ms. Lee. Yes, but the reserves are way over $3 billion
right now.
Mr. Secretary, final question is, just on the section 8
vouchers, you have been responding to questions about that. I
just want to ask you, in my area, the city of Alameda, there
are going to be $800,000 or so under just in June based on the
formula that you had come up with. I would like some
clarification from your department with regard to certain
areas, including the city of Alameda. Okay? I have just got to
say to you I am very disappointed in your responses today, Mr.
Secretary, and I hope that you begin to understand that
``poor'' really is not a State of mind, but there are some
economic conditions that create poverty.
Mr. Ney. The time has expired.
The gentleman from Ohio.
Mr. Tiberi. Thank you, Mr. Chairman. Mr. Secretary, thank
you for being here today. Thank you for your call yesterday.
Congresswoman Pryce and I want to thank you for your dealing
with the Columbus situation.
Secretary Jackson. Thank you.
Mr. Tiberi. I actually would like you, and I know you are
pretty busy, to come out to Columbus because we have a housing
authority that has been pretty innovative in dealing with
section 8 vouchers. We have a Rebuilding our Lives program with
an organization called the Community Shelter Board that has
really been a leader in attacking homelessness.
Homelessness is not just about shelter. It is about many
other things dealing with services to these folks who are
homeless. This program has just been an outstanding national
model. We would love to have you to look at not only that, but
also some of the innovative things our housing authority is
doing with section 8.
A concern I have with the section 8 program, I think you
mentioned it; I think Chairman Ney mentioned it; is how the
budget of section 8 is expanding so rapidly it is impacting
other programs. One of those programs that I have expressed a
concern about is the community block grant program. I have the
2000 study in front of me. We had a hearing in Columbus and the
mayor and the council and other community leaders in Columbus,
Ohio rightfully made an argument that the current formula for
community block grant really negatively impacts newer cities.
For instance, in your own numbers, the 2000 numbers, Columbus
is the largest city in Ohio. The metropolitan area of Columbus
is the second largest in Ohio, to Cleveland, but yet Akron,
Cincinnati, Cleveland and Dayton all receive more CDBG money
than Columbus.
So I would hope that the study that you have undertaken
most recently that we have not seen yet, that has not been
released yet, takes a look at this hopefully, and hopefully
will address the needs of cities like Columbus, growing new
cities that are mostly in the south and west, but happen to be
in other parts of the country as well, and how your budget is
going to impact the growth of CDBG.
Secretary Jackson. Thank you, Congressman. We are extremely
sensitive and well aware of that. We are trying to make sure
that we address it in a very equitable and fair manner.
Mr. Tiberi. The only other point, and I will yield back the
balance of my time, is I want to thank you. I was a realtor
before I came to Congress. I understand homeownership is a
dream for many who unfortunately have not gotten there yet.
Congressman Scott and I have introduced a bill. I heard the
President this morning talk about the keys to homeownership,
and certainly support your efforts at HUD to promote the zero
downpayment bill. I want to thank you personally.
Secretary Jackson. Thank you very much.
Mr. Tiberi. I yield back.
Mr. Ney. The gentleman yields back the balance of his time.
I would note there are three votes, 15, 5 and 5 minutes.
What we will do is we will take another question. We are going
to hold strict to the time. But also, when we come back, only
the members that are currently here, they will have the obvious
priority to ask their questions. With that, I recognize the
gentleman, Mr. Capuano.
Mr. Capuano. Thank you, Mr. Chairman.
Mr. Secretary, thank you for coming today. I want to focus
on the section 8 issue that we just passed up. As I understand
it, in April HUD notified various state and local agencies
across the country that an interpretation of some language
would require them to retroactively cut certain parts of the
section 8 program. The result of that was widespread,
nationwide panic among at least 60,000 to maybe 200,000 people.
The result of that was then that everybody was in a hue and cry
across the country, all across party lines.
In May, HUD basically said, no, we found the money, which
to me indicates the money was never the issue, which is what I
thought at the first part, and I do not think HUD ever said the
money was the issue, but there was a language issue. I am just
curious, what changed between April and May to have HUD change
its opinion?
Secretary Jackson. No, and I think that is a very fair
question, Congressman. I do not think anything changed. I think
that when we made the announcement according to our reading of
the congressional mandate by Congress, we felt that clearly we
had the reserves that were there to replenish for those who had
asked for a replenishment, but there had not been very many who
asked.
Secondly, we felt that everyone who did not over-lease
could operate within the guidelines that were set. It was clear
that there were a number of agencies that over-leased. One of
the first agencies that we heard from was from Los Angeles. We
went out and worked with them and got them back basically into
compliance.
So the question was not that we did not feel that we could
address the needs. It was that we felt that with the mandate
that Congress had put forth, that the housing authorities could
operate under it. Now, I want to clear it up because I have
heard a lot of people say ``nationwide.'' We have almost 2,600
housing authorities around this country. We have a number of
housing authorities in major urban areas who are in the process
of over-leasing or had vouchers on the street at the time.
Clearly, most of those agencies had reserves that could address
that need. Where we could, we worked with those agencies.
So we have not in any way stopped working with agencies. We
have been working with them from the inception.
Mr. Capuano. So in the final analysis, and I appreciate
that, there was never any real need to get well over 200,000
families upset at the prospect of being evicted within a couple
of months. I will tell you that in Massachusetts, well over
2,000 families, actually more than that because no one knew how
it was going to be implemented, went through two months of
hell. I will tell you, I appreciate the fact that it has been
worked out.
I do not appreciate the fact that it was not worked out
before an announcement was made. You drove these people through
hell that they were going to lose their house, and it was
unnecessary. I think it just simply shows some of the attitude
in HUD.
I will tell you that I had a whole series of other
questions, but your comment that ``poor'' is a State of mind, I
will tell you, stopped me in my tracks. I find it so offensive,
I am almost speechless. I am actually speaking slower than
Representative Baker for the first time in history.
Apparently, you do not know anyone, right now, as we speak,
within America, who is without a job, without the prospects of
a job, facing eviction, not being able to pay their rent, not
being able to pay their heat bill, not being able to pay their
auto insurance bill, with no prospects of a job because they
may or may not be non-white, living in an area with 15 to 20
percent unemployment.
If they are not poor, what is? I understand the definition
of ``poverty of spirit,'' and that is a wonderful concept that
has some place in our society for a wonderful after dinner
discussion. But to not recognize the fact, the indisputable
fact that there are real serious honest-to-God poor people in
America disgusts me. The fact that you do not recognize maybe
that any of them, that somehow simply by changing their concept
of mind, they could get out of poverty. That is all it takes.
Close your eyes and wish; change your attitude.
To say that is a disregard of the history of mankind. To
say that to me in my presence is insulting to the constituents
that I represent that are poor. That does not mean they have a
poverty of spirit. I do not know where or how you were raised,
and I have no doubt that maybe you have had some struggles in
your life and your family has, too. And you have risen above
that and I appreciate it, but there are many who have not and
you have insulted them.
Thank you, Mr. Secretary.
Mr. Ney. The time has expired. Let me just note, we are
going to take a recess. The committee will go over and vote,
and please come right back. Let me just make it clear who is up
on the docket. We have on the majority side, Shays and Royce;
on the minority side Israel, Scott, Davis, Carson, Hinojosa and
Clay.
The committee is in recess.
[RECESS]
Mr. Ney. The committee will come to order. We will begin
again. The order that we have is Mr. Shays, Mr. Israel.
Secretary Jackson. Mr. Chairman, may I ask a favor of you
please?
Mr. Ney. Yes, sir.
Secretary Jackson. At the end of the hearing, one of the
congresspeople was speaking to me. I would like to ask your
permission or indulgence if I might be able to really elaborate
on exactly what I said, because I do not want what I said to be
misinterpreted.
Mr. Ney. Without objection. Yes, Mr. Secretary?
Secretary Jackson. I think I made a statement earlier when
asked by one of the congresspeople my perception. I said that
``poor is a State of mind, not a condition.'' That in no way
eliminates my perception that there are people in poverty. I am
well aware of that. But I think it goes back to a sense of how
I was raised in the sense that as was stated when I was
introduced that I am the last of 12 kids. My father had a
fifth-grade education.
I wonder if you will understand this. I think it was my
ninth-grade year when I had just gone to Catholic school and
many of the kids had a lot more than I had, and I came home and
asked him why were we poor. Well, today with what he did to me,
he would probably be accused of being a child abuser. He
informed me that we were not poor. I will never forget what he
said. He said that ``poor is a State of mind, not a
condition.'' He said as long as there is hope, you can clearly
make it in this country.
Lastly, if you notice what I said when I said that, I said
that I have a lot of friends who are very wealthy, but poor. I
am talking about a mindset, not a person's economic set in this
country, because I am well aware that there is poverty in this
country and I want to do everything as Secretary of Housing to
eradicate that poverty.
Mr. Ney. Thank you for the clarification, Mr. Secretary.
Mr. Israel?
Mr. Israel. Thank you, Mr. Chairman.
Mr. Secretary, welcome. I appreciate your clarification. I
am sure you do not really believe that being poor is a State of
mind.
I want to share with you the plight of 50 families in my
district who may be poor, not because of their State of mind,
but because of the State of the bureaucracy at HUD. This is a
unique situation in my district. This is not about funding or
the lack of funding, and it is not about formulas. It is about
50 people who are about to be thrown out on the street because
a bureaucrat at HUD, perhaps not even while you were Secretary,
told one of my community development agencies something which
turned out not to be true. This is a crisis that needs to be
solved.
Let me briefly take you through this. This is my only
opportunity to do that. Several years ago, the Community
Development Corporation of Long Island was awarded 75 vouchers
under the HUD section 811 mainstream tenant-based rental
assistance program. Before that agency submitted its budget to
HUD for the first year of the program, it became clear that the
award figure provided by HUD was insufficient to support a
lease-up of the full 75 units. The agency spoke with HUD and
HUD indicated to the agency that at the time they could only
lease-up 32 units, far below the 75, and the agency resubmitted
their budget to HUD, again projecting 32 leased-up units.
When HUD received this agency's budget, a HUD official
contacted the Community Development Corporation and indicated
both verbally and in writing that a higher authorized amount
would be made available to this agency on Long Island, and that
the agency should request a budget modification later in the
year. HUD later approved that budget, and based upon that
assurance the Community Development Corporation of Long Island
proceeded to lease-up the full 75-unit allocation. Got me so
far?
Now, after that allocation has been leased-up to the 75
units, HUD has said, well, we were wrong and the likelihood of
obtaining an allocation for additional funding is bleak.
Without sufficient funding to cover these rental costs, 50
households face the specter of homelessness. From my
perspective, this situation was caused simply because somebody
at HUD gave somebody at the Community Development Corporation
of Long Island wrong information, wrong advice, and the victims
should no be these 50 families.
So my question to you, Mr. Secretary, is rather simple. How
can we work together in a constructive fashion to address this
problem and ensure that these 50 families are not thrown out on
the street, not because it is their State of mind, not because
of funding formulas, not because of a broad national debate on
the amount of available funds for section 8, but because of a
simple bureaucratic mistake. How can we work together and what
specific actions can I expect your office to take to work with
me to solve this problem?
Secretary Jackson. I cannot tell you right now the specific
actions, but let me say this to you. I have encountered on a
number of occasions where we have committed to something and
reneged. Each time, we have tried to rectify it. I would like
to know the specifics and I would ask you to get with Dr.
Weicher and to let us know that. We will work through it with
you. If it is our fault, then we will do everything in our
power to rectify it. And that is a very different situation
than we were talking about earlier today.
Mr. Israel. It is different, and Mr. Secretary, I do have a
letter that I will give to you to give to your staff, and my
staff will be following up within several days. Thank you.
Thank you, Mr. Chairman. I yield back the balance of my
time.
Mr. Ney. I thank the gentleman.
Secretary Jackson. Thank you.
Mr. Ney. Thank you.
The gentleman from California, Mr. Royce.
Mr. Royce. Thank you, Mr. Chairman.
Firstly, I would like to commend our witness today on his
good service to this country.
Secretary Jackson. Thank you, sir.
Mr. Royce. I think you have an outstanding background in
housing. I think we are very fortunate to have you. I want to
commend you also on your testimony and on your presence this
morning in the face of Capitol Hill.
Secretary Jackson. Thank you.
Mr. Royce. I hope you do not take my following question as
critical of your overall efforts, because you have done an
outstanding job.
I do, however, have a few concerns about an initiative HUD
is currently proposing. I am concerned that the zero
downpayment program may not be an appropriate policy to be
enacted by the government per se. I am somewhat sympathetic to
the goals of this program, but I am afraid that if we enact
this zero down, we may be suffering from what Friedrich Hayek
called the fatal conceit, where there is a belief that, in his
words, ``man is able to shape the world around him according to
his wishes.''
Hayek and pretty much every other economist would tell us
that a command-and-control role for government in the
marketplace does not usually bring desired results over the
long term. Many have argued for some time that to retain its
market share, the FHA resorts to some questionable underwriting
practices, and that those practices might put both the
homebuyer and the taxpayer at greater risk.
So to look at this new program, here you have a buyer that
would be financing in essence more than 100 percent of the
value of the home. I am afraid that this program might actually
result in many more families being placed into default because
some may not be able to afford over 100 percent of the value of
their homes.
Alternatively, I understand the FHA believes and predicts
that it is going to make $180 million in profits on this
program. My question is, Mr. Secretary, is FHA saying it is
smarter than the market, which gives me great hesitation, or
does the lack of participation from the marketplace in the zero
down product suggest that there are more risks to the program
than FHA's financial modeling predicts?
Secretary Jackson. Thank you very much for the question. I
do not think we are smarter than the marketplace. I will be the
first to say that. But Congressman Royce, I really believe from
my experience, and it might be limited, but my experience in
Texas when I was running the Dallas Housing Authority, and then
had the chance to sit for the Governor on a number of
committees, that when a person or family is paying 50 percent
or 55 percent or 60 percent of their income for rent, that if
we can give them an opportunity to own their homes, even at 40
percent of their budget, it is much better.
So we are not going to change the underwriting guidelines.
What we are saying is this, these persons will qualify. I have
encountered so many families, especially Hispanic families,
that want to own a home, but they do not have the downpayment
or the closing costs. Now, I will tell you, the American Dream
Downpayment Program which you all passed is excellent. But in
my effort to be innovative and creative, we are trying to find
other ways to get people into homes.
To me, we are going to strictly scrutinize the persons that
are coming in. I do not think our default rate will be any
higher than it is in our regular program. If we see it, believe
me, I had your same reservations when I was sitting down
talking about the program. If it is, and I am the Secretary, I
will come back and cut the program immediately. I think it is
our responsibility to be very judicious with the taxpayer's
money.
Mr. Royce. Secretary Jackson, I thank you. I thank you for
appearing again here today.
Secretary Jackson. Thank you.
Mr. Ney. I thank the gentleman.
The gentleman, Mr. Scott.
Mr. Scott. Thank you very much, Mr. Chairman.
Secretary Jackson, I have two phases to my period of
questioning.
Secretary Jackson. Yes, sir.
Mr. Scott. The first one concerns legislation that I am
working on and this committee is taking very seriously, and we
have put forward. The major lead sponsor is Chairman Ney. Of
course, Chairman Oxley is working on this and also our Ranking
Member, Barney Frank, and also myself. It has to do with
financial literacy. In its form in our housing counseling
program, we have put forward a very significant measure.
As you know, we are having a serious problem with predatory
lending. We have a serious problem with financial abuses. It is
all targeted as a part of this program, the cornerstone of
which is a 1-800 toll-free number with a live person on the
other end. In addition to that, we set up local councils; we
set up grants that could be made available to some of the
groups, NAACP, AARP, other groups with credibility there.
We would like to get your commitment today to this
committee, to myself, that wants this bill passed and signed by
the President, that you will implement this; the two-way 800
number in its entirety.
Secretary Jackson. When it is passed, you can be assured
that I will do that, Congressman. We faced this before in
another incident at HUD where we had numerous numbers and no
one answered the phone. I am totally averse to that. I think
that there should be a live person on the other end of the
phone when people call.
Let me say this to take it a little further. I cannot
reiterate enough my feelings about if we are going to help low-
and moderate-income people own homes, that counseling is
absolutely imperative that they have, because they have to
understand, first of all, what occurs at closing and what to
look for, and second of all, how they have to have reserves to
make sure that they stay in their homes.
Mr. Scott. I am so glad to hear you give that response. I
appreciate your commitment. This committee does as well,
because that two-way 800 number, to have that person, to get a
human being on the other end of that phone is going to go a
long way. That is the major infrastructure piece that we have
in place.
It also serves to help us have a good measuring device. We
will be able to receive input, and therefore be able to design
the literacy programs to fit the target group. If we have a way
of them initiating the communications to us, we will know that.
So I really appreciate that and look forward to working with
you.
The other part of my question goes to HOPE VI.
Secretary Jackson. Yes.
Mr. Scott. I represent Georgia, the Atlanta metro area. I
think you may know Renee Glover, the director of our Atlanta
Housing Authority, a wonderful program, one of the great, great
success stories, as you know, in Carver Homes and the
Centennial Olympic Village that we have, Eastlake. All of those
are great programs.
What we have, though, is we are in the middle of this. I
want to lean on you, and I have been very, I do not want to say
entertained, but I have been very well informed with this
morning's presentation and your interaction with this
committee. I want to establish as best we can a partnership. It
is very interesting that you made the point that you helped to
write this law. As you know, it was founded as a Republican
vehicle. It was founded by Jack Kemp out of New York.
Secretary Jackson. That is correct.
Mr. Scott. It is one of the great stories, one of the great
successes of the Republican Party in its efforts. Therefore, I
am somewhat disappointed that there is any means of canceling
this program. I can see adjustments. I can see where there have
been some abuses. But why throw out the baby with the bath? In
my own state, in Georgia, we would be very dramatically
affected because we have programs in process. We have had great
success there. I want to impress upon you to review your
decision to be against this and do it in the name of your
father's advice that you just said he gave to you, just 20
minutes ago, when you gave your Statement to correct an
impression that you gave.
You said, ``my father told me that as long as there is
hope, you can make it in this country.'' Let us keep HOPE VI
alive, in the name of your father.
Secretary Jackson. Thank you.
Mr. Ney. The time of the gentleman has expired.
Mr. Shays.
Secretary Jackson. Thank you, Congressman. Thank you very
much. I will look at it.
Mr. Scott. Thank you.
Mr. Shays. Mr. Secretary, welcome.
I have been wrestling with a number of questions that I
want to ask you, but HOPE VI was kind of on the top of my list.
I have been trying to understand the Administration's
opposition to HOPE VI for a number of years, because I find it
bizarre. I speak from just the experience. We have a HOPE VI
project in Stamford where upper-income, upper-middle-income,
middle-income, lower-middle income, lower-income and destitute
people live in the same units. When an upper-income person
leaves that unit, you do not know who may go in, but it could
be someone with no income.
You see young African Americans and Hispanic kids seeing
someone get into a nice car, but guess what, they are going to
a nice job. They are seeing firemen and policemen. They are
seeing what I think is just an extraordinary experience. They
are seeing the real world that they were cut out from seeing
when they lived in public housing.
Secretary Jackson. That is true.
Mr. Shays. What I am hearing as an argument is that the
money has not been spent quickly enough. But when it is spent,
it is spent well, is it not?
Secretary Jackson. Yes. I will tell you, Congressman, that
of the 136 projects that we funded, the 25 that have been
completed have done very well. I would like to say something in
answering your question to Congressman Scott and to Congressman
Watt, nine of the successful 25 programs have been done within
two cities, Atlanta and Charlotte.
But at the same time, I think it is only fair for me to be
candid with you. When we sat down, the five of us, at the
request of the Congress and Secretary Jack Kemp, we envisioned
this program to work extremely well very quickly. We have not
had that.
Mr. Shays. I accept that, but what I want to know is, you
know, the money is not spent until the projects are under way,
so the worst that happens is it is not spent, but when it is
spent, it is spent so well. Of all the projects I have ever
seen the government do, I am not exaggerating, this is the
best. It is the best program. I feel real pride in it. And what
was there before? What was there before was public housing that
was smelly, dirty, just lots of poor kids. There was drug
dealing. And now there is a swimming pool; there is a weight
room; there are a lot of neat things.
I just would again, in the name of your father or your
mother or your grandmother or your great-grandmother, I would
like you to review this. I think this is an awesome program. It
is something that I think Jack Kemp and you and others did
well. I think for some reason your assumption that it is not
being spent has made you think that maybe we do not need it. I
just would try to say, well, why isn't it being spent as
quickly and what can we do to make it be spent more quickly.
The other thing I just want to touch base with you on is, I
have always questioned the logic of eliminating all public
housing, which seems to be the direction, because when you have
public housing, you know you have locked yourself in to a
certain cost. We replaced it with section 8 vouchers in many
cases. But it is just logical that the section 8 vouchers are
going to cost more each year as the market goes up. It is kind
of like why I bought my own home. I bought my own home so I did
not have to pay more exorbitant rent. That same logic, it seems
to me, applies with public housing.
Don't you have a bit of concern that we have become so
reliant on section 8s that ultimately we will not be able to
afford them?
Secretary Jackson. Yes.
Mr. Shays. Okay. Thank you, Mr. Chairman.
Mr. Ney. I thank the gentleman.
Mr. Miller?
Mr. Miller. Thank you, Mr. Chairman.
Good morning, Mr. Secretary. Mr. Secretary, on page 17 or
your testimony at the top of the page you devote two paragraphs
to predatory lending. I would like to direct your attention to
that. First of all, the rules that you talk about there, they
apply only to FHA programs. Is that not correct?
Secretary Jackson. I do not have the testimony.
Mr. Miller. Can we stop the clock, Mr. Chairman?
Mr. Ney. We have a copy that is coming to you.
Secretary Jackson. Which page now?
Mr. Miller. Page 17, the top two paragraphs, predatory
lending.
Secretary Jackson. Yes, thank you.
Mr. Miller. First of all, the regs that you are talking
about just apply to FHA programs. Isn't that right?
Secretary Jackson. Yes.
Mr. Miller. They do not apply more broadly to what is going
on in the economy or happening to consumers generally.
Second, a definition. There does not appear to be an
agreed-upon definition of predatory lending. We have had
hearings at which lenders have testified the operating
definition of predatory lending appeared to be something bad
that I do not do. I would like to get at what your definition
of predatory lending is.
These two paragraphs seem to mix up two things. One is
selling houses at fraudulently inflated rates based upon
fraudulent appraisals, et cetera. And then also borrowing by
someone who is, as I think Mr. Weicher testified to in
February, a consumer who owns their home, who is house-rich and
cash-poor, who is in a home with a lot of equity, but is
strapped for cash, and practices that target those consumers.
That is what I am talking about. Could you tell us what of the
regs that FHA or your department has enacted get at that second
situation, the consumer who is in their home and is
refinancing?
Secretary Jackson. I can tell you, if you would like to go
into detail, I think you would want a detailed answer for a
short period. I will ask Dr. Weicher to do it for you.
Mr. Miller. Okay.
Mr. Weicher. Mr. Miller, we have a number of regulations.
You are quite right. There is a distinction between the
flipping regulations and the regulations addressing lending
proper. We have a flipping regulation which we think is very
effective.
With respect to the lending regulations, what we have been
doing is identifying individual practices of lenders which are
damaging to people who are buying homes with FHA-insured
mortgages. We have been either prohibiting those practices or
we have been establishing rules as to what is exactly
permitted.
With respect to situations where people are borrowing more
than they should be, what we have is essentially ratio
guidelines as to how much of your income can be devoted to your
mortgage payment. If your payment-to-income ratio is above our
guidelines, then either there has to be a very good reason or
we will not insure that mortgage.
Mr. Miller. How about equity-stripping practices, up-front
fees, the financing of up-front fees, single-premium insurance
policies, credit insurance, otherwise, are those prohibited by
your rules?
Mr. Weicher. Single-payment premium credit life insurance
certainly is prohibited. Excessive up-front fees are either
prohibited or they come under the provisions of the HOPE, the
homeowners equity protection act. In that situation, at that
point, it is in the province of the Federal Reserve as to what
is permissible. Those are not FHA loans.
Mr. Miller. If you know some Federal Reserve regs on this,
you know more than I do.
Mr. Weicher. I am sorry?
Mr. Miller. I am not aware of any Federal Reserve regs on
that point.
Mr. Weicher. I cannot give you the reference right here,
but I can give it to you, Mr. Miller.
Mr. Miller. Okay. Also, at various places in your testimony
in February and the Secretary's testimony, there are various
phrases used, predatory lending, abusive lending practices,
deceptive and fraudulent practices. Do you use those terms
interchangeably or do you mean something different by them?
Secretary Jackson. They are interchangeable, but also
different, because you can have fraudulent transactions that
might not necessarily be predatory. But usually when you have
predatory transactions, they are fraudulent in many ways.
Mr. Miller. Okay. Well, particularly the phrase ``deceptive
and fraudulent practices,'' I cannot help but notice how close
that is to the phrase ``unfair and deceptive trade practices''
in section five of the Federal Trade Commission Act. Do you
regard these practices that you prohibited as in violation of
section five of the Federal Trade Commission Act?
Mr. Weicher. Mr. Miller, it is coincidental that our
definition is very close to the FTC's definition, but we have
talked to them about that when we discovered that.
Mr. Ney. The time has expired.
We will now go on to the gentleman from Missouri, St. Louis
to be specific, Mr. Clay.
Mr. Clay. Thank you, Mr. Chairman. It is always good to see
the Secretary, to spend the better part of my morning with you.
I am glad to see you again, Mr. Secretary.
Secretary Jackson. Thank you.
Mr. Clay. In St. Louis County, we are going to lose between
200 to 300 of slightly more than 6,000 vouchers in the section
8 program. It is worse than that in St. Louis City. The county
is going to be forced to use up their reserves to cover the
shortfall of section 8 funding. You announced on May 18 that
HUD will calculate payments for the first quarter of 2004 by
applying a full year inflation adjustment over an agency's
average per-unit cost in May through July in 2003, and pay that
same level for each and every quarter of 2004.
The frontloading of payments supposedly will ease the
crisis. This is not seen as a solution in the First
Congressional District of Missouri as our figures show that
this will still result in a shortfall at the end of the year.
This is only postponing the manifestation of the problem. Since
you are already seeing evidence of States, Oregon for example,
terminating voucher contracts, how is this announced efficiency
supposed to work? Is it efficient to eliminate families from
housing and place them in the streets? Is this a plan of the
Administration to reduce section 8 rolls and place them on the
homeless rolls?
Mr. Clay. Congressman, let me answer the last part. No, we
are not in any way trying to reduce the section 8 rolls or to
throw any person who presently has a certificate or voucher in
use out of the certificate or voucher.
I do believe that those persons who have vouchers that are
on the street that have not been utilized, if they are over the
cap that has been set, yes, that does present a problem. I am
not going to sit here today and tell you it does not. But any
person who is in the process right now, on a voucher, housing
choice voucher, they are not losing their voucher. We believe
that the corrections that we talked about earlier this morning,
that I talked about earlier this morning, will address the need
in St. Louis County as it has addressed the needs in Boston and
the other places.
I think it does clear up the problem, because the shortfall
as the housing authorities foresaw it, was this year. We have
corrected that problem. I think that if the flexible voucher
program is approved by Congress, then clearly we will serve as
many people, almost the two million people we serve today, on
the present program.
Again, I go back to what I said earlier. I did not have a
unit-based section 8 program. I had a budget-based, where until
1998 they went to the unit-based. They gave us a budget. That
is what we are doing to the housing authorities now. We are
saying, you have a budget; utilize your budget and stay within
that budget. That is the way I operated the section 8 program
for almost 16, 17 years.
Mr. Clay. Okay. Thank you for that answer.
Let's go to GSEs. Are you familiar with an April 28 Wall
Street Journal article entitled Regulators Hit Fannie, Freddie
With New Assault.
Secretary Jackson. Yes, I remember.
Mr. Clay. Okay. In 2003, at Fannie Mae alone, investment in
the low-income housing tax credit supported the production and
preservation of over 37,000 homes, making them affordable to
very low-income families. Additionally, mortgage revenue bonds
financed affordable homes for nearly 98,000 families. Why don't
these numbers count toward reaching the GSEs's housing goals?
Don't we want to encourage these activities?
Secretary Jackson. If they qualify, they will be used to
count against them. But again, Congressman, I will simply say
this, because the question has come up so many times today.
What I would ask you or the other members of the committee to
do is to ask the persons at the GSEs to give us permission to
release the figures to you and let you judge yourself if they
are meeting the goals of low-and moderate-income persons. We
are restricted. We cannot. They give us quarterly those
figures. I am willing to release them if the Chairman of each
one of those GSEs says we can. They are not meeting their
goals. They are not leading the market.
Mr. Clay. I have heard what you said today that you follow
the direction of this Congress. I find the timing somewhat
peculiar, that at a time when section 8 and HOPE VI are being
curtailed, and that the major force holding up the economy is
housing, that OFEO and Treasury and now HUD have the GSEs in
their scope. Why 6 months prior to the presidential election is
there this drive for goals?
Secretary Jackson. Well, Congressman, I will tell you, as I
said to the Congresslady from New York and Congresswoman Waters
and Congressman Frank, this is not new. I have been reiterating
the housing goals and the sub-goals almost from day one coming
in, because I thought then and I think now that they are very,
very important to meet the low-and moderate-income guidelines
that were set by Congress. It is not new.
There is not a person probably in this room that is more
supportive of the GSEs than I am. I think that they can do and
have done a good job, but I think that clearly they can do a
lot more to address the charter mandate group of people that
they should serve. I am not in any way trying to restrict, halt
them or hurt them. That is not the case, I can assure you of
that.
Mr. Ney. The time has expired.
Would Mr. Davis like to yield to Mr. Clay?
Mr. Davis. Not after two-and-a-half hours, Mr. Chairman.
[Laughter.]
Mr. Ney. Good answer, Mr. Davis.
Mr. Davis. Thank you, Mr. Chairman.
Let me try to go back and try to identify a little bit of
new ground, Mr. Jackson, or at least a new question on some old
ground. One thing that no one has really asked you today is
this, you have heard from a lot of people on my side of the
aisle about HOPE VI and the passion that certain Democrats feel
around it. What is striking to me is that frankly there are a
lot of Republicans, and not just Chris Shays, who has a fairly
strong attachment to this program. Ms. Harris from Florida is a
strong supporter of this program.
Maybe most tellingly, you and I have a mutual friend in
common in Secretary Kemp, your former boss. Based on my last
conversations with him, he remains a supporter of HOPE VI. Can
you for just a moment, I do not want a filibuster on this from
you, but can you just give me some quick insight on why so many
Republicans are as unenlightened as you are on this issue? On
why so many Republicans are, from your perspective, as
unenlightened as you are on this issue? Why do so many
Republicans disagree with you on HOPE VI? What are they missing
that you know?
Secretary Jackson. I honestly do not know. I am just
speaking, Congressman, from my perspective.
Mr. Davis. Does that make an impression on you? Just to
give you some history, as you know, last year we had the same
discussion with Mr. Martinez, and ultimately the bipartisan
forces that favored HOPE VI prevailed. Again, I give our
colleagues on this side of the aisle their share of the credit
for that. Does that move you at all, that so many people in
your own party and of your own philosophy just do not agree
with you on this, including Mr. Kemp?
Secretary Jackson. Does it give me reason to think? Yes, I
have thought about it.
Mr. Davis. Does it give you reason to move?
Secretary Jackson. No. I think that from my perspective,
when you have authorities, 75 percent of them that have
outstanding balances with their HOPE VI, that have gone on for
more than 6 or 7 years, no.
Mr. Davis. What is the primary structural reason for that,
Mr. Jackson? If you had to give me very quickly one primary
structural reason why so many of these HOPE VI's have not been
completed, what is it?
Secretary Jackson. I will tell you, in my mind it is that
from the inception of the program when we wrote it, we told the
housing authorities they should go out and get developers who
would leverage the program and create the atmosphere that
Congressman Scott just talked about, and Congressman Shays,
both socially and economically integrate the communities. They
did not do it. In the process of them not doing it, the money
has sat there.
Mr. Davis. Then Mr. Jackson, why don't you and the
President simply come to Congress and give us a legislative
approach that addresses exactly that problem, rather than
throwing the whole program out?
Secretary Jackson. Well, my position is, and this is my
recommendation and I do not want you to keep saying ``the
President.'' I think that after reviewing the program with
you----
Mr. Davis. I am saying ``the President'' because he signs
his budget.
Secretary Jackson. Yes, he does. And after a year being
here looking at it, and having another chance to evaluate it,
it was my perspective and the Secretary at that time, Secretary
Martinez, that clearly with almost $3.6 billion outstanding
then, it would be better to let the program continue in its
present form. And if they show us that in fact that the program
is moving in the direction, whether we reestablish HOPE VI or
some program corollary to that, then we would be willing to do
that.
Mr. Davis. Let me shift gears in the time I have, to the
GSEs for a moment. Something that I do not understand about
your position, the Administration's position, Mr. Jackson. I
hear your concern that the GSEs are not doing enough to meet
their goal of providing affordable housing and to serve the
mission. I understand that. What does that have to do with
receivership?
I will tell you why I make that point. I looked at
Secretary Snow's letter where he lays out the primary reasons
he favors GSE regulatory reform. He spends the whole second
paragraph talking about receivership. There is nothing in the
second paragraph talking about affordable housing goals. Later
on, there is a reference to affordable housing goals. Can you
enlighten me on what receivership and changing over to the
receivership option has been a failure as it has to do with
housing goals?
Secretary Jackson. No, actually I cannot enlighten you
about receivership. My only objective is to make sure that they
meet the housing goals that they are chartered under.
Mr. Davis. Have you seen the bill that was marked up in the
Senate?
Secretary Jackson. Yes.
Mr. Davis. Do you agree with me that there are very few
provisions in that bill? There is a lot that deals with
receivership. There is a lot that deals with the identity of
the regulator. Do you agree with me that there is very little
in that bill that deals with affordable housing goals and
expanding that mission?
Secretary Jackson. The affordable housing goals were coming
separate, and we have submitted----
Mr. Davis. I did not ask you about that. I asked you about
the Senate bill, just to get your opinion on that.
Secretary Jackson. I support a strong regulator.
Mr. Davis. But to answer my question, have you reviewed the
Senate bill?
Secretary Jackson. I have reviewed it. You mean the initial
one?
Mr. Davis. The one that was marked up a few weeks ago.
Secretary Jackson. Yes.
Mr. Davis. Do you agree with me that in a 39-page bill
that, being charitable, maybe only two or three pages of it
actually deal with the affordable housing mission, and that the
bulk of it deals with receivership and the identity of the
regulator?
Secretary Jackson. No, I thought the bulk of the bill, and
this will be a difference in our interpretation, dealt with an
efficient and effective way to regulate the GSEs.
Mr. Davis. I agree with that, but how much of the bill
deals with the phrase ``improving affordable housing'' mission
or the concept of improving the affordable housing mission?
Secretary Jackson. I cannot get in depth of what it deals
with, but I think the ultimate goal is to regulate them----
Mr. Davis. I will tell you, if the chair will indulge me 30
seconds since we are wrapping up, this is why I raise this, Mr.
Jackson. I think Mr. Clay does raise an interesting point. We
hear that the Administration is deeply concerned about
improving the affordable housing mission, but yet the
Administration appears to be supportive of a Senate bill that
does not really address that issue. We hear that the
Administration is concerned about safety and soundness, but yet
the Administration has not identified a safety and soundness
crisis. Those things do raise an obvious question of why the
Administration is pushing this particular agenda, absent a
crisis context.
Just one final note, do you know of any scenario that leads
you to think that the GSEs are more likely to collapse than,
say, any major bank in this country?
Secretary Jackson. No. Let me say this. I agree with you.
That is not the issue. The issue is steel.
Mr. Davis. What is not the issue? When you say that is not
the issue, what do you mean when you say ``that is not the
issue''?
Secretary Jackson. You asked me if I believe that they were
any more able in preventing themselves from collapsing.
Mr. Davis. Right. Okay.
Secretary Jackson. No.
Mr. Davis. So you agree with me on that.
Secretary Jackson. Yes.
Mr. Davis. Okay.
Secretary Jackson. But the issue is I do think that as we
regulate banks or others, that a strong regulator is very
important for the carrying out of the missions and making sure
that they carry out their responsibility. That is all that I
think.
Mr. Davis. But just to close out and summarize, you do
agree with me that there is no empirical evidence that the GSEs
are any more at risk than any other financial institution.
Secretary Jackson. I cannot tell you there is no empirical
evidence. I can tell you that is----
Mr. Davis. That is not your major concern.
Secretary Jackson. My major concern is affordable housing
goals.
Mr. Davis. Okay. All right.
Thank you, Mr. Chairman.
Mr. Frank. Mr. Chairman?
Mr. Ney. The gentleman?
Mr. Frank. I just have to respond for 30 seconds on this
Administration's concern about the affordable housing goals.
The fact is that you had the legal authority to promulgate
increased goals last year that would now be in effect. Your
Administration failed to do that. Indeed, when we called
attention to that failure, the original response from the
department was, oh well, we are planning to do it. Only
afterwards did they realize that the time has passed in which
you could have done it for this year.
So the fact is that there was no, a whole presidential term
will have gone by in which the goals were left untouched,
although you had the authority last year to increase them, and
you deliberately did not exercise that authority and you
promulgated them this year, but you had the legal authority to
do it last year, let it go by. In fact, when we noted that,
someone said, well, we are going to it, but it was too late for
you to do it last year.
So it is pretty clear to me that historically your interest
in increasing the goals came after your desire to make other
changes in the GSEs. Otherwise, I do not know why you would not
have done it before. Let me ask you then, why did HUD not last
year use its authority to promulgate those higher goals so they
would already be in effect?
Secretary Jackson. Congressman, I think that is absolutely
a fair question. I will simply answer this way. It was an
oversight on our part. I believe that the rules should be
promulgated.
Mr. Frank. It was an oversight. You forgot to raise the
goals for the GSEs.
Secretary Jackson. It was an oversight. I think your
analysis is correct. It was brought to the attention, and
immediately when it was brought to our attention----
Mr. Frank. We brought it to your attention.
Secretary Jackson. I agree with you. You brought it to our
attention. But it was not that we had not been working on it.
Mr. Frank. It is hard for me to believe, Mr. Secretary,
that if this was really an important thing to you, that
something that basic you would have just lost it.
Secretary Jackson. It is very important to me. That is why
we are working on it. I am the Secretary and that is why we are
working on it.
Mr. Frank. But you overlooked it last year.
Secretary Jackson. I was not the Secretary last year.
Mr. Frank. Okay, the Secretary overlooked it. You are
clean.
Secretary Jackson. No, I was part of the Secretary. I said
``we'' and you are correct.
Mr. Ney. And wrapping up briefly, 30 seconds, Mr. Scott.
Mr. Scott. Thank you very much, Mr. Chairman, for your
kindness on this question.
Let me go back to HOPE VI just for a moment. I am not
giving up on you. I am still there with you.
Secretary Jackson. Yes, sir.
Mr. Scott. Let us see if we cannot get an area with which
we can work going forward. You have agreed that Atlanta is a
success story. You have agreed that Charlotte is a success
story; that Dallas, Mr. Shays and several of us on this
committee. You also recognize the strong bipartisan Republican
and Democratic effort here. It is a great success story.
What I would like to implore of you is to look and see
going forward if we cannot do what is fair. Why should we
punish those projects in Atlanta and other places across this
country that have been successful; that have done everything
they were supposed to do, and have gone on and have made
additional investments of which they are partially through with
other HOPE VI projects, which would be jeopardized if the
funding is cut.
Cannot we come up with a process in which we can evaluate
each on its own basis? Those programs that are totally
failures, I agree with you. If they have failed, if they have
not done, then we should use a set of circumstances to deal
with them, but not throw the whole baby out with the bath.
Let's find a way to keep those programs going that are
successful, and then separate those others that have not and
have failed, and work with those communities on maybe an
alternative program, but to keep this program going where it
has been successful.
Could we get your commitment to work with this committee on
that?
Secretary Jackson. You can get my commitment to work with
the committee. I cannot give you a commitment that it is going
to be in the form of the HOPE VI. Maybe there will be a HOPE
VII program, but we have tried and we will continue to try to
look at ways to make sure that we invest in the cities, and
that the cities have the opportunity to propagate programs.
Again, I go back. Yes, I will look for ways to work with
cities who have been very, very productive. We are doing that
now with bond issuance that we are permitting cities like
Atlanta, Chicago, Charlotte and others to do, because we
realize that they have been very progressive. I think that it
is our responsibility when we have progressive cities who are
doing what they should be doing for low-and moderate-income
persons, that we work with them in every way to make sure that
they are carrying out their mission. I will continue to do
that.
Mr. Scott. Fine. Thank you. I look forward to working with
you on that and the financial literacy.
Secretary Jackson. Thank you.
Mr. Scott. Thank you very much, Mr. Chairman.
Mr. Ney. Thank you.
And I want to thank everyone for participating. I would
just make a closing comment, if I could. I do not want to get
into the GSE debate, but I do think frankly that Treasury, and
I have written a letter. I am speaking for myself here, but I
think that as the whole debate started to go forth where we
were going to discuss very serious issues about the future of
housing and of course the controversy that has swelled up over
this. I do think that, again a personal opinion, that Treasury
just took the bill and completely scrapped it. The House will
was completely unacceptable and then the Senate became
unacceptable. Somebody made a comment about the Senate.
Treasury finds the Senate unacceptable.
So I do not know what they find acceptable, but I think
they have put the kibosh, frankly Treasury did, on the whole
ball of wax. I do not know if they intend to do it some other
way. So this is not HUD. You see, I am giving you a break here.
It is Treasury. I just think at some point in time we have to
get together to talk the issue out. I think it was not fair,
again, to a lot of the members on either side of the aisle, to
do that, but it is just my opinion.
I want to thank the members. I want to especially thank the
Secretary for your time and your patience in coming before the
Congress.
Secretary Jackson. Thank you so much.
Mr. Ney. With that, the committee will be adjourned. The
record will be open, without objection, for 30 legislative days
in which members can have additional questions or revise and
extend remarks.
[Whereupon, at 1:55 p.m., the subcommittee was adjourned.]
A P P E N D I X
May 20, 2004
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