Thank you, Chairwoman (Patty) Murray.  I want to thank you, Ranking Member (Chris) Bond, and the members of the subcommittee for this opportunity to appear today.

Madam Chair, I am here to present the Fiscal Year (FY) 2009 HUD budget.  But, before I do that, I want to thank you, Madam Chair, and the entire subcommittee for the priority given to Federal Housing Administration (FHA) modernization.

As you and your colleagues finish work on this important legislation, I should mention the Administration’s remaining priorities with respect to what’s in the final bill.

First, the legislation must allow the Department of Housing and Urban Development (HUD) to address the recent explosion in loans where sellers provide buyers with down payment assistance, and then add it to the price of the home.  These loans have a foreclosure rate two to three times the norm.  They are costing hard-working Americans their homes and these types of loans have pushed FHA to the brink of insolvency.

Second, Congress should allow FHA to proceed later this year with some flexibility in setting premiums.  I assure you we have no intention of increasing premiums on our bread-and-butter customers.  But, a few modest changes will strengthen FHA’s ability to offer safer alternatives to homeowners who want to refinance out of high-cost subprime loans, and it will actually allow us to reduce premiums for our potential homeowners with low incomes. 

Such legislation would fit in well with the general direction of the President’s budget. We need actions that are positive, on-point solutions to the complex problems confronting homeowners and the housing market, like FHA modernization and Government Sponsored Enterprise (GSE) reform.

The proposed budget is fiscally sound and represents an historic investment of $38.5 billion for the programs at HUD.  This is an increase of more than $3 billion, or nine percent, over last year’s proposal.  The budget is almost $1 billion more than our current budget authority. 

This funding will be timely and on-target for the people served by my department.  We need this budget to maintain current homeownership and stimulate new purchases.  It will help us expand our current efforts. 

Let me put the budget in context.  Last year, the President and I introduced FHASecure to help more Americans facing foreclosure refinance into a safer, more secure FHA loan. We did this using current regulatory authority.  And we have been able to make FHA available to more qualifying families.  There has been a noticeable increase in the number of closings.  We believe that FHASecure will help about 300,000 families refinance into affordable FHA-insured mortgages. 

FHASecure has proven to be extremely valuable.  Madam Chair, you should also know that in only five months, from September 2007 through January 2008, FHA helped pump more than $37.5 billion of much-needed mortgage activity into the housing market.  More than $14.7 billion of that investment came through FHASecure.

FHA modernization would greatly assist our efforts.  As you know, the economic stimulus package provides a temporary, 10 month window.  We announced the new loan limits last week.   They will help hundreds of thousands of people nationwide right away, perhaps as many as 250,000.  But this is no substitute for FHA modernization, which would raise appropriate loan limits permanently, but also provide other important changes that would benefit American homeowners. At a time of high foreclosures, FHA is helpful in others ways, such as its strong loss mitigation program, which has saved hundreds of thousands of homeowners from going into foreclosure.

In addition to FHA-related actions, we are also taking steps to ensure it is easy for homeowners to understand the fine print when they do sign on the dotted line.  That’s why we are committed to RESPA reform.  We are in the process of publishing a new Real Estate Settlement Procedures Act (RESPA) rule and hope it will help bring much needed transparency to the home-buying process.

Now, the budget will work in concert with these other actions.  For instance, the proposed budget appropriately increases the funding for housing counseling.  America needs the President’s request for $65 million in this budget for housing counseling.  Those funds, in addition to NeighborWorks’ $180 million, provide great services to those who reach out.  Many Americans facing foreclosure would have greatly benefited from housing counseling.  We know it works.  This funding will help partially address today’s crisis and prevent another such situation in the future.  It will get the job done.  We want to make sure that groups get the funds they need, now and in the future, and can manage the funds they get.   

We also need to continue government efforts to partner with the private sector to help build back the housing market.  The Hope Now Alliance is a good example.  Hope Now is a private-sector, voluntary industry effort to address foreclosure through freezing mortgage interest rates and working directly with financially-troubled homeowners. 

I also commend a recent effort by six Hope Now Alliance members to provide a temporary “pause” for homeowners in the foreclosure process. 

These actions provide direct assistance to those who need it right now.  These are the sort of responses that provide quick help for homeowners.

As in the past, the largest part of our budget is for affordable rental housing.  Combined, this budget seeks more than $29 billion for our rental assistance programs which we expect will help more than 4.8 million households. We are mindful of the continued need for more affordable rental housing, especially as low-and-middle-income workers still find themselves priced out of the real estate market in many cities.  We need to maintain the units currently available and expand that number.  This budget will help us do that.

Finally, the homeless must not be forgotten.  We are making strides in cutting the number of chronically homeless with our “continuum of care” approach.  For the first time ever, we saw a decrease in the number of chronically homeless last year – a drop of 12 percent.  We must continue that progress.  Our budget once again seeks an increase for homeless programs to continue this good work.   

Madam Chair, I know you are mindful of the need to help our nation’s homeless veterans.  Americans are deeply, profoundly grateful for the service and sacrifice of our nation’s veterans.  In the proposed budget, there is a request for $75 million for our Veterans Affairs Supportive Housing Program (VASH).  Prior to FY 2008, this program had not been funded since 1993.  Working with the Veterans Administration (VA), we will create an additional 9,800 vouchers for FY 2009.  This will bring the total to approximately 20,000 homeless veterans being served through housing and social services, double the number of available housing vouchers.

Overall, this is a good budget for the department…balanced, reasonable, appropriate, and workable.  It allows us to operate within a framework of cooperation and partnership with related federal agencies, other levels of government, and non-profit initiatives. 

Madam Chair, as we proceed through the budget process, I look forward to working with you and the subcommittee.     

Thank you. 

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