Opening Statement of
The Honorable Mel Martinez
before the U.S. Senate Committee on
Banking, Housing, and Urban Affairs
December 13, 2001
Chairman Sarbanes, Ranking Member Gramm, and distinguished Members
of the Committee, thank you for the invitation to testify before
you this morning. I appreciate this opportunity to address the many
ways in which the Department of Housing and Urban Development (HUD)
is working to meet the nation's housing and community development
Mr. Chairman, I would like to begin by thanking you and the Members
of this Committee for the advice and expertise you provided this
year as I settled into town and took on this tremendous challenge.
The Committee has shown me great respect, which I appreciate, and
we have developed a very positive working relationship.
Let me also thank you for your cooperation in confirming HUD's
Presidential nominees. I consider myself fortunate to be surrounded
by colleagues who bring great expertise to the job from both the
public and private sectors, and have a rich diversity of background
and experience. With your continued assistance, we hope to have
our entire management team in place in the near future.
Our job is made easier through the support of a President who is
firmly committed to HUD's mission of public service. President Bush
is an active advocate for our work at HUD. He speaks passionately
about the dreams a family can achieve through homeownership. He
has joined me on two occasions to stress the point by building homes
with Habitat for Humanity� and wants to triple the funding for the
HUD program that supports the good work of similar organizations.
President Bush has directed this Department to serve Americans
in need not simply by raising their quality of life to some minimum
standard, but by fueling their hopes and dreams to achieve the life
they always imagined. Despite the success of welfare reform, too
many families still live below the poverty line. As a catalyst in
our communities, HUD is putting its resources to work empowering
citizens to lift themselves out of poverty and into prosperity.
We have touched many lives this year� in many different ways.
The Department reacted quickly and sympathetically following the
tragic events in September. I immediately required lenders to provide
relief on FHA-insured mortgages for families of the victims, and
urged conventional lenders to do the same. They responded, and we
have protected these families from losing their homes. A short time
later, Secretary Rumsfeld and I also announced a mortgage rate cut
for National Guardsmen and Reservists called to active duty.
HUD is providing an additional $700 million in Community Development
Block Grant funds to help stimulate New York City's economic recovery.
We also allowed waivers of regulatory provisions for the HOME, Section
8, and public housing programs.
Immediately after being sworn in, I took steps to steer HUD's focus
back to its core mission: helping families find affordable and decent
housing. This means ensuring housing opportunities for those who
rent either out of necessity or by choice. And it means creating
new opportunities for homeownership, so that more families can achieve
what is envied around the world as the American Dream.
The Census Bureau reported in October that the homeownership rate
reached an all-time high of 68.1%. Historically, homeownership rates
for minority groups have been lower than for the rest of the population.
Minority homeownership stands at 49.2%, and while this is a record
high and positive news, we must continue to do better in closing
We have begun to create new opportunities for homeownership, so
that more families can achieve what is envied around the world as
the American Dream.
This year, HUD reached out to the thousands of low-income families
who find the road to homeownership blocked by high downpayments,
and proposed the President's American Dream Downpayment Fund. We
also put forward the new Federal Housing Administration (FHA) hybrid
adjustable rate mortgage, which promotes homeownership by reducing
initial homebuying costs. Congress recently provided funds subject
to authorization for the first of these, and authorized the second,
for which you have my thanks.
If we are to further expand the ranks of America's homeowners,
we must address the challenge of making the homebuying experience
less complicated, the paperwork demands less time-consuming, and
the mortgage process itself less expensive.
To ensure that homebuyers have the information they need in order
to make an informed purchase, I have undertaken comprehensive reform
of the Real Estate Settlement Procedures Act (RESPA). In addition
to preserving yield spread premiums as a valuable tool for opening
the doors of homeownership, reform will: (1) ensure better protections
for new homebuyers and those who refinance; (2) offer clarity for
the mortgage lending industry about their disclosure responsibilities,
and; (3) provide an additional tool to fight predatory lending.
The need for RESPA reform is even more urgent during times of economic
uncertainty. Homeownership helps create financial stability for
families, and in return brings economic stability to our communities.
Homeownership is an important goal, but is obviously not an option
for everyone. I appreciate the need to expand the availability of
affordable rental housing, and ensure quality and options for residents.
The just-enacted 25 percent increase in the limits for FHA multifamily
insurance will help to spur the construction and rehabilitation
of affordable rental housing. I am awaiting the recommendations
of the Millennial Housing Commission, as we look to ways to address
affordable housing needs. I will continue to urge the industry,
and the Government-Sponsored Enterprises in particular, to do much
more in the area of affordable housing production.
But let me say that I look forward to the day when we measure compassion
not by the number of families living in assisted housing, but the
number of families who have moved into a home of their own.
Predatory lending and property flipping are abusive practices that
continue to plague homebuyers in cities across the country. Senator
Sarbanes, the Administration is particularly concerned about the
situation in Baltimore. Since April, our Housing Fraud Initiative
has resulted in 40 indictments, six federal arrests, two state arrests,
27 successful prosecutions, and 66 debarments. We have provided
relocation assistance to 46 families. We also worked with you, Mr.
Chairman, to develop the Credit Watch legislation that was included
in the fiscal year 2002 budget.
I am pleased with these accomplishments, but we know there is more
work to be done. HUD remains committed to addressing the problems
in Baltimore, and we feel confident that the lessons we learn there
will be beneficial to the rest of the country. HUD looks forward
to joining with the Treasury Department in its efforts to encourage
the development of national best practices to address predatory
Exposure to lead-based paint is a serious concern that many low-income
citizens deal with on a daily basis. Every American child deserves
the opportunity to grow up in a healthy home, safe from the debilitating
and often irreversible effects of lead exposure. Because the most
common source of exposure is lead paint in older housing, HUD has
a critical role in protecting our children. HUD awarded more than
$67 million in grants nationwide in October to protect children
from lead-based paint, with a focus on eliminating lead hazards
in low-income housing.
At HUD, we are working to ease the daily struggles of those who
live in the most difficult circumstances. Certainly, this includes
the residents of the colonias. Earlier this year, I traveled to
the colonias - the communities along the Mexico border steeped in
poverty - to see the difficult living conditions for myself. HUD
has stepped in to offer assistance, through grants that will bring
water and sewer hook-ups, and a Colonias Task Force I established
to ensure that HUD programs make an impact in the colonias.
In January, President Bush directed HUD to assist in his Faith-Based
and Community Initiatives. We have studied the barriers that prevent
grassroots social service providers from reaching out in partnership
with the federal government to Americans in need. HUD has prepared
a report examining what the Department can do through regulatory
and management improvements to "level the playing field" and encourage
greater acts of charity in our communities, while preserving Constitutional
I urge the Senate to take up the President's faith-based legislation
before Congress adjourns. This legislation is critical to helping
HUD expand its partnerships with groups working to meet the housing
needs of low-income Americans, the elderly, disabled citizens, and
those living with HIV/AIDS.
HUD has a special duty to the nation's vulnerable populations,
and this includes those who have no place to call home. Last month,
we announced the awarding of more than $1 billion to organizations
serving homeless Americans - the largest homeless assistance in
history. To streamline and focus the response of the many federal
agencies involved in delivering homeless services, the Interagency
Council on the Homeless is being reactivated.
In addition, the Administration remains committed to expanding
housing opportunities for people with disabilities. For example,
a voluntary compliance agreement, signed recently with the District
of Columbia Housing Authority, will provide more than 500 fully
accessible public housing units to disabled residents. HUD continues
to strive to ensure equal housing opportunities for all.
Mr. Chairman, Committee Members warned me during the confirmation
process that HUD was plagued by mismanagement on many levels. I
understood that meeting the needs of the American people meant improving
HUD's management, and I assured you that I was prepared to take
on this challenge.
In the past eleven months, HUD has significantly streamlined its
management structure to improve the quality and delivery of services,
and restore the agency's credibility in the eyes of Congress and
the American public.
I set a goal that HUD address audit findings made by the Inspector
General in a timely manner and make corrections that actually fix
serious management problems. As a telling sign that we are committed
to doing better, HUD completed the six-month period ending September
30 with no overdue management decisions on any of the Inspector
General's 363 audit recommendations. This is only the second time
that HUD has met the goal of no overdue decisions in all the years
that the OIG has been reporting audit resolution activity to the
Our goal is to deliver the best possible services to those in need,
and we have moved aggressively to ensure that HUD programs are getting
the job done.
With the support of the National Education Association, the American
Federation of Teachers, and the Fraternal Order of Police, I suspended
HUD's Officer Next Door and Teacher Next Door programs in April.
This came after officials handed down indictments and felony convictions
against buyers who purchased their homes fraudulently. We put into
place aggressive monitoring and tightened controls to prevent homebuyer
fraud, and restarted the programs in August.
Working with Congress, we terminated HUD's drug elimination program
this year. This was a well-intentioned program that suffered from
a large number of abuses, and duplicated the work of other Cabinet
Departments. Despite the termination of this program, HUD's commitment
to ensuring safe and drug-free homes for America's families has
not wavered. In fact, to partially offset the elimination of this
program, the President's FY 2002 Budget proposed, and the Congress
appropriated, an enhancement for the Public Housing Operating Subsidies,
which local officials may use at their discretion, including for
activities formerly supported by the drug elimination program. I
will work with the Office of National Drug Control Policy (ONDCP)
to determine how best to capture and account for Departmental funds
used for drug control activities. In addition, I am working with
ONDCP, the Department of Justice, and other agencies in exploring
ways to effectively meet this commitment.
Until this year, HUD's credit subsidy - which is used to cover
expected losses on FHA multifamily loans - was fraught with uncertainty
due to regular appropriations shortfalls. The Department restructured
the program to make it more self-sufficient and less dependent on
taxpayer dollars. Since the restructuring became effective on October
1, 2001, HUD has issued firm commitments totaling $869 million for
more than 10,000 housing units.
I am proud of the strides we have made in identifying the programs
that are meeting the needs of the people� and identifying - and
fixing - those that are not. HUD is quickly becoming a more efficient,
more effective provider of the services no agency but ours can deliver.
Mr. Chairman, I will conclude my formal testimony so that I may
dedicate as much of our remaining time as possible to answering
questions from the Committee. As I indicated to you in our last
conversation, HUD's ongoing negotiations with the White House regarding
the fiscal year 2003 budget preclude me from addressing - in anything
more than very general terms - any budget initiatives we may be
In closing, we all understand that housing is a non-partisan issue
- one that crosses the lines of politics and party. The families
who come to us for help are not interested in our political affiliations,
and our success in serving them depends on cooperation. I am happy
to say that this is the spirit in which HUD and the Committee have
undertaken our work this year� and the same spirit that will guide
us tomorrow and into the future. I would like to thank each of you
for your personal support of my efforts, and I welcome your guidance
as we continue our work together on behalf of the American people.
Last modified: December 14, 2001
Content Archived: March 17, 2010