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THE FUTURE OF HOUSING IN 

AMERICA: OVERSIGHT OF THE 

RURAL HOUSING SERVICE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND INSURANCE 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

MAY 19, 2015 

Printed for the use of the Committee on Financial Services 

Serial No. 114–25 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

SUBCOMMITTEE ON HOUSING AND INSURANCE

BLAINE LUETKEMEYER, Missouri, Chairman 

LYNN A. WESTMORELAND, Georgia, Vice 

Chairman 

EDWARD R. ROYCE, California 

SCOTT GARRETT, New Jersey 

STEVAN PEARCE, New Mexico 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

DENNIS A. ROSS, Florida 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

ROGER WILLIAMS, Texas 

EMANUEL CLEAVER, Missouri, Ranking 

Member 

NYDIA M. VELA ́ ZQUEZ, New York 

MICHAEL E. CAPUANO, Massachusetts 

WM. LACY CLAY, Missouri 

AL GREEN, Texas 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

JOYCE BEATTY, Ohio 

DANIEL T. KILDEE, Michigan 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

May 19, 2015 ..................................................................................................... 1 

Appendix: 

May 19, 2015 ..................................................................................................... 39 

WITNESSES 

TUESDAY, MAY 19, 2015 

Hernandez, Tony, Administrator, Rural Housing Service (RHS), U.S. Department of Agriculture .............................................................................................. 3 

Scire, Mathew, Director, Financial Markets and Community Investment, U.S. 

Government Accountability Office (GAO) .......................................................... 5 

APPENDIX 

Prepared statements: 

Hinojosa, Hon. Ruben ....................................................................................... 40 

Hernandez, Tony .............................................................................................. 44 

Scire, Mathew ................................................................................................... 52 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Waters, Hon. Maxine: 

Written statement of the Housing Assistance Council .................................. 77 

Written statement of the National Rural Housing Coalition ....................... 82 

(1) 

THE FUTURE OF HOUSING IN 

AMERICA: OVERSIGHT OF THE 

RURAL HOUSING SERVICE 

Tuesday, May 19, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON HOUSING

AND INSURANCE, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 10 a.m., in room 

2220, Rayburn House Office Building, Hon. Blaine Luetkemeyer 

[chairman of the subcommittee] presiding. 

Members present: Representatives Luetkemeyer, Pearce, Hurt, 

Stivers, Barr, Rothfus, Williams; Cleaver, Green, Ellison, Beatty, 

and Kildee. 

Ex officio present: Representative Waters. 

Chairman LUETKEMEYER. The Subcommittee on Housing and Insurance will come to order. Without objection, the Chair is authorized to declare a recess of the subcommittee at any time. 

Today’s hearing is entitled, ‘‘The Future of Housing in America: 

Oversight of the Rural Housing Service.’’ 

Before I begin, I would like to thank the witnesses for appearing 

before the subcommittee today. I look forward to your testimony. 

I realize that we don’t have—there are only two clocks here that 

tell time for the witnesses and/or the rest of the members of the 

subcommittee. We will try and give you a little heads-up whenever 

we get down to the 30-second mark. But as everybody knows, you 

have 5 minutes to ask your questions. And at that point, we will 

try to be a little bit liberal because of the lack of clock time to actually know when you are going to be gaveled out. But as far as that 

goes, our witnesses are here today and we certainly welcome them. 

I would like to recognize myself for 3 minutes to give an opening 

statement. 

Like many of my colleagues, I represent a rural area. My hometown has 336 people. It is a place where it takes several jobs to 

make a living, and where the incredible benefits of living in rural 

America far outweigh the challenges. 

These aren’t areas that easily attract major construction projects 

or real estate investors. There is limited housing, particularly for 

those in need of affordable rental housing. That is why the mission 

of the Rural Housing Service (RHS) is important. That is also why 

this subcommittee will dedicate time today and in the future to exVerDate Nov 24 2008 18:14 Oct 23, 2015 Jkt 095069 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\95069.TXT TERI
2 

amine the objectives, successes, and opportunities for improvement 

of RHS. 

Last week, I met with a REALTOR® from Miller County, Missouri. The bulk of her business is with RHS. This isn’t a REALTOR® making a living off of million dollar home sales. This is 

someone who has spent her adult life in my community and has 

focused solely on helping qualified borrowers in Miller County get 

into a home they can afford and have the opportunity to live the 

America Dream. 

It sounds like the process of dealing with RHS can be a big 

nightmare. There is little to no continuity across government programs, and there seems to be a significant lack of flexibility for 

RHS customers. Its systems are outdated and incredibly inefficient. 

The real estate agent from Miller County tells each of her customers to photocopy and file every check sent to RHS because RHS 

loses, in her experience, an average of at least one mortgage check 

a year per household. 

It is 2015, and we have a program that operates like it is 1975. 

A status quo isn’t acceptable. Rural Americans deserve more. RHS 

should heed suggestions immediately by GAO and increase interagency collaboration and consider consolidation where appropriate. 

It is incumbent upon this committee to ensure that RHS is also appropriately managing risk. 

RHS oversees a $120 billion portfolio in direct loans and loan 

guarantees, but doesn’t have a chief risk officer or modern underwriting systems in place. That is why GAO is currently studying 

the RHS risk management practices in addition to specific housing 

assistance programs and duplication of Federal housing programs. 

Today’s hearing will allow those concerned with the future of 

housing—members of this committee, and people across rural 

America—to better understand the challenges facing rural housing 

and the opportunities to improve a system plagued with inefficiencies. We continue to see throughout the Nation an overwhelming 

need for affordable housing, and we need to ensure that RHS is 

doing everything in its power to fill that need. 

I want to thank the witnesses for appearing today. We look forward to your testimony. 

The Chair now recognizes the ranking member of the subcommittee, the gentleman from Missouri, my colleague and friend, 

Mr. Cleaver, for 5 minutes for an opening statement. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Housing is always an important discussion for me, for a number 

of reasons. Some of them, maybe the majority of them, are from my 

own personal life experience. I often say to groups in both the 

urban part of my district, Kansas City, Missouri, and in the rural 

parts of my district, the eastern part, that there is a symbiotic relationship between urban and rural. 

I actually wish—and this will never happen during my lifetime— 

that all congressional districts could be designed where there is an 

urban and a rural component. Because I think we would have far 

fewer political conflicts. And one of the unintended blessings for me 

when the district lines were redrawn is that I was given 3 rural 

counties, counties that were previously represented by CongressVerDate Nov 24 2008 18:14 Oct 23, 2015 Jkt 095069 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\95069.TXT TERI
3 

man Ike Skelton, who had been here 34 years and was born and 

raised in one of those counties, Lafayette County. 

So I am very, very happy whenever we get into these issues. I 

think my district represents a microcosm of the Nation. I think everybody is there. 

The RHS program, which is operated by the USDA, provides the 

kinds of housing options that do not exist outside of rural America. 

The 502 Guaranteed Program offers borrowers an opportunity for 

homeownership with no money down. And it keeps rural families 

where they desire to live, in rural America. 

In my own district, 346 loans were administered in Fiscal Year 

2013. And Missouri ranked as 7th in the Nation in administering 

the Guaranteed Rural Housing Program. The Section 502 Direct 

Loan Program is one of only a few programs in the Nation which 

is targeted to low- and very-low-income rural families. 

And contrary to what perhaps many urban dwellers believe, people in rural areas are in many instances struggling like people in 

the urban core. Given the lack of credit options, the unacceptable 

rates of poverty, and the limited housing choices facing many in 

the rural areas, we must continue to keep the USDA housing programs well-funded and productive. 

In fact, I think we need additional funding. And, of course, I 

agree with the Chair that there are some things we can do better 

to streamline the programs that we are operating. But I am not so 

sure that we cannot do both: streamline the programs; and make 

sure that adequate funding is there. 

Finally—and I guess I do need to mention this just because it 

makes me feel good—the central collection and service center for 

this program operates in our State, in St. Louis, Missouri. Why did 

I mention that? Because I can, and because I want everybody to 

know. 

So I want to thank the witnesses. And I am very, very interested 

in having a dialogue with you as we move through this hearing. 

Thank you, Mr. Chairman. 

Chairman LUETKEMEYER. I thank the gentleman. 

We will now turn to our witnesses. Today, we welcome the testimony of Mr. Tony Hernandez, the Administrator of the Rural 

Housing Service at the U.S. Department of Agriculture; and Mr. 

Mathew Scire, the Director of Financial Markets and Community 

Investment at the the U.S. Government Accountability Office. 

Each of you are recognized for 5 minutes to give an oral presentation of your testimony. And without objection, each of your written statements will be made a part of the record. 

Mr. Hernandez, we will start with you. You are recognized for 5 

minutes. Welcome. 

STATEMENT OF TONY HERNANDEZ, ADMINISTRATOR, RURAL 

HOUSING SERVICE (RHS), U.S. DEPARTMENT OF AGRICULTURE 

Mr. HERNANDEZ. Thank you, Mr. Chairman. I am glad to be 

here. Chairman Luetkemeyer, Ranking Member Cleaver, and members of the subcommittee, thank you for the opportunity to testify 

regarding the work we do to support rural families and communities. 

4 

As Administrator, I have the privilege of managing programs 

that turn dreams of homeownership into reality. We provide rental 

housing that families can afford. And we develop facilities like hospitals, fire stations, and schools that are essential to a thriving 

rural America. Our housing programs only serve rural families 

with limited incomes, a segment market that private lenders and 

landlords rarely reach. 

Through mortgage lending and guarantees and rental assistance 

to private property owners, we help sustain and grow rural economies. To do this effectively, the majority of our staff lives and 

works in the areas they serve. We are a storefront operation. 

Our staff works in America’s small rural towns. They focus our 

programs on the specific economic challenges and opportunities 

within their arena. This intimate hands-on approach is what 

makes us unique and effective. We provide the support and direct 

oversight necessary to serve families with limited resources. 

We remain committed to continuous enhancements of our service 

to the public through predictability, consistency, accuracy, and enhanced communication. These four elements are guiding our process improvements at the Rural Housing Service. During my tenure, 

we are embracing innovation improvement through automation and 

streamlining. We are utilizing technologies to create efficiencies 

that benefit rural families, our lenders, our staff, and ultimately, 

the taxpayers. 

In April, we modernized the Guarantee Single Family Loan Program by implementing a paperless operation. Field offices are now 

able to transact business with approved lenders electronically. This 

has resulted in significant savings of paper, postage, and most importantly, time. We estimate that more than $4 million nationwide will be saved 

in just 1 year through paperless processing. Similarly, we have 

begun rolling out new assessment and underwriting tools in our 

multi-family program. These will improve our transfer process from 

a willing seller to a willing buyer. It will be more transparent and 

attract more nonprofits to partner with us. This will extend the 

value of the Federal investment to over 400,000 rural rental properties. 

Our goal for 2016 is providing more than 170,000 rural residents 

the assistance needed to become homeowners through 25 billion direct loans and guarantees. Multi-family housing programs request 

just over $1 billion, with the fund—the renewals of nearly 250,000 

rental assistance agreements and support over 5,000 new units. 

Funding alone cannot ensure long-term viability to address programmatic challenges. In the multi-family housing program, we 

propose administrative tools that provide management flexibility to 

better administer the program. 

In the Single Family Housing Guarantee Program, we propose a 

user fee to support technology and maintenance costs associated 

with the automation. We also request delegated loan approval authority for selected high-performing lenders. 

Although rural America lags in terms of recover from the recession, the delinquency in foreclosure rates in our housing portfolio 

remains very low. This is a testament to our prudent underwriting 

and strong loan servicing and our careful oversight. 

5 

As of March, the foreclosure rate of the guaranteed loan program 

was 1.5 percent, the lowest it has been in nearly 5 years. Even in 

the direct loan portfolio, more than 9 out of 10 families served succeeded in homeownership. Our success is due in part to the 

strength of our hardworking people in rural America. 

I believe, and I am sure that many of you do too, that rural 

Americans deserve an opportunity to own or rent a decent, safe, 

and affordable house. Since the passage of the Housing Act of 1949, 

3.8 million rural Americans have received housing loans and accumulated assets through equity in their homes. 

Our single family housing program fills a gap in the private market. We are one of the most critical resources available to help 

smaller, poorer, and more rural communities gain access to mortgage credit. There is a strong and consistent demand for our programs. We change people’s lives every day. 

Congress has had the foresight to strategically place comprehensive programs for rural America in one agency, USDA. We take seriously the charge to help address any challenges faced by rural 

residents in need of safe and affordable housing. 

Thank you for the opportunity to serve in this agency that uses 

our programs to support our affordable housing in rural America. 

I am happy to answer your questions at this time. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Hernandez can be found on page 

44 of the appendix.] 

Chairman LUETKEMEYER. Thank you, Mr. Hernandez. 

Mr. Scire, you are now recognized for 5 minutes. Welcome. 

STATEMENT OF MATHEW SCIRE, DIRECTOR, FINANCIAL MARKETS AND COMMUNITY INVESTMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE (GAO) 

Mr. SCIRE. Chairman Luetkemeyer, Ranking Member Cleaver, 

and members of the subcommittee, thank you for the opportunity 

to be here today to discuss our work involving the Rural Housing 

Service. 

My statement focuses on issues involving program overlap, improper rental assistance payments, and management of the Farm 

Labor Housing Program, as well as preliminary observations from 

ongoing work, assessing risk management in RHS’s Single Family 

Loan Guarantee Program. 

In response to a statutory mandate, GAO has identified Federal 

programs or activities that are fragmented, overlapping, or duplicative. In our 2012 report, we included an analysis of housing programs and activities and reiterated a recommendation that Congress require USDA and HUD to examine the benefits and costs of 

merging these programs that serve similar markets and provide 

similar products. 

Later in 2012, we identified opportunities to build on existing coordination efforts among the various agencies. For example, we recommended those efforts be expanded to include evaluating specific 

opportunities for consolidation that would require statutory change. 

Such an evaluation would be an important step in enhancing the 

efficiency and effectiveness of Federal support for housing. 

6 

Nonetheless, we recognize that consolidating programs carry certain implications for users, existing programs, personnel, portfolios, 

and associated information systems; thus, any evaluations would 

involve complex analyses, trade-offs, and difficult policy decisions. 

Meanwhile, RHS needs to continue focusing on improving the 

management of its ongoing programs. In this regard, I can report 

that it has taken some important steps to address recommendations in our recent studies of rental assistance and farm labor 

housing. 

With regard to the latter, RHS has improved the specificity of 

compliance review information it maintains in information systems. 

It has established deadlines for spending obligated funds. And it 

has sought authority to use the HHS new hires database to verify 

tenant income. 

But it has not completed action on other important recommendations. For example, it could do more to use existing data to target 

assistance to areas of greatest need. It could better ensure that requirements for tenant eligibility are met across the Farm Labor 

Housing portfolio. And it could complete its efforts to establish the 

use of civil money penalties to better enforce program regulations. 

In the area of rental assistance payments, RHS has sought authority to use the new hires database and taken other steps, but 

could do more to implement our recommendations. For example, it 

should seek OMB review of its move to a $100 threshold for considering a payment to be improper. It could also seek authority for 

using SSA benefits information. 

Finally, we are currently looking at the management of the RHS 

loan guarantee program for single family loans for the subcommittee. Though this work is still under way, there are a few 

preliminary observations which I would like to highlight today. 

It is important to know that RHS has in place policies and practices and key risk management functions, including underwriting, 

loan approval, and lender oversight. Also, RHS is taking steps to 

improve its risk management practices. For example, it is developing an econometric model for estimating program costs and is 

considering the appointment of a chief risk officer. 

Nonetheless, there are some areas we are exploring where there 

may be more RHS can do to manage risk, for example, by better 

defining key benchmarks, establishing procedures for its credit policy committee, and documenting lines of authority and communication across its risk management structure. 

As we complete our work, we will consider the need for recommendations addressing these and other issues. Looking forward, 

we are glad to help the subcommittee in its oversight of these important housing programs. 

This concludes my opening remarks. Thank you again for the opportunity to speak today. And I would be glad to answer any questions you may have. 

[The prepared statement of Mr. Scire can be found on page 52 

of the appendix.] 

Chairman LUETKEMEYER. Thank you, gentlemen. I will now recognize myself for 5 minutes for questions. Let me start with Mr. 

Hernandez. 

7 

Mr. Hernandez, Mr. Scire has indicated—and we have discussed 

a little bit ourselves—that with regard to some of the duplicative 

overlapping with other agencies, one of the problems with that is 

the cost to continue to have those programs be available and then 

overlap and what have you. 

So with HUD having such a large portfolio and overlapping in so 

many of the areas—I think the data from Mr. Scire’s testimony 

showed that in 2009, 74 percent of HUD borrowers also met the 

same eligibility for the RHS Single Family Guarantee Program. If 

that is the case, make the case for why we need to continue with 

RHS? 

Mr. HERNANDEZ. Great question, Mr. Chairman. 

What is nice about USDA and Rural Development is that our 

focus is just on rural folks. We only deal with people in rural America. And as you know, in rural America the salaries and the wages 

are much less. We have programs that are designed just for folks 

in rural America if they can qualify. 

Chairman LUETKEMEYER. Okay. Let me interrupt there. I understand that part. Why is HUD encroaching on your area? Should we 

back them off? 

Mr. HERNANDEZ. I have an answer for you, sir. Let me get there. 

Chairman LUETKEMEYER. Okay. I would love to hear it. 

Mr. HERNANDEZ. Okay. What we are trying to do is make sure 

we have a product that provides the right type of product for our 

folks. Our folks’ incomes are about $29,000 for the direct program, 

and about $50,000 for the guarantee. At the same time, these individuals or families cannot afford a downpayment, and FHA requires a 3.5 percent downpayment. They also have an up-front MIP 

cost, which makes it unaffordable for a lot of the customers in rural 

America. 

And that is why Congress created us. They are trying to say, do 

you have a product that really meets the needs of rural America? 

Ours does. Ours is zero percent down, with no closing costs. 

We actually have our lenders in the guarantee program certify 

that borrowers cannot get conventional lending. Some of our folks 

qualify for FHA, and we tell them they should go to FHA. But if 

you don’t have a downpayment or can’t afford a mortgage insurance premium (MIP) as high as FHA requires, that is why Congress created us, to have a product that meets their needs. 

So we both provide loans, but we have different customers. Our 

customers are those who cannot afford a downpayment or an MIP. 

Chairman LUETKEMEYER. My point though, Mr. Hernandez, was 

that 2009 data show that 74 percent of HUD borrowers also met 

your eligibility requirements. 

Mr. Scire, can you give me an explanation of that comment? 

Mr. SCIRE. What we did was look at program data from both 

RHS and FHA, including income for the borrowers and where the 

property is located. And that is what that number represents; it is 

the percentage of FHA borrowers who were in RHS-eligible—actually, the most rural RHS-eligible areas, and borrowers who also 

met the RHS income test. 

Chairman LUETKEMEYER. Okay. So Mr. Hernandez says there is 

a niche for RHS. Would you agree with that, then? 

8 

Mr. SCIRE. I think that is uncertain. And I have not seen any 

data that would demonstrate what proportion of RHS borrowers 

would be unable to obtain an FHA-insured mortgage, for example. 

So within the guaranteed program, it is less and less obvious 

with time that what RHS is offering is unique. The 3.5 percent 

downpayment is certainly something that distinguishes the RHSguaranteed product from the FHA. And if I am a rural resident 

with lower income, I might want to go with the RHS product. But 

that doesn’t mean that I couldn’t get another product with a little 

downpayment. 

Chairman LUETKEMEYER. Okay. I only have a minute left. So let 

me switch gears a little bit to the risk management portion of this. 

Mr. Scire, you indicate that there are some problems there but 

the agency is making some progress. Can you elaborate just a little 

bit? 

Mr. SCIRE. There are some things that we—of course, our work 

is still ongoing. But the first thing we wanted to look at was to see 

what sort of policies and practices they have in place. And they do 

meet a lot of what you would expect for a credit program. 

Chairman LUETKEMEYER. Well, if we have a 1.5 percent past due 

ratio—I believe that is what Mr. Hernandez testified—do we have 

a problem? 

Mr. SCIRE. I would look very carefully at those estimates. I don’t 

know whether that is an indicator of strength in the program— 

Chairman LUETKEMEYER. Let me take a timeout here. Mr. Hernandez, what is your loss ratio? 

Mr. HERNANDEZ. We have for historic losses 2.2 percent— 

Chairman LUETKEMEYER. 2.2 percent. 

Mr. HERNANDEZ. —Mr. Chairman. What I am trying to say is 

that not only do we offer a product that meets the needs, it also 

doesn’t cost the government or the taxpayers anything. 

Chairman LUETKEMEYER. Okay. Just a second. My time is almost 

up here. 

Mr. SCIRE. That is less certain. 

Chairman LUETKEMEYER. Is that an acceptable level? 

Mr. SCIRE. I think that the long-term costs of the program are 

uncertain. 

Chairman LUETKEMEYER. Okay. My time has expired. Thank you 

very much. 

I now yield 5 minutes to the distinguished—Mr. Kildee first? 

Okay. We will go with Mr. Kildee, the distinguished gentleman 

from Michigan, for 5 minutes. 

Mr. KILDEE. I started to get a little worried when you began to 

excise the distinguished part when you discovered it was going to 

be me. 

Chairman LUETKEMEYER. You would be surprised what I can determine from behind. 

Mr. KILDEE. First of all, thank you both for being here. And I do 

have a couple of questions for each of you. 

I want to start with Mr. Hernandez and ask you a bit more about 

how your agency works with partners on the ground. I think obviously the importance of the program speaks for itself. And I want 

to get into some of the details in terms of some of the analysis that 

has been done. 

9 

But I wonder if you could talk to us about how your agency collaborates with other stakeholders and industry partners on the 

ground to maximize the resources that you have? 

Mr. HERNANDEZ. Great. Thank you very much. It is a great question. In order for us to be successful, we have to have key partners 

and stakeholders. We work a lot with nonprofits. We require homebuyer education as part of it. That is why we use metrics to measure the success of the program. It is not just making a loan that 

is effective. It is how do you keep people in the home. 

And the way we do is we work with packagers or nonprofits to 

do homebuyer education. That is a growing need. In order to have 

successful programs, you have to have the right partners. 

When Congress reduced our budget level, we lost about 20 percent of our staff. Which means the staff we had to go out and find 

customers were lost. Also, the staff who actually do the loans directly were lost. 

So the good apart from that was that we had an opportunity to 

look at how we do business better. And so that is where we spent 

so much time doing what we call ‘‘business process improvement’’— 

trying to find better ways to do that. 

One of the things that came out is, how do we work with partners? And how do we work with nonprofits, so they can help us 

find additional customers so we can close loans? We call those 

packagers. We have a new rule coming out right now that will 

allow us to actually compensate nonprofits so they help us do the 

work. So we have a two-pronged strategy of trying to find the customers. We do it, they do it. We don’t have enough staff. So really, 

it requires us to have strategic partnerships. 

And with that, that is how we get better loan performance. It is 

kind of nice. Our performance right now with the Single Family Direct is 2 to 3 percent. That is very, very good performance. That 

is first-year delinquencies, sir. That means we are picking the right 

folks in the first year and they do not lose their homes, 9 out of 

10 people. These folks make $29,000, sometimes a family of 3 or 

4 makes $29,000. 

And with the partnership that we have, we are actually keeping 

them in the homes. With the guarantee program, we have the lowest—as of March, we had the lowest delinquency rates of 1.56 percent. It is the lowest in our history, very, very good performance, 

which contributes to the success of our program. Not only are we 

managing the program well, it is also not costing us. 

We are very fortunate in the guarantee program with our partners as well, it is real truth-in-lenders and nonprofits, they are 

helping us find ways to get more homeownership. So we are trying 

to find strategic partnerships, sir. That is what we do. 

Mr. KILDEE. Thank you again, Mr. Hernandez. 

Mr. Scire, I wonder if I could just get you to comment a little bit 

further on the questions about performance? You indicated that it 

was unclear to you what their performance was on the direct loan, 

or on the guaranteed program. Could you expand on that? Because 

I am a little bit confused about what data you might be looking at 

and— 

10 

Mr. SCIRE. The question was whether it was good or bad. And 

so, I would want to compare that with some other cohort to tell you 

whether or not it is relatively good or bad, so— 

Mr. KILDEE. But how would it compare to—if, in fact one of the 

potential recommendations would be to merge this program with 

other existing programs, wouldn’t it make sense before coming to 

that conclusion to compare the performance of this program— 

Mr. SCIRE. Absolutely. 

Mr. KILDEE. —to the program with which you might merge it? 

Mr. SCIRE. Absolutely. When we talk about opportunities for consolidation and coordination, we are not necessarily assuming that 

the best practices are at FHA. Some of the better practices might 

be at the Rural Housing Service. But then, why wouldn’t FHA take 

advantage of those? 

But to get back to the question about comparative performance, 

the analysis has not been done yet that would hold constant some 

of the factors that could explain the loan performance you are seeing with RHS versus FHA. And that is one of the areas where we 

think actually some of the benchmarking RHS does can be improved. Because it is important to control, for example, when the 

loan was made, where it was made, and some other borrower characteristics. That might explain more of the differences you are seeing in loan performance than the operation of the RHS program. 

Mr. KILDEE. Okay. One of the things—and this relates to not just 

this program, but others—that I would really encourage anyone 

who is analyzing these programs to look at, and this is very rarely 

attempted, is to try to measure the positive externalities, even considering the risk and potential default. But to measure the positive 

externalities of homeownership programs on housing and neighborhoods that have nothing to do with the programs directly, but actually receive pretty big benefits in terms of equity preservation and 

stability in these communities. 

We talk about all sorts of ways of measuring these programs. 

And especially in the rural environment, supporting homeownership has value that goes well beyond the recipient of the support 

that got them into a home in the first place in terms of maintaining some degree of stability in the market. I know that is difficult 

to do, but I would certainly encourage you to do that. 

And I wonder, Mr. Hernandez, if you could comment quickly on 

the loan origination process and how you think that works and results in positive outcomes for you? 

Mr. HERNANDEZ. Yes, sir. What is nice about the direct program 

is we have storefront operations. So folks can either come directly 

to us in each of our offices in the rural areas, or importantly, right 

now we are working with our partners to create what we call ‘‘electronic submission by nonprofits’’ so they can help us submit loan 

applications. 

We still underwrite them, we still make the decision. But with 

the delinquency in industry standard, anything below 5 percent is 

very good in performance. We are at 2.3 percent. We are doing very 

well. And the guarantee, our lenders do it. We try to monitor our 

lenders. And we have the lowest first-year delinquency of 1.5 percent. It is very, very good, and we are going to try to get more of 

those lenders. 

11 

Mr. KILDEE. Thank you very much. Mr. Chairman, thank you for 

the additional time. 

Chairman LUETKEMEYER. And with that, we go to the gentleman 

from Virginia, Mr. Hurt. 

Mr. HURT. Thank you, Mr. Chairman. I want to thank the Chair 

for holding this hearing. 

I come from a rural district, Virginia’s fifth district, and it geographically largest district in the State of Virginia. So we know 

rural, and we also believe that a huge part of what we need to be 

doing here in Washington is adopting policies that give greater access to capital all across Virginia, all across rural Virgnia. Because 

obviously, the people you serve need better jobs, need better income. And that is obviously a part of what I think the focus on our 

committee should be. And I think it is. 

I guess my question is, building on the chairman’s questions 

about sort of the differences between now—I guess this agency was 

created back in the 1940s—and then. And then also, the difference 

between what your agency does in the context of HUD and VA programs. 

I guess my question is, it sounds like you are supportive of the 

idea of consolidation and trying to streamline things. But from my 

understanding, the Administration began this or indicated that it 

was interested in a single family housing task force back in 2011. 

And I guess my question is, what is the progress, Mr. Hernandez, 

of this consolidation review? 

And why on earth is it taking so long to develop some clear understanding of where we can streamline these programs and make 

them serve the taxpayers, as well as the target of the benefit. Once 

you answer, I would like to get Mr. Scire’s comments as well. 

Mr. HERNANDEZ. Sure. Great. Thank you, Congressman. What is 

really nice about our program is we are in—as stated before, we 

are for rural folks only. What we are interested in doing is trying 

to create the products and programs and process that focus on delivering a better service to customers. We participate with the Joint 

Federal Housing Subcommittee looking for ways to streamline and 

align to a similar process if there is opportunity. But because we 

have different missions—HUD is urban, that is why they call them 

‘‘Housing and Urban Development.’’ We are focused just on rural 

America. 

And as you know, representing a rural district, rural is different 

than urban. You have to find different ways to provide service to 

folks because they live so far away. So how do we find an outreach 

model with partners to provide service? 

Mr. HURT. Do you support the idea that the Administration sort 

of led the way in 2011 in terms of consolidating and making these 

programs more efficient between the agencies? 

Mr. HERNANDEZ. What we support right now, sir, is providing 

better service to our customers. And right now, consolidation— 

Mr. HURT. That doesn’t sound like consolidation. 

Mr. HERNANDEZ. No. Not necessarily, sir. Sometimes you look at, 

how do you do better alignment. Some people have better core expertise. Ours, we probably have the best guarantee product in the 

country right now, better than anybody else. We have some best 

practices that maybe some other agencies should come to us. 

12 

But what we are trying to do is, how do we make a better program and reach out to customers better, are we doing a great job? 

And that is why we need your help. We have come forward this 

year to help address this. 

Let me give you an example. One of our biggest barriers, the difference between when we were created and now, is we do everything manually. Mr. Chairman, you had a great example. We are 

on manual process. Manual process, sir. Now, I have been in the 

housing industry for over 30 years. You cannot be making copies 

of checks and sending them out. 

We just came to the 21st Century on December 1st. We now have 

an electronic system for all of our guarantee programs. We save $5 

million a year. We save time. We can give a response now in 48 

hours. We couldn’t do that back in 1930. The rest of the industry 

was there. We are there now. It actually saves money. 

What is great about our program is it does not cost the taxpayer 

any dollars. It pays for itself. We have a zero subsidy program, sir. 

What a wonderful program to create opportunities, open doors, 

have strategic partnership, and it doesn’t cost the taxpayer any 

money— 

Mr. HURT. That is what they said about Fannie Mae and Freddie 

Mac. 

Mr. HERNANDEZ. I don’t know about— 

Mr. HURT. Until it cost us $200 billion. 

Mr. SCIRE. I see the light is turning yellow. If I could? 

Mr. HURT. Mr. Scire, please. 

Mr. SCIRE. There is a lot there. The task force is limited. It is 

not really looking at statutory changes that might be needed for 

doing further consolidation. So we think its charge could be expanded. 

But I think what you heard just now is part of the dilemma— 

this notion that HUD is ‘‘urban.’’ HUD does far more in rural areas 

than does RHS. So HUD would deny the notion that they are solely 

focused on urban areas. 

And the idea that there is a zero cost to this program remains 

to be seen. I would point out that there is a big difference here between the FHA and the USDA program, which is that FHA is required to maintain a reserve. So actually, it is more likely to have 

a zero cost than the Rural Housing Service. 

But the first step in any of this process is to admit there is a 

possible problem here. And so I think it would be important for 

USDA and HUD to open up to the notion that there is overlap. And 

I look forward to them entertaining that idea. 

Mr. HURT. Thank you. My time has expired. 

Chairman LUETKEMEYER. Thank you. With that, we will go to 

the ranking member, the gentleman from Missouri, Mr. Cleaver, 

for 5 minutes. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Mr. Scire, even if some shoes are cute but too small, won’t they 

hurt? 

Mr. SCIRE. Naturally. 

Mr. CLEAVER. Yes. And more is not always better, do you agree? 

Mr. SCIRE. Not always, no. 

13 

Mr. CLEAVER. Yes, yes. The point here is HUD operates more 

programs in the rural areas than the housing program that operates in Mr. Hernandez’s department. 

Mr. SCIRE. Yes. I am limiting my remarks there to the 502 Guarantee Program. 

Mr. CLEAVER. Okay. Same thing, 502, 504, 514, 516 programs. 

They have a potpourri of programs. I think the Housing Act was 

passed in 1937. HUD was created in 1965—1965, Lyndon Johnson’s Great Society; am I correct? 

Mr. SCIRE. Yes. 

Mr. CLEAVER. Do you agree then that HUD almost automatically 

leans urban? 

Mr. SCIRE. No, I don’t. I think that HUD would disagree with 

that assertion also. They see themselves as serving the entire country. So that is a distinction I think between the Rural Housing 

Service and HUD, that the Rural Housing Service is limited to the 

‘‘rural areas.’’ In fact, much of the Nation— 

Mr. CLEAVER. I would disagree with the Secretary, or you for 

that matter, that HUD does not lean urban. And I can give you 

some examples. A quick one would be— 

Mr. SCIRE. I am not sure what ‘‘lean urban’’ means actually. 

Mr. CLEAVER. Lean means that— 

Mr. SCIRE. What we base it on is where they are. And actually, 

the work that they do and the products they offer are all across the 

country. And they are not as concentrated in rural areas, but they 

actually serve more borrowers in the single family guarantee space 

than does RHS. 

Mr. CLEAVER. HUD has limited experience in administering programs that are designed exclusively for rural areas. 

Mr. SCIRE. No, that is not correct. HUD actually does have programs that are designed for rural areas. 

Mr. CLEAVER. And as I say, they have limited experience. 

Mr. SCIRE. Okay. 

Mr. CLEAVER. If I didn’t say ‘‘limited experience,’’ I apologize. But 

I meant limited experience. Do you agree with that? 

Mr. SCIRE. It is not the largest part of their portfolio, programs 

targeted to rural areas, but they do have some programs that are 

targeted to rural areas. 

Mr. CLEAVER. But limited experience in working in the 502 program? 

Mr. SCIRE. They don’t work in the 502 program at all. 

Mr. CLEAVER. So they have no experience? 

Mr. SCIRE. I am not sure what you are asking about, operating 

in the 502 program. They do operate a single family loan guarantee 

program which is very similar to the 502 Guaranteed Loan Program. 

Mr. CLEAVER. Yes. One of the things that makes Washington operate with an odor is that some people automatically on one side— 

that we are supposed to say everything that HUD is doing is great, 

and the other side is saying HUD is not supposed to be great. And 

I think that is why we don’t make the kind of progress we need. 

I think that the chairman is right. And I think we need to look 

at these programs. But what I would also like to make sure we understand and acknowledge is that what HUD does is dramatically 

14 

different than what is done in rural areas. And it was intended to 

be that way. As Mr. Hernandez said, they are the United States 

Department of Housing and Urban Development. And they lean 

urban. HUD leans urban. 

Why do we say urban America? CDBG grants, for example, in 

our State, the people who get the annual allocation are in: Kansas 

City, the largest city; Saint Louis, the second largest city; Springfield, the third largest city; and Independence, the fourth largest 

city. 

If you live in rural America, the money goes to the State, and 

you have to compete with other small communities to get CDBG 

dollars or 108 loan moneys. So we lean urban with HUD— 

Mr. SCIRE. I just don’t agree with the concept of leaning urban. 

And I don’t think that HUD would agree with that. But clearly, 

HUD does operate in the same markets that USDA operates in 

terms of single family loan guarantees. 

Mr. CLEAVER. If a HUD Secretary believes that, he or she should 

go. 

Thank you, Mr. Chairman. 

Chairman LUETKEMEYER. Thank you, Mr. Cleaver. 

I now recognize the gentleman from New Mexico, Mr. Pearce, for 

5 minutes. 

Mr. PEARCE. Thank you, Mr. Chairman. I appreciate you having 

this hearing. We share the concern of Mr. Cleaver there, that if we 

are going to do something, we remember the rural areas. Mr. Hurt 

mentioned that he represents the largest rural district in Virginia. 

My district is almost twice the size of all the State of Virginia. I 

represent more dirt than anybody here. And so I just want to keep 

you aware that we watch for the rural piece of this. 

Mr. Hernandez, you had mentioned that quite possibly there are 

some best practices in your agency which other agencies should 

come and take from you. Could you give me two or three of those? 

Mr. HERNANDEZ. One of those, sir, is how we do our guarantee 

program. We never own the property. What we do is we provide 

through our lenders guaranteed lending; we guarantee 90 percent 

of the loans, and they provide the loans. If a loan should go bad— 

Mr. PEARCE. I am just asking for the program, not the full explanation on it. 

Mr. HERNANDEZ. It would be the guarantee programs, sir. 

Mr. PEARCE. Okay. Any other ones, sir? 

Mr. HERNANDEZ. The other would be how we work with our 

packagers, how we provide— 

Mr. PEARCE. Okay. In your testimony, on page two, you talk 

about Rita Fincher of Park Hills, Missouri. Do you ever track how 

much you invest in—and I appreciate the story you are telling here 

of helping someone out of homelessness—any of those projects? For 

instance, what was the total expenditure on that one, since you 

mentioned it in your testimony? 

Mr. HERNANDEZ. I don’t remember the exact dollars. But we do 

track it by— 

Mr. PEARCE. Just roughly how much? 

Mr. HERNANDEZ. Depends on—up to $20,000. 

Mr. PEARCE. Up to $20,000. Okay. And for that, what did you actually do? 

15 

Mr. HERNANDEZ. Sometimes, we do safety. 

Mr. PEARCE. On this case. You brought it up in your testimony. 

So what were you actually doing? 

Mr. HERNANDEZ. We were actually trying to repair the roof, do 

some safety. Bathrooms, safety. Most of the time— 

Mr. PEARCE. Okay. But you are saying in here that you got her 

out of homelessness. So what did you actually do? It sounds like 

you did more than safety. I am just trying to let you tell your story 

here. 

Mr. HERNANDEZ. Sure. We helped move her into a house that she 

could own long-term. So she actually became a homebuyer, is what 

we are trying to get to. 

Mr. PEARCE. Okay. By giving her cash assistance? 

Mr. HERNANDEZ. Homebuyer education with our partner. Getting 

her to find a house that she could afford, helping her with jobs in 

the area so that she then qualifies for a house, and then getting 

her in a house. And what is nice about the program, sir, is if she 

has difficulty making the payments, we work with her to make 

sure she stays and is successful. 

Mr. PEARCE. Okay. And also in your answer to one of my questions, you mentioned that your agency is constantly looking for 

ways to streamline. Could you give me a couple of those ways? 

Mr. HERNANDEZ. Perfect, sir. What I had proposed is actually 

what we call ‘‘delegated underwriting.’’ Right now, we review every 

loan manually, one at a time. That is not where the industry is. 

What we are trying to do is just give delegated authority to the 

top-performing lenders. That will streamline the process, the decision much faster. 

The second part of that is having a way to generate dollars to 

improve technology. So we have a proposal that asks for up to a 

$50 flat fee per loan closed only. That is for automation. Another 

example would be, we are working with reducing our time for loss 

mitigation. It used to take us 230 days to assign a loan, sir. We 

do it in our processing less than 19 days. 

So with all the investment in technology, business improvement, 

retraining of staff, we are providing better service every day. 

Mr. PEARCE. Okay. Just to put it in context, you mention in your 

statement that in 2014 you helped 146,300 families, and 870 built 

their own homes. And keep in mind there are 46 million people on 

food stamps. So I don’t know exactly how many of those are in the 

rural areas. But in my rural area, our average income is about 

$30,000, $31,000, $32,000. So we have a lot of need there. 

And so when I sit here and I see that our kind of bragging point 

is that we helped 146,000 people, that feels like a small number, 

sitting up here listening. I don’t mean to diminish it, but just so 

that you would understand. 

Now, the GAO had suggested in 2010 or 2012 different changes. 

Have you all looked at those? And what have you done? 

Mr. HERNANDEZ. Yes, sir. As a matter of fact, as Mr. Scire has 

indicated, we are making significant progress in a lot of the areas 

that we have identified. We are both aligning with HUD in the 

places where it is appropriate. We are also building on our best 

practices in different places. So we are making progress. 

16 

Mr. PEARCE. Have you thought about converting your 521 program to just a voucher program? 

Mr. HERNANDEZ. We looked at that. And the reason—the way we 

are created, our focus is on rental assistance, sir. We provide a subsidy to a project. We are not like HUD. HUD has something called 

a Section 8. It costs more to do that. We are looking for a way that 

is more streamlined and effective. And we believe our rental assistance is the best way to go, sir. 

Mr. PEARCE. Thank you, Mr. Chairman. I yield back. 

Chairman LUETKEMEYER. Thank you. With that, we go to the 

gentlelady from Ohio, Mrs. Beatty, for 5 minutes. 

Mrs. BEATTY. Thank you, Mr. Chairman, and Ranking Member 

Cleaver. I am still trying to figure out if my cute shoes today hurt 

or if they are comfortable. But thank you for that. 

But thank you, Mr. Cleaver. 

I am from Ohio. And my Third Congressional District does not 

have a lot of rural. But in the great State of Ohio, maybe my colleague Mr. Stivers and others have more of that rural. 

But I come with some 20 years of experience, housing experience. 

More specifically, you mentioned Section 8 with public housing, 

working with Section 8. So I am not quite as familiar with some 

of the intimate details with rural housing, but some of the information that I received talks about how in rural housing, you can give 

direct funds to someone to buy a home. 

That would be somewhat unheard of or a disclaimer in public 

housing. If someone gave you a loan, then you wouldn’t be able to 

qualify and you wouldn’t be able to get it unless you are part of 

the self-sufficiency move out. So I see them as quite different. 

So I guess my question to you is, given the current existing 

shortage of the number of available and affordable rental units in 

both rural housing and HUD or urban housing supply, and the 

longstanding underfunding of Federal affordable housing programs, 

could you describe to me any concerns you would have with consolidating rural housing and HUD programs, as some had suggested? 

Mr. HERNANDEZ. Sure. There are concerns when you look at consolidation. What you are looking for is, what is the best way to 

meet the customer’s need? What we have found is that rental assistance and counseling is very good. About 30 years ago, they had 

a strategic decision they made. They said, we are going to invest 

in rental assistance. We have 14,000 properties, 400,000 families, 

whose incomes are between $10,000 and $12,000; 60 percent of 

those folks are elderly and disabled and live in rural America. They 

want to stay there. 

So we, with your help, created a policy and a program called 

Rental Assistance. And that program works very well. The challenge we have is those properties are coming to maturity right now. 

We have 11,576 properties whose contract with us and through 

Congress is coming to an end. That means the subsidy, which is 

30 percent of their income that they pay for rent, will go away unless Congress decides to help us find a way to address this challenge. 

So we have folks who potentially could be homeless. We are looking for the opportunity today to recommit to providing affordable 

housing and rental housing in rural America. To do that, we have 

17 

to address our maturing mortgages problem and challenge that we 

have. 

To do that, we use rental assistance. Now, the reason rental assistance is a great tool is because it is not a Section 8 product. It 

stays with the building. So we reinvest in that building, we modernize that building. We have the private sector providing the services. We are a guarantee. We provide a loan. So the private sector 

is providing the service. It is a partnership that Congress created 

here for us to provide service to them. And that is what we do 

today. 

So those owners today, we are working with them to preserve as 

many of those properties as possible. And to do that, we have to 

find ways to reduce the cost. 

Mrs. BEATTY. Are you familiar—on the HUD side, we had something like that, and it was called ‘‘Project Base.’’ And it was a 20- 

year program that was developed. And then in more recent years, 

unlike what you just described, the Federal Government took away 

project base. It was even with the homes. 

So, for example, if I owned several homes, then the public housing authority through HUD would give me the money to fix it up 

and I got it. Now, it is a lot different in terms of that. If a tenant 

does something to your home, you are responsible for fixing it up 

and there are no dollars for renovating. So there is a difference. 

When you are in urban areas—it is always quite interesting to 

me. And I don’t know if either one of you gentlemen can help me 

out. But if we are talking about rural and we are talking about 

farmers, it is a subsidy. And when we are talking about rural and 

we are talking about housing, it doesn’t have the negative connotation that as soon as we go to urban, people make it like they are 

getting a handout or that they are getting welfare. 

But you make it sound so eloquent. And oftentimes in this same 

committee when we are talking about urban or inner city, it just 

seems like a more negative connotation to lifestyles and individuals. So I would be interested in your comments on that. 

Mr. SCIRE. In the single family arena, one might ask the question, why isn’t it that a lower-income household who wants to buy 

a home in an urban area shouldn’t have access to the no-downpayment mortgage that the Rural Housing Service offers, for example. 

In the multi-family arena, I think the programs are—there are 

a lot of similarities, but they are not quite as similar as in the single family arena. And here, RHS can offer a 1 percent loan for a 

builder to construct a building and have rental assistance with it 

too. So it really makes that property possible. 

I am not so sure you could find those same kinds of provisions 

in an urban area. 

Mrs. BEATTY. Thank you. 

Chairman LUETKEMEYER. Thank you. 

With that, we go to the gentleman from Texas, Mr. Williams, for 

5 minutes. 

Mr. WILLIAMS. Thank you, Mr. Chairman. And thanks to both of 

the witnesses for being here. We appreciate it. 

Mr. HERNANDEZ. Sure. 

Mr. WILLIAMS. This committee, as you probably know, spends a 

lot of time discussing taxpayer risk. Whether that is Fannie Mae, 

18 

Freddie Mac, or rural housing programs, Congress has the responsibility at the end the day to make sure that taxpayer risk is minimized or eliminated. 

In addition, making sure programs are run efficiently and reach 

those who most need them is something that I hear from my constituents back in Texas quite a bit. 

So my first question to you, Administrator Hernandez, is the Rural Housing Service currently has a portfolio of $120 billion, and 

a 2012 GAO report entitled, ‘‘Housing Assistance, Opportunities 

Exist to Increase Collaboration and Consideration Consolidation,’’ 

found that FHA, for example, served a significantly larger number 

of rural communities than the RHS, as we talked about this morning. Yet, RHS has a much larger workforce serving a smaller population. 

So my first question would be, can you tell me how many Federal 

employees work for RHS? 

Mr. HERNANDEZ. Sure. We have about 1,500. 

Mr. WILLIAMS. Say it again? 

Mr. HERNANDEZ. RHS: I have 100 in D.C., and I have 500 in St. 

Louis. That is what I have. Now, we have other staff within rural 

development, sir. The way it works, rural development is more 

than just RHS. Rural development includes utilities, broadband, 

and small business. My RHS, I only have a total of 600 employees 

for RHS nationwide. 

Mr. WILLIAMS. Okay. Second, please help me understand how 

this workforce will change over the next decade, especially as Federal budgets get smaller and smaller? 

Mr. HERNANDEZ. What is nice about our programs is we do rural 

development. We do community development that includes more 

than just housing. As you know, we have, I think, over 11 different 

offices in Texas. We are a storefront operation, sir. So we are different than any other Federal agency. People can come to us to 

ask. 

And the way we are getting better, sir, is we are automating and 

streamlining the process. That is what makes our programs more 

effective and more efficient. So what we are trying to do is find 

ways to build on the success that we have had in the past. 

Mr. WILLIAMS. But how are you going to change? You are going 

to have to change because budgets are going to get smaller. 

Mr. HERNANDEZ. Right. And the way we have been changing is 

doing business process improvement, sir. In most every program we 

have we are trying to find a way with less staff, how do you do it 

better? That requires partnership and commitment with Congress 

and us to provide appropriate dollars for automation. Because we 

can’t be everywhere. But our customers should be able to come to 

us either through a portal and find a way to find service that way. 

So we are looking for your help to do that, both on the single 

family side and the multi-family side. 

Mr. WILLIAMS. Sometimes, like the private sector, you have to do 

more with less and give good service. 

Mr. HERNANDEZ. We have been very good at doing more with 

less. We have lost close to 20 percent of our staff in the last 4 

years, sir, and we are producing more with less staff. We can do 

even more with your help as you help us support a number of our 

19 

proposals that provide more integrity, more streamlining, and more 

effectiveness to the program. But that requires an investment and 

a continued support for affordable housing. 

Mr. WILLIAMS. Next question: I know we talked today about how 

there are more than 330,000 units maturing by the year 2024. 

Mr. HERNANDEZ. Yes; 11,576, sir. 

Mr. WILLIAMS. I’m sorry? 

Mr. HERNANDEZ. 11,576 properties. 

Mr. WILLIAMS. By 2024? 

Mr. HERNANDEZ. Yes, sir. 

Mr. WILLIAMS. Potentially. 

Mr. HERNANDEZ. Sure. 

Mr. WILLIAMS. Owners of these units must decide to move out of 

this program? 

Mr. HERNANDEZ. That is correct. 

Mr. WILLIAMS. So my question is, if fewer and fewer people are 

in the program but the need is still there, who fills the void? Can 

the private sector—you talked a little bit about the private sector. 

I am a private sector guy. I believe the private sector can do almost 

everything. Okay? 

Can the private sector come in and offer a viable option for affordable rural housing, if you come to Congress and ask for help 

with some ideas? 

Mr. HERNANDEZ. Great question. The reason Congress— 

Mr. WILLIAMS. That is why I asked it. 

Mr. HERNANDEZ. It is a great question, sir. The reason the private sector does not provide it, sir, is we are in a market that the 

private sector does not serve. It is riskier to lend in rural America. 

It is riskier for developers to be in rural America. It is hard to get 

workers in rural America. 

And that is where Congress says, we have a good idea. Where 

it says, we are going to provide a guarantee to reduce the risk, and 

encourage the private sector. What is nice about our programs is 

that it is the private sector that is operating the buildings, not the 

government. It is the private sector. 

So in partnership with the private sector, we are providing a 

service that would not be provided unless we had a partnership. So 

sir, we are building on your success on how to partner with the private sector. And we are doing it through guarantees, low-interest 

loans, and incentives to bring the private sector to provide a service 

that would not be there unless the government and the private sector partnered together. 

Mr. WILLIAMS. That is good. Don’t give up on the private sector. 

My next question is to you, Director Scire. As we heard in your 

testimony this morning, housing assistance programs are fragmented across multiple Federal agencies, some 116 in total. In 

2011, this Administration announced it was going to begin to examine consolidating homeownership loan programs. 

So my question is, in your opinion, would reducing the number 

of housing assistance programs hurt Americans living in rural 

areas, or potentially help them by offering more efficiently run programs? 

Mr. SCIRE. It has the potential to streamline the operations of 

these programs. I think that it is also important that you carefully 

20 

look at whatever change you might decide upon so that it wouldn’t 

have a detrimental effect on those with the greatest need. 

So I don’t think that necessarily reducing the number of programs somehow must have a negative effect on those who are 

served. 

Mr. WILLIAMS. So it could potentially be a positive thing? 

Mr. SCIRE. It all depends on how this is designed. But again, I 

think the first step is recognizing that there is some overlap here 

and there are some opportunities. And that is why we recommended that these task forces be expanded to include looking at 

those things requiring statutory change. 

Mr. WILLIAMS. Thank you. I yield back. 

Chairman LUETKEMEYER. Thank you. With that, we go to the 

gentleman from Pennsylvania, Mr. Rothfus, for 5 minutes. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

This is a great discussion. And I appreciate the witnesses being 

here this morning. As I look at some of the challenges our Nation 

is facing over the coming years, the need to adopt some efficiencies 

within our government agencies, much like we have been seeing 

happening in the private sector as companies in the private sector 

find redundancies and decide to put certain offices together and 

save on some overhead and a lot of further collaboration. 

As the ranking member mentioned, he would like to see a lot of 

districts have a combination of both the urban and the rural. That 

pretty much describes my district. I go right down to the City line 

in Pittsburgh, and then I stretch out to the Ohio border and all the 

way east to Johnstown, covering about 120 miles of southwestern 

Pennsylvania. So we have many of these issues, both from an 

urban perspective and from a rural perspective. 

Mr. Hernandez, I understand that HUD and VA and USDA and 

Treasury all agreed to work toward meeting some GAO recommendations and report on ways to consolidate potentially duplicative housing programs. Have the agencies gotten together to discuss the GAO recommendations? 

Mr. HERNANDEZ. Yes, sir. As a matter of fact, we meet monthly, 

looking for opportunities to align together to save money, and 

streamline process. An example of that, we are working with the 

VA right now. Since they have more foreclosures—they have about 

1,000 per month. We have only have 1,657 for the whole year. That 

is all we have. The VA has close to 1,000 every month. 

Our core experience is not in doing REO property. That is not 

what we are good at. We are good at doing loans. And so we are 

trying to partner with people who have some other core expertise. 

We are working with VA right now to see if maybe they can be the 

guys who work with us in our REO and our direct program, rather 

than us trying to recreate a new wheel. 

Mr. ROTHFUS. Have the agencies developed a list of objectives on 

where they might be able to— 

Mr. HERNANDEZ. I think what we identified—we identify the opportunities, rather than objectives; where can we find opportunities 

to work together? And they are in a number of areas: REO; appraisal; standard evaluating servicing practices; doing inspections 

of properties on the multi-family side. 

21 

We have identified opportunities. An example of where we have 

gotten together and learned together is how we do a best practice 

in using a handheld device to inspect multi-family properties. It 

came out of working together. Somebody else does it, and we say, 

how do we build on that? So we are now coming out with our new 

handheld devices to inspect multi-family properties. Because we 

don’t have enough people anymore. It takes a while to drive in 

Texas to go find those places. 

Mr. ROTHFUS. Mr. Scire, would you agree with Mr. Hernandez’s 

description? 

Mr. SCIRE. I agree that those task forces have focused more on 

how to improve processes. And I think that over time, that will result in benefits as a consequence. But they are not focusing on opportunities for consolidation. 

I think what will happen over time is that as these programs become more and more alike, because of this alignment of processes 

and so forth, it will make the transition a little easier. But I really—they are not focusing—the part of the charter is not to focus 

on these opportunities that would require statutory changes. 

Mr. ROTHFUS. Mr. Scire, you talked a little bit about improper 

rental assistance payments at RHS in your testimony. Could you 

talk a bit about what leads to improper payments going out the 

door? 

Mr. SCIRE. There could be a lot of reasons. Some are because of 

processing, that a payment is made that is incorrect. But the focus 

typically is more on the calculation of what the payment should be. 

And there it is important to understand and verify the tenant’s income. Because the payments on rental assistance, for example, are 

based in part on the tenant’s income. 

Mr. ROTHFUS. Can RHS do anything to recoup the improper payments that have gone out? 

Mr. SCIRE. There is more that it can do. And it has begun exploring hiring a contractor to go after some of these improper payments. It is a real challenge. Because each payment may not be 

that great, but there may be lots of them. 

Mr. ROTHFUS. Let me ask a final question for Mr. Hernandez. 

Again, as we look at those challenges over the next 5 to 10 years, 

and ways to have government be more efficient and accountable, if 

we ever found the office of RHS somehow under the same agency 

of HUD, are there things that folks at RHS could be teaching 

HUD? 

Mr. HERNANDEZ. There are best practices in every agency. One 

of the opportunities we have is trying to find a way to address this 

cost or improper payments. One of our proposals that we have is 

to ask for what we call the ‘‘new hires database.’’ We do not have 

statutory authority to do that. We have been trying to get statutory 

authority for years and years. We have come and asked Congress, 

please give us the authority to improve the integrity of the program. And so far, we haven’t been successful in getting that 

passed. 

Mr. ROTHFUS. But the concept is there are similar operations 

going on in the housing space and to have the cross utilization and 

collaboration that may be there, I think could lead to more effective 

government. 

22 

Mr. HERNANDEZ. Effective government is great and we all want 

that. But to do that, sometimes we have to partner together. And 

sometimes, the answer is not obvious. Consolidation doesn’t mean 

it is right. It is one of the options that people look at. The focus 

is on the customer. 

Mr. ROTHFUS. There is a lot of consolidation happening in the 

private sector. Because, again, there is a discipline of the market 

where folks in the private sector have to try to make ends meet 

with what they have. 

Mr. HERNANDEZ. Sir, we have consolidation that happens in RHS 

every year. As budgets are reduced, our same staff do this, work 

for multiple programs. It is really important that you understand 

that my staff who do RHS also do utilities, also do community facilities, also do small business. We have consolidated to provide 

services to our customers. 

Mr. ROTHFUS. I yield back. 

Chairman LUETKEMEYER. Thank you. I now recognize the ranking member of the full Financial Services Committee, Ms. Waters 

from California, for 5 minutes. 

Ms. WATERS. Thank you very much. I wanted very much to come 

in and participate in this hearing, because we have been talking 

about the problems of rural housing for a long time. But I am 

dumbfounded as I watch what we do in this committee. And I don’t 

understand why particularly those representatives who have rural 

areas in their district don’t understand how they can do more to 

help their rural communities. 

I am not going to talk a lot about consolidation, because I don’t 

think that should even be considered. As we look at the needs of 

rural housing, I think we should be talking about how do we not 

complicate their problems by consolidating in HUD with anything 

else. 

I can recall that we did a bipartisan effort when we talked about 

an exception to the QM rule for the banks that dealt with rural 

housing and providing those mortgages. And while some of us had 

been against balloon payments for years because we thought that 

disadvantaged homeowners—you made us understand why this 

was important to rural communities. We get that. 

And one of the reasons I wanted very much to be able to support 

that is because I am amazed at what a lack of reputation rural 

communities have, not only in housing, but in health care services, 

or you name it. If it wasn’t for urban legislators who fight for 

money and don’t mind being called tax-and-spend liberals, the 

rural communities wouldn’t get anything because rural representatives don’t fight for them enough. 

And I am against complicating their needs by talking about 

throwing them into HUD that does not have enough money to do 

anything. As a matter of fact, HUD has millions of people on waiting lists across the country. And so to talk about supporting RHS 

just doesn’t make good sense. 

So I want to just say to Mr. Hernandez and Mr. Scire, first, do 

you understand how consolidation is going to make it better for 

rural housing? Are you able to articulate that somehow consolidation is going to do what we have not done all these years for rural 

housing? If so, tell us right now. 

23 

Mr. HERNANDEZ. Madam Congresswoman, we are committed to 

trying to find the best delivery process we have. We believe the 

programs in USDA focused on rural Americans as the best way to 

provide services. Our focus is only on those folks who have limited 

income in rural America. Only in rural America. 

Congress will change the definition of rural America. We will do 

whatever Congress wants to do on that definition. But we are focused, laser focused on how to improve people’s lives. 

And as you know, housing is a conduit to family, neighbor, and 

community. That is why we put so much focus on it. So with Congress’ help, we are improving our processes, automating our processes. We have legislative proposals that will fix and streamline 

things, but we need support from Congress to do that. And one 

happens to be— 

Ms. WATERS. So how does consolidation help you? 

Mr. HERNANDEZ. I don’t think consolidation is going to help us 

solve— 

Ms. WATERS. That is all I want to hear. 

Sir, how does consolidation help? 

Mr. SCIRE. Well, consolidation would make this delivery system 

more efficient. 

Ms. WATERS. You have not said anything. 

Mr. SCIRE. And so— 

Ms. WATERS. Tell me what you mean. 

Mr. SCIRE. —for USDA, I think that how you consolidate makes 

a big difference as to whether it could help or hurt. And so there 

is a way to do this where it can actually have USDA provide greater focus on where the greatest need is. 

Ms. WATERS. Okay. You are in front of a committee now of people who care about these issues. Tell us how you do that? 

Mr. SCIRE. We haven’t done the analysis to tell you exactly how 

to do it. 

Ms. WATERS. Of course you haven’t. 

Mr. SCIRE. But I can easily imagine where you would have— 

Ms. WATERS. No, no, no. No imagination today. Facts. 

Mr. SCIRE. —where you would want USDA to focus— 

Ms. WATERS. I can imagine a lot of things. 

Mr. SCIRE. —its direct guarantee program— 

Ms. WATERS. Just one moment. 

Mr. SCIRE. —as it is, the guarantee program is— 

Ms. WATERS. How does consolidation help rural housing? Don’t 

give me your imagination. Give me some facts. 

Mr. SCIRE. The fact is that if USDA were able to focus more on 

those areas of greatest need, consolidation could actually— 

Ms. WATERS. Taking many back my time, Members, there it is. 

Now, for those of you—I don’t have any rural areas. But I have 

often thought it is not fair that we don’t pay the attention that 

we—I have often wanted us to come together on a good approach 

to dealing with urban and rural and being fair to both. And you 

guys are missing out because you have people with imaginations 

who come in here and tell you they could imagine something, rather than facts. 

I yield back the balance of my time. 

24 

Chairman LUETKEMEYER. Thank you. With that, we go to the 

gentleman from Kentucky, Mr. Barr, for 5 minutes. 

Mr. BARR. Thank you, Mr. Chairman. 

And I can tell you that there is an instance that affects my district where I don’t have to imagine, where there are actual facts 

that demonstrate the problem of duplication and overlap. 

As you know, if Congress had not passed a grandfather extension 

in the 2014 Farm bill, there would have been 921 communities that 

would have lost their eligibility for USDA rural housing programs, 

including two in my district: Nicholasville, Kentucky; and Georgetown, Kentucky. 

As the dynamics of rural America change, especially in the prevalence of rural communities that are near the statistical area of a 

metropolitan area, the problem becomes distinguishing between 

what is rural and what is non-rural. And we have rural places that 

are near urban areas. As a result of those changes, and because of 

the complexity of this distinction between rural and non-rural, we 

had a situation where if Congress had not intervened to clarify 

what these rural places were, these rural places would have been 

excluded from the rural housing programs for which Mr. Hernandez is part of the administration. 

So my question would be, what is the recommendation for a rural 

definition that would ensure that rural communities in metropolitan statistical areas are not excluded? And wouldn’t it be more sensible if you had a single agency responsible for all low-income housing so that as populations shift and change and rural/non-rural 

boundaries become a little bit more difficult to distinguish, 

wouldn’t it make a lot more sense if you had a single administration of these programs? 

Mr. Hernandez, as you answer these questions—you and I have 

had this conversation. The Federation of Appalachian Housing Enterprises, Inc. (Fahe), in my district, which does some good work, 

it just doesn’t make sense that Congress has to intervene so that 

certain rural places have to be eligible for one program versus 

HUD in a nearby urban area. 

Mr. HERNANDEZ. Sure. Mr. Chairman, what is nice about what 

we do is that we have what we call a ‘‘storefront operation’’ in the 

private sector, and I have been in the private sector many times. 

I love it. And I love to come back to the government because people 

like the know what is the difference between the two. 

Sometimes in government, we like to say everything has to be 

like this, one way. What is nice about the private sector is we have 

different ways to get outcomes. And Congress was very smart and 

they created agencies to provide different services. Sometimes overlapping doesn’t mean it is bad. They are trying to find what is the 

best way to provide a service. 

In working with Fahe, we are working with them because we 

need to have a partnership that helps us reach out where we cannot do anymore. So Congress decided they wanted to have a definition for rural in character. Whatever you want it to be, we will implement it. 

Mr. BARR. What does RHS do better than FHA? 

Mr. HERNANDEZ. We do lots of things better for all industry. Our 

performance right now on our single-family loans, multi-family 

25 

loans, our performance is very, very good, in some cases, better 

than FHA, and better than VA, depending on the type of product. 

But see, you can’t compare apples to apples all the time. I know 

everybody wants to. This is loan making. So that is why we use 

metrics like first-year delinquency. Ours is better than— 

Mr. BARR. And speaking of metrics, sir, do you measure how 

many 502 direct and guaranteed loans are converted into self-sustaining, non-guaranteed, non-USDA loans? 

In other words, you get people into housing with no downpayment. Are you measuring how many of those are able to refinance 

later and be self-sufficient, independent of the government? 

Mr. HERNANDEZ. We are working with folks. We have a graduation program. So if people get a direct loan, that is where we are 

the lender— 

Mr. BARR. I would be interested in those numbers. 

Mr. HERNANDEZ. Sure. 

Mr. BARR. And let me ask the GAO witness here— 

Mr. HERNANDEZ. I will get you some numbers. 

Mr. BARR. Do they provide that data? 

Mr. SCIRE. We haven’t gotten data on that. But we haven’t asked 

for it, either. 

Mr. BARR. See, you can measure success in different ways. And 

certainly, one way you measure success is you put a roof over 

someone’s head. I think that is one way to measure success. Another way to measure success, though, is that if you have a nodownpayment loan that is assisted by the government, eventually 

that individual builds up some equity, refinances, and becomes 

independent of the government. Do we measure that? 

Mr. HERNANDEZ. One of the things that we are doing right now 

is we are getting data from RHS that would allow us to do an analysis of what explains the loan performance for RHS and compare 

that with FHA so that we can see whether or not its processes actually do result in a better outcome. 

Mr. HERNANDEZ. Mr. Chairman— 

Mr. BARR. Yes, sir. 

Mr. HERNANDEZ. —part of what we are trying to do is have better technology so that we can analyze our data. That is why one 

of our proposals is asking for a flat fee so we can generate the automation and the analysis. We are actually doing this analysis right 

now we call an ‘‘econometric model,’’ how to better perform our 

mortgages, how can we slice and dice? To do that takes investment. 

Mr. BARR. But I didn’t hear the answer to the question. Do we 

measure whether or not the individuals move off of— 

Mr. HERNANDEZ. I don’t have the data for you, but I can get the 

data that we do have. 

Mr. BARR. That is important. Because to me, that is success. If 

we are moving people from dependency on the government to independent, self-sufficiency, that to me is success. That would be a 

program that I would be interested in supporting. 

The other thing I want to mention is rural America has been hit 

hard in terms of credit availability since the passage of the DoddFrank Act. The American Bankers Association did a survey in 2014 

which found that two-thirds of private sector financial lenders say 

that they would restrict lending as a result of the Qualified MortVerDate Nov 24 2008 18:14 Oct 23, 2015 Jkt 095069 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\95069.TXT TERI
26 

gage Rule. Maybe more people are dependent on these kinds of programs because we are limiting credit availability as a result of the 

Qualified Mortgage Rule in rural places. 

I yield back. 

Chairman LUETKEMEYER. Thank you. The gentleman from Minnesota, Mr. Ellison, is next for 5 minutes. 

Mr. ELLISON. I would like to thank the chairman and the ranking member. 

Mr. Hernandez, I am concerned about the lack of affordable rental housing for extremely low-income families. The experts say that 

80 percent of the families earning below about $30,000 a year pay 

more than half of their income on housing and utilities. And as you 

pointed out, housing is a platform from which family success can 

take off. And I agree with that. 

And yet, our Congress has been moving backwards. There is a 

shortage of about 7 million affordable rental homes for low-income 

families. And the House HUD budget bill wouldn’t even renew all 

the vouchers that families are using this year, let alone restore any 

of the 85,000 vouchers lost to sequestration. 

So I have a bill out there. And I would like to talk to you a little 

bit about it. It is called the Common Sense Housing Investment 

Act, H.R. 1662, that would provide an additional $20 billion a year 

for affordable rental housing. If my bill were to pass, what additional funds for Section 8 housing trust fund low-income housing 

tax credit and public housing, what would that mean for rural 

America? Are you familiar with my bill, by the way? 

Mr. HERNANDEZ. I am not, sir. 

Mr. ELLISON. Let me just tell you what we would do. We would 

convert the mortgage interest deduction into a mortgage interest 

credit, a 15 percent mortgage interest credit. There would be a cap 

of $500,000 of deductible mortgage interest. That is essentially how 

the bill would work. 

Mr. HERNANDEZ. Great. 

Mr. ELLISON. And it would—we would provide about $20 billion 

a year for affordable rental housing. 

Let me just make this observation. The United States of America 

spends a whole lot of money on housing. Mostly it is for the wellto-do in the mortgage interest and homeownership area. We literally subsidize people who don’t need it and we talk about consolidation for people who do. 

And so I guess if we were to convert mortgage interest deduction 

to a mortgage interest credit, cap it at interest on mortgages of 

$500,000, 15 percent mortgage interest credit, we would have extra 

money to put into housing. We wouldn’t be subsidizing the incredibly well-to-do anymore. But they still would get something out of 

it because it would be a mortgage interest credit. 

How would it help rural housing if we had $20 billion more for 

affordable rental housing? 

Mr. HERNANDEZ. Mr. Ellison, one of the opportunities we have 

is—the rental assistance we provide for rental housing needs is so 

high that our budgets allocation is just minimal. We are barely 

meeting it. So we have lots of folks who are rent-burdened, as you 

have indicated. 

Mr. ELLISON. Yes. 

27 

Mr. HERNANDEZ. They are paying more than their income, which 

means they have to make other choices. They cannot save for 

school, they cannot pay for health care, or other things like pharmacy or food. So anything that provides the opportunity for folks 

to have more discretionary dollars so they can make better choices. 

So in your bill you may want to look at where is the rental assistance part— 

Mr. ELLISON. Right. 

Mr. HERNANDEZ. —how do you support rental assistance. Because that is a key part for us, is rental assistance. We do not do 

Section 8. We only do rental assistance. And our vouchers are different than HUD’s, because we believe in a different way to provide 

assistance to folks in a different way. 

Mr. ELLISON. Right. 

Mr. HERNANDEZ. So without reading your whole bill completely, 

I think it would provide some assistance to us to provide more 

services to folks in rural America who need help. 

Mr. ELLISON. Yes. Let me tell you, there are more than, I 

guess—I think you might have pointed out already that loans—you 

have loans on more than 11,500 properties representing nearly 

333,000 units that will mature by the year 2024 that—and many 

may be lost and you provide housing to families on wait list, assist 

with the oversubscribed 515 program. 

Mr. HERNANDEZ. That is true. 

Mr. ELLISON. Yes. 

Mr. HERNANDEZ. Mr. Ellison, we have approximately 6 million 

units where people are overburdened. And they are paying more for 

their rent than they can afford right now. And they do it because 

they have a nice play to live. That is what we are trying to do, is 

get Congress to recommit to affordable housing in rural America. 

Mr. ELLISON. One thing about it, I am a rural legislator. My family is rural in background. My grandfather comes from a farm in 

Georgia, my mother comes from a farm in Louisiana, and I am 

from Minnesota. 

And I can tell you that if you don’t provide some sort of a good, 

solid program in rural America, folks will move to the urban area. 

They leave the housing choice they may want, and it just leads to 

overcrowding in the urban areas. So everyone needs to be about 

health and rural housing so people can be supportive. 

So that is one reason why, in keeping with what Ranking Member Waters said, we urban Members are—first of all, a lot of us are 

directly connected to rural America. But more than that, we want 

people to be able to live where they want to live. You know, some 

people like hearing the birds sing out there in rural America. And 

that is where their livelihood is. So thank you very much, Mr. Hernandez. 

Chairman LUETKEMEYER. Thank you. That concludes our first 

round of questioning. I have had a request for a second round. I 

am going to defer my questions to the end. 

And with that, we will go to the ranking member of the subcommittee, Mr. Cleaver, for his questions in the second round. 

Mr. CLEAVER. Thank you, Mr. Chairman. I may not take the full 

5 minutes. 

28 

I have been on this committee since 2004, and on this subcommittee since 2004. And on May 25, 2011, Peter Carey, the 

President/CEO of Self-Help Enterprises, and a board member of 

the Housing Assistance Council, and a board member of the National Rural Housing Coalition, in testimony he provided to this 

committee said, ‘‘HUD has limited experience in administering programs directed exclusively to rural areas. It is likely that rural 

housing programs would be force-fit—he probably knew that somewhere in the future somebody would do the shoe analogy—it would 

be force-fit into the HUD delivery system, which would change the 

ability of those programs to reach rural communities. HUD lacks 

the administrative system to deliver effective rural programs. Its 

programs’ consistency and interest lie elsewhere.’’ 

Do either of you disagree with that? 

Mr. HERNANDEZ. I believe that USDA is focused on doing rural 

services. And so what we are trying to do is find ways to streamline our processes, improve our focus, and capitalize on our storefront operation, which makes it nice. We have offices that work directly with Tom Crew in—they are there. So that is Tom Fern and 

the State director. So we have a State director in every place. That 

is a storefront. That is a retail operation. 

Other Federal agencies don’t do it. That doesn’t mean it is 

wrong. I am just saying we have developed, with Congress’ input, 

a way to reach out to customers and solve it. So you may not just 

want a cookie-cutter delivery system. And that is what consolidation is about, cookie-cutter, everybody should be the same. We have 

found a way that provides better service, changes people’s lives, 

and uses the tools that you have given us. 

And that is why we come back and say we need some additional 

tools. Because we have a delivery system that is changing people’s 

lives. We can measure the performance. We can measure the success. But to do that, we have to change. We are proposing how to 

change. But to do that, we need your help to enhance our delivery 

system. We are focused in rural America, with storefront operations and products that meet the needs of those with limited income. 

Remember, these folks are only making $29,000. For rental housing, it is $11,000, $12,000. These are limited income folks who have 

smaller choices. And that is why we partner with the private sector, to reduce the cost on us. The guaranteed program, we have 

zero cost to the taxpayer. What a great program. And we are using 

the private sector to make it happen. We have a specific role. 

So what you have asked us to do is to be creative, be strategic, 

and find ways to partner. And we are doing that, but we need your 

help on some legislative proposals. Our proposals, there are about 

seven of them in there. We would love for you to look at it. 

If you only pick two out of the multi-family, the ones we would 

like—they are all important. But if you only pick two, we need the 

partial budget authority. When Congress goes to a continued resolution, we don’t get dollars. That means we actually distribute close 

to $90 million every month in rental subsidy. But if you don’t give 

us the authority to do partial year contracts, by law you tell us we 

have to fund the whole year by law. So we are asking for some 

29 

management flexibility to do that. To do that, you have to change 

the law. 

The other thing we are asking for is access to the new hires database. We want the program integrity to be better. You tell us you 

want it to be better. Here is the opportunity. Support legislation 

that allows us the authority to access data that is there. It is sitting there. We are just waiting to get to it so we can improve the 

integrity of the program. We need your help there. 

On the single-family program, we need help to do delegated authority to streamline the process, make it easier for the private sector to provide service so we can monitor and provide good oversight. We can’t do it without you. Oh, we need your help and this 

partnership is so important. This is the great time for Congress to 

recommit for another 30 or 40 years of affordable housing in rural 

America. 

Mr. CLEAVER. Good sermon. I mean, I am into sermons. 

Given the current existing shortage and the number of available 

and affordable rental housing units in both RHS and HUD and the 

longstanding underfunding of Federal affordable housing programs, 

what are your concerns if there is some kind of a consolidation 

brought forth? 

Mr. HERNANDEZ. My first concern is who would be hurt, rather 

than served better. So I looked back at my maturing properties. I 

have 11,576—400,000 households. That is a lot of people. Consolidation, whatever you call it. 

And I am trying to get us not to think about a solution before 

you define the problem. A lot of times people jump to the solution. 

Apparently, you think consolidation is a solution. I am not sure 

what the problem is yet. To me, the problem is, how are we serving 

customers better? 

So my first concern is, are we going to be better off than we were 

before? And so you have to rely on what is the best strategy, what 

is the outcome we are looking for. I am looking for better, safer, 

and more decent housing in partnership with the private sector. 

We just guarantee loans. We don’t manage these properties. So 

who is going to be hurt? 

So, define the problem better. I think Congress has the opportunity to help better define what you are trying to achieve here. 

And I want to be a partner to help you define the problem so we 

can collectively find a better solution. 

Mr. CLEAVER. Thank you, Mr. Hernandez. 

Chairman LUETKEMEYER. With that, we go to the gentleman 

from Kentucky, Mr. Barr, for a final question. 

Mr. BARR. Thank you, Mr. Chairman. 

So back to Mr. Hernandez’s testimony about underfunding of 

rural housing. We know the impact of the Budget Control Act and 

sequester. Between 2010 and 2015, the overall USDA budget has 

been cut by about 14 percent. Rural housing loans and grants have 

been cut by $208 million, or about 54 percent, during that time period. 

These figures actually though would have been far worse for 

rural housing if Congress had actually enacted the President’s 

budget. The President’s budget request consistently proposed significant cuts that even exceeded the cuts that happened during the 

30 

sequester. In fact, this year President Obama proposed an additional $27 million in reductions above and beyond what we are already looking at. So with our country facing an $18 trillion national debt, I certainly agree we have to get our fiscal house in order and we have 

to be fiscally responsible about deploying these taxpayers resources. So I am—as a fiscal conservative, I am very sensitive to 

that. 

But my question is, given your testimony here today, why do you 

think the President and his budget people put such a low priority 

on rural housing? 

Mr. HERNANDEZ. Mr. Chairman, we place a high priority on 

housing. As a matter of fact, as I stated before, housing is a conduit 

to family, neighborhood, and community. So Congress reduces our 

budget. Whatever you give us, we would administer. Or if you want 

to give us more dollars, we will administer those dollars. And the 

President is very committed to doing affordable lending— 

Mr. BARR. But the President’s budget proposes to cut it far more 

than what we have. 

So my question to you is why are your priorities not the same 

as the President’s priorities? 

Mr. HERNANDEZ. Our priority is to administer the dollars that 

are given to us. Whatever dollars you give me, I will administer, 

sir. 

Mr. BARR. Let’s go back to this duplication issue. Because as I 

pointed out with my question earlier about Georgetown, which is 

a suburb of a metro area, and Nicholasville, which is a suburb of 

a metro area, without congressional intervention, they would have 

been reclassified and would have been ineligible for your programs 

in rural housing. We had to intervene because we wanted to keep 

those communities eligible for rural housing. But obviously, because of changes in population, you are getting overlap. And I don’t 

think I heard your answer to the question. 

If you have one agency, you don’t have to have Congress doing 

this song and dance and switching communities back and forth between rural and non-rural. You have one administration. Isn’t that 

more efficient? Isn’t that a better steward of the taxpayer resources? 

Mr. HERNANDEZ. No, it is not. 

Mr. BARR. I know you say we don’t want a cookie cutter. And 

maybe you are right. Maybe it is your agency that does a better 

job. You talk about how you all are innovative and you are doing 

a better job. And your testimony to me earlier was you are doing 

better than FHA. So maybe it is your model that should replace 

FHA. Is that your testimony? 

Mr. HERNANDEZ. Mr. Chairman, what we are trying to do is we 

have to—don’t look at agencies first. What you do is you look at 

customers. What customers are you trying to focus on? What we 

have learned great from the private sector is if you focus on the 

customer first before you reorganize, consolidate, focus on the customer. Let me just—Mr. Chairman—our customers are different 

than FHA. We compare to FHA because we don’t have any other 

comparison. FHA does a great job. But their are customers are different than ours. 

31 

Mr. BARR. Okay. So let’s—and my friend, Mr. Cleaver, was asking a great line of questioning earlier about HUD and whether they 

serve rural communities or not. 

My question to you is, since it is different and you need different 

models, should HUD and FHA get out of rural lending? 

Mr. HERNANDEZ. Should we get out of it? 

Mr. BARR. Should FHA get out of rural lending? 

Mr. HERNANDEZ. I only talk about USDA because that is what 

I know. You might want to FHA about their programs. We do more 

than housing. We are a community development agency just for 

rural America. So I do jobs, housing, transportation, education, 

health care, and public safety. Does that mean you want to consolidate to all one agency, just one? No. What you try to do is, who 

can deliver the service better to the customer. That is what the private sector has done so well. 

Mr. BARR. If you can do it better, why is FHA in the rural places 

of America? 

Mr. HERNANDEZ. They offer services to different customers, sir. 

Our customers cannot qualify— 

Mr. BARR. Okay. Mr. Scire, you— 

Mr. HERNANDEZ. Wait. I am not done yet— 

Mr. SCIRE. They serve the same customers. 

Mr. HERNANDEZ. No. What we are going to talk about— 

Mr. SCIRE. I think what we haven’t seen is— 

Chairman LUETKEMEYER. The gentleman from Kentucky controls 

the time. 

Mr. BARR. Sorry. Mr. Scire, I know you wanted to jump in on 

that. 

Mr. SCIRE. We are hearing a little bit of a fantasy here, that 

there are differences in the customers who are served between 

FHA and the Rural Housing Service in terms of single family. 

What we saw was that the FHA is in rural areas. They are serving 

the same income base. 

What we don’t know and what USDA does not know is how 

many of the borrowers it has could qualify for an FHA-insured 

mortgage. So is there really something needed here that they are 

offering—and I am just talking single-family guaranteed right now. 

And RHS can’t tell you that statistic because it doesn’t know. 

And so that is what we are trying to get at here. And I agree 

they should start out with, how can you serve housing needs first? 

But you have to begin at the basis of understanding who you are 

serving. And I think there is a bit of a denial going on here as to 

who RHS is serving. 

The storefront notion, by the way, is a bit of a fantasy, as well. 

Borrowers who are trying to get an RHS-guaranteed loan and an 

FHA-guaranteed loan are going to the same place. They are not 

necessarily going to a USDA office. The direct single family is different. The multi-family is different. I don’t advocate one, and GAO 

does not have the answer to how to do this. We think the agencies 

should take a serious look at opportunities for consolidation. Right 

now, they are not. 

Mr. BARR. Okay. My time has expired. 

Thank you, Mr. Hernandez. Thank you, Mr. Scire. 

Chairman LUETKEMEYER. Okay. Mr. Pearce has a question. 

32 

Mr. PEARCE. Thank you, Mr. Chairman. 

Mr. Cleaver mentioned how long he had been on the committee. 

And I have been here almost the same length of time. And Mr. 

Hernandez, I just had to make the comment that I have heard a 

lot of witnesses, but I think you just outpreached the preacher. And 

we will watch the instant replay to see if you actually finished 

ahead of him. But you gave it a good run. 

My question for you, sir, Mr. Hernandez, is in the whole definition of ‘‘rural’’ that the Consumer Financial Protection Bureau 

(CFPB) came up with, did they approach you when they had that 

definition? Because my State was severely impacted. We have one 

county that just has one road going north and south and it is kind 

of a square county and the town sits right in the middle of it. So 

you have about 2,500 people or something in the town and about 

10,000 square miles. And they put them in the same category as 

New York City. And so I thought that maybe wasn’t slicing the pie 

quite well enough. 

And so, Mr. Cordray and I dusted it up quite a bit. But did they 

ever approach you? 

Mr. HERNANDEZ. I was not privy to any of those discussions on 

that. 

Mr. PEARCE. Did you approach them? In defense of your customer base, did you write a letter and say hey, this is crazy? That 

is what I said, but you might say it in better terms. 

Mr. HERNANDEZ. What Congress has asked us to do is use a 

number of tools to help you determine rural— 

Mr. PEARCE. I guess my question is, did you try to get into that 

discussion? Because it was a fairly significant disadvantage into at 

that rural areas because they got defined completely differently. 

When you describe your customer, who is your customer? 

Mr. HERNANDEZ. It depends on the program. The first program, 

if you look at the direct program, those folks are only making 

$29,000 or less. We have a great program— 

Mr. PEARCE. I don’t need all of the definitions. The customer is, 

in your mind, the one who is receiving help from you? 

Mr. HERNANDEZ. Yes. 

Mr. PEARCE. Yes. 

Mr. HERNANDEZ. That could be a single family person, it could 

be a multi-family household. 

Mr. PEARCE. Yes. But as a person who represents 600,000, 

700,000, which we all do, I would just encourage you to pencil in 

to your definition of customer those people who pay the bills. 

Mr. HERNANDEZ. Oh, we do, sir. 

Mr. PEARCE. Oh, you do? 

Mr. HERNANDEZ. Sure. 

Mr. PEARCE. I haven’t detected that in your testimony. I have 

been on your side on a lot of stuff today here. But I really think 

that it is a one-dimensional look. And as somebody who is just trying to find the best, most effective way to govern— 

Mr. HERNANDEZ. Sure. 

Mr. PEARCE. —it is not as effective when you sit here and say 

that the recipient is a total consuming view that we have. 

Now, my last question is—and thank you, Mr. Chairman, for indulging me through this—are there disadvantages in the proVerDate Nov 24 2008 18:14 Oct 23, 2015 Jkt 095069 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K:\DOCS\95069.TXT TERI
33 

grams? Have you found harm done in any of the programs where 

you try to help people and instead harm results? 

Mr. HERNANDEZ. Harm? 

Mr. PEARCE. Let me help you out. And I will finish up with this. 

Because I really do think it is important for you to think about this 

other thing. And I think it was one of your programs. The first year 

I was in Congress, in 2003, we went down to Las Cruces, New 

Mexico, went about 40 miles south of there and gave a check to a 

woman. And it came from USDA, about $4,000. She had the downpayment. 

About 4 years later she came up and said, if it hadn’t been for 

you—she said, I had a home before but I was encouraged to buy 

a home that I could never pay for. And I only could do it because 

of the government guarantee, and now I have lost everything. 

So just as we are running down that pathway—and I appreciate 

the prose that you use when you talk about your programs. But understand that there is a downside to that when we are encouraging 

people to do something they cannot do. 

So I thank you very much, Mr. Chairman, I appreciate the— 

Chairman LUETKEMEYER. Thank you. Let me just wrap up here 

with a few comments and a couple of questions. 

Mr. Hernandez, I have heard from a number of people in the 

housing industry who use RHS services. They have concerns, and 

I think it would be beneficial for you to meet with them. Would you 

be willing to do so? 

Mr. HERNANDEZ. I would love to meet our partners and stakeholders. 

Chairman LUETKEMEYER. Okay. I have some requests, and they 

are kind of concerned that they haven’t been able to meet with you. 

So if you would be willing to do that, I would certainly pass that 

on. 

Also, I think to Mr. Barr’s line of questioning, I don’t know that 

we want to do away with anybody. But I think any time you 

have—and GAO has eloquently talked about this and documented 

it. Any time you have a plethora of different programs and policies, 

some of which—in fact, with HUD they don’t even know how many 

they have and what they have—overlap, there are bound to be 

some inadequacies, there are probably some holes, and some people 

are falling through the cracks. 

I don’t know why it wouldn’t be something we shouldn’t consider 

to try to figure out how we can provide a better safety net, a better 

program, whether it is to consolidate, whether it is to come up with 

a whole new group. Our job here is to find ways to streamline the 

process, to find dollars. And you have talked about that. 

One of the questions I have is when you talked—somebody alluded to it a while ago too, when you talk about the employees, if 

you proportion out the employees versus what HUD has, you guys 

are about double-staffed compared to what they are. Are you looking to try and do away with some of these employees? 

Mr. HERNANDEZ. We have been— 

Chairman LUETKEMEYER. Versus the amount of money that you 

are overseeing. Let me put it that way. 

34 

Mr. HERNANDEZ. We are trying to make sure we have the right 

staff in the right place to provide better service. And that is why 

we focus more on business process we are engineering. 

So we are looking for ways to focus on the real problem, which 

is how do you deliver a service— 

Chairman LUETKEMEYER. No, that is not my question. You have 

been very good today with going around the answer that we are 

trying get to and get to your speech. 

My question is, are you looking for ways to trim your employee 

base? 

Mr. HERNANDEZ. Looking for—no, I am not looking for ways to 

trim employees. I am looking for ways to provide better service. 

Where should I have— 

Chairman LUETKEMEYER. So you are not looking to provide the 

same service with fewer employees? 

Mr. HERNANDEZ. We do that today, sir. 

Chairman LUETKEMEYER. That is the problem. See, that is the 

problem, Mr. Hernandez. You are not listening to us. 

Mr. HERNANDEZ. Okay. 

Chairman LUETKEMEYER. We are looking to try to find a way to 

deliver the same product or a better product with the same number 

of people, and then for it to be at less cost. And you haven’t said— 

you haven’t told us that yet today. 

Mr. HERNANDEZ. Let me share how we are doing that, sir. We 

have asked for automation. We have a number of proposals to 

change the way we do business. A lot of times people say do this 

differently. And I say wait a minute, before you start— 

Chairman LUETKEMEYER. You just told me, though, you weren’t 

looking to cut people. 

Mr. HERNANDEZ. I am looking at where is— 

Chairman LUETKEMEYER. I am looking at ways for people who 

can be innovative and find ways to reduce your staff to be at the 

same levels of FHA. That is our—yes, HUD. That is my question. 

Because— 

Mr. HERNANDEZ. The question I think you are trying to get me 

to answer is how do you best allocate resources and deliver goods 

and services. That is what we are doing. We are evaluating business processes— 

Chairman LUETKEMEYER. Let me ask Mr. Scire. 

Mr. Scire, do you understand my question? We seem to have— if you look at the total dollars, $120 billion versus a trillion, the 

number of employees, 600 versus I think it is 2,400 and something 

here. It looks like they have about twice as many people as they 

need compared to the number of dollars that are invested. Is there 

something inherent in there that is a reason for that? 

Mr. SCIRE. This is part of the reason why we make a recommendation for them to look at opportunities. Because there is 

somewhat of a legacy here, where RHS used to have far more of 

its activity in direct lending, which does require a lot of personnel. 

But they are moving more and more and more toward guaranteed 

lending, just like FHA. You require fewer people to do that. 

Chairman LUETKEMEYER. Okay. I know that you have a lot of 

recommendations in your report. Mr. Hernandez, have you read the 

reports that— 

35 

Mr. HERNANDEZ. Yes, sir. 

Chairman LUETKEMEYER. Are you going to implement some of 

those recommendations? 

Mr. HERNANDEZ. Yes. We are partnering with GAO to make sure 

we identify the right ones to implement. What is nice about his report is he talks about how there is overlap, not necessarily duplication. So where is the appropriate overlap? Where should it be? Just 

because you have it, doesn’t mean it is wrong. 

Chairman LUETKEMEYER. Okay. Mr. Scire, are they working with 

you? 

Mr. SCIRE. Yes, I thought so up until this moment. I think that 

all our recommendations should be implemented, not just some. So 

I— 

Chairman LUETKEMEYER. Mr. Scire, as someone who has spent 

some time on the other side as a banker, there are times when recommendations don’t fly. But quite frankly, I understand your point 

of view. 

But my question basically is to Mr. Hernandez and to you. Are 

you guys working together to try and find some ways to— 

Mr. SCIRE. Yes, absolutely. 

Chairman LUETKEMEYER. —find efficiencies, cut out the waste? 

Because I understand there is always going to be some parochial 

interest here. There is not going to be— 

Mr. SCIRE. We have the same objective here. And that is how to 

improve the way government works. I think that we are a little 

less parochial, and so we can look across agencies and see where 

there are opportunities. And that is where we think that it is time 

to take a more serious look at those possibilities. 

Chairman LUETKEMEYER. And I think that is what we are trying 

to do here, to find ways to get rid of the overlap, get rid of the 

waste, and find ways to use the same amount of dollars more efficiently and effectively. 

With that, we have been graced with the presence of the gentleman from Texas, the distinguished Mr. Green, if you would like 

to ask some questions, or you can make a comment or two, sir. 

Mr. GREEN. Thank you, Mr. Chairman. I think I am making history today. I have located myself in a bipartisan position. 

Chairman LUETKEMEYER. It graces you. It looks good on you, sir. 

Mr. GREEN. With your consent and permission, may I stay, or do 

I need to go over and find my nameplate across the room? Am I 

okay? 

Chairman LUETKEMEYER. No, you are fine. You are the new and 

improved version of Mr. Hurt. How is that? 

Mr. GREEN. I am very comfortable. 

Chairman LUETKEMEYER. Go right ahead. 

Mr. GREEN. Thank you very much. And I thank the witnesses 

and the ranking member as well, Mr. Chairman. I regret my being 

tardy, but I did have another event that necessitated my attention 

with the Secretary of Labor and it took a little longer than we 

thought it would. 

I am one who probably does not represent what would be styled 

a rural area in the United States of America. Houston, Texas, for 

the most part is what I represent, and a couple of other smaller 

36 

cities. But I am very much concerned about people. This is my 

country. I love my country. 

And I think these programs that we are discussing are programs 

that have been implemented to be of help to people. They did not 

occur haphazardly, capriciously, and arbitrarily. They were 

thoughtful programs and I think that they still have some meaningful rewards that we can reap from them. 

But I do understand that we have had some level of improper 

payments with RHS. And my concern has more to do with what 

corrective measures can we take, as opposed to whether we should 

eliminate programs. I have found that acquiring these programs is 

much harder than eliminating them. Once they are gone, they are 

gone forever for the most part. So would you kindly give me a response? 

Mr. HERNANDEZ. Sure, Mr. Green. What we are trying to do is 

try to find ways to prevent what we call ‘‘improper payments’’ first. 

And that is why one of our proposals is to do what we call the new 

hires database. So we are asking for authority to access a database 

that is operating today. HHS has this database. If we can address 

that, access it, we can make better decisions at the property level. 

It is not us, it is not our staff who will do it. It is the private sector 

property managers who use the database to make sure folks are 

not getting into properties for which they are not eligible. So I am 

trying to prevent it on the front end. 

Now, sometimes people get through and are not eligible. We find 

them on the back end. So we are working with some of the recommendations that GAO has given us to try to better perform on 

the back end side; putting better regulations, better training, looking at the calculations differently and better to make sure we identify the problems we find. 

Most of my life, just like yours, we try to prevent problems. And 

so that is why our legislative proposals say, would you please give 

us statutory authority so we can have access to the new hires database. That is one of their recommendations. We are trying to follow 

the recommendation. For 4 or 5 years, we have been asking for 

this. And every year the report comes back saying that they are 

still not doing it. It is true, because we can’t get the legislative authority to access the database. We need your help. We want your 

help so we can perform better there. 

So please look at that legislative proposal and see if you agree 

with it this year. We are willing to spend time with you to help 

educate you on how it works. Together, we will show you the benefits of that legislative proposal so we can perform better on the 

multi-family side. 

Mr. GREEN. Have you requested elimination as a solution? 

Mr. HERNANDEZ. I don’t understand the question, sir. 

Mr. GREEN. Elimination of a program. 

Mr. HERNANDEZ. No. What we have asked for is, how we improve 

different programs and streamline the process, partner more with 

different Federal agencies, align more to reduce the cost, and use 

technology in a way that allows us to do more with less people. 

Because we have less. We have 20 percent fewer people than we 

had before. So we are doing more with less. But to do that, we have 

to have some technology to replace that. 

37 

Mr. GREEN. Thank you. And I thank you, Mr. Chairman. I do 

want to simply say this in closing, Mr. Chairman. I don’t want anyone to assume that I have realigned myself by taking a certain 

seat. I am still the same Al Green who arrived here in 2005. 

Thank you much. 

Chairman LUETKEMEYER. Duly noted, sir. 

With that, we certainly, again, thank the witnesses for their testimony today. Again, we are on a fact-finding mission here with 

this committee with regard to what is going on with rural housing. 

Part of the job of Congress is not just to legislate, but also to provide oversight. 

And part of that oversight means we are responsible for looking 

into the activities of the different branches of government, or in 

areas where this committee has jurisdiction, making sure things 

are done properly, making sure that the Department is being a 

good steward of the taxpayers’ dollars, and that the laws and rules 

are being properly adhered to and administered. 

So, again, don’t take anything we say out of context. We are just 

trying to do our job. With that, again, thank you for being here 

today. 

The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to these witnesses and to place their responses in the record. Also, without objection, Members will have 5 legislative days to submit extraneous 

materials to the Chair for inclusion in the record. 

With that, this hearing is adjourned. 

[Whereupon, at 11:46 a.m., the hearing was adjourned.] 

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