Congressional Justifications for 1998 Budget Estimates

Budget Activity 9: General Counsel
Salaries and Expenses

Scope of Activity

The General Counsel, as the chief legal officer of the Department, is the legal adviser to the Secretary and other principal staff of the Department. It is the responsibility of the General Counsel to provide legal opinions, advice and services with respect to all programs and activities, and to provide counsel and assistance in the development of the Department's programs and policies.

Workload

The principal workload of the Office of General Counsel (OGC) consists of providing advice to program managers; preparing memoranda on legal problems arising under HUD programs; representing the Department in litigation and administrative hearings; drafting and reviewing regulations; and drafting, reviewing and clearing legislation and legislative materials.

OGC plans to transfer some of its Headquarters staff and functions to Field Legal Services in 1997 and 1998 to support the Department's efforts to significantly reform programs and delivery mechanisms to respond to locally driven priorities and support the Secretary's initiative of a place-based organization. The Deputy General Counsel for Operations currently is serving on the Deputy Secretary Management Action Team to determine core OGC functions and identify what activities can be eliminated, transferred to the Field, contracted out or in-sourced, and restructured to reduce staff requirements.

1. Headquarters

The work of the proposed 1998 legal staff will address the requirements and initiatives of the Secretary with respect to the completion of the reinvention of HUD by significantly streamlining HUD's rules and regulations as well as providing legal opinions, advice and assistance performing progress requirements especially in the multifamily and public housing programs, in reforming programs and delivery mechanisms to fundamentally empower communities to transform all Federal Affordable Housing, and to open homeownership accessibility to larger numbers of people, including public housing residents and Section 8 recipients.

a. Immediate Office of General Counsel

The Office of General Counsel is responsible for providing all of the legal advice and service necessary at the Headquarters level for the formulation, implementation and operation of Departmental programs and administrative management. The General Counsel also provides professional supervision to the staff and functions of the legal offices of the Department in the Field. The Immediate Office is professionally staffed by the General Counsel and several essential senior attorney and administrative personnel.

b. Office of Deputy General Counsel (Programs and Regulations)

The primary function of the Deputy for Programs and Regulations relates to legal work in connection with Federal Housing Administration (FHA) activities, Government National Mortgage Association (Ginnie Mae) oversight, bond financing and tax matters, and with the development, clearance and publication of the Department's regulations. Consequently, the Deputy for Programs and Regulations focuses primarily on the legal issues raised by the Assistant Secretary for Housing; the President of Ginnie Mae, the Assistant Secretary for Congressional and Intergovernmental Relations, the Assistant Secretary for Policy Development and Research, as well as those generated by oversight of Ginnie Mae, Federal National Mortgage Association Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). This Deputy also addresses programmatic issues of the Assistant Secretary for Public and Indian Housing and the Assistant Secretary for Community Planning and Development. The Deputy for Programs and Regulations works very closely with OGC's Office of Finance and Regulatory Enforcement, Office of Insured Housing, and Office of Legislation and Regulations.

The primary function of the Deputy for Civil Rights and Litigation relates to legal work in connection with Title VIII of the Civil Rights Act of 1968, Title VI of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, Executive Order 11063 concerning Equal Opportunity in Housing, Executive Order 11625 concerning Minority Business Enterprises, and Section 3 of the Housing and Urban Development Act of 1968. Therefore, the Deputy for Civil Rights and Litigation focuses on issues raised by the Assistant Secretary for Fair Housing and Equal Opportunity and litigation issues raised by the Assistant Secretary for Public and Indian Housing and the Assistant Secretary for Community Planning and Development. This Deputy works very closely with OGC's Office of Assisted Housing and Community Development, Office of Program Enforcement, and Office of Litigation and Fair Housing Enforcement.

d. Office of Deputy General Counsel (Operations)

The Office of Deputy General Counsel for Operations provides day-to-day operational guidance to OGC and Field Operations with respect to all administrative, management and organizational issues, including all personnel, staffing, budget, training and travel activities, as well as the development of computerized systems and facilities. The Deputy is the rating official for all Field Assistant General Counsel with the General Counsel being the reviewing official. This Office is responsible for the oversight and effective management of the salaries and expenses budgets for both Headquarters and the Field legal services. The Deputy directly oversees all activities of the General Counsel's Office of Human Resources and all operational activities of all other aspects of the Headquarters and Field Office of General Counsel. The Deputy for Operations also represents the General Counsel at all levels in and out of the Department and acts in the absence of the General Counsel or the Deputy General Counsel for Programs and Regulations or Deputy General Counsel for Civil Rights and Litigation. The Office includes the Administrative Services Staff and the Field and Management Operations Staff.

e. Office of Assisted Housing and Community Development

As the Department continues devolution of its programs and its Field structure, there remains in this Office the basic client-driven Headquarters work required by law. The provision of program counsel written and oral advice is an intrinsic element of developing, implementing, and administering assisted housing and community development programs in accordance with law. The immediate horizon calls for completing the preliminary models and actual case approvals for "gap financing" and other public housing mixed finance leveraging, gearing up the second round of Empowerment Zones and Enterprise Communities, furthering program consolidation, and other new statutory programs and requirements transforming HUD.

Program counsel perform work on the development and initial implementation of statutory, regulatory, and other administrative policy governed by Headquarters, including providing written opinions, oral advice, and some drafting of regulations. Given staff limitations and the increased demand for new and revised regulations as a result of the pending public housing reform legislation and the Administration's proposed American Communities Partnership Act (ACPA) and other authorizing legislation, program counsel are increasingly involved in the writing of regulations. The Office's demand is exacerbated by authorization-type legislation enacted annually through the appropriations process. Beyond these statutory responsibilities, many of the new initiatives identified through: (1) HUD's Blueprint II, (2) Departmental Field reorganization, (3) program consolidation, and (4) other priorities of the Administration, fall within the program area coverage of this Office. An already lean staff can absorb only a minor reduction in workforce in order to spur rapid, reliable new and increased legal counseling responsibilities.

The shift from a Headquarters-oriented operation to a bottoms-up Field decentralization has intensified the need for special legal expertise on questions arising from the Field. The occasion of this advice is rooted in the need for uniformity and the complexity and precedential nature of the questions. HUD's Field Counsel are experienced but that experience is broad-based and covers a variety of programs, and does not permit the specialization which Headquarters program counsel can provide. As the Department shifts increasingly to a place-based method of operation, Field Offices correlatively need quick, comprehensive legal advice from Headquarters program counsel. The need is intensified by staff reassignments and reductions. At the same time, the Assistant Secretaries and their staffs administering programs in Headquarters require prompt and dependable advice from the General Counsel's Office to ensure legality in Headquarters program decisions, whether in developing a new policy or in handling a tricky case problem arising in the course of a national competition funding round.

For this reason, only the most modest cut to further Departmental streamlining can be made in connection with the work of the Office of Assisted Housing and Community Development. All of the Administration's major program consolidation funds under ACPA will be furnished legal advice by this Office, which is made up of two Divisions: the Assisted Housing Division and the Community Development Division.

Assisted Housing Division

The Assisted Housing Division provides legal advice in connection with the Department's programs under the United States Housing Act of 1937, including conventional and turnkey public housing, public housing modernization, the Performance Funding System (PFS) for operating subsidies, the Section 8 housing assistance programs, the Housing Development Grant Program, Indian housing, and homeownership and resident management programs. It serves as program counsel for HOPE VI (the Urban Revitalization Demonstration) and for HOPE VI "Plus" and other initiatives to leverage private and other non-Federal investment in developing low-income housing. This Division also has responsibility for the Housing for Special Populations: Elderly and Disabled programs; HOPE 1 homeownership; the child care demonstration program; the Nehemiah Housing Opportunity Grant Program; administration of the Architectural Barriers Act; tax-exempt financing; the elimination of drugs in assisted housing; Youth Sports; and congregate housing.

The Assisted Housing Division has experienced increased demands for services from the Office of Public and Indian Housing, in particular with respect to HOPE VI and overhauling of public housing development. With the funding of these programs and legislative changes, the demand for legal advice has grown significantly. The Assisted Housing Division also monitors hundreds of litigation cases in which HUD or a Public Housing Authority (PHA) is a party.

New initiatives added to this office include: (1) Section 8 housing counselling initiatives; (2) HOPE VI; (3) HOPE VI "Plus;" (4) designated housing; and (5) pending public housing reform legislation. In addition, the growth of the public housing modernization and operating subsidy budgets has produced vastly increased legal interpretational workload for this Division. This Division will be responsible for complex legal implementation questions under the Reinvention Blueprint II for both public housing transformation and for Section 8 certificates.

Community Development Division

The Community Development Division provides legal counsel in connection with the Community Development Block Grants (CDBG) Fund authorized under title I of the Housing and Community Development Act of 1974, the HOME program established under the National Affordable Housing Act, the homeless housing assistance programs, Empowerment Zones and Enterprise Communities, Comprehensive Housing Affordability Strategies (CHAS), Youthbuild, the Housing Opportunities for Persons With AIDS (HOPWA) program, the HOPE 3 program, Special Purpose Grants, phase-out of the Urban Development Action Grants (UDAG) program, and the Revolving Fund for Liquidating programs. The Office also is responsible for the provision of legal services regarding the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 as it affects all HUD programs.

The Community Development Division has maintained the substantial increase in its workload resulting from the additional programs for which it was given responsibility under the last major legislative initiatives (HOME, HOPE 3, McKinney Act homeless assistance, Empowerment Zones and Enterprise Communities, and Economic Development Initiative (EDI) grants in connection with the Section 108 loan guarantee program, the CHAS, and HOPWA).

This high level of workload can be expected to continue as the Division carries out the CDBG and HOME consolidation funds under the ACPA as well as its previous responsibilities. The formula grant transition for homeless programs can be expected to reduce the heavy workload stemming from legal advice for Headquarters discretionary grant programs for the homeless. Nevertheless, the implementation of that fund will require speedy, reliable legal advice. Further, there will be a need for program counsel's heavy involvement in areas of major initiatives such as new Empowerment Zones and Enterprise Communities, continuing simplification of the HOME program, defense base closures, and simplified planning requirements through the Department's incorporation of statutory CHAS and other planning requirements into the Consolidated Plan.

f. Office of Finance and Regulatory Enforcement

The Office of Finance and Regulatory Enforcement consists of three Divisions. These are the Ginnie Mae Finance Division, the GSE/RESPA Division and the Program Compliance Division. These Divisions provide legal services for a wide band of key HUD regulatory and programmatic functions, virtually all of which presently operate from HUD Headquarters. At this time, Ginnie Mae has no Field Office personnel, the Department's Tax issues are almost exclusively in Headquarters, and all of the Ginnie Mae/Finance Division's Capital Markets requests emanate from Headquarters. Similarly, responsibilities for the GSE, RESPA regulation and Lead-Based Paint functions are completely centralized in HUD Headquarters with the GSE and Lead functions operating out of the Secretary and Deputy Secretary's office. While certain operational Environmental and Labor functions are carried out by Field staff, essentially all of the Government Sponsored Enterprises (GSE)/Real Estate Settlement Procedures Act (RESPA) Division's services are provided to Headquarters policy officials for these functions. Although the Program Compliance Division is already utilizing Field staff to assist in bringing certain cases, the remaining RESPA Enforcement, Manufactured Housing, Interstate Land Sales and Debt Collection legal responsibilities are now all centralized functions operated from HUD Headquarters.

The program offices to which the Office of Finance and Regulatory Enforcement provide legal services have not yet undergone transformation from centralized operations to bottoms-up, place-based, Field oriented operations. Several of the functions may not in fact undergo such transformation because they either require centralized operation because of their Secretarial priority or the need to ensure uniformity in policy direction. For these reasons, the cut in staffing for this Office cannot be greater. To the extent program offices served by the Office quicken their pace of reconfiguration to a field structure during the budget year, the Office will reconfigure accordingly to best serve client office needs and Departmental priorities.

Ginnie Mae/Finance Division

The Ginnie Mae/Finance Division provides virtually all of the legal services for the Government National Mortgage Association (Ginnie Mae), a government corporation whose annual revenues have exceeded expenses by approximately $500 million in each of the last several years. The Division provides opinions concerning Ginnie Mae's statute, regulations and handbooks, including recommendations and drafting support for the preparation or revision of proposed or amended legislation or regulations.

The Division provides legal support in connection with all defensive, affirmative and enforcement litigation, including: preparation of the administrative record; researching relevant case law; drafting affidavits, briefs and other filings; attending depositions, hearings and trials; coordinating with Justice, contract counsel and opposing counsel; and initiating and responding to settlement offers. In connection with this litigation, the Division drafts the annual audit letter concerning pending and threatened litigation and claims, and a monthly litigation report. With respect to issuer defaults, the Division travels to execute the default, if appropriate, provides legal support in the recovery, possession and control of the Ginnie Mae mortgage portfolio, including all legal and servicing documents and accounts.

In the development of new products and programs, such as multiclass and property improvement loan securities and pledge of servicing, the Division provides legal support and expertise. The Division expects to be significantly involved in the proposed restructuring of Ginnie Mae, whether as a performance-based organization, or otherwise. In connection with Ginnie Mae contracting operations, the Division provides legal support for the procurement and administration of contracts, including monitoring legal services contracts through the review of work product and billings. The Division reviews all documents for the sale by Ginnie Mae of mortgage servicing rights, whole loans and real estate owned.

The Division reviews for legal sufficiency all Ginnie Mae Guides (and revisions), All Participant Memoranda, significant correspondence and agreements. The Division prepares all form contracts contained in the Guides or All Participants Memoranda, as well as the text relating to them. The Division provides research and advice on legal policy issues, such as the impact on Ginnie Mae programs proposed by other Departmental offices (e.g., FHA's risk sharing initiatives), or by other agencies (e.g., the Department of Veterans Affairs), or the legal implications of new technologies such as electronic signatures and the mortgage electronic registration system. The Division also provides tax and capital markets advice to the Department.

GSE/RESPA Division

The Government Sponsored Enterprises (GSE)/Real Estate Settlement Procedures Act (RESPA) Division provides all necessary legal services to carry out at least six major regulatory functions of the Department and certain other services including providing legal advice to assist the Secretary's designee in deciding Secretarial reviews. The Division has a heavy workload because of the priority and significance of the subject areas which it is assigned and the many initiatives called for by the Secretary in the Division's areas of responsibility.

The Division is responsible for providing all legal services for the Secretary's regulation of the Fannie Mae and the Freddie Mac, both are referred to as GSEs, under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 which revised the Secretary's regulatory responsibilities and the GSEs' Charter Acts. The Division is providing legal services for HUD's: (1) monitoring and enforcing low- and moderate-income housing, central cities, and special affordable housing goals which apply to the GSEs; (2) reviewing and soliciting requests for new programs from the GSEs; (3) implementing new Fair Housing requirements (including establishing and operating under arrangements with other Federal regulatory agencies); and (4) protecting and disclosing GSE data, including operating a new public use data base. The Division also will provide services for the Department's report on privatizing the GSE, HUD's Annual Report to the Congress, and HUD initiatives respecting automated underwriting and affordable housing. Expenditure of legal and other resources on the GSE regulatory efforts results in uncommonly large results; it has been estimated that the new GSE regulations will result in $150 billion of capital for mortgages to low- and moderate-income families and residents of neighborhoods underserved by mortgage credit. As a related matter, the Division also provides legal services to assist the Secretary in carrying out his responsibilities under the Financial Institution Reform, Recovery and Enforcement Act of 1989.

The Division provides legal services for the Real Estate Settlement Procedure Act, and Regulation X, the RESPA regulation, including preparing numerous RESPA rules which cover settlement transactions for nearly every 1-4 family residential real estate loan in America. These rules impact as much as $1 trillion in residential mortgage originations annually. They also regulate the mortgage servicing industry, including the administration of 31 million escrow accounts, and the transfers of mortgage servicing. In fiscal year l997, the Division produced a final rule and several interpretive rules revising HUD's November 1992 RESPA rule in light of substantial controversy and litigation. In fiscal year 1998, the Division will continue to provide legal services for several other HUD RESPA initiatives including a new rule concerning the disclosure of mortgage broker fees (resulting from a landmark HUD negotiated rulemaking), a new final rule concurring modifications to the escrow rule, and other interpretive rules in areas of public interest, such as lender pay mortgage insurance, captive reinsurance companies, and the permissibility of payments to affinity groups by settlement service providers. A full revision of HUD's severely outdated consumer handbook for shopping settlement services is contemplated.

The Residential Lead-Based Paint Hazard Reduction Act of 1992 (the 1992 Act) substantially expands the Department's and the Division's counselor responsibilities respecting lead-based paint poisoning prevention and abatement. At the beginning of 1996, the Department and the Environmental Protection Agency (EPA) issued final regulations, drafted by the Division, implementing requirements for disclosure of lead-based paint hazards to prospective tenants and homebuyers of virtually all pre-1978 housing, an estimated 64 million homes. In 1997, the Division will provide all necessary legal services to implement and enforce these regulations. In 1997 and 1998, the Department will issue and the Division will draft and final rules revising all Federal lead-based paint requirements for residential housing. In addition to providing services for the establishment, implementation and advice under these regulations, the Division will also provide all legal services in support of the Office of Lead Hazard Control and other activities including HUD's $60 million Lead-Based Paint Hazard Control Reduction Grant Program.

The Division provides advice and review for all Headquarters environmental and Davis-Bacon issues with a nationwide effect on the Department's programs. Division staff serve as OGC's Environmental Clearance Officers, providing environmental review of all Departmental regulations and drafting of provisions respecting the environment. The Division provides legal services for the Assistant to the Secretary for Labor Relations concerning HUD's nationwide implementation of Davis-Bacon prevailing wage rate requirements, HUD-determined public housing maintenance wage rates and related labor standards. These services include advice on all labor related HUD program issues, legislative initiatives, providing liaison with the Office of the Solicitor of Labor and representing the Department as needed in cases before the Department of Labor's Wage Appeals Board.

Program Compliance Division

The Program Compliance Division serves as legal counsel and enforcement counsel in four major nationwide program areas discussed below. This work involves consumer protection, enhancement of public safety, disclosure of information to land purchasers and home buyers, enforcement of anti-fraud and anti-kickback statutes, and collection of debts owed to the Department. The Division has lost several attorneys and the work is now accomplished with only four staff attorneys. The program offices served by the Division are all located in HUD Headquarters.

The Division manages all the legal work for the nationwide enforcement of RESPA. To keep the costs of settlements down, RESPA prohibits the giving or accepting of a referral fee or kickback for the referral of settlement service business involving a Federally related mortgage loan. During the last year, the Division has been extensively involved in the development of the controlled business rules and statements of policy dealing with enforcement issues. The Division conducted an investigation of title insurance practices in Florida involving 12 major title insurance underwriters. The Division also coordinated three public RESPA educational forums in Houston, San Francisco, and Miami during the year. Although the RESPA enforcement office is based in Washington, the Division has conducted training of Field attorneys to assist with RESPA enforcement cases. During the year, 28 new RESPA cases were handled by Field attorneys. Division attorneys are monitoring and assisting with these cases and will be involved with new cases during the coming year.

The Division acts as the advisory and enforcement counsel for the National Manufactured Housing Construction and Safety Standards Act of 1974 which regulates 25 percent of all new housing starts in the country. This statute provides Federal construction and safety standards in manufactured homes and notification to consumers and correction of homes which consumers have purchased with defects or safety hazards. The Division is now actively involved in several cases in Federal District Court. In one of the cases, the Division assisted in enforcing an appeal of the court's decision in the Court of Appeals. The Division supplied counsel to the program office on preemption issues, assisted in the reform regulations for enforcement, and worked on the use of manufactured homes as part of the Secretary's affordable housing initiatives. The Division has and is continuing to provide significant counsel to the program office in drafting a bill proposing significant changes to the Act's standard development process for manufactured homes. Division attorneys assisted in successfully litigating and negotiating a settlement of litigation in Federal District Court. The Division is now actively involved in several enforcement actions including an action against a manufacturer for building as many as 1600 homes with defective roofs and an action against a private agency licensed to monitor the product of manufactured homes. Additional enforcement actions are planned in the upcoming year against manufactured home producers and dealers with defective or unsafe homes.

The Interstate Land Sales Full Disclosure Act requires developers to give full disclosure of material facts about the sales offerings and to engage in honest sales practices. The Program Compliance Division's enforcement of the Act plays a significant role in encouraging ethical practices in land sales. Recently, there was widespread publicity of a precedent-setting $8.6 million order of restitution from a Federal court in a fraud and non-registration case, despite the defendant's unsuccessful attempt to discharge the debt in bankruptcy. The Division played a major part in obtaining the affirmance from the Fourth Circuit Court of Appeals and Supreme Court in this case. The Division also obtained $1 million in debt cancellation and $184,000 in restitution for consumers in a case against a Virginia developer and bank for fraud violations of the Act. The Division is representing the Department at a trial in a North Carolina Federal Court in Cisneros v. Peninsula Development, a fraud and non-registration case, and is working with other Federal agencies on several enforcement cases against developers of Colonias subdivisions who defrauded lower-income purchasers. Because of the streamlining of hearing procedures, there is expected to be an increase in Land Sales civil penalty cases in 1997 and 1998.

The Division is responsible for the Department's debt collection including advising the Chief Financial Officer and other Headquarters HUD clients on collection policies and strategies, and enforcing collection in administrative and Federal court forums. In this regard, the Division currently is pursuing collection of over $10 million in cases before Federal courts and administrative tribunals. The Division has delegated to Field Counsel Federal income tax refund offset cases before the Board of Contract Appeals, which docketed more than 450 cases in the last year. The Division continues to supply expertise and support to the Field on these cases. This work has allowed the Department to refer to the IRS for collection $240 million in past due debt. The volume of debt collection cases is expected to continue at the same level in 1997 and 1998. As a result of the Debt Collection Improvement Act of 1996, HUD is expected to be a Federal debt collection center for other agencies.

g. Office of Human Resources

The Office of Human Resources provides legal services pertaining to the programs and functions of the Assistant Secretary for Administration, the Chief Financial Officer, the Inspector General, the Assistant Secretary for Public Affairs, and handles all program Assistant Secretary legal issues relating to ethics and compliance with the governmentwide Standards of Conduct; financial disclosures by appointees and senior Department officials; and political and official travel. The Office also represents the Department in Unfair Labor Practice claims; adverse and disciplinary employee actions; and discriminatory employment matters. The Office has legal responsibility regarding contract and procurement, bid protests and contract claim disputes filed before GAO, the HUD Board of Contract Appeals or the U.S. Court of Claims. The Office of Human Resources will be critical to the Department's employment reduction and downsizing operations. This office has three divisions, the Ethics Law Division, the Personnel Law Division, and the Training and Administrative Law Division.

Ethics Law Division

The Ethics Law Division recommends Departmental policy for compliance action regarding the Ethics in Government Act, the HUD Reform Act of 1989, the criminal conflict of interests statutes under 18 U.S.C., and the Standards of Conduct regulation for employees of the Executive Branch. The Division provides advice to high level agency officials regarding prohibited financial interests; financial disclosure reporting requirements; political and official travel; and outside and post-government activities. The Division also coordinates corrective and disciplinary action with HUD program offices regarding conflict of interest declinations issued by the Justice Department. The Division advises the Office of the Secretary and Principal staff on matters of gift acceptance, the Hatch Act, and the reporting requirements governing official and political travel. The Ethics Law Division is charged with assisting the Department in meeting an array of mandatory requirements imposed by law and regulation. These include the responsibility for:

Coordinating the Department's ethics program and responding to inquiries, audits and reports from the Office of Government Ethics, GAO and other governmental entities;

Providing annual ethics training to HUD employees throughout the nation, including training for newly hired employees;

Ensuring that an effective system continues to be in place regarding the review and certification of public and confidential financial disclosure reports; and

Providing Departmentwide advice and counsel to the Agency's 11,000 employees regarding compliance with the Governmentwide Standards of Ethical Conduct regulation at 5 CFR Part 2635, the Federal criminal statutes under 18 U.S.C., HUD Reform Act of 1989, and the Hatch Act.

Personnel Law Division

The Personnel Law Division provides counsel to HUD management on the implementation of an array of Federal personnel laws and regulations governing whistleblower protection actions, equal employment opportunity, adverse and disciplinary employee actions, labor relations and the Department's downsizing operations. Attorneys in this Division serve as Agency Representatives in administrative hearings before the Merit Systems Protection Board (MSPB), the Office of Special Counsel, the Equal Employment Opportunity Commission (EEOC) and the Federal Labor Relations Authority (FLRA). The Division assists Assistant U.S. Attorneys in personnel litigation actions filed in the Federal courts.

The functions of the Personnel Law Division are critical to the Department's consolidation and downsizing activities. Given the Department's Budget and staffing constraints, aggressive action will be required in order to meet the stated goals. As a result, the workload in this Division will increase substantially throughout the next and outlying fiscal years. As the agency moves toward a smaller work force, the number of personnel challenges is likely to increase in every forum, including appeals filed in the Federal courts. The Division will also be required to provide more direct assistance to HUD Field Offices toward addressing actions filed by management officials as HUD consolidates functions and programs in Headquarters and the Field Offices. The Division will continue to play a major role toward avoiding litigation through innovative Alternative Dispute Resolution action.

Training and Administrative Law Division

Attorneys in the Training and Administrative Law Division advise HUD management on all matters relating to procurement and contracting, bid protests, delegations of authority, and matters filed with the General Accounting Office (GAO), the HUD Board of Contract Appeals and in litigation before the Court of Claims. The Division also issues Freedom of Information Act (FOIA) appeals and provides legal assistance regarding training and other administrative and litigation law activities.

The procurement and contracting legal functions performed by attorneys in this Division require expedited legal research and the provision of expert legal advice regarding contract award, procurement and grant formation. These functions require that the Division maintain expertise regarding the Federal Acquisition Regulation, the Competition in Contracting Act, and the Brooks Act. Staff serve as legal counsel to numerous Source Evaluation Panels and Boards. Division attorneys provide critical procurement advice and guidance to management officials. The Division is central to the Department's contracting streamlining actions and provides legal assistance in implementing several streamlining recommendations. The workload in this Division is expected to increase over the next several years, as the Department moves toward consolidation and the outsourcing of functions and operations in order to meet its downsizing goals.

The Division's training responsibilities will continue to increase as the Department moves to re-train employees for a smaller and more efficient work force. Division attorneys will continue to provide legal opinions to program offices regarding expenditures and budgetary authorizations relating to training activities. As the new HUD administration establishes its direction and priorities, new and revised delegations of authority will be required. Division attorneys will continue to work with HUD Field Offices to the various Assistant Secretaries to implement the Department's mission and program initiatives.

h. Office of Insured Housing

The Office of Insured Housing serves as program counsel for the FHA which is the single largest program area in the Department. The term "program counsel" is used to describe those attorneys who specialize in the interpretation of statutes, regulations, administrative guidance, and case law interpretation that govern the operation of Departmental programs. The work includes providing oral and written legal guidance, preparation of correspondence on program legal matters, and drafting contracts and other legal documentation. The Office has substantial contact with HUD Field Offices, HUD Housing program staff, and members of the public on matters affecting FHA programs.

The Office provides legal services with respect to all FHA mortgage insurance programs under the National Housing Act and works with the other six OGC Offices on a regular basis. It actively supports the Office of Legislation and Regulations by drafting legislation and regulations on FHA programs and by submitting comments on regulatory and statutory initiatives as well as on Notices of Funding Availability (NOFAs). The Office provided significant legal support for the regulation reinvention initiative and the drafting of necessary legislation. The Office coordinates with the Office of Litigation and Fair Housing Enforcement on Departmental representation for defensive litigation as well as compliance with the Fair Housing Act and civil rights laws. The Office works with the Office of Program Enforcement on matters concerning affirmative litigation and preparation of legal advice relating to actions before the Mortgagee Review Board. The Office coordinates with the Office of Assisted Housing and Community Development on matters (e.g., the Section 8 program) that affect the FHA programs. The Office interacts with the Office of Human Resources on matters such as personnel law, ethics, and the Federal Acquisition Regulations (FAR). The Office works with the Office of Finance and Regulatory Enforcement on issues related to the Ginnie Mae Mortgage-Backed Securities (MBS) programs and RESPA.

The current staffing level enables the Office of Insured Housing to provide legal advice and support for the FHA program activities described below. FHA is reviewing its Headquarters functions to identify those which can be reassigned to Field Offices. Legal services provided by the Office may be reassigned to Field Offices to the extent such reassignment is necessary to support FHA's realignment of its functions. The need for uniform interpretation (precedential in scope) of statutory and regulatory authority as well as program administrative requirements, however, will require the services of experienced program counsel in Headquarters OGC. This specialized legal expertise usually is not available in Field Offices where the legal work calls for a broader range of skills and experience from each attorney. Therefore, only very modest staff reductions can be absorbed so that the Office may be able to continue to provide timely, accurate legal support to a streamlined FHA staff in Headquarters. Extensive reductions would require a reprioritization of legal services as well as a determination of which functions can be provided through procurement of outside legal counsel so that support can be provided in a manner that will further the Secretary's priorities.

Multifamily Mortgage Division

This Division provides legal advice and support for FHA's multifamily programs which include multifamily rental housing, elderly housing, nursing homes, intermediate care facilities, hospitals, group practice facilities, cooperatives and condominium projects, multifamily mortgage loan sales, and property disposition initiatives. This legal advice includes: support for the Office of Housing in development of new FHA mortgage insurance programs under existing insurance authorities; streamlining various program regulations for multifamily rental housing and health care programs; developing a risk-sharing program for hospital mortgage insurance; drafting new legislation which would consolidate the various multifamily rental housing and health care mortgage insurance authorities; assisting the Office of Housing in its effort with the Department of Health and Human Services (HHS) to develop and implement several major health care initiatives designed to strengthen communities by offering better quality health care to citizens; management and disposition of the HUD-owned inventory; operation of the State and Local Housing Finance Agency (HFA) Risk-Sharing Program and the Reinsurance Pilot Program involving Fannie Mae, Freddie Mac, the National Cooperative Bank, and the Federal Home Loan Bank of Seattle; developing new and modifying existing policies and procedures for avoiding loan defaults and mortgage insurance claims; implementation of the Prepayment and Preservation Program which has statutory processing deadlines; sale of HUD-held multifamily mortgages; defensive litigation support to the Office of Litigation and Fair Housing Enforcement and to Field Offices on all cases of national import within the FHA program area; implementing the fiscal years 1997 and 1998 Portfolio Reengineering Demonstration programs; review of FHA documents in time-sensitive bond refunder transactions; processing FHA multifamily mortgage insurance claims; and advice regarding operation and improvement of existing programs of mortgage insurance, including the interpretation, application, and revision of existing documents, guidelines, and regulations.

Single Family Mortgage Division

This Division provides legal advice and support for FHA's single family programs which include Title I property improvement and manufactured home programs, Title II mortgage insurance programs, single family mortgage loan sales, property disposition and affordable housing initiatives, and housing counseling. This legal advice includes: support for implementation of the 1994 Single Family Foreclosure Act which provides for nonjudicial foreclosure of HUD-held single family mortgages; drafting changes to regulations and agreements for implementation of two single family risk sharing programs; assistance in management of the HUD-held mortgage portfolio; implementation of new strategies in the area of housing counseling; assistance in expanding housing programs and developing affordable housing by expanding use of the Section 203(k) housing rehabilitation program; improving management of FHA's acquired housing inventory; innovations to existing programs meeting specific needs (e.g., Home Equity Conversion Mortgage program); reviewing or drafting regulations, handbooks, or other issuances to implement new housing initiatives; enforcement of requirements for lender participation in FHA mortgage insurance programs (e.g., approval and monitoring of Title II mortgagees and Title I lenders); advice to Title I Accounting and Servicing in effecting repurchase by Title I Lenders of improperly originated or serviced Title I loans and in debt collection activities; implementation of innovations to Title I home improvement and manufactured home programs; implementation of Section 235(r) mortgage assistance refinancing program; and implementation of FHA's new loss mitigation statutory authority.

i. Office of Legislation and Regulations

The Office of Legislation and Regulations performs a variety of legal functions in connection with the Department's legislative and regulatory programs. The Office has two Divisions--the Legislation Division and the Regulations Division each headed by an Assistant General Counsel. Major areas of legislative responsibility include: development, preparation and clearance of the annual and special programs of authorization legislation; provision of legal counsel during Congressional consideration of the legislation; preparation and clearance of reports on proposed or pending Federal legislation; provision of drafting and all other legal services with respect to appropriations law and the Department's annual appropriation Acts; response to Congressional budget and requests for assistance in drafting HUD-related legislation; and maintenance of a legislative reference service for the Department and members of the public. Major areas of responsibility for regulation include: drafting and clearing regulations and other policy documents (e.g., NOFAs) necessary to carry out the Department's programs and policies; managing HUD's implementation of rulemaking under 24 CFR Part 10, Section 7(o) of the Department of Housing and Urban Development Act, the Regulatory Flexibility Act, the Paperwork Reduction Act, and Executive Order 12866; clearing within the Office of General Counsel non-regulatory Departmental issuances; preparing the Department's views on proposed Executive Orders; and advising program offices concerning newly enacted legislation which may give rise to a need for new or amended regulations.

The Office is responsible for ensuring that the policies of the Department are translated into action documents of the highest quality, frequently under exceedingly tight time schedules. Since the Divisions' work products become enacted as statutes or otherwise have the force of law, perfection is always the necessary goal. The work is exacting and relentless: new "priority" regulations and legislative assignments are frequently added. The reduction of FTEs will require the Office to set more stringent priorities for the work of its two Divisions. Since the implementation of the expected demands of the Secretary's initiatives are to a large extent within the responsibilities of the Office, this management task will be very challenging.

Legislation Division

The demand for the Legislation Division's services has grown dramatically over the last several years and is expected to continue at or above the current level for the foreseeable future as major legislation affecting the central mission of the Department is considered by the Congress. Priority work performed by the Division includes: ensuring that HUD's annual legislative program is completed on time and at the level of quality that is required effectively to present the Department's legislative priorities; preparing reports (requests for comments on pending and proposed legislation from the Congress and the Office of Management and Budget) so that the Department can communicate its views within the Administration and with the Congress on a host of important proposed and pending bills in a timely manner; meeting congressional requests for technical drafting and other services; and providing ongoing advice on Budget and appropriation law matters.

Regulations Division

The Department has historically carried a docket of over 300 rule assignments. The Regulation Division's workload for 1997 and thereafter is expected to increase, given the need to implement through regulation and related documents any major changes in HUD's authorizing legislation or policies, and continuing demands for streamlining existing regulations. With its current small staff, the Division is able to work primarily only on the Department's very highest priority rules--the so-called "Top 25" list of rules and other high priority documents, and funding documents (NOFAs), as well as high-priority, externally-required documents, such as the Semi-Annual Agenda of HUD rules and the annual Regulatory Plan.

j. Office of Litigation

The Office of Litigation is composed of two Divisions: the Litigation Division and the Program and Enforcement Division.

Litigation Division

The Litigation Division performs a central coordinating role with respect to all litigation brought against HUD. The Division, working in conjunction with the Department of Justice (DOJ), handles the defense of major, nonroutine lawsuits against the Department involving substantial programmatic issues of nationwide impact, or raising issues of particular importance or sensitivity. The Division maintains a unique function combining negotiations of settlements with its defensive role. Since the Department does not control the origination of the cases in defensive litigation, the Division is not able to decline to defend these cases, particularly in the implementation of court orders or settlement agreements. The Division's attorneys are responsible for handling, in conjunction with DOJ counterparts, lawsuits in Federal courts throughout the country. Each attorney is responsible for handling all aspects of litigation with respect to his or her individual caseload, which can vary in size, depending on the work demands of the assigned cases.

Cases that are sufficiently important, complex, and/or sensitive must be handled in Headquarters by the Litigation Division, and not in HUD Field Offices, because:

1. The Litigation Division's attorneys are experienced in handling cases requiring familiarity with complexities of constitutional law and the Administrative Procedure Act, including recent evolutions in those fields. Working with DOJ, this Division is able to present legal arguments that are on the very cutting edge of the law. Many cases handled by the Litigation Division have implications for HUD nationwide. For example, the Division is handling the defense of numerous cases filed by over 180 owners of low-income properties against the United States, under the Low-Income Housing Preservation and Resident Homeownership Act (LIHPRHA). It is also defending against litigation created by the Department's sales of sizable pools of HUD-held mortgages. The Division acts as a convenient and logical conduit to coordinate events that are happening throughout the country. HUD Field counsel, by contrast, generally handle cases with implications within their designated geographic area.