HUD STRATEGIC

PLAN

FY 2003–FY 2008

HUD STRATEGIC

PLAN

FY 2003–FY 2008
HUD 

STRATEGIC

PLAN

FY 2003–FY 2008 

“I believe there is such a thing as the American Dream. And I believe those of us 

who have been given positions of responsibility must do everything we can to 

spotlight the dream and to make sure the dream shines in all neighborhoods, all 

throughout our country.” 

-President George W. Bush 

U.S. Department of Housing and Urban Development 

March 2003 
HUD STRATEGIC PLAN

MESSAGE FROM SECRETARY MEL MARTINEZ

We have worked hard at the U.S. Department of Housing and Urban Development 

to aggressively implement President Bush’s housing agenda and to fulfill our obligations to 

the American people. Our mission is to expand homeownership, increase access to 

affordable housing free from discrimination, support community development and address 

the housing needs of society’s most vulnerable. 

For many families, the American Dream means owning their own home. HUD is 

dedicated to helping more families—especially minorities—realize the dream for themselves. 

We are breaking down the barriers that lock too many families out of homeownership. We 

have taken significant steps to make the homebuying process itself less confusing and less 

expensive. In this way, we are empowering families to know the security of self-sufficiency, 

helping communities benefit from increased homeownership in their neighborhoods and 

strengthening the nation as a whole in many measurable ways. 

While we are passionate about our mission to increase the ranks of America’s 

homeowners, HUD’s agenda is broad and covers every aspect of single-family and 

multifamily housing, the special needs of vulnerable citizens and urban and economic 

development. 

Each year, millions of Americans—including low-income families; the elderly; 

individuals with disabilities; homeless men, women and children; and persons with AIDS—

turn to the Department for assistance in meeting their housing needs. State and local 

governments depend upon HUD and its system of grants to support community 

development projects that revive troubled neighborhoods and spark urban renewal. 

Responding to such a multitude of needs demands an effective management plan that 

outlines specific strategic goals and provides a yardstick for measuring progress. 

This Strategic Plan provides the long-term goals and objectives that will guide HUD 

through FY 2008 and the means by which we will determine our progress. This Plan 

underscores the commitment I brought to HUD to improve the Department’s performance, 

and to produce these improvements in a manner consistent with the President’s 

Management Agenda and the highest standards of ethics and accountability. Only by 

continually reassessing its strategic goals can an agency with HUD’s size and scope know 

whether its resources are being properly allocated—and whether the people who depend 

upon the Department are, in fact, being served. 
HUD’s mission of service to others is built upon compassion, and yet compassion 

can be difficult to measure. And so in addition to setting goals and quantifying results, we 

will continue to ask ourselves the following questions: 

How many minority families who dreamed the American Dream of homeownership 

have taken out their first mortgage? How many people experiencing chronic homelessness 

have taken a step up the ladder of self-sufficiency? How many neighborhoods once cloaked 

in despair have new hope? How many faith-based and community organizations that had 

been denied the opportunity to compete for federal funding are today using HUD grants to 

expand their reach? How many neighborhoods once facing a shortage of affordable housing 

have homes enough for all? 

The answers to these questions are the measurements by which we will judge our 

success as a department guided by compassionate service to others. 

As the face of HUD and the helping hands that guide those who turn to us for help, 

our employees are integral to our success. An organization can have the best-planned 

programs, processes and structures in place, but if it lacks a dedicated, skilled and ethical 

workforce to carry them out, the work is ultimately meaningless. I am proud of the men and 

women of HUD and their commitment to our mission. 

The American Dream is an attainable goal. I know this because I see it achieved 

every day, so often by families and individuals who never imagined owning their own home 

or reaching economic self-sufficiency. Through HUD’s work in the coming years, our 

communities and the entire nation will grow even stronger as more families experience the 

American Dream.

Mel Martinez 

Secretary 
TABLE OF CONTENTS

Message from the Secretary........................................................................................... ii 

Introduction ................................................................................................................... 1

Development of this Strategic Plan...................................................................................................... 1 

HUD’s New Strategic Framework.................................................................................................... 2 

HUD’s Strategic Goals .................................................................................................. 3

Increase Homeownership Opportunities............................................................................................... 5 

Promote Decent Affordable Housing ................................................................................................13 

Strengthen Communities...................................................................................................................23 

Ensure Equal Opportunity in Housing............................................................................................33 

Embrace High Standards of Ethics, Management and Accountability ..............................................39 

Promote Participation of Faith-Based and Community Organizations...............................................49 

Aligning Resources with Results................................................................................. 53

Budget and Staff ..............................................................................................................................53

Interagency Partnerships...................................................................................................................53 

Policy Development, Program Evaluations, Related Research ............................................................57

Appendix...................................................................................................................... 61

About HUD ..................................................................................................................................61 

The Performance Management Cycle at HUD .................................................................................61

Perspective and Outlook...................................................................................................................62 

Key Statutes.....................................................................................................................................64

Introduction 

This document presents the U.S. Department of 

Housing and Urban Development’s (HUD’s) 

Strategic Plan for fiscal years (FYs) 2003–2008. The 

Strategic Plan describes HUD’s newly realigned

strategic goals and objectives for the next six years 

and its plan of action for achieving these objectives 

and measuring results. It outlines the challenges 

facing the Department and its programs, and 

describes its commitment to overcoming these 

challenges. It highlights the effective working 

relationships HUD has developed with other 

federal agencies and branches, and its renewed

emphasis on creating partnerships with local

governments, faith-based and community 

organizations and the private sector. It also 

describes the policies, means and strategies needed

to ensure that HUD is a high-performing agency 

that fulfills its mission to increase homeownership, 

support community development and increase 

access to affordable housing free from

discrimination. 

Secretary Martinez has made a commitment to

improve HUD’s performance and to produce these

improvements in a manner that reflects the highest 

standards of ethics, management and accountability. 

This is in keeping with President Bush’s 

Management Agenda, which HUD is implementing 

actively to resolve chronic management weaknesses. 

This introductory section presents a brief overview 

of the Strategic Plan and its development. The

following section explains in detail the six strategic 

goals, providing a template for measurement of 

results. The final section links resources with 

results, putting forth a vision for how HUD’s 

budget and human capital can best be utilized to 

achieve its strategic goals. As a reference, the 

appendix to this Strategic Plan contains greater 

detail about HUD; its strategic planning and 

management processes; key statutes that direct its 

work; and an assessment of major economic, social, 

demographic or other trends that may impact the 

direction and success of HUD’s efforts. 

Development of this Strategic Plan

• 

• 

• 

• 

• 

• 

In 2002, Secretary Mel Martinez tasked HUD 

leadership with fully assessing HUD’s strategic 

mission, goals and objectives and determining how 

HUD’s work substantively contributes to these aims. 

All principal areas of HUD contributed to this effort. 

The Secretary also requested an expedited submission 

of this Strategic Plan six months prior to the statutory 

due date, so that the Strategic Plan aligns with the FY

2004 Budget and Annual Performance Plan. These 

documents reflect HUD’s new realigned strategic 

goals and objectives, and, taken together, they provide 

substantial information on HUD’s long-term 

objectives and strategies for achieving those 

objectives. 

In preparing its new Strategic Plan, the Department

obtained stakeholder feedback by meeting with 

representatives of Congress; consulting with staff of 

the Office of Management and Budget; and 

conducting regional stakeholder consultation meetings 

in Albuquerque, Cincinnati, Providence and Los 

Angeles and a meeting with national stakeholder 

groups in Washington, DC. The Department also 

solicited comments from citizens, stakeholders and 

HUD employees by publishing a draft of this plan on 

its Web site. The Department’s leadership engaged in 

extensive deliberations about appropriate strategic 

goals, objectives and policies. This Strategic Plan 

reflects HUD’s efforts to balance its priorities with 

input received from stakeholders. 

HUD’s New Strategic Framework

HUD’s Strategic Framework consists of a “mission 

statement” supported by strategic goals and objectives 

that summarize the Department’s aims over the next

six years. This new strategic framework includes three 

programmatic strategic goals and three cross-cutting 

strategic goals. Programmatic goals reflect the 

program areas where HUD’s efforts benefit families 

and communities. Cross-cutting goals reflect HUD 

priorities with a wide cross-cutting impact that affect

each of HUD’s program areas. Under each goal are 

the key strategic objectives that HUD will use to guide 

its performance. 

Mission Statement: Increase homeownership, 

support community development, and increase access 

to affordable housing free from discrimination.

Programmatic Strategic Goals

Increase homeownership opportunities 

Promote decent affordable housing 

Strengthen communities 

Cross-cutting Strategic Goals 

Ensure equal opportunity in housing 

Embrace high standards of ethics, management

and accountability 

Promote participation of faith-based and 

community organizations 

The Department’s new framework of strategic goals 

and objectives is shown in the following table.

HUD Strategic Plan 1
HUD’s Strategic Framework

Mission: Increase homeownership, support community development, 

and increase access to affordable housing free from discrimination.

Increase 

homeownership 

opportunities

Promote 

decent affordable 

housing

Strengthen

communities

Program

m atic Strategic Goals 

• Expand national

homeownership

opportunities. 

• Increase minority 

homeownership. 

• Make the homebuying 

process less complicated and

less expensive. 

• Fight practices that permit 

predatory lending.

• Help HUD-assisted renters 

become homeowners.

• Keep existing homeowners 

from losing their homes. 

• Expand access to affordable 

rental housing. 

• Improve the physical quality 

and management 

accountability of public and 

assisted housing. 

• Increase housing

opportunities for the elderly 

and persons with disabilities. 

• Help HUD-assisted renters 

make progress toward selfsufficiency.

• Provide capital and 

resources to improve 

economic conditions in 

distressed communities. 

• Help organizations access 

the resources they need to 

make their communities 

more livable. 

• End chronic homelessness 

and move homeless

families and individuals to 

permanent housing. 

• Mitigate housing 

conditions that threaten 

health. 

Ensure equal opportunity in housing 

• Resolve discrimination complaints on a timely basis. 

• 

• 

Promote public awareness of fair housing laws. 

Improve housing accessibility for persons with disabilities. 

Embrace high standards of ethics, management and accountability 

• Rebuild HUD’s human capital and further diversify its workforce. 

• Improve HUD’s management, internal controls and systems and resolve audit issues. 

• Improve accountability, service delivery and customer service of HUD and its partners. 

• Ensure program compliance. 

• Improve internal communications and employee involvement. 

Promote participation of faith-based and community organizations 

Cross-C u tting S t rategic Goals 

• 

• 

• 

• 

Reduce regulatory barriers to participation by faith-based and community organizations. 

Conduct outreach to inform potential partners of HUD opportunities. 

Expand technical assistance resources deployed to faith-based and community organizations. 

Encourage partnerships between faith-based/community organizations and HUD’s traditional 

grantees. 

2 HUD Strategic Plan
HUD’s Strategic Goals 

• 

• 

• 

Strategic Objectives 

Means and Strategies 

Performance Measures 

HUD Strategic Plan 3
4 HUD Strategic Plan
Strategic Goal 

Increase Homeownership Opportunities 

“In areas where homeownership flourishes, neighborhoods are more stable, 

residents are more civic-minded, schools are better, and crime rates decline. 

Homeownership generates wealth for families and provides stability for 

children. Homeownership is the American Dream.”

-Secretary Mel Martinez

Overview

From the early days of the Federal Housing 

Administration (FHA) in the 1930s to the present, 

Congress and the President have repeatedly

charged HUD with opening doors to

homeownership for more Americans. Through 

homeownership, an individual or family makes an 

investment in the future. A home is an asset that 

can grow in value and provide capital to finance 

future needs of a family, such as college educations 

or retirement. Homeownership helps stabilize 

neighborhoods, strengthen communities and 

stimulate economic growth. Holding other factors 

equal, homeownership improves outcomes for 

children on a number of dimensions, including 

school achievement and dropout rates. 

This strategic goal focuses on HUD’s activities to 

expand homeownership opportunities for 

minorities, low-income families and other 

Americans. HUD’s activities under this strategic 

goal will help to make homeownership more 

accessible and less expensive for millions of 

families. 

Six strategic objectives support this goal. 

Objective H1: Expand national 

homeownership opportunities. 

This objective reflects HUD’s goal of helping 

more families, particularly low- and moderateincome families, attain homeownership. Since its 

creation in 1934, FHA has insured almost 32 

million single-family mortgages totaling $1.6 

trillion, and has served as a model for housing 

finance around the world. 

While the overall homeownership rate for 2002 

was 67.9 percent, the homeownership rate for lowand moderate-income families was only 52.0 

percent. While recognizing that homeownership is 

not an option for everyone, HUD will focus on 

ensuring that the benefits of homeownership are 

made available to more American families. 

Objective H2: Increase minority 

homeownership. 

The President has charged HUD with creating an 

unprecedented public/private partnership to 

eliminate barriers to minority homeownership and 

add 5.5 million more minority homeowners by

2010. This unique partnership will bring together 

government, the real estate and mortgage finance 

industry, affordable housing groups and advocacy 

organizations on a nationwide campaign to 

increase homeownership opportunities for 

minority families. 

The homeownership rate for minorities in 2002 

was 49.2 percent, more than 25 percentage points 

below the 74.5 percent homeownership rate for 

nonminority households. 

Objective H3: Make the homebuying 

process less complicated and less

expensive. 

Under this strategic objective, HUD is pursuing 

major reform of Real Estate Settlement 

Procedures Act (RESPA) regulations that provide 

basic consumer protections in the homebuying

process. HUD’s efforts will require better 

disclosure of settlement costs, allow consumers 

more choices, limit excessive settlement fees and 

 HUD Strategic Plan 5
Increase Homeownership Opportunities

encourage innovation and competition in the

marketplace. 

HUD’s efforts are founded upon a set of

consumer-driven principles that guide the 

settlement process. These principles mandate that 

homebuyers have several rights: 

• 

• 

• 

• 

• 

i

• 

• 

To receive settlement cost information early 

in the process, allowing them to shop for the 

mortgage product and settlement services that

best meet their needs; 

To have the disclosed costs be as firm as

possible, thereby avoiding surprises at 

settlement; 

To benefit from new products, competition 

and technological innovations that could 

lower settlement costs; 

To have access to better borrower education 

and simplified disclosure; 

To know they are protected through vigorous 

RESPA enforcement and a level playing field 

for all industry providers. 

Objective H4: Fight practices that 

permit predatory lending. 

Recognizing the harm that predatory lending 

causes to neighborhoods and families—-in 

particular low-income families—this new strategic 

objective is specifically devoted to eliminating 

practices that permit predatory lending. HUD is 

committed to work with other federal and state 

agencies and to vigorously enforce RESPA. 

Predatory lending may be undertaken by creditors,

brokers, or even home improvement contractors. 

It involves deception or fraud, manipulating the

borrower through aggressive sales tactics, or taking 

unfair advantage of a borrower’s lack of 

understanding of loan terms. 

Objective H5: Help HUD-assisted 

renters become homeowners. 

HUD is committed to helping more HUD-assisted 

renters become homeowners through expanded 

use of Housing Choice Vouchers for 

homeownership. Homeownership vouchers cover 

the cost of a downpayment or the ongoing costs 

of a mortgage. Other policies designed to help

HUD-assisted renters make progress toward selfsufficiency also contribute to the achievement of 

this objective. 

“At closing, too many American families sit 

down at the settlement table and discover

unexpected fees that can add thousands 

of dollars to the cost of their loan.... They

are not told who is getting their money, or

what services they are receiving in return. 

Because this is thrust upon the buyers at 

the last moment, they have no opportunity 

to determine whether these extra costs are 

at all reasonable.”

-Secretary Mel Martinez Objective H6: Keep existing 

homeowners from losing their homes. 

It is not enough to help more families become

homeowners; HUD is also increasing the focus on 

assisting new homeowners in maintaining their 

homeownership status through housing 

counseling, foreclosure prevention activities and 

better monitoring of appraisals. In particular, the 

loss mitigation HUD requires of lenders has 

proven successful. In FY 2002, of the 73,000 loss 

mitigations claim payments made by HUD, 69,000 

resulted in families being able to remain in their 

homes. 

Means and Strategies 

HUD brings a wide variety of tools to bear on the 

goal of increasing homeownership opportunities. 

The overall strategy is to carefully apply publicsector dollars, whether through mortgage

insurance, grants, loans, or direct subsidies, to

leverage the private market and make it easier for 

low- and moderate-income Americans to buy and 

keep their own homes. 

Increase homeownership 

opportunities for minor ties, HUDassisted renters and other families. 

Among other efforts to increase homeownership 

opportunities, HUD plans to: 

Provide increased funding for downpayment 

assistance, thereby addressing one of the 

principal barriers to homeownership. 

Increase funding for housing counseling and 

the Self-Help Homeownership Opportunities 

Program (SHOP). Housing counseling plays a

particularly important role in helping minority 

families access homeownership. The increase 

in SHOP funds will help meet the needs of 

very-low-income families for whom 

homeownership is only possible through the 

contribution of sweat equity, the signature 

characteristic of SHOP. 

6 HUD Strategic Plan
Increase Homeownership Opportunities

• 

• 

• 

• 

• 

• 

 

Expand the use of Housing Choice Vouchers 

for homeownership. These vouchers can help 

low-income families purchase homes by 

covering the ongoing costs of a mortgage or, 

under recent legislation, by allowing the use of

one year’s worth of Section 8 assistance for 

the downpayment on a home. HUD plans to 

take steps to substantially increase 

participation in the program, including: 

publishing a handbook for the Section 8 

homeownership program; using incentives 

through HUD’s funding competitions; 

proposing legislation to eliminate the 

requirement that the use of Housing Choice 

Vouchers for downpayment assistance be

contingent on advance approval in annual 

appropriations acts; and exploring strategies 

to help housing agencies obtain the resources 

they may need to launch these programs and

provide homeownership counseling. 

Work with the Department of Treasury to 

enact a tax credit for developers of affordable 

single-family housing. 

In addition, many of HUD’s core programs help 

low- and moderate-income families, including 

many minority families, to achieve the goal of

homeownership.

1 For example: 

FHA insurance helps first-time homebuyers 

and other families who could have difficulties 

obtaining a mortgage. About one million 

households obtain FHA-insured mortgages in

an average year. 

The HOME Investment Partnerships

Program provided $1.7 billion for housing 

activities, including rental housing, during FY 

2002. Grantees used HOME funds to provide 

critical assistance to an average of 25,604 new 

homebuyers annually during FYs 1999–2001 

and also assisted existing homeowners. 

The Community Development Block Grant 

(CDBG) program provided $1.35 billion for 

housing activities, including rental housing, 

during FY 2002. 

Ginnie Mae keeps mortgages affordable by

attracting capital into the residential mortgage 

market. Ginnie Mae’s mortgage-backed 

securities program guaranteed the issuance of 

$174.9 billion in securities during FY 2002, 

thereby providing capital to finance the 

purchase or refinance of approximately 1.5

million homes, including multifamily units. 

The total volume of single-family mortgagebacked securities with Ginnie Mae guarantees

was $568.4 billion on September 30, 2002. 

• 

• 

• 

• 

• 

• 

• 

• 

 

1 See “Aligning Resources with Results” for a 

comprehensive table of budget and staff resources

allocated by program and strategic goal. 

Programs for Native American communities 

expand homeownership opportunities for 

these disadvantaged groups. 

Through SHOP, HUD engages faith-based 

and community-based organizations in 

creating new homeowners. 

HUD funds housing counseling programs to 

help its partners break through the 

noneconomic barriers to homeownership. 

Among American households, low incomes 

and distressed central-city locations are 

strongly associated with minority status. 

Therefore, HUD programs that focus on 

lower income groups and distressed 

communities work effectively to expand

homeownership opportunities for minorities. 

HUD promotes homeownership for minority 

families and persons with disabilities by 

enforcing the Fair Housing Act and through 

special marketing, outreach and education 

efforts of FHA. 

The Department will promote the use of 

FHA’s new mortgage scorecard, Technology 

Open To All Lenders (TOTAL) Scorecard, by

mortgage lenders. When used in an automated 

underwriting system, the scoring system will 

ensure that mortgage applications are 

evaluated fairly and uniformly. 

HUD also regulates Fannie Mae and Freddie

Mac, two government-sponsored enterprises 

(GSEs), to ensure that they fulfill their public 

purposes as mandated by Congress.2 Both 

GSEs are required to meet three housing 

goals each year, which are intended to expand 

affordable housing opportunities for people 

and communities traditionally underserved by 

the mortgage markets, including areas with a 

higher proportion of racial minorities. 

In addition to serving targeted markets, both 

GSEs—as well as Ginnie Mae—create

liquidity in the mortgage markets to ensure an

uninterrupted flow of mortgage funds on a 

nationwide basis. 

2 The financial safety and soundness of the GSEs is

regulated by the independent Office of Federal Housing 

Enterprise Oversight. 

HUD Strategic Plan 7
Increase Homeownership Opportunities

Keep existing homeowners from 

losing their homes. 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

FHA recently implemented its Loss

Mitigation Program, under which lenders have 

more options to help some homeowners keep 

their homes. 

In FY 2003, the Department is implementing 

an accelerated claim disposition

demonstration program. Under this 

demonstration, loans that are almost certain 

to be foreclosed will be sold to a joint venture 

partnership that will be managed by a privatesector entity. This entity will decide on the 

most financially viable option to dispose of 

and/or restructure the loans, which may allow 

some families to remain in their homes. 

HUD-approved housing counseling agencies 

are available to provide information on 

services and programs that can help 

homeowners, with or without FHA insurance, 

avoid foreclosure. 

HUD’s full implementation of the RESPA

rule, discussed above, will foster a better 

understanding of the home mortgage process,

thereby reducing the likelihood of a 

homeowner entering into a mortgage contract

with unfavorable terms and increasing the 

likelihood that borrowers will be able to

maintain their homeownership status. 

Simplify the homebuying process and 

counter predatory lending. 

To empower homebuyers to shop for the best 

mortgage and make the best decision for their

families, HUD is modifying the RESPA rules 

to require better, clearer upfront disclosure of

all costs associated with obtaining a home 

loan prior to the payment of nonrefundable 

fees. 

HUD also is clarifying the rules regarding 

disclosure of yield spread premiums and 

removing regulatory barriers to allow the

offering of guaranteed mortgage packages. 

To address the problem of predatory lending, 

FHA is building on the results of a predatory 

lending pilot designed to provide relief to 

borrowers already in distress and to

strengthen FHA endorsement and fraud 

detection procedures to prevent predatory 

practices from occurring in the first place. 

Based in part on the experience with the predatory

lending pilot program, FHA plans to take a 

number of steps to eliminate practices that permit 

predatory lending. FHA will: 

Strengthen licensing and certification 

requirements for appraisers on the FHA

appraiser roster. 

Strengthen FHA policies and procedures for 

endorsing single-family mortgages for 

insurance, including prohibitions on the quick

resale known as “property flipping.” 

Enhance FHA’s ability to identify and 

discipline perpetrators of fraud and predatory 

lending practices. 

Enforce RESPA in coordination with the Fair 

Housing Act. 

Ensure field offices implement consistent 

policy relative to identification and reporting 

of potentially predatory lending activity, 

customer response and public education and 

awareness.

8 HUD Strategic Plan
Increase Homeownership Opportunities

Performance Measures3

Long-Term Performance Measures

HUD will assess its long-term success in achieving this goal by measuring the following outcomes 

discussed below: 

• 

• 

• 

• 

• 

• 

• 

• 

• 

An additional 5.5 million minority households will become homeowners by 2010. 

The average closing cost of FHA-insured single-family mortgages will decrease by FY 2006. 

The share of FHA-insured home-purchase mortgages for first-time homebuyers remains above 

80 percent in each year through 2008. 

Between FY 2004 and FY 2008, approximately 400,000 claims will be submitted under the Loss 

Mitigation Program. 

Between FY 2004 and FY 2008, 3.5 million families will receive HUD housing counseling. 

Through the Section 601 Accelerated Claims Disposition demonstration, enhance policy 

objectives, such as savings to the government and homeownership retention. 

Implement regulatory changes to combat predatory lending. 

Implementation of RESPA regulatory changes will reduce consumer confusion with the 

mortgage financing process. 

Between FY 2004 and FY 2008, 240,000 families will have purchased homes through the 

HOME Downpayment Assistance Initiative, Housing Choice Homeownership Vouchers, the SelfHelp Opportunities Program and other targeted initiatives.

 

3 Two sets of performance indicators are specified for each strategic goal. The first set of measurements, discussed in the main text, 

reflects the projected long-term outcomes of the policies employed to achieve the goal. The second set of measurements, listed in the 

text boxes titled “Intermediate Measures Supporting this Goal,” reflects shorter term results that HUD plans to track closely over the 

next year or two to determine if progress is being made in achieving the goal. Both sets of measures will be included in the Annual

Performance Plan. 

An additional 5.5 million minority 

households will become homeowners by 

2010. 

This goal reflects a Presidential commitment to

significantly increase minority homeownership. Although 

homeownership rates can fluctuate yearly due to many

external factors, over the long term, they should increase

considerably as part of targeted HUD policies and 

programs. This indicator reflects HUD’s expectation that,

over the long term, its policies will contribute to an 

increase in minority homeownership. 

The national minority homeownership rate rose from 43 

percent in March of 1994 to 49.1 percent in March of 

2002. This measure projects a similar rate of increase 

through 2010. Achieving this challenging goal despite the 

changed economic circumstances will depend on a 

continued focus of HUD policies and resources on 

making homeownership opportunities available for 

minorities and on the significant cooperation of the 

private sector.

The average closing cost of FHA-insured 

single-family mortgages will decrease by FY 

2006. 

Reforming RESPA and increasing enforcement will 

prevent additional closing costs from being added and 

will increase competition for lending services. As a result, 

the costs of obtaining a mortgage should decrease. 

HUD is preparing a closing cost database based on a 

representative sample of HUD–1 forms from loans 

endorsed by FHA during FY 2001. HUD–1 forms, which

are required by RESPA for all residential mortgages, list 

closing costs associated with loans, title insurance, 

attorneys, settlement agents, taxes, escrow accounts and 

other payments in the transaction. This database will 

facilitate statistical analysis of closing costs. The 

Department will replicate this study in five years (FY

2006), allowing assessment of changes in closing costs. 

The projected outcome is a reduction in closing costs.

HUD Strategic Plan 9
Increase Homeownership Opportunities

The share of FHA-insured home-purchase 

mortgages for first-time homebuyers 

remains above 80 percent in each year 

through 2008. 

FHA is a major source of mortgage financing for firsttime buyers as well as for minority and lower income 

buyers. HUD supports the overall homeownership rate 

through FHA endorsements for first-time homebuyers. 

This performance measure tracks the share of first-time 

homebuyers among FHA endorsements for home

purchases—thus excluding refinanced loans made for 

home improvements or other reasons. This performance 

goal of 80 percent is HUD’s benchmark that reflects the 

continued high performance achieved since FY 1998. 

Between FY 2004 and FY 2008, 

approximately 400,000 claims will be 

submitted under the Loss Mitigation 

Program. 

This measure tracks the success of FHA loan servicers in 

implementing statutorily required loss-mitigation 

techniques when borrowers default on their FHA 

mortgages. A borrower can resolve a default (90-day

delinquency) in several ways short of foreclosure: by

paying down the delinquency (cure), by a pre-foreclosure 

sale with FHA perhaps paying an insurance claim in the 

amount of the shortfall, or by surrendering a deed in lieu 

of foreclosure. Better loss-mitigation efforts, such as 

enhanced borrower counseling, help borrowers keep their 

current homes or permit them to buy another home 

sooner. Avoidance of foreclosure also reduces FHA’s 

insurance losses, making FHA financially more sound and 

enabling it to help more borrowers. For both reasons, by 

achieving this goal HUD will help increase the overall 

homeownership rate. 

Between FY 2004 and FY 2008, 3.5 million 

families will receive HUD housing 

counseling.

The Department is placing more emphasis on housing 

counseling, and counseling is a requirement for several 

programs such as Section 8 homeownership. An increase 

in housing counseling funding in FY 2003 will not only 

increase the number of homebuyers and homeowners 

counseled but also allow the Department to provide 

technical assistance to improve the capacity of its housing

counseling agencies. Those counseled include

homebuyers, homeowners, homeless clients and families 

seeking affordable rental housing. In particular, new 

counseling resources will help more members of minority 

and other underserved groups to build the knowledge to 

become homeowners and to sustain their new tenure by 

meeting the ongoing responsibilities of homeownership. 

Through the Section 601 Accelerated Claims 

Disposition (ACD) demonstration, enhance 

policy objectives, such as savings to the 

government and homeownership retention. 

Under authority from Section 601 of the National 

Housing Act in 1999, HUD has implemented a 

demonstration program to reform the single-family claims 

and property disposition process and maximize recoveries 

on claims paid. Under the demonstration, FHA takes 

assignment of notes and transfers them to private parties

for servicing, foreclosure avoidance, property 

management and asset disposition. FHA utilizes a 

structured financing, retaining an equity interest in the 

property, but will not take ownership of property. HUD 

aims to shorten the time in which servicers can file a

claim for default, address defaults by aligning private 

sector interests with HUD’s objectives, reduce its real 

estate owned (REO) portfolio and increase the value of

single-family assets and recovery to FHA. In addition, 

delinquent borrowers with mortgages included in the sale

will have a greater range of options to remain in their 

homes. To the extent possible, this public/private 

partnership will help borrowers retain homeownership by

reinstating or restructuring existing loans and then 

packaging them for resale. In FY 2003, FHA will conduct 

an evaluation of the ACD demonstration to determine, 

among other things, the extent to which it enhances 

HUD’s ability to achieve policy objectives, such as savings 

to the government and homeownership retention. 

Implement regulatory changes to combat 

predatory lending.

HUD will publish in FY 2003 regulations to help reduce 

predatory lending, including a rule that prohibits quick resales, or “flipping,” of FHA-insured properties. Other 

rules will govern lender accountability for appraisals, 

limitations on nonprofit participation, revisions to Credit 

Watch, changes to the Section 203(k) rehabilitation loan 

insurance program, lender compliance and accountability 

enhancements, duties and responsibilities of loan 

correspondents and sponsors and appraiser qualifications. 

HUD will continue to review and analyze the long-term 

impact of these strengthened regulations. Once

implemented, the impact of these rules is expected to 

grow over time. 

Implementation of RESPA regulatory 

changes wil reduce consumer confusion 

with the mortgage financing process. 

l

The complexity of the mortgage process and the 

confusion it causes among borrowers places an enormous 

burden on families shopping for mortgage loans. The 

proposed RESPA regulation addresses the need for more 

consumer understanding of the mortgage process, simpler

10 HUD Strategic Plan
Increase Homeownership Opportunities

disclosures at the shopping stage and more reliable 

estimates of settlement costs. A study will be undertaken 

in 2006 to analyze the extent to which consumer 

confusion is still a problem and indicate whether further

action is needed. 

Between FY 2004 and FY 2008, 240,000 

families will have purchased homes through 

the HOME Downpayment Assistance 

Initiative, Housing Choice Homeownership 

Vouchers, the Self-Help Opportunities 

Homeownership Program and other 

targeted initiatives. 

This measure tracks the number of homeowners assisted 

with Housing Choice Homeownership Vouchers, the 

HOME Downpayment Assistance Initiative, SHOP and 

other homeownership funds. Over five years, HUD 

expects to assist 200,000 new homeowners through the 

HOME Downpayment Initiative, 26,000 new 

homeowners through SHOP and 12,000 new 

homeowners with Housing Choice Homeownership 

Vouchers. These projections assume funding levels 

equivalent to those in the Administration’s FY 2003 

budget request.

External Factors 

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National and regional economic conditions have a 

strong impact on the homeownership rate and on 

several performance measures related to HUD 

homeownership programs. 

State and local grantees under the CDBG program 

have discretion about whether to use funds for 

homeownership, rental housing, or other 

community and economic development activities. 

In some cases, economic growth supported by

community development activities results in higher, 

unaffordable housing costs. 

Historical patterns of discrimination and differences 

in schooling and income levels make it more 

difficult for minorities to secure the income and 

credit history needed to become homeowners. 

Intermediate Measures Supporting this Goal 

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By the end of FY 2003, FHA will: 

o prevent the issuance of FHA mortgage insurance on properties that have been transferred 

within three months. 

o publish regulations for FHA mortgage insurance programs that increase lender compliance 

and accountability, codify the responsibilities of loan correspondents and sponsors and 

strengthen appraiser qualifications. 

o publish regulations designed to reduce defaults by limiting nonprofit participation in FHA 

programs and strengthening the Section 203(k) rehabilitation loan program. 

Beginning in the third quarter of FY 2003, field offices will report a consolidated listing of all activities 

related to predatory lending to HQ through the regional directors on a quarterly basis. 

Eighty percent of FHA-endorsed home-purchase mortgages each year will be for first-time 

homebuyers.

In FY 2003, 78,000 claims will be submitted under the Loss Mitigation Program. 

In FY 2004, 700,000 families will receive housing counseling. 

In FY 2003, FHA will conduct an evaluation of the Accelerated Claims Disposition demonstration. 

The number of minority households assisted in becoming homeowners through the HOME program 

increases.

With respect to predatory lending, a variety of state 

and federal authorities regulate home mortgage

lending, and none have a formal definition of 

predatory lending. Therefore it is difficult to

quantify the scope of predatory lending practices, 

whether market-wide or specific to FHA. 

The impacts of HUD efforts may be limited by

structural, economic and social influences on 

neighborhood housing markets. These include the 

lack of financial sophistication of disadvantaged 

households, language barriers to understanding the 

intricacies of the American real estate finance and 

lending markets and the numerous actors and 

inherent complexity of the home purchase and 

mortgage processes. 

HUD Strategic Plan 11
12 HUD Strategic Plan
Strategic Goal 

Promote Decent Affordable Housing 

“We will measure success by the number of Americans who have 

moved out of assisted housing and are climbing the ladder of 

self-sufficiency. At the same time, we acknowledge that HUD 

provides a vital safety net for many in society; we take this

obligation seriously, and will continue to fulfill it.”

-Secretary Mel Martinez

Overview 

Promoting decent affordable housing is a central part of 

HUD’s mission. To this end, HUD seeks to expand

access to affordable rental housing, improve the physical 

quality and management accountability of public and 

assisted housing, increase housing opportunities for the 

elderly and persons with disabilities and help HUDassisted renters make progress toward self-sufficiency. 

Success in achieving the goal of promoting decent 

affordable housing will require the cooperation, support 

and initiative of local communities. Clearly, the federal 

government has a role in helping to address the 

challenges of housing affordability in America. The 

government provides tax credits to stimulate rental 

housing construction and rehabilitation, block grants that 

can be used for housing production, rental assistance to

low-income citizens and insurance and guarantee 

programs. But success in meeting the nation’s affordable 

housing needs cannot be achieved without devolving 

decision-making authority to the state and local level. No

one is in a better position to address a community’s

specific affordable housing concerns than the 

community leaders themselves. 

Objective A1: Expand access to affordable 

rental housing. 

To help low-income families afford the costs of rental 

housing, HUD provides rental assistance to more than 

four million households through public and assisted 

housing programs. HUD also funds a number of rental 

assistance programs geared to special populations, such 

as the Housing Opportunities for Persons with AIDS 

(HOPWA) program and homeless assistance programs, 

and through the HOME program provides states and

localities with flexible funding they can use to produce 

affordable rental housing. Within the constraints of its 

budget, HUD seeks to provide affordable housing 

opportunities to as many families as possible. 

HUD also will work to develop creative solutions to the 

problems presented by local regulatory barriers and other 

obstacles to the development of affordable rental 

housing. 

Objective A2: Improve the physical quality 

and management accountability of public 

and assisted housing. 

HUD is committed to improving the quality of HUDassisted housing and ensuring that all subsidized families 

live in units that meet basic quality standards. Through 

the use of management tools that track the housing 

quality of public and assisted housing, the Department

will continue to work with its partners toward meeting 

this objective. 

The Department also plans to focus on improving the 

management accountability of public and assisted 

housing. Public and assisted housing programs have 

suffered from a number of serious management 

weaknesses, including: the lack of a comprehensive 

evaluation system; the failure to accurately calculate 

tenant incomes and rents, leading to subsidy 

overpayments; the failure to maintain subsidized 

developments in adequate condition; and, in extreme 

cases, severe mismanagement or even fraud. 

As part of the effort to preserve affordable housing 

through the Mark-to-Market program, HUD sets 

 HUD Strategic Plan 13
Promote Decent Affordable Housing

appropriate market-level rents for HUD-assisted

housing—thereby eliminating subsidy overpayments—

and incorporates policies and procedures to ensure good

management and good physical condition at properties 

that have gone through the program. 

Objective A3: Increase housing 

opportunities for the elderly and persons 

with disabilities. 

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Elderly households and persons with disabilities have

special needs that require flexible housing strategies. 

HUD’s strategies supporting this objective are intended 

to maximize the independence of these households. 

These strategies should focus on promoting communitybased living opportunities for the elderly and persons

with disabilities where appropriate and making 

supportive services available to residents of rental 

housing, enabling them to live as independently as

possible in the most integrated setting. One way HUD 

supports independence for persons with disabilities is to

promote visitability in all HUD-funded projects. 

HUD’s Section 202 and 811 programs for elderly 

households and persons with disabilities are unique 

among HUD programs in providing the only 

construction financing program for affordable

supportive rental housing for the target populations. 

Objective A4: Help HUD-assisted renters 

make progress toward self-sufficiency. 

This objective, together with Objective H5, “Help 

HUD-assisted renters become homeowners,” reflects the 

Department’s intention to maximize public and assisted 

housing’s role as a springboard that helps low-income 

families progress toward self-sufficiency and 

homeownership. 

Efforts to promote self-sufficiency among residents of

public and assisted housing serve four core objectives: 

By helping increase the capacity for family earnings, 

improving the quality of life for families in

subsidized housing; 

Assisting families in subsidized housing to acquire 

sufficient assets and incomes high enough to buy a 

home; 

By helping families in subsidized housing to become 

homeowners or afford the costs of unsubsidized 

rental housing, freeing up space for other needy 

families; 

Helping to achieve a mix of incomes in public 

housing and project-based assisted housing. 

Means and Strategies 

Expand access to affordable rental housing. 

HUD has three major rental assistance programs 

that collectively provide rental subsidies to more 

than four million households nationwide: the 

Housing Choice Voucher program (also known as 

Section 8 voucher program), the project-based 

Section 8 program and public housing. A substantial

share of HUD’s budget is devoted to renewals of 

Housing Choice Voucher and project-based Section

8 contracts, as well as the operating and capital 

funds that support public housing. In addition, the 

Office of Housing continues to preserve affordable 

housing through the Mark-to-Market and Mark-Upto-Market programs. 

A number of HUD’s programs and initiatives help 

to annually increase the number of families that 

obtain access to affordable rental housing. These 

programs include: 

o Incremental housing vouchers, 

o The HOME Investment Partnerships program; 

since 1992, participating jurisdictions have 

spent more than 55 percent of HOME on 

rental housing, 

o The Supportive Housing for the Elderly 

(Section 202) program, 

o The Supportive Housing for the Disabled 

(Section 811) program, 

o The HOPWA program, 

o The Native American Housing Block Grant 

program, 

o The CDBG program and 

o FHA multifamily insurance. 

In addition to the programs administered by HUD, 

other federal programs play a significant role in

expanding access to affordable rental housing. 

These include the Low-Income Housing Tax Credit 

and tax-exempt bonds—both of which were 

significantly expanded in recent years—as well as 

programs of the Rural Housing Service at the 

Department of Agriculture. 

To further expand the number of residents that benefit 

from the existing supply of subsidized rental housing, 

HUD will work to: 

Expand the number of households that receive 

HUD rental assistance by improving the utilization 

of Housing Choice Vouchers (see below for specific

steps); 

14 HUD Strategic Plan
Promote Decent Affordable Housing

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Make it easier for families to successfully use 

Housing Choice Vouchers. Among other recentlyadopted policies, HUD has taken steps to improve 

the accuracy of Fair Market Rents (FMRs) by

increasing funding for the rent surveys used to

calculate FMRs; allowing housing authorities 

experiencing difficulties using vouchers to adopt a 

higher 50th percentile FMR; publishing a Housing 

Choice Voucher handbook to help local housing 

authorities improve their programs; and 

implementing the Section 8 Management 

Assessment Program (SEMAP) that gives incentives 

to public housing authorities (PHAs) to improve the 

performance of their voucher programs; 

Improve the utilization of public housing capital 

funds by local PHAs that have large amounts of 

unobligated and unspent capital funds; 

Revitalize and transform public housing projects to 

retain them as affordable housing in decent 

neighborhoods. 

HUD also will work to ensure that the stock of assisted 

housing is not diminished as a result of opt-outs, prepayments and other changes in the housing stock, and

that the extent to which these events adversely affect 

tenants is minimized. In particular, the expiration of 

long-term Section 8 project rental subsidies (Housing 

Assistance Payments or HAP contracts) can leave 

properties vulnerable to being removed from the 

nation’s stock of affordable housing. HUD will continue 

the following affordable housing preservation activities: 

Subject to the availability of appropriations, HUD 

will offer to renew HAP contracts on all subsidized 

units that meet housing quality standards.

The Mark-to-Market program’s alignment of owner 

incentives will continue to preserve the privately 

owned HUD-assisted affordable housing stock. 

To maintain the supply of affordable housing that 

already exists, HUD will increase rents in certain 

areas through the Mark-Up-to-Market program to

preserve assisted multifamily units where an owner 

might otherwise opt out of a housing assistance 

contract. 

In some cases, HUD will execute and enforce use 

agreements as part of the sale of HUD-owned 

property and/or as a condition of prepayment of 

FHA multifamily insurance. 

HUD will use other available incentives to

encourage owners of multifamily assisted rental 

housing to maintain affordability. These incentives 

can include increased distributions, increased rents 

to facilitate a transfer to a nonprofit and structured 

refinancing to recapitalize a property for 

rehabilitation or other purposes. 

HUD will ensure that, as a result of changes in the 

stock of public and assisted housing, all eligible lowincome tenants are protected from increases in rents 

and all project-based units lost are replaced with 

housing vouchers or new units. 

Finally, HUD plans to continue its efforts to expand

families’ access to affordable private-market housing 

through activities such as: 

Multifamily mortgage insurance. 

Research that seeks to reduce the construction and

operating costs of housing. 

The maintenance of a regulatory barriers 

clearinghouse for sharing information on how to 

address local regulatory barriers to the development 

of affordable housing. 

Improving physical conditions and 

management accountability. 

Improving the performance of housing intermediaries in 

meeting HUD’s physical standards for public and 

multifamily housing is a high priority for this 

administration and was, therefore, included in the 

President’s Management Agenda (PMA) for HUD. In 

2000, only 70 percent of public housing units and 85 

percent of privately owned, multifamily assisted housing 

met these standards. In the PMA, HUD set 2005 goals 

of 84 percent for public housing and 92 percent for 

multifamily assisted housing. In February 2002, public 

housing units met the 2005 standard, well before the 

original target date. As a result, a new goal was 

established, and HUD expects to raise the proportion of 

all public and assisted units meeting HUD’s physical

standards to 92 percent by 2005. 

The Department has several current tools and is 

developing others to improve the physical quality and

management accountability of public and assisted 

housing. HUD plans to: 

Continue to monitor privately assisted multifamily 

housing through Section 8 contract administrators 

who perform management and occupancy reviews, 

and through physical inspections on 100 percent of 

their portfolios. 

More fully develop the Public Housing Assessment 

System (PHAS) so that it will assess multiple 

dimensions of public housing management and 

conditions, and identify PHAs that are troubled in 

order to improve their operations. 

Fully implement and improve the SEMAP, used to

objectively measure PHA performance related to

HUD Strategic Plan 15
Promote Decent Affordable Housing

their Housing Choice Voucher programs, and 

identify troubled agencies for remedial measures. 

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Use the Mark-to-Market program to ensure that the 

management of HUD-assisted, privately-owned 

housing meets its operating obligations, resulting in 

the ongoing maintenance of proper physical 

standards at these properties. To date, repairs and 

rehabilitation of over 45,000 units have been 

accomplished with over $60 million in repair

escrows funded through the Mark-to-Market

program. HUD estimates an increase of $100 

million in repair escrow funds through the life of the 

Mark-to-Market program. Additionally, significant 

increases in reserve for replacement account

deposits and 30-year use agreements will ensure the 

maintenance of this resource. 

Use data from the Real Estate Assessment Center

(REAC) on the financial soundness of providers of 

assisted multifamily housing, physical quality of the 

stock, and satisfaction of the residents to refer 

substandard properties to the Departmental 

Enforcement Center (DEC). The DEC is 

responsible for working with multifamily properties 

that have been identified as substandard in one or

more areas by REAC. For some noncompliant 

multifamily development owners, the DEC makes 

civil referrals to the Department of Justice or 

criminal referrals to HUD’s Inspector General. 

HUD has recently instituted a system of referrals to 

the DEC for multifamily properties with REAC 

scores between 30 and 60. For those properties, 

HUD will require repairs to be completed within 60 

days. If property conditions do not meet HUD 

requirements, HUD will force compliance or take 

appropriate enforcement action. 

Require assessments of lead-based paint risk for all 

pre-1960 multifamily housing that receives over 

$5,000 per unit in project-based Section 8 assistance, 

and complete lead hazard assessments by the end of

FY 2003 for assisted multifamily housing 

constructed between 1960 and 1977. 

HUD is implementing the Rental Housing Integrity 

Improvement Project (RHIIP) to reduce error in income

and rent determinations. RHIIP comprises a number of

efforts: 

Develop tools to assist housing agencies and 

assisted housing owners in the determination of 

income and calculation of rent; 

Introduce a quality control program to monitor the

performance of housing intermediaries; 

Assess opportunities to simplify current laws and 

regulations regarding income and rent 

determinations to improve program compliance; 

Expand local efforts to match income data against 

state records. 

Several means were employed, beginning in FY 2002, to 

improve the utilization of Housing Choice Vouchers by

PHAs: 

Give substantial weight to utilization rates in 

determining PHAs’ ratings under SEMAP;

Allocate new incremental vouchers to PHAs with 

utilization rates above 97 percent; 

Implement a new tracking system to measure

current utilization rates, so that underutilizers can be

identified earlier and corrective actions taken; and 

Provide remediation services to PHAs with troubled

Section 8 programs, which generally have low rates 

of Section 8 utilization. 

HUD also will provide resources to PHAs to improve 

their conditions and protect the nation’s investment in 

the public housing stock. HUD plans to: 

Ensure effective and timely use of the Public

Housing Capital Fund, which provides formula 

grants to PHAs to address new modernization

requirements and reduce the backlog of

rehabilitation and modernization requirements. 

Establish a new Capital Financing Program to 

attract private capital to address the backlog in

public housing capital improvement needs and put 

public housing developments on sound financial 

footing in the future by focusing on property-based 

planning and management. Authorization for the 

program was requested as part of the FY 2003 

budget request. 

Support the completion of HOPE VI projects, 

which fund the demolition and revitalization of 

severely distressed public housing. Changes have 

been made to ensure project readiness and timely 

use of funds that will speed up the production of 

units. 

Increase housing options for the elderly. 

HUD is implementing a number of new policies 

designed to assist the elderly. These policies, which were

authorized in the American Homeownership and 

Economic Opportunity Act of 2000 and the FY 2001 

VA-HUD Appropriations Act, will: 

Expand eligibility for the Assisted Living 

Conversion Program to include not only Section 

16 HUD Strategic Plan
Promote Decent Affordable Housing

202 projects but all HUD multifamily projects with 

project-based Section 8 and with Section 236 and 

Section 221(d)(3) insurance. 

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Allow nonprofit sponsors of Section 202 

developments to form limited partnerships with forprofit entities to compete for low-income housing 

tax credits and give sponsors greater discretion in 

how funds are used to meet the needs of the elderly.

Make prepayment and refinancing of Section 202 

projects more attractive to owners, and ensure that 

at least 50 percent of the annual savings are used in 

a manner that directly benefits the residents. 

Encourage service coordinators to assist low-income

elderly families living near, as well as those residing 

in, multifamily assisted housing designated for the 

elderly and people with disabilities. 

In addition to implementing these new provisions, HUD 

will continue to use core programs to help low-income 

seniors obtain suitable and affordable living 

environments that support independence: 

Provide mortgage insurance to finance the 

construction and rehabilitation of assisted living 

facilities through the Section 232 program. 

Permit housing rental vouchers to be used for the 

housing costs in assisted living facilities. 

Provide affordable housing and rental subsidies for

older renters through Section 202, and convert 

elderly housing to assisted living or creating new 

assisted living facilities. 

Provide Home Equity Conversion Mortgages 

(HECMs), or “reverse” mortgages, to allow senior

homeowners to convert accumulated equity in their 

homes to income in the form of monthly payments, 

a lump sum or a line of credit. HECMs can help 

elderly homeowners adapt their homes to 

accommodate changing physical needs, or simply 

pay medical and living expenses to maintain their 

quality of life. 

Through HUD’s public housing and Section 8

programs, provide substantial numbers of affordable 

housing units for elderly households. 

More closely monitor the use of Section 202/811 

grant funds. The Section 202 and 811 programs are 

unique in providing the only construction-financing 

programs for affordable supportive rental housing. 

Through close monitoring, the Department has 

substantially reduced the number of grants

outstanding where there was no evidence of

progress. Less than two years ago, there were more

than 100 of these projects in the development 

pipeline. As of the end of FY 2002, there are only 

26 projects predating 1997 that have not reached 

initial closing. This represents only 1.3 percent of 

the 2,058 projects that were funded during that 

timeframe. Funds recaptured from these cancelled

projects are available and used for new grants. 

Increase housing oppor unities for persons 

with disabil ties. 

President Bush launched the New Freedom Initiative in 

2001, with an executive order charging HUD and five 

other federal agencies to improve access to services and

opportunities for community integration of persons with 

disabilities. HUD has several key initiatives to implement 

the President’s order:

Revising HUD’s Section 8 rent subsidy program to

permit people with disabilities to use vouchers to 

make mortgage payments to purchase their own 

homes. 

Implementing a pilot program in 11 states called

Project Access, a joint effort between HUD and the 

Department of Health and Human Services (HHS),

designed to ease the transition of nonelderly persons 

with disabilities from nursing homes into 

community living. 

Expanding rental choices and ensuring that housing 

vouchers are being used effectively by offering

technical assistance to PHAs and nonprofit 

organizations having difficulty in utilizing housing 

vouchers. Preference is given in the awarding of 

general-purpose vouchers to housing authorities 

that agree to use a specified percentage for persons 

with disabilities. 

Signing a Memorandum of Understanding with the 

Department of Justice and Internal Revenue Service 

to ensure that multifamily properties within the 

Low-Income Housing Tax Credit Program, the 

number-one producer of low-income housing, 

comply with federal accessibility standards.

In addition, HUD is continuing to vigorously enforce the

Fair Housing Act and other federal laws prohibiting 

discrimination against people with disabilities. 

Through voluntary compliance agreements between 

HUD and the housing authorities in the District of 

Columbia and Boston, an additional 1,200 fully 

accessible housing units will become available in 

those cities. 

In FY 2003, HUD will award more than $16 million 

in Fair Housing grants to fund organizations leading 

the fight against housing discrimination. 

HUD recently entered into an historic partnership 

with the National Association of Home Builders 

HUD Strategic Plan 17
Promote Decent Affordable Housing

aimed at ensuring that multifamily housing complies 

with the Fair Housing Act’s design and construction 

requirements. 

• 

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• 

HUD has launched two major education and 

outreach initiatives to make certain that more

apartments and condominiums are built to be

accessible to people with disabilities. 

HUD’s Shelter Plus Care program provides $100 

million a year in grants to help provide rental 

assistance and supportive services to homeless 

individuals living with disabilities. 

Promote self-sufficiency. 

The Family Self-Sufficiency (FSS) program is HUD’s 

primary tool for helping families in the Housing Choice 

Voucher and public housing programs build assets and

increase their incomes. 

To help families achieve their goals, FSS families 

work with a service coordinator who provides 

referrals for appropriate supportive services in the 

community such as childcare, transportation, 

education, or job training. 

FSS has an escrow component that helps families 

build savings. As a family’s earnings increases, an

amount equal to the increase in the family’s rent is

deposited in an escrow account that they can use to 

purchase a home, obtain higher education, or 

achieve other personal goals. 

HUD plans to work to significantly expand participation 

in the FSS program by: 

Reaching out and providing technical assistance to 

housing agencies; 

Using the performance measures of the SEMAP to 

support incentives for active FSS participation for 

housing agencies in HUD’s funding competitions; 

Examining program rules to determine if additional 

changes are needed to increase participation.

A number of additional programs help families in public 

and assisted housing make progress toward selfsufficiency. These include:

Continuing to support the creation of 

Neighborhood Networks centers and other 

computer centers in assisted multifamily housing 

developments. These multiservice community 

technology centers help low- and moderate-income 

residents gain knowledge and skills through the use 

of computer learning to prepare themselves for the 

job market and attain self-sufficiency. 

Expanding enforcement of Section 3 of the HUD 

Act of 1968, which ensures that HUD-funded 

construction, rehabilitation, or other public 

construction expands employment and training 

opportunities for low-income residents. HUD will 

further ensure that contract opportunities are 

awarded to Section 3 Business Concerns for all 

nonexempt contracts. The Department will focus on 

education and outreach to its internal and external

clients. 

18 HUD Strategic Plan
Promote Decent Affordable Housing

Performance Measures 

Long-Term Performance Measures

HUD will assess its long-term success in achieving this goal by measuring the following outcomes 

discussed below: 

• Improve the Public Housing Assessment System (PHAS). 

• The average SEMAP score increases. 

• Among households living in assisted multifamily properties, the share living in developments that 

have substandard financial management decreases by 2.5 percent per year. 

• The utilization rate of Housing Choice Vouchers increases to 98 percent by 2006 and stays 

above 98 percent through 2008. 

• By FY 2008, increase the proportion of those entering HUD’s housing assistance programs who 

“graduate” from assistance within five years (or receive continuing assistance as homeowners) 

because their income is sufficient to pay for adequate housing. 

• Increase the amounts of leveraged private capital in public housing.

• Increase the timely performance of HOPE VI grants. 

• Continue to enhance the quality of life of the elderly and persons with disabilities through 

developments funded under Sections 202 and 811 that meet their physical needs and provide

supportive services. 

• Between FY 2004 and FY 2008, over 1.2 million households will receive housing assistance with 

CDBG, HOME, HOPWA and Native American Housing Block Grants (NAHBG). 

Improve the Public Housing Assessment 

System (PHAS). 

In FY 2003, an improved and simplified assessment 

system will enable HUD to enhance the livability, 

management, accountability and resident satisfaction of

the nation’s public housing system. The new PHAS will 

track HUD’s progress toward increasing the capability 

and accountability of PHA partners. HUD will, for the 

first time, perform extensive quality reviews of 350 

housing agencies on an annual basis to ensure that PHAs

are accurately certifying their management performance. 

HUD will also continue to step up its efforts to identify 

and root out poor performing audit firms that audit 

PHAs. As measured through the new PHAS, HUD 

expects PHA scores to increase through FY 2008. 

The average SEMAP score increases. 

The SEMAP was fully implemented in 2002. SEMAP 

provides HUD with an essential tool for measuring the 

quality of housing agency administration of the Housing 

Choice Voucher program. SEMAP tracks housing 

agency performance on a broad range of indicators of 

program administration, including voucher utilization, 

compliance with housing quality standards and correct 

calculation of rental subsidy. 

Among households living in assisted 

multifamily properties, the share living in 

developments that have substandard 

financial management decreases by 2.5 

percent per year. 

The REAC evaluates the financial management of 

privately owned multifamily properties based on 

generally accepted accounting principles. The REAC 

Financial Assessment Subsystem involves Internet-based 

submission of audited financial information in a 

standardized format. Data are validated, reviewed and 

scored, resulting in standard and substandard 

designations. Multifamily financial scores are determined 

at the project level for every subsidized development—

meaning properties that have Section 8 contracts,

HUD Strategic Plan 19
Promote Decent Affordable Housing

outstanding mortgages with interest subsidies, or both—

and are household-weighted to focus attention on the 

greatest problems nationally. For the reporting period in 

2001, the share of households living in subsidized 

multifamily properties that had substandard financial 

management was 29.5 percent. 

The utilization rate of Housing Choice 

Vouchers increases to 98 percent by 2006 

and stays above 98 percent through 2008. 

The Housing Choice Voucher program is one of HUD’s 

best tools for providing affordable housing to renters 

with very low or extremely low incomes, including those 

with worst case housing needs. While most Housing 

Choice Vouchers are currently being used to assist lowincome families, some PHAs are not fully utilizing all 

allocated funds and vouchers, reducing the number of 

vouchers available to help families. For 2001, the 

national lease-up rate for units was 89.6 percent, and the

funding utilization was 91.3 percent. This indicator 

reflects HUD’s expectation that its policies will

substantially increase the utilization of Housing Choice 

Vouchers such that, by 2006, the rates for both funding 

and units reach 98 percent. 

By FY 2008, increase the proportion of 

those entering HUD’s housing assistance 

programs who “graduate” from assistance 

within five years (or receive continuing 

assistance as homeowners) because their 

income is sufficient to pay for adequate 

housing. 

A key role of HUD’s public and assisted housing 

programs is to provide low-income families with housing 

stability that can help them make progress to selfsufficiency. In FY 2004, HUD will establish the baseline 

proportion of those families who have been assisted for 

fewer than five years that are leaving federally assisted

housing because they can afford adequate housing on 

their own. This will include determining the duration of 

tenancy and changes in their employment, and 

homeownership since they first received housing 

assistance. In FY 2008, HUD will determine whether a 

later sample group of entrants into housing assistance 

fared better with regard to achieving self-sufficiency than

the initial group. Success in this measure will also allow 

HUD to serve more people with housing assistance 

needs. This performance measure excludes the elderly

persons HUD serves but includes disabled persons who 

can work. 

Increase the amounts of leveraged private 

capital in public housing. 

By 2008, HUD will increase the amount of leveraged 

private-sector financing by over three times the amount 

leveraged in FY 2001. This leveraging promises to 

improve physical conditions for public housing residents 

by increasing the amount of capital improvements to a 

level that is considerably greater than that supported by

Public Housing Capital Fund appropriations. This 

leveraging will increase the livability and sustainability, as 

well as greatly help to preserve the nation’s supply of 

affordable housing. By FY 2008, HUD will be attracting 

at least $150 million of private capital for public housing

on an annual basis. 

Increase the timely performance of HOPE 

VI grants. 

By 2008, HUD will ensure that 100 percent of all HOPE 

VI affordable housing units funded through FY 2001 

will be built. The Department is more closely monitoring 

the performance of existing HOPE VI grantees. 

Program reforms geared toward tracking projects, 

streamlining processing, monitoring and assisting 

housing authorities and ensuring completion of the 

existing projects will result in the replacement of severely 

distressed public housing projects with mixed-income, 

mixed-finance developments in revitalized 

neighborhoods. This policy affects 68,700 affordable 

housing units. 

Continue to enhance the quality of life of 

the elderly and persons with disabilities 

through developments funded under 

Sections 202 and 811 that meet their 

physical needs and provide supportive 

services. 

HUD’s Section 202 and 811 programs for elderly 

households and persons with disabilities provide 

construction financing for affordable supportive rental 

housing for target populations. These properties can 

enhance the resident’s quality of life by providing 

physical improvements such as wheelchair accessibility 

and grab-bars and services that support their daily 

activities. In its survey of residents of multifamily 

properties, HUD will include a subset of questions 

specially designed to measure how well these programs

are meeting the physical and supportive service needs of 

the elderly and persons with disabilities. The results of 

this survey will be used to analyze the benefits of Section

202/811 housing. 

20 HUD Strategic Plan
Promote Decent Affordable Housing

Between FY 2004 and FY 2008, over 1.2 

million households will receive housing 

assistance with CDBG, HOME, HOPWA 

and NAHBG. 

Because of shortages of affordable housing and the need 

to maintain existing housing units, it is desirable to

increase the number of households aided with housing 

assistance, including rental housing production. The level 

of these housing outputs is subject to appropriations as 

well as economic conditions and local discretion. 

Grantees use their discretion to decide what types of

housing assistance to provide with HOME and NAHBG 

funds. In the case of CDBG and HOPWA funds, 

housing assistance is one of several eligible activities 

from which grantees may choose. 

Intermediate Measures Supporting this Goal 

The Department will track:

• The number of households who have accumulated assets through the FSS program, and the average 

escrow amount of FSS graduates. 

• The share of households living in FHA multifamily developments that have substandard financial 

management. 

• The average PHAS score.

• The average SEMAP score. 

• The utilization of Housing Choice Vouchers. 

• The percentage of HOME project funds and number of units of rental production.

• The number of households receiving housing assistance with CDBG, HOME, HOPWA, and

NAHBG. 

In addition: 

• In FY 2004, HUD will establish the baseline proportion of those families who have been assisted 

for fewer than five years that graduate from HUD assistance because they can afford adequate 

housing on their own. 

• For FY 2003, Section 202/811 tenants will continue to have an overall satisfaction rate above 80 

percent. 

• During FY 2004, Section 202/811 tenant satisfaction rates shall be compared to similar survey 

data for the low-income elderly as reported in the American Housing Survey. 

• In FY 2003, all Section 202/811 projects initially funded in FY 1997 and earlier, with the 

exception of projects that are the subject of litigation, shall go to initial closing or be cancelled.

• Use FY 2002 results, based on projects funded in FY 2000, to provide a baseline for improving

the timely completion of Section 202/ 811 projects. 

• For FY 2004, close 75 percent of projects funded in FY 2002 within 24 months of funding. 

• By the end of FY 2003, 95 percent of the active inventory of substandard assisted multifamily 

properties inspected are repaired or are subjected to the appropriate enforcement action. 

• The share of HUD-assisted multifamily properties observed with exigent health and safety or fire 

safety deficiencies decreases by 0.6 percent by the end of FY 2003. 

• In 2005, the share of public and assisted housing units that meet HUD’s physical standards will 

exceed 92 percent. 

HUD Strategic Plan 21
Promote Decent Affordable Housing

External Factors 

Many external factors affect the supply of affordable 

rental housing for low-income families and for the 

elderly and persons with disabilities. These include local 

rental markets, building codes and land use regulations, 

state and local program decisions and the actions of 

HUD’s many other partners. The continued growth in 

the number of elderly persons, fueled in part by the 

baby-boom generation, will continue to challenge those 

working to ensure access to diverse housing

opportunities for this population. 

Finally, broad economic factors that affect opportunities 

for low-income workers will directly affect HUD’s ability 

to assist HUD-assisted renters as they make progress 

toward self-sufficiency. 

22 HUD Strategic Plan
Strategic Goal 

Strengthen Communities

“Communities flourish when they have the freedom to put local solutions to 

work solving local problems. HUD has its most positive impact on the local 

level when we empower communities—through new tools and resources—to 

chart their own destinies.”

-Secretary Mel Martinez

Overview 

Through the programs of HUD’s Office of Community 

Planning and Development (CPD), HUD supports the 

community and economic development efforts of states,

local communities and other HUD partners. For nearly

30 years, Community Development Block Grant

(CDBG) funds have built and rehabilitated homes, 

fueled business development to create jobs and

improved the overall health of our nation’s communities. 

Instead of trying to impose a one-size-fits-all program on

every locality, CDBG-funded programs are designed by

each community to best meet unique local needs.

Additionally, the HOME program helps strengthen

communities by expanding the availability of 

homeownership and affordable rental housing. CPD also 

is responsible for administering HUD’s homeless 

programs, which are an essential component of the 

Administration’s bold strategy for eliminating chronic 

homelessness in ten years. 

Other HUD Offices contribute to this goal through

maintaining and promoting quality affordable housing in 

neighborhoods, reaching out to communities through

University Partnerships and fostering international 

exchanges on housing, community development and 

urban planning. 

This strategic goal has four objectives: 

Objective C1: Provide capital and resources 

to improve economic conditions in 

distressed communities. 

A key objective of HUD’s community and economic 

development programs is to help improve economic 

conditions in distressed communities. Economic 

development is a key activity under the CDBG program.

Funded activities include job creation and retention, as 

well as education, training and services that strengthen 

the workforce.

Section 3 of the Housing and Urban Development Act 

of l968 requires that, to the greatest extent feasible, 

HUD will ensure that jobs, training and contracts are 

given to low- and very-low-income persons residing in 

the economic distressed areas where federal financial 

assistance is provided to HUD’s recipient agencies. 

Objective C2: Help organizations access 

the resources they need to make their 

communities more livable. 

Helping communities become more “livable” means 

addressing quality-of-life issues as well as economic 

factors. Livability reflects the positive impacts of public 

services and improvements that result from funds spent 

to revitalize poor neighborhoods, along with intangible 

benefits such as community volunteerism. 

Many communities use HUD resources for projects

designed to improve livability. For example, CDBG 

funds are used for roads, sewers and other infrastructure

investments, or for community centers, parks and other 

assets that help to strengthen and revitalize low-income 

communities. HUD also funds housing development and 

rehabilitation through CDBG, HOME, Youthbuild and 

Lead Hazard Control grants. 

Objective C3: End chronic homelessness 

and move homeless families and 

individuals to permanent housing.

HUD is committed to ending chronic homelessness 

within ten years—by 2011. HUD’s working definition of 

a person experiencing chronic homelessness is an 

unaccompanied individual with a disabling condition 

 HUD Strategic Plan 23
Strengthen Communities

who has been continuously homeless for a year or more 

or has had recurring episodes of homelessness. Even 

when housing is available, their disabilities sometimes 

make it difficult for them to remain in that housing for 

long periods unless they also have supportive services 

including case management and regular health care. 

Although there are no reliable counts, the Millennial 

Housing Commission Report “Meeting Our Nation’s 

Housing Challenges” estimates the number of persons 

experiencing chronic homelessness to be between 

150,000 and 200,000. 

“For too many years, Washington waited until a

person became homeless before taking action. 

Today we come together to commit the combined

resources of the federal government as we move

beyond managing homelessness toward a more

holistic approach, including a greater emphasis on

preventing individuals from becoming homeless in

the first place.” 

-Secretary Mel Martinez, July 2002 Meeting of the

Interagency Council for the Homeless

While those experiencing chronic homelessness are often

the most visible of the homeless population, there is also 

a substantial problem of families and individuals who 

experience a more temporary crisis, such as loss of 

employment or eviction, and become homeless. HUD 

will forge a three-pronged attack that will focus on: 

• 

• 

• 

• 

The prevention of homelessness; 

The development of needed permanent and

transitional housing for both those persons 

experiencing chronic homelessness and the growing 

numbers of homeless families; 

The coordination of housing and supporting

services. 

Given the variety of individual needs and locally available 

resources, each community can best design its own 

strategies to help each homeless person and family 

achieve permanent housing and self-sufficiency. HUD’s 

homeless assistance programs will continue to foster 

local initiatives by providing flexibility while providing 

incentives to meet important national objectives 

including ending chronic homelessness. 

Objective C4: Mitigate housing conditions 

that threaten health. 

A safe housing stock is a critical precondition for safe, 

livable communities. Along with responsibility for HUDassisted private housing and public housing, HUD 

addresses hazards in unassisted private housing. The 

Department is committed to eliminating the poisoning 

of children by lead-based paint in older homes. Along 

with the Environmental Protection Agency, HUD 

regulates the disclosure of lead paint when homes are 

rented or sold. HUD provides financial resources for

communities to address their own lead paint hazards 

through the Lead Hazard Control Grant program.

HUD’s Healthy Homes program conducts research, 

demonstrations, and public education on how other 

housing conditions are related to other preventable 

children’s diseases and injuries, such as asthma and 

carbon monoxide poisoning. The CDBG program also

provides resources to communities for a wide range of 

community development and housing activities, 

including for lead hazard control separately or as part of

housing rehabilitation, counseling and health services. 

Through innovative research, HUD is also advancing the 

safety of the nation’s housing. In addition to the 

evaluation of lead hazard reduction programs, HUD 

supports research and development of housing 

construction that resists natural disasters such as 

hurricanes, floods, earthquakes, tornados and firestorms. 

In addition, for persons with HIV and other chronic 

health challenges, the risks of homelessness pose a direct 

threat to their health, stability and relative wellness. The 

Department’s homeless assistance programs and the 

HOPWA program are vital tools in reducing the health 

consequences for persons who are homeless or at severe

risk of homelessness. 

Means and Strategies 

Supporting community and economic 

development. 

HUD funds a variety of programs that support the 

community and economic development efforts of state 

and local communities. HUD’s strategy focuses on

providing and coordinating resources for neighborhood 

revitalization and other community development efforts 

by local partners. By employing these resources for 

building local economies and developing community 

assets, communities can leverage local contributions to

address their priority problems: 

The CDBG program is HUD’s most important 

community development program and is one of the 

most flexible grant programs provided to localities 

by the federal government. A significant proportion 

of CDBG funds supports improving conditions in 

lower income and distressed communities. 

24 HUD Strategic Plan
Strengthen Communities

• 

• 

• 

• 

• 

 

Under the Community Renewal Tax Relief Act,4

HUD has designated 40 areas of pervasive poverty, 

unemployment and general distress as Renewal 

Communities (RCs). Businesses in Renewal 

Communities will be eligible for federal tax 

incentives as well as tax relief and regulatory 

streamlining provided by state and local 

jurisdictions. HUD also has designated a third round 

of Empowerment Zones (EZs), which will receive 

all the tax benefits of current EZs even though 

grants will not be available. 

HUD’s multifamily Neighborhood Networks 

centers will continue to strengthen communities by: 

(1) Providing services for adults, youth and seniors. 

Adults receive job training and placement, education 

and supportive services. Youth improve their 

academic achievement. Seniors become connected

to their community and on-line services and 

information, and often youth in the community 

become involved with seniors through the center.

(2) Helping to reduce property crime and vandalism,

thereby producing safer communities. (3) Providing 

local employers with skilled workers. (4) Supporting 

service providers. And (5) benefiting taxpayers, as 

residents of HUD housing become more 

economically self-sufficient and rely less on 

government subsidies. 

Under the Section 242 program, HUD helps 

hospitals access affordable financing for capital 

projects. Uses for HUD hospital loans include new 

construction, modernization and refinancing. Since 

the program began in 1968, 311 hospital mortgages 

have been insured for approximately $9 billion. 

Clients range from small rural hospitals to major 

urban medical centers. These hospitals serve as

community anchors, providing not only needed 

healthcare services, but also jobs that range from 

entry level to professional. Many of the hospitals are 

in distressed communities and in areas designated as

medically underserved. Often, they are the largest 

employers in their communities. Without access to 

capital through HUD-insured loans, some hospitals 

would not have been able to afford the repairs,

renovations and equipment to remain open. 

Through the Lead-Based Paint Hazard Reduction 

and the Healthy Homes Program, HUD funds local 

organizations to eliminate the residential lead-based 

paint hazards that threaten low-income children. 

By establishing suitable goals for the governmentsponsored enterprises, Fannie Mae and Freddie 

Mac, HUD ensures that more housing capital is 

available to promote homeownership and affordable 

rental housing in underserved areas. 

• 

• 

• 

• 

• 

4 Incorporated by reference in the Consolidated Appropriations

Act of 2001 (P.L. 106–554). 

HUD encourages use of FHA loan programs and 

purchase of HUD homes in distressed 

neighborhoods to improve housing conditions and 

raise homeownership rates.

Through the proposed Colonias Gateway Initiative, 

help rural communities and neighborhoods along 

the 1,500-mile Mexican border meet their 

substantial community development needs. 

Encourage grantees to certify Section 3 residents 

and businesses and provide more permanent job 

opportunities in fields other than construction. This 

will be done through monitoring and compliance 

reviews and technical assistance, encouraging 

grantees to enter into training agreements with

universities and state- and locally funded training 

agencies. HUD will require that Section 3-related 

grievances are processed and settlements are 

generated as a result of noncompliance. 

HUD also supports the redevelopment of distressed 

communities through the University Partnership 

programs and the Indian Community Block Grant 

program. 

Streamline the consolidated planning 

process, making it more results-oriented 

and useful to communities. 

While the diversity of community development efforts 

makes them difficult to measure and quantify, HUD is

working with local stakeholders to identify performance 

measures that make the consolidated planning process 

more results-oriented and useful to communities in 

assessing their own progress toward addressing the 

problems of low-income areas. Streamlining the 

consolidated planning process was identified in the PMA 

as an important area for HUD’s focus. The Department

issued guidance clarifying current consolidated planning 

requirements in November 2002. The reform initiative 

is based on the conviction that community revitalization 

efforts are most effective if they are tailored to local 

circumstances and reflect the views of local stakeholders. 

HUD also is looking at how technology can play a larger 

role in making improvements in the consolidated 

planning process. 

Input from city, county and state representatives 

from around the country suggested some

streamlining changes would enhance the usefulness 

of the consolidated planning and reporting process. 

HUD Strategic Plan 25
Strengthen Communities

These changes include: 1) integration with existing 

plans and reporting documents, 2) use of 

standardized templates, 3) replacement of the

Community 2020 mapping software with a Webbased system, 4) decreasing narrative required, 5) 

receiving more guidance from HUD on reporting 

performance and 6) a more flexible Integrated 

Disbursement and Information System (IDIS) that 

allows simple adjustments in performance 

measurements and easy collection and organization 

of data. 

• 

• 

• 

• 

• 

• 

• 

Performance measures for broad formula programs

such as CDBG are best when tailored to local

circumstances and reflective of local visions of

success. HUD will build on local efforts in 

demonstrating performance by designing 

performance measurement strategies that link goals 

and objectives to annual reporting of projects while 

maintaining local flexibility. HUD will be sharing 

these models with grantees and pilot testing

performance measures in selected communities 

during 2003. Other steps will include the 

development of standardized measures that grantees

can use and improved use of benchmarks. 

End chronic homelessness and move 

homeless families and individuals to

permanent housing. 

The primary focus of HUD’s efforts to end chronic 

homelessness and address the needs of other homeless 

households is to provide both flexible and targeted 

resources to communities as well as to encourage

planning and coordination to maximize the impact of

these resources. 

HUD’s FY 2001 Appropriations Act reauthorized 

the Interagency Council on the Homeless (ICH) 

through FY 2005. The Secretaries of HUD, HHS 

and Veterans Affairs (VA) have created an 

interagency working group to both identify the 

obstacles to enrollment of homeless people in 

mainstream service programs and recommend

specific changes—legislative, policy and 

procedural—that would make federal mainstream 

supportive service programs (e.g., Medicaid, 

Temporary Assistance for Needy Families, 

Substance Abuse Block Grants, Mental Health 

Block Grant, Food Stamps) more accessible to

homeless people. One tangible result of this 

interagency effort is a $35 million joint venture by 

the three federal agencies to help weave together 

housing and social services for homeless people 

with addictions, mental illnesses, prison histories 

and other root causes of persistent homelessness. 

As homeless families and individuals better access 

needed mainstream services, and as the coordination 

between HUD and other federal agencies coalesces,

it is HUD’s goal to work to concurrently reduce the 

proportion of HUD homeless funds used for the 

provision of social services and to increase the 

proportion used for housing. 

A key tool for ending chronic homelessness will be 

to provide permanent supportive housing—housing 

combined with services. The Department has and 

will continue to ensure that at least 30 percent of all 

available homeless funding is awarded for 

permanent housing. Providing permanent 

supportive housing will significantly reduce the cost 

of medical, mental health and criminal justice 

resources that are used for persons experiencing 

chronic homelessness. In fact, recent research has 

demonstrated that providing permanent supportive 

housing costs about the same as leaving an 

individual on the streets and having him or her cycle 

through the various disconnected health care, 

correctional, mental health and substance abuse 

treatment institutions. 

HUD will carefully scrutinize the policies of its 

mainstream housing programs to determine whether 

additional mainstream housing resources can be 

brought to bear on the problem of homelessness, 

including both persons experiencing chronic 

homelessness and homelessness among families. 

HUD’s internal task force to reduce barriers to

persons with special needs in accessing HUD’s 

housing and community development resources has 

identified numerous initiatives that HUD program 

offices will pursue with providers of assistance to 

persons who are homeless and persons with 

HIV/AIDS. Two examples include an initiative by

Ginnie Mae that will provide the right of first refusal 

to homeless service organizations on the purchase 

of Ginnie Mae manufactured housing inventory, and 

a new FHA requirement that 10 percent of all 

HUD-owned multifamily units conveyed to state 

and local governments with right of first refusal will 

be designated for homeless persons. 

HUD is also collaborating with other federal 

agencies in efforts to better connect HUD program 

recipients with resources made available to address 

health, human services, job development, education 

and other services that are needed by persons with

special needs. The results of these efforts should 

help ensure that HUD recipients achieve their 

housing mission with improved access to the related 

social services provided by other federal programs.

26 HUD Strategic Plan
Strengthen Communities

Finally, HUD will continue to: 

• 

• 

• 

Assist communities in developing the 

Congressionally mandated Homeless Management

Information Systems (HMISs) to track homeless 

persons moving through emergency shelter, 

transitional housing and into permanent housing. 

HMISs will identify the characteristics of homeless 

persons and track milestones, including access to 

benefits, educational opportunities and employment. 

Encourage states and communities to improve 

discharge planning from their health care, foster

care, youth facilities and criminal justice programs,

so that, upon discharge, people move to stable 

permanent housing rather than becoming homeless. 

Provide extensive technical assistance to applicants

and potential applicants for the Department’s

homeless assistance programs. In addition to a 

continuation of the local, regional and national 

technical assistance resources already in place, HUD 

will inaugurate targeted technical assistance 

specifically tailored to faith-based organizations and 

organizations serving homeless persons living in 

Colonias areas. Existing targeted technical assistance

efforts under way to veteran service organizations 

will also be expanded. 

International exchanges about urban 

issues. 

The Housing Act of 1957 gives broad latitude to the 

Secretary to “...exchange data relating to housing and 

urban planning and development with other nations and 

assemble such data from other nations, through 

participation in international conferences and other 

means, where such exchange or assembly is deemed by 

him to be beneficial.” Such exchanges can improve the 

knowledge base related to strengthening communities in

the United States and abroad. 

In coordination with the White House and the

Department of State, HUD’s Office of International 

Affairs, part of HUD’s Office of Policy Development 

and Research, supports the diverse international interests 

of the Secretary, implements cooperative exchange 

programs with foreign governments and international 

organizations and promotes research collaboration 

between governments in housing finance, building 

technology, community planning and development and 

national urban policy. Over the next few years, it is likely 

that the Department will enter into other bilateral and 

multilateral cooperative programs as it identifies 

common urban policy research interests with foreign

governments and international organizations. 

Performance Measures 

Long-Term Performance Measures

HUD will assess its long-term success in achieving this goal by measuring the following outcomes 

discussed below: 

• The share of CDBG entitlement funds that benefit low- and moderate-income persons remains 

at or exceeds 92 percent. 

• The share of state CDBG funds that benefit low- and moderate-income persons remains at or 

exceeds 96 percent. 

• Neighborhoods in which significant CDBG investments have been made will demonstrate 

increases in measurements of neighborhood health. 

• By FY 2008, over 400,000 jobs will be created or retained through CDBG. 

• The number of communities that have implemented HMIS is maximized. 

• The number of persons experiencing chronic homelessness declines by up to 50 percent by FY 

2008. 

• The number of children who have elevated blood lead levels will be less than 260,000 by 2004 

and less than 56,000 by 2008. 

HUD Strategic Plan 27
Strengthen Communities

The share of CDBG ent tlement funds that 

benefit low- and moderate-income persons 

remains at or exceeds 92 percent.

i

Entitlement communities are required to use at least 70 

percent of their CDBG funds for activities that benefit 

low- and moderate-income residents. CDBG grantees

historically have exceeded this requirement, and HUD 

has an interest in encouraging continuing strong 

performance in this area so the greatest local needs are 

met. Of the approximately $3.5 billion in CDBG 

entitlement funds spent during FY 2001, 94.9 percent 

were spent on activities that had benefit for low- and 

moderate-income households, up from 93.7 percent in 

FY 2000. 

The share of state CDBG funds that benefit 

low- and moderate-income persons 

remains at or exceeds 96 percent.

Whereas the prior measure relates to the targeting of 

CDBG grants by entitlement communities, this measure

relates to the targeting of CDBG funds by states. Like

entitlement communities, states are required to use at

least 70 percent of their CDBG funds for activities that

benefit low- and moderate-income residents. CDBG 

grantees historically have exceeded this requirement, and 

HUD has an interest in encouraging continuing strong 

performance in this area so the greatest local needs are 

met. States used 96.4 percent of the roughly $1.5 billion 

of CDBG funds they spent in FY 2001 on activities that 

had benefit for low- and moderate-income persons. 

Neighborhoods in which significant CDBG 

investments have been made will 

demonstrate increases in measurements of 

neighborhood health. 

This performance measure will help the Department 

assess the contribution of CDBG and other HUD 

economic development programs that are intended to 

improve conditions in distressed communities. 

Neighborhood health will be measured at the census 

tract level based on indicators such as median housing 

prices, income levels, number of new businesses, 

housing vacancy rates, crime, labor force participation, 

overcrowding of housing units, the incidence of singleparent households and the incidence of households 

receiving public assistance. Since grantees make the key 

choices on priorities to pursue, which activities to fund 

and how to design them, HUD will seek their input. 

Consolidated Plan Initiative pilots will help inform 

options for this measure. HUD will use data from the 

American Community Survey (ACS) as well as other 

sources such as the Home Mortgage Disclosure Act and 

Dun and Bradstreet, for which there is a positive 

correlation between CDBG expenditure and the 

indicator(s) to measure improvements in neighborhoods 

in which significant CDBG investments have been made. 

The ACS will begin collecting rolling samples in 2003 

and beginning in 2008 will have sufficient data for tractlevel estimates for 2005. In the interim, HUD will 

continue to work with stakeholders to develop a viable

methodology for assessing neighborhood health and 

CDBG investment over time. Implementation is 

dependent on anticipated improvements to IDIS. 

By FY 2008, over 400,000 jobs will be 

created or retained through CDBG.

Many communities choose to use a significant portion of 

their CDBG grants to improve the local economy and 

help their citizens find productive work. In FY 2001, 

entitlement communities used $283 million—8.3 percent 

of their funds—for economic development, and states

used $206 million or 18.9 percent. The estimates for 

CDBG are the expected number of jobs created or 

retained during the fiscal year, based on the average job 

creation or retention per grant dollar as reported by 

grantees and projected outlays. 

The number of communities that have 

implemented HMIS is maximized. 

Counting homeless individuals and families is both 

difficult and expensive. Rather than relying on special 

national surveys to measure progress in achieving this 

goal, HUD will instead utilize the evolving infrastructure 

of HMISs. Although at present only a small percentage 

of all jurisdictions have HMISs, the number will increase 

significantly in the coming years. HUD is working 

toward attaining a nationally representative sample of

jurisdictions through HMISs to measure progress under 

this goal. 

This performance measure will estimate the incidence of

homelessness in HMIS jurisdictions to see if the 

expected outcome—a decline in homelessness—is 

achieved. Initially, the measure will use data from all 

valid HMIS systems. Once a nationally representative 

sample of jurisdictions has HMISs, this measure will 

utilize data from that sample. 

The number of persons experiencing 

chronic homelessness declines by up to 50 

percent by FY 2008. 

While there is currently no way to accurately measure the 

number of persons who experience chronic 

homelessness, HUD is working with other federal 

agencies and communities to develop definitions and 

methods for estimating the extent of chronic 

homelessness and progress under this goal. The targeted

reduction of 50 percent represents substantial progress 

toward the ten-year goal of eliminating chronic 

28 HUD Strategic Plan
Strengthen Communities

homelessness. HUD will develop an estimate of the total 

number of persons experiencing chronic homelessness in 

the United States by December 2003. This estimate will 

serve as the baseline for this performance measure. 

The number of children who have elevated 

blood lead levels will be less than 260,000 

by 2004 and less than 56,000 by 2008. 

Approximately 890,000 children under the age of six 

were estimated to have elevated blood lead levels (EBL) 

in the period from 1991–94. These children, especially

those less than three years old, are vulnerable to 

permanent developmental problems because of the wellunderstood effect of lead on developing nervous 

systems. This indicator reflects an aggressive goal of 

reducing the number of children with EBL to 260,000 by 

2004 and 56,000 by 2008. 

While substantial progress has been made in reducing the

number of children with EBL, additional progress is 

needed to address this significant health threat. Local 

data collected by the Centers for Disease Control and 

Prevention (CDC) from 19 states showed that the 

proportion of children under the age of six who tested 

with EBL decreased from 10.5 percent in 1996 to 7.6

percent in 1998. By 1999, preliminary results indicated 

that the mean blood lead level had declined 26 percent 

from the 1991–94 period. The CDC is expected to

release updated estimates of children with EBL in 2004 

and annually thereafter through its National Health and 

Nutrition Examination Survey (NHANES). Blood lead

level estimates are the best performance measure of the 

HUD lead hazard control program. HUD’s recentlycompleted national Survey of Lead-Based Paint in 

Housing shows that the number of housing units with 

lead-based paint declined from 64 million in 1990 to 38 

million in 2000. HUD will repeat this survey in 2004. 

EBL is more common among low-income children living 

in older housing. In addition to HUD’s lead-based paint 

hazard control grant program and regulations concerning

federally-assisted housing, other factors causing the 

decrease in the number of children with EBL are

demolition, substantial rehabilitation and hazard control

financed by the private sector or local and state 

government and ongoing public education. 

HUD Strategic Plan 29
Strengthen Communities

Intermediate Measures Supporting this Goal 

• During FY 2004, a total of 84,000 jobs will be created or retained through CDBG. 

• During FY 2004, the share of CDBG funds that qualify as benefiting low- and moderate-income 

persons remains or exceeds 96 percent for states and 92 percent for entitlement communities. 

• By 2004, 300 Continuums of Care will report to HUD the institutional discharge activities that will 

help to prevent homelessness. 

• By December 2003, HUD will develop an estimate of the total number of persons experiencing 

chronic homelessness in the United States. 

• The proportion of HUD homeless funding spent on housing activities increases and the proportion 

spent on social services declines.

• The number of communities with at least 75 percent of their beds covered by HMIS will increase by 

50 during FY 2004. 

• Of those in HUD’s homeless projects, 45,000 will become employed and 80,000 will become 

permanently housed in 2004; from 2004–08, a total of 175,000 people will become employed, and a 

total of 250,000 will move into permanent housing. 

• Achievement of milestones for reforming the consolidated planning process: 

o Design pilot of alternative planning procedures and identify communities prepared to test 

them by March 31, 2003; 

o Evaluate the pilots to inform policy, legislative and regulatory changes needed to implement this 

initiative by March 31, 2004;

o Review needed changes to grants management system requirements to support local setting 

and tracking of performance and aggregation of results relative to national program goals by 

September 30, 2004. 

External Factors 

Community and economic development 

The success of distressed communities in improving 

their economic conditions depends heavily on broad 

macro-economic trends in their region and the nation. 

The recent economic slowdown also has led to higher 

unemployment rates, reduced revenues and lower 

spending on public services by states and localities. A 

rapidly changing global economy has made it challenging 

for Americans to compete when capital is highly mobile, 

markets for goods and services are widely dispersed and 

wages for low-skilled employment are much lower in 

many locations abroad. 

Local shortages of low-skilled jobs are compounded by 

mismatches between the locations of available jobs and 

the residences of the unemployed. Many older urban 

communities have adopted aggressive strategies to

alleviate these mismatches, but they face numerous

barriers including tax rates, scarcity of land, scattered 

and/or absentee ownership, large concentrations of poor 

residents, blighted/vacant properties and schools with 

fewer resources.

Rural communities often face additional challenges 

because of the changing structure of the farming 

industry, underinvestment, weak infrastructure, limited 

services and few community institutions. 

CDBG, HUD’s primary source of community and

economic development funding, helps ensure that 

greater resources continue to flow toward poorer, slowgrowing, distressed areas. While HUD can encourage 

certain uses of funds, and while funds are targeted to 

low- and moderate-income residents as the primary 

beneficiaries, each jurisdiction makes its own decision 

about how to use CDBG funds. 

30 HUD Strategic Plan
Strengthen Communities

Homelessness 

Success in helping the homeless achieve housing stability 

is affected by a variety of factors beyond HUD’s control.

The incidence of homelessness is driven by 

macroeconomic forces such as unemployment levels, the 

supply of low-skilled jobs and the availability of low-cost 

housing. Personal factors such as domestic violence, 

mental illness, substance abuse, disabilities, HIV/AIDS, 

other chronic health issues and the extent of a person’s 

educational or job skills also contribute to homelessness. 

Discrimination against persons with disabilities can also 

lead to homelessness. The Department’s success in 

achieving this objective also depends critically on the 

efforts of a wide variety of community partners. 

HUD Strategic Plan 31
32 HUD Strategic Plan
Strategic Goal 

Ensure Equal Opportunity In Housing 

“Housing discrimination is not only illegal, it contradicts in every 

way the principles of freedom and opportunity we treasure as 

Americans. The Department of Housing and Urban Development 

is committed to ensuring that for everyone seeking a place to live, 

all housing is Fair Housing.”

-Secretary Mel Martinez

Overview 

Part of HUD’s core mission has always been to help 

families find affordable and decent housing. This mission 

will be fulfilled when all Americans have an equal 

opportunity to buy or rent housing that matches their 

individual needs. Unfortunately, discrimination against 

minorities and persons with disabilities exists. These 

include architectural barriers, refusals to rent or sell, 

denials of financing and a lack of housing options. These 

barriers have resulted in an exclusion of some individuals 

from the diverse housing opportunities that should be

available to them. HUD is committed to ending the 

practice of discrimination through enforcement of fair 

housing laws as well as through educating lenders, 

housing providers, developers, architects, homeseekers,

landlords and tenants about rights and obligations in 

complying with the laws. Working with state and local 

partners—as well as the private sector—the Department

is involved in a cooperative effort to increase access to 

the nation’s housing stock so that more Americans can 

afford to live where they want to live. 

Over the past three years, HUD has conducted several 

key studies to determine the levels of fair housing 

awareness and the types of discrimination that people 

experience. HUD’s Housing Discrimination Study 2000 

(HDS 2000) provides the most rigorous nationwide 

estimates of housing discrimination since HUD’s 1989 

Housing Discrimination Study. HDS 2000 found that 

African-American renters and homebuyers and Hispanic 

homebuyers experienced significant declines in

discrimination between 1989 and 2000, while the 

discrimination rate against Hispanic renters remained 

virtually unchanged during the same period. 

Nonetheless, the overall level of housing discrimination 

experienced by African Americans and Hispanics 

remains high. 

HUD’s 2002 Housing Awareness Study “How Much Do 

We Know?” measured the general public’s knowledge of 

fair housing laws and their prohibitions against rental 

and sales discrimination. Although the study indicated 

that fair housing education and enforcement had greatly 

increased awareness, it also found that many Americans

still do not recognize unlawful discrimination when it 

occurs. For example, 46 percent of people surveyed did

not know that it is illegal for real-estate agents to limit a 

home search to certain neighborhoods based on the race 

of the home seeker and the racial composition of the 

neighborhood. When asked about differential treatment 

of families with children, an alarming 62 percent of those 

surveyed were not aware that such different treatment 

was illegal.

In 2001, HUD studied pre-application lending 

discrimination in two major metropolitan areas. The “All 

Other Things Being Equal” study found that while 

minorities and whites receive equal treatment in the

majority of cases, there are patterns of unequal treatment 

that systematically favor whites. For example, African 

Americans received less information about the loans and 

less follow-up than white homebuyers with similar 

economic histories. In one city, Hispanic borrowers were 

quoted a loan amount that was on average $10,000 less 

than the amount quoted to whites with identical 

economic profiles. These differences in treatment, even 

at the pre-application stage, influence a family’s decision 

about what home to choose and the amount of the loan 

and type of loan they can afford. 

These studies provide HUD with important information 

to fulfill its mission and ensure equal opportunity in 

housing. 

 HUD Strategic Plan 33
Ensure Equal Opportunity in Housing

Objective FH1: Resolve discrimination 

complaints on a timely basis. 

HUD is responsible for enforcement of the Fair 

Housing Act and for ensuring that HUD programs 

promote fair housing and comply with civil rights laws. 

The Fair Housing Act makes it unlawful to discriminate 

in housing against persons based on race, color, religion,

sex, national origin, disability or familial status. 

Unfortunately, discrimination is still a reality for many 

Americans—including racial and ethnic minorities, 

families with children and persons with disabilities. The 

Department investigates all complaints filed by

individuals who believe they have experienced 

discrimination in housing. Resolving these complaints on

a timely basis reflects HUD’s commitment to continuing 

and improving this important aspect of its work. 

Objective FH2: Promote public awareness 

of fair housing laws. 

This strategic plan is the first to make increasing public 

awareness of fair housing law a strategic objective. To

raise public awareness of fair housing laws, HUD’s 

Office of Fair Housing and Equal Opportunity (FHEO) 

works in a cooperative effort with builders, landlords, 

tenants and other stakeholders to ensure the right of

equal housing opportunity and free and fair housing 

choice without discrimination based on race, color, 

religion, sex, national origin, disability or family

composition. The “How Much Do We Know?” study, 

described above, suggests that prior efforts to boost 

awareness of fair housing laws may have been successful 

but that more work is needed to increase public

awareness of these basic protections. 

Objective FH3: Improve housing 

accessibility for persons with disabilities. 

The Department has a series of programs that help to

improve the accessibility of housing to persons with 

disabilities, including rental housing programs and fair

housing enforcement activities. As a result of HUD’s 

enforcement efforts under Section 504 of the 

Rehabilitation Act of 1973, which prohibits 

discrimination in federally assisted programs or activities, 

HUD anticipates an increase in accessible housing. HUD

also has a statutory responsibility to ensure that 

individuals are not subjected to discrimination on the 

basis of disability in any program or activity receiving 

HUD assistance. HUD engages in educational efforts to 

acquaint the public and building community with the 

rules regarding accessibility and enforces compliance 

with the Fair Housing Act, Section 504 of the 

Rehabilitation Act of 1973 and the Americans with 

Disabilities Act. 

Means and Strategies 

HUD and its office of Fair Housing and Equal 

Opportunity will promote fair housing through a number 

of continuing and expanded programs, activities and 

strategies. 

Resolve discrimination complaints on a 

timely basis and promo e public awareness 

of fair housing laws. 

t

• 

• 

• 

• 

• 

• 

Investigate and resolve (as appropriate) housing 

discrimination complaints under the Fair Housing 

Act, Title VI of the Civil Rights Act of 1964, Section 

504 of the Rehabilitation Act of 1973, the 

Americans with Disabilities Act and Section 109 of 

Title I of the Housing and Community 

Development Act of 1974. 

Encourage, support and expand the network of state 

and local agencies that enforce laws that are

“substantially equivalent” to the federal Fair

Housing Act. Encourage, support and expand

private fair housing groups in unserved and 

underserved areas such as those not already served

by substantially equivalent agencies. 

Educate homeowners and renters, the housing 

industry, lenders, recipients, grantees and project

sponsors about fair housing laws. 

Work with the Department of Justice to enforce the

Fair Housing Act, to aggressively handle criminal 

acts of housing discrimination (e.g., hate crimes) and 

cases that involve either a pattern and practice of 

discrimination or discriminatory zoning and land use 

activities. 

Work with the Departments of Treasury and Justice 

to ensure that Low-Income Housing Tax Credit 

projects are in compliance with the Fair Housing 

Act. 

Administer two primary grant programs that help to 

reduce the incidence of housing discrimination—the 

Fair Housing Assistance Program (FHAP) and the 

Fair Housing Initiatives Program (FHIP). 

o FHAP provides grants to state and local

agencies to enforce laws that are substantially

equivalent to the federal Fair Housing Act. 

o FHIP provides funds to public and private fair 

housing groups, as well as to state and local 

agencies, to educate the public and housing 

industry about fair housing laws, investigate 

allegations of discrimination and help combat 

predatory lending practices. 

34 HUD Strategic Plan
Ensure Equal Opportunity in Housing 

• 

• 

• 

• 

Monitor the government-sponsored enterprises’ 

(GSEs’) compliance with fair housing requirements 

and the Federal Housing Enterprises Financial 

Safety and Soundness Act (FHEFSSA). 

Improve the accessibility of housing to 

persons with disabilities. 

Provide more homeownership opportunities to 

persons with disabilities through FHA.

Administer housing programs for the disabled, 

including the Section 811 rental housing program; 

Housing Opportunities for People With AIDS; 

Mainstream Housing Opportunities for Persons 

with Disabilities; and other rental assistance of 

nonelderly persons with disabilities. 

Track the number of building professionals such as 

architects, builders and code officials who are 

educated through training events, seminars and 

workshops sponsored by HUD and the industry 

regarding Fair Housing Act accessibility guidelines 

and requirements for new construction or who

otherwise learn of these requirements. 

Performance Measures 

Long-Term Performance Measures

HUD will assess its long-term success in achieving this goal by measuring the following outcomes 

discussed below: 

• Awareness of fair housing laws increases from the 2001 baseline. 

• The number of newly accessible HUD-assisted housing units, as a result of HUD’s efforts to 

enforce Section 504 of the Rehabilitation Act of 1973, increases by 7,500 by 2008. 

• By the end of FY 2008, no more than 20 percent of the open fair housing complaints, excluding

pattern and practice and systemic complaints, will be aged over 100 days. 

• By the end of FY 2008, no more than 35 percent of FHAP aged complaints, excluding pattern 

and practice and systemic complaints, will be aged over 100 days. 

• From FY 2003 through FY 2008, the percentage of architects and builders indicating awareness 

of the design and construction requirements of the Fair Housing Act increases. 

Awareness of fair housing laws increases 

from the 2001 baseline.

Broader awareness of fair housing laws is critical to 

reducing discriminatory actions. HUD completed a 

national survey of fair housing awareness in 2001 that 

found relatively widespread knowledge of some core fair 

housing protections and prohibitions, yet a more limited 

understanding of others. The baseline survey showed

that, while almost half of the general public can correctly 

identify as unlawful six or more of eight scenarios 

describing illegal conduct, almost one-quarter of persons 

surveyed knew the law in two or fewer of the eight 

scenarios. This indicator tracks the effect of HUDconducted or funded fair housing public information 

campaigns on public understanding of their rights and 

responsibilities under the law. 

HUD plans a similar survey in FY 2006 to determine 

whether awareness of the fair housing laws has

improved. By 2006, HUD’s goal is to increase awareness 

so the number of persons correctly identifying six or

more of the eight scenarios will increase from 51 percent

to 55 percent. The number of persons getting two or less 

correct would decrease from 16 percent to 12 percent. 

HUD Strategic Plan 35
Ensure Equal Opportunity in Housing

The number of newly accessible HUDassisted housing units, as a result of 

HUD’s efforts to enforce Section 504 of the 

Rehabilitation Act of 1973, increases by 

7,500 by 2008. 

Section 504 of the Rehabilitation Act of 1973 prohibits 

discrimination because of disability in federally assisted 

programs. HUD’s implementing regulations generally 

require that a minimum of 5 percent of housing units be 

accessible to persons with disabilities. An additional 2 

percent must be accessible to persons with hearing or

vision impairments. HUD conducts compliance reviews 

of recipients of HUD assistance to determine if they are 

complying with Section 504. When recipients are found 

to be in apparent noncompliance with Section 504, 

HUD may enter into a Voluntary Compliance 

Agreement with the recipient to correct the

noncompliance. As a result of these efforts, HUD 

expects to have legally binding agreements to create

1,500 newly accessible units per year, or an additional 

7,500 units by 2008. 

By the end of FY 2008, no more than 20 

percent of the open fair housing 

complaints, excluding pattern and practice 

and systemic complaints, will be aged over 

100 days. 

Efficient enforcement of processing is an important 

dimension of the fair housing performance of HUD. 

Speedy processing encourages victims of discrimination 

to file complaints and increases the likelihood that 

violations will be punished. This measure tracks the 

processing time for complaints handled by HUD, 

including time for determination of jurisdiction and for 

conducting investigations and conciliation, excluding 

pattern and practice and systemic complaints. 

Complaints alleging either pattern and practice or 

systemic violations (either geographically or throughout 

an industry) are excluded because they typically require 

broader and more complex investigations. At the end of 

FY 2001, 37 percent of fair housing complaints in the 

HUD inventory were aged. At the close of FY 2002, the 

percent of aged complaints fell to 29 percent. HUD 

expects the percentage of HUD aged fair housing 

complaints will decrease annually by 2 percent. 

By the end of FY 2008, no more than 35 

percent of FHAP aged complaints, 

excluding pattern and practice and 

systemic complaints, will be aged over 100 

days. 

The FHAP provides grants to state and local agencies to 

enforce laws that are substantially equivalent to the Fair 

Housing Act. This measure tracks the processing time

for complaints handled by HUD, including time for 

determination of jurisdiction and for conducting 

investigations and conciliation. Complaints alleging 

either pattern and practice or systemic violations (either 

geographically or throughout an industry) are excluded

because they typically require broader and more complex

investigations. HUD expects the proportion of FHAP 

complaints that are aged, excluding pattern and practice

complaints, to decrease by 2 percentage points annually.

At the end of FY 2001, 69.3 percent of these fair 

housing complaints were aged. At the end of FY 2002, 

48 percent were aged. By the end of FY 2008, no more 

than 35 percent of open FHAP complaint inventory will 

be aged. 

From FY 2003 through FY 2008, the 

percentage of architects and builders 

indicating awareness of the design and 

construction requirements of the Fair 

Housing Act increases. 

HUD will work with housing industry associations such 

as the National Association of Home Builders and other 

federal agencies such as the Department of Justice and 

the Internal Revenue Service to devise methods for 

sampling the multifamily housing industry to measure 

the impact of HUD training, technical guidance and

marketing initiatives on the awareness level of architects, 

builders and others regarding the accessibility 

requirements of the Fair Housing Act. During FY 2003, 

HUD will work to develop a baseline level of awareness 

among multifamily builders. 

Intermediate Measures Supporting this Goal 

• The percentage of fair housing complaints aged over 100 days in the HUD inventory decreases 

2 percentage points per year. 

• The percentage of fair housing complaints aged over 100 days in the FHAP inventory decreases 

2 percentage points per year. 

• Create 1,500 newly accessible units annually through legally binding agreements as a result of

enforcement of Section 504. 

36 HUD Strategic Plan
Ensure Equal Opportunity in Housing 

External Factors 

Social, cultural and economic conditions influence the 

acceptance of minorities and persons with disabilities. 

Local policies and practices impacting the development 

and construction of housing will continue to have some 

influence on the levels of discrimination, income 

isolation and disparate homeownership rates. The need 

for accessible housing and housing that provides access

to supportive services in community settings will be 

greater than before. In 1999, the Supreme Court ruled 

that states must place persons with disabilities in 

community settings rather than institutions when 

treatment professionals determine that community 

placement is appropriate (Olmstead v. L.C.). As a result 

of this decision, more persons with disabilities will be 

moving into communities at a time when affordable 

housing is increasingly scarce. 

HUD Strategic Plan 37
38 HUD Strategic Plan
Strategic Goal 

Embrace High Standards of Ethics, Management 

and Accountability 

“Public service is a public trust, and the public’s confidence is earned, not 

assumed. We hold ourselves to the highest ethical standards and are guided 

each day by our insistence on accountability with results.”

-Secretary Mel Martinez

Overview 

To achieve the Department’s other strategic goals 

effectively, it is essential that HUD employees and 

HUD’s partners embrace high standards of ethics, 

management and accountability. Because HUD manages 

public programs using public resources, HUD is 

accountable for ensuring that government funds are 

handled properly and achieve the purposes for which 

those resources were provided. The Secretary has made

stronger ethics and accountability a top priority. Part of 

putting compassionate conservatism into action means 

using resources efficiently and effectively so HUD has

the means to help others live the American Dream. This

goal cuts across all of the Department’s programs and 

applies to each employee and each partner organization 

that contributes to HUD’s mission. This goal also 

stresses the importance HUD places on its most valuable 

resources—its employees and program partners—

recognizing that it is only through their efforts that

HUD’s mission will be carried out. The importance of 

these resources is reflected in the development of 

HUD’s Strategic Human Capital Management Plan to

guide its efforts in this area through 2008. 

The Department has already improved its management

and operations. The General Accounting Office (GAO) 

recognized HUD’s progress in addressing HUD 

programs deemed to be high-risk.5 GAO’s report 

indicated that the remaining programs requiring

additional improvement are single-family mortgage 

insurance and rental housing assistance. Additionally, 

GAO has identified human capital management and the 

 

5 U.S. General Accounting Office, “Major Management 

Challenges and Program Risks: Department of Housing and

Urban Development,” January 2003. 

need for a strategic approach to managing HUD’s staff 

as the most pressing management challenge facing HUD.

Other key management challenges are information 

systems, including financial management systems, and 

acquisitions management. Recent feedback from HUD 

employees has indicated a need to improve internal 

communications and employee involvement. 

Four objectives under this goal articulate the

Department’s long-term efforts to address management

challenges and to become an increasingly highperforming agency. 

Objective EM1: Rebuild HUD’s human 

capital and further diversify its workforce. 

This strategic objective raises the visibility of human

capital issues as a mission-critical management challenge 

at HUD. HUD’s goal is to develop and maintain a 

workforce where its employees are renowned for their

professional leadership, management and technical 

competency and have the opportunity to gain the widest 

possible range of skills and experiences. 

The impending retirement of over half of HUD’s 

workforce over the next several years poses a significant

threat to HUD’s operations. As GAO has recognized, 

this is a government-wide problem. HUD views it as an 

opportunity to attract and develop a new cadre of 

employees to take on the future challenges of housing 

and being able to make a difference in the lives of 

millions of Americans and American families. In the 

future, all employees of HUD will have the knowledge 

and skills to manage information effectively. An 

adequate diversity of skills and backgrounds in HUD’s 

workforce will increase exponentially its ability to 

successfully respond to constituent needs. Critical to

 HUD Strategic Plan 39
Embrace High Standards of Ethics, Management and Accountability 

HUD’s success in managing human capital will be an

increased emphasis on internal communications. 

Objective EM2: Improve HUD’s 

management, internal controls and systems 

and resolve audit issues. 

HUD will remain focused on the continuous 

improvement of the organization and functions, and 

respond as effectively to the needs of its partners as the 

private sector responds to its customers. As a large 

organization with multiple responsibilities, HUD must 

maintain strong internal controls to ensure that HUD 

effectively meets its responsibilities, including the 

elimination of fraud, waste and abuse of federal 

resources. 

As discussed in more detail below, HUD’s most 

significant management challenges are to: 

• 

• 

• 

• 

• 

Complete Department-wide organizational changes; 

Improve financial management systems; 

Ensure adequate and sufficiently trained HUD staff; 

Improve FHA single-family origination and real 

estate owned (REO) property oversight; and 

Improve the effectiveness and efficiency of public 

and assisted housing program administration. 

Objective EM3: Improve accountability, 

service delivery and customer service of 

HUD and its partners. 

HUD’s extensive use of the partnership model is a 

fundamental aspect of the Department’s operations. This 

objective highlights HUD’s goal of improving the 

performance of its partners as well as the goal of the 

President’s Management Agenda (PMA) to improve the 

performance of intermediaries. HUD’s partners include

state and local governments, nonprofit organizations, 

for-profit organizations and even other federal agencies. 

HUD has a legal and financial relationship with 4,500 

PHAs and numerous private housing providers. 

Approximately 4,000 localities and service providers 

administer HUD’s community development programs. 

Private partners also participate in housing finance 

programs that insure mortgages and guarantee mortgagebacked securities totaling over a half trillion dollars. 

Objective EM4: Ensure program 

compliance. 

The increased devolution of authority in many of HUD’s 

programs has given housing agencies and local

administrators the opportunity to adapt the programs to 

meet local conditions and priorities. At the same time, it

has increased the challenges involved in HUD’s 

monitoring efforts to ensure accountability. 

To balance the competing objectives of devolution and 

accountability, HUD will continue to focus on

improving enforcement and regulatory oversight 

throughout its programs. This will be accomplished by 

strengthening HUD’s field offices so they have the staff 

and authority to properly monitor local use of HUD 

resources, continuing to strengthen HUD’s remote 

monitoring capacity through information technology and 

other means, and targeting monitoring resources to areas 

most at risk of abuse. Giving HUD’s partners a clear set

of performance and accountability standards is the best 

way to ensure accountability. 

Objective EM5: Improve internal 

communications and employee 

involvement. 

HUD will take steps over the duration of this plan to

improve internal communications and employee 

involvement. The outcome of these actions will be a

more cohesive organization that exhibits greater 

comprehension of, commitment to and capacity for 

achieving departmental goals. The need for increased use 

of two-way communication tools linking all 

organizational levels within the Department was 

identified through results of HUD’s 2002 Organizational 

Assessment Survey (OAS). More than half of HUD 

employees responding indicated the need for an increase

in communications between different organizational 

levels, and many said they are generally ill informed on 

organizational conditions and issues related to their job.

New tools will ensure an active feedback loop capable of 

disseminating mission and policy information, while also 

encouraging employee input. The result will be a more 

cohesive organization with greater comprehension of 

departmental goals and increased commitment and 

capacity for achieving them. 

Means and Strategies 

Dealing with mission-critical management 

challenges. 

In February 2002, HUD’s Inspector General (IG) 

identified five management challenges faced by HUD. 

Addressing these challenges is an extremely high priority

for the Department. The IG findings provide a roadmap

for the management challenges HUD intends to address 

under this goal. These same priorities are reflected in

specific agreements made by the Department as part of 

the PMA. The PMA also includes five government-wide 

efforts in the areas of human resources, eGovernment, 

competitive sourcing, financial performance and budget 

and performance integration, as well as other HUDspecific goals. Information on how HUD plans to meet 

40 HUD Strategic Plan
Embrace High Standards of Ethics, Management and Accountability 

these challenges is described below. A number of 

performance indicators are included in HUD’s Annual 

Performance Plans to track the successful completion 

and ongoing benefits of these management milestones. 

• 

• 

• 

• 

• 

Complete Department-wide organizational 

changes. During FY 2002, HUD improved internal 

management by consolidating several independent 

offices under existing program offices. The formerly 

independent offices included the Real Estate 

Assessment Center (REAC), the Departmental 

Enforcement Center (DEC), the Office of

Multifamily Housing Assistance Restructuring and 

offices of the Chief Information Officer and Chief 

Procurement Officer. HUD has also reorganized its 

Office of the Chief Information Officer and 

consolidated the security functions into the Office 

of Security and Emergency Planning. These efforts

consolidated staff expertise into organizations where 

it was already concentrated, improved 

management’s span of control and substantially 

resolved the management reforms begun several 

years ago. Field offices have been empowered to

solve local problems through the appointment of 

regional directors and field office directors with

clear lines of authority for operational management. 

Improve financial management systems. Recent

substantial improvements in financial controls have 

enabled HUD to receive clean audit opinions for 

three consecutive years. Weaknesses in FHA 

information systems have been a recurring source of 

audit deficiencies. These problems will be resolved 

by the phased implementation of an integrated 

financial system for FHA by the end of 2006. The 

first phase, implementation of FHA’s new core 

general ledger system, was completed in October 

2002. In addition, HUD is undertaking a thorough 

and rigorous assessment of all its financial systems. 

Known as the HUD Integrated Financial 

Management Improvement Project (HIFMIP), this 

effort is expected to be fully completed by FY 2007. 

Through this and other efforts, HUD plans to

sharply reduce the number of financial management 

systems that fail to comply with the Federal 

Financial Management Improvement Act. The 

Department also has acted to ensure timely 

management decisions on all audit 

recommendations made by the IG, and is taking 

steps during FY 2003 to cut in half the number of

overdue final actions on these recommendations. 

Ensure adequate and sufficiently trained HUD 

staff. During FY 2002, the Total Estimation and 

Allocation Mechanism (TEAM) was implemented to

provide information about workload 

accomplishments and staff utilization. TEAM 

establishes a foundation for better allocation of staff 

resources according to workload during the early 

years covered by this Strategic Plan. Human capital 

issues are also examined annually under Quality 

Management Reviews. 

Building on this foundation, HUD will prepare a 

comprehensive, strategic workforce plan. This

comprehensive plan will identify the kind of work to 

be done now and in the future; knowledge, skills 

and abilities of staff to do this work; capabilities and 

development needs of staff and appropriate 

deployment across organizations; and strategies for 

identifying and filling gaps. HUD will then work to 

close these gaps and reinforce high levels of ethical 

standards through the following means and 

strategies: 

o Developing an education curriculum for core 

competencies; 

o Establishing guidelines for minimum annual 

continuing education training and development 

requirements; 

o Maintaining a skills inventory and training 

profile on each employee; 

o Establishing an ethics training, briefing and 

information dissemination program. 

Improve FHA single-family origination. FHA 

single-family mortgage insurance programs may 

experience problems arising from inadequate 

monitoring and reviews of lender underwriting and 

property appraisals. To address these problems, 

FHA has implemented a process that removes 

nonperforming nonprofits and 203(k) consultants 

from the roster of approved program participants. 

Additional regulations are being processed that will 

further strengthen the oversight of program

participants. These regulations will establish an

Appraiser Watch system to measure the 

performance of individual appraisers, establish

procedures for ensuring that all approved appraisers 

meet the requirements of the Appraisal

Qualifications Board, require lenders to exercise

more oversight of appraisers they employ and track 

the performance of lenders who underwrite loans. 

The Department is also promulgating a final rule to 

prohibit property flipping on FHA-insured 

mortgages. Several rules are also under development

to increase the required qualifications of lenders 

who participate in the FHA program. 

Improve oversight of FHA REO property. The 

REO program disposes of the homes that become 

HUD property through mortgagor default. The 

HUD IG determined that HUD’s oversight of

Management and Monitoring (M&M) contractors 

who manage and sell REO properties was 

HUD Strategic Plan 41
Embrace High Standards of Ethics, Management and Accountability 

inadequate, and that insufficient public benefit was 

received from discounted sales of REO properties 

to nonprofit organizations. The Department has 

implemented procedures to monitor its M&M 

contractors, including onsite reviews, physical

property inspections and data collection. Monthly 

performance letters are issued to each M&M 

contractor, and the contractor’s response to 

identified deficiencies is resolved through verified 

corrective action. The Department also employs a 

risk analysis model on a monthly basis to track

trends in M&M contractor performance. Finally, the 

Department performs a quarterly assessment of the 

M&M contractors targeted to three specific areas of

performance: sales, property maintenance and 

contract compliance. This increased monitoring has 

resulted in significant improvement in the operation 

of the REO process. The inventory has been 

reduced to less than 30,000 properties, from 51,000 

in FY 1999, and the net return to the government is 

the highest in the history of the program.

• 

• 

• 

• 

Improve the effectiveness and efficiency of 

public and assisted housing program 

administration. One outcome of the inadequate 

monitoring of public and assisted housing providers 

has been the large number of incorrect rental 

subsidy determinations and associated loss of

subsidy resources. HUD is addressing this issue with 

the Rental Housing Integrity Improvement Project 

(RHIIP), which will significantly reduce erroneous 

rent determinations in these programs during the 

course of this Plan. In addition, underutilization 

and recapture of funds have been significant 

problems for the Housing Choice Voucher 

Program. HUD will take steps to improve the 

delivery of these rental and homeownership 

subsidies by simplifying the administration and 

strengthening the management of this program. 

HUD also has implemented management 

assessment systems for public housing, assisted 

multifamily housing and voucher programs. Studies 

of these systems will validate the reliability of the 

information collected about program conditions and 

management. In addition, Section 8 Contract 

Administrators currently review and certify 100 

percent of billing invoices for accuracy. 

Using human capital effectively. 

Human resources are the indispensable key to

accountable management. Using innovative human 

resource programs and flexibilities, HUD will recruit, 

develop, maintain and nurture a workforce that is strong

in its diversity of skills, experiences and backgrounds. 

HUD will strive to maintain a work environment that 

encourages all employees to participate, learn and grow 

well into the 21st century. 

HUD is implementing a strategic human capital 

resources planning process to identify and justify staff 

resources and ensure staff are available and have the 

necessary skills to carry out HUD’s mission. Key issues 

addressed by the human capital plan are workforce 

succession, retention, recruitment, training and 

placement. A well-trained, well-equipped and strategically 

placed staff is necessary to implement other means and 

strategies for this and the other five strategic goals. The

Human Capital Steering Committee (made up of 

representatives from the major program areas at HUD)

has drafted a Strategic Human Capital Management Plan 

for the agency. The Plan is designed to ensure that HUD

is a mission-focused agency, has a high quality workforce 

and has an effective succession plan. 

To become a mission-focused agency, employees

will be aligned to fulfill the strategic goals efficiently 

and effectively. This will be accomplished through 

better deployment of the workforce, more careful 

alignment of business activities with HUD’s mission 

and more consistent attention to addressing

management challenges. 

To attain a high quality workforce, HUD will 

improve the recruitment, development and

management of a high quality and diverse 

workforce. This will result in employees who have 

the knowledge, skills and abilities needed to perform 

their jobs; are empowered to do their jobs; and are 

rewarded for good performance and held

accountable for marginal or unsatisfactory

performance. 

Lastly, it is critical for HUD to have effective 

succession planning. This means that staff who 

retire over the next five years will be succeeded by 

qualified staff who are prepared to continue quality 

service and program delivery. It also implies that 

technical knowledge will be captured, documented 

and institutionalized to support sustainable high 

performance. Effective succession planning ensures 

that HUD’s capacity to achieve its mission is

replenished with fresh skills and knowledge; 

maintains the resource of institutional knowledge; 

provides for high levels of customer service even 

after waves of retirements; and retains highperforming mid-level and junior employees because 

clear lines of succession are established. 

Managing information.

Reliable information is the second critical factor needed 

to increase accountability. HUD has a number of 

strategies to improve the use of information. In recent 

years, the Department has greatly expanded the use of

performance information to manage programs and 

operations, to guide budget decisions, to inform 

42 HUD Strategic Plan
Embrace High Standards of Ethics, Management and Accountability 

stakeholders about program results and to strengthen

enforcement of partners who fail to act with integrity. A

number of the efforts described below are reflected and 

supported by performance goals in HUD’s Annual 

Performance Plan: 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

Continue to use the annual Management Plan

process to specify operational goals that support the 

goals established in the Annual Performance Plan. 

The overall Management Plan is integrated with 

Field Management Plans that reflect local resources, 

needs and opportunities. 

Maintain a strong research program focused on

program evaluations to assess the effectiveness of 

HUD programs and develop recommendations for 

program improvements. 

Strengthen and replace financial management

systems to improve the integrity of financial data 

and to ensure that accounts can be fully audited.

Apply principles of business process analysis and 

evaluation, target enterprise architecture objectives

and integrate common processes to improve HUD’s 

management and internal controls, improve systems, 

resolve audit issues and improve service delivery to 

all customers.

Continue to improve the Internet content, policy,

technology and reliability of program data and 

certify compliance of program data systems 

according to the standards of the Chief Information 

Officer, the principles of enterprise architecture and

performance-based system development practices. 

HUD’s data quality initiative includes assessment of 

data elements in mission-critical systems, correcting 

data problems and certifying the systems.

Information integrity also is being improved with a 

series of computer security projects and by

implementing HUD’s information quality policy for 

disseminated information. 

Increase citizen access to information on HUD’s

programs and their local implementation. This is 

accomplished through citizen participation in the 

Consolidated Plan process, as well as through

electronic government. These “eGov” efforts 

include satellite broadcasts, Webcasts, HUD’s 

award-winning Internet site and the HUD USER 

Web site, which focuses on research dissemination. 

Electronic government also is being implemented 

for core business purposes, beginning with eGrants. 

Enhancing monitoring and enforcement. 

A cornerstone of effective management and 

accountability consists of HUD’s program monitoring, 

enforcement and regulatory oversight activities: 

Implement the RHIIP to reduce overpayments of 

low-income rent subsidies due to the incomplete 

reporting of tenant income, the improper calculation 

of tenant rent contributions and the failure to fully 

collect all outstanding rent. Efforts include 

developing software tools for housing providers, 

introducing a quality control program—including 

income matching—to monitor their performance, as 

well as exploring program simplification 

opportunities. 

Through the REAC, rate key partners—including 

PHAs and private owners of assisted housing—for 

financial management and physical upkeep. Low 

performing PHAs are referred to the Troubled

Agency Recovery Center and Office of Public and 

Indian Housing for remedial action. 

Through REAC, rate the performance of 

Independent Public Accountants that perform

financial audits of PHA and multifamily assisted 

properties. Poor performers are referred to the

Departmental Enforcement Center for debarment.

Through Housing’s new Office of Regulatory 

Affairs and Manufactured Housing and the Office 

of General Counsel, protect consumers through 

investigations and enforcement actions under the

Real Estate Settlement Procedures Act, the

Interstate Land Sales Full Disclosure Act and the 

Manufactured Housing Construction and Safety 

Standards Act. 

Through FHA’s Office of Single Family Housing, 

implement new protocols for the monitoring of 

FHA appraisers. 

Through HUD’s Mortgage Review Board, levy fines 

against lending institutions and restrict their dealings 

with the FHA when they violate federal lending 

policies. 

Work with participants in the mortgage lending 

industry to reduce predatory lending. FHA is

sharing the Neighborhood Watch/Early Warning 

system with lenders so that they, as well as FHA 

staff, can monitor mortgage default rates.

Hire, train and retain a quality program monitoring 

and enforcement workforce capable of ensuring 

greater accountability for results by program 

participants. 

Working with partners. 

HUD’s principal management and senior managers also 

are working closely with HUD’s partners to jointly 

improve management operation and controls and 

strengthen incentives. HUD will: 

HUD Strategic Plan 43
Embrace High Standards of Ethics, Management and Accountability 

• 

• 

• 

• 

• 

• 

• 

• 

• 

Periodically survey HUD’s customers and partners 

to assess programs, policies and monitoring, as well 

as the Department’s relationship with these 

stakeholders. 

Provide technical assistance to improve voucher 

utilization. 

Distribute additional vouchers to areas of high

utilization. 

Consult with community development partners to

streamline the Consolidated Plan development 

process. 

Through the Troubled Agency Recovery Centers 

and the Office of Public and Indian Housing, help 

troubled housing agencies improve management to 

achieve standard or high-performing status. 

Review the following programs to determine how to 

increase the rates of obligation and expenditure of 

funds: Housing Choice Vouchers, elderly housing 

grant funds (Section 202) and the Public Housing 

Capital Fund. 

Building a communications loop. 

To improve internal communications and employee 

involvement, HUD will implement several strategies: 

Effective communication vehicles. HUD will 

assess its communication vehicles to look at the 

function, effectiveness and audience of all internal 

communication vehicles used at HUD. This 

assessment will also determine potential new 

vehicles and communication channels. 

Improve upward communication. HUD will 

design a system of upward communication that 

seeks, acknowledges, responds to and uses employee 

feedback. 

Engage the field. HUD management will work 

with field directors to understand communication 

weaknesses unique to each office. This information 

will be used to build general communication

strategies sensitive to the needs of field employees

and specific initiatives responsive to individual

offices. 

Performance Measures 

Long-Term Performance Measures

HUD will assess its long-term success in achieving this goal by measuring the following outcomes 

discussed below: 

• HUD’s budget documents clearly link allocated resources to anticipated results, and policy 

directions and resources are linked to specific strategic goals. 

• HUD will modernize its financial management and information systems. 

• HUD will strengthen controls over rental housing assistance payments. 

• HUD will strengthen controls over FHA’s single family housing program risks. 

• By 2008, HUD will have implemented its human capital strategic plan and will have its workforce 

training, retention and recruitment policies in place and determined acceptable by an 

independent review. 

• The satisfaction of HUD partners with the Department’s performance, operations and programs

increases.

• Employee satisfaction will increase from the 2002 baseline by 2008.

44 HUD Strategic Plan
Embrace High Standards of Ethics, Management and Accountability 

HUD’s budget documents clearly link 

allocated resources to anticipated results, 

and policy directions and resources are 

linked to specific strategic goals. 

The PMA provides the guiding principle for budget and 

performance integration. HUD will develop its annual 

budget with a focus on collecting and using quality

performance information, utilizing full cost accounting

principles and emphasizing program evaluations and

research to inform decisionmaking. HUD views the

integration of performance and budgeting as an iterative 

process that will reflect shorter-term, intermediate and 

long-term results. Over time, the effort will require 

improved information and data in order to better mesh

performance and budgeting efforts. Additional data will 

depend in part on systems and data development and 

pursuing needed program evaluations. The Department 

will work closely with OMB, other federal Departments, 

the Congress and its many partners to continue to 

improve and measure program performance. 

HUD will modernize its financial 

management and information systems. 

The PMA includes a specific focus on improving 

financial management performance. One of the key 

components of improving HUD’s financial management

performance is the modernization of financial systems, 

one of HUD’s highest priorities. HUD financial systems 

currently fail to meet federal financial management 

requirements and applicable federal accounting

standards. FHA has partially converted its private-sector

accounting systems to comply with generally accepted

federal accounting standards. The Office of the Chief 

Financial Officer (OCFO) is leading a Department-wide 

effort to assess HUD’s financial systems and carry out a 

program to bring the Department into compliance by

FY 2007. Modernizing HUD’s financial systems will not 

be easy. Notwithstanding, HUD has the sustained 

leadership commitment, time and resources to achieve 

success. 

To guide and support HUD’s systems modernization 

efforts, the Chief Information Officer (CIO) is leading a 

number of Information Technology (IT) management

improvement efforts, including: 

• 

• 

• 

• 

• 

• 

i

Refinement and institutionalization of HUD’s IT 

Investment Management (ITIM) Process. 

Completion of HUD’s Enterprise Architecture (EA) 

initiative to provide Department-wide 

documentation of HUD’s current business and 

technology systems architecture baseline, as a basis 

for both better managing HUD’s current

information systems and better meeting future

information systems needs through development of 

a “target architecture” for future systems 

development. 

Implementation of a performance-based, outcomeoriented infrastructure contract, called HUD IT

Services (HITS), to provide improved services and 

innovative IT solutions. 

IT project management reviews at the highest levels 

to focus executive attention on projects needing 

direction. 

The use of Integrated Procurement Teams to

manage and implement the transition of IT support 

contracts to performance-based contracts. 

Implementation of HUD’s Enterprise Security

Program to provide protection of HUD’s critical

infrastructure, both physical and information 

systems. This entails developing and implementing 

effective security procedures; security awareness and 

training; disaster recovery/contingency planning; 

and monitoring compliance and effectiveness of 

security procedures, policies and standards.

HUD will strengthen controls over rental 

housing ass stance payments. 

The PMA includes the reduction of overpaid rental 

housing assistance as a separate HUD-specific initiative, 

with an overall goal of a 50 percent reduction in the $2 

billion net annual assistance overpayment estimate by

2005. HUD has developed a comprehensive corrective 

action plan to address the root causes of these erroneous 

payments. Efforts are under way to reestablish an 

adequate program oversight capacity, through enhanced 

staffing, guidance, training, systems and enforcement.

Improved guidance, training and automated tools for its

third-party program administrators are also being

provided. Improved computer matching and data 

sharing on assisted tenant income have the potential to 

reduce much of the estimated payment error. HUD has 

interim goals to reduce the overpaid assistance by 15 

percent in 2003 and 30 percent in 2004, and there are 

plans to measure HUD’s progress in meeting those 

targets. 

HUD will strengthen controls over FHA’s 

single family housing program risks. 

The number of program participants that fail to meet

FHA’s performance standards and compliance 

requirements will be significantly reduced. FHA is 

committed to fighting the practice known as property 

flipping to reduce the risk of loss to the FHA fund. 

Other FHA efforts will protect homebuyers from 

predatory lending practices. In addition, FHA’s 

Appraiser Watch process automatically targets housing 

appraisers with poor performance records for 

monitoring, or even disqualified from program 

participation, when they hit certain unacceptable 

performance thresholds. FHA’s Credit Watch, 

HUD Strategic Plan 45
Embrace High Standards of Ethics, Management and Accountability 

Neighborhood Watch and other program monitoring 

and enforcement efforts are also being strengthened. 

By 2008, HUD will have implemented its 

human capital strategic plan and w ll have 

its workforce training, retention and 

recruitment policies in place and 

determined acceptable by an independent 

review. 

i

Under the PMA, HUD’s five-year Human Capital 

Management Strategy aligns its human capital with its 

mission, goals and organizational objectives, and 

eliminates the skill gaps or deficiencies in mission critical 

occupations. HUD will address needed improvements in 

organizational structure, succession planning, recruiting 

and hiring, training and performance incentives, 

evaluation and recognition. A baseline of existing gaps in 

staff knowledge, skills and abilities will be established in 

2004, and implementation of the Human Capital 

Management Strategy will result in a decrease in that 

baseline through 2007. This effort will also support other 

long-term performance measures under this strategic 

goal, such as integrating budget and performance and 

providing the skills needed to better manage information 

technology and reduce risks in the rental housing 

assistance and single-family housing programs. 

The satisfaction of HUD partners with the 

Department’s performance, operations and 

programs increases. 

In 2001, HUD published the results of a survey of key 

HUD partners concerning their satisfaction with the 

Department’s service and programs. A goal of the 

Department is to ensure a high level of satisfaction 

among those groups who are needed to implement 

HUD’s program effectively. In 2003, HUD will replicate 

the 2001 survey to determine how partners’ satisfaction

has changed over time. 

Employee satisfaction will increase from 

the 2002 baseline by 2008. 

In the spring of 2002, HUD conducted a Web-based 

OAS. The survey was designed by the Office of Personal 

Management to measure HUD employees’ satisfaction 

with their workplaces. The survey measured personal 

experiences, job satisfaction and 17 dimensions of 

organizational climate that are key to high performance 

(balancing work and family life, leadership, teamwork, 

fairness). The survey was complemented by results from

22 focus groups at eight HUD locations nationwide. 

The OAS results will be used to set priorities in the areas 

that were identified as needing improvement, to help 

develop new performance goals and to create plans that

focus on the areas where HUD can achieve the greatest 

progress through 2008 to address key organizational 

concerns. The 2002 OAS will be the baseline against 

which HUD measures progress in employee satisfaction 

and its transformation into a high performing 

organization. 

46 HUD Strategic Plan
Embrace High Standards of Ethics, Management and Accountability 

Intermediate Measures Supporting this Goal 

• The number of noncompliant financial management systems decreases. 

• Complete assessment of HUD financial systems by FY 2004. 

• Achievement of milestones for implementing the FHA integrated financial management system 

by 2006. 

o Implement the U.S. Standard General Ledger and credit reform accounts; 

o Implement automated funds control processes; 

o Automate FHA’s interface with HUD’s departmental general ledger;

o Eliminate manual accounting processes. 

• Achievement of milestones in the RHIIP process and interim targets for error reduction. 

o Complete regulatory simplification; 

o Develop structured forms and tools for rent determination; 

o Complete training for rent determination;

o Implement automated tenant data sources for rent determination; 

o Implement risk-based monitoring of housing providers.

• Implement actions including a communication assessment, to address challenges raised in the 

2002 Organizational Analysis Survey by 2004 and 2007. 

• Complete follow-on Organizational Analysis Survey by 2005 and 2008. 

• Complete a comprehensive, strategic workforce plan in 2004. 

• Complete an integrated human resources/training/workforce management system (HIHRTS) in

2005. 

External Factors 

The large number of HUD agents and grantees 

implementing HUD’s programs in the field greatly

complicates monitoring and performance measurement.

For instance, the assumption underlying the distribution 

of grants by formula is that local decisionmakers are best 

positioned to respond to local housing needs and market 

conditions, and that local choices of activities that should 

be funded produce the most effective results. 

HUD Strategic Plan 47
48 HUD Strategic Plan
Strategic Goal 

Promote Participation of Faith-Based and 

Community Organizations 

“Faith-based and community groups are a force for tremendous good – but 

we know they could do so much more to help ease the suffering in our 

neighborhoods. And so we are tearing down the barriers and opening the 

door of opportunity for America’s ‘armies of compassion.’ They are eager to 

serve; we are offering them every encouragement.”

-Secretary Mel Martinez

Overview 

In January 2001, President Bush created the White 

House Office of Faith-Based and Community Initiatives 

and charged it with lifting up this nation’s charitable 

service organizations and encouraging their good works.

Roadblocks—including outright bias, arbitrary and 

burdensome regulations and general confusion over the 

way the federal government has addressed the separation 

of church and state—often have prevented HUD and 

other federal agencies from expanding its partnerships 

with America’s faith-based groups. HUD’s goal is to

break down the barriers and substantially strengthen and 

expand its partnerships with faith-based and community 

groups to take full advantage of their capacity to provide 

quality services to communities and families. 

Objective FC1: Reduce regulatory barriers 

to participation by faith-based and 

community organizations. 

HUD’s activities under this objective will help to 

maximize full participation by faith-based and 

community-based organizations, by identifying

regulatory barriers that inhibit participation and by

assessing procurement and other internal policies and 

practices. 

Although HUD enjoys a long history of partnering with 

faith-based and community groups, many have been at a 

disadvantage. Some have been required to strip 

themselves of their religious identity and to separate their 

faith from their good works. In some instances, other 

impediments have either prohibited or discouraged 

participation by faith-based and community 

organizations. Additionally, some smaller grassroots and 

faith-based institutions have lacked access to

information, critical networking contacts and complete 

capacity to be successfully eligible to receive federal 

funding. 

Objective FC2: Conduct outreach to inform 

potential partners of HUD opportunities. 

Faith- and community-based organizations, large and 

small, can play a significant role in helping HUD to

achieve its core mission. Among other assets, many of

these organizations have a detailed knowledge of the

needs of low-income communities and the trust of lowincome residents. Led by its Center for Faith-Based and 

Community Initiatives (CFBCI), HUD will reach out to

groups—especially the smaller grassroots organizations 

that tend to be excluded—and help them with

educational seminars, technical assistance and other

services. By increasing the involvement of faith-based 

and community organizations in HUD’s programs, 

HUD intends to provide higher quality services to the 

nation’s communities. 

Objective FC3: Expand technical 

assistance resources deployed to faithbased and community organizations. 

One of the constraints faced by faith-based and 

community nonprofit organizations is a lack of capacity 

to expand their operations to effectively implement new 

programs or absorb new increments of funding. 

Expanding technical assistance to these organizations 

will help increase their professionalism and efficiency as 

they benefit from the lessons learned by larger 

 HUD Strategic Plan 49
Promote Participation of Faith-Based and Community Organizations 

organizations. Training will include topics of capacity 

building, resource development strategies, the 

importance of generating partnerships and strategic 

planning. 

Objective FC4: Encourage partnerships 

between faith-based/community 

organizations and HUD’s traditional 

grantees. 

The goal of utilizing faith-based and community 

grassroots organizations to advance the mission of HUD 

ultimately hinges on the extent to which these 

organizations are able to access resources at the local 

level. HUD annually awards on the order of $2 billion in 

competitive grants for which nonprofit organizations are 

eligible. By comparison, $6 billion is potentially available 

through the CDBG and HOME programs—and more 

still through PHAs. Some local government entities may 

have limited experience in working with nonprofit, 

community-based service providers, and so the CFBCI

will play a leading role—initially in a few target cities—in 

bringing together local government and community 

organizations to discuss the unmet needs of the 

community and the capacity of faith communities to 

respond to those needs. 

Additionally, the CFBCI seeks to encourage access to 

local funds by creating a greater transparency of the 

grant making processes. To this end, HUD will publicize 

the local grant opportunities, the points of contact and 

examples of recent grants to faith-based and community 

grassroots organizations. 

Means and Strategies 

A number of specific strategies have potential to help 

match some of the vast resources of the federal 

government with the vision, commitment and expertise 

of community-based religious and voluntary 

organizations that are on the frontlines. Planned 

activities include the following:

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

Eliminating regulatory language that creates 

unnecessary barriers for faith-based groups; 

Eliminating or modifying requirements that are not

mandated by statute or regulation and act as 

impediments; 

Expanding technical assistance to faith-based and 

community groups, many of these groups are served

through HUD’s capacity building grants; 

Expanding outreach and field development;

Publicizing successful programs of faith-based 

service delivery relevant to HUD’s mission, with the 

aim of encouraging other groups to use these 

programs as a model; 

Facilitating the formation of partnerships between 

formula grantees of HUD (community development

and public housing officials) and local faith-based 

and community grassroots organizations; 

Creating pilot programs within each of HUD’s 

principal operating units (Housing, PIH, CPD) for 

the purpose of demonstrating the potential of faithbased and community grassroots organizations to 

advance the mission of HUD; 

Designating faith-based liaison officers at the 

regional and field offices to advance the Initiative 

within a local context; 

Building partnerships between the federal 

government and corporations, foundations and 

nonprofit organizations, including the Corporation 

for National Community Service. 

HUD established the CFBCI in compliance with 

Executive Order 13198. CFBCI will partner with the 

comparable centers at the Departments of Education, 

Justice, Labor and Health and Human Services to 

advance the Initiative. Among other activities, the Center

will: 

Plan and conduct interagency events and 

conferences designed to educate and train faithbased and community organizations on equal access 

issues and partnership opportunities; 

Launch pilot and demonstration projects that bring 

program resources and other resources of these

agencies together to serve faith-based and 

community organizations. These will include 

establishing a resource center and interagency Web

site for the Initiative. Specific areas for which 

interagency coordination is planned beginning with 

FY 2003 include HUD’s Family Self-Sufficiency 

program and HUD’s activities in Colonias, 

homelessness and predatory lending. 

50 HUD Strategic Plan
Promote Participation of Faith-Based and Community Organizations 

Performance Measures 

Long-Term Performance Measure 

HUD will assess its long-term success in achieving this goal by measuring the following outcome 

discussed below: 

• Participation of faith-based and community-based organizations in HUD programs increases, as 

evidenced by the number of grant applications for and partnerships in HUD programs. 

Participation of faith-based and 

community-based organizations in HUD 

programs increases, as evidenced by the 

number of grant applications for and 

partnerships in HUD programs. 

One measure of HUD’s success in making programs 

accessible to faith-based and grassroots community 

organizations is the number of grant applications these 

groups submit to HUD. The number of grant 

applications submitted each year represents the effective

demand for federal resources by grassroots

organizations, as well as a threshold level of capacity. 

The organizations demonstrate a higher threshold of 

capacity when they are able to submit applications that

are qualified and competitive enough to merit grant 

awards. Further, as faith-based and community-based 

organizations are educated about HUD housing and 

community development programs, HUD expects 

increased participation of these organizations as partners 

in its programs. By FY 2004, HUD intends to establish a 

baseline number of applications submitted by faith- and 

community-based grantees and to set a target for 

improvement. By FY 2005, HUD intends to establish a 

mechanism for tracking other participation in HUD 

programs and to set a target for improvement. 

Intermediate Measures Supporting this Goal 

• Establish a baseline number of applications by faith- and community-based grantees and a target 

for increased participation by FY 2004. 

• Create recording mechanisms for analyzing competitive grant applications for faith-based groups by 

FY 2004. 

• Create recording mechanisms for analyzing formula grant applications for faith-based groups by

FY 2005. 

External Factors 

More than 85 percent of HUD funds are distributed to 

local governments and PHAs via block grants, contract 

renewals and vouchers. Faith-based and community 

organizations are typically eligible as sub-recipients for 

some of these HUD funds but must apply through their 

respective local governments. While HUD can 

encourage certain uses of funds, and while funds are 

targeted to low- and moderate-income residents as the

primary beneficiaries, each jurisdiction makes its own 

decision about how to use block grant funds. 

HUD Strategic Plan 51
52 HUD Strategic Plan
Aligning Resources with Results 

This section provides in-depth background information 

on three key aspects of HUD’s implementation of this 

plan: the budget and staff resources that are aligned with 

each Strategic Goal; the interagency partnerships that

contribute additional resources and strategies; and the 

program evaluations and performance information that 

are crucial to budgeting for results.

Budget and Staff 

The Department’s ability to achieve the targets set forth 

in this Strategic Plan depends on the level and allocation 

of budgetary and human resources. HUD strives to

allocate resources efficiently by evaluating programs,

consulting with stakeholders and measuring 

performance. 

HUD has instituted a series of measures to increase 

accountability and performance. One such measure is the 

adoption of resource management methodology. HUD 

has implemented the Total Estimation and Allocation 

Mechanism (TEAM), an online tool for measuring the 

allocation of staff resources. TEAM provides several 

benefits for the Department: 

• 

• 

• 

• 

• 

• 

• 

• 

• 

Estimating resources for budget formulation, 

execution and analysis; 

Linking resources to performance measures 

specified in the Annual Performance Plan under the 

Government Performance and Results Act; 

Validating and monitoring actual resource 

utilization. 

Interagency Partnerships 

In addition to private partners and state and local 

governments, HUD relies extensively on other federal 

agencies to help accomplish its mission. The interagency 

cooperation that is planned during the period covered by

this Strategic Plan is summarized for each strategic goal 

below. 

Strategic Goal: Increase homeownership 

opportunities 

Ginnie Mae will continue to guarantee mortgagebacked securities backed by pools of mortgages that 

are insured by the FHA and the Department of 

Agriculture’s Rural Housing Service (RHS) or

guaranteed by the Department of Veterans Affairs 

(VA). 

To implement and enforce the Real Estate

Settlement Procedures Act (RESPA) effectively,

HUD will enhance coordination with the major 

banking regulators including the Federal Deposit 

Insurance Corporation (FDIC), the Comptroller of

the Currency, the National Credit Union 

Association, the Office of Thrift Supervision and 

the Federal Reserve Board. In addition, HUD will 

work with the Department of Justice, the Federal

Trade Commission, the Internal Revenue Service 

and state attorneys general on joint enforcement 

actions. 

HUD also will continue to work cooperatively with 

these five regulatory agencies to collect data under 

the Home Mortgage Disclosure Act (HMDA). The 

Federal Financial Institutions Examination Council 

(FFIEC) is the governing board that is responsible 

for collecting and disseminating this information. 

HMDA data show how mortgage credit is provided 

across the country and are invaluable in assessing 

disparities in lending practices among mortgage

lenders that affect underserved groups. 

HUD will continue to work with agencies such as 

the Department of the Treasury to address 

predatory lending. The Interagency Task Force on 

Predatory Lending consists of federal law 

enforcement and banking supervisory agencies

jointly seeking solutions to the problem of predatory 

lending. 

HUD cooperates with the Department of Justice to 

enforce fair housing laws that prohibit 

discrimination on the basis of minority status or 

disability. HUD also serves on the Interagency Task

Force on Fair Lending, whose members include the 

Departments of Justice and the Treasury, the FDIC, 

Federal Housing Finance Board, Federal Reserve 

Board, Federal Trade Commission, National Credit 

Union Administration, Office of Federal Housing 

Enterprise Oversight, Office of the Comptroller of

the Currency, and Office of Thrift Supervision. The 

Task Force coordinates fair lending activities across

all federal agencies. 

Under a plan approved by the Federal Housing 

Finance Board, HUD formed a new partnership 

with the Federal Home Loan Bank (FHLB) of

Seattle to buy up to $100 million in loans guaranteed 

by HUD under Title VI of the Native American

Housing and Self Determination Act. HUD 

guarantees of principal and interest will help create 

an incentive for other financial institutions to extend 

financing to Native American communities. 

 HUD Strategic Plan 53
Aligning Resources with Results 

Strategic Goal: Promote decent affordable 

housing 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

HUD will continue to work with the Department of 

the Treasury to ensure efficient use of the LowIncome Housing Tax Credit (LIHTC). HUD has 

done significant research on the tax credit program 

to inform LIHTC policy. HUD sets the maximum

LIHTC rents by publishing estimates of 60 percent

of area median income, and identifies Difficult 

Development Areas and Qualified Census Tracts—

areas where tax credits can be taken on a higher 

percentage of a project’s “qualified basis.” HUD’s

Office of Housing continues to work with Treasury 

to make the LIHTC program work better with FHA 

insurance. HUD also works closely with Treasury 

on tax-exempt bond regulations and other tax policy 

rulings that affect the continued provision of quality 

multifamily housing with affordable rents.

HUD recently signed a Memorandum of

Understanding (MOU) with the RHS of the 

Department of Agriculture. The purpose of this 

MOU is to ensure an ongoing working relationship 

between HUD and the RHS in preserving 

affordable rental housing in rural America. The 

MOU will facilitate the processing of Multifamily 

Housing Assistance Payment contract renewals for

RHS-financed projects. 

HUD will work with the Environmental Protection 

Agency (EPA) and the Department of Energy in a 

partnership that supports the goals of the 

President’s National Energy Policy by promoting 

more widespread use of EnergyStar products in 

HUD’s inventory of public, assisted and insured 

housing. 

HUD and the Federal Housing Finance Board 

signed a MOU in 1999 that sets forth the policy for 

approving the use of FHLB Affordable Housing 

Program (AHP) funds for subordinate financing of 

Section 202 and Section 811 projects. The need for 

a policy was prompted because sponsors of these 

properties were increasingly approaching FHLBs for 

AHP subordinate financing, for a variety of reasons. 

The MOU streamlined the approval process and 

decreased the time it takes for financing to become

available for these projects, which house elderly and 

disabled persons. 

HUD will continue to work closely with a number 

of federal agencies, including the Departments of 

Health and Human Services (HHS) and Labor, to 

ensure the successful implementation of welfare 

reform policies designed to help low-income 

families make progress toward self-sufficiency. 

HUD serves on the Interagency Committee on

Supports for Low-Income Workers, promotes the 

HHS Assets for Independence competitive grant 

program through HUD’s communications 

mechanisms and assists HHS in its technical 

assistance program for state welfare agencies, 

including through technical assistance conferences

and broadcasts. HUD also encourages HUD-funded

employment and training programs as well as 

subsidized housing providers to: (1) establish and 

maintain Neighborhood Networks centers for the 

implementation of such programs; and (2)

coordinate and partner with the Department of 

Labor’s national system of One-Stop Employment 

Centers. 

HUD has worked with HHS to develop guidance 

and a model cooperative agreement for public 

housing agencies (PHAs) and local welfare agencies. 

PHAs are encouraged to enter into cooperative 

agreements with local welfare agencies to target 

services and assistance to welfare families who

receive housing assistance and to reduce fraud and 

noncompliance with program requirements. 

HUD and HHS work collaboratively to increase the 

availability of assisted living facilities for low-income 

seniors, especially through coordination with states 

that have Medicaid waivers and can spend Medicaid

funds on assisted living services. 

HUD signed a MOU with the FDIC to establish a 

national partnership to promote financial education 

using Money Smart, FDIC’s financial education 

curriculum. FDIC is sending an educational package 

to over 4,000 PHAs across the United States, as well 

as to HUD’s Public and Indian Housing Directors 

and Coordinators. The curriculum may be used in 

HUD-sponsored programs such as Resident 

Opportunities and Self-Sufficiency, Family SelfSufficiency and Welfare to Work vouchers. 

Strategic Goal: Strengthen communities 

Through the White House Office of Faith-Based

and Community Initiatives, an Administration-wide 

effort to better support the work of faith-based and 

community organizations, HUD and four other 

agencies are working to coordinate a national effort

to strengthen the capacity of faith-based and other 

community organizations to better meet the social 

and economic needs in America’s communities. 

HUD is a member of the Interagency Council on 

the Homeless. The other federal Departments 

represented on the Council include the Departments 

of Agriculture, Commerce, Defense, Education, 

Energy, HHS, Justice, Labor, Interior,

Transportation and VA, the Social Security

Administration, the Federal Emergency 

Management Agency, the Government Services 

54 HUD Strategic Plan
Aligning Resources with Results 

Administration, the Office of Management and 

Budget, the National Corporation for National 

Community Services and the Postmaster General. 

The Council coordinates federal programs 

supporting homeless families and individuals to 

minimize duplication and improve overall results. 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

HUD will continue to work with the Departments 

of HHS and VA to better integrate HUD housing 

for homeless persons with HHS and VA service 

resources. The three agencies will continue to

sponsor policy academies with state agencies to 

bring senior state and local policymakers together to 

discuss how to improve access to mainstream

federal service programs by persons who are 

homeless. 

HUD’s Office of Native American Programs

coordinates Native eDGE, an interagency initiative 

designed to facilitate sustainable economic

development within American Indian and Alaska 

Native communities. Native eDGE includes a 

telephone call center, a publications clearinghouse, a 

Web site and a technical assistance information 

center. The Web site links 18 federal agencies,

tribes, Native Americans, lending institutions, 

nonprofits, foundations and private businesses 

through a single portal so they can collaborate to 

promote sustainable economic growth in Indian 

country.

HUD is a member of the Interdepartmental Task 

Force on HIV/AIDS and is collaborating with the 

White House Office of National AIDS Policy and 

other federal agencies in addressing the challenges 

from the HIV epidemic. These efforts will involve 

the coordination of training and technical assistance 

for providers of housing, health care and other 

social services for persons with HIV/AIDS. In

addition, HUD is collaborating with the Centers for 

Disease Control and Prevention (CDC) on a study 

of the connections of homelessness or stable 

housing to HIV transmission and the progression of 

HIV disease, to assist CDC in gaining understanding 

and help prevent HIV transmission. 

HUD works with the Department of Justice and the 

EPA to enforce the Lead Disclosure Rule of the 

Residential Lead-Based Paint Hazard Reduction Act 

of 1992, which requires that landlords and sellers of 

housing constructed prior to 1978 provide each 

purchaser or tenant with information about lead 

hazards. 

HUD is working on the Healthy Homes Initiative 

with the CDC, the EPA, the National Institute for 

Occupational Safety and Health, the National

Institute of Science and Technology and the

National Institute of Environmental Health 

Sciences. Under the initiative, HUD awards grants

to public and private organizations and makes 

agreements with other federal agencies for

evaluation studies and demonstration projects to 

address housing conditions responsible for diseases 

and injuries. 

HUD is continuing joint research with the Federal 

Emergency Management Agency that will help

reduce the risk and economic impacts of floods. 

Strategic Goal: Ensure equal opportunity in 

housing 

HUD chairs the President’s Council on Fair 

Housing, which is an interagency group committed 

to promoting equal opportunity in mortgage 

lending, and serves on the Interagency Task Force 

on Fair Lending, which coordinates enforcement of

fair lending laws across the federal government. 

Through the Interagency Task Force on Fair 

Lending, HUD works with the Departments of

Justice and the Treasury, the FDIC, Federal 

Housing Finance Board, Federal Reserve Board,

Federal Trade Commission, National Credit Union 

Administration, Office of Federal Housing 

Enterprise Oversight, Office of the Comptroller of

the Currency and Office of Thrift Supervision to 

provide guidance to lenders consistent with the Fair

Housing Act and the Equal Credit Opportunity Act 

and their implementing regulations. 

The Interagency Working Group on Limited 

English Proficiency (LEP), chaired by the Office of

the Assistant Attorney General Civil Rights Division 

of the Department of Justice, consists of 

representatives from all Federal Civil Rights offices. 

The group is working together to ensure effective 

and efficient implementation of Executive Order 

13166 and Title VI of the Civil Rights Act of 1964 

as it relates to LEP issues. The Group will ensure 

that persons with limited English proficiency will 

have meaningful access to funded and federally 

conducted programs and activities. 

HUD and the Department of Justice continue to

coordinate their fair housing enforcement activities, 

especially with respect to responding quickly and 

effectively to Fair Housing Act complaints that 

involve criminal activity (e.g., hate crimes), a pattern 

and practice of housing discrimination, or the 

legality of state and local zoning or other land use 

laws or ordinances. 

HUD will continue to work with the Departments 

of Justice and the Treasury to ensure that LIHTC 

projects are in compliance with the Fair Housing 

Act. Under a MOU, the three agencies formalized a 

monitoring and compliance process to ensure that

HUD Strategic Plan 55
Aligning Resources with Results 

low-income housing tax credit properties meet the 

requirements of the Fair Housing Act. 

• 

• 

• 

• 

• 

HUD is partnering with HHS to help states and 

communities comply with Olmstead v. L.C. by 

providing community living options for persons 

with disabilities. In the pilot initiative, HUD is 

supplying vouchers and technical assistance, while 

HHS, working through state Medicaid agencies, is

providing Nursing Home Transition Grants, 

Medicaid funds and other resources to facilitate the 

transition to community living.

As part of the Presidential Task Force on

Employment of Adults with Disabilities, HUD 

proposed and designed a national pilot project 

implemented in 1999 to learn how federally 

supported service programs might better lead to 

employing adults with disabilities, especially adults 

who are members of racial, ethnic and language 

minority communities. 

Strategic Goal: Embrace high standards of

ethics, management and accountability 

HUD will continue to rely on the Department of 

Justice to accept civil referrals of multifamily 

development owners who have troubled 

management. Criminal referrals are sent to HUD’s

Inspector General. 

HUD will continue to show leadership in housing 

and community development policy by supporting 

cooperative research efforts. These include the 

National Survey of Homeless Assistance Providers 

and Clients (involving HHS, along with a number of

other agencies); an Interagency Agreement with the

Department of Justice’s National Institute of Justice 

to evaluate drug elimination strategies; and 

coordination with the Department of State to enter 

into MOUs to facilitate information exchange with 

counterpart housing officials from other countries.

HUD continues to participate in the interagency 

FedStats task force to facilitate electronic data 

dissemination. FedStats is intended to provide an

interagency clearinghouse for statistical data that will 

transform existing information searches from a

fragmented, agency-focused process to a more

unified and customer-oriented one. 

Strategic Goal: Promote participation of 

faith-based and community organizations 

HUD’s CFBCI will partner with the Centers for FaithBased and Community Initiatives at the Departments of 

Education, HHS, Justice and Labor to plan and conduct 

interagency events and conferences. The conferences are

designed to educate and train faith-based and community 

organizations on partnership opportunities, launch pilot 

and demonstration projects and build partnerships 

between corporations, foundations and nonprofit 

organizations. The Corporation for National Community 

Service will also play a role, and the Department of 

Agriculture will also be invited to participate. 

56 HUD Strategic Plan
Aligning Resources with Results 

Policy Development, Program 

Evaluations, Related Research 

HUD’s Office of Policy Development and Research 

(PD&R) has launched a long-term research planning 

process designed to provide a solid foundation for future 

policy development. The process involves identifying 

and anticipating the key housing and community 

development issues likely to face the nation in 2010 or 

2020 and then structuring a long-term research agenda to

inform the development of policies that can have a 

major impact in addressing these issues. PD&R is also 

conducting a series of internal policy reviews of key

issues and HUD programs to develop shorter-term 

policy options that HUD and other agencies can use to 

improve program effectiveness and efficiency. 

Evaluation Strategy 

PD&R is in the process of substantially increasing 

program evaluation activity to support an 

Administration-wide effort to carefully evaluate the 

performance and impacts of government programs, 

including HUD programs. PD&R’s ability to carry out 

this expanded level of program evaluation activity will 

depend on the availability of adequate appropriations. 

Based on input from the Secretary and program offices

within HUD, PD&R is developing a program evaluation 

plan to ensure that evaluations advance key policy 

objectives and that major HUD programs are reassessed 

at regular intervals. 

While PD&R regularly evaluates each of HUD’s

principal programs, there currently is no fixed timetable 

that dictates specific intervals for evaluating a particular

program. Rather, decisions about when to evaluate 

programs are made on the basis of input from the 

Secretary, program offices and PD&R, in light of current 

policy needs, recent program experience and budget

constraints. While early implementation evaluations and 

impact evaluations are generally conducted for significant 

new programs, most evaluations of mature programs 

focus in depth on particular issues that need research. 

Evaluation and Research 

PD&R currently has an active docket of program 

evaluations and related research designed to help 

improve program performance and inform the 

Department’s policy development process. This section 

describes, by strategic goal, HUD’s recent and ongoing

program evaluations and related research by PD&R, as

well as the impact that certain prior research projects 

have had on HUD policy. Additional information on 

HUD program evaluations and research, including 

copies of recently issued reports, may be found on the 

Web site for PD&R: www.huduser.org.6

Strategic Goal: Increase homeownership 

opportunities 

• 

• 

• 

 

Increasing minority homeownership. The

President has established an ambitious goal to create 

5.5 million more minority homeowners by 2010. In 

support of this objective, PD&R has initiated 

studies of the reasons for the racial and income gaps 

in homeownership and the early homeownership 

experiences of low-income families. Work in this 

area is being expanded to include topics such as the 

extent of any supply-side constraints on lower 

income homeownership opportunities and the 

effectiveness of policies and programs aimed 

specifically at boosting minority homeownership 

and helping low-income and minority families to

remain homeowners. 

Affordable housing goals for GSEs. PD&R 

research and analysis supports the review and 

establishment of new affordable housing goals for 

the government-sponsored enterprises, Fannie Mae 

and Freddie Mac. These goals play a significant role

in ensuring that the GSEs do their part to expand 

homeownership opportunities for low-income and 

minority families. Among other activities, PD&R 

will analyze newly available census data to revise the 

areas classified as “underserved” for the purposes of

the affordable housing goals. Prior analyses have 

provided the foundation for establishing the GSE 

housing goals to ensure that the institutions do their 

utmost to help make housing affordable. 

Evaluations of HUD homeownership programs.

To better understand the impact of HUD 

homeownership programs and determine how they 

can be improved, PD&R will initiate or continue 

work on a number of program evaluations, 

including evaluations of Housing Choice Voucher 

homeownership, homeownership activity under 

HOME, FHA single-family insurance and programs 

that concentrate homeownership investments in 

particular neighborhoods. Past research in this area 

has led to significant improvements in HUD’s 

homeownership programs. For example, an

evaluation of the FHA assignment program led to

6 Additional research and evaluations are conducted by HUD’s

Office of Healthy Homes and Lead Hazard Control. 

Information on the work of this Office may be found on the

internet at: http://www.hud.gov/offices/lead.

HUD Strategic Plan 57
Aligning Resources with Results 

termination of that program and institution of new 

FHA loss mitigation tools. PD&R analysis also has 

contributed to the development of mortgage 

scorecards for use in FHA’s automated underwriting

and to the restructuring of FHA mortgages 

insurance premiums. 

• 

• 

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• 

• 

• 

• 

Providing essential data on homeownership and 

other housing issues. A significant portion of

PD&R’s budget is dedicated to funding major

ongoing housing market surveys that provide critical 

data on the state of the nation’s housing stock and 

markets. These surveys include the American 

Housing Survey, the Residential Finance Survey, the 

Survey of New Home Sales and Completions, the 

Survey of Market Absorption and the Survey of

New Manufactured Homes Placements.

Building technology. PD&R will undertake 

research to explore new approaches for production, 

rehabilitation and maintenance of housing to 

enhance affordability and energy efficiency. Other 

areas of needed research include expanded research 

in support of modernization of the Manufactured 

Safety and Standards Act, research on the needs of 

special users including the disabled and the elderly,

energy research and technological research to 

support HUD’s own assisted housing programs. 

RESPA analysis. Since the passage of RESPA in 

1974, PD&R has helped to shape its implementation 

and enforcement. PD&R economists have worked 

to help the Department simplify and improve the 

mortgage origination process so that consumers can 

benefit from lower settlement service prices. PD&R 

will help the Department evaluate comments on the 

proposed RESPA rule, prepare a final rule and 

assess its impact.

Reducing closing costs. Closing costs contribute 

to the upfront cost of buying a home, but there is 

little empirical work in this area because of the lack 

of a useful database. PD&R is currently creating a 

database of FHA mortgages that can provide 

reliable information on closing costs for the nation 

as a whole, for each of the 50 states and for certain 

cities and metropolitan areas. Analysis of this

database will help to inform policymaking on 

strategies for reducing closing costs.

Predatory lending. PD&R will continue its analysis 

of the subprime lending market to help

policymakers distinguish between legitimate

subprime lending activity that helps to expand

homeownership opportunities for low-income and 

minority families, and predatory lending that takes 

advantage of these families. PD&R will also examine 

the role of mainstream lenders in our inner cities. 

Strategic Goal: Promote decent affordable 

housing 

Regulatory barriers to the production of 

multifamily and single-family housing. State and 

local regulations operate as a significant barrier to

the production of affordable housing. Various 

studies estimate that construction and development

costs can be reduced as much as 35 percent through

new regulatory tools and processes. PD&R research 

will help policymakers better understand the nature 

and effects of these barriers and options for 

overcoming them. Among other impacts, past 

research has identified opportunities for 

streamlining rehabilitation codes to stimulate greater 

rehab activity to preserve existing housing. 

Additional research topics under consideration 

include regulatory barriers in the form of land use, 

building code and other regulatory impediments and 

opportunities to reduce the cost of land and 

infrastructure—the fastest rising component of 

housing costs. 

Development and evaluation of new strategies 

for expanding access to affordable housing.

These include strategies for facilitating access to 

financing for construction and land acquisition and 

expanding access to information on the availability 

of land suitable for the development of affordable 

housing. 

Improving the quality and management 

accountability of public and assisted housing.

PD&R is working to help improve management of 

public and assisted housing, including a crosscutting analysis of housing quality in HUD’s various 

rental housing programs—public housing, Housing 

Choice Vouchers and the project-based Section 8 

program. 

Strengthening the Housing Choice Voucher 

Program. PD&R has a long-standing research 

program focused on evaluating and improving the 

voucher program, which is HUD’s largest affordable 

rental housing program. Among other things, 

PD&R plans to mine the wealth of research on

Housing Choice Vouchers to distill lessons for 

states in implementing the new Housing Assistance 

for Needy Families program. 

Helping HUD-assisted renters make progress 

toward self-sufficiency. PD&R is presently 

evaluating a number of programs designed to

advance this objective, including: the Family SelfSufficiency Program; the Welfare-to-Work Housing 

Voucher program; the Jobs Plus program; and the

Moving to Opportunity Program. PD&R is also

closely analyzing HUD administrative data to 

establish a benchmark for assessing the efficacy of 

58 HUD Strategic Plan
Aligning Resources with Results 

future efforts to increase the incomes of families in 

public and assisted housing. Work on these 

priorities will continue in future years. 

• 

• 

• 

• 

• 

• 

• 

• 

• 

• 

Other affordable housing topics under 

consideration. Other program evaluations under 

consideration for FY 2003 and beyond include: an 

evaluation of assisted living conversions and other 

initiatives to appropriately house the aging elderly; a 

study of the Housing Choice Voucher 

administrative fee structure; a study of landlord

relations in the Housing Choice Voucher program; a 

study of the outcomes for people leaving housing 

assistance; and a study of the factors leading owners 

to opt out of the project-based Section 8 program 

and the effectiveness of policies to preserve this 

housing stock. 

Strategic Goal: Strengthen communities 

Ending chronic homelessness. PD&R is actively 

engaged in research designed to support the 

Secretary’s goal of ending chronic homelessness in 

ten years. Projects include researching effective 

strategies for meeting the needs of on-the-street 

homeless individuals and evaluating the 

effectiveness of HUD-funded permanent housing 

for persons with disabilities. 

Preventing homelessness. To effectively address 

the challenge of homelessness, it is essential to focus 

on preventing families and individuals from

becoming homeless in the first instance. To help 

develop more effective policies for preventing 

homelessness, PD&R will be researching the causes 

of homelessness, with a focus on procedures for 

discharging individuals from various publicly funded 

institutions, including jails and mental health 

institutions. 

Improving the usefulness of the Consolidated 

Plan. PD&R is actively involved in the Presidential 

Management Agenda goal of streamlining the 

Consolidated Plan and making it more useful to 

communities. Among other activities in FY 2003, 

PD&R will help to assess the efficacy of pilot 

strategies to streamline the consolidated planning 

process and help improve the usefulness of data that

HUD provides communities for use in analyzing 

housing and community needs through the 

development of improved geographical information 

systems (GIS) templates.

Evaluating the formulas for distributing 

HOME, CDBG and other Funds. PD&R will 

analyze the impact of new census data on formulas 

for distributing HUD funding, including HOME 

and CDBG funds, as well as HIV surveillance data 

for Housing Opportunities for Persons with AIDS 

funds, to determine whether changes to these

formulas are necessary to ensure the effective

targeting of HUD funds.

Improving the lives of residents of the Colonias.

PD&R is engaged in an ongoing research effort to 

support the Secretary’s goal of helping to improve 

the lives of residents of the poor areas along the 

U.S.-Mexico border known as “Colonias.” Among 

other things, PD&R’s research program is designed 

to better understand the nature of the problems 

faced by residents of the Colonias and analyze policy 

options for addressing these problems. 

State of the Cities Data Base. PD&R maintains 

and updates the State of the Cities Data System, 

which provides community and economic 

development practitioners with a centralized source

of a variety of economic, demographic and housing 

data. Practitioners and researchers use the data 

system to track local conditions in cities and suburbs 

across the nation. 

Strategic Goal: Ensure equal opportunity in 

housing 

Housing discrimination. PD&R has an active

research program designed to better understand the 

extent and nature of housing discrimination. 

Activities include a major study of the extent of 

housing discrimination in 2000 in the rental and 

homeownership markets (funded through the Fair

Housing Initiatives Program, or FHIP). This study 

will update an earlier major study conducted in

1989, which found a substantial amount of

differential treatment of minorities seeking to buy or

rent housing and led to the authorization for the 

FHIP. PD&R also is developing pilot testing 

methods for detecting housing discrimination 

against persons with disabilities and conducting the 

first-ever assessment of housing discrimination

against Native Americans. Another recent study 

assessed the level of public awareness of the fair 

housing laws. PD&R will continue to support the 

efforts of FHEO in this area in coming years. 

Housing accessibility. PD&R research helps to 

assess compliance with accessibility standards and to 

develop strategies for making the marketplace more

aware of those standards. A recent study found that 

most new multifamily properties comply with some 

of the accessibility standards, but few comply with 

all of them. 

Strategic Goal: Embrace high standards of 

ethics, management and accountability 

Program evaluation activity. In an effort to

strengthen the accountability of HUD programs for 

results, PD&R plans to substantially increase 

HUD Strategic Plan 59
Aligning Resources with Results 

funding for HUD program evaluations in FY 2003 

and future years. Based on input from the Secretary

and program offices within HUD, PD&R will 

develop a plan for program evaluation activity to 

ensure that it advances key policy objectives and 

leads to regular periodic evaluations of major HUD 

programs. 

• 

• 

• 

Research specific to performance management 

and the Government Performance and Results 

Act. PD&R will continue its research program to 

improve HUD’s ability to measure the direct effects 

of HUD’s programs. The American Housing 

Survey, program evaluations and special-purpose 

research efforts provide and validate performance 

data about program impacts.

Reducing errors in income and rent 

determinations. PD&R supervises periodic

evaluations of the income and rent determinations 

of HUD’s rental assistance programs to gauge the 

magnitude of errors and develop recommendations 

for reducing them. 

Strategic Goal: Promote participation of faithbased and community organizations 

Building the capacity of faith-based and 

grassroots nonprofits. Prior research by PD&R 

identified the lack of organizational capacity as a key 

obstacle to the funding (or expansion of funding) of 

many smaller nonprofit groups active in the housing 

and community development areas, including faithbased groups. Future research in coordination with 

HUD’s Center for Faith-Based and Community 

Initiatives will assess effective strategies for 

strengthening these groups’ capacity and will 

identify improved criteria for assessing capacity 

among smaller groups. 

60 HUD Strategic Plan
Appendix 

The appendix briefly covers four areas: (a) what HUD 

does and whom HUD serves; (b) the performance 

management cycle at HUD; (c) an assessment of major 

economic, social, demographic or other trends outside 

the Department with a potential to impact achievement 

of the Department’s goals; and (d) the key statutes that

govern HUD’s operations. 

About HUD 

Mission 

HUD’s mission is to increase homeownership, support 

community development and increase access to

affordable housing free from discrimination. To fulfill 

this mission, HUD will embrace high standards of ethics, 

management and accountability and forge new 

partnerships—particularly with faith-based and 

community organizations—that leverage resources and 

improve HUD’s ability to be effective on the community 

level. 

What Does HUD Do? 

By working closely with other federal agencies and

branches, as well as with local governments, faith-based 

and community organizations and the private sector,

HUD provides a coordinated and comprehensive

response to America’s housing and community 

development needs. Among the key activities of the

Department are to: 

• 

• 

• 

• 

• 

• 

• 

• 

Increase homeownership opportunities by fighting 

predatory lending, simplifying the homebuying

process, helping HUD-assisted renters become 

homeowners and insuring loans for first-time and 

low-income homebuyers to increase access to the

benefits of homeownership. 

Promote decent affordable housing by expanding

access to affordable rental housing, improving the 

physical quality and management of public housing 

and increasing housing opportunities for vulnerable

populations. 

Strengthen communities by eliminating chronic 

homelessness, mitigating housing conditions that 

threaten health and providing grants to communities 

to help meet locally defined needs for housing, 

economic development and infrastructure. 

Ensure equal opportunities in housing by resolving 

discrimination complaints swiftly, promoting public 

awareness of fair-housing laws and improving 

housing accessibility for persons with disabilities. 

Promote participation of faith-based and 

community organizations by removing the 

regulatory barriers that discourage these 

organizations from partnering with HUD. 

Whom Does HUD Serve? 

HUD has more than 9,000 employees and 81 field 

offices, with a presence in all 50 states, the nation’s

capital and Puerto Rico. Here are a few examples of the 

people and communities that benefit from HUD’s 

programs: 

Through the Federal Housing Administration and 

Government National Mortgage Association

(Ginnie Mae), both part of HUD, families who 

otherwise could not afford homeownership are 

helped in achieving that part of the American 

Dream. 

Millions of Americans—disabled individuals, the 

elderly, individuals with HIV/AIDS and people

who were once homeless—receive HUD rental 

assistance, enabling them to afford a decent place to 

live. Through expansion of its successful Section 8 

homeownership program, the Bush Administration 

is committed to helping more families move from 

renting to owning. 

Every state and more than 1,000 cities receive 

Community Development Block Grants, and a large 

portion also participate in the HOME Investment

Partnerships and other grant funding, helping them 

to meet locally defined needs for housing, 

community development and basic services. 

To fulfill its mission, HUD works closely with Congress 

and other federal agencies, and builds partnerships with 

local governments, faith-based and community 

organizations and the private sector. HUD’s 

headquarters staff and field offices work with cities, 

counties, states, lenders, nonprofits and members of the 

housing industry. HUD strives to make its programs 

efficient and flexible. In FY 2002, Congress approved a 

budget of more than $31 billion for HUD programs. 

 HUD Strategic Plan 61
Appendix

The Performance Management Cycle 

at HUD 

This section briefly describes how HUD uses the 

Strategic Plan. The diagram shows the integrated set of

strategic planning and performance management tools 

that HUD uses to produce results. Together, the tools

ensure better planning and accountability for results 

consistent with HUD’s mission. 

The Strategic Plan, the initial step in this performance 

management cycle, defines the strategic goals and 

objectives for the Department’s work and establishes a 

vision of what HUD seeks to achieve during the next six 

years. Agencies are required to submit a new Strategic 

Plan to Congress at least once every three years. The last 

Strategic Plan was submitted in the fall of 2000. 

Each year HUD develops and submits an Annual 

Performance Plan (APP) to Congress in conjunction 

with the President’s Budget to identify the performance 

goals and results HUD intends to accomplish during the 

year with the resources in its budget request. The APP 

establishes the specific performance measures that will 

help us gauge progress in achieving the strategic goals

and objectives articulated in the Strategic Plan. The FY

2004 APP will be submitted to Congress in February or 

March 2003. 

Strategic Plan

Annual Performance &

Accountability Report 

Management Plans &

Program Delivery

Systems

Annual Budget 

Performance Plan

Results

Quarterly Review of

Key Indicators

HUD’s Strategic Planning and 

Performance Management Cycle Once Congress acts on HUD’s budget proposal for a 

fiscal year, all HUD organizations, both in headquarters 

and the field, establish annual Management Plans to

ensure the day-to-day management processes and

program operations support the achievement of the 

measurable results contained in the APP. The field office

plans identify the coordinated strategies and actions each 

office will implement to respond to local needs and to 

contribute to the achievement of the goals and objectives 

articulated in the APP. 

In addition to the internal HUD Management Plans, the 

President prepares a Management Agenda with HUD

that includes specific action items. The first iteration of

the President’s Management Agenda (PMA) was 

announced in conjunction with the FY 2003 budget 

submission in early 2002. 

Progress in achieving milestones in both the internal 

Management Plans and the PMA is tracked on an 

ongoing basis and reviewed at Executive Management

Meetings held monthly by the Deputy Secretary with

principal staff. In addition, beginning in FY 2003, the 

Secretary will hold quarterly meetings with principal staff 

to review progress in achieving key APP indicators and 

meeting implementation milestones. These progress 

reviews and the results of ongoing oversight of field 

operations provide essential information for appropriate 

corrective actions and policy adjustments to ensure

performance goals are achieved. 

At the end of the fiscal year, HUD prepares a 

Performance and Accountability Report (PAR) that

reports on HUD’s performance in the prior FY and the 

extent to which HUD achieved the goals of the APP.

The FY 2002 PAR will be submitted to Congress in 

February 2003. 

The annual process of planning, budgeting, managing 

and reporting on performance will go through several 

cycles during the life of this Strategic Plan. The longer 

Strategic Plan cycle is completed when information 

about results, including program evaluations, is

combined with stakeholder input to inform and shape 

Departmental strategies for a revision of the Strategic 

Plan. 

62 HUD Strategic Plan
Appendix 

Perspective and Outlook 

An essential element of a strategic overview of HUD’s 

role is an assessment of major economic, social, 

demographic or other trends outside the Department

with a potential to affect achievement of the

Department’s goals. Several aspects of the nation’s 

economy and demography are worthy of note because of 

their current or potential impact on HUD operations. 

Economy 

The ability of families to afford their housing costs is 

strongly influenced by the economy, and in particular, by

interest rates and unemployment levels. 

Unemployment rates rose during the recent recession

but are expected to decline as the economy recovers. 

Family incomes declined slightly in 2001 according to 

the Census Bureau. 

Interest rates are currently low, which is a driving force 

in making homeownership affordable for more families. 

An increase in interest rates could slow the growth in 

homeownership. 

Housing Markets 

On a national basis, rental vacancy rates are at or near

record high levels. Even so, there are some markets, for

a variety of reasons, including the additional burden of

compliance with state and local regulations, where 

affordable housing is less available. 

Demographics 

Continuing growth in the elderly population during the 

coming decade will create new demand for housing that 

is appropriate for elderly families, including assisted 

living opportunities. 

There is a growing population of Hispanic households in 

the United States, including many new immigrants. The 

ability of these households to access mainstream housing

resources may be impacted by language barriers, 

discrimination and (in some cases) lack of credit history.

The 1999 Supreme Court ruling in Olmstead v. L.C. 

required states to place persons with disabilities in 

community settings rather than institutions when 

treatment professionals determine that community 

placement is appropriate. This decision affects the need

for accessible housing and housing linked to supportive 

services. 

Welfare Reform 

Many HUD tenants also receive income from welfare. 

Some HUD-assisted tenants have done well under 

welfare reform, moving completely from welfare to work 

or increasing their earnings. The long-term budgetary

impact for HUD and housing providers is still being 

evaluated. 

Devolution and Local Control 

The Quality Housing and Work Responsibility Act of 

1998 continued the trend toward devolution of

responsibility for HUD’s housing programs, delegating 

more authority to state and local housing agencies. 

HUD’s ability to achieve its goals is heavily contingent 

on the performance of its partners. 

Local jurisdictions have local authority to create building 

codes and zoning requirements. Through this authority, 

jurisdictions often create regulatory barriers that prevent 

the development of affordable housing or lead to

increased costs. 

HUD Strategic Plan 63
Appendix

Key Statutes 

The Department of Housing and Urban Development is 

the Executive Branch Agency, established by Congress,

whose chief responsibility is the implementation and 

enforcement of federal housing and community 

development statutes passed by Congress. Through the

years, Congress has passed legislation that not only 

created the programs that HUD is responsible for 

administering, but also established HUD’s overall goals 

and mission. While there have been a multitude of 

programs established by Congress over the years, the 

goals and mission of the Department have generally 

focused on the need for innovative and comprehensive 

solutions to housing and community development 

problems, an emphasis on HUD’s service to

disadvantaged individuals and distressed neighborhoods 

and a reliance on partnerships as a means to achieve 

results. 

The following is a list of key statutes that define HUD’s 

mission:

1934 National Housing Act: Created the Federal 

Housing Administration “to encourage 

improvements in housing standards and 

conditions (and) to provide a system of 

mutual mortgage insurance.” 

1937 United States Housing Act of 1937:

Created the public housing program. 

1949 Housing Act of 1949: Established grant 

programs to assist state and local 

governments with community planning and 

urban renewal. It also established the national 

“...goal of a decent home and a suitable 

living environment for every American

family.” 

1959 Housing Act of 1959: Established the 

Section 202 Supportive Housing for the 

Elderly program and FHA Mortgage

Insurance for Nursing Homes program.

1965 Department of Housing and Urban 

Development Act:: Created the Department

in order “...to achieve the best

administration of the principal programs of 

the Federal Government which provide 

assistance for housing and for the 

development of the Nation’s communities, to

assist the President in achieving maximum

coordination of the various Federal activities 

which have a major effect upon urban

community, suburban, or metropolitan 

development...and to provide for full and 

appropriate consideration, at the national 

level, of the needs and interests of the 

Nation’s communities and of the people who 

live and work in them.” 

1968 Housing and Urban Development Act:

Established rental and homeownership 

programs for lower income families and 

created, within HUD, the Government

National Mortgage Association (Ginnie Mae). 

1968 Civil Rights Act: Prohibited discrimination 

in housing and gave HUD responsibility for 

administering those provisions. 

1971 Lead-Based Paint Poisoning Prevention 

Act: Required the Secretary to establish 

procedures to eliminate as far as practicable 

the hazards of lead-based paint poisoning. 

1974 Housing and Community Development 

Act of 1974: Created Community 

Development Block Grants for state and 

local governments “to promote the 

development of viable urban communities” 

and also established Section 8 rent subsidies 

for low-income families.

1974 Real Estate Settlement Procedures Act of 

1974 (RESPA): Required that the costs of

real estate settlement services be disclosed to

the consumer and forbade the payment of 

referral fees, kickbacks, splits of fees and

unearned fees for these services. RESPA 

governs almost every individual residential 

mortgage transaction involving a mortgage 

loan in the United States.

1983 Housing and Urban-Rural Recovery Act:

Created the housing voucher program as an

addition to Section 8 rent certificates and 

repealed authority to make new commitments

under the Section 8 project-based program. 

1987-

1988 

Stewart B. McKinney Homeless 

Assistance Act and the Stewart B. 

McKinney Homeless Assistance 

Amendments Act of 1988: Created new

programs to assist the homeless. 

1988 Fair Housing Amendments Act: Expanded 

the scope of fair housing provisions of the 

1968 Civil Rights Act and gave HUD 

additional enforcement responsibilities. 

1988 Housing and Community Development 

Act of 1988: Made housing vouchers a

permanent program; allowed sale of public 

housing to resident management 

corporations, giving residents the ability to

manage and buy their developments; and

authorized enterprise zones. 

64 HUD Strategic Plan
Appendix 

1988 Anti-Drug Abuse Act of 1988: Established the 

Public Housing Drug Elimination Program. 

1989 Department of Housing and Urban 

Development Reform Act: Established over 

50 legislative reforms to help ensure ethical, 

financial and management integrity. 

1990 National Affordable Housing Act of 1990 

(a.k.a. Cranston-Gonzalez Act): Created 

programs to empower and help the most needy 

through a variety of economic incentives, lowincome homeownership opportunities and 

other housing and economic development 

programs. Created the HOME Investment

Partnership, Housing Opportunities for Persons 

With AIDS (HOPWA) and Shelter Plus Care

programs. Also established the Section 811 

Supportive Housing for Persons With

Disabilities program and the HOPE programs. 

1992 Housing and Community Development Act 

of 1992: Established the Youthbuild and Low 

Income Housing Preservation and 

Homeownership programs. Also created a 

comprehensive lead paint hazards reduction 

program, HUD risk-sharing programs with

housing finance agencies and GSEs and the 

Indian housing loan guarantee program. 

1992 Federal Housing Enterprises Financial 

Safety and Soundness Act: Strengthened 

HUD’s regulatory authority over Fannie Mae

and Freddie Mac, the two housing governmentsponsored enterprises regulated by HUD, to 

improve access to affordable housing for verylow-, low- and moderate-income families and 

families living in underserved areas. The Act 

established the framework by which HUD 

establishes the level of three housing goals that 

the GSEs are required to achieve annually. The 

Act also expanded HUD’s new program 

approval and general regulatory authority over 

the GSEs. In addition, the Act established the

Office of Federal Housing Enterprise Oversight 

as an independent office within HUD to 

examine the safety and soundness of the GSEs. 

1992 Lead-Based Paint Hazard Reduction Act:

Addressed the need to control exposure of 

children under the age of six to lead-based paint 

hazards, such as deteriorated lead paint, lead

dust and lead in soil, in federally assisted and 

federally owned housing. 

1994 Multifamily Housing Property Disposition

Reform Act of 1994: Amended disposition 

requirements for multifamily mortgages. 

Created the Economic Development Initiative 

program.

1996 Native American Housing Assistance and 

Self-Determination Act: Established Indian 

housing block grant and loan guarantee 

programs. 

1997 Multifamily Assisted Housing Reform and 

Affordability Act of 1997: Established the 

Mark-to-Market Program (M2M) and the Office 

of Multifamily Housing Assistance 

Restructuring (OMHAR) through the end of 

FY 2001. Under this program, individual

projects in HUD’s multifamily portfolio of 

insured Section 8 housing projects are 

restructured by resetting rents to market levels 

and reducing mortgage debt, if necessary, to 

permit a positive cash flow. In 2001, Congress 

extended M2M and OMHAR through 2004.

1998 Quality Housing and Work Responsibility

Act of 1998 (a.k.a. Public Housing Reform 

Act): Made significant changes in the public

housing and Section 8 tenant-based programs. 

Substantially deregulated high-performing 

public housing authorities, decreased poverty

concentrations in public housing and promoted 

mixed-income communities, ensured that a 

threshold share of units and housing vouchers 

remain available for the truly needy and created 

incentives for residents to become selfsufficient.

1998 VA-HUD Appropriations Act for Fiscal 

Year 1999: Increased FHA’s single-family loan 

limits, giving HUD the opportunity to provide 

more affordable mortgages to first-time, 

minority and central-city homebuyers, and 

substantially amended FHA Single Family 

Property Disposition requirements.

1999 Preserving Affordable Housing for Senior 

Citizens and Families into the 21st Century 

Act: Enabled HUD to develop a broad range of 

housing options to meet the changing housing 

needs of senior citizens, and authorized Markup-to-Market, which protects low-income 

renters by minimizing the number of owners 

that choose to opt out of the project-based 

housing assistance program.

1999–

2000 

VA-HUD Appropriations Acts: For FY 1999, 

Congress approved 50,000 new housing 

vouchers to help individuals and families with 

worst case housing needs and help families 

move from welfare to work. This was the first

significant appropriation of new vouchers for 

the Department since FY 1994. 

For FY 2000, Congress approved 60,000 new

vouchers, demonstrating renewed commitment 

to reduce the severe shortage of affordable 

housing. 

HUD Strategic Plan 65
Appendix

2000 American Homeownership and Economic

Opportunity Act: Expanded homeownership

opportunities for low-income Americans, 

including the disabled, senior citizens and 

Native Americans.

2000 Community Renewal and New Markets 

Initiative of 2000: Encouraged economic 

development in low- and moderate-income 

rural and urban communities. Created the New 

Markets Tax Credit and the Renewal 

Communities program; expanded the 

Empowerment Zones program; and increased

the supply of Low Income Housing Tax Credits 

and Private Activity Bonds.

66 HUD Strategic Plan