FY 99 Budget
The Department is proposing a number of reforms and
improvements to its programs, in conjunction with the Budget.
Three of these are highlighted below:
IV. Program Reforms and Improvements
A. Property Disposition Reform
The proposed reforms to the single family property disposition
program would provide HUD with the flexibility to choose the most
cost-effective way of paying insurance claims and disposing of
acquired (defaulted) notes on insured homes. Current law requires
HUD to pay insurance benefits for defaulted single family mortgagees
and details the manner of calculating the amount of insurance
benefits that must be paid.
If enacted, HUD would be able to take assignment of the mortgage
notes (instead of taking properties into inventory) and then selling
or transferring the property to a third party for servicing, loss
mitigation, foreclosure and potentially disposition. It is expected
that savings of more that $525 million (on a present value basis)
will be result from the higher return on sales and reduced interest
payments to lenders because properties will be disposed of much
sooner than can be accomplished under current law.
B. Repealing Unnecessary HUD Programs
HUD has identified numerous programs that are no longer operative
and which have not received funding for a number of years. Therefore
the Department will be submitting legislation to repeal a number
of programs that no longer are being funded or which were one-time
demonstration projects that have been completed. In addition,
a number of programs which have been authorized but never funded
will also be included in repeal legislation.
C. Section 8 Savings Proposals
The Department is requesting a number of savings proposals for
the Section 8 program. The budget extends several provisions
which were enacted in 1998 appropriations law but expire at the
end of the fiscal year. These include reforms that establish
minimum rents of up to $25 per month, maintain current law public
housing authority administrative fees for tenant-based rental
assistance PHAs, and maintain Section 8 fair market rents at the
40th percentile of existing rents.
In addition, the Department is proposing two new savings provisions.
One such provision enhances enforcement of rent reasonableness
tests in the administration of Section 8 to ensure that private
landlords are not oversubsidized. In addition, the budget proposes
to adjust occupancy standards for single individuals, so that
singles are subsidized on the assumption that they rent efficiency
apartments rather than one-bedroom apartments, where efficiencies
are available in the private market place.
If enacted, all of these reforms are expected to save the Section
8 program over $300 million in 1999 and nearly $1 billion by the
Content Archived: January 20, 2009