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HOUSING OPTIONS IN THE AFTERMATH

OF HURRICANES KATRINA AND RITA

HEARING

BEFORE THE

SUBCOMMITTEE ON 

HOUSING AND COMMUNITY OPPORTUNITY

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

DECEMBER 14, 2005

Printed for the use of the Committee on Financial Services

Serial No. 109–68

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

ROBERT W. NEY, Ohio 

SUE W. KELLY, New York, Vice Chair 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

JIM RYUN, Kansas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

VITO FOSSELLA, New York 

GARY G. MILLER, California 

PATRICK J. TIBERI, Ohio 

MARK R. KENNEDY, Minnesota 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

CAMPBELL, JOHN, California 

BARNEY FRANK, Massachusetts 

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

DARLENE HOOLEY, Oregon 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

HAROLD E. FORD, JR., Tennessee 

RUBE ́ N HINOJOSA, Texas 

JOSEPH CROWLEY, New York 

WM. LACY CLAY, Missouri 

STEVE ISRAEL, New York 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

JIM MATHESON, Utah 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

DEBBIE WASSERMAN SCHULTZ, Florida 

GWEN MOORE, Wisconsin, 

BERNARD SANDERS, Vermont

Robert U. Foster, III, Staff Director 

(III)

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

ROBERT W. NEY, Ohio, Chairman

GARY G. MILLER, California, Vice Chairman 

RICHARD H. BAKER, Louisiana 

WALTER B. JONES, JR., North Carolina 

CHRISTOPHER SHAYS, Connecticut 

PATRICK J. TIBERI, Ohio 

GINNY BROWN-WAITE, Florida 

KATHERINE HARRIS, Florida 

RICK RENZI, Arizona 

STEVAN, PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

MICHAEL G. FITZPATRICK, Pennsylvania 

GEOFF DAVIS, Kentucky 

CAMPBELL, JOHN, California 

MICHAEL G. OXLEY, Ohio 

MAXINE WATERS, California 

NYDIA M. VELA ́ ZQUEZ, New York 

JULIA CARSON, Indiana 

BARBARA LEE, California 

MICHAEL E. CAPUANO, Massachusetts 

BERNARD SANDERS, Vermont 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

ARTUR DAVIS, Alabama 

EMANUEL CLEAVER, Missouri 

AL GREEN, Texas 

BARNEY FRANK, Massachusetts 

(V)

C O N T E N T S 

Page 

Hearing held on: 

December 14, 2005 ........................................................................................... 1

Appendix: 

December 14, 2005 ........................................................................................... 33

WITNESSES 

WEDNESDAY, DECEMBER 14, 2005

Montgomery, Hon. Brian D., Assistant Secretary for Housing/Federal Housing 

Commissioner, Department of Housing and Urban Development, accompanied by Hon. Orlando J. Cabrera, Assistant Secretary for Public and 

Indian Housing ..................................................................................................... 7

APPENDIX 

Prepared statements: 

Ney, Hon. Robert W. ........................................................................................ 34

Montgomery, Hon. Brian D. ............................................................................ 36

Statement of the National Housing Coalition ................................................ 52

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Hon. Barney Frank: 

Letter from Steven B. Nesmith ....................................................................... 65

Letter to Alphonso Jackson ............................................................................. 67

(1)

HOUSING OPTIONS IN THE AFTERMATH 

OF HURRICANES KATRINA AND RITA 

Wednesday, December 14, 2005

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HOUSING AND

COMMUNITY OPPORTUNITY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 2:20 p.m., in room 

2128, Rayburn House Office Building, Hon. Robert W. Ney [chairman of the subcommittee] presiding. 

Present: Representatives Ney, Waters, Velazquez, Lee, Scott, 

Frank (ex officio), Davis of Alabama, and Cleaver. 

Also present: Representative Watt. 

Chairman NEY. The House subcommittee meets this afternoon to 

continue its discussion of the Federal Government’s response to the 

emergency housing needs of residents affected by the hurricanes, 

by Katrina and Rita. 

Last week this subcommittee heard from FEMA regarding its efforts to provide housing assistance to the hurricane evacuees. 

Today we are pleased to have two witnesses from HUD who are 

testifying, FHA Commissioner Brian Montgomery, and Assistant 

Secretary for Public and Indian Housing, Orlando J. Cabrera. 

Along the Louisiana and Alabama and Mississippi Gulf Coast, of 

course, there is a Herculean task of coordinating the relocation of 

thousands of individuals. In order to save time, I am going to just 

stop with that. I will entertain, of course, opening statements, but 

a lot of the statements that I would be making today are statements about Katrina that we made last week, and I am, of course, 

curious to hear from the witnesses today. 

With that, I am going to yield to our ranking member. 

Ms. WATERS. Thank you very much, Mr. Chairman. I appreciate 

you taking the time to come back this week to hold this hearing. 

And the reason that we are doing it is because HUD did not have 

a representative at the meeting that was called where we thought 

we would be talking with FEMA and HUD at the same time. So 

I am delighted that you are here today. I am hopeful that you can 

help us to shed some light on a few things. You are probably as 

much in the dark as we are about some of the activities that FEMA 

is responsible for. 

As you know, this is the Subcommittee on Housing of the Financial Services Committee, and we are concerned about a lot of 

things, but we are concerned about housing. I am particularly concerned that we sat in this committee, we sat in roundtable discusVerDate 0ct 09 2002 16:42 Oct 12, 2006 Jkt 026759 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 F:\DOCS\HBA348.040 HFIN PsN: TERRIE
2

sions that were organized by the chairman, and we sat on several 

occasions talking about shelters and temporary housing. We talked 

about trailers early on and manufactured housing. We talked about 

the need that we were going to have to house the victims of 

Katrina and Rita, and we never, we never thought that we would 

be at this point and have FEMA announcing that the support for 

the victims and their rental assistance would be running out, as 

they first announced, in December, and that now it has been extended by the court until February 7th. But February 7th is right 

around the corner, and we have thousands of victims who are going 

to be without housing unless we can make sense out of all of this. 

I don’t know why we don’t have the temporary housing. I don’t 

know why we don’t have the temporary housing that we thought 

we would have. It is very disturbing, and it is very disturbing to 

watch on television the description of this lack of housing and people saying that they have offered space to FEMA for the temporary 

homes; that the mayors are saying they have cooperated in every 

way that they can do. And while you don’t have a responsibility for 

this, or maybe you do have some responsibility somewhere; if you 

do, I would like you to tell us what it is. If you don’t, I would like 

for you to tell us that, and I would like for you to tell us whether 

or not you have any ideas about how we could move this along, 

whether you know something about whether or not the manufacturing can be speeded up, whether or not there are some problems 

with locating the space, whether or not there are some problems 

with cooperation from local elected officials. If you have any insight 

into this, we would like you to share that with us. 

Beyond that, if we can get people in temporary housing and out 

of these shelters and out of the hotels; they are going to have to 

have permanent homes. That is where HUD can play a role. How 

and what is HUD going to do to help build low- and moderate-income housing for the many victims of Katrina and Rita? 

So that is where we are today. We are trying to find out what 

role can HUD play. I would also like to know whether or not HUD 

had offered to the Administration to play a role that could have 

been helpful that maybe was not agreed upon. It seems to me that 

you are kind of bystanders, watching what is going on, when 

maybe there is something else that you could be doing to help get 

these people into temporary housing. 

With that, I yield back the balance of my time, Mr. Chairman. 

Thank you. 

Chairman NEY. The gentleman from Massachusetts, the ranking 

member of the committee. 

Mr. FRANK. Thank you, Mr. Chairman, and thank you for your 

efforts to make sure that we have had this hearing. 

I don’t want to get involved in recrimination. I will say I think 

it would have been better if we had had FEMA and HUD together 

because they have been working together. And I have to say, given 

the need for them to work together in this, the notion that they 

couldn’t sit next to each other and testify is somewhat troubling. 

I would think sitting next to each other and testifying would be 

easier to coordinate than dealing with actually housing people. But 

at least you are here, and let us focus on that. 

3

I want to say here I do believe I have only one major concern 

with regard to the short-term situation, because this has obviously 

been FEMA’s responsibility primarily. I do appreciate—I have a 

copy of a letter from Assistant Secretary Nesmith dated November 

29th. We received it on the 8th. One of the things that I think has 

now been cleared up is that in the immediate aftermath, HUD did 

suggest with varying degrees of emphasis to some housing authorities that they take Katrina evacuees and put them ahead of people 

on the Section 8 waiting list. Many of us thought that a poor idea 

because there was money voted for the Katrina evacuees, and we 

already have the problem of the waiting list. 

I appreciate the fact, if I understand it now, that it is no longer 

the policy. There was—as the letter said, there had been some suggestions about that on the website; they have been removed, and 

it is now clear going forward housing authorities are under no pressure from the Federal Government or from HUD to put evacuees 

ahead of people on the waiting list. This does not mean evacuees 

don’t get help, it means they get it out of another pot. 

But we did have situations where HUD-funded Section 8 vouchers were made available by some housing authorities, in part because they thought HUD wanted them to do that. And what I had 

asked was that they be reimbursed for this. We already have a 

tight Section 8 situation. And I would just quote Mr. Nesmith’s letter. It says, ‘‘Your suggestion that the Department ask FEMA to 

reimburse PHA’s for the cost of providing housing choice vouchers 

to families that were not HUD-assisted will be taken under consideration.’’ In other words, where the families were previously HUDassisted, I know they were taken care of by the program, the 

KDHAP program, but there were some people who were not. And 

I appreciate that it is being taken under consideration. It really 

does seem to me that you ought to be asking FEMA for that reimbursement. There is a large pot of money there. I don’t think anybody wants to pit evacuees against worthy people in various cities. 

So I think that is a very high priority. 

The second issue I want to raise and I hope we can address in 

the questions, and I know your written testimony, understandably, 

Secretary Montgomery, does deal with the emergency, but while 

FEMA had the primary role in the emergency, it is up to HUD to 

help make sure that New Orleans can be repopulated with some 

of the people who used to live there. We need to be very clear. 

Lower-income people in New Orleans, many of whom whatever 

they had was somewhat wiped out, they will not be able to come 

back to New Orleans unless the Federal Government steps up and 

provides significant funding through programs. 

That is really I think what we need to start focusing on now. We 

need to focus on the need to make sure that the result of this hurricane is not, frankly, a richer, whiter New Orleans. That is not 

what we ought to tolerate morally as a country. I know there has 

been debate about, well, what was the situation; was it racial or 

not? Let us set up this one standard. If, as a consequence of this 

and the failure of public policy, we wind up with a richer, whiter 

New Orleans, it will be because lower-income people, not all of 

whom, but many of whom, will be African Americans, were finanVerDate 0ct 09 2002 16:42 Oct 12, 2006 Jkt 026759 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 F:\DOCS\HBA348.040 HFIN PsN: TERRIE
4

cially unable to move back in, and if that is the case, shame on us 

as a Nation. 

It is going to be HUD that has the burden of working on that 

with us. So we are available to you to deal with that. We have already begun on this side. Frankly, we have expressed some agreement with the Governor of Mississippi, Governor Barbour, in terms 

of the funding he wants. We will be having a markup tomorrow, 

I am pleased to say, on the bill that the gentleman from Louisiana 

from this committee, Mr. Baker, has put in. He has worked, and 

we have worked; the gentleman from North Carolina Mr. Watt, the 

head of the Congressional Black Caucus, we have had negotiations. 

We will be producing a bill that I think begins the process, because 

we can only authorize, we cannot appropriate, of providing the 

basis for the poorest and hardest-hit victims of Katrina that will 

at least be able to move back home. I hope you will begin to address that, and you will certainly have our cooperation if you do, 

and a big fight if you don’t. 

Mr. Chairman, again, thank you for making sure that we were 

able to have this hearing under these circumstances. 

Chairman NEY. The gentlewoman from New York, Ms. Velazquez. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. Thank you, Mr. 

Montgomery and Mr. Cabrera, for attending today’s hearing. We 

hope that today you will be able to provide some clarity and explain how HUD has responded to the devastating hurricanes. As I 

stated last week, the hurricanes were an unprecedented disaster, 

and, for that reason, they deserve an unprecedented response. 

However, thus far we have not seen much more than ineffective 

and inefficient solutions. Red tape and misinformation face victims 

at every turn. And, despite a tried and true option being available 

in the form of apartment rentals and Section 8 vouchers, the Administration moved forward with expensive cruise ships, trailers, 

and a soon-to-expire hotel program. Three months later announcements continue to be revised, extended, and canceled. Displaced 

families read one thing in the papers, hear another from FEMA advisors, and yet another from HUD counselors. The right hand is 

not talking to the left, and something must change. 

I also am interested in the steps HUD will be taking to alleviate 

the horrendous health hazards that exist in the hurricane region, 

especially since it appears that each agency is passing the responsibility for providing mold remediation assistance. Mold has infested 

many homes, and removing it is neither an easy nor inexpensive 

task. And for voucher holders, we must ensure that their homes 

are clean and healthy when they return. 

Mr. Chairman, displaced families are tired. They are tired of 

waiting for trailers, they are tired of receiving contradictory information or no information at all, and they are tired of hearing that 

the check is in the mail. These families need more from our government, and they deserve more from our government. I look forward 

to hearing from our witnesses as to how HUD will be providing 

this assistance. Thank you, Mr. Chairman. 

Chairman NEY. Thank you. The gentlewoman from California, 

Ms. Lee. 

5

Ms. LEE. Thank you, Mr. Chairman. I, too, want to thank you 

and Ranking Member Waters for convening this hearing and welcome both of our witnesses. 

Let me say a couple of things with regard to just first the coordination between FEMA and HUD. I think after the hearing last 

week, I became quite concerned, given the way that FEMA passed 

the buck to HUD, just really what type of communication and coordination is there. If, in fact, it was that loose here and that confusing, I can’t imagine what people who are needing your assistance are going through. So this kind of coordination, I think, is 

very important, and I would like to hear a little bit about that. 

Secondly, I would like to know exactly, and I asked the FEMA 

representatives this also, with regard to the homeless, because, you 

know, I understand the regulations and laws that govern programs 

for the homeless, but I need a clear understanding about what happened to those people and what will happen to those people who 

are homeless in the Gulf region and still remain homeless, and 

what you are doing to help make sure they are provided with decent housing now and not—because from FEMA’s—from what I remember of FEMA’s response was that, well, they were homeless 

then; there is probably not much of anything we can do. I just 

think that is downright shameful. So I would like to know what is 

going on on your front with regard to the homeless. 

Also, it has been reported that Katrina and Rita evacuees have 

faced considerable discrimination in their efforts to find rental 

housing and flexible leasing. Of course, the Congressional Black 

Caucus has, I think, the best Katrina response legislation, and in 

that bill we put in some requirements for enforcement of housing 

discrimination. I wanted to see what kind of—what are you doing 

right now and what actions are being undertaken to make sure 

that these individuals are not discriminated against nor gouged 

really as a result of landlords seeing an opportunity now. 

Finally, let me just say, I think long term, I think in terms of 

how HUD proceeds, temporary housing, yes, immediately; but also 

long term, the equitable distribution of housing resources and 

housing counseling to prevent future pockets of poverty, and just 

how you are going to address the long-term economic and community development needs to help use HUD resources now to begin 

to alleviate the critical numbers in terms of poverty rates that we 

have in the Gulf region. 

With that, I yield the balance of my time and just thank you 

again for being here. 

Chairman NEY. Thank you. Mr. Davis, from Alabama. 

Mr. DAVIS OF ALABAMA. Thank you, Mr. Chairman. I want to be 

brief so that we can quickly get to questions, but I want to make 

two observations. The first one, I remember in the early days after 

Katrina when we first came back here after the August recess, 

there was a lot of hope on this committee that HUD would take 

very seriously the problem of people defaulting on their mortgages, 

not being able to pay their mortgages. I don’t want us to leave this 

hearing without the record being clear that two members of this 

committee were stalwarts on this issue, Mr. Watt from North Carolina, and Ms. Waters from California. Frankly, their efforts were 

seen as quixotic by some. There was a mindset that, well, that is 

6

just not something that we are going to get out of this Administration, or something that we are going to get out of this committee. 

I will give your HUD department some credit. While it has certainly not taken on the comprehensive problem of mortgage defaults, you have at least addressed it in the context of the FHA. 

But I want to make sure the record is very clear that the two people who were most aggressive in raising this issue were the gentleman from North Carolina and the gentlewoman from California. 

The final point that I want to make, I almost hate to raise this 

point, but this is the fourth hearing in a row that we have had on 

Katrina-related issues where there has been a very conspicuous tilt 

when you look at who attends these hearings. Frankly, I wish I 

could just say it was Democrats and not Republicans, but if you 

look around the dais, it is actually even starker than that. I don’t 

know how clearly I can make this point. Katrina is not a black 

folks issue. It is not an issue that somehow the black members of 

this committee have a special interest in and no one else cares 

about. 

I haven’t seen a racial breakdown of how many evacuees are African American, how many are Latino, how many are Caucasian, 

and I could care less, and I don’t think anybody on this committee 

could care less. I just wish that we understood, as we talk about 

these issues, this is not a special interest case or a special pleading 

case, and, frankly, I wish more of our colleagues on both sides of 

the aisle would take the time to attend these hearings. 

Chairman NEY. Mr. Scott of Georgia. 

Mr. SCOTT. Thank you very much, Mr. Chairman. Thank you for 

coming. It is good to see representatives from HUD here, finally, 

at last. It is still unfortunate that your leader Mr. Alphonso Jackson is not here. That, to me, typifies the level of concern that this 

Administration has for this issue. It shows blatantly that for this 

kind of catastrophe where the number one issue for these evacuees 

is trying to get a roof over their heads, housing, and you don’t even 

have the Secretary of HUD coming to this committee for the second 

time. I hope somebody somewhere remembers that and marks that. 

This is the hill that this committee has to climb. Not only that, 

but as my colleague Mr. Davis so eloquently spoke, that it is left 

to a few. But just as the disciple said and the Lord said, where 

there are few gathered, the Lord is there with us. I am convinced 

that the Lord is with us here as we go forward. 

But it is very, very interesting that in last week’s Congressional 

Quarterly, and I don’t know if you all saw this or not, but when 

FEMA was here and we were running around trying to figure out 

why HUD wasn’t here, there was an interesting quote in the Congressional Quarterly that I hope you will go back and see, because 

it says that, the HUD spokesman said that they, HUD, did not 

want to be seen sitting side-by-side with FEMA. That is astounding, given the magnitude, just for any reason, but given the magnitude of the hurt and the pain that this Nation is going through 

right now, the two primary agencies that should be seen working 

together are FEMA and HUD. 

I am particularly vexed about this because my State of Georgia 

is the third State in terms of the number of evacuees that we are 

housing from Mississippi and from Alabama, and I am consistently 

7

perplexed by this. But there are a number of issues and there are 

a number of questions that the people in Georgia want to hear answered today. 

One of the major concerns is that this is not enough, and there 

is no long-term plan at all. The amount of money that is being 

given to the evacuees is not enough to cover even their short-term 

needs. 

So I yield back the balance of my time, Mr. Chairman, and I will 

reserve the balance of my time to ask questions. 

Chairman NEY. I do want to caution everybody, around 2:45, 

2:50, probably, there is going to be a vote. 

Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. I will reserve my questions that I would like an answer to until later, but this is a rhetorical question: Is the failure to show up a request to give up? 

Chairman NEY. Thank you. Mr. Watt. 

Mr. WATT. Mr. Chairman, I pass. I just came because I was interested in hearing the witnesses’ testimony. 

Chairman NEY. Thank you. 

Mr. FRANK. Mr. Chairman, parliamentary inquiry. Is it permissible for a Member to come to a hearing because he wants to hear 

testimony? That is unusual. 

Chairman NEY. With that, without objection, the statement from 

the National Housing Coalition is included for the record, and also 

we will note Mr. Watt, who has great interest in the hearings. 

We will go ahead and start with Brian Montgomery and Orlando 

Cabrera. 

Mr. Montgomery. 

STATEMENT OF BRIAN D. MONTGOMERY, ASSISTANT SECRETARY FOR HOUSING/FEDERAL HOUSING COMMISSIONER, 

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT; ACCOMPANIED BY ORLANDO J. CABRERA, ASSISTANT SECRETARY FOR PUBLIC AND INDIAN HOUSING, DEPARTMENT 

OF HOUSING AND URBAN DEVELOPMENT 

Mr. MONTGOMERY. Thank you, Mr. Chairman. 

Mr. FRANK. Mr. Montgomery, you have overestimated the eyesight of the Members. 

Mr. MONTGOMERY. Apologies, sir. 

Mr. Chairman, Ranking Member Waters, Ranking Member 

Frank, distinguished members of the committee, I am Brian Montgomery, HUD’s Assistant Secretary for Housing and Federal Housing Commissioner. 

I do want to also offer that we regret any miscommunication last 

week. Speaking for my colleague to my left and myself, we were—

it is our understanding we were going to appear this week, and, 

again, if there was any miscommunication on that part, we regret 

that it happened. The important thing is, sir, that we are here 

today. 

I also would request that our written statement, Mr. Chairman, 

be entered into the record. 

Chairman NEY. Without objection. 

Mr. MONTGOMERY. Thank you, sir. 

8

Today we will discuss what HUD, at the direction of the Federal 

Emergency Management Agency, has done in the effort to help people recover and rebuild from the devastation caused by Hurricanes 

Katrina, Rita, and Wilma, and what we are doing to provide housing for so many people with unprecedented challenges before them. 

As it became apparent that the first of these major storms was 

going to make landfall, Secretary Jackson directed the establishment of a HUD working group to coordinate all agency resources 

that might be utilized. Known as the Hurricane Response and Recovery Center, or HRRC for short, this emergency center served as 

a command post for HUD-related efforts and was staffed with 

housing professionals from every program office at HUD. 

I would also like to add, Mr. Chairman, that while many other 

Cabinet agencies have 24-hour command posts, this was certainly 

new territory for HUD, and I certainly want to commend my HUD 

colleagues for their efforts. So many of them worked 40, 50, 60 

days straight manning that Response and Recovery Center. 

A couple of months later, as we moved forward in the recovery 

and rebuilding stage, the Secretary and Deputy Secretary established HUD’s Assistance and Recovery Team, known as HART. 

This team is now coordinating all HUD deployment with FEMA, 

ensuring that program offices are fulfilling their mission, as well 

as coordinating policy decisions. 

HUD has been working closely with FEMA to get housing assistance to those who have been displaced and those who have been 

uprooted by these hurricanes. This partnership with FEMA and, I 

might add, along with our colleagues at agriculture, VA, HHS, and 

others, demonstrates our dedication to providing housing assistance. 

I think some of the best examples of these partnerships are the 

Katrina Disaster Housing Assistance Program that my colleague 

will discuss later; also, programs that provide multiple types of 

temporary Federal housing. Another example is the Joint Housing 

Solution Center that was stood up within days of the hurricane, in 

Baton Rouge, which HUD played a role in that, as well as the numerous times that we have joined with other Department staff to 

brief staff and Members of Congress, including members of this 

committee, as well as Senate staff. 

The program offices at HUD have aided in the recovery process 

as well and have played a large part in that, and, Mr. Chairman, 

I would like to summarize those quickly. 

HUD’s Office of Community Planning and Development, for example, has issued waivers of more than 40 requirements for the 

States of Louisiana, Mississippi, and Alabama, in an effort to increase the flexibility of our existing grant programs to be used 

within their current resources for disaster relief. For example, CPD 

issued a series of waivers in the HOME program that included selfcertification of income, elimination of the match requirement, and 

greater flexibility in the use of HOME and American Dream Downpayment Initiative funds to help low-income families receive tenant-based rental assistance and to rehabilitate and to buy homes. 

Beyond these efforts with the HOME program, we have issued 

a series of waivers for the Community Development Block Grant 

program, the Emergency Shelter Grants program, and the HOPWA 

9

program as well. The Office of Housing took the lead in providing 

the first 90-day foreclosure relief for Presidentially declared major 

disaster areas impacted by Hurricanes Katrina, Rita, and, finally, 

Wilma. On November 22nd, Secretary Jackson and I extended the 

foreclosure moratorium in those counties declared eligible for individual assistance. That additional 90 days will go through February 28, 2006. The extended foreclosure relief will provide mortgagees additional time in which to confirm the mortgagor’s intention 

and ability to repair their homes or their ability to resume regular 

mortgage payments, all in an effort to help retain homeownership. 

Now, to that end, earlier this month the Department announced 

an additional homeownership retention initiative to help homeowners with FHA-insured mortgages who live or work in the Presidentially declared counties. Under this initiative, known as the 

Mortgage Assistance Initiative, FHA will advance mortgage payments for up to 12 months for eligible borrowers who are committed to continue occupancy of their homes as their principal residence, and are expected to have the financial capacity to repair 

storm damage and resume making full mortgage payments at some 

point within a 12-month period. 

This unprecedented, and I want to stress unprecedented, mortgage relief program is expected to help up to 20,000 families and 

perhaps more that were seriously impacted by the hurricanes. We 

are doing this in an effort to help retain homeownership so these 

families can also concentrate on repairing their homes or on finding 

jobs. I want to stress, Mr. Chairman, that it was very important 

to us to not have families have to worry about those bills, and I 

am, again, very proud of the effort of our staff at HUD for putting 

forward this unprecedented initiative. 

In addition, Secretary Jackson and I have personally encouraged 

lenders to undertake actions such as mortgage modification, refinancing, and waiver of late charges for those in the hurricane disaster areas and to also refrain from reporting derogatory credit information to credit bureaus. 

The Office of Public and Indian Housing has issued guidance to 

the Nation’s more than 3,000 public housing authorities on how to 

assist displaced public housing residents. For example, HUD’s 

guidance and Q and A’s for PHA’s and public housing residents are 

located on HUD’s website. This document, titled Guidance for Public Housing Agencies in Assisting Families Displaced by Hurricane 

Katrina, has also been distributed to all PHA’s, to all HUD field 

office directors, and to HUD’s field policy and management staff. 

The KDHAP initiative that I referenced earlier is providing housing vouchers for evacuee households that were previously receiving 

public housing assistance and to evacuees who were homeless prior 

to the hurricane. The details of that program include that individuals and households must register with FEMA and be determined 

ineligible for FEMA assistance. FEMA will transfer appropriate 

registrant qualification data and authorized Stafford Act funds to 

HUD for this program. 

Displaced families, including former HUD-assisted evacuees who 

do not qualify for other assistance such as FEMA IHP grants or 

homeowners insurance, can qualify for HUD’s KDHAP program. 

Housing assistance will be administered through the established 

10

network of local PHA’s located across the country. Eligible individuals and households may contact local housing authorities nationwide to participate in this program. Participants will receive housing vouchers that can be redeemed for both public and private 

housing units in any community at the discretion of the participant. Vouchers will be calculated at 100 percent of the fair market 

rent in any community that an evacuee selects. 

Eligible evacuees may receive rental assistance payments for up 

to 18 months. Finally, the effective date for this program was September 26th of this year. 

Also, HUD’s Center for Faith-Based and Community Initiatives 

has been an active participant with the rest of the Department in 

responding to the hurricane. The center participated in the Department’s post-Katrina hurricane meetings and continues its contribution as a member of the HART team. The Center has also contacted thousands of faith-based and community organizations to recruit their engagement in the Department’s KDHAP enrollment efforts. 

Mr. Chairman, ranking members, we thank you for the opportunity to appear today to present HUD’s testimony. My fellow HUD 

colleagues and I will respond to any questions you may have. 

[The prepared statement of Mr. Montgomery can be found on 

page 36 of the appendix.] 

Chairman NEY. Thank you. As I understand it, Mr. Cabrera does 

not have a prepared statement, but is here to answer questions. I 

want to thank you for your time. 

On page 2 of the testimony, you indicate that HUD identified 

20,000 units of multifamily housing that were made available to 

displaced families through FEMA starting in September of 2005. 

Can you just elaborate a little bit on what types of housing you 

identified in terms of public housing units, project Section 8-based, 

or what? 

Mr. CABRERA. I think HUD’s efforts with respect to locating units 

was very broad. So finding what the inventory was amongst the 

public housing stock was an issue of simply communicating with 

public housing authorities. But it didn’t stop there. There was a 

broad, industrywide effort to find units for folks to move into, and 

that included the stakeholder, the private sector element, which 

meant apartments and companies that owned multifamily assets. 

But on top of that, housing finance agencies were contacted and, 

frankly, the full gamut of anybody having an available unit. This 

even included, in many cases, people who owned single-family 

homes that happened to be vacant. I know of at least a couple of 

incidences of that. 

Chairman NEY. Just to follow up for a second, of the 20,000 that 

were open, whether it was a unit or multifamily, or whatever it 

was, how many of the FEMA evacuees went into there, 20,000-

some people, or do you know? 

Mr. MONTGOMERY. Mr. Chairman, we can give you an exact 

number, but I daresay probably the vast majority of those were occupied by evacuees. 

Chairman NEY. And you were going to say something else? 

Mr. MONTGOMERY. I was just going to also add, sir, that again, 

HUD worked diligently with our career staff and others to identify 

11

these units. We knew early on that this was an unprecedented disaster, and we also worked with the Department of the Treasury to 

get the income waiver guidelines for tax credit properties. We knew 

that the market for the affordable housing in parts of the south 

was very soft, and there were thousands of vacant units, so it was 

critical that we worked with Treasury to get that waiver early on, 

as well as making sure that the vouchers for victims who were displaced, that those could be ported to other locales. 

Chairman NEY. Some of the people previously had HUD Section 

8, but there is also a whole new group of people who are brandnew now into the system who lost what they owned, so they are 

new. I imagine that some emergency vouchers probably applied to 

them, correct, to the new people? 

Mr. CABRERA. Currently the partnership we have with FEMA 

under their duties pursuant to the Stafford Act are to deal mostly 

with those folks who are in that universe of tenants who were receiving a Federal subsidy under public housing or Section 8, but 

does not include those who were not. 

Chairman NEY. So what happens with individuals who were on 

the waiting list down there, let’s say, for a voucher, a waiting list, 

and then you have to take care of people who had the vouchers. 

Some people have been displaced to other areas of the country, so 

did a voucher follow? 

And then the other question I would have is, then who will pay 

for this as new people come on to the Section 8? Who pays for that? 

Does that come out of HUD? Has that been talked about yet? Or 

does it come out of FEMA? 

Mr. CABRERA. Well, currently no one new is coming on to Section 

8 vouchers. But coming back, Mr. Chairman, to the first question 

you asked, which was the issue of the waiting lists, it has been a 

long-standing policy in many PHA’s, PHA’s have this within their 

own policy, that preference be given to people who are victims of 

disasters. That is nothing new, and that is something that PHA’s 

can opt to do or not. 

Chairman NEY. Well, that is what I am wondering, and my time 

is running out, and I want to get on to the other Members, but I 

may come back to this if we all get through questions. But who 

pays for that at the end of the day, if someone needs help, and then 

they come up to Ohio and they get the voucher, and then somebody 

up there is on the waiting list? Are we going to count at the end 

of the day how much money we need to take care of the people who 

were also on the waiting list and obviously take care of the evacuees, too? 

Mr. CABRERA. Only momentarily taking off my HUD hat and not 

speaking for FEMA, and putting on my prior hat, my experience 

is that FEMA is currently paying for that. That is the housing 

piece of FEMA assistance, and those folks are still covered under 

the housing allocation that FEMA is providing. 

Chairman NEY. The gentleman from Massachusetts, Mr. Frank. 

Mr. FRANK. Thank you. 

Let me go back to the issue I mentioned where we had a period 

where HUD had encouraged people, and it was on the website, 

housing authorities, to give priority to evacuees. The letter I got 

dated November 29th said you were thinking about asking FEMA 

12

to reimburse. FEMA has large amounts of unpaid money. What is 

the current status of your thinking on asking FEMA for a reimbursement to those housing authorities? Because we have a tightness in Section 8. Is there any further thinking on that? 

Mr. CABRERA. On the first issue, as I recall, the only thing that 

we were trying to clarify was that those who did not have a stated 

policy already on dealing with the waiting list issue, that they had 

the flexibility now to deal with it the way that other PHA’s already 

had. So they can make that decision. We were providing them autonomy to make that decision. 

Mr. FRANK. I will tell you that somehow the authorities felt some 

pressure to do that. 

Mr. CABRERA. Okay. 

Mr. FRANK. And I would think that whether they did it autonomously or not, we have a shortage of Section 8 in some cities where 

there are waiting lists. We have at this point some extra FEMA 

money. I would think that HUD would be interested in facilitating 

that transfer to help it out. Is there any reason or public policy not 

to? 

Mr. CABRERA. Not to do what, Congressman? 

Mr. FRANK. To reimburse those housing authorities that use 

scarce Section 8’s where they had waiting lists for evacuees. 

Mr. CABRERA. Congressman, that is a conversation I have not yet 

had, but I am happy to inquire. 

Mr. FRANK. I hope you do that. 

One other question, and this is a FEMA decision, but I would 

hope you would have some input here. Several cities have been 

willing, I think quite admirably, to be intermediaries. We are talking about people who were displaced, people who did not have a lot 

of experience with travel and did not have a lot of resources, and 

they are being told to go out and find a 3-month rental. I know the 

City of Houston was pretty active, the City of Atlanta, and at some 

point FEMA told the cities that it would no longer allow them to 

be the intermediaries, that they could not sign the leases and be 

reimbursed by FEMA, that the individuals had to sign the leases 

directly. That just seems to me to be a very bad idea. We are talking about some people who are literally bereft. Would it not be a 

good idea if the cities were willing to undertake that, to encourage 

them to continue to do it? 

Mr. CABRERA. Congressman, truthfully, I can’t speak to that 

issue. It sounds like—I am not trying to punt. 

Mr. FRANK. It is a FEMA issue, but do you want me to give you 

FEMA’s phone number? I mean, I have it. 

Mr. CABRERA. Yes, I have it, too. 

Mr. FRANK. You are the Housing Department. You have housing 

expertise. We have counseling. How about being a little bit energetic and proactive and maybe picking up the phone? I am asking 

you in the advice—you guys are used to dealing with housing more 

so than FEMA. We are not talking now about providing a physical 

short-term emergency, but getting people long-term housing. 

Wouldn’t it be a good idea to get the cities involved, and couldn’t 

you help FEMA understand that? 

Mr. CABRERA. I think that the cities that you have mentioned, 

mostly Houston and Dallas, have both noted that they had their 

13

own challenges in trying to accommodate a whole lot of folks, and 

I think what FEMA was trying to make sure of is that if people 

wound up in living arrangements that somehow they could finalize 

in the form of a lease, that they could do that as swiftly and as 

easily as possible on their own with these leases. But I don’t believe that either Houston or Dallas were acting as housing locator 

services. 

Mr. FRANK. I am trying to be calm about this. Why are you trying to put a gloss on this? You are putting words in people’s 

mouths who don’t put them there themselves. The Mayor of Houston has complained about this. They were willing; in fact, they 

signed the leases, because you have people who have no resources, 

they have nothing. They were told, well, we will give a 3-month 

deal. The cities were willing to put themselves out, and they have 

been told they can’t do it. It is not at all what you described. 

I am really disappointed that you would start creating some rationale for a bad policy rather than trying to be helpful. I am serious. I am disappointed. That is not what the cities themselves tell 

us. They are willing to be the intermediaries. Why, if the cities are 

willing to be the intermediaries and get the reimbursement, is that 

not a better idea than leaving all of these people to fend for themselves? 

Mr. CABRERA. Congressman, far be it for me to disappoint you. 

That is not what I am trying to do. What I am trying to do is explain to you the logistical— 

Mr. FRANK. I asked you a question. Why is it not a good idea to 

have the cities, if they are willing to do this, to be intermediaries 

for these people? 

Mr. CABRERA. Congressman, that is not an issue that we are 

handling here. That is what I am trying to explain it to you. 

Mr. FRANK. I am sorry we don’t have a bowl for you to wash your 

hands in, Mr. Assistant Secretary. I am very disappointed. I know 

you were not dealing with that. I said it was FEMA. I was asking 

why you wouldn’t use your expertise in the housing area to suggest 

to them that maybe this is something they ought to do. 

Let me ask you, Mr. Montgomery, where are we on planning for 

affordable housing on a permanent basis? What is the status of 

that? 

Mr. MONTGOMERY. Congressman, are you referring to the longterm redevelopment? 

Mr. FRANK. I am referring to the possibility of poor people who 

were driven out and lost their homes being able to return to live 

in the city. 

Mr. MONTGOMERY. Thank you very much, sir, for that question. 

One of the key things that we, speaking for FHA, sir, determined 

early on, to reference my previous point, was we could—we saw, we 

heard the concerns from many families who, through no fault of 

their own, had been uprooted and moved— 

Chairman NEY. The gentleman’s time has expired. You can summarize, and then we can come back for a second round. 

Mr. FRANK. No, my patience has expired along with the time. 

Chairman NEY. Okay. Mr. Davis. 

Mr. DAVIS OF ALABAMA. Thank you, Mr. Chairman. 

14

Mr. Montgomery, let me ask you a little bit again about the 

homeownership or the home default initiative that has been lodged 

related to FHA payments. What percentage of the national mortgage market is FHA-backed? 

Mr. MONTGOMERY. Currently, Congressman, our market share, 

our current market share, is about 4 percent of all loans out there. 

Mr. DAVIS OF ALABAMA. Now, with respect to Louisiana and Mississippi, is there any reason to think that the number is substantially greater than that 4 percent? 

Mr. MONTGOMERY. Congressman, I can’t give you an exact figure, 

but, yes, it would be. 

Mr. DAVIS OF ALABAMA. Well, what is your basis for thinking 

that it is significantly greater in Louisiana and Mississippi than it 

would be in the rest of the country, and how much greater do you 

think it is? 

Mr. MONTGOMERY. Primarily due to the housing prices, sir, 

where because of the loan limits, it is difficult for FHA to compete, 

if you will, in markets such as up here in Washington, D.C., or on 

the west coast. Where housing prices are much more affordable, 

sir, the FHA has been a very good product for many low-income 

people. 

Mr. DAVIS OF ALABAMA. It is as high as 15 percent in Louisiana 

and Mississippi, the FHA share of the market? 

Mr. MONTGOMERY. Again, Congressman, if I could get you an 

exact figure? 

Mr. DAVIS OF ALABAMA. Okay. The reason for my asking is that 

despite what I think is a good program, there clearly are a lot of 

mortgagees who are facing defaults who are not affected by HUD’s 

efforts, and I wanted to ask, is there any particular good public policy reason for not launching some kind of initiative to reach the 

large number of families who don’t have FHA-backed mortgages? 

Mr. MONTGOMERY. Congressman, we have asked ourselves that 

same question many times within HUD. I, as the FHA Commissioner, can only speak for FHA. As much as I would like to, given 

the parameters of what FHA can and can’t do, I just don’t see right 

now how, without some legislative authority, we could reach the 

conventional market, if you will. 

Mr. DAVIS OF ALABAMA. Would HUD look favorably on Congress 

providing legislative authority to reach beyond the FHA market, either one of you? 

Mr. MONTGOMERY. Yes, yes, Congressman. 

Mr. DAVIS OF ALABAMA. And I assume, Mr. Cabrera, you would 

share that? 

Mr. CABRERA. I would, but it is his world. 

Mr. DAVIS OF ALABAMA. Well, it is all of our world. We all live 

in it together. 

Mr. CABRERA. In my case, and to the extent that it actually affects Indian housing, the answer is yes. 

Mr. DAVIS OF ALABAMA. I agree with you, and I think a lot of 

the members on the committee would agree with you, that if we 

are serious about addressing the housing problem, I think you are 

right, that there is probably a greater FHA share of the mortgage 

in this these relatively low-income, southern States than in the 

15

country, but it is still a very small share of the market, I would 

suspect. 

The second thing I wanted to ask you about is the Homesteading 

Initiative, which, again, has positive elements to it, but as I understand the Homesteading Initiative, it is up to the person who 

would move into the home to bear the cost of the repair; am I right 

about that? That, in effect, the person would have the opportunity 

to come into this abandoned land, but would have to bear the cost 

of the repair; is that right? 

Mr. MONTGOMERY. Not necessarily, Congressman. The key thing 

to note here is that HUD wants to do what they can to keep communities together, to help stabilize neighborhoods that will certainly need that. This program, we think, is designed to do that. 

Rather than under the current program where HUD can sell those 

properties, in this case we would turn them over to local units of 

government for $1. We, of course, will take a substantial financial 

hit for that, but it is part of our effort to make sure those communities are stabilized. We think it is something we should do. Now, 

it is up to the local unit of government whether they will work with 

the nonprofits such as Enterprise, Habitat for Humanity, just as 

some examples, to actually do the sweat equity or the repair to the 

home. 

Mr. DAVIS OF ALABAMA. Let me again just follow up on that, because I think that you are—I understand what you are saying, but 

obviously, the local governments might have to bear a lot of the responsibility. But I would echo what Mr. Frank said, that this is a 

place for HUD to be proactive. It does not make a lot of public policy sense for me to say to these people, you have a shot of reclaiming this property and making some use of it if you can afford it, 

because, obviously, a lot of them are in destitute conditions. 

The final point that I will make before my time runs out, I think 

it is enormously important that we move forward with a much 

more expansive approach on housing, because this is the consequence of the government’s inaction over the last several months. 

A lot of people who used to live in New Orleans feel they have no 

reason to go back. Unless we want this disaster to result in the repopulation and realignment of this city, the government needs to 

do more; frankly, HUD needs to do more and Congress needs to do 

more, to make an affirmative statement and to put proposals in 

place to make this city livable again. Otherwise, we are engaging 

in what amounts to a resettlement, and there is no place for that 

in our conscience when it comes to these evacuees. 

I yield back the balance of my time. 

Chairman NEY. Thank you. 

The gentlewoman from California, Ms. Waters, the ranking member. 

Ms. WATERS. Thank you very much. 

I may have missed this answer already, but I am sorry I will 

have to request it again. HUD took some actions early on to build 

assistance, and I know that was discussed, I think, in the testimony that you had prepared where you talked about a number of 

things. One of the things you talked about was making some of the 

HUD properties available to FEMA, over 5,000 properties that you 

had. Were those accepted and utilized by FEMA? 

16

Mr. MONTGOMERY. Thank you, Ranking Member Waters. Early 

on, FHA identified about 6,000 homes that were currently unoccupied that had been foreclosed on. That was in the 11-State region 

around—well, to include Alabama, Mississippi, and Florida, and 

Louisiana as well. Since those homes have been foreclosed, many 

of them required extensive repair. 

Now, as part of an existing interagency agreement with FEMA 

that was developed with the hurricanes in Florida last year, we 

quickly modified that agreement to include these disasters. But 

again, many of these units needed repair. We quickly identified 

1,800, began the repair on them, and made those a part of the 

agreement with FEMA. We dispatched HUD staff to the FEMA regional office in Dallas over 2 months ago to work on placing families into these properties, a lot of which were located in Texas. To 

date, back to the 1,800 for a minute, about 500 families have 

moved in. About another 700 families have been matched to a property, but not quite moved in, and the balance of that number are 

still under repair. 

Now, getting back to the other 4,000 or so homes, again, many 

of those need to be repaired. As families move out of hotels, we will 

certainly make those properties available to them. We are also researching the possibility of maybe offering some of those homes on 

a very discounted sale to some other families. But again, we are 

still working through those issues. 

Ms. WATERS. Well, let me ask you, you said 6,000 properties. 

How many all together? 

Mr. MONTGOMERY. A little less than 6,000. 

Ms. WATERS. Something less than 6,000. Why is it only 1,800 are 

repaired? 

Mr. MONTGOMERY. Well, I would say that it requires time. Unfortunately, whenever a home is foreclosed, we found that on average, 

they require at least $15,000 worth of repair. Building materials 

are in short supply. It is hard to get, in some cases, the labor to 

repair these homes. The last thing we want to do is put a family 

into a home that doesn’t have appliances, or the roof is not— 

Ms. WATERS. Do you have the money for the labor? 

Mr. MONTGOMERY. As part of the interagency agreement, FEMA will reimburse us up to $10,000 per home. The rest of that— 

Ms. WATERS. So the money is there for the labor? 

Mr. MONTGOMERY. Finding the labor has been the biggest difficulty, given the shortage of labor in that part of the country. 

Ms. WATERS. I am not sympathetic to that argument, because we 

have victims of Katrina and Rita coming from the area looking for 

jobs. You have contractors down there—you don’t, but FEMA—

where they are getting people from Guatemala. We have people 

who want to work, people who are unemployed. I don’t buy the argument that you can’t find the labor. 

What I buy is that between, I guess, HUD, FEMA and everybody 

else, there has been no program put in place by which to identify 

the unemployed, particularly those who come from the regions affected by the hurricane, and to place them into jobs. I mean, it is 

just outrageous that we have all of these unemployed people, and 

then we talk about we don’t have enough people to do this kind of 

work. 

17

And if $15,000 is the average amount of work that is required on a foreclosed home, you could spend $15,000 in 15 minutes in repairs. That is not a lot of money. That is not a lot of repair. I mean, 

that is a few drywalls and, you know, some faucets replaced. I 

mean, that is no big deal. We have people whom we are spending 

millions of dollars on and who are still on ships and in hotels, and 

we have got to do something to get these people into homes. 

How many days has it been since— 

Mr. WATT. One hundred ten. 

Ms. WATERS. One hundred ten days, and we have about 4,000 

properties that could be repaired and used that we just haven’t 

been able to get on line yet; is that right? 

Mr. MONTGOMERY. I am sorry? 

Ms. WATERS. About 4,000 properties we just have not been able 

to get on line yet, we haven’t been able to get repaired and put into 

use? 

Mr. MONTGOMERY. That number is accurate. But I would add, 

again, we are also looking at the homes that require less repair to 

perhaps be able to offer to some families who have expressed interest, who have called our call center. Because again, these homes 

have been pulled off the market. We didn’t want to sell them at 

market rate. We may be in a position to offer these at a discounted 

sale to some families. 

But I do want to add that we did—we repaired over 1,800 homes 

less than 10 weeks or so after this agreement was signed. 

Ms. WATERS. I know. I know you probably think you did a good 

job and you should be complimented. We are just not in a complimentary mood right now with these television stories every night 

about these poor people who are dying for someplace to live. We 

really—I am really focused on the trailers, but when I saw your 

testimony, with the 6,000 homes, my appetite was immediately 

whetted, and I thought, oh, you know, here we go. 

So you had 6,000 homes; about 4,000 of those are left, 1,800 have 

been repaired, but only 500 people are housed in that possibility 

of 6,000. 

But the other thing that you did is you gave a lot of waivers, and 

those waivers could have gotten people into homes, etc. How much 

have the waivers been able to do to get people into housing? 

Mr. MONTGOMERY. As I referenced earlier, the last thing we 

want to do is to waive safety and soundness. 

Ms. WATERS. We don’t want you to do that. What did you waive? 

Mr. MONTGOMERY. The waivers I referenced earlier had to do 

with our CPD program. 

Ms. WATERS. Okay. So how many people got into houses as a result of those waivers? 

Mr. MONTGOMERY. I will have to get that number for you. 

Ms. WATERS. The chairman is telling me we have to go and vote, 

but I just want you to leave here knowing that we would really appreciate it if, for every housing resource you have, you could get 

somebody in it, and we are going to have to find a way to track 

that, because we just have to do better than we are doing. Thank 

you very much. 

Chairman NEY. We have a vote, but I would note to the Members 

that I am more than willing to come back and have questions. I 

18

would like to personally do a round of questions after you all ask 

your questions. I am more than willing to do that. 

The other thing, too, I wanted to note, I have talked with the 

ranking member, I think it would have not worked that well to 

have had a hearing at the point in time this happened. Now, in the 

critical juncture, maybe in January we could go down to New Orleans and Gulfport and physically go to the people and have a hearing. I know individual Members who went down. I know it would 

be helpful if we could do that. 

Mr. SCOTT. Before we vote, Mr. Chairman, could I ask my question? 

Chairman NEY. Absolutely. I am willing to come back. 

Mr. SCOTT. I do have a question. I want to get your response, because as I mentioned in my opening statement, we in Georgia rank 

third in the number of evacuees that we have, so it is a very critical issue. A major concern in one of those areas that HUD is involved in is your rental assistance through your KDHAP program 

in which you are providing some rental assistance. 

With that in mind, I want to share with you a major concern. I 

want to read just a part of a letter to me from my constituents in 

Georgia, the Georgia Municipal Association. They say, Congressman Scott: The Federal Government’s policy of rental assistance 

money simply does not align with market reality. As I am sure you 

know, the Federal Government is offering evacuees $786 per month 

for rent, although in the metro area, the fair market value of rent 

is considerably higher, over $1,000. The Department of Housing 

and Urban Development’s fair market rent of approximately $830 

for the City of Atlanta is still not sufficient. As of last week, we 

were told by the Georgia Emergency Management Agency that a 

housing assessment conducted by the City of Atlanta had identified 

only 740 apartments that were available at that rate. 

My question simply is that given that the average rental payment for a two-bedroom apartment in Atlanta, Georgia’s market 

approximates $1,000 per month, not even counting estimated 

monthly utility costs of another $400 per month; how do you think 

and how did you arrive at a market value substantially lower than 

that, and did you do an analysis of the market value? And given 

the fact that this information is coming from Georgia, what can we 

do to increase that to get the help down to the local governments 

so that this burden isn’t totally on them to make up that difference? 

Mr. CABRERA. Congressman, I am reasonably certain that the Atlanta MSA has an area median rent that is higher than $746. The 

KDHAP voucher is not pegged to any one number. It is pegged to 

the area, the area fair market rent. 

So I am not entirely sure where the number was that you mentioned, $746. 

Mr. SCOTT. Right, $786. 

Mr. CABRERA. $786, where that came from. I will be happy to go 

back. 

Mr. SCOTT. Which does not include the utility cost. And when the average two-bedroom cost is over $1,000. 

Chairman NEY. We have about 4 minutes left in the vote. You 

can come back? I will be back. 

19

Mr. SCOTT. I think I will come back. It is important. 

Chairman NEY. We will reconvene in about 8 minutes. 

[Recess] 

Chairman NEY. We will go ahead. I want to thank you for returning. 

We will start with Mr. Scott. He was in the middle of a question. 

Mr. SCOTT. Thank you, Mr. Chairman. I think where we left off 

was the situation in Georgia that we are faced with, and this discrepancy in the amount of money that is allocated to cover rent, 

rental assistance, which is clearly about $200, maybe $300, $350 

less, not including the cost for utilities. 

How do we deal with that? How can we get that discrepancy 

closed? We, in Congress, have allocated the moneys for that; you 

all have that authority. How quickly can we solve that problem? 

Mr. CABRERA. Mr. Scott, I did get some clarity on the rent issue. 

As I noted earlier, it is, in fact, area fair market rent that predominates in any given market where KDHAP is used. 

In the case of the Atlanta MSA, that number is $818, which 

means that a study was done, and I have signed those in the last 

3 weeks. I was sworn in 3 weeks ago. And so sometime recently 

there was a rent study done. The rent study said that the fair market rent for a two-bedroom unit in the Atlanta area is $818. That 

is the applicable rent pursuant to KDHAP. 

Now, as part of the KDHAP program, the tenant also gets a utility deposit allowance and gets a security deposit allowance. But 

they don’t get utilities, as far as I know. I can check with my staff, 

but let me find out. 

Correct, there are no utilities in the KDHAP program. 

Mr. SCOTT. I mean—you have got winter coming. How are people 

going to stay warm? How are they going to eat? How are they going 

to subsist? There is no utility. 

Mr. CABRERA. The KDHAP program is designed to deal with 

emergency response. It is allocated to FEMA. KDHAP comes out of 

a small subprogram within FEMA’s program that we are administering for them. It is designed to essentially take care of a victim’s rental needs or housing needs. 

Mr. SCOTT. In your opinion, what is it going to take for us to get 

some help down to our State and our local communities who are 

facing this issue? You say, it is $819. My folks down in Georgia say 

it is closer to $1,000 per month. There is a problem here. How do 

we address that? 

Mr. CABRERA. There are different elements to housing assistance 

and emergency response. 

Generally, there is an emergency response package that is provided to those folks who are not receiving help, essentially from 

HUD, in the form of anything that has to do with public and Indian housing. And those folks are being helped by FEMA. The folks 

that public and Indian housing are helping are folks that were previously receiving vouchers under Section 8 and those who were 

residents in public housing. 

And I have just been corrected by my staff, and evidently the fair 

market rent includes utilities. 

Mr. SCOTT. Well, I understand that. For $200, I think. Is that 

right, you have a utility of $200? 

20

Mr. CABRERA. I do not know what the utility allowance is. 

Mr. SCOTT. So that $200 is included in the $816? 

Mr. CABRERA. That is not—I know that is not how they used to 

statistically handle it. 

May I have a moment, please. 

Mr. SCOTT. Sure. 

Mr. CABRERA. Congressman, I am going to again go back to an 

old hat I used to wear. 

As a matter of practice, what typically happens is that there is 

fair market rent and there is a utility portion of rent that HUD 

publishes. As a general rule, that utility portion is published from 

time to time. 

The issue that you have just identified is unclear to me. We are 

looking it up right now, and I will get back to you as to whether 

the $818 number is a gross number or whether it is a net rent 

number with a utility on top. I suspect it is a gross number. 

Mr. SCOTT. Well, let me just say before I go to my next question, 

I know there are other questions that obviously this is an issue. It 

is a very serious one. I think it is one which we can do something 

about in terms of it. We need your direction to tell us what we need 

to do in Congress to fix that problem. 

It could be an additional appropriation. It needs to be something 

because it is clear that, you know, you have got average utility 

down there. My folks are saying—Georgia Municipal Association, 

City of Atlanta, Clayton County, Cobb County, De Kalb County, all 

of these counties that are holding over 30-, 40,000 folks, they are 

facing this dilemma. 

And so, we need to address that. That is a really killing issue to 

us. 

And you have got $900 or $1,000 in rent for a two-bedroom 

apartment, the utility is $400, that is $1,300, and you got only an 

assistance of $819, as you say. And quite possibly $200 of that is 

folded in to take care of the utilities. 

Let me just ask you one other question too. For the FHA, in 

those FHA-insured homes in the devastated area, have you issued 

any moratorium on closure? 

Mr. MONTGOMERY. Thank you, Congressman. Yes, sir, we have. 

We issued the first 90-day moratorium shortly after the hurricane. 

The first moratorium expired in late November. We extended, sir, 

an additional 90 days that will currently take us to the end February of 2006. 

Mr. SCOTT. Let me ask you. Another major concern is the longterm planning of this and your ability to work. Whatever it is, I 

do not know what these differences are. 

Well, before I get into that, what are the differences? Let’s lay 

the cards on the table. I just believe that there are some problems. 

Not only are there problems within FEMA responding to this, problems within HUD responding to this, there appears to be a very serious problem of getting HUD and FEMA together. 

What is the status of your relationship with one another? Be 

frank and honest with us because there are clearly some problems 

here; we need to address those. There are people out there who are 

hurting because there is a failure with these two agencies, one 

dealing with the temporary that has to hand it off to the 

21

semipermanent to the permanent housing to fix. If there is no 

bridge there, if there is no glue there, we have a problem. 

Mr. MONTGOMERY. I will address that, speaking for FHA and for 

housing at HUD. We realized early on that this was an unprecedented disaster. And we, on our own, dispatched dozens of HUD 

staff to staff Disaster Recovery Centers, knowing that FEMA would 

need those resources. 

We again modified an existing interagency agreement that we 

had with them, so we quickly put that into place along the Gulf 

Coast, relative to the FHA foreclosed homes that we had in our inventory. And working with them, we quickly pulled those homes off 

of the market, knowing that they would be occupied. 

What we did know early on was the level of repair that they required. But, again, that was us working together with FEMA. 

Mr. SCOTT. I want to get to this point. I want to know if this is 

the root of the problem. 

There have been individuals and housing advocates all across the 

board—and I am sure you are aware of this. They have increasingly been raising the issue of whether some or all of FEMA’s housing assistance responsibilities should be transferred to HUD, the 

Federal agency which is primarily, as you are, for housing policy. 

And these calls have increased in light of the continuing criticism 

of FEMA’s administration of its emergency housing programs. 

Where are we on that? Is there movement here? Is there any 

substance to these issues and this effort to transfer all of the housing into HUD? 

Mr. MONTGOMERY. Well, certainly, sir, that is a decision others 

will have to make. But, speaking for the here and now, I think we 

have all learned significantly from this. And to the degree that we 

could, when we encountered a problem, instead of saying, Well, 

that is a square peg in a round hole, we said, let’s make that 

square peg fit in that round hole. 

Mr. SCOTT. You are aware that some people are suggesting that? 

Mr. MONTGOMERY. Sir, I am aware of that. Again, those are decisions for others to make. 

But I would also say one thing that we learned from this. 

Chairman NEY. I’ve got to call time on this. Sum it up. 

Mr. MONTGOMERY. We learned from this, working with other 

Cabinet agencies—as you know, HUD is not the only Cabinet agency that has a housing role; certainly, USDA does and VA does. We 

work very closely with our partners in those other Cabinet agencies, including in the Disaster Recovery Centers, bringing all of our 

efforts, all of our properties to bear; and particularly USDA should 

be commended for what they did. 

Chairman NEY. I could be wrong, but before FEMA was created, 

didn’t HUD have a HUD disaster, and they handled everything, 

and people got mad and they created FEMA. 

Mr. MONTGOMERY. That is my understanding. 

Mr. WATT. Thank you, Mr. Chairman. I am not a member of this 

subcommittee, and I am an interloper, so I want to try to stay well 

within the 5 minutes. 

There is plenty of abuse that HUD, FEMA, and everybody else 

is taking. I want to take the opportunity to praise something that 

I think may have the capacity to be built upon. 

22

The Congressional Black Caucus’s Katrina relief bill has a provision in it that would provide for payment of mortgage payments by 

the government for a 1-year or 2-year period; and I think it is wonderfully significant that HUD has picked that up with reference to 

the things that are under its jurisdiction. 

So a couple of questions, because I think we may have the potential here to build on something that you all have taken the lead 

on. 

Have you—in the aftermath of your decision to do this mortgage 

assistance program for FHA-insured mortgages, have you found 

any receptivity in your discussions with private mortgage lenders 

to do the same, to replicate this program with non-FHA insured 

mortgages? That is the first question. 

Second, you may not have this information readily available with 

you today, but I certainly would like for you to give the information 

to the committee. What is it going to cost to do this mortgage assistance program? Obviously, you all have costed it out, I would assume you have; you may not have the figures right here. But it 

seems to me that the way you have done it, picked up the payments for a period of time, and then tacked those payments back 

on the end of the mortgage, while it costs something in the short 

term, saves something in the long term because you do a lot less 

foreclosures. 

And where I am headed to here is, if we could get a number and 

this is a manageable number, we might be able to convince our colleagues here that by spending a little bit of money on a program 

such as this in the short term, we might even be able to convince 

lenders that by doing this in the short term, it is a long-term savings to them. 

So is there any receptivity that you have sensed from the private 

mortgage lenders to follow your lead, and if they did and did it basically on the same model, tacking the payments that are deferred 

onto the end of the mortgage, what would be the financial impact 

of doing that? 

Mr. MONTGOMERY. Thank you, sir, for your questions. I will answer the second one first. You had asked about the cost of doing 

it. 

Speaking for HUD, we considered the cost of not doing it, that 

by investing in this—yes, it is a note, a second mortgage that is 

not payable, however, until the first mortgage is paid off or refinanced—we will lose less money in the long term. 

It wasn’t our principal reason for doing it. We wanted to give 

these families some relief. They have got enough to worry about. 

We wanted to be able to take this off of their plate. To the degree 

that we could, sir, we did that. 

Mr. WATT. But you are not really saying that the net cost effect 

is—you have costed it out—is a positive figure, are you? I mean, 

surely it is costing you something. 

Mr. MONTGOMERY. Absolutely. 

Mr. WATT. I understand that this is a good gesture. But I want 

the record to be clear. You are not saying FHA and HUD are going 

to gain money as a result of doing this? 

Mr. MONTGOMERY. No, sir, we will not. 

23

Mr. WATT. So there is a cost associated with it that is aside from 

the, you know, the cost of not doing it? 

Mr. MONTGOMERY. That is correct. 

Mr. WATT. That is the cost I am looking for. And, you know, you 

may not have it today. I just think it is important for us to get it 

in the record. 

Mr. MONTGOMERY. Yes, sir. We will do that. 

Chairman NEY. The time has expired. You can sum up. 

Mr. MONTGOMERY. Just quickly, sir. It is difficult for us to speak 

for the conventional market. Speaking for Fannie and Freddie, 

though, they did put moratoriums on their mortgages fairly early 

on. 

Perhaps the conventional market will look at the fact that we 

will lose less money by doing this effort, and they will have to 

make those decisions on their own. 

Chairman NEY. Ms. Lee. 

Ms. LEE. Let me go back to asking my question with regard to 

the homeless. In terms of those who were homeless prior to 

Katrina, what are the details in terms of eligibility for program assistance and funds for evacuees now, who were homeless prior to 

Katrina, and who knows where they are now? 

But what is going on with them and how do they become eligible 

for housing assistance? 

Mr. CABRERA. Many of these questions are answered, frankly, by 

the existing system. It is a continuum of care. And those who are 

homeless and involved in a continuum of care, who are identified; 

and then what we would do is match that with current FEMA intake information and try to locate them. 

In those cases where they were located, we are providing housing, including KDHAP vouchers. 

Ms. LEE. And when they return home, what will they go back to? 

Where will they be returned to in terms of housing? 

Mr. CABRERA. We are implementing a housing solution that 

would entail a greater incentive than just the physical locale in 

which to live, with respect to the Katrina response. 

But returning home is an issue as well. I mean, New Orleans is 

probably not going to be an alternative for a homeless person to go 

back to for a while. So at the end of the day, what we are trying 

to do is maintain this program, the KDHAP program, in order to 

provide for their housing as long as possible. 

Ms. LEE. I guess when they return home, when it is safe for 

them to return home and when there has been adequate housing 

built, a person who was homeless prior to Katrina, will they be eligible to return to some rental housing, for example, subsidized by 

HUD, or where they will return? 

Mr. CABRERA. They will be eligible to still receive the subsidy 

they previously received when they were part of the continuum of 

care. 

Ms. LEE. But—part of the continuum of care, sure, but if you are 

homeless, you are living in a shelter or you are homeless. So do you 

return homeless to the block where you were living, or do you go 

to the shelter? 

Mr. CABRERA. In the case of the homeless, there are a variety of 

groups. There are folks who are homeless for one reason or anVerDate 0ct 09 2002 16:42 Oct 12, 2006 Jkt 026759 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 F:\DOCS\HBA348.040 HFIN PsN: TERRIE
24

other. In some cases, those are folks that are going to go to shelters. That is the place where they feel they are best served. So that 

largely becomes an issue of how that city deals with the homeless 

issue in their particular area. 

For those who are looking to go beyond that, that is a longerterm issue that I believe frankly would be outside the orbit of 

emergency response. Most of what we have been dealing with here 

is emergency response. 

Ms. LEE. Okay. So for those living in the streets who are homeless and had to leave to survive, what do they return to? 

Mr. CABRERA. Well, I think it depends upon—it is not a question 

of what they return to. Their question is, we have to locate them 

now. 

Ms. LEE. Well, once you locate them. 

Mr. CABRERA. I am trying understand the question a little bit 

better. I think what you are trying to ask me is, what happens 

after the subsidy is up, the KDHAP subsidy is up? 

Ms. LEE. When people return home, when housing is built, when 

it is safe to return, people who were living in the streets, who had 

to leave— 

Mr. CABRERA. They were already receiving some subsidy from 

public and Indian housing. 

Ms. LEE. But they did not have any place to live. What I am trying to find out is, will they have a place to live now when they return to New Orleans? 

Mr. CABRERA. I think that is part of a more general question, 

which is, what is that continuum of care eventually going to do for 

folks who are homeless, what is ‘‘homeless’’ defined as? 

Ms. LEE. But if you are living on a block, a street corner, and 

you are homeless, and you get whatever subsidy you get every 

month to get food stamps or whatever, do you return to that block 

where you are living, where you were living? 

Mr. CABRERA. You were previously in a program where people 

were familiar with you and people were attending to your needs. 

And at that time, the time the hurricane hit, we were asked to undertake essentially a housing solution for them in that context. For 

those folks, that continuum of care will persist. 

But I am not sure that those are the only folks you are discussing. 

Ms. LEE. I am talking about other folks. I know that New Orleans had a large homeless population, like many urban areas. So 

what happens to those were living in the streets? 

Mr. CABRERA. For folks who were living in the streets, whose 

continuum of care we are not aware of, I mean, no one— 

Ms. LEE. So everyone had shelter? Everybody was living in a 

shelter? 

Mr. CABRERA. I do not believe that anyone has ever maintained 

that those folks had shelter. I think the issue is that there is a continuum of care that was trying to deal with them. That is the context that we can best address. 

Ms. LEE. But will they have shelter when they return? 

Mr. CABRERA. The issue is first locating and identifying. 

Chairman NEY. The time has expired. Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

25

Mr. Montgomery or Mr. Cabrera, first of all, this is a question 

that I think all human beings can feel. 

What is your assessment of the interest of Congress in trying to 

solve the issues, the mammoth issues, in the Gulf Coast region 

based on—you know, there are four people here from the committee, but does that say anything to you at all? 

Mr. MONTGOMERY. I am sorry, Congressman. I want to make 

sure I understand the question. You are asking our assessment of 

Congress’ role or their interest? 

Mr. CLEAVER. No. I know the role of Congress. 

I am asking if you can look here at the four Members present, 

and realize there are about 30 others who are not here, maybe 

more. Does that make any suggestion to you about the disinterest 

in Congress, that this issue has already had its moment in the sun, 

and so there is no need to, you know, press forward to try to resolve the issues that are in front of us? 

What do you think when you look up here? 

Mr. MONTGOMERY. Congressman, it is hard for me to speak why 

there are so few Members here today. 

Mr. CLEAVER. No, no, no. 

Mr. MONTGOMERY. If I understand the question, we have had significant discussions with Members not here today, with their staffs, 

and certainly the Members who are in the Gulf Coast region. 

Mr. CLEAVER. That is not what I am talking about. 

I don’t blame you for avoiding it, because it has nothing to do 

with you in a way; it has something to do with the problem that 

I think faces this country on almost any issue. That is attention 

deficit disorder. 

I mean, all of a sudden there is no interest, it appears, in this 

issue. And people are in pain. And I just wonder whether or not 

both HUD and FEMA would have a different kind of aggressiveness if there appeared to be Herculean interest both from the Administration and from Congress? 

And you are saying that it wouldn’t matter, you are going to—

you are going to just push ahead no matter what anyway. I mean, 

that is the correct answer. 

Mr. MONTGOMERY. It is true, sir. We are pushing ahead. 

Mr. CLEAVER. I understand. Okay, well, I am trying to make my 

point too. Hopefully, I have. 

Is training going on now for fair housing and 504 housing accessibility requirements in the flood-ravaged area? Are you doing 

training on fair housing and 504? Assistant Secretary Kim 

Kendrick recently described training on fair housing and 504 housing accessibility requirements that the Department is conducting in 

the hurricane affected areas. 

Can you describe now the training that is going on? 

Mr. MONTGOMERY. Congressman, I cannot get into a level of detail on the training, as that is not a program that is under my purview. But I can wholeheartedly say that Assistant Secretary 

Kendrick is 100 percent committed to making sure that fair housing remains a large part of the recovery and rebuilding effort in 

and around the Gulf Coast region, and throughout the country. 

Early on, staff from fair housing were dispatched to the Gulf 

Coast region, within days, and those staff are still down there, sir. 

26

And since that time, Assistant Secretary Kendrick has been sworn 

in, and she has continued an equally aggressive posture in that regard. 

Mr. CLEAVER. I am not sure if it is under your purview or not. 

But do you know if HUD is doing something proactively to make 

sure that HUD contractors are aware of 504 and fair housing 

guideline obligations? 

Mr. MONTGOMERY. Sir, if I can get you a concrete response after 

this, after I have discussed it with Assistant Secretary Kendrick— 

Mr. CLEAVER. Thank you very much. 

Let’s move on. One of the concerns that seems—that I think is 

being kind of overlooked: Why is it that the mortgage lenders—why 

are mortgage lenders asking evacuees to get vacant property insurance? 

Mr. MONTGOMERY. I am sorry, sir, about property insurance? 

Mr. CLEAVER. Vacant property insurance. Evacuees, some have 

said to us that they are being required to get vacant property insurance. 

Mr. MONTGOMERY. Well, sir, I can speak for FHA in that regard; 

I cannot speak for the conventional market. 

But part of our market assistance initiative is, we will pay the 

insurance for that 1-year period. In addition to the principal, the 

interest, and the taxes, we also pay the insurance. 

Mr. CLEAVER. Okay. 

Chairman NEY. Let me just ask one question, and then we will 

go on if you have some other rounds of questions. 

Has HUD completed the damage assessments in the impacted 

areas? Have you completed those? 

Mr. MONTGOMERY. Speaking for FHA, sir, those damage assessments continue as we speak. I have previously shared some of the 

numbers on the FHA properties, as far as the levels of damage, 

whether they are severely damaged or can be repaired. 

Relative to the multifamily portfolio, we have a little more concrete answers. It appears right now, for the three disasters in the 

Gulf Coast region, the estimated damage for multifamily properties 

is a little less than $400 million. 

Chairman NEY. One thing I wanted to mention. This is what was 

in a recently updated version of HUD’s online report. I know you 

took some of those actions on assessing damages. 

In the recent report, it says, ‘‘Actions taken in response to Hurricane Katrina,’’ dated November 1st, HUD states, ‘‘All physical inspections of both public housing and multifamily properties in the 

impacted counties in Mississippi, Louisiana, Alabama and Florida 

have been postponed.’’ That was online. Are you aware of that? 

Mr. MONTGOMERY. I do not believe, speaking for our portfolio, 

sir, I do not think that is the case. We have fairly concrete numbers now. 

Mr. CABRERA. Mr. Chairman, I think what that might be referring to—and I will go back and double-check—is that as part of our 

customary practice, we do physical inspections. So they mean the 

physical inspection of units that are required, I think, in public 

housing. 

The postponement means that we know you are busy trying to 

recover, so therefore you should not expect HUD or any of its inVerDate 0ct 09 2002 16:42 Oct 12, 2006 Jkt 026759 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 F:\DOCS\HBA348.040 HFIN PsN: TERRIE
27

spectors to knock on the door and assess you based upon damaged 

property. That is, I think, what they intend by stating it. 

Chairman NEY. Do you know why the proposal, I think, we have 

seen so far from the Administration—why it did not include designated funding for repairing and rebuilding the damaged and destroyed public housing properties; or is that altered and there is 

now a proposal to do that? In other words, restoring public housing 

that was damaged in those areas, is there something in the Administration’s proposal that would do that? 

Mr. CABRERA. I think the Administration is committed to restoring multifamily housing to the extent that the President has committed or made it clear that New Orleans needs to recover, because 

it is critical to the United States. 

I think the issue is that there are a lot of ways to recover inventory. And I am not entirely sure that it is just an issue of the public housing appropriation. I also think that part of the appropriation in the supplemental was designed to deal with the ability to 

either rehabilitate or build units of one kind or another for affordable housing. 

Chairman NEY. Well, I will move on to our ranking member. I 

just think as this—you know, I have other questions which we will 

ask HUD. But with the housing authorities and what had to happen, and moving people and brand-new Section 8 vouchers, and 

people have gone across the country with all of these issues that 

are out there, I just think that we are going to have to be careful 

in the Congress to make sure that as we try to help people, HUD 

then does not, you know, try to assume the costs of all this, and 

then people who are on waiting lists in other parts of the country 

do not have help. 

I mean, I think that is something that we have got to be careful 

to watch. 

Ms. WATERS. I know that you have probably been asked some of 

these questions more than once. 

But what is amazing me as I examine what FEMA is supposed 

to be doing and what HUD is doing, I believe that there are just 

tremendous resources, but we do not feel the impact of those resources out there. 

Let me just ask you, the Katrina Disaster Housing Assistance 

Program—HUD is responsible for administering the Katrina Disaster Housing Assistance Program—will provide up to 18 months 

of temporary rental assistance for tens of thousands of families displaced by Hurricane Katrina; will jointly administer this program 

with the help of approximately 2,500 public housing authorities for 

those receiving HUD assistance before the hurricane struck. 

To be eligible, displaced families must register with FEMA. Families will be given a rental subsidy based on 100 percent. 

Okay, so FEMA handles this program for you, for the victims of 

the disaster. They register with FEMA, those who are eligible for 

the Katrina Disaster Housing Assistance Program. They register 

with FEMA. Is that how it works? 

Mr. CABRERA. Typically what happens is that anyone who is a 

storm victim registers with FEMA generally. If that person happens to have been a tenant in public housing or a recipient of a 

Section 8 voucher, then the KDHAP program was created in order 

28

to provide them with the ability to pay for housing, and that is 

what the KDHAP is designed to do. 

Ms. WATERS. So how many families or individuals have you assisted who have gone through and gotten their FEMA registration, 

and they have been connected with or identified with one of the 

persons eligible for KDHAP? How many of those have you assisted? 

Mr. CABRERA. The number of people assisted right now is—approximately 12,500 people have been processed to receive KDHAP. 

Ms. WATERS. What does that represent of the total number, or 

would you have any way of knowing? 

Mr. CABRERA. The total number of people who are potentially 

qualified to receive KDHAP is approximately 75,000 in terms of 

people who received HUD assistance. 

Ms. WATERS. What do you think happened to the rest of those 

folks, the 75,000? 

Mr. CABRERA. I see why the difference between 75,000 and approximately 12,500. In many cases, it is finding folks; in many 

cases, it is people who have not signed up; in many cases, issues 

of eligibility are being dealt with. 

It is not an easy thing to locate people after a storm, even 110 

days after a storm. 

Ms. WATERS. Do you have a public relations program or a public 

service program of some kind where you do outreach to try and 

say, if you lived in public housing, this is what you do? Do you 

have something like that? 

Mr. CABRERA. Yes, we have, and we have used it extensively. 

Ms. WATERS. Okay. 

Now, Congresswoman Lee was asking you about homeless individuals. This information that you gave us said eligible families include displaced public housing residents, Section 8 voucher holders, 

other HUD-assisted households, and predisaster homeless individuals who are directly affected by the hurricane. 

Mr. CABRERA. Correct. 

Ms. WATERS. Do you know if any of those homeless people have 

been assisted? 

Mr. CABRERA. As I recall, a lot of those folks are currently receiving KDHAP vouchers, yes. I do not know the number affirmatively, 

because again it is difficult to ascertain. 

These are people who would have to register with FEMA. In 

many cases, they do not. 

Ms. WATERS. Okay. 

The FHA provides both single and multifamily housing insurance 

when there is a disaster declared. The declaration automatically 

implements certain procedures with regard to FHA-insured mortgages in the affected areas. These procedures remain in effect for 

1 year. 

Who, and how can you describe who has received assistance from 

HUD as a result of this declaration? I am interested in the mortgage payment problem. We have a lot of homeowners in some of 

these areas, and most of them cannot continue to pay the mortgage, but I guess they will continue to owe. Some of them were insured and some were not. How do you fit into that? 

Chairman NEY. The time has expired, but please go ahead and 

answer the question. 

29

Mr. MONTGOMERY. Thank you, Ranking Member Waters. Again, 

speaking only for FHA, we just announced this program last week. 

And mortgagees, lenders, are in the process of reaching out to their 

borrowers who will be eligible for this program. 

We have also sent out numerous news releases, media interviews 

within the region, encouraging people who have FHA mortgages to 

call their lenders as soon as possible. And I can get you some numbers after this meeting. 

Ms. WATERS. Well, just tell me how it works real quick, if I may. 

They call and say, I cannot pay my mortgage, then what happens? 

Mr. MONTGOMERY. We will have to look at their current situation. But if they do qualify for the program, then we will forebear, 

we will put off those payments for a period of up to 12 months. 

Ms. WATERS. Up to 12 months. So it is too soon to know whether 

or not anybody is taking advantage of that program? It is recent? 

Mr. MONTGOMERY. Yes, ma’am. We just announced it last week. 

I will get you some numbers after this meeting and communicate 

those back to your office. 

Ms. WATERS. And you will make that program aware to the 

mortgage holders, the banks, and what have you, and they will tell 

the people that they can have their mortgages placed on hold for 

a year? 

Mr. MONTGOMERY. The lender, if you will, will sit down with the 

borrower and look at their assessment, look at the damage assessment, and determine whether or not they are eligible for the program, because it is the lender’s loan; FHA just provides the insurance. 

Ms. WATERS. All right. Mr. Chairman, I will follow up on that. 

Chairman NEY. Other final questions? 

Ms. LEE. I would like to ask you about HUD’s contracting authority and what exactly takes place as it relates to housing and 

community development efforts in this whole Katrina response. 

Several of us met with the African American Chamber of Commerce and minority and small businesses. And, of course, the concern right after Katrina was that these companies have been shut 

out of the primary contracts in terms of cleanup and all of the immediate kind of work. 

Does HUD intend to, or are you contracting any of these programs out now, or will you be? And if so, what type of contracts 

will you be letting? 

Mr. MONTGOMERY. Congresswoman, we have our Assistant Secretary for Community Planning and Development here if you would 

like her to respond to those questions. 

I will offer, though, that HUD, as an agency, I believe leads the 

government in contracts with minority and disadvantaged firms in 

8a contracts. I know that they have an outstanding record in that 

regard. 

Ms. PATENAUDE. Congresswoman, if I could echo Assistant Secretary Montgomery, Secretary Jackson is very committed to small 

business. It is actually a procurement question. 

Ms. LEE. And minority businesses? 

Ms. PATENAUDE. Absolutely. 

30

Ms. LEE. Could you tell us, give us an example of the type of contracts that will be coming down the pike as it relates to the 

Katrina efforts? 

Mr. CABRERA. Most of the efforts relating to contracting at NPIH 

we have worked in within the context of the existing contracts. A 

lot of those servicers are 8a and minority-owned contracts. And we 

have simply, within the orbit of the law, within what is permissible, expanded that servicing. 

What is coming down the pike, I am—honestly, Congresswoman, 

I do not know. But I think one of the things you are asking me is 

whether HUD will have to do, for example, debris removal, or will 

HUD do other kinds of emergency response functions. And typically, the answer from PIH’s perspective—and not to speak for either of my two colleagues, but generally from HUD’s perspective, 

is, no, that is typically handled by FEMA. 

Ms. LEE. Okay. Well, is there a way, though, that we can get an 

idea of what you will be contracting out in terms of the Katrina response? 

Mr. CABRERA. I am happy to inquire and get back to your office. 

Ms. LEE. Thank you very much. And also what if the plans are, 

if it is strictly expanding 8a contracts to include a larger scope of 

work, let us know that, or just what exactly you plan to do with 

those new funds. 

Thank you. 

Chairman NEY. Mr. Cleaver. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

I am going to give you the HUD funding targeted for the rescission package, and I want you to tell me if it will have an adverse 

impact on what we are trying to do in the Gulf region: $100 million 

for Section 811 disabled housing construction program; $24 million 

for the HUD brownfields redevelopment grant; and $6 million in 

credit subsidies for the CDBG Section 8 program. 

Those are all targeted for rescission. What impact will that have 

on what we are trying to do in the Gulf region? 

Mr. MONTGOMERY. Sir, relative to the 811, the $100 million was 

unobligated funds. Those funds had not yet been obligated. 

Mr. CLEAVER. So there is no impact. Is that what you are saying? 

Mr. MONTGOMERY. Sir, it is difficult to say what that impact 

would have been, since they were unobligated. But that is what the 

decision is that was made. 

Mr. CLEAVER. Brownfield, I mean if there has ever been a 

brownfield explosion, it would be certainly in the Ninth Ward. And 

$24 million is being cut from the brownfield program. 

Mr. MONTGOMERY. Again, Congressman, I would ask that Assistant Secretary Patenaude, who administers that program, respond. 

Ms. PATENAUDE. Congressman, we have money still available in 

fiscal year 2005. We have not awarded the 2005 awards, and we 

do anticipate having $10 million in 2006. 

Mr. CLEAVER. So they were unobligated. These were brownfield 

dollars that were available that cities were not awarded. 

Ms. PATENAUDE. They have not been awarded yet for 2005. They 

will be shortly. 

Mr. CLEAVER. They will be awarded shortly? 

Ms. PATENAUDE. Correct. 

31

Mr. CLEAVER. So we cannot count that as dollars that will be 

used in New Orleans? 

Ms. PATENAUDE. That competition was under way prior to the 

hurricane. 

Mr. CLEAVER. Yes, that is the precise point I am making. So $24 

million in the rescission for brownfield will have an impact on what 

we are going to need it to do in New Orleans. 

Ms. PATENAUDE. We will still have $10 million available in fiscal 

year 2006 for brownfields. 

Mr. CLEAVER. So the $24 million is irrelevant to what we want 

to do in New Orleans? 

Ms. PATENAUDE. It could have a potential impact. It is a competitive program. 

Mr. CLEAVER. I am a former mayor. I am familiar with all of 

these programs, very familiar with them. And since New Orleans 

cannot compete, probably, right now in terms of developing the programs and making all of the assessments, how are we going to deal 

with brownfield problems and no money? 

I mean, they cannot compete. You are saying that the cities have 

already competed. 

Go ahead. 

Ms. PATENAUDE. In 2006, we will have $10 million available. 

Mr. CLEAVER. For New Orleans? 

Ms. PATENAUDE. New Orleans would be eligible to compete for 

those dollars. 

Mr. CLEAVER. Okay. So if we have, let’s say, four major projects, 

let’s say five or six large service stations or some other highly toxic 

soil, it will take up the $10 million. 

So what we are saying is that there is a minuscule amount of 

money compared with the need that will go into New Orleans? I mean, $10 million. God bless everybody, but I mean, I wish I had $10 million. But, you know, $10 million in my pocket is different than $10 million in New Orleans after this flood, and after 

the contamination level has made the whole city a brownfield. 

So $10 million is insufficient; isn’t that right? 

Ms. WATERS. Will the gentleman yield so I can give you some information that may be helpful with this questioning. I am told by staff that the $24 million in brownfield has been rescinded. They sent in a request for rescinding that money, along 

with $100 million for Section 811 and $6 million for CDBG. 

Mr. CLEAVER. Yes, I just gave them that information. 

Ms. WATERS. She said it was going to be awarded? 

Mr. CLEAVER. She said there was $10 million that was not 

awarded last year that will be used in New Orleans. 

As a former mayor, I am saying that $10 million in Kansas City, 

the largest city in the State of Missouri, would not deal with 10 

blocks. We are talking about a whole city that is a brownfield, 

Brownfield, Louisiana. So we do not have enough money, right, for 

the brownfield? 

Ms. PATENAUDE. We have $14 million still available for fiscal 

year 2005, and $10 million for the fiscal year 2006 after the rescission. 

Mr. CLEAVER. So we would have had $48 million without the rescission? 

32

Chairman NEY. Any additional questions? Time has expired. 

Ms. PATENAUDE. We are dealing here with 2 fiscal years. 

Mr. CLEAVER. I understand. 

Ms. PATENAUDE. The $24 million rescission is for fiscal year 

2005. 

Mr. CLEAVER. So we do not have enough money, right? 

I mean, can somebody else answer, somebody over here? Do we 

have enough money? 

Ms. PATENAUDE. Sir, the CDBG program can also be used. 

Chairman NEY. No, we don’t. 

Seriously, it is going to take billions of dollars for the infrastructure, just to get the cleanup. That is my opinion. I mean, I think 

it is going to take billions. Any response to that? 

Mr. CLEAVER. Write it out and do not sign your name to it. I 

mean, you know, when you look at the rescission and then you look 

at the problems that are out there, does HUD support this, the rescission? 

Mr. MONTGOMERY. Sir, relative to all of the decisions, obviously 

this was a disaster of unprecedented scale. Some difficult decisions 

had to be made. 

Mr. CLEAVER. So HUD doesn’t support it? 

Mr. MONTGOMERY. Sir, that was a decision that was made on the 

rescission. 

Mr. CLEAVER. So you are denying HUD made it? God bless you. 

Have a nice holiday season. I appreciate it. 

Chairman NEY. If we could follow up with questions that you 

have, we would like them back in writing. 

I wanted to also note, this is Cindy Chetti’s birthday. 

Cindy, raise your hand. So happy birthday. 

She does a lot of work on this committee and helps a lot. 

I want to thank the members. I want to thank HUD. I appreciate 

your patience today, and follow-up questions, I think, will be important. 

So with that, we may have additional questions for this panel; 

they may want to submit in writing. Without objection, the hearing 

will remain open for 30 days for members to submit their questions 

and for the witnesses to place their response. 

Thank you very much. 

[Whereupon, at 4:30 p.m., the subcommittee was adjourned.] 

(33)

A P P E N D I X

December 14, 2005

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