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THE FUTURE OF HOUSING IN AMERICA: 

OVERSIGHT OF THE DEPARTMENT OF 

HOUSING AND URBAN DEVELOPMENT 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JUNE 11, 2015 

Printed for the use of the Committee on Financial Services 

Serial No. 114–30 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

JEB HENSARLING, Texas, Chairman 

PATRICK T. MCHENRY, North Carolina, 

Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

ROBERT HURT, Virginia 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

MARLIN A. STUTZMAN, Indiana 

MICK MULVANEY, South Carolina 

RANDY HULTGREN, Illinois 

DENNIS A. ROSS, Florida 

ROBERT PITTENGER, North Carolina 

ANN WAGNER, Missouri 

ANDY BARR, Kentucky 

KEITH J. ROTHFUS, Pennsylvania 

LUKE MESSER, Indiana 

DAVID SCHWEIKERT, Arizona 

FRANK GUINTA, New Hampshire 

SCOTT TIPTON, Colorado 

ROGER WILLIAMS, Texas 

BRUCE POLIQUIN, Maine 

MIA LOVE, Utah 

FRENCH HILL, Arkansas 

TOM EMMER, Minnesota 

MAXINE WATERS, California, Ranking 

Member 

CAROLYN B. MALONEY, New York 

NYDIA M. VELA ́ ZQUEZ, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JAMES A. HIMES, Connecticut 

JOHN C. CARNEY, JR., Delaware 

TERRI A. SEWELL, Alabama 

BILL FOSTER, Illinois 

DANIEL T. KILDEE, Michigan 

PATRICK MURPHY, Florida 

JOHN K. DELANEY, Maryland 

KYRSTEN SINEMA, Arizona 

JOYCE BEATTY, Ohio 

DENNY HECK, Washington 

JUAN VARGAS, California 

SHANNON MCGAHN, Staff Director 

JAMES H. CLINGER, Chief Counsel 

(III) 

C O N T E N T S 

Page 

Hearing held on: 

June 11, 2015 .................................................................................................... 1 

Appendix: 

June 11, 2015 .................................................................................................... 59 

WITNESSES 

THURSDAY, JUNE 11, 2015 

Castro, Hon. Julian, Secretary, U.S. Department of Housing and Urban Development .............................................................................................................. 5 

APPENDIX 

Prepared statements: 

Hinojosa, Hon. Ruben ....................................................................................... 60 

Castro, Hon. Julian .......................................................................................... 62 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Poliquin, Hon. Bruce: 

HUD Office of Inspector General report entitled, ‘‘Office of Public and 

Indian Housing, Washington DC, Monitoring of the Community Service 

and Self-Sufficiency Requirement,’’ dated February 13, 2015 .................. 74 

Castro, Hon. Julian: 

Written responses to questions for the record submitted by Representative Waters .................................................................................................... 99 

Written responses to questions for the record submitted by Representative Murphy ................................................................................................... 101 

Written responses to questions for the record submitted by Representative Hinojosa .................................................................................................. 102 

Written responses to questions for the record submitted by Representative King ........................................................................................................ 106 

Written responses to questions for the record submitted by Representative Poliquin .................................................................................................. 111 

Written responses to questions for the record submitted by Representative Royce ....................................................................................................... 114 

Written responses to questions for the record submitted by Representative Ross ......................................................................................................... 116 

Written responses to questions for the record submitted by Representative Stutzman ................................................................................................ 120 

Written responses to questions for the record submitted by Representative Garrett .................................................................................................... 121 

(1) 

THE FUTURE OF HOUSING IN AMERICA: 

OVERSIGHT OF THE DEPARTMENT OF 

HOUSING AND URBAN DEVELOPMENT 

Thursday, June 11, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 10:07 a.m., in room 

2128, Rayburn House Office Building, Hon. Jeb Hensarling [chairman of the committee] presiding. 

Members present: Representatives Hensarling, King, Royce, 

Lucas, Garrett, Neugebauer, Pearce, Posey, Fitzpatrick, Luetkemeyer, Huizenga, Duffy, Hurt, Stivers, Stutzman, Mulvaney, 

Hultgren, Pittenger, Wagner, Barr, Rothfus, Messer, Schweikert, 

Guinta, Tipton, Williams, Poliquin, Love, Hill, Emmer; Waters, 

Maloney, Velazquez, Sherman, Meeks, Capuano, Hinojosa, Clay, 

Lynch, Scott, Green, Cleaver, Perlmutter, Himes, Sewell, Kildee, 

Murphy, Delaney, Beatty, and Heck. 

Chairman HENSARLING. The Committee on Financial Services 

will come to order. 

Without objection, the Chair is authorized to declare a recess of 

the committee at any time. 

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

Oversight of the Department of Housing and Urban Development.’’ 

I now recognize myself for 3 minutes to give an opening statement. 

As we approach the 50th anniversary of the founding of the Department of Housing and Urban Development, one can’t help but 

be struck by President Johnson’s boldness as he launched the 

Great Society with these words: ‘‘We have declared unconditional 

war on poverty. Our objective is total victory.’’ 

HUD was established 1 year later, in 1965, to become the war’s 

main weapon for combating poverty, rebuilding our cities, and 

making housing more affordable for all. 

Yet by nearly every official measure, poverty and its consequences are as bad as they were 50 years ago. The poverty rate 

today is essentially unchanged from when HUD was founded. Millions more Americans fall below the poverty line today, including 

an unbelievable one out of five children. This is shameful. 

HUD states that its mission is to ‘‘create quality, affordable 

homes for all.’’ Yet according to inflation-adjusted figures from the 

Census Bureau, since HUD was established, the median price of 

new homes has doubled and median rents have gone up by more 

2 

than one-third. In other words, it is not just the poor who find the 

cost of housing soaring beyond their means; it is almost everyone. 

This is unacceptable. 

To make matters worse, to achieve this unenviable record, HUD 

has already spent $1.6 trillion in its history and is asking for a 9 

percent budget increase—$1.6 trillion is more than $13,000 for 

every household in America. It is equivalent to the cost of feeding 

a family of 4 for an entire year. 

Meanwhile, one of the greatest threats to our poor continues to 

spin out of control—namely, the national debt clock. Given the 

Obama economy of the last 6 years, clearly, taxpayer rental subsidies for the poor are needed. But it is also an open question 

whether housing vouchers and public housing projects, HUD’s 

mainstay, are a long-term solution or are simply helping to create 

a permanent underclass. 

For whatever good HUD does, it clearly has not won the war on 

poverty. Only economic growth and equal opportunity can do that. 

In other words, the greatest housing program in America remains 

a good career path and a growing economy, not a HUD program. 

If we truly care about the least of these among us, we can no 

longer measure success by the number of dollars appropriated to 

HUD. That should be obvious. Instead, success must be measured 

by the number of our fellow citizens who rise from lives of poverty 

and dependency to lives of hope, self-sufficiency, and pride. That is 

true success. 

It is time to bring a new focus and new ideas on how to best help 

the poor in our society. On this purpose, which is a moral purpose, 

there should be no debate. 

I have been encouraged to hear our witness, Secretary Castro, 

state that he believes in an ‘‘evidence-based management style,’’ directed to the goal of ‘‘giving every person new opportunities to 

thrive.’’ To give these opportunities, again, it is time to think anew, 

not to reflexively add 9 percent to programs that have failed, again 

in the words of President Johnson, to ‘‘not only relieve the symptoms of poverty but to cure it and, above all, prevent it.’’ 

I now yield 3 minutes to the ranking member for an opening 

statement. 

Ms. WATERS. Thank you, Mr. Chairman. 

And welcome back, Secretary Castro. 

Today, we gather to discuss the future of housing in America. 

But, frankly, if left to my Republican colleagues, that future looks 

very bleak for many of our most vulnerable populations. 

Mr. Secretary, HUD remains a critical part of our Nation’s social 

safety net, and it is essential to ensuring that families have a stable roof over their heads. But, as we will see here today, my colleagues have no interest in strengthening our national housing system. Their priorities—that is, on the opposite side of the aisle—are 

clearly reflected in the recently passed HUD funding bill, which 

drives investment in this agency down to historic lows, undercutting programs which help families reach housing stability. 

HUD provides critical rental and homeless assistance for our 

country’s most vulnerable populations, makes important investments in local community development and affordable housing initiatives, and helps millions of families achieve the American Dream 

3 

of homeownership, all while ensuring fairness for historically disadvantaged communities. 

Safe, decent, and affordable housing is critical to ensuring that 

our young people are healthy and successful. Studies have shown 

that children who lack stable housing often fall behind their peers 

in school. 

And, today, HUD is more important than ever. In the wake of 

the foreclosure crisis, our Nation is facing a significant affordable 

rental housing shortage. Although private capital has an important 

role to play on this front, it cannot be leveraged without reliable 

Federal funding. 

To truly address the acute need for affordable rental housing and 

the epidemic of homelessness, it is absolutely critical that we fully 

fund and expand the housing and homeless assistance programs 

that have been so successful at HUD. 

This year marks the 50th anniversary of the establishment of 

HUD. And as I think about the next 50 years of housing in America, I believe that if we are truly serious about ending poverty and 

uplifting all communities, we must reinvest in HUD. 

Mr. Secretary, I believe that these same principles also underlie 

your vision for the future of housing in America, and I look forward 

to hearing your testimony today. 

Thank you, and I yield back the balance of my time. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from Missouri, Mr. Luetkemeyer, chairman of our Housing and Insurance Subcommittee, for 2 minutes. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

And welcome, Mr. Secretary. It is good to see you again. I’m glad 

you are here with us today. 

Mr. Secretary, I want to start by thanking you for traveling to 

Jefferson City a few weeks ago to meet with me, as well as area 

housing advocates and industry representatives. The common 

theme in those meetings was the dire need for regulatory relief. 

That was particularly true in the conversations we had with public 

housing officials. 

I think Allen Pollock, the long-time executive director of the Jefferson City Public Housing Authority, best described the current 

state of play when he said that the funding situation isn’t changing 

and that you, Mr. Secretary, need to take the initiative to reduce 

unnecessary burdens so that people can do their jobs with the resources they have been given. 

In the last 2 weeks, I have visited sites run by two different public housing authorities, and just last week Mr. Cleaver and I held 

a roundtable with advocates and industry representatives to talk 

about the immense challenges facing low-income housing organizations. 

When it comes to public and low-income housing, the status quo 

isn’t acceptable. Anyone who says there isn’t a need for reform or 

changes at HUD isn’t listening to the advocates, the administrators, or the residents of public housing. 

Mr. Secretary, you have been on the job for nearly a year now, 

and the most significant action you have taken at this point seems 

to be a cut of one-quarter of the revenue for the Federal Housing 

Administration, a move, as I stressed with your staff earlier this 

4 

week, that I believe continues to jeopardize homeowners and taxpayers. I have yet to see the changes necessary to build a stronger 

housing system for the American people. I know that you and I had 

some discussions, and you have some ideas, and I am looking forward to hearing about those ideas as the committee continues 

moves forward on this. 

But again, I welcome you, and I look forward to your testimony 

and to talking with you here shortly. 

Thank you. I yield back, Mr. Chairman. 

Chairman HENSARLING. The gentleman yields back the balance 

of his time. 

The Chair now recognizes another gentleman from Missouri, Mr. 

Cleaver, the ranking member of our Housing and Insurance Subcommittee. 

Mr. CLEAVER. Thank you, Mr. Chairman, Ranking Member 

Waters, and members of the committee. 

Mr. Secretary, good morning. 

The Secretary visited the Fifth Congressional District of Missouri 

not long ago. He actually visited both the other side of our State 

with Mr. Luetkemeyer and then came to the better side of the 

State and spent time in Kansas City. 

And so we are here today with the hearing entitled, ‘‘The Future 

of Housing in America: Oversight of the Department of Housing 

and Urban Development.’’ I think it is always important to look to 

the future, and hopefully this hearing will deal with the future 

more than the past, otherwise we are like somebody trying to drive 

a car looking through the rearview mirror. I think we have to go 

to the future, and figure out the things that we can do that would 

be important. 

But if we look at the past, I think it is important for us to think 

about the fact that when the economy teetered on the brink of cataclysmic collapse in 2008, the housing market was decimated, some 

families had lost generations of wealth, and unemployment skyrocketed. Home sales ground to a halt. 

And in the 7 years since, our economy has slowly improved. Last 

week, in their monthly report, the Bureau of Labor Statistics announced that the economy added 280,000 new jobs in the 63rd consecutive month of private sector job creation. Private-sector employment rose by 262,000. HUD’s April 2, 2015, housing scorecard cited 

the National Association of REALTORS® stating that sales of existing homes, including single-family homes, townhomes, and condominiums, rose 6.1 percent from February to a pace of 5.19 million, the best since September 2013. 

So I think there are some things that certainly we can do better, 

but I am very pleased, Mr. Secretary, that HUD is, in fact, doing 

a lot of things well. 

I yield back, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

At this time, it is my pleasure to welcome the Honorable Julian 

Castro back to our committee. 

The Secretary was sworn in as the 16th HUD Secretary on July 

28, 2014. He has been introduced before, and needs no further introduction. 

5 

At the Secretary’s request, before I recognize him to give an oral 

summary of his written testimony, the Secretary has asked to be 

yielded a minute in order to offer a statement of honor on behalf 

of a HUD colleague who passed away this week. 

So for that purpose, Mr. Secretary, you are recognized at this 

time. 

Secretary CASTRO. Thank you very much, Chairman Hensarling, 

Ranking Members Waters, and members of the committee. Thank 

you for inviting me to appear before you today and for giving me 

a bit of extra time to talk about one of our HUD family who passed 

away earlier this week, our Chief Financial Officer, Brad Huther. 

Brad really set the gold standard during his career for public 

service over a career that spanned 3 decades. He was a leader 

whose intellect allowed him to master complex subject matter and 

policy, and whose integrity made him a champion for everyday 

folks, who often count on effective government the most. 

After a decorated economic development career that included 

time at the U.S. Department of Commerce, and the World Intellectual Property Organization, Brad came out of retirement in 2014 

to join us at HUD. And although he was only with us for a short 

time, he made large contributions to our Department and to its 

work on behalf of the American people. 

He was an administrator’s administrator, a man of integrity, 

someone whom all of us respected and had confidence in. And his 

passing is an incredible loss for the field to which he contributed 

so much over his career. 

And, Mr. Chairman, I just wanted to say that our thoughts and 

prayers at HUD are with Mr. Huther’s family, and I wanted to acknowledge him in front of this committee because I know he had 

the opportunity to work with many of you, as well. 

Chairman HENSARLING. Mr. Secretary, on behalf of the House Financial Services family, we issue our sincere condolences to your 

colleagues as part of the HUD family on the gentleman’s passing. 

At this time, Mr. Secretary, I will recognize you for an oral summary of your written testimony. Please know that your complete 

written statement will be made a part of the record. Again, welcome, and you are now recognized for your testimony. 

STATEMENT OF THE HONORABLE JULIAN CASTRO, SECRETARY, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Secretary CASTRO. Thank you again. 

Mr. Chairman, we gather today at a very special moment for 

HUD. This year marks our 50th anniversary. 

I think all of us would agree that much has changed since 1965, 

but one thing hasn’t: the important role that quality housing and 

strong communities play in the lives of the American people. Where 

a person lives often shapes how they live, the jobs that are available to them, the education that their children receive, and the 

overall quality of life that they enjoy. 

That is why all of us at HUD come to work every day knowing 

that we can make a difference for others. And I am proud to say 

we are making an impact in a number of ways. 

6 

For example, HUD, along with our Federal and local partners, 

continues to make progress toward achieving the goals of President 

Obama’s Opening Doors initiative to prevent and end homelessness. From 2010 to 2014, we have seen a 21 percent drop in chronic 

homelessness and a 33 percent drop in veteran homelessness. And 

we will keep working until we reach that day when every person 

who needs housing can find it in our great Nation. 

We also continue to make important strides in helping families 

of all income levels secure a decent place to call home. One example is our innovative Rental Assistance Demonstration, which has 

helped communities leverage nearly $1 billion in private market 

construction investments to address long overdue repairs to public 

housing. And with an additional $5 billion coming down the pipeline, it is clear that we are going to help ensure that public housing 

is quality housing for years to come. 

We are also helping more responsible families achieve their 

dreams of homeownership through our Federal Housing Administration (FHA). FHA served as a stabilizing force during the housing 

crisis and has provided access to credit for generations of underserved borrowers. 

We built on this legacy earlier this year by making responsible 

homeownership more affordable by lowering our annual mortgage 

insurance premium half a percentage point to encourage another 

250,000 new borrowers to enter the market over the next 3 years, 

all while continuing to strengthen FHA’s financial health. 

HUD is making a tremendous difference across-the-board, and 

we all must continue working to do more. In fact, under HUD’s current budget, we are able to serve only one out of every four people 

who are eligible for our assistance. That is why we are examining 

our own operations to see how we can deliver results faster and 

more effectively to those whom we serve. 

I have charged HUD’s Deputy Secretary, Nani Coloretti, with 

making operational efficiency her top priority, and she has hit the 

ground running. The Deputy Secretary has spent her first 6 

months leading an operational and management review that we 

call ‘‘Deep Dives.’’ With many of these findings in hand, we are now 

taking action to improve how we do business to build on what is 

working and to adjust what needs improvement. 

One area of focus is our procurement process, which can take 

over 9 months to complete from beginning to end. These delays are 

unacceptable, which is why we have embarked on an effort to 

transform this process and reduce procurement days by 30 percent. 

In addition, by October 1st, we aim to reduce or resolve 10 out 

of the 11 material weaknesses outlined in our Fiscal Year 2014 annual financial review. We are also using shared service providers 

to minimize our unnecessary back-office functions so that we can 

better serve our Nation’s families and communities. 

At the end of the day, we know that our work isn’t about program names or statistics or charts; it is about people. No matter 

what side of the aisle you are on, I am sure that we can all agree 

on one thing: that our Nation is at its best when every person has 

an opportunity to thrive. And the work that HUD does gives folks 

the opportunity to thrive. 

7 

Working with our partners, we have given this opportunity to 

those experiencing homelessness who wanted a fresh start; to veterans who needed a little support adjusting to life after service; to 

older Americans, who deserve to live in comfort and dignity; and 

to families who are looking to buy their first home, put down roots, 

and build wealth for themselves and their children. And we continue to look for new ways to extend these opportunities to all 

Americans. 

Our partnership with Congress is essential to this work, and we 

look forward to working with you to secure funding that invests in 

proven housing initiatives to build a better and stronger HUD and 

to help more families achieve their own dreams. Through the 

strength of our partnerships, the power of our policy ideas, and our 

hard work, I am confident that we can ensure that the doors of opportunity are available to Americans today, tomorrow, and for the 

next 50 years. 

Thank you very much. 

[The prepared statement of Secretary Castro can be found on 

page 62 of the appendix.] 

Chairman HENSARLING. Thank you, Mr. Secretary. 

The Chair now yields himself 5 minutes for questions. 

Mr. Secretary, I am sure you are aware that this year doesn’t 

just mark the 50th anniversary of HUD; it also represents the 50th 

anniversary of the Moynihan Report, which many historians actually believe provided the impetus for the creation of HUD in the 

first place. 

Recently, the Urban Institute published a report entitled, ‘‘The 

Moynihan Report Revisited.’’ Are you familiar with the report, or 

have you had an opportunity to read it? 

Secretary CASTRO. I have not had an opportunity to read the entire report, no. I did see some press about it, yes. 

Chairman HENSARLING. Well, Mr. Secretary, in that report, after 

alluding to the alarming statistics of 50 years ago in the original 

report, it goes on to say about those statistics that, ‘‘They have 

grown worse, not only for blacks, but for whites and Hispanics as 

well.’’ 

You weren’t even born when HUD was first created, but after 50 

years, regarding $1.6 trillion, your requested 9 percent increase, 

specifically, what is the statistical evidence that HUD has made 

progress in achieving its original goal of eliminating poverty? 

Secretary CASTRO. Yes. Thank you very much for that. Let me 

give you two examples, Chairman Hensarling. Thank you for bringing up that report. 

Let me begin by saying that I see it differently. I do believe that 

we have made tremendous progress in the lives of Americans because of the investments that HUD has made. In fact, if we need 

proof of that, we can look at some of the committee members here 

who grew up in public housing, and who have been very clear that 

the fact they grew up and had a place to live, in public housing, 

is one of the reasons that they were able to achieve success— 

Chairman HENSARLING. Mr. Secretary, I am aware of the stories, 

and they are certainly inspirations to us all. But the statistics I see 

show that poverty is essentially unchanged after 50 years. So, let’s 

just start off with the statistical evidence. 

8 

Secretary CASTRO. Yes. So let me— 

Chairman HENSARLING. Do we have statistical evidence that 

HUD has actually played a role in eliminating poverty? 

Secretary CASTRO. Yes. I will give you a couple of examples. 

One of the examples I mentioned in my opening statement is veteran homelessness. We have seen a 33 percent reduction in veteran 

homelessness, and a large part of that is because of HUD–VASH 

vouchers that have been funded by this Congress. And the President has led that effort to effectively end veteran homelessness. 

Another example— 

Chairman HENSARLING. Over what time period, Mr. Secretary? 

Secretary CASTRO. We have seen a 33 percent reduction in veteran homelessness between 2010 and 2014. 

Another example is our Jobs-Plus initiative. There has been research done on Jobs-Plus that has shown that individuals who 

went through Jobs-Plus—which Congress has also funded in the 

past and for which we are requesting a significant increase because 

of its effectiveness—tend to earn 14 percent more than individuals 

who do not and that— 

Chairman HENSARLING. So why is the poverty level essentially 

unchanged in 50 years? 

Secretary CASTRO. Mr. Chairman, I believe that the answer to 

that is much larger than HUD and its programs. Not only that— 

Chairman HENSARLING. Let me ask you this, then, Mr. Secretary, in the limited time that I have. You and I have had private 

conversations, and, again, I have been encouraged by many things 

that you and I have spoken about, but I am still somewhat unclear, 

at the end of the day, as Secretary, how do you measure success 

at HUD? How is success measured? How do you define it, and how 

do you measure it? 

Secretary CASTRO. We measure success in several ways. You and 

I have had conversations about how we need to continue to get better about not just measuring input, how much investment we 

make, but also measuring outcomes. 

One outcome is the fact that somebody has a roof over their 

head. That makes a tremendous difference in their life. We have 

seen that, for instance, through Housing First, which tries to give 

veterans housing first so that they can stabilize themselves and 

then address other issues to get on the right track in life. 

However, I believe that we need to continue to measure, when 

we invest in things like Jobs-Plus, Family Self-Sufficiency, and the 

Resident Opportunities and Self-Sufficiency (ROSS) program, the 

extent to which those individuals who go through those programs 

go on and get good job training and get a job, the extent to which 

they get a good education, and that they are able to move up and 

out. 

Chairman HENSARLING. Mr. Secretary, my time is winding down. 

Let me ask you three specific questions. 

Number one, in tracking people’s right to rise, their ability to 

succeed, does HUD currently have any way of tracking when an individual leaves the assistance of one PHA and moves to another? 

Does HUD have any way to track that? 

Secretary CASTRO. HUD does track who is on the rolls of— 

9 

Chairman HENSARLING. But do you have a way of tracking if 

someone leaves one PHA and goes to another? 

Secretary CASTRO. I believe that we do have the opportunity to 

track that, Mr. Chairman. 

Chairman HENSARLING. Okay. I would like to have you share 

that with this committee, because— 

Secretary CASTRO. Sure. 

Chairman HENSARLING. —I haven’t seen those statistics. 

Do you have a way of tracking when someone leaves a PHA and 

becomes homeless? 

Secretary CASTRO. When someone leaves a housing authority and 

becomes homeless? 

Chairman HENSARLING. Do we have any way of knowing, if 

someone leaves a HUD program, whether or not they become 

homeless? 

Secretary CASTRO. I believe that we have a way to track within 

a continuum of care how many individuals are homeless. As to 

whether that person was— 

Chairman HENSARLING. If you would share that with the committee, because I haven’t seen that. 

And then last but not least, since I am already way over my 

time, is there any way that HUD today can track when people become self-sufficient and stay that way, say, 3 years or 5 years 

later? 

Secretary CASTRO. Yes. I— 

Chairman HENSARLING. Do you have any way to track that? 

Secretary CASTRO. —would be glad to share with you the evidence that we do have on that. Sure. 

Chairman HENSARLING. So you can track that? 

Secretary CASTRO. We have done some tracking of self-sufficiency, particularly— 

Chairman HENSARLING. For individuals. 

Secretary CASTRO. —particularly on the Family Self-Sufficiency 

Program. 

Chairman HENSARLING. Mr. Secretary, I haven’t seen it, so I look 

forward to receiving it. 

I am way over my time. 

Secretary CASTRO. Sure. 

Chairman HENSARLING. I now yield to the ranking member for 

5 minutes. 

Ms. WATERS. Thank you very much, Mr. Secretary. We are delighted that you are here with us this morning. And we thank you 

for the way that you have come into your position and the leadership that you have provided thus far. 

And I am very pleased to hear from Members on both sides of 

the aisle how generous you have been in visiting— 

Secretary CASTRO. Sure. 

Ms. WATERS. —their communities and how you have been so 

very, very helpful. 

I think I want to ask you a little bit about the rental housing 

and homeownership crisis that we have. 

In the current rental housing crisis, rent is taking a larger share 

of income, and families are facing greater challenges in saving for 

10 

a downpayment and being able to own a home. This could have serious negative consequences for the housing market. 

Just this week, again, the Urban Institute released a major 

study which predicts that the homeownership rate will continue to 

decline through 2030 and that a major rental surge is upon us— 

a surge that we are truly not prepared to meet. The homeownership rate will decrease for nearly all age groups, and African-Americans will fall further behind all racial groups in homeownership. 

What is your vision for how we solve this problem? And how can 

HUD, given the proper resources, enable more families in this 

country to own a home or affordably rent one? 

Secretary CASTRO. Yes. Thank you very much for the question, 

Ranking Member Waters. 

You are correct that what we see out there in the United States 

right now is an affordable housing rental crisis. A good example of 

this, a good demonstration of this was in our latest ‘‘Worst Case 

Housing Needs’’ assessment. What that found was that there are 

7.7 million low-income households who either are paying 50 percent or more of their income in rent, are living in substandard 

housing, or both of those things. And those families, by the way, 

are families who are not on any government assistance right now. 

Another report was released last week by the Low Income Housing Coalition that was fascinating in what it found. It said that in 

no decent-sized city in the United States could you afford a twobedroom apartment, a decent two-bedroom apartment, working 

minimum wage full-time, and that in the vast majority of communities, you couldn’t even afford a one-bedroom apartment. 

So what is HUD doing about that? That is why we have requested additional Section 8 vouchers, for instance, because we lost 

67,000 Section 8 vouchers through sequestration. It is why we seek 

to stretch our resources as far as we can through initiatives like 

the Rental Assistance Demonstration (RAD). It is why we believe 

in properly funding both capital and operating for public housing 

and why we look to be innovative in communities with initiatives 

like Choice Neighborhoods and Promise Zones. 

We want to take a holistic approach to making more affordable 

housing opportunities possible for Americans. And, as I mentioned 

early on, right now we are only serving one out of every four people 

who qualify for HUD services. So we see that there is a tremendous 

need out there, and we want to do something about it. 

Ms. WATERS. I thank you very much. 

In the National Housing Trust Fund, we have a deficit of over 

7 million affordable available units. And we all know that Barney 

Frank worked very hard—I worked with him—to get the National 

Housing Trust Fund. 

We don’t seem to have much support from our friends on the opposite side of the aisle. We must find ways to fully capitalize the 

Trust Fund and defend against Republican attacks to abolish the 

program, including the latest attack in the House funding bill. 

Can you speak to this issue quickly? 

Secretary CASTRO. Yes. 

I was glad to see Director Watt flip the switch on the National 

Housing Trust Fund. This is particularly important and will be a 

powerful tool in creating more affordable housing opportunities beVerDate Nov 24 2008 17:48 Apr 28, 2016 Jkt 096991 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\96991.TXT TERI
11 

cause it focuses on extremely-low-income individuals. These are individuals who are making 30 percent or less than area median income. Sheila Crowley testified recently in front of Chairman 

Luetkemeyer that that is the segment of the population where we 

see the biggest gap in terms of affordable housing opportunities. 

And so we are disappointed in the Transportation, Housing, and 

Urban Development’s (THUD’s) recommendation that this be essentially wiped away and that HOME take its place. Those two 

programs have separate identities. 

Ms. WATERS. Thank you so very much. 

I yield back the balance of my time. 

Chairman HENSARLING. The gentlelady yields back. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Luetkemeyer, chairman of our Housing and Insurance Subcommittee. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. 

And, again, welcome, Secretary Castro. And, again, thank you for 

stopping by our district, the jewel of the Midwest and the most important area in Missouri, contrary to my good friend from Kansas 

City’s comment. 

But, again, I am just kind of curious. We had a meeting last 

week, the ranking member and I, with a bunch of industry and 

housing officials. And they came up with a lot of different concerns, 

but the same message that we heard in Jefferson City that day, 

and the same message I heard again last week: Regulation is 

strangling their ability to deliver services. 

Let me just give you an example of some of the things that they 

were talking about here. I see one of the advocates here this morning, and I will give you a couple of his ideas. 

Number one, recognize that you don’t have the same amount of 

funds that you would like to have, and figure out how you can use 

what you have more efficiently. If the Moving to Work (MTW) program works, expand it. If regulation is costing too much money, figure out how to minimize it. Raise the minimum rent. 

Another one we talked about was flexibility. Flexibility is going 

to be very important for them to be able to utilize the assets they 

have and to be able to serve the people they are supposed to serve. 

Another comment they had was that there is an inconsistency between regions of HUD’s offices, especially with regard to transportation issues. It is hard for one area to look at another area and 

see that they are getting to do something and that you are not, and 

that is a problem within your agency. 

I know in our discussions, you were trying to look for some ways 

to improve services, and these are some suggestions we have. So 

I guess my question to you is, are they something that you could 

work on with us? 

Secretary CASTRO. Absolutely. 

Let me say I also enjoyed the opportunity to visit Jefferson City 

and to hear from folks in the real estate industry and also some 

of the advocates, including PHA representatives. It was very insightful to hear particularly the concerns of a smaller PHA. 

And let me say unequivocally that, as I mentioned that day to 

you personally, we are ready to work with you and with the entire 

committee and with Congress on some of these issues. 

12 

I will give you an example of that. One of the things that was 

mentioned was this issue of the administrative burden related to 

income verification. Why do we require income verification every 

year for certain residents who are making the same income, basically, year after year? That is a good question, because 56 percent 

of our households who are HUD-assisted are elderly or disabled. So 

we are supportive of a change to that, which would only require income verification every 3 years for folks where at least 90 percent 

of their income is fixed-income sources. 

And with regard to MTW and the other issues that you mentioned, we are working on that. In this budget, for instance, we 

have proposed an increase of 15 MTW agencies that would have 

greater flexibility. And we are willing to look at these other issues, 

as well. 

Mr. LUETKEMEYER. Thank you for that. And we look forward to 

working with you on those issues. 

You made a comment a minute ago that there were 67,000 HUD 

vouchers that you said were cut out of the budget. In my discussions with a lot of the individuals in the industry, they made it 

seem like there were about 200,000 that went unused. Is that true? 

That they— 

Secretary CASTRO. I am not familiar with that— 

Mr. LUETKEMEYER. —were not able to access them because they 

didn’t have the funds or administrative opportunities or there were 

restrictions. Somehow, they couldn’t utilize all of them. 

Secretary CASTRO. That may have been true some time ago. 

However, what we saw when we went through sequestration is 

that folks out there, PHAs actually had to pull vouchers back. Instead of letting them out on the street, they had to inform families, 

no, no, you can’t use that voucher. 

Mr. LUETKEMEYER. Well, I am— 

Secretary CASTRO. So we are trying to get back to where we were 

before. 

Mr. LUETKEMEYER. These are people who are on the ground who 

are using these, and they are saying there are a lot of them that 

are left unused because of the problems that they have to deal 

with—the restrictions, the lack of flexibility, the whatever it is that 

is causing them not to be able to that. 

So I think it is something that you need to take a look at, because if we have them going unused, we need to—throwing a figure 

out, the 67,000, because of sequestration is not going to fly. 

Next, we had a long discussion with a group of your folks with 

regard to the income that was cut back in January. And, again, it 

really concerns me because according to your quarterly report, 

which I have right here, you are continuing to take in or lend to 

a group of folks who are probably more problematic, from the 

standpoint of you now are going to the 640 to 679 credit scores, 

which is fine, but by doing that, they expose you to more risk. More 

risk means more possible loss. 

And if you look at the losses, I really have some problems here 

with some of the loss information in the report. In one place, it 

says you have lost $7.5 billion over the first half of the year, which 

means you are going to lose $15 billion this year. In another place, 

it says that your loss ratio will probably go down, which is great, 

13 

but that number doesn’t jibe with this other one. So I am kind of 

concerned about that. 

But I think the bottom line is there seems to be a continued 

problem, in my mind, with regard to the ability of income to cover 

the expenses. And we are going to watch it very carefully. I hope 

that this all works out. 

Thank you, Mr. Chairman. I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Cleaver, the ranking member of our Housing and Insurance Subcommittee, for 5 minutes. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

Mr. Secretary, I don’t know how we are going to be able to erase 

this stereotype or the misinformation that seems to be eternally 

out here in the world, that people who live in public housing move 

in and their goal is to stay for an entire lifetime. The facts don’t 

match the stereotype. If you have children living in a multi-family 

property, the average stay is about 5.14 years. That is about the 

time that my family lived in public housing. And that is just so 

dramatically different than what people seem to want to believe 

and how it is perpetuated. 

Do you have any ideas for how we can erase that misinformation 

that seems to be all over the country? And I think there is always 

some resentment from those of us who—in my case, I saw my father work three jobs to save enough money to buy a lot to get a 

house. And other families were doing the same thing. But I don’t 

know how we get that out. 

So my father, who is 92—and if this is on C-SPAN, he is probably watching. So thanks for everything, Daddy. 

But I don’t know—it is an insult to him and a lot of other people. 

How can we erase this? 

Secretary CASTRO. Yes. It is a great question. And let me say, as 

well, as I enjoyed visiting with Chairman Luetkemeyer in his district, I also enjoyed visiting with you in your district, Ranking 

Member Cleaver. 

You ask a great question. And what we see every day is that, 

whether it is in public housing or folks receiving a Section 8 voucher, we see folks who want to work hard and want to get on the 

track to a better life. And we understand that our investment in 

public housing and in HUD-assisted housing is a way to get them 

on that track. 

I reject the notion that somehow folks who are living in public 

housing are lazy or that it creates a culture of dependency. The fact 

is that 56 percent of the households that we serve are headed by 

someone who is elderly or disabled to begin with. And, of the rest, 

a significant number of the folks are under the age of 18; they are 

children. 

Of the folks who are working age, a decent number of those folks 

are working. And if they are not working, then they are required 

to do some sort of community service or be in school or go through 

job training. So, this is very much an opportunity for folks to get 

onto the track of a better life that they want to get on. 

Mr. CLEAVER. Thank you. And I agree, obviously, with everything you have said. It is so frustrating to hear to the contrary. 

14 

Let’s talk about FHA for just a moment, because FHA plays a 

major role for first-time home buyers. And FHA has helped almost 

half-a-million people get into homes since 2014, and about one-half 

of them are brown and black Americans. 

Do you believe that FHA, as we talk about the future, is one of 

the agencies that absolutely must be preserved so that we can continue to provide this kind of assistance to first-time home buyers 

as well as others? 

Secretary CASTRO. FHA plays an invaluable role in creating upward mobility in our Nation for people of all income levels. It has 

been the primary vehicle for first-time home buyers to get into a 

home, people of all different backgrounds. As you mentioned, for 

the African-American and Latino communities today, about 50 percent of those home buyers have an FHA-insured loan. 

Over the last couple of years, we have seen the Mutual Mortgage 

Insurance Fund rise in value by $21 billion. It is on the right path. 

So, yes, we need to do everything that we can to continue to 

strengthen FHA and ensure that it is there to provide that opportunity for folks to reach the American Dream. 

Mr. CLEAVER. Thank you. 

It may be also important to realize that those individuals qualified for the loan, that they were not just— 

Secretary CASTRO. Sure. And I know there are a few seconds left. 

We have to distinguish between the issue of affordability and access. 

What we did was that we lowered the mortgage insurance premium, so we made it more affordable. That did not in any way 

change who qualifies for a loan. We still have, historically, a fairly 

high average credit score for FHA-insured loans of 677. The average credit score out there is 687, to give you a sense of the closeness of those numbers. 

Mr. CLEAVER. Thank you, Mr. Secretary. 

I yield back, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from New Jersey, Mr. 

Garrett, chairman of our Capital Markets Subcommittee. 

Mr. GARRETT. Thank you, Mr. Chairman. 

Mr. Secretary, something we can agree on is that the Fair Housing Act makes it unlawful to refuse to sell or rent a dwelling to any 

person because of race, color, religion, sex, or national origin. And 

that is the law, as it should be. 

However, HUD’s Disparate Impact Rule allows you, the government, to allege discriminatory practices based not on intent, but 

solely on statistical outcomes, and not, as I say, on any discriminatory intent or disparate treatment. 

As a result of that, the cost of litigation is strangling the market, 

and the availability of credit is thereby cut back on lending to potential homeowners—the very same potential homeowners that we 

hear you say that we are trying to help. Therefore, what it does 

is to reduce the supply of new affordable housing, as builders basically back away from the projects that are vulnerable to litigation 

from you. We are basically punishing the people that we are trying 

to help. 

15 

Let’s take a look at your agency. In the 2014 FHA annual report 

to Congress regarding the financial status of the Mutual Mortgage 

Insurance Fund, it says that FHA indicated that its single-family 

endorsements for that year were, what, 61 percent, as you put in 

your report, to Whites, 17 percent to Hispanics, and 10 percent to 

Blacks. 

Statistically, is that not disparate impact? Statistically, is that 

not your agency discriminating? Are you doing anything about 

that? 

First of all, is that disparate impact? 

Secretary CASTRO. I reject that premise. Thank you, Congressman, for the question, but— 

Mr. GARRETT. Then, let me just ask— 

Secretary CASTRO. —I think it is misguided. 

Mr. GARRETT. Not the premise— 

Secretary CASTRO. And I think you know what I am talking 

about. 

Mr. GARRETT. Let me ask you, is that a disparate impact— 

Secretary CASTRO. That is not at all the way that disparate impact has been analyzed or used. As you know, this is in litigation. 

And I will say that I believe in disparate-impact analysis and that, 

if we look at the legal rationale for that and how that actually 

plays out— 

Mr. GARRETT. Let me just ask you— 

Secretary CASTRO. —I have confidence in the way that it has 

been used. 

Mr. GARRETT. Let me just ask you, is a 40 percent disparate impact, disparate impact? The population of the Black community is 

around 13.5 to 14 percent. You are lending or endorsing to only 10 

percent. 

Secretary CASTRO. This issue would never come up in that context. You are taking it completely out of context. 

Mr. GARRETT. No. Well— 

Secretary CASTRO. It would never come up in that context. And 

that is not the context that it is being litigated about either. 

Mr. GARRETT. No. That is because you are litigating against 

lenders and the like, or people in the housing industry. I am asking 

about what you are doing. Is what you are doing disparate impact? 

Should we use disparate impact theory against you? And if it is fair 

against them, is it not fair against you? 

Secretary CASTRO. What we need to do— 

Mr. GARRETT. Yes. 

Secretary CASTRO. —is to preserve disparate-impact analysis because it is important to determining where there is a discriminatory impact and where other tools can be utilized to have a better 

impact. 

Mr. GARRETT. So what is— 

Secretary CASTRO. In fact— 

Mr. GARRETT. —a disparate impact? What percentage off is a disparate impact? 

Secretary CASTRO. I reject that notion, Congressman. These are 

issues that are applied in very fact-specific cases. 

Mr. GARRETT. So what are the— 

16 

Secretary CASTRO. And I reject the notion of a hypothetical that 

would never come up in the first place to try and analyze such a 

serious topic. 

Mr. GARRETT. So you cannot define for us what percentages are 

disparate impact even though your agency brings those lawsuits? 

Mr. CASTRO. You know very well that the definition of what a 

disparate impact is changes in different scenarios, in different industries, and as that is applied to different cases. 

Mr. GARRETT. Exactly. And isn’t that the exact problem? 

Secretary CASTRO. No. I think that is part of the strength of the 

tool— 

Mr. GARRETT. No, it isn’t. 

Secretary CASTRO. —that it is not a one-size-fits-all tool. It is a 

very sensitive tool— 

Mr. GARRETT. So what you are saying— 

Secretary CASTRO. —in analyzing the context of individual cases. 

Mr. GARRETT. So what you are saying is, if I am a lender or a 

builder, a homebuilder, I don’t know what your charge against me 

is going to be because, as you just stated right now, it changes from 

circumstance to circumstance. 

Secretary CASTRO. Not at all. 

Mr. GARRETT. There is no clear definition of what disparate impact is— 

Secretary CASTRO. Not at all. In fact, disparate-impact law and 

the burden-shifting that happens if it is litigated actually gives the 

defendant an opportunity to show that there is a legitimate business reason for why those statistics are the way they are. And 

then, when they demonstrate that, it forces the plaintiff to actually 

have to come back and show that, no, you should be doing it a different way that would be more effective and have not so much of 

a disparate impact. 

So the burden-shifting— 

Mr. GARRETT. But by your own testimony— 

Secretary CASTRO. —the burden-shifting that is involved there 

actually protects the defendant. 

Mr. GARRETT. The defendant, only after he has been brought to 

court, hired attorneys, gone through the expense of this, and having to put a defense on something that you have just told me and 

told this hearing that you do not have a definition of what it really 

means. So— 

Secretary CASTRO. That is not true. As a lawyer, there are plenty 

of lawsuits that are thrown out summarily, and so I am not sure 

what you are talking about. There are plenty of the lawsuits that 

are thrown out summarily, dismissed. 

Mr. GARRETT. Only after the defense has to defend the charge of 

disparate impact that you have just told this hearing there is no— 

Secretary CASTRO. I would just encourage you to look at— 

Mr. GARRETT. —definition to it. 

Secretary CASTRO. Just look at the track record of disparate impact. And it has had a good track record in terms of its usage. 

Mr. GARRETT. What I see is disparate impact apparently by your 

very own agency, and I— 

Ms. WATERS. Regular order, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

17 

The Chair now recognizes the gentlelady from New York, Mrs. 

Maloney, ranking member of our Capital Markets Subcommittee. 

Mrs. MALONEY. Thank you so much, Ranking Member Waters 

and Chairman Hensarling, for this important hearing. 

And I thank you, and HUD, for all you do for affordable housing 

in America. 

Two programs that I am constantly asked about are Section 8 

and the Section 202 program, which does so much to provide housing for seniors. And, according to your own study, seniors with low 

incomes are the most likely to pay more than they can afford for 

their housing than any other sector in our society. 

This program is very important not only to New York but, I 

would say, the whole country. And I am concerned that we don’t 

have enough funding to meet the rising demands for affordable 

senior housing. The capital advance, the new construction, I understand, has been frozen, has very little in it. And, according to the 

AARP, for every Section 202 unit that becomes available, there are 

well over 10 seniors on a waiting list. 

So can you describe what HUD is doing to meet the demand, the 

rising demand for affordable housing for seniors under the Section 

202 program? 

Secretary CASTRO. Thank you very much, Representative. I do 

appreciate the chance to speak to this, particularly because as 

much fuss is made over the idea of these millennials and young 

people, and cities are chasing these millennials, we all know that 

the fastest growing segment of the population is actually our Baby 

Boomers, who are turning 65, who are elderly, and who are spread 

out in every single community out there and are a focus of the Section 202 program. 

We are requesting an additional investment in Section 202, particularly for a demonstration project, in this budget. This demonstration project would allow us to show the linkage between our 

investment in housing for the elderly and a reduction in healthcare 

costs. Because we believe that it is important to show that does 

exist, and hopefully that will inform policy in the future, because 

by spending a little bit for housing and supportive services on one 

end, you can actually save money in the healthcare system on the 

other. That is the hypothesis. 

But more broadly, as I mentioned a few moments ago, 56 percent 

of the households that we serve are actually headed by someone 

who is elderly or who is disabled. And that goes across HUD-assisted housing. So our service to elderly Americans is by no means 

limited to Section 202; it is also public housing, it is Section 8, 

project rental assistance. And it is part of the reason that we are 

requesting greater levels of voucher and funding for our traditional 

housing programs. 

Mrs. MALONEY. Thank you. 

The other HUD programs that I am interested in supporting additional support for are Section 3, the earned-income disregard in 

public housing, and the Family Self-Sufficiency Program. These are 

important tools for the Department and local housing providers to 

help families earn more income and achieve more economic mobility. 

18 

Can you talk about the importance of these programs and policies and how we can work with you and the Administration to 

strengthen and expand them? 

Secretary CASTRO. I can. 

We want the folks that we serve—whether it is Section 8 vouchers or in public housing—who are working age, to be able to have 

gainful employment and eventually not need our public assistance. 

I agree with folks on that point. And one tool that we can use is 

Section 3. 

Section 3 says that, when an investment is made—let’s say there 

is construction that a PHA does—that the contractors make best efforts to hire low-income individuals in that area, including public 

housing residents. So this gives folks an opportunity to get a good 

job, to be able to provide better for their families, and hopefully to 

use that to move up and out eventually. 

Recently, we promulgated a new rule on this to give communities 

stronger guidance on the use of Section 3. 

This is about investing in economic opportunity for low-income 

individuals. And we look forward to working with you, the committee, and Congress to ensure that we can make the most of Section 3. Because the fact is, frankly, that the track record is checkered for housing authorities out there in how much they have utilized Section 3, and we want there to be consistency in the utilization of Section 3. 

Mrs. MALONEY. My time has expired. Thank you. 

Chairman HENSARLING. The gentlelady yields back. 

The Chair now recognizes the gentleman from Texas, Mr. Neugebauer, chairman of our Financial Institutions Subcommittee. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. 

Mr. Secretary, thank you for being here. 

Twenty years ago this month, President Clinton announced the 

National Homeownership Strategy. And he said, ‘‘I want to say this 

one more time: Our homeownership strategy will not cost the taxpayers one extra cent. It will not require legislation. And it will not 

add more Federal programs to a growing Federal bureaucracy.’’ I 

think we can all agree that vision didn’t turn out that way. 

If you recall, back in February you and I had a conversation 

about the fact that you were about to lower your guarantee fee by 

50 basis points, and the fact that you were still not meeting the 

federally-mandated reserve ratio for the fund at FHA. And I think, 

back then, the number was .41 percent. The mandate is 2 percent. 

I wondered if you could tell us today, Mr. Secretary, what is the 

current status? 

Secretary CASTRO. Yes. Thank you very much, Representative, 

for the question. 

I cannot give you that information because that won’t be available until the next annual report. As you know, that is done by an 

independent actuary, and so we do not do that analysis. That analysis is done by a neutral third party. We expect to have that 2015 

report in November of this year. 

Mr. NEUGEBAUER. Mr. Secretary, I want to make sure I understand that. So you don’t know until the end of the period how you 

are doing? 

19 

Mr. Secretary, you were the mayor of San Antonio. And I can 

imagine the director of finance, if you asked him, how are our sales 

tax receipts coming in line with our projected budget, and he says, 

I won’t be able to tell you that for a year, would that be an appropriate answer? 

Secretary CASTRO. What I would say is that you all can change 

that. That is set by Congress, not by me. 

Mr. NEUGEBAUER. But, internally— 

Secretary CASTRO. If you want to change it, go ahead and change 

it. 

Mr. NEUGEBAUER. Internally, I would think that you would have 

people monitoring— 

Secretary CASTRO. Let’s be clear about that. 

Mr. NEUGEBAUER. —the progress of the fund. 

Secretary CASTRO. As Mr. Luetkemeyer said, we do put out a 

quarterly report, and Mr. Luetkemeyer, to his credit, asked my 

staff to go and review the quarterly report with him. We would be 

glad to do that with you. 

However, to your question as to whether I have an update on 

that capital reserve ratio, the answer is no, because Congress has 

an independent actuary that does this once a year for us. 

Mr. NEUGEBAUER. Let me ask you another question. Are the premium revenues that you projected to meet the standard—because 

I believe what you told me in February is that by the end of 2015, 

you would be at 2 percent. So you don’t have any idea whether you 

are going to be at 2 percent at the end of the year? 

Secretary CASTRO. Again, just to correct the record, what I said 

when I was here on February 11th was that we expected that in 

2 years, within 2 years, that we would reach the 2 percent capital 

reserve. That is what I said in February. 

Mr. NEUGEBAUER. I think the problem that a lot of us have is that you are running an organization that has a $42 billion budget, 

has a trillion-dollar-plus contingent liability, and we don’t have the 

ability to track progress other than on an annual basis? I don’t 

know— 

Secretary CASTRO. That is not true at all. In fact, we provided 

to Chairman Luetkemeyer our quarterly report. We do track several statistics. However, you asked specifically about that capital 

reserve ratio. 

Mr. NEUGEBAUER. Then, let me ask about the revenues. Are the 

revenues on track to meet that goal? 

Secretary CASTRO. The answer to that is that they are encouraging so far. Let me give you a precise example. 

Mr. NEUGEBAUER. I don’t want to know whether they are encouraging or not. I want to know, are they on track to—are you going 

to meet the 2 percent at the end of the year? 

Secretary CASTRO. They are encouraging right now. 

Mr. NEUGEBAUER. Yes. Well, ‘‘encouraging’’ is not the— 

Secretary CASTRO. So I will give you an example of why I say 

that. Okay? 

When you look at March of 2014 versus March of 2015, for instance, there were 8,000 more borrowers through FHA-insured 

loans. That is just a month-to-month comparison. We have seen, as 

the quarterly report indicated, a significant uptick in refinancing. 

20 

So you have to understand that this thing took effect on January 

26th. With the limited early data that we have, we believe that we 

are on track. However, we will not get an official number on this, 

the assessment, until around the Thanksgiving timeframe when 

that independent actuary gives us the report. 

Mr. NEUGEBAUER. I think the thing that is troubling is, a lot of 

my colleagues on the other side of the aisle talk about a safety net, 

and to me a safety net is something that is provided to keep you 

from failing or falling or hurting yourself. And so the safety net 

that we have today is made out of string, and I think you would 

agree that if I had a safety net, I would rather have one made out 

of rope. And when you have $1 trillion of the taxpayers on the hook 

and you only have 0.41 percent equity, the taxpayers are at risk. 

Secretary CASTRO. Yes. That is apples and oranges. You are 

conflating two things. I don’t think that is the way it works. 

Mr. NEUGEBAUER. I’m sorry, Mr. Secretary, how is that apples 

and oranges? 

Secretary CASTRO. The capital reserve ratio is not a simple ratio 

of how much money we have to pay claims. We have more than 

enough to handle the claims, the losses, that we have in front of 

us. 

Mr. NEUGEBAUER. It is the economic present value of your liability. 

Ms. WATERS. Regular order, Mr. Chairman. 

Chairman HENSARLING. The Chair can see the clock. 

The Chair now recognizes the gentlelady from New York, Ms. 

Velazquez. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

Mr. Secretary, this hearing could not come at a better time, as 

the House unfortunately just passed the Fiscal Year 2016 THUD 

spending bill, which, if enacted, will severely underfund virtually 

every HUD program and jeopardize the housing stability of vulnerable Americans. 

The shortage of affordable rental housing is a huge problem in 

New York, and a new analysis released this week brought the severity of the problem home. Between 2002 and 2014, rents in New 

York City rose by 32 percent citywide, even after the effects of inflation were removed. 

My question is, Mr. Secretary, what will happen to working families if we do not have public housing? For example, in New York 

City we have 615,000 people who live in public housing and Section 

8. These are hard-working people, and if we don’t provide those 

types of resources, where will they go? 

I don’t suffer from multiple personalities. I understand that if we 

want to tackle the issue of poverty, it takes investment; that if we 

want to tackle the issue of homelessness among veterans, it takes 

the role of the Federal Government. 

And by the way, I am proud to report that in New York City, 

the number of homeless veterans in New York dropped by 40 percent last year and declined 75 percent since 2012. Why? Because 

of vouchers and homeless assistance grants and because the City 

is also pooling resources. That is what it takes. 

And so we want to tackle the issue of poverty in our country, and 

then we ask what is it that HUD can show to demonstrate the efVerDate Nov 24 2008 17:48 Apr 28, 2016 Jkt 096991 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 K:\DOCS\96991.TXT TERI
21 

fectiveness of the agency? It takes investment and the understanding that for the last 20 years there is one issue that has really impacted Americans. They are working harder. They are working two and three jobs. But there is one thing, and that is wage 

stagnation. While the 1 percent is doing extremely well, the rest, 

99 percent, are working harder and getting less. 

So, Mr. Secretary, if the THUD funding bill that passed the 

House is enacted, how will this impact HUD’s efforts to address the 

affordable housing crisis? 

Secretary CASTRO. If the THUD bill becomes law it will seriously 

injure, seriously damage our ability to meet the needs out there. 

As it is, as I mentioned earlier, we only serve one in four people 

right now who qualify for HUD services. And a couple of weeks 

ago, Chairman Luetkemeyer had at his subcommittee a group of 

individuals to discuss public-private partnerships, which I think is 

a very fruitful discussion that ought to be had. 

It was very clear in that testimony, whether it was the nonprofit 

sector, public sector, or private sector, that said: If HUD doesn’t do 

these things, who else is going to do them? There is no private 

market to serve people who are extremely-low-income, and those 

are the vast majority of the people that we serve. 

And so whether it is traditional public housing or Section 8 

vouchers or project-based rental assistance, we need to make an investment. If we don’t, what it means is more people out on the 

street, more mothers with children who are homeless or doubling 

up, more veterans who don’t have the chance to have a place to call 

home. Those are the human consequences of the budgetary decisions that are on the table. 

Ms. VELAZQUEZ. So, Mr. Secretary, I would like to ask you about 

Section 3. I have been working on Section 3 for many, many years. 

When Secretary Donovan was there, I introduced legislation, and 

I am happy to see that some of the provisions that were contained 

in my legislation are being reflected in the rule that you are putting out. But if there is a tool that could empower residents in public housing, it is Section 3. Without the proper oversight and without the proper training and investment, it is not going to work. 

Secretary CASTRO. Thank you for that. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair now recognizes the gentleman from Michigan, Mr. 

Huizenga, chairman of our Monetary Policy and Trade Subcommittee. 

Mr. HUIZENGA. Secretary Castro, I have a different line of questioning, but something that my colleague from Missouri, Mr. 

Cleaver, had brought up about the short time versus long time for 

a lifetime myth that exists with people who are utilizing HUD and 

housing through you, he threw out a statistic of 5.4 years for families with teens. I don’t know if that is accurate or where he got 

that. Are you familiar with that statistic at all? 

Secretary CASTRO. Yes, that sounds about right, in the 5-year 

range. I think, and I guess Ranking Member Cleaver is not here 

right now, however, what he was probably referring to is for working-age individuals. Recall that for the majority of folks that we 

serve, these households who are elderly or disabled, our goal is not 

22 

to just get them in and out. So they do have a longer period of average stay. But that sounds correct. 

Mr. HUIZENGA. I think that is completely different. But earlier, 

at the beginning, the chairman was asking you specifically about, 

and you couldn’t answer, whether we are tracking people from one 

PHA, as they exit that, presumably within that 5-year timeframe, 

to what happens to them. Where do they go next? Do they go to 

another public housing authority? Do they maybe move to another 

State? What do they do? And you couldn’t provide that matrix. 

Secretary CASTRO. Well, no, I said that we will get the information we have on that. Do I believe right now that we are tracking 

that as well as we would like to? The answer to that is no. 

Mr. HUIZENGA. Okay. It seems if we can dial it down to 5.4 

years, you ought to be able to figure out how you are going to make 

sure that people are utilizing that service. 

Shifting to what is more of my concern, how do we make sure 

that we have an opportunity economy that eliminates poverty and 

breaks that cycle that may exist? 

I was a former licensed REALTOR®. I started my career in that. 

Some of my proudest moments that I was involved in weren’t with 

my big sales. My first listing was a two-family house in Holland, 

Michigan, that was very transitional, a Hispanic family on top who 

shared a one-bedroom apartment—in fact, Luis and Alaya are still 

friends today—and helping them transition into buying their own 

place. 

One that I talked about in this committee before is someone else 

who still remains a friend, Jill, whose husband had left the family, 

and she moved from a trailer park into her first home, and I was 

able to help explain to her kids why and how important that was. 

And literally sitting here 20 years later, I am getting emotional 

and choked up because that really is why you exist. You don’t exist 

to just make sure that we are taking care of people temporarily. 

You exist to make sure that we are taking care of people long-term. 

And I don’t mean getting into your system and staying in your system. What is the opportunity? 

And I am afraid that as I am looking at this report, it seems that 

the solution typically has been to just simply throw more money at 

it. And it is not only about subsidizing the market, I would hope, 

with Section 8 or other things, it is how do we make sure that, as 

my colleague was starting to address, the people who are providing 

that, who are building it, have some assurance and have some understanding of what the ground rules are, what the guideposts are, 

so that they are not going to get sued, and they are not going to 

have these questions as they linger over there. That, to me, is vital. 

In this remaining minute, on page 8 and page 9 of your testimony, I wanted to highlight a couple of things. One of them, start 

with this, the evidence-based Jobs-Plus program, ‘‘a proven model 

for increasing public housing residents’ employment and earnings.’’ 

I am curious, are you tracking that, and can you please share that, 

provide the matrix on that as well? Because I am curious, is this 

just Web-based, is this physical presence that people are having 

from HUD? Explain this, because it is $100 million that you are 

putting into this. That can provide a whole lot of housing temporarily. 

23 

Secretary CASTRO. Thank you very much for that question, Representative. And let me say that I agree with you on the premise 

that for folks who are working age, and this is what the law requires, that if they are not working, that they be either doing community service or job training or pursuing an education. 

So we want folks to basically be on a path to self-sufficiency. 

Jobs-Plus does track. We do have numbers, and we would be glad 

to provide them, on how we are doing. However, one of the things 

that I have said is that with this opportunity agenda, HUD needs 

to get better at measuring the outcomes there. So I would love to 

work with the committee on how we can do that. 

Mr. HUIZENGA. Amen to that. I know my time has expired, but 

I hope that you will get much, much better at that and provide that 

to the committee. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair recognizes the gentleman from Texas, Mr. Hinojosa. 

Mr. HINOJOSA. Thank you, Mr. Chairman, and thank you, Ranking Member Waters. I ask unanimous consent that my opening 

statement and my questions be made a part of the record. I am late 

for opening a meeting, and I must leave. 

Chairman HENSARLING. Without objection, it is so ordered. 

In that case, the Chair recognizes the gentleman from New York, 

Mr. Meeks, for 5 minutes. 

Mr. MEEKS. Thank you, Ranking Member Waters, and Chairman 

Hensarling. 

Mr. Secretary, first let me just identify myself as a proud product 

of public housing, and my whole family, all of whom are doing fairly well now. I don’t know how well we would have been done or 

how my parents would have been able to do what they did without 

public housing. 

And then, when I think about my friends, some who are now attorneys and doctors and engineers and pharmacists, all products of 

public housing. But had it not been for that assistance so that they 

could move forward, I don’t know whether any of us would be in 

the positions that we are in. 

So I personally know the critical need and the significant importance of public housing, giving individuals an opportunity, giving 

families an opportunity to come together and to be successful in 

life. And I can’t think of a greater investment that we as a country 

can make, especially when we are talking about and oftentimes 

when we are campaigning, the average, everyday person, and the 

poor person, and making sure that they have a quality of life, there 

is nothing better than making sure they have a decent roof over 

their head so a child can get an education in a place where that 

they can grow and become productive members of society. 

In New York, I am concerned, because when I look at the budgets and the funding packages that the Republican Party is putting 

forward, where I see that it fails to restore funds lost to sequestration and revokes critically needed investments in the National 

Housing Trust Fund and it shortchanges several rental assistance 

programs for very low-income households, I get concerned about 

what is going on in New York a little bit. 

Because recently our Mayor de Blasio released a new ambitious 

plan to revamp New York City’s Housing Authority and to bring 

24 

it back into a stable financial footing and to rebuild and expand 

and preserve public and affordable housing. And the plan is highly 

dependent on converting thousands of units to a project-based Section 8, and is therefore highly dependent on HUD subsidies 

through the Rental Assistance Demonstration program (RAD). 

So as we move, and currently Section 8 accounts for roughly twothirds of your budget, and as more public housing moves into Section 8 through RAD, I am just wondering how is HUD coping with 

such increased demands from communities across the country, and 

how can cities like my City of New York plan for the future with 

the uncertainty around increased Federal assistance to preserve affordable housing stocks? 

Secretary CASTRO. You are correct that we do need a certain 

level of confidence in that investment. RAD has been one way that 

we have tried to stretch resources, by doing exactly what folks have 

suggested, that we engage with the private sector, in this case so 

that they can renovate those public housing units. Because the fact 

is, we have a $26 billion backlog in renovation needs in public 

housing, and we lose 10,000 units every year to disrepair, and in 

New York you see that in spades. 

So that is why we are requesting a couple of things in this budget, including $50 million for that RAD program. We are also requesting additional resources in terms of salary and expenses because the cap was lifted in Fiscal Year 2015 to $185,000. We want 

to ensure that we can meet that demand. By the way, we already 

have applications for RAD that are around $180,000, so it is a successful effort at getting interest, public-private sector collaboration. 

And on top of that, what we see with RAD is that for every $1 

of public money that we spend, we leverage $19 of private investment. But we need to do it right, and we need to make sure that 

those resources are there that undergird it, which are public resources, that we treat tenants right, and that it still is fundamentally public housing, even though you have this public-private partnership. 

Mr. MEEKS. And so I guess what my nervousness is, because I 

am not sure what these budgets are looking like and I am not sure 

that everybody is on the same priority level, so as you move forward, I am worried about the underpinning of the public sector 

continuing what it needs to match the private sector, because if we 

get into these scenarios and then we lose the subsidies to keep 

them affordable, what happens to public housing? So can you tell 

me? 

Secretary CASTRO. I agree with you that if we are not careful, 

then the public sector won’t even have the strength to engage the 

private sector so that we can fruitfully renovate or create new 

housing. That was a point that was made in the subcommittee 

hearing, that the private sector needs the public sector to do affordable housing. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Wisconsin, Mr. 

Duffy, chairman of our Oversight and Investigations Subcommittee. 

Mr. DUFFY. Thank you, Mr. Chairman. 

And thank you for being here, Secretary Castro. 

25 

I just want to make a note that homelessness doesn’t just exist 

in urban America. It also exists in rural America, in places like my 

district, rural Wisconsin. For the last 2 years we have held a homelessness and hunger summit trying to bring in the stakeholders 

from across our rural community, trying to figure out how we can 

address this problem more effectively, trying to figure out where 

the bright spots are of what small agencies, what they do to more 

effectively tap into resources in their community, how they can 

more effectively tap into government resources. 

And so it is a problem that we think we have to address, and 

my comments are in no way trying to undermine the problem of 

homelessness across the country. I would note, though, that I do 

hear a lot about the rules and regulations, especially for small providers in our community. And, listen, if you are a one- or two-person organization, it becomes incredibly difficult for them to navigate the rules and regulations. 

But I want to move beyond that. You are asking for more money, 

a 9 percent increase, or that is in the President’s budget. Why do 

you need more money when we have improved the homelessness in 

America? Why do you need more public housing money? Why do 

you need more Section 8 housing money when we have had improvements in the economy and in the space? 

Secretary CASTRO. The fact is that, for instance, let’s take our 

vouchers. Through sequestration, we lost 67,000 vouchers. What we 

see out there is that we are only able to serve one out of every four 

people who need us. 

Mr. DUFFY. But have we had an improvement in the space, with 

those who are homeless? 

Secretary CASTRO. On homelessness, we have seen an improvement over the last. And why was that? 

Mr. DUFFY. But you are asking for more money, though. 

Secretary CASTRO. And the reason for that was that we dedicated 

more resources to it. HUD–VASH vouchers. To the committee’s 

credit, Congress’ credit, and the President’s leadership, the main 

reason that we have seen a reduction in veteran homelessness is 

because we have actually invested in ending veterans’ homelessness. 

Mr. DUFFY. I appreciate your comments on veterans, and that is 

a nice number. 

Secretary CASTRO. Okay. Then, let’s talk about folks who live in 

rural areas or tribal communities. 

Mr. DUFFY. Let’s talk about it as a whole then. What success 

have you had of getting people not just into the system of public 

housing and Section 8, but out of the system? 

And it goes back to the questions that the chairman asked and 

Mr. Huizenga asked, that you come and ask for more money, but 

you can’t sit there today and say, listen, you guys, this is what we 

are doing, we are bringing people in, they need help, we all want 

to help them. 

Secretary CASTRO. That is not true. I gave you an example earlier. 

Mr. DUFFY. No, no, hold on, let me finish. But here are the facts 

and the numbers of how we have moved people out of the space of 

public assistance and into self-sufficiency. But if you don’t track 

26 

people, you don’t know if the numbers that you give us are people 

who go from assistance to sustainability themselves or to another 

public housing authority. You can’t actually give us the right numbers, and you are asking for more money. 

Secretary CASTRO. I gave an example earlier. A good example of 

that is Jobs-Plus. 

Mr. DUFFY. I don’t want examples. I am looking at numbers. 

Secretary CASTRO. A good example of what we have seen is that 

through our Jobs-Plus initiative— 

Mr. DUFFY. Let’s talk about Jobs-Plus. Is the 9 percent increase 

asked for by the President going to the programs that you say 

work, like Jobs-Plus? 

Secretary CASTRO. What we are requesting is that we are going 

in Jobs-Plus— 

Mr. DUFFY. Across-the-board. 

Secretary CASTRO. —we are going from $15 million to $100 million. That is what the request is. 

Mr. DUFFY. That is not my question. Mr. Secretary, hold on a 

second. 

Secretary CASTRO. If your question is, is the only thing we are 

requesting Jobs-Plus? Of course not. 

Mr. DUFFY. So if you have programs that work, Jobs-Plus—I am 

not arguing your stats on that—why aren’t you saying, Congress, 

listen, let’s talk about programs that work, that will take people off 

assistance and into sustainability? 

Secretary CASTRO. That is what I am talking about. 

Mr. DUFFY. No, it is not. You are giving me a small section. The 

funding that is asked for is funding across-the-board, not to be 

driven into Jobs-Plus, not to programs that actually move people 

to sustainability. It gets back to your original point. I think you 

judge success by how much money we spend. That is how you judge 

success. 

Secretary CASTRO. No, I don’t. No, that is not true. The other day 

I was in— 

Mr. DUFFY. Tell me the number. 

Secretary CASTRO. The other day I was— 

Mr. DUFFY. Hold on. This is my time. 

Secretary CASTRO. When I was in— 

Mr. DUFFY. Tell me the number with regard to people— 

Secretary CASTRO. —there was a group of veterans— 

Chairman HENSARLING. Mr. Secretary, the time belongs to the 

gentleman from Wisconsin. Please add 10 seconds to the clock. 

Mr. DUFFY. If that is not how you judge your success, tell me the 

percentage of people who go into Section 8 public housing and then 

actually move out into self-sustainability. What does that look like? 

Secretary CASTRO. As I said earlier, we would love to get you the 

information we have on that. 

Mr. DUFFY. You don’t have that number. So you can’t— 

Secretary CASTRO. What I do know is that we have a waiting list 

of 189,000 folks in public housing. 

Mr. DUFFY. My time. If you were judging success by getting people off assistance and into self-sustainability, you would be here 

today telling us those numbers. But you can’t tell us because this 

27 

is not how you judge success in your agency. That is part of the 

problem. 

Secretary CASTRO. Representative, I just did tell you some of 

that. 

Mr. DUFFY. You didn’t give a number, so you don’t even know it. 

Secretary CASTRO. I did. 

Mr. DUFFY. What was the number? 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from California, Mr. 

Sherman. 

Mr. SHERMAN. Mr. Secretary, I want to recognize with you that 

Section 8 and other housing programs are successful in every one 

of our districts, that a housing program has to chiefly be evaluated 

based on whether it provides housing. And getting people off the 

street and in housing is a good thing. Whether they then get a 

well-paying job is a little bit outside your Department. 

And I look forward to working with the last gentleman to defeat 

fast track so that we can get the high-paying jobs that will lead not 

only to successful housing programs, but successful economic futures for those you benefit. 

But I think it is wrong for us to say we are going to cut back 

on Section 8 until you give us perfect numbers and until you establish that providing housing means somebody gets a good-paying job 

too. I will give you time to comment. 

Secretary CASTRO. What I said that one outcome is, an important 

outcome is that somebody has a roof over their head. That is what 

the Department of Housing is for; we are first and foremost about 

housing. 

However, to the second question, do I believe that we should also 

make investments—and we are making some investments—that 

seek to get folks to a stronger track so that they can achieve the 

American dream? Of course I do. And should we look at the outcomes of that? Yes, we should, and I think we can work together 

on that. But to say that it doesn’t count at all that somebody has 

a roof over their head is just ridiculous. 

Mr. SHERMAN. Well said. And I now want to move to FHA and 

a couple of technical areas, where FHA has a rule or a policy that 

clashes with another Federal rule and hope that FHA moves in the 

direction of the other Federal rule. 

The first example of this is with property subject to transfer fees. 

Now, 99 percent of transfer fees are terrible. I thank you at FHA 

for working to prohibit them. FHFA, which of course oversees 

Fannie Mae and Freddie Mac, has done a slightly more nuanced 

job. Instead of prohibiting all of them, they have only prohibited 

the 99 percent that are bad. The 1 percent that are helpful are 

those that benefit the property, that are key to the business plan 

of homeowners associations and fund homeowners associations by 

a reasonable amount when the property is transferred. 

So I wonder whether you would look at a technical tweak to the 

FHA regulations and see whether the FHFA’s very similar regulations, but a little bit more nuanced, might be better for both similar Federal programs? 

Secretary CASTRO. Thank you very much for that question. Let 

me just very briefly say that at FHA our primary concern, of 

28 

course, is to ensure that responsible borrowers can access credit. 

We also want to continue to play that countercyclical role that FHA 

has historically played. And on top of that, we are interested, 

where it makes sense in policy that encourages neighborhood stability, for instance, and we are looking at matching FHFA on this 

issue that you brought up. And so we would love to follow up with 

you and your staff on that and give you an update on what we are 

up to. 

Mr. SHERMAN. Good. It is similar agencies trying to carry out the 

same policy, and they ought to have identical or very close to identical rules. And in this one case, your sister agency has a more sophisticated rule. 

Federal statute generally requires that you have to stop paying 

mortgage insurance once you have a 78 percent situation. You have 

a situation where borrowers have to keep paying FHA forever unless they refinance. 

Now, if they had to pay forever, I would say: Well, maybe you 

need the money. But if you are not going to get the money, they 

are just going to refinance, then I would say that is a—I have been 

through some refinancings. It is a lot of paperwork. And then it 

would be easier for borrowers if they are trying to compare FHA 

insurance with private insurance, if you were offering the same 

product; that is to say, something that is cancelled at 78 percent. 

Will you take a look at that? 

Secretary CASTRO. We are always, of course, looking at how we 

can be sensitive to the conditions out there. As you know, this lifeof-loan issue came to pass during the last few years where there 

was a need to do everything that we could to ensure that we built 

up our reserves. And we want to do what is prudent. We are always willing to look at this issue. 

Mr. SHERMAN. Thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from New York, Mr. 

King. 

Mr. KING. Thank you, Mr. Chairman. 

Good morning, Mr. Secretary. I regret that I was not here for 

your opening statement. I was actually across the hall. There was 

a hearing being held on the reauthorization of the 9/11 Health 

Care Act, so I was there. But I want to thank you for being here 

today. 

Generally when I ask a question it is not written out, but this 

one I am going to read as it is written because there are a lot of 

specifics involved. It regards Westchester County in New York, 

which is not in my district, but it is pretty adjacent to it, and the 

implications of what is going on in Westchester could well impact 

my district. So I would like to ask the question. To the extent you 

can answer it today, fine. To the extent you have to get back to me 

in writing, I would greatly appreciate that. 

I understand that in 2009, HUD reached an out-of-court settlement with Westchester County settling a 2006 civil lawsuit alleging that the county failed to consider race as an impediment to fair 

and affordable housing in filing its Analysis of Impediments document, which is filed with HUD when seeking CDBG block grants. 

29 

It is my understanding from talking to Westchester County officials, including the county executive, Mr. Astorino, and I would say 

at this stage I don’t see this as being a partisan issue because the 

original settlement was with the Democratic county executive, it is 

now being implemented by a Republican county executive. So I 

don’t see this as being a partisan issue. 

But from talking to the county executive, he believes that the 

county is ahead of schedule in implementation of the settlement 

terms: 469 of the 750 required public housing units have been financed; 424 have building permits; and so far the county has spent 

$37 million and leveraged another $112 million from other sources, 

and at least $51.6 million was agreed upon in the settlement 

terms. So, they have $37 million and $112 million. Yet, the county 

believes that HUD is not recognizing this progress. 

In response to a HUD request, the county included in its Analysis of Impediments (AI) an examination of all of its 853 local zoning districts for evidence of exclusionary practices based on race 

and ethnicity and found none. Since then, it has made seven more 

such analyses, each time including consideration of more data as 

requested by HUD. The most recent AI was more than 700 pages, 

and each time the county has found no evidence of exclusionary 

practices, a conclusion that has been supported by an independent 

authority. HUD, however, has disagreed with the county and in 

2011 began cutting off housing grants, which is, I believe, more 

than $20 million to date. 

Two questions: Can you say why HUD has summarily rejected 

each of the 8 Analyses of Impediments submitted by Westchester 

County in the past 6 years to fulfill the settlement requirements, 

and also all CDBG entitlement grantees, such as Westchester 

County, must certify that they are ‘‘affirmatively furthering fair 

housing,’’ and in order to meet this obligation, grantees must conduct these analyses. What is the average length of an AI document 

and how often are they rejected, and what criteria does HUD use 

to determine whether or not an AI is acceptable? 

And as I said, this case as it goes forward could have implications in my district and other districts in the region. So, any testimony you can give today will be appreciated. 

Secretary CASTRO. I appreciate very much the opportunity to just 

address this briefly. I would love to get back to you and your staff 

with the specifics on Westchester. 

Let me begin by saying that, of course, we take the issue of fair 

housing very seriously. Under the Fair Housing Act of 1968, it requires that the Secretary affirmatively further fair housing. As you 

know, Congressman, this issue of Westchester has been with us for 

a while and there has been a tremendous amount of work that 

HUD staff has done in conjunction with the local community to try 

and resolve these issues. 

What I have told my staff is that, of course, there is a time when 

we are punitive, and this is one of those cases historically that developed and went into litigation, but we often seek what I call mission-driven flexibility to work with communities to meet the goals 

of the programs but also to ensure that they can undertake feasible 

actions to get into compliance. 

30 

Having said that, I would like to be able to get back with you 

on the specifics and an update on where we are at with regard to 

Westchester, because I do know that my staff has been working 

hard on that. 

Mr. KING. And, again, I don’t reside in Westchester, but I do 

know the officials up there, and they believe they are attempting 

to comply in good faith. They don’t feel that HUD is acknowledging 

that. I am not getting in the middle of this, but again, I think it 

is important that we can set some parameters, because I do know 

there are other pending actions in the region which could have an 

impact on my district, and again, on all the people in the region. 

And you are right, fair housing is essential. On the other hand, 

local governments have to try to comply. And again, this is very expensive, and again, it can be complicated. So whatever you can get 

back to me on it, I would truly appreciate it. 

Thank you for your testimony this morning. 

Chairman HENSARLING. The time of the gentleman has expired. 

At the request of the Secretary, the committee will stand in recess 

for 5 minutes. 

[recess] 

Chairman HENSARLING. The committee will come to order. The 

Chair now recognizes the gentleman from Massachusetts, Mr. 

Capuano. 

Mr. CAPUANO. Thank you, Mr. Chairman. 

Welcome back, Mr. Secretary. 

Mr. Secretary, I know we have mentioned the FHA. I want to be 

clear, and if I am correct, as I understand it, not a single penny 

of general fund taxpayer dollars has been spent to help the FHA. 

Is that correct? 

Secretary CASTRO. That is right 

Mr. CAPUANO. Okay. As I understand it—and by the way, happy 

birthday, 50 years old and all that—in those 50 years, as I read 

it, there have been 5 Republican Presidents serving 28 of those 50 

years. Did any of those 5 Republican Presidents—Mr. Nixon, Mr. 

Ford, Mr. Reagan, Mr. Bush, and Mr. Bush—shut down HUD? 

Secretary CASTRO. No, of course not 

Mr. CAPUANO. Did any of them admit defeat in HUD’s mission? 

Secretary CASTRO. No. 

Mr. CAPUANO. But today we are hearing that HUD is a failed 

agency and we should probably close it down. I guess that would 

come to a surprise to Mr. Reagan and others. 

Prior to HUD, were there any programs anywhere to help seniors 

find decent, affordable housing? 

Secretary CASTRO. No. With the advent of HUD, that really led 

to the assistance of the elderly. 

Mr. CAPUANO. So without HUD, there would be not less, but 

none; there would be no senior housing programs in this country 

whatsoever? 

Secretary CASTRO. That is right. The answer is, if not HUD, then 

no one. 

Mr. CAPUANO. Then no one. 

I have heard a lot of criticism today, and I actually think I have 

heard some fair questions and fair comments. But of the criticism, 

I believe in giving elected officials what they want whenever posVerDate Nov 24 2008 17:48 Apr 28, 2016 Jkt 096991 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 K:\DOCS\96991.TXT TERI
31 

sible, and I have heard several elected officials today publicly state 

that they think that HUD’s programs are failing. So therefore, if 

they have a failing program, why would they want your money? 

I actually think you are doing a pretty good job, and I would suggest that you give those officials exactly what they want, which is 

nothing, and send your money into my district, because I think you 

are doing a great job. And I am not saying that out of anything 

other than respect for the opinion of others. And I hope, as a 

former mayor, you would appreciate that approach. 

I guess now I want to move on to something else, and I apologize, 

but our time is limited here, as you know. I do want to pick a little 

scab. The Distressed Asset Stabilization Program (DASP), my least 

favorite program that HUD participates in, not because I don’t like 

the program, I know some of it is necessary, but because I don’t 

like the focus. And I guess my concern is that basically we have 

been selling these houses in batches to the richest people in the 

world. And that is okay, not a problem, except for me, I thought 

part of HUD’s mission was to actually create strong, sustainable, 

inclusive communities and quality, affordable homes for all. 

With that mission, I always ask myself, who is in the best position to know what that means in a given community? So I looked 

up the last, I guess it is not the last one, but the November 2014 

DASP sale, and on that there was some housing, some foreclosed 

housing, in a county I actually never heard of before, but maybe 

you are familiar with, Bexar County. 

Secretary CASTRO. Sure. This is the county that includes San Antonio. 

Mr. CAPUANO. That is what I read—42 properties in this batch averaging $106,560 on their foreclosure loans, and it was sold to 

a company called AMIP Management, LLC. I looked them up, and 

they are a subsidiary of American Homes that has headquarters in 

Agoura Hills, California, which is kind of wedged in between Thousand Oaks and Simi Valley. 

And I am just wondering, do you really think that somebody in 

a nice, beautiful building in Agoura Hills knows better what to do 

with 42 foreclosed properties in San Antonio than, say, maybe the 

mayor of San Antonio, or maybe a person named Walter Martinez, 

who runs the San Antonio Community Development Council (CDC) 

with headquarters on El Paso Ave, or somebody named Oscar Ramirez, who runs the Avenida Guadalupe Association with headquarters on Guadalupe Avenue? 

Which do you think is in a better position to know what is probably in the best interest of the people of San Antonio, those people 

or somebody in Agoura Hills, California? 

Secretary CASTRO. It is a point well taken, Congressman, and I 

want to thank you for your advocacy on this, and because of your 

advocacy, the advocacy of others, and also nonprofits who have 

made this very point, that part of our responsibility really is to understand the effect that these policies have on neighborhoods. 

So we believe that DASP has been a powerful tool to help stave 

off foreclosure in some instances. We would love to get back with 

you on the changes we have made to it to improve it. 

Mr. CAPUANO. Thank you. 

Thank you, Mr. Chairman. 

32 

Chairman HENSARLING. The time of the gentleman has expired. 

On behalf of the Secretary’s Texas ears and my Texas ears, and for 

the sake of the Members north of the Mason Dixon, it is pronounced ‘‘Bexar’’ County. 

Mr. CAPUANO. We need to have an elocution lesson here. There 

is an ‘‘X’’ in there somewhere. 

Chairman HENSARLING. Not for a Texan. 

Mr. CAPUANO. And I am happy to give you elocution lessons. 

Chairman HENSARLING. The Chair now recognizes the gentleman 

from California, Mr. Royce, chairman of the House Foreign Affairs 

Committee. 

Mr. ROYCE. Thank you, Mr. Chairman. 

Mr. Secretary, it is good to see you again. Let me ask you about 

a line of questioning here where I think you and I may be in concurrence. 

Last week, we both had an opportunity to talk a little bit about 

a subject I publicly endorsed moving forward with: some building 

block housing finance reforms. These reforms would increase private sector participation in the secondary housing market and decrease taxpayer exposure to future losses and would over time limit 

the disruption in the market. And I wanted to get your take on 

this. 

The things we discussed at that forum were an increase in private sector credit risk sharing by the GSEs, including a timeline 

to ramp up the offerings; the creation of a truly common 

securitization platform which allows for issuance of mortgagebacked securities other than the GSE; and the development of a 

common residential mortgage-backed security by Fannie Mae and 

Freddie Mac. 

And I thought I would just give you the floor right now to discuss 

how this might bring private sector capital back into the market 

and how we might work together to achieve these goals as kind of 

a building block. 

Secretary CASTRO. Congressman Royce, I of course appreciate 

your efforts on this issue of housing finance reform. Housing finance reform has been a long and winding road, I think it is fair 

to say. But the Administration is supportive of housing finance reform, and, in fact, I think there is agreement on some of these 

issues. 

The President has made it very clear that he does have an interest, I think like all Americans do, in taking taxpayers off the hook 

in the event, God forbid, that we did experience the same kind of 

housing crisis that we just went through. I agree that we can find 

ways to introduce more private capital into the market. My hope 

is that in there we will find a way to ensure that people of modest 

means who are responsible are able to get access to credit. 

And so with respect to proposed legislation, I think there are 

some common principles that are the foundation to build on, and 

we will look forward to working with you on that. 

Mr. ROYCE. The question that I was going to try to drive to was 

the idea that GSEs increasing their risk-sharing activities in the 

form of volume of offerings and percentage of risk sharing, that 

would be a big step to bring private capital in. Certainly the common securitization platform, that idea you are familiar with, and 

33 

making that available for the private sector to come in as well, I 

think would be helpful, and I was trying to listen. 

Secretary CASTRO. Yes. I am very willing to have conversations 

about that and build on legislation. We are hopeful. Of course, the 

ball is in Congress’ court. 

Mr. ROYCE. Let me then go to another question, Mr. Secretary, 

which concerns a headline I saw: ‘‘Banks cede FHA market share 

to thinly capitalized nonbanks.’’ So we do have a situation where 

the FHA market share for large banks has recently been cut in 

half, from 61 percent to 33 percent, and I know that is a concern. 

Nonbanks have increased now. They were 24 percent. Now, several 

years later, they are 51 percent. 

Is this troubling? And do you think legal uncertainty maybe is 

part of the problem in terms of getting the traditional lenders more 

involved here? What about the need for a greater certainty around 

the rep and warranty framework here? Have you been looking at 

that as a way of maybe bringing capital back in? 

Secretary CASTRO. The answer to that is yes, we are looking at 

that. We believe it makes sense to take reasonable steps to create 

more business certainty for lenders. I know this is something that 

Director Watt at FHFA has worked on, and is working on now. 

That is something that we are working on with something we have 

called Blueprint for Access to Credit. We hear from lenders about 

the uncertainty that does exist regarding potential liability, and so 

we are working on that. And we look forward to being able to create, I hope, greater certainty that will help open up the credit box 

reasonably for responsible Americans to get access to credit. 

Mr. ROYCE. One of the CEOs that I know was interviewed on 

this said, ‘‘If you want to stick with a program of putting back anytime, anywhere, whatever, that is fine, we are just not going to 

make these loans, and there are going to be a whole bunch of 

Americans who are underserved in the mortgage market.’’ I think 

that is the part of this that is concerning. There have been some 

ideas put forward in terms of how to adjust this and handle it. But 

given the percentage of erosion here in market share, and especially the fact that it is thinly capitalized nonbanks that are coming 

in, I think it needs to be addressed. 

So, thank you. 

Thank you, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Massachusetts, 

Mr. Lynch. 

Mr. LYNCH. Thank you, Mr. Chairman. And I want to thank 

Ranking Member Waters as well. 

And thank you, Mr. Secretary, for helping the committee with its 

work. It is good to see you again. 

Mr. Secretary, I am one of those Members of Congress that you 

referred to who grew up in public housing, like Mr. Meeks of New 

York. I grew up in the Old Colony housing project in South Boston, 

with five sisters. It has been described as one of the poorest predominantly White census tracts in the Nation. And we considered 

ourselves very, very fortunate to have a home, to have that home. 

And listening to this debate here today about the question that 

was posed earlier—does HUD’s affordable housing program 

34 

work?—I guess from listening to the debate, if your family has not 

struggled, no explanation is possible, but if you have actually lived 

in public housing, no explanation is necessary; you understand 

what that means. 

We talked a little earlier, I have had an opportunity in the last 

couple of weeks, we cut a ribbon on one of my big veterans’ housing 

projects that is coming up. We just broke ground, it is the New 

England Center for Homeless Veterans. And it is going to provide 

38 new permanent supportive housing units for veterans, including 

a dedicated floor just for women veterans. We have a lot of them. 

It is going to renovate 59 existing supportive housing units for veterans. And then it is going to create 165 new units. So it has everything—if you have substance abuse problems, if you have psychiatric problems, we have the whole city together. 

And I want to give credit to Mayor Walsh, Marty Walsh, who is 

part of this, and also Governor Baker, who is a Republican, but we 

worked together on this. There are at least a dozen different agencies, City, State, and Federal, that have combined on that project. 

And I have another project that is an old police station in my home 

neighborhood of South Boston where they are converting this old 

police station to single occupancy units for veterans. 

So like most communities, we love our veterans, and we want to 

make sure that their service is remembered, is respected, and is rewarded. But I have to say that it has really been a collaboration 

of a bunch of different projects in trying to figure out all the different aspects of what HUD is doing on behalf of our veterans. 

And I was wondering, you alluded to it a couple of times in earlier questions, but can you drill down and explain what the Obama 

Administration is doing, what HUD is doing on veterans’ housing 

in this country today and what your most successful models have 

been in creating that housing? 

Secretary CASTRO. I am glad to do that. This is a real American 

success story because President Obama in 2010 became the first 

President to say that we are not just going to reduce homelessness; 

we are going to end it, starting with veteran homelessness. And 

what we have seen since that time, from 2010 to 2013, is a 33 percent reduction in veteran homelessness through collaboration with 

Congress that funded HUD–VASH vouchers. 

So you asked, what works, why are we here? Strong coordination 

between HUD, the VA, and providers out there on the ground to 

quickly get veterans into housing, and the adoption of smart policies like Housing First. 

Housing First basically says we are not going to make our veterans jump through hoops, stay a certain number of nights in a 

shelter or transitional living; we are going to get them into permanent housing right away. Because the research is compelling that 

if you get someone into permanent housing with supportive services, that is a real stabilizing influence on their lives. So they can 

address then if there is some other issue in their life, perhaps if 

there is an addiction issue or there is a mental health issue or 

other issues. Having that housing is the key to being able to stabilize and address those issues. 

And what we are seeing now is communities like New Orleans, 

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35 

fectively eliminated veteran homelessness. I joined Congressman 

Green the other day in Houston. Houston has put in place the system to get to functional zero. So this is a real success story that 

we need to continue to support. 

Mr. LYNCH. That is great. 

In closing, I only have 10 seconds left, I just want to say that 

we have 2.5 million sons and daughters of America who have 

served since the first Gulf War, so this is something we are really 

going to have to focus on. A lot of them have done multiple tours 

of duty. So obviously, they need some help. Thank you. 

I yield back, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Pennsylvania, Mr. 

Fitzpatrick, chairman of our Terrorism Financing Task Force. 

Mr. FITZPATRICK. Thank you, Mr. Chairman. 

And thank you, Mr. Secretary, for the time spent with the committee here today. 

I just want to stay on this issue of veteran housing and homelessness among veterans for a moment. You said in your opening 

statement that you have reduced homelessness among veterans by 

33 percent, and that is not an insignificant number. And I think 

together we should celebrate that a little bit, recognizing as well 

that there is still a lot of work to be done, because that means of 

that subset population of veterans in this country, who have served 

this country, 67 percent of them are still without homes. 

And you mentioned that President Obama has made this commitment to end veterans’ homelessness. One veteran who is homeless is one too many. 

I remember in November of 2009—I was a private citizen back 

then—in my home in Levittown, Bucks County, Pennsylvania, 

watching the news, and it was being reported that General 

Shinseki, who was then the Secretary of the VA, had articulated 

this commitment. And he actually put a timeframe on it, he said 

that in 5 years—this was November 2009—the goal was to end veteran homelessness in the United States. 

And my thought at that point in time was that was a pretty aggressive goal, and I love aggressive goals, but I had some concerns 

about how we were going to get there as a Nation. And in my community—Levittown is a town that was built for veterans returning 

from World War II and the Korea-era veterans, one of whom is my 

father—many never would have had that opportunity to own a 

home had it not been for the VA and for that commitment. But 

tucked between the City of Philadelphia and the City of Trenton, 

New Jersey, as it is, housing prices skyrocketed. It was built in the 

shadow of a steel mill. And so many of that population found themselves over time to be sort of what is described as house-rich and 

cash-poor. And so, housing prices have gone through the roof. So 

in addressing this issue in my community, housing costs are very 

expensive. 

And then my second concern is that homelessness is but a symptom, I believe, of other problems like substance abuse, and behavioral health issues such as PTSD and TBI, as these veterans are 

coming back. 

36 

There is a community right next to my hometown called 

Bensalem. This gets to the issue of bringing in private sector solutions. They proposed a 60-unit-or-so veteran housing project. The 

mayor of Bensalem, Joe DiGirolamo, has committed to donate the 

land. There are private developers involved. And there is an opportunity for us in our community to work with HUD so that you 

could be the last dollar into the project rather than the first dollar 

and let the private sector lead. So I just would like the opportunity 

to work with you and your Under Secretaries on that. 

But I want to get to another Bucks County issue, because I think 

this is an issue in housing authorities that other congressional districts and Members of Congress are dealing with, and this has to 

do with a recapture of sweeping of accounts that occurred a couple 

of years ago, probably before you were appointed Secretary. Housing authorities across the country received a letter where Washington wanted to recapture or reclaim reserves in their accounts 

back to Washington to redistribute for other programs. 

And the Bucks County Housing Authority, of which I am very 

proud, and which does a good job, which manages its housing well, 

and which had built up significant reserves and uses those reserves 

to build new projects to get individuals in the projects on the road 

to self-sufficiency, received this letter, and they were going to lose 

millions of dollars that they were prepared to reinvest in the community. 

The housing authority just to the south of us, the City of Philadelphia, is well known for the problems that they had. They really 

had no reserves, they had mismanaged their authority, they settled 

lawsuits unrelated to housing, and paid millions and millions in 

legal fees. 

And so the message that was sent by HUD was that if you are 

a well-run housing authority and you have built up cash reserves 

getting prepared to reinvest in your community, you will be penalized, and the mismanaged housing authorities in this country were 

really not penalized in that case because they were going to get the 

dollars redistributed. 

I was just wondering if you could comment on what message you 

think that sends to the housing authorities in many of our congressional districts that are working hard, trying to do a good job in 

managing and reinvesting in their community so we can get to ending things like veterans’ homelessness in this country. What message does that send? 

Secretary CASTRO. On the first issue, I look forward to working 

with you on the issue of veteran homelessness. 

On the second issue, we want our public housing authorities to 

succeed. And so you are right this does predate me a little bit. 

However, it was the subject, I believe, of an IG audit, and that 

money is being held by HUD, but will belong, does belong to the 

PHAs. We want them to have the resources they need to be successful, and we will look forward to working with you and others— 

Mr. FITZPATRICK. I appreciate it, but the PHAs could have reinvested in the communities which were well-managed housing authorities. So, I would just ask you to consider that. 

Thank you, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

37 

The Chair now recognizes the gentleman from Texas, Mr. Green, 

ranking member of our Oversight and Investigations Subcommittee. 

Mr. GREEN. Thank you, Mr. Chairman. 

Mr. Chairman, as I have sat here this morning, I have literally 

had tears well in my eyes as I have heard some of what has been 

said regarding people who are in need of help. And, Mr. Chairman, 

I want the record to reflect that ‘‘I,’’ personal pronoun, will not sit 

silently by while the tools that are needed to fight invidious discrimination and help those who are in desperate need of assistance 

are eliminated. 

These tools have been hard won and hard fought for. We cannot 

allow the evisceration of the Fair Housing Initiative Program, the 

decimation of the Housing Trust Fund, and we cannot allow disparate impact to be eliminated. These tools have been recognized 

by courts, and they have made a difference. 

And I applaud you for standing up and standing your ground 

this morning. Somebody has to take a stand. I applaud you and all 

of my colleagues who are doing so. 

Mr. Chairman, Mr. Secretary more specifically, under disparate 

impact, statistical analysis alone will not bring a victory to the 

plaintiff. The plaintiff has a further obligation to go on and show 

that there is a less discriminatory alternative, and absent that, the 

plaintiff will not prevail. 

Disparate impact is not a theory. It is a standard that 11 circuit 

courts have approved. And it bears a methodology by which one 

who is accused improperly can defend and win. 

The Fair Housing Initiative Program is the most efficacious way 

that we know of to present empirical evidence of invidious discrimination. It has proven to be the best way. If there is another way, 

I defy someone to show me, other than a person just confessing 

that I am a person who discriminates, which rarely happens, which 

is why you have the disparate impact standard, because people 

don’t confess. They have facially neutral policies, but in application 

it is invidious discrimination. And we cannot allow what we have 

fought hard for over the decades to just simply evaporate because 

some people don’t understand. 

I know what invidious discrimination is like. I have been to colored water fountains. I have had to sit in the back of the bus. I 

have had to sit in the balcony of the movies. So I know what I am 

talking about. I know what it smells like. I have gone to those 

filthy fountains. I know what it looks like. I have had the Klan protest because of my protestations. 

So I am going to make a stand, and I want to make it very 

known that we cannot allow poor people to go without advocacy in 

the Congress of the United States of America. 

Now, who is helped by the Federal rental assistance program? 

The elderly with children, the elderly themselves, the disabled with 

children, disabled adults. More than 50 percent of the people on 

Federal assistance are disabled, elderly, and children. Are we saying that America no longer wants to help the disabled, the elderly, 

and the children? Have we gotten to a point now where we have 

to cut through the bones all the way to the elderly, all the way to 

38 

the disabled? Is this the America that we have fought hard to create? 

I stand with you, and I promise you, especially those who are listening who don’t have the advocacy that you need in Congress, that 

there are some among us who will not sit silently by. We will not 

acquiesce. We will not give our consent. We will fight. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Virginia, Mr. 

Hurt. 

Mr. HURT. Thank you, Mr. Chairman. 

And thank you, Secretary Castro, for being here. 

I am interested to hear some of the comments that we have 

heard from our colleagues on the other side of the aisle, the accusations that there are people on our side who want to shut down and 

end HUD, folks who believe that there is anything but full support 

for the Fair Housing Act. 

And so it interests me to hear that, because I don’t think that 

is what I have heard, and I don’t think that anybody, certainly that 

I represent in Virginia’s Fifth District, a rural district, believes 

that. I think the people that I represent believe that there should 

be a safety net and that HUD plays a very important role in providing that. 

I think that we also recognize, and the people that I represent 

recognize, that we need to have Federal programs that work, that 

are efficient. I know that you believe that as well. We need them 

to be efficient, not only to serve those who need the assistance, but 

we also need to serve those who pay the bills, and that is the taxpayer. 

So that is the perspective I bring to this. I am concerned about 

folks that I represent who live in rural Virginia. And I guess one 

of the things that I would like to ask you about relates to the role 

of HUD and its housing programs and housing assistance as it relates to the Rural Housing Service with the USDA. 

I noted in your testimony, and I think that we all know, that in 

1965 when HUD was created, it was really primarily geared, and 

maybe it is safe to say continues to be primarily geared, towards 

urban areas. Would you agree that is true, and how would you say 

that has changed in the last 50 years? 

Secretary CASTRO. I would say that, certainly, we do a lot of 

work in cities of significant size. However, you could just as easily 

say that we are the housing and community development department, because we do a lot of work in rural areas and tribal communities. So by no means are the investments that we make limited 

to our urban areas. 

Mr. HURT. With that said, there was a GAO report in 2012 which 

confirmed that, and said that there is indeed a tremendous amount 

of work that HUD does in rural areas. 

And I guess my question is, if you are interested in trying to 

make sure that we are most effectively using the tax dollars and 

the leverage of the Federal Government to provide the most for 

the—most effectively, I guess my question is, are there opportunities where we can see reform and consolidation between the Rural 

Housing Service at the USDA and HUD programs? 

39 

Secretary CASTRO. We are always willing to talk about the potential for efficiencies. 

I know that this question about potential consolidation between 

FHA and the Rural Housing Service has been discussed recently, 

and this is not the first time that it has been discussed. Just one 

note of caution there. These are two programs that are distinct. 

They have different underwriting approaches, and other standards 

that are different. 

I would say that while HUD certainly does a robust amount of 

work in rural communities, there is no question that the USDA has 

much greater reach in our rural communities than HUD does. 

Mr. HURT. So how can you say that there is not a duplication of 

effort and— 

Secretary CASTRO. I think they are complementary. As I said, 

they do have different—RHS and FHA do have different approaches on underwriting and other things. We would love to get 

you and your staff a follow-up on that analysis. 

All of that is to say that we are willing to explore what is possible, but I think at the end of the day, this conversation should 

be had as part of a larger conversation about housing finance reform. 

Mr. HURT. But Mr. Secretary, our Housing and Insurance Subcommittee held a hearing on this in May. The Director, Mr. Hernandez, did not seem to be very open to consolidation at all. 

And I guess my question is, based on the 2014 agreement or organizational charter for the Joint Federal Housing Agencies Charter, which I assume you are familiar with, what has been done? 

Have you met with anybody at the USDA or with Mr. Hernandez 

to figure out how we can consolidate these efforts between the 

USDA, HUD’s efforts, and the VA’s efforts? 

Secretary CASTRO. Yes, it is a great question. I know that my 

staff has had conversations in the past with the Rural Housing 

Service. Of course, we can get you the details of those conversations and— 

Mr. HURT. I would like to see them, because this is something 

that has been an issue since 2011, when the President started out 

on this course. So I would like to have some feedback. 

Secretary CASTRO. Great. 

Mr. HURT. Thank you very much, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Missouri, Mr. 

Clay, ranking member of our Financial Institutions Subcommittee. 

Mr. CLAY. Thank you, Mr. Chairman. And thank you for conducting this hearing and inviting Secretary Castro back. 

Welcome, Secretary Castro. And before I ask any questions, let 

me just personally thank you for your visits that you have made 

to St. Louis in May, to the State of Missouri. We hosted you a couple of weeks ago in Ferguson, Missouri, and I appreciate the attention that you have given that community, especially with our newly 

minted Promise Zone designation. 

Today, it is an unfortunate reality that a child’s ZIP Code has 

huge implications for life outcomes, including access to quality education, health care, and transportation. 

40 

HUD is currently working to finalize a proposed rule regarding 

the Fair Housing Act’s requirement that all recipients of Federal 

housing funds take steps to affirmatively further fair housing. Can 

you explain how this rule will help ensure greater equality for our 

children in the future? 

Secretary CASTRO. I would be glad to. 

This is really a piece of unfinished business from the 1968 Fair 

Housing Act. The Fair Housing Act requires that the Secretary 

take steps to affirmatively further fair housing, and that our grantees affirmatively further fair housing. The challenge has been that 

the Federal Government has never provided precise guidance, sufficient precise guidance to communities on how they ought to do 

that. We also, historically, have not really given them the tools to 

do that. 

So we are closing in on a rule, a new affirmatively furthering fair 

housing rule. Part of that is an Assessment of Fair Housing Tool 

that they will be able to use to understand what the fair housing 

challenges in those communities are. And I can tell you, as a 

former mayor, a former local elected official, and former council 

member, I wish that I had had that kind of tool when I was on the 

city council or as mayor of San Antonio because, as a policymaker, 

it would have helped to understand what more we could do. 

They will file an assessment of fair housing with their consolidated plans every 5 years. 

And we are looking forward to their rolling this out. This is still 

in the rulemaking process, so I won’t go into the specifics of it, but 

we are excited about the possibility of this improving the fair housing landscape in the United States. 

Mr. CLAY. Thank you for that response, and for your efforts in 

that area. 

Studies show that Federal rental assistance helps families stay 

out of poverty, achieve stability, and ultimately leads to better life 

outcomes, particularly for children. Can you elaborate on the positive impacts that HUD’s rental assistance programs have on our 

most vulnerable households across the country? 

Secretary CASTRO. It is tremendous. The impact that we have 

provides stability for young people. It provides comfort and dignity, 

as was mentioned, to the 56 percent of households that are headed 

by someone who is elderly or disabled. It gives individuals who are 

working age the chance to get on a stronger path to prosperity. In 

fact, 43 percent of our working-age adults in HUD-assisted housing 

do, in fact, work. 

So the rental assistance that we give is, in and of itself, successful in putting a roof over folks’ head, giving them stability, and 

putting them on a path to the kind of prosperity that they want 

to work for. 

Mr. CLAY. And how does the Brooke Rule that caps tenants’ rent 

at 30 percent of income help families maintain housing affordability while still having enough room in their budgets for other 

basic necessities? 

Secretary CASTRO. What that rule ensures is that—of course, 

they have a responsibility to pay 30 percent of their income in rent 

so they have skin in the game, they are putting something forward. 

41 

At the same time, it does shield them, to some extent, from increases in rents. 

What we see out there is that the rents are going through the 

roof in many communities, and this is impacting everybody. The 

fact is that so many households today are paying 50 percent or 

more of their income in rent. As I mentioned earlier, 7.7 million 

low-income households who don’t receive any government assistance are paying at least 50 percent of their income in rent. 

Mr. CLAY. Thank you for your responses. 

I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Ohio, Mr. Stivers. 

Mr. STIVERS. Thank you, Mr. Chairman. 

I am glad you are here, Mr. Secretary. And thanks for your call 

last week offering to work with me on a lot of issues for which we 

share a passion. 

I want to read from HUD’s mission statement and then ask you 

about four areas really quickly. And this is a summary of your mission statement. It talks about how you want to work to strengthen 

the housing market, you want to utilize housing as a platform to 

improve the quality of life, to build inclusive and sustainable communities free from discrimination, and to transform the way HUD 

does business. 

That is my summary of your mission, so I hope you believe that 

is an accurate summary, but it is excerpts from your mission. 

Secretary CASTRO. Sure. 

Mr. STIVERS. And I would like to talk to you about four areas: 

first, Moving to Work, which you have already talked a little bit 

about; second, a ‘‘homeless youth’’ definition, which you and I have 

talked about individually; third, housing finance, especially involving condominium rules; and fourth, the Fair Housing Initiative, if 

we could. 

I would like to start with Moving to Work. It is, frankly, an easy 

one. It is a bipartisan issue. We all care about it. I believe it is a 

flexible and holistic program that does indeed use housing to build 

people’s quality of life and transform lives. 

So I guess I just want to get you on the record as saying you are 

going to work with us on this bipartisan bill that hopefully will expand the program and allow it to be used to help a holistic program 

that actually looks not just at the housing needs but the total 

needs of the residents and makes it a little more flexible for the 

agencies administering it. 

Secretary CASTRO. We absolutely are. 

Mr. STIVERS. Okay. 

Secretary CASTRO. We are looking to do what we can to ensure 

that we— 

Mr. STIVERS. I will take ‘‘yes’’ as an answer. 

Secretary CASTRO. —have a strong MTW. And— 

Mr. STIVERS. Great. Perfect. 

Secretary CASTRO. —of course, our budget proposes 15 more. 

Mr. STIVERS. Great. Thank you. 

Second, on the homeless youth, you may be aware that the 2014 

Annual Homeless Assessment Report to Congress actually said 

that homelessness among families declined by 8 percent between 

42 

2007 and 2014, yet the numbers reported through our Department 

of Education said that they went up 85 percent since the 2007 

school year. 

So that is a big disparity, and it really has to do with the fact 

that the HUD definition leaves out homeless children. And I guess 

my question is—and I don’t want this to be a loaded question, but 

it kind of is—how are we going to solve the problem of homeless 

youth if we don’t count them correctly? 

Secretary CASTRO. I believe that we are counting them, and I believe—first of all, I look forward to working with you. We had a 

good conversation about this issue. 

Mr. STIVERS. Yes. 

Secretary CASTRO. As you know, we have some concerns about 

this legislation. One of those concerns is that it injures HUD’s—in 

fact, may take away entirely HUD’s flexibility to prioritize or emphasize— 

Mr. STIVERS. And we want to work with you to make sure you 

can emphasize—the whole point is you have to count people before 

you can help people. If you don’t know they are homeless—and so 

the HUD definition, excluding whole categories of homeless folks 

who are under 18, I just want to work with you— 

Secretary CASTRO. Although I would say— 

Mr. STIVERS. —and give you the flexibility, but it is really important that we count them, and your definition excludes them. 

Secretary CASTRO. I would say there is more overlap than has 

been commonly given credit for. But let’s work together on it. 

Mr. STIVERS. And there is some disparity in the report. So I just 

would love to work with you to help solve that, because we can’t 

help those people until we count them. They count, in my opinion, 

and I want you to help count them. So I appreciate your willingness to work on that. 

Third, with regard to condominiums, you may know that the 

process with regard to FHA funding for condominiums really is 

complicated. And if FHA would simply move to risk-based pricing 

for condominiums only—I am not asking you to do it everywhere. 

You have had the ability to do risk-based pricing since before I 

got to Congress. Clearly, condominiums have a higher risk than 

single-family homes. I will stipulate that. If you would move to that 

model, you could move away from a model that excludes so many 

condos. In fact, only about between 10 to 20 percent of condos are 

eligible for FHA financing. 

We have to fix that, because it is an affordable way for some people to get housing. It is a big way that a lot of urban people get 

housing. And to exclude FHA from them is a real travesty. I would 

love to work with you on that, too. 

And I do want to quickly get to the Fair Housing Initiative, if 

we can. Did you, by any chance, since you have been at HUD—I 

know that you came long after it happened, but did you happen to 

look at your IG’s report that was issued in 2013? Have you had a 

chance to see this? 

Secretary CASTRO. Yes. I am familiar with this report. I think 

you are— 

Mr. STIVERS. I appreciate it. 

43 

Secretary CASTRO. —talking about this one that I brought with 

me. 

Mr. STIVERS. Great. Have you implemented the recommendations? 

Secretary CASTRO. We have implemented those recommendations. And we have issued a directive emphasizing the need for onsite monitoring. And our Office of Fair Housing and Equal Opportunity (FHEO) has implemented a tracking system, as well. So— 

Mr. STIVERS. That is great. 

And I know I am out of time, but, really quickly, can you also 

tell us, have you updated your conflict-of-interest standards? Because they are really low, and they don’t include having board 

members who actually compete against the folks who are subjected 

to these lawsuits. 

Secretary CASTRO. I look forward to following up with you. 

Mr. STIVERS. Let’s talk about it. I’m sorry. I am out of time. 

Chairman HENSARLING. The gentleman is correct; he is out of 

time. 

The Chair now recognizes the gentleman from North Carolina, 

Mr. Pittenger. 

Mr. PITTENGER. Thank you, Mr. Chairman. 

Mr. Secretary, it is good to be with you. 

Mr. Secretary, I am a businessman. I served in the North Carolina Senate. I led an effort for efficiencies and restructuring our 

government and looking for abuse, looking for fraud, looking for 

waste. I worked with a Democrat legislature, and came up with a 

billion-and-a-half dollars of savings. None of those amounts were 

contested by anyone. I worked with the speaker addressing what 

we could do to consolidate our health and human services department. I worked on Medicaid fraud, which was pervasive throughout 

our government and, as such, around the country, about 20 percent 

of it. 

I think the pushback that maybe you sense from this side of the 

aisle today is wanting a recognition that there is a concern for 

some abuse. 

You referenced several times that the individuals that you serve 

come from the very poor or the disabled. Disability insurance has 

increased in the last decade from $88 billion to $145 billion. That 

is a lot of money. That is a lot of people. It seems that a lot of folks 

have been able to gain access to that. 

I have worked with our secretary of health and human services 

in North Carolina on addressing food stamps. There are very few 

eligibility requirements. I have been on the phone with our majority leader and our staff trying to create eligibility requirements and 

incentives to address it. 

I think the overall concern is the abuse of the system and what 

is being done. You have made a clear, compelling statement of a 

great American success story and addressing the needs of veterans 

and their homelessness. I think what we are looking for is that 

great American success story in creating accountability inside the 

system and looking for real metrics, looking for what you are doing 

to make sure that only those who really need assistance are getting 

it. 

44 

If you have 56 percent of your folks that you are servicing from— 

and a good portion of those from the disabled, and you have enormous access to disability, where does that fall in line, in terms of 

people being able to access not just disability but then be able to 

get Federal housing? 

So all of this is of real concern to all of us who want a fiscally 

accountable government. I really reject the statements that were 

made to imply that there is some type of racial concern here. I 

have been involved in Federal housing in my community for 25 

years. You can talk to civic leaders, pastors, African-American pastors, with whom I have worked with very closely. I understand the 

need, and I am responsive to that need. 

But, at the same time, I represent individuals who want a fiscally accountable government. And we don’t see a demonstrated effort in so many ways of how that is being manifest. 

And I would really appreciate your response to those concerns. 

Secretary CASTRO. I appreciate the question and the concern. 

Early on in my tenure, we set out a vision for HUD. And one important part of that vision was to create a more accountable and 

transparent Department. 

So one of the first things I did was that I co-authored a letter, 

a joint letter with our IG that went out to all of our employees, telling them that folks ought to cooperate with IG investigations and 

reviews. We have gotten our departmental enforcement center to 

work closely with our IG. We work with our IG to implement the 

recommendations on audits and reports so that we improve performance out there. 

We are looking at ways that we can improve monitoring of our 

grantees. One challenge, for instance, is that we have over 8,000 

grantees— 

Mr. PITTENGER. Mr. Secretary, if you don’t mind, could I interrupt you? I don’t have much time left. 

Would you agree with me that there is abuse in the system? 

Secretary CASTRO. That abuse happens in the system sometimes? 

Mr. PITTENGER. Yes. 

Secretary CASTRO. I agree with you on that. 

Mr. PITTENGER. Good. I think that is what we want, is a—if you 

want to come back to us with real, measured results, not what you 

have given to your staff and what to look for, but measured results 

on what you have done to bring accountability inside your system, 

that would really demonstrate to us that we are putting our tax 

dollars where they really belong. 

We care deeply about those in the safety net who need our help. 

We care deeply, though, as well, about the American taxpayer and 

how they are being exploited time and again. 

Secretary CASTRO. I share that concern, and we would love to follow up with you. 

Mr. PITTENGER. Thank you very much. 

Chairman HENSARLING. The time of the gentleman— 

Mr. PITTENGER. I yield back. 

Chairman HENSARLING. —has expired. 

The Chair now recognizes the gentleman from Arizona, Mr. 

Schweikert. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. 

45 

Mr. Secretary, a couple of quick questions just to sort of build the 

box. 

What do you think the thing is you do or the Department does 

best, where you do it efficiently, you actually affect people’s lives, 

and the cost, the dollar outcome, as you measure it, is something 

you are proud of? 

Secretary CASTRO. There are several things that fit that category. 

Mr. SCHWEIKERT. No. Just— 

Secretary CASTRO. I think it is fair to say the thing that many 

of us are proudest of is this progress that we have made working 

with the VA and others on veteran homelessness. 

Mr. SCHWEIKERT. Okay. So your veterans’ homeless program. 

Secretary CASTRO. Yes. 

Mr. SCHWEIKERT. What is the thing that most concerns you, 

where the dollar per life affected or helped and changed is unacceptable to you? What is that? 

Secretary CASTRO. What is your question? 

Mr. SCHWEIKERT. Same thing, it is just the opposite, the mirror 

image of the first question. What in the dozens and dozens and 

dozens of programs and initiatives you are managing—and, look, 

you have inherited much of this—of the dollars spent, it is unacceptable to you, the quality, the outcome in affecting and helping 

people’s lives? 

Secretary CASTRO. I think it is fair to say that every day I read 

the clippings from around the country, and I see one of the grantees that is not spending money the way they ought to— 

Mr. SCHWEIKERT. No, no. I beg of you, I don’t want to go the anecdotal direction. I almost want this to be sort of your math-brain 

side saying, as the manager of a multi-billion-dollar agency, what 

program is unacceptable to you that the dollars being spent on the 

numbers of lives you are actually helping? 

Secretary CASTRO. I don’t believe that there is a program that 

HUD has— 

Mr. SCHWEIKERT. So, no program— 

Secretary CASTRO. I guess what you are calling is basically a useless program. 

Mr. SCHWEIKERT. No, no, no. On the contrary. We all— 

Secretary CASTRO. I disagree with that. 

Mr. SCHWEIKERT. We all have those that, either the way they are 

designed, the efficiencies—I am sure you ran into that as mayor, 

by— 

Secretary CASTRO. Is your question what program we need to improve in terms of its efficiency? 

Mr. SCHWEIKERT. Or restructure. Because you just told me you 

are very proud of your homeless veterans’ program. So, obviously, 

you came up with a methodology and mechanics there that you 

thought was effective per dollar. 

Secretary CASTRO. Yes. 

Mr. SCHWEIKERT. But on the flip side, you can’t tell me anything— 

Secretary CASTRO. No, no, no. 

Mr. SCHWEIKERT. —out of all the programs— 

46 

Secretary CASTRO. If your question is what program or programs 

can we improve the efficiency on, what programs concern me about 

the efficiency on— 

Mr. SCHWEIKERT. If you had to target right now where it was 

time for a technology revolution, cost revolution, delivery revolution 

in what you do, to use that money to affect people’s lives, what is 

that program that it is time to have that management revolution 

that you— 

Secretary CASTRO. Oh, there are many. I will give you an example. 

Mr. SCHWEIKERT. Give me the number one. 

Secretary CASTRO. One of them that I think we can make more 

progress on is CDBG. I am told by my folks who administer this 

that a lot of the work on CDBG is centered around essentially just 

routine paperwork. And we need— 

Mr. SCHWEIKERT. So what is the technology you can bring to that 

to bring that revolution about so the dollars per lives affected is acceptable to you? 

Secretary CASTRO. This is why we are requesting IT upgrades, so 

that we can improve our IT system to enhance monitoring and cut 

down on the amount of time that our people have to spend doing 

paperwork— 

Mr. SCHWEIKERT. So those IT upgrades— 

Secretary CASTRO. —so they can be more effective. 

Mr. SCHWEIKERT. —should provide the efficiencies that ultimately will cover those costs? And that is a program where you are 

going to— 

Secretary CASTRO. That is one example. 

Mr. SCHWEIKERT. —be able to help more people’s lives and accomplish it through the efficiencies and pay for it through those efficiencies? 

Secretary CASTRO. Yes, but your characterization, I think, is off 

about that it is one program. It is not one program. 

Mr. SCHWEIKERT. You do initiatives at the program level. 

Secretary CASTRO. Sure. Yes, there is no question, Congressman, 

there are efficiencies that we have yet to achieve that we need to 

achieve. I think my message is it is going to take us improving the 

systems. That often takes an investment. And we need that investment from you. 

Mr. SCHWEIKERT. You actually have a misnomer there, because 

if you take a look at the rest of the world, particularly in the private sector, the adoption of technologies and efficiencies is supposed to save money and allow you to help more— 

Secretary CASTRO. Congressman— 

Mr. SCHWEIKERT. No. Let me finish. 

Secretary CASTRO. —if you would just invest— 

Mr. SCHWEIKERT. Let— 

Secretary CASTRO. —as much in my program— 

Mr. SCHWEIKERT. Mr. Secretary— 

Secretary CASTRO. —as you did in this room— 

Mr. SCHWEIKERT. Mr. Secretary, let me finish. 

Secretary CASTRO. —with this carpet with gold insignia— 

Mr. SCHWEIKERT. Mr. Secretary— 

Secretary CASTRO. —and this kind of— 

47 

Mr. SCHWEIKERT. Mr. Secretary, let me— 

Secretary CASTRO. —wonderful Taj Mahal— 

Mr. SCHWEIKERT. Come on. 

Secretary CASTRO. —I think that— 

Mr. SCHWEIKERT. Hey. 

Secretary CASTRO. —we could make the kind of improvements 

that we need to make. 

Chairman HENSARLING. Mr. Secretary, the time belongs— 

Mr. SCHWEIKERT. You have shocked— 

Chairman HENSARLING. —to the gentleman from Arizona. 

Mr. SCHWEIKERT. —me with that rudeness. I am— 

Secretary CASTRO. That is the fact. 

Mr. SCHWEIKERT. Shall we try again, Mr. Secretary? Come on. 

You are better than this. You are much better than this. And your 

brother is one of my favorite people here. 

So, as we try to help you, policy-wise, to find those efficiencies 

where you believe you can have the most impact—through your 

testimony and statement, you keep repeating over and over investment, investment, investment. But then, in the same breath, you 

tell me that these technology dollars are going to provide you efficiencies. Why aren’t you also telling us these efficiencies are going 

to pay for these technology investments? 

And, with that, Mr. Chairman, I yield back. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Pennsylvania, Mr. 

Rothfus. 

Mr. ROTHFUS. Thank you, Mr. Chairman. 

Welcome, Mr. Secretary, and thank you for joining us today. 

I would like to talk a little bit about HUD’s Continuum of Care 

Program, which I understand is set up to engage local communities 

in providing transitional housing and services to individuals and 

families. 

Your staff has been talking with my office and a constituent provider in my district about some challenges with HUD regulations 

they have run into as a single-sex provider. This provider does 

great work in the north hills of Pittsburgh helping women with 

children avoid homelessness. Most of the women there have been 

in poverty. Many are domestic violence survivors, and many have 

experienced mental health or substance abuse issues. Despite that, 

the outcomes achieved have been tremendous, with more than 80 

percent of clients increasing income and education levels and finding permanent housing. 

Each of these figures exceed HUD requirements. However, the 

regulations as they currently stand prevent this provider from continuing to serve females with children. And I can’t imagine that 

they are the only ones experiencing this issue. 

In thinking through some of these issues, I question whether it 

makes sense for every program to be all things for all people. This 

provider serves a unique population that seems like a key tenet of 

the program is, again, to empower folks on the ground to tailor programs to meet the specific needs of their community. It can’t be 

one-size-fits-all. 

48 

Instead, could services under the Continuum of Care Program for 

different genders be provided at different locations if that is what 

the community deems to be the most appropriate? 

Secretary CASTRO. Yes. Thank you for the question, Congressman. You know, of course, that I am not familiar with this particular case. I am glad that my staff has been working with your 

staff on it and would love to follow up with you on it personally. 

We always strive to allow local communities to meet their own 

needs, and sometimes it becomes a challenge when those local 

needs clash with other dictates. However, we would like to work 

with you and with the community to see what is possible on that. 

Mr. ROTHFUS. So would you agree that you can work with different genders, depending on the context of the situation? For example, if you have a residence that has been helping with domestic 

abuse survivors, that maybe there should be a particular sensitivity there to the residence? 

Secretary CASTRO. Yes, I would agree with you that that does 

exist in different places. Sure. 

Mr. ROTHFUS. And should Washington, D.C., come down and say, 

no, no, you can’t do that, you have to open up the program, when 

you have a specific population there who— 

Secretary CASTRO. Again, I don’t want to speak to the specific 

case. I am not familiar with the details of this particular case. 

However, in general, what we like to do is, as I mentioned earlier, have mission-driven flexibility so that we can meet the mission 

that HUD has, working with local communities, and effectively 

serving those people that our programs are meant to serve. 

Mr. ROTHFUS. Do you know whether there are waivers in a program, for example, that HUD would be able to grant? 

Secretary CASTRO. In many of our programs, there are waivers. 

And under certain circumstances, we have granted waivers on a 

whole number of things in order to meet the fundamental goal of 

that program. 

Mr. ROTHFUS. We would like to— 

Secretary CASTRO. Sure. 

Mr. ROTHFUS. —follow up with you and ask you to consider any 

waivers that would be appropriate to help this very vulnerable population. 

In meeting with the housing authorities and affordable housing 

providers throughout my district, there is some concern and frustration with regulations that are burdensome and require a level 

of compliance effort that diverts resources away from actually providing housing. 

Can you tell me how often HUD is doing a retrospective review 

of regulations? 

Secretary CASTRO. That is a good question. 

A few years ago, the President asked each of the Departments 

to look at all of their regulations and to eliminate at least 5 percent—that was the goal—of those regulations. In that time, roughly 

over the last 3 or 4 years, HUD has eliminated—I believe the last 

thing I saw was 11 percent of those regulations. And we would be 

glad to get your staff a follow-up on which regulations those have 

been. 

49 

We share a goal, I think. And we heard this from Congressman 

Luetkemeyer and others. We hear very loudly and clearly at PHAs, 

at nonprofits and other grantees that, ‘‘Hey, HUD, can you get better about streamlining some of these administrative burdens?’’ 

Where we can do that, mark my words, we are going to— 

Mr. ROTHFUS. Is there any formalized ongoing review of existing 

regulations so that every 2 years— 

Secretary CASTRO. Oh, sure. There is. There is a streamlining 

rule that is in development, and— 

Mr. ROTHFUS. The rule is in development right now? 

Secretary CASTRO. The rule is in development. 

Mr. ROTHFUS. When can we see that? 

Secretary CASTRO. The proposed rule was issued in January of 

2015, and our goal is to issue that rule in the summer of 2015, so 

this summer. 

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

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentlelady from Utah, Mrs. Love. 

Mrs. LOVE. Hello, Mr. Secretary. How are you doing? 

Secretary CASTRO. I am doing well. 

Mrs. LOVE. Okay. 

I just came in, so I don’t know all of the questions that were 

asked, but I want you to know that I am hoping that we have a 

good, civil, back-and-forth so we can get some information. Good? 

Yes? 

Secretary CASTRO. Yes. Sure. 

Mrs. LOVE. Okay. Great. 

I have just finished reading an article in The Hill and I understand that the Administration, the Obama Administration, is moving forward with regulations designed to help diversify America’s 

neighborhoods. 

You are pushing forward with that, right? 

Secretary CASTRO. I wouldn’t characterize it that way, in terms 

of diversifying America’s neighborhoods. I think you are talking 

about the affirmatively fair housing? 

Mrs. LOVE. Okay. Well— 

Secretary CASTRO. Furthering fair housing? 

Mrs. LOVE. —I am actually looking specifically at a HUD rule 

that is coming out that is dedicated to diversifying neighborhoods 

in the attempt to try and end some areas that you think are segregated, for instance. 

Secretary CASTRO. Well, yes. We just had a conversation about 

this, the rule on affirmatively furthering fair housing. 

Mrs. LOVE. Okay. 

So I just want to know some quick examples that you have where 

the Federal Government has actually been able to diversify areas 

or end poverty in local areas where the local municipalities could 

not do that. 

Secretary CASTRO. Yes. That is not the way that I am thinking 

about it. That is not the way we are thinking about it. The way 

we are thinking about it— 

Mrs. LOVE. How are you thinking about it? 

Secretary CASTRO. Yes. So the way we are thinking about it is— 

and I used to be a mayor. I know you used to be a mayor. 

50 

Mrs. LOVE. Yes. That is why I am asking you on—I know that, 

as a mayor, you wouldn’t want the Federal Government coming in 

and telling you what to do with your zoning laws or with your 

rules, because you have more skin in the game, you have more of 

an incentive to take care of the people who live in your areas. You 

are the boots on the ground. And so that is why I am trying to figure out where you think this would be a good idea. 

Secretary CASTRO. Yes. So the linchpin—and I am going to be 

careful about what I say about the rule, because it is in rulemaking 

right now. And so we don’t want to prejudge all of the contents of 

the rule. 

However, I think it is fair to say that the goal is to ensure that 

local communities have the tools to assess the landscape of housing 

in their area and where the investments are, where affordable 

housing opportunities are— 

Mrs. LOVE. Okay. 

Secretary CASTRO. —to understand what some of the challenges 

are— 

Mrs. LOVE. So you think that they don’t have the tools right now, 

and you need to provide the tools that they need to landscape their 

area to have more data for their area? 

Secretary CASTRO. I believe that through this rule, they will be 

able to get, through what we call an Assessment of Fair Housing 

Tool— 

Mrs. LOVE. Do you feel like you didn’t have the right type of tools 

to make the right types of decisions in your area? 

Secretary CASTRO. Oh, yes, I said earlier that I wished that I had 

had this tool when I was major. It would have been fantastic, as 

a policymaker. It truly would have helped us, I think, to understand how we could ensure that throughout the community, people 

at least have the opportunity for upward mobility. So I am convinced that it is going to be a fantastic tool. 

Mrs. LOVE. I have a limited amount of time, so before we go on, 

can I get a commitment from you that you are not going to do anything that preempts what the municipalities are doing in their 

areas, that you are not going to go in and make any zoning laws 

or any rules that are going to preempt what cities are going to do 

when— 

Secretary CASTRO. Yes, I have seen some of the talk about that, 

Congresswoman. This is not about changing— 

Mrs. LOVE. Yes? 

Secretary CASTRO. That is right. 

Mrs. LOVE. Okay. 

Secretary CASTRO. This is not about changing zoning laws, planning laws, anything like that. 

Mrs. LOVE. Okay. 

Saratoga Springs, Utah, the City that I was mayor of, was 

named one of the best cities for livability and affordability. 

Secretary CASTRO. Okay. 

Mrs. LOVE. And it wasn’t because we put pockets in areas of affordable housing. It wasn’t because we said there are people who 

cannot afford specific housing so we are going to make sure that 

we do that. It is because we actually lowered the price. We lowered 

taxes. We made sure that our taxes paid for public safety, police, 

51 

and fire. And we gave people the opportunity to use their own 

money in order for them to be able to pick affordable housing in 

their own neighborhoods, neighborhoods of their own choosing, so 

that their kids can go to schools of their choosing. 

One of the things that I am really concerned about—I just put 

up an article on Facebook that talked about Utah going from 1,932 

chronically homeless to 178 homeless. That is remarkable, that a 

State can actually do that. 

Secretary CASTRO. Yes. 

Mrs. LOVE. And they have their own housing problems— 

Secretary CASTRO. They did it with a lot of our money, so I agree. 

Mrs. LOVE. No, no, no. Listen. But they actually did that, because that was their decision. 

Secretary CASTRO. With our money. 

Mrs. LOVE. They came in— 

Secretary CASTRO. Sure. 

Mrs. LOVE. They came in—what do mean, ‘‘our money?’’ It is the 

taxpayer dollars. You think that— 

Secretary CASTRO. Yes. Our— 

Mrs. LOVE. —this money belongs to you? 

Secretary CASTRO. —taxpayer money helped fund HUD–VASH— 

Mrs. LOVE. This money does not belong to you. It belongs to the 

people. 

Secretary CASTRO. —and other initiatives. I am proud it. I am 

proud of what Utah has done. 

Mrs. LOVE. It belongs to the people. 

Secretary CASTRO. I celebrate with you. 

Mrs. LOVE. So what I am saying is that you should take note 

from what we are doing. Why not follow what Utah is doing so that 

we can actually end hopelessness? 

Every program that we have aimed at poverty should be aimed 

at making poverty temporary, not tolerable. 

Thank you. 

Chairman HENSARLING. The time of the gentlelady has expired. 

The Chair wishes to advise all Members that in order to accommodate the Secretary’s schedule, the Chair intends to recognize 

three more Members: the gentleman from Colorado; the gentleman 

from Arkansas; and the gentleman from Kentucky. To those who 

are monitoring the hearing in their offices, you are a day late and 

a dollar short. 

At this time, we will recognize the gentleman from Colorado, Mr. 

Perlmutter. 

Mr. PERLMUTTER. Thank you, Mr. Chairman. 

Mr. Secretary, it is good to see you. 

Secretary CASTRO. Good to see you. 

Mr. PERLMUTTER. I would like to talk about some of the sustainability, energy-saving measures that the Department has undertaken with local governments, with local public housing authorities. 

I know in Colorado your agency has worked very closely with a 

number of our local governments and local housing authorities to 

really make sure that the residents have very well-built units and 

complexes that are very efficient in their operation. 

52 

So if you could just talk to us a little bit about what the agency 

is doing nationwide and any specific examples that you want to 

raise. 

Secretary CASTRO. Yes. And I want to say how much I appreciate, Representative, the chance that I got to get out to Denver not 

too long ago. And, in fact, the Denver Housing Authority is a good 

example of this. I had the chance to visit North Lincoln Homes. 

And at North Lincoln Homes, they have installed 10,400 solar panels on those buildings. 

And what we want is we want folks to have a roof over their 

heads, we want them to live in a safe environment, and we want 

them to do it in a healthy environment as well. And we have a winwin here, because it is healthier, it is better for the environment, 

and they are saving money in terms of energy savings. 

Mr. PERLMUTTER. And I just want to—for the record, Colorado is 

the fittest State in the Nation too. So just—Utah has a lot of— 

Secretary CASTRO. I won’t challenge you on that. 

Mr. PERLMUTTER. —nice things about it— 

Secretary CASTRO. I think you are probably right. 

Mr. PERLMUTTER. —but I want to talk about Colorado for a second, and I appreciate your doing that. 

Secretary CASTRO. Yes. 

So we are doing just a whole bunch of work on this. Those buildings were part of what is called our Better Buildings Challenge. 

And the Better Buildings Challenge includes a push to get multifamily-building owners to agree to improve their energy efficiency 

by 20 percent over the next decade. And already we have gotten 

about 89 multifamily partners that represent about 400 million 

square feet of space and serve 400,000 people. So that is one significant advancement we have made. 

There are also other big communities like New York, through its 

housing authority, NYCHA, that is working to do green-energy retrofits. And we worked with them to make it economically feasible, 

in conjunction with the private sector, so that they are going to 

have renovated and more environmentally sound, green-energy 

units there in New York. And we just think that this is a victory 

all the way around. 

Mr. PERLMUTTER. And I have seen instances where your Department has worked with other Departments within the Federal Government, whether it is Education or Transportation or Energy, to 

make sure that new complexes, new housing units are near transit 

so it is easy for the residents to get from one place to another. 

Can you comment on that? 

Secretary CASTRO. I am confident that one of the lasting legacies 

of the Obama Administration is that it has broken through the 

silos. Sustainable Communities is a good example of this, which 

was HUD, DOT, and EPA working together and asking local communities to do the same thing. Because we know, if we are going 

to lift up the quality of life for people, it is not just about housing; 

it is also about access to transit, it is about a good school, it is 

about the opportunity for a good job. So how do all of us work together across those silos so that folks have a holistic opportunity 

to rise. 

53 

And Denver is a good example of this, whether it is in the investment in transit that connects to some of the housing there or environmental investments that have been made. The Promise Zones 

that we recently announced the second round of are another good 

example of this. We want to ensure that we are making an overall, 

holistic impact on quality of life and economic opportunity. 

Mr. PERLMUTTER. Is there anything that I haven’t touched on 

that you would like to talk about? 

Secretary CASTRO. Oh, there are a million things we would love 

to talk about, but we are very proud of so much of the investments 

that are made. We are also mindful, as folks, I know, on this side 

of the aisle have said, that we can continue to work on efficiency 

and accountability, and we will do that. 

Mr. PERLMUTTER. With that, Mr. Chairman, I will yield back. 

Chairman HENSARLING. The gentleman yields back his time. 

The Chair now recognizes the gentleman from Arkansas, Mr. 

Hill. 

Mr. HILL. Thank you, Mr. Chairman. 

And thank you, Ranking Member Waters. 

Secretary Castro, it is good to have you before the committee 

today. 

I had the pleasure of being in the great State of Texas over the 

weekend, and I had dinner in Austin at the LBJ Library. And I 

was thinking quite a bit at that dinner about would the President, 

this many years later, be happy or sad about the performance of 

the Great Society programs, since we really haven’t gotten poverty, 

as a percentage of the population, down since his time. And I know 

we have spent trillions trying to do so. 

But I do welcome you back to the committee. 

I have met with my public housing authority twice in Little 

Rock, Arkansas, and one thing that came up consistently was 

HUD’s bureaucratic delays in disposition of properties. I was informed that it can take up to literally a year through your Chicago 

disposition office to take a property that has been sold, take it off 

the books. And, therefore, we can’t redevelop new units without 

putting that cash to work, can’t do a real estate closing. 

That seemed like a really long time to me. I wondered what you 

consider a good benchmark for that disposition process. 

Secretary CASTRO. Yes. I believe it is fair to say that, according 

to the history of the property and the size of it, that you see a 

range. However, I agree with you that we certainly should endeavor to do it in a way that is as swift as possible. 

And while I am not familiar with the particular case of the Little 

Rock Housing Authority, I would be glad to follow up with you and 

with your staff so that we can figure out, with regard to that, how 

do we improve that situation and then, more broadly, give you an 

answer on what our average is. It may well be that that is an aberration. 

Mr. HILL. No. Well, yes, my question is not case-specific, it is 

prospective. 

Secretary CASTRO. Yes. 

Mr. HILL. But I have seen it in a couple of instances now, and 

I encourage you to set a benchmark that is substantially better 

than that. 

54 

You talked a lot about your success with veteran homelessness 

today. We appreciate that. But in preparing for the hearing, I was 

really shocked when I read a CRS memo that suggests that, of the 

$45 billion in new discretionary appropriations provided for HUD’s 

programs and activities for Fiscal Year 2015, $43 billion, so some 

95 percent, basically all of it, is—nearly all of that funding is apparently disbursed by automatic or computer-driven funding. And 

so, it is basically on autopilot that it goes out. 

They say it is allocated by formula; 95 percent of HUD’s appropriations are allocated by formula. So I assume CDBG or public 

housing payment or whatever that might be, which means that 

HUD doesn’t have a lot of managerial input. 

And this is a real change I have noticed since coming back to 

Washington, that our Cabinet Secretaries don’t have a lot of control 

about mixing programs or changing personnel. We see it at the 

Veterans Administration all the time. I know you have been frustrated by it. Whether you chose to mention that here or not is your 

business. 

But it appears to me that—how many more houses could we 

build or how many more lives could we change if we had a reduction in the 7,800 employees that you have? If 95 percent of your 

spending is driven by a formula, do you really need that big of a 

head count? 

Secretary CASTRO. Well, we— 

Mr. HILL. And could we reduce that head count? What do you 

think about that? 

Secretary CASTRO. We are always looking for efficiency, but let 

me give you another stat. In January of 1981, we had 16,500 employees at HUD, and today, by the last count that I saw, we had 

7,810. 

Mr. HILL. Yes, well, you also spent a lot less money then, too. 

You were spending probably $10 billion in 1983 in HUD. 

Secretary CASTRO. What I am saying is we are having to do more 

with less people. 

But I think you and I can agree on this: that we are always looking for ways, through the use of technology, through just doing 

things smarter, that we can become more efficient. 

Mr. HILL. But does that number shock you, 95 percent? Does 

that surprise you, that CRS says that 95 percent of your spending 

is all based essentially on a standing formula that flows out to 

your— 

Secretary CASTRO. Does it surprise me? I might want to doublecheck that percentage. It doesn’t surprise me that a lot of our programs are essentially formula-funded. However, there are also a 

number of them that are competitive-funded, as well. 

But it is either formulaic or competitive. There is not much discretionary power that is given over— 

Mr. HILL. So what do— 

Secretary CASTRO. —to the Cabinet Secretary. 

Mr. HILL. —what do the nearly 8,000 people do in that instance, 

then? 

Secretary CASTRO. Oh, they essentially administer these programs. We have had a lot of talk about how we can ensure more 

55 

accountability. They are our front line in ensuring that accountability. 

Mr. HILL. But if you just had a good Inspector General and get 

Congress to agree to a big IT upgrade, wouldn’t that—if you are 

going to have that much automated spending, wouldn’t that be the 

way to handle it? 

In other words, where do they get to innovate? Where do they get 

to add value? 

Secretary CASTRO. Well, no, that is why I do think that we need 

the investment in IT, so that we can achieve some of that. I agree 

with you on that. 

Mr. HILL. I yield back, Mr. Chairman. 

Chairman HENSARLING. The time of the gentleman has expired. 

The Chair now recognizes the gentleman from Kentucky, Mr. 

Barr. 

Mr. BARR. Thank you, Mr. Chairman. 

And, Mr. Secretary, thank you for your patience. We are winding 

up the hearing here, and I appreciate your time here today. 

The Congressional Research Service, as you probably know, reports that HUD has spent since its origination in 1965 approximately $1.65 trillion on its programs over the course of these 50 

years. And yet, since 1965, the percentage of prime-age male workers in the workforce has declined from over 90 percent to only 

about 77 percent today. Also, the official poverty rate, as has been 

discussed, has remained essentially flat. 

In 1965, 7 percent of American children were born outside of 

marriage. Today, that number is over 40 percent. That matters, of 

course, because single-parent families are 4 times more likely than 

married-couple families to lack self-sufficiency and to persist in 

poverty. 

And finally, since 1965, since the advent of your Department, the 

number of single-parent families in official poverty has more than 

tripled. 

So we have talked about this quite a bit today, but how do you 

personally define success in the mission of the Department of 

Housing and Urban Development? 

Secretary CASTRO. We have addressed this, Congressman. I define success in several ways. 

First of all, somebody having a roof over their head, a veteran 

who served our country having a roof over his or her head is success. 

Mr. BARR. Can I stop you right there? I agree with you. Putting— 

Secretary CASTRO. Well, then, we agree on that. 

Mr. BARR. But I want to elaborate here a little bit. 

Secretary CASTRO. Sure. 

Mr. BARR. Putting a roof over someone’s head is success, certainly, in keeping that individual out of homelessness— 

Secretary CASTRO. For the Department of Housing. 

Mr. BARR. Sure. But wouldn’t you define success with higher expectations, that the aspiration of your agency shouldn’t just be putting a person who is homeless into shelter or putting a roof over 

their head, but instead putting a person in a position where they 

themselves are putting a roof over their head? Isn’t that the expecVerDate Nov 24 2008 17:48 Apr 28, 2016 Jkt 096991 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 K:\DOCS\96991.TXT TERI
56 

tation that we would want? Isn’t that what the American taxpayers 

expect in terms of the return on their investment? 

Secretary CASTRO. What they expect is that the Department of 

Housing will provide safe, quality, affordable housing first. And 

then we also, of course, want to work to ensure that people also 

have the stability to get onto the path that they want in life. But 

let’s not suggest that the fact that they have a roof over their head 

doesn’t count for anything. 

Mr. BARR. Oh, it certainly counts. I just think that our aspirations need to be much higher. Our expectations are far too low. The 

expectation should be that success is measured not just in how 

many people we are moving into dependency on the Department— 

Secretary CASTRO. I wouldn’t call it dependency. 

Mr. BARR. —but how many people we are moving— 

Secretary CASTRO. I would disagree with that. 

Mr. BARR. —how many people we are moving out— 

Secretary CASTRO. There is no evidence— 

Mr. BARR. —of dependence on— 

Secretary CASTRO. —to suggest dependency. 

Mr. BARR. I think we just went over a few statistics on that, 

but— 

Secretary CASTRO. What is the evidence on that? 

Mr. BARR. Since my time is expiring, Mr. Secretary, let’s talk 

about your stated testimony, which I appreciate, that you are always looking for ways to become more efficient, you are always 

working on efficiency and accountability, and that you have assigned your Deputy Secretary to lead an operational and management review, the Deep Dives, to deliver more efficiency. 

Let me give an example of where I think the Department could 

deliver on that commitment. In Kentucky, I have heard from many 

of my constituents who are grantees of Continuum of Care, which 

is supposed to take care of our homeless population. In one city in 

Kentucky with a homeless rate that is average, they are getting 

about $8 million. In a similar city with the same homelessness 

rate, they are getting about one-eighth of that money. 

And for those constituents in that underserved community, what 

they tell me is that HUD has been capricious in prohibiting unused 

funds from being redirected. So, in other words, in the city with the 

large number of Continuum of Care funds, the grantee is supposed 

to by statute have 24 months to expend all those funds, or those 

funds will be recaptured. 

But the statute also says that the Secretary shall reallocate the 

funds for another homeless assistance and prevention project that 

meets the requirements of this part to be carried out, if possible 

and appropriate, in the same geographic area as that area served 

through the original grant. But I have heard from my constituents 

that the request to move the unexpended funds from one grantee 

in one Kentucky county to another less than an hour away has 

been denied. 

So my question to you is, what do you define as a geographic 

area? And why can’t we take unspent funds in one area and reallocate those to another area where there is an equal and chronic 

need? 

57 

Secretary CASTRO. That is a great question. In fact, it is a great 

question because this is one of the things that we would like to 

work on, especially in smaller communities, to allow them to be 

able to share resources, whether it is on overhead or direct provision of services. So, let’s work on that. 

Mr. BARR. Mr. Secretary, I appreciate your offer. I want to work 

with you on that to, again, help you make good on your commitment to make these dollars go further for the American taxpayer. 

Thank you. I yield back. 

Secretary CASTRO. Thank you. 

Chairman HENSARLING. The time of the gentleman has expired. 

I would like to thank the Secretary for his testimony today. 

[applause] 

The committee will come to order. 

The Chair notes that some Members may have additional questions for this witness, which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 5 legislative days for Members to submit written questions to this witness 

and to place his responses in the record. Also, without objection, 

Members will have 5 legislative days to submit extraneous materials to the Chair for inclusion in the record. 

This hearing stands adjourned. 

[Whereupon, at 1:06 p.m., the committee was adjourned.] 

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