Message from Secretary Martinez
on the FY 2002 Budget

Housing and community revitalization are at the heart of the Department's mission. President Bush and I are committed to making HUD's mission a success. That is why our proposed $30.4 billion budget for fiscal year 2002 builds on the Department's core programs and strengthens areas of weakness and high risk.

Our goal is to establish a solid foundation that will enable HUD to be a leader in management reform, an effective partner at the grassroots level, and a strong voice in the debate on the challenges that new growth and prosperity can bring. With increased funding for key programs and sensible reductions in duplicative or inefficient programs, we will work with local and state officials, non-profit and faith-based organizations, low-income housing advocates and industry groups to expand the supply of affordable housing. Together, we can give more Americans the opportunity to own a home, and empower communities across the country so that every neighborhood, every child, every citizen can enjoy the promise of this great nation.

Over the last 10 years, America's prosperity has enabled more families to become homeowners than ever before, yet minority families continue to struggle, less than half of African-American and Hispanic-American families own their own home. Four new initiatives proposed by the President will give hundreds of thousands of Americans the key to the American Dream: homeownership.

• The American Dream Downpayment Fund. The fund will provide $200 million within the HOME program to match downpayment assistance and help more than 130,000 low-income families overcome their greatest obstacle to homeownership.

• Section 8 Homeownership. HUD will help low-income renters by expanding the use of Section 8 vouchers for homeownership. Voucher-holders will be able to use up to 1-year's worth of Section 8 assistance for the downpayment on a home, or use their vouchers to make ongoing mortgage payments.

• Renewing the Dream Tax Credit. To further promote homeownership opportunities, the Administration will propose a $1.7 billion tax credit to support the rehabilitation or new construction of an estimated 100,000 homes for purchase by low-income households over a 5-year period.

• Hybrid Adjustable Rate Mortgages. For FY 2002, HUD will seek authority to allow FHA to offer low-income families a hybrid adjustable rate mortgage, reducing families' initial homeownership costs by combining a low fixed rate in the early years with a rate that later adjusts with the market.

The FY 2002 budget includes important initiatives to help meet the need for affordable rental housing. The budget will add 34,000 new housing vouchers at a cost of $197 million, and renew all expiring Section 8 contracts - for 2.7 million families - at a cost of $15.1 billion, a $2.2 billion increase over the previous year's budget. HUD also has proposed that the limits for FHA multifamily insurance be increased by 25 percent - the first increase since 1992. Increasing the limits will help spur new production and substantial rehabilitation of affordable rental housing that had been dramatically slowed by increased residential construction costs.

HUD will vigorously enforce the nation's fair housing laws to help assure that every American has fair and equal access to decent, affordable housing. Our 2002 budget includes an increase in funding to step up the fight against housing discrimination. We will also be aggressive in combating predatory lending which primarily impacts elderly and minority Americans.

Because many faith-based and other non-profit organizations are effective in solving local problems - from homelessness to housing for seniors - this year we will identify the barriers that prevent faith-based organizations from full participation in HUD programs. We strongly believe that partnering with faith-based groups will make a dramatic difference in how we meet the needs of the underserved.

Finally, we must look to the future. During FY 2002, HUD will develop a long-term strategy to be prepared for anticipated retirements expected over the next several years. Currently, the average HUD employee is 50 years old with 17 years of Federal service. To ensure our ability to deliver our programs effectively, we must develop a strategy to meet the needs of our changing workforce.

Our goals are high, but the focus of our budget is clear - our mission is people not programs. Our priorities are strengthening program oversight and efficiency with a goal to provide every American with the tools to achieve their homeownership dreams.

	Mel Martinez
	April 9, 2001