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35–406 PDF 2007

U.S. DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT’S FISCAL YEAR 2008 BUDGET

HEARING

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

MARCH 14, 2007

Printed for the use of the Committee on Financial Services

Serial No. 110–14

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

JULIA CARSON, Indiana 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin, 

LINCOLN DAVIS, Tennessee 

ALBIO SIRES, New Jersey 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

ROBERT WEXLER, Florida 

JIM MARSHALL, Georgia 

DAN BOREN, Oklahoma 

SPENCER BACHUS, Alabama 

RICHARD H. BAKER, Louisiana 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

PAUL E. GILLMOR, Ohio 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

RICK RENZI, Arizona 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MARSHA BLACKBURN, Tennessee 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III)

C O N T E N T S 

Page 

Hearing held on: 

March 14, 2007 ................................................................................................. 1

Appendix: 

March 14, 2007 ................................................................................................. 45

WITNESSES 

WEDNESDAY, MARCH 14, 2007

Jackson, Hon. Alphonso, Secretary, Department of Housing and Urban Development .................................................................................................................. 6

APPENDIX 

Prepared statements: 

Carson, Hon. Julia ............................................................................................ 46

Sires, Hon. Albio ............................................................................................... 48

Waters, Hon. Maxine ........................................................................................ 49

Jackson, Hon. Alphonso ................................................................................... 57

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Secretary Jackson’s responses to questions submitted by Hon. Joe Baca ... 66

Secretary Jackson’s responses to questions submitted by Hon. Ruben 

Hinojosa ......................................................................................................... 74

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U.S. DEPARTMENT OF HOUSING AND URBAN 

DEVELOPMENT’S FISCAL YEAR 2008 BUDGET 

Wednesday, March 14, 2007

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. Barney Frank [chairman of the committee] presiding. 

Present: Representatives Frank, Waters, Maloney, Velazquez, 

Watt, Moore of Kansas, Capuano, Hinojosa, McCarthy, Baca, 

Lynch, Miller of North Carolina, Green, Cleaver, Moore of Wisconsin, Sires, Ellison, Klein; Baker, Manzullo, Biggert, Miller of 

California, Capito, Hensarling, Neugebauer, Bachmann, and 

Roskam. 

Also present: Representative Meek. 

The CHAIRMAN. The committee will come to order. This is a hearing on the Department of Housing and Urban Development, and 

we are pleased that Secretary Jackson has once again joined us. 

Pursuant to the rules, we’re going to have opening statements of 

16 minutes, 8 minutes on each side, and I will begin with my 5 

minutes. 

Obviously with the change in majority control, there are going to 

be some differences in housing policy. In fact, I think it is in housing policy more than in any other area under this committee’s jurisdiction that the last election will have some impact. 

In particular, many of us believe that the time has come to get 

the Federal Government back in the business of either preserving 

or constructing affordable housing units. The Section 8 program 

and its various components does add equity to the housing market. 

It gives people who don’t have enough money to afford decent housing the ability to do so. 

But with current policy where it is mostly on a year-by-year 

basis, what the Section 8 voucher program does is add to the demand for housing in a way that is unlikely to increase the supply 

so that we both add equity but we also have an upward pressure 

on price. 

We see this particularly in, for instance, New Orleans, where the 

physical destruction of so many rental units has caused a special 

problem. And that’s why, when this committee brought out a bill 

previously which will go to the Floor next week, we talked about 

trying to start construction of some units. Particularly, for example, 

project-based Section 8 units so that a developer can get a 20-year 

2

commitment to us, literally take that commitment to the bank and 

begin to build the housing. 

Simply providing rental assistance in an area like New Orleans, 

where so much of the rental housing has been destroyed, does not 

accomplish what we need to accomplish. New Orleans is obviously 

the worst case because of the hurricane, but there are other places, 

so we will, in these coming 2 years, be focusing on what we hope 

will be sensible housing production. 

I want to address one of the great obstacles to housing production, which is cultural lag. If we asked many Americans, including 

many who serve here, to think about federally funded housing, 

they would see large sterile towers with far too many low-income 

people packed in and too few services; they’d see Pruitt-Igoe in St. 

Louis or Cabrini Green or Columbia Point. 

The point we need to make is that we have long since stopped 

making those mistakes. We also want to be clear—those units were 

never the idea of the poor people who lived in them. That was the 

idea of society as to how to warehouse and keep them. 

We have the capacity, working particularly with private developers, both profit and nonprofit, to have Federal help so that housing is constructed in a way that is good for the people who live 

there and good for the neighborhoods in which those people live, 

and we will be working on that. 

One initiative of which I am particularly proud, and Mr. Secretary, this is where I think we would have cooperation. Without 

any new money being voted, and money is always going to be a 

problem, members of the staff of this committee are working with 

the members of the staff of the Ways and Means Committee, under 

the supervision of Chairman Rangel, so that the tax-supported 

housing programs work as seamlessly as possible with the appropriations-based programs. 

In many parts of the country, such as the one that I represent, 

the low-income housing tax credit is a good thing, but it does not 

get the rents low enough, given the various costs. If you can have 

the low-income tax credit or housing revenue bond work closely 

with HOME, with HOPE VI when we get that going again, or 

HOPE whatever, with other housing programs, then you can get 

more bang for the buck. 

And so without in any way increasing appropriations, we can cut 

down on the transaction costs, legal fees, and other fees; we can 

speed it up. And in housing of course, time is money; the more 

quickly you can build, the better off we are. That’s one of the areas 

where we will be working. 

One of the other areas we want to work on, and I want to say, 

Mr. Secretary, and I will get to this, that many of us are appreciative of your decision regarding Starrett City. You stepped in to 

prevent the loss of affordable units in New York City when they 

were needed, and I hope we can work in the future to take the 

principle you acted on there and generalize it. 

That is, it is difficult, as you all know, to build new, affordable 

housing, because people have what I think is often an irrational resistance to it. The importance of preserving those subsidized units 

that have already been built, as you are doing in Starrett City, is 

that you avoid one of the most serious problems and one of the 

3

most serious expenses. Subsidized housing that has already been 

built, if we can preserve them going forward as subsidized units, 

not just for the tenants, we avoid all the zoning issues; we avoid 

all the political battles. Also, of course, it may be cheaper than 

building from scratch. 

And, therefore, one of the things we want to do, and we look forward to working with you, is an inventory of all the housing now 

under various restrictions where those restrictions are going to expire. We recognize that the owners have legal rights that we should 

not try to interfere with, but I believe it is more efficient in a number of areas to try to either buy these owners out or provide them 

incentives so that we preserve the units. 

Our policy has been to protect the tenants, but then when the 

tenants moved or died or whatever, we lost the unit. I would like 

to take the principle on which you quite correctly acted in Starrett 

City, and see if we can nationally, working together, do the maximum to preserve units. I think it will be the least expensive way 

to do affordable units in a number of categories. 

My last point is this, and then I’ll recognize members on the 

other side. We know, we think, what we can do to prevent future 

predatory lending, which has caused so many problems. I notice 

Senator Dodd, to his credit, has announced that he’s interested in 

this, and I think that it’s one of the areas where he’s been taking 

a lead and deserves credit for it. 

Are there things we can do for the people who have already been 

trapped? There may or may not be. I’d like to be able to do a little 

bit. Certainly we know that the regulators have been wishing guidance to the banks, urging them to show forbearance where possible. 

And we’re certainly going to be asking Fannie Mae and Freddie 

Mac, to the extent that these things are in their portfolio, to not 

only show forbearance, but to also look at whether or not there’s 

anything we can do for the current victims. We also, of course, will 

be working together for the future. 

And next, the Chair recognizes for 5 minutes the gentleman from 

Texas. 

Mr. NEUGEBAUER. Well, I thank you, Mr. Chairman. And welcome, Secretary Jackson; it’s always good to have a fellow Texan 

before the panel here. 

Let me begin by welcoming Secretary Jackson back to the committee to discuss the state of America’s housing markets and to report on the President’s budget proposal for the Department of 

Housing and Urban Development. 

One of Secretary Jackson’s main priorities since assuming his responsibilities in 2004 has been to make HUD programs function in 

a more cost-effective and efficient manner while still serving those 

in need. The recent decision by the Government Accountability Office to remove both HUD’s single-family mortgage insurance and 

the rental housing assistance programs from the GAO’s list of government programs at high risk for waste, fraud, abuse, and mismanagement demonstrates that the Secretary’s efforts are making 

a real difference in changing the culture at HUD. 

Secretary Jackson should also be commended for his continued 

leadership in helping Americans realize the dream of homeownership. 

4

Over the last several years, the Administration has sought to 

change the direction of many of our Nation’s housing programs. 

Rather than merely addressing the symptoms, the Administration 

has proposed changes designed to promote economic opportunity 

and ownership and encourage greater self-sufficiency among our 

citizens. This budget continues the President’s commitment to increasing homeownership, and fostering an ownership society. 

The housing market has driven the Nation’s economy over the 

last several years as Americans bought and refinanced homes in 

record numbers. Today, nearly 70 percent of all American families 

own their homes. 

The benefits of homeownership are well documented. Homeownership is not only the key to financial independence, but it creates stakeholders who tend to be active in charities, communities, 

churches, and other civic-minded pursuits. Homeowners are more 

likely to vote and take an interest in local issues. And families 

owning a home are often in a better position to offer children a 

more stable living environment. 

While highlighting the many benefits of homeownership, we 

must also acknowledge that there are many people in today’s society who are not yet ready to own a home. Mr. Secretary, I appreciate your efforts on both of these fronts, to expand homeownership 

and to assist those who are not yet equipped to take this big step. 

The President’s budget also continues to emphasize improvements to the FHA program, designed to increase homeownership in 

low-income communities. Since 1934 more than 34 million Americans have become homeowners through FHA, however in recent 

years the FHA program has not kept pace with the changing technology or the needs of many families it was chartered to serve. 

The housing approved bipartisan legislation in last Congress to 

allow FHA to engage in risk-based premium pricing, boost the 

amount of availability for FHA-insured mortgages, and provide 

more down payment options. These important reforms would expand the reach of FHA programs so that more families have access 

to homeownership. 

Mr. Secretary, once again, we are very pleased to have you before 

the committee. I look forward to working with you throughout the 

coming year. 

The CHAIRMAN. I apologize. I was being bipartisan. Next, I will 

recognize my colleague and neighbor, the gentleman from Massachusetts, Mr. Lynch, for 3 minutes. 

Mr. LYNCH. Thank you, Mr. Chairman. I want to thank the Secretary for coming before us to help us with our work. As many of 

our colleagues will note today, this budget, the President’s budget, 

has many troubling aspects to it from the standpoint of a former 

tenant of public housing like myself. 

In view of these changes, I think it provides some of the most 

important governmental services in general—the housing department. I am disheartened that year after year, it seems we’re discussing more cuts to the HUD budget, and I believe that since the 

Bush Administration took office, and including the proposed budget, programs have been slashed, including cutting disabled housing 

by 51 percent by one estimate. Elderly housing programs have been 

cut by 38 percent, and CDBG grants, which are also a source of 

5

benefit to a lot of people in public housing in our inner cities have 

been cut by 43 percent. 

Those are just the programs that have been reduced; I won’t 

have time to mention the programs that have been cut. I feel that 

we should be moving in a different direction. We have seen an erosion of healthcare security for working families. We’ve seen an erosion of job security for a lot of working families. We’ve seen an erosion of pension security. Those protections are the very events and 

aspects of life here in America that will cause families to have to 

resort to public housing. And yet now, with this budget, I see us 

pulling the rug out from under the housing programs as well. 

I think the Section 8 voucher programs are an essential element 

of public housing, especially in districts like mine and the chairman’s, with high real estate values where homeownership is much 

more aspirational for the neediest of families. In Boston, we have 

a waiting list of 15,000 families, and there is a 50,000-deep list 

across Massachusetts for Section 8 vouchers from the DACD alone. 

How do you propose we take care of these families with a budget 

that cuts $90 million? 

The community development block grants are to be cut by 20 

percent. Again, these funds are used by communities to meet those 

critical development and infrastructure needs around affordable 

housing. These cuts will specifically affect my district by taking 

away a critical $300,000, and we’re scrambling to make up that 

loss. 

Finally, in closing, the proposed budget eliminates funding completely for the Brownfields Rural Housing and Economic Development Grants and Section 108 CDBG loan guarantees. I just think 

we’re going in a completely wrong direction, and I look forward to 

hearing your responses to that in your testimony. 

Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. I thank my colleague. Your neighbor and the 

gentlewoman from Illinois, the ranking member of the Subcommittee on Housing and Community Opportunity, is now recognized for 3 minutes. 

Mrs. BIGGERT. Thank you, Chairman Frank, and welcome back, 

Secretary Jackson. For the past few years we have been honored 

to have you here during the month of March to review the President’s budget proposal. Our discussions during this annual hearing 

are always lively, but they are in fact serious, and very important 

to me, my constituents, and millions of Americans who count on 

HUD and Congress to promote safe, decent, and affordable housing. 

We on the committee are acutely aware of the many difficult 

HUD management and budget challenges, especially those inherent 

in the Section 8 program. I congratulate you, Secretary Jackson, for 

your leadership and for taking steps to strengthen HUD’s management and performance. HUD received a clean audit for the 7th consecutive year, and GAO removed HUD from its high-risk government programs list for the first time in over a decade. I am sure 

that was no easy task, so congratulations to you and your team. 

As for the President’s fiscal year 2008 budget proposal, I am 

heartened by the fact that the President acknowledges the need to 

reform several HUD programs that aim to end homelessness, foster 

6

homeownership, and when renting is the most viable option, provide individuals and families with rental assistance, and provide 

housing counseling to help homeowners, for example, avoid foreclosure. I couldn’t agree more with these goals. 

However, I couldn’t disagree more with the proposed cuts to Federal housing programs that are tailored to meet the housing needs 

of the disabled and our seniors, Section 811 and 202 programs. 

Cutting in half the budgets for these two programs in the absence 

of comprehensive reform constitutes a great disservice to our seniors and disabled citizens. 

About one-third of the residents in my congressional district are 

elderly. That figure will only grow as the Baby Boomer Generation 

continues to age. In order to ensure that my constituents are well 

served in 2008, I will support level funding this year for Sections 

811 and 202 as we work to reform these programs, but I would 

like, Mr. Secretary, a commitment from you today that we will 

work together to review and reform Section 811 and Section 202 

programs. 

In addition, I look forward to working with you, Ranking Member—I was going to say Bachus, but I am looking at Mr. 

Neugebauer here—and Chairman Frank and Chairwoman Waters 

to strengthen Federal housing programs, including FHA, Section 8, 

GSEs, those that aim to end homelessness, and those like the 

American Dream Down Payment that give a helping hand to firsttime homebuyers. 

Again, welcome, Secretary Jackson. I look forward to your testimony. 

Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. I thank the gentlewoman. We’ve been joined by 

the chairwoman of the Subcommittee on Housing, and she has graciously deferred a statement at this point. 

Mr. Secretary, please go ahead with your statement. Without objection, any written material you want to insert will be put into the 

record. 

STATEMENT OF THE HONORABLE ALPHONSO JACKSON, SECRETARY, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Secretary JACKSON. Thank you very much, Chairman Frank, 

Ranking Member Bachus, and distinguished members of the committee. I thank you for the opportunity to be here to discuss the 

President’s 2008 Budget. It’s a good budget, and I encourage you 

to give it your support. 

The President is very concerned about helping all Americans 

have access to affordable housing that is decent and dignified, and 

his $32.2 billion budget for HUD, an increase by $1.6 billion over 

last year’s request, demonstrates that concern. 

I want to highlight how the President’s budget would help HUD 

achieve the mission Congress has assigned us, particularly in three 

areas: helping more Americans own their homes, especially those 

who thought homeownership was out of their reach; helping those 

not ready or willing to own their home find decent rental housing 

in this country; and making necessary reforms to multiple program 

7

areas, including FHA, public housing, community development 

block grants, and homeless programs. 

Our first area, Mr. Chairman, is helping Americans achieve the 

dream of homeownership. Under President Bush’s leadership, this 

Administration has achieved new records in the rates of homeownership. Today more than 75 million families, or nearly 70 percent of all Americans, are homeowners, the largest number of 

Americans ever to own their homes. 

But many low-income Americans struggle to overcome the single 

greatest obstacle to homeownership, the cash down payment and 

the closing costs. That is why the Administration proposed an additional $50 million to continue funding the American Dream Down 

Payment Initiative. Added funding has helped more than 21,000 

families to purchase their first home, of whom approximately 50 

percent were minorities. The Administration request is a $25 million increase over 2007. Additionally, the Department is requesting $1.97 billion in FY 2008 

for the Home Investment Partnership Program, which is the largest Federal block grant to State and local governments designed to 

produce affordable housing for low-income families. 

More than ever, potential homebuyers need assistance to make 

smart homeownership choices. That is why the President has proposed another $50 million for housing counseling. Housing counseling is the most cost-effective way to educate an individual. This budget also provides $367 million in Section 184 loan guaranteed under the Indian Housing Loan Guarantee Program to increase homeownership in the tribal areas. Our second focus, Mr. 

Chairman, is helping low-income families find decent, affordable 

rental housing. 

At HUD, we realize that homeownership may not be a viable option to everyone. That is why the largest component of HUD’s 

budget promotes safe and affordable rental housing. The 2008 

budget supports rental housing for nearly 4.8 million people 

through public housing, and Section 8 and other assistance programs, including $575 million in funding for support of housing for 

the elderly, 202 program; and $300 million in new grant funds for 

housing assistance related to support of services for low-income 

persons with HIV/AIDS and their families. 

The third focus, Mr. Chairman, is laying the groundwork for reform of some of HUD’s most vital programs to better serve those 

in need. The Federal Housing Administration needs to improve the 

ability to reach traditionally under-served buyers, which will also 

help increase minority and first-time homebuyers. 

Too many individuals and families have been steered into highcost, high-risk loans, particularly minorities, first-time homebuyers, 

and families with less than perfect credit. American homebuyers 

need FHA. That is why the legislation to modernize it is so critical, 

and I appreciate that this committee understands the urgent need 

to bring FHA into the 21st Century. 

The President also proposed an innovative reform to the Section 

8 voucher program. The reform will allow the public housing authorities that have been good stewards of the taxpayers’ money to 

assist more families. We estimate that 180,000 more families will 

be able to get rental assistance. 

8

Another way to strengthen the community would be to reform 

the Community Development Block Grant program. It has become 

increasingly clear that an outdated formula that once measured the 

needs of urban America no longer reflects the modern needs of today’s cities, large suburban counties, and States. Some high-need 

areas receive smaller grants than they should, and some low-need 

areas receive larger grants than they need. 

The Department will continue to pursue a formula of fairness by 

supporting a new formula that will more effectively target the 

Community Development Block Grant funds to areas of greatest 

need in the 21st Century. 

Ending chronic homelessness remains a priority. Since 2001, the 

Bush Administration has awarded more than $9 billion to help 

homeless individuals move beyond life on the street. To provide further supportive housing options for the chronically homeless, the 

2008 budget will provide $1.59 billion, an increase of $50 million 

over last year. We will also be proposing legislation to change consolidated HUD homeless programs to improve the efficiency and effectiveness of the delivery of these critical, needed funds. 

In conclusion, Mr. Chairman, the Administration’s 2008 budget 

makes good progress towards successfully realigning the Federal 

Government priorities to fit the Nation’s changing needs. This 

budget also lays the groundwork for program reforms like FHA, 

Community Development Block Grants, homeless grants, and Section 8, and it will enable HUD to continue along the path to greater efficiency and effectiveness. 

As noted a few minutes ago, HUD improved program management capacity. I would like to mention, as the Congresswoman did, 

that HUD was removed from the Government Accountability Office’s list of high-risk agencies. This occurred in 1994, and finally, 

we were removed. 

This is a good budget, Mr. Chairman, and I respectfully urge 

Congress to adopt it. And I am now available to answer questions 

from you and other members of the committee. 

[The prepared statement of Secretary Jackson can be found on 

page 57 of the appendix.] 

The CHAIRMAN. Thank you, Mr. Secretary. I want to express publicly what I just said to you, that I appreciate, and I know Ms. Waters does as well, the cooperation we got from your staff as we were 

working on the bill dealing with the aftermath of the hurricane. 

We understand there are policy differences, and we’ll continue to 

press them, but the staff of HUD was very helpful technically; the 

bill was improved it its technical aspects by your staff’s cooperation. I want to acknowledge the good work that they did. 

Secretary JACKSON. Thank you. 

The CHAIRMAN. I also want to repeat—and I know my colleague 

from New York, Ms. Maloney, will feel this way as well—that 

many of us were very pleased, as I said, with what you did with 

Starrett City, and some of us would have hoped that the City of 

New York might have been wanting to do that with Stuyvesant 

Town or Peter Cooper Village. 

I guess the mayor of New York has a different view about the 

affordability of public housing in Manhattan versus Brooklyn. I 

9

wish he was more amenable to it in Manhattan, but Brooklyn is 

okay; it is better than nothing. 

But that’s the point I wanted to touch on with you for the future. 

Obviously we have our differences. The proposed cuts in CDBG—

I know the President proposed a cut in CDBG. I do not think there 

are 10 Members of Congress who will pay serious attention to that 

proposal, and I don’t plan to be one of them now. 

Similarly, I don’t think we’re going to cut back on the proposals 

to construct housing for the elderly and for the disabled. You know, 

in particular, when you’re talking about housing for the disabled, 

the market is simply not going to be able to shoulder that on its 

own. That is a legitimate issue of market failure in technical economic terms. 

But I do want to talk about the issue that I mentioned about acting on the Starrett City principle. Look, we’re all aware that the 

voucher program has a mixed impact because it does provide some 

equity, but in areas where there is a shortage of rental housing, 

the voucher program has an upward price impact. That’s why we 

will be talking some about production. 

But let me talk to you about preservation, and I would hope we 

could work together on this issue quite seriously, Mr. Secretary. 

The principle that you acted on with regard to Starrett City, as I 

understand it, was you were not going to give approval to the extent that you had the right not to—in some cases you don’t have 

that legal right—but that you would use your legal authority, in 

appropriate cases, to prevent the loss of affordable units, i.e., not 

simply protecting existing tenants, but also preserving the number 

of units so that when that one tenant moved out, the units were 

still there. Is that an accurate description of the principle that you 

acted on? 

Secretary JACKSON. Yes. 

The CHAIRMAN. Well, could we work together to generalize that? 

As you know, we had the GAO do a study for us. There are hundreds of thousands of units of affordable housing that were built 

in the 1960’s and 1970’s with Federal funds. You and I weren’t part 

of this. A decision was made then, which I regret, but I have 

enough recent decisions to worry about that I regret, without trying to spend too much energy on 30- and 40-year-old ones. 

Many hundreds of thousands of units that are now available for 

people of moderate income, generally, not the lowest income; we 

have to deal with that elsewhere. We could lose them to the market. Of course, I think what has happened is, not surprisingly, people in the 1960’s and 1970’s hadn’t fully seen the extent to which 

public tastes would differ, that living in central cities would become 

more desirable than it was, gentrification, and various other 

things. 

We now have hundreds of thousands of units at risk, if we don’t 

act, of going from an affordable status to the pure market. My view 

is that the most efficient use we could make of dollars would be to 

try to buy up the right to take those out. Some of these are in the 

Ways and Means area, for instance, Exit Tax Relief. I’m told that 

would be very important. 

Could we work together? I would hope that you would designate 

the appropriate people at the Assistant Secretary level to work 

10

with our staff. I would hope that we could say, let’s figure out what 

it would cost to preserve virtually all of those units. There would 

be some where the neighborhood had changed so much it wouldn’t 

make sense, or the units might have deteriorated, but I think that 

we ought to set a goal of preserving the great bulk of those units 

as affordable. We should at least figure out how much it would cost 

and what legal authority we would need. 

And I’d like to work with the States there, too. That’s why the 

Starrett City thing was important. A number of States, the 

Mitchellama in New York, or Massachusetts have also done this. 

I would hope we could look at all of the programs that have been 

put forward to preserve affordable housing and try and maximize 

that. Is that something you think we could work on? 

Secretary JACKSON. Yes, I do. And we’re very fortunate, Mr. 

Chairman, to have the Assistant Secretary for Policy, Research, 

and Development, Darlene Williams, who is extremely good at this. 

I would like nothing better than to work with you because I agree 

with you—where we can preserve we should. We should not let 

units go back into the market. 

As you know, we had a case, I guess it was about 3 years ago 

in Massachusetts, where we tried very hard to keep that unit affordable, but eventually they paid off the loan, and— 

The CHAIRMAN. Right, we understand. People have a legal right 

to do that. We’re not abrogating the rights of contract. I do think, 

however, that we have a right and we certainly had this legislation 

before. We could, I think, get a right of first refusal on the books, 

and in many cases—well, in some cases it won’t happen. 

In my experience, most of the people who built this housing had 

an inclination to build this housing. If they wanted to just be in 

the conventional market, they could have done that right away. 

Some of them are non-profits. A lot of them would be willing to 

work with us. We’re not trying to take away their rights without 

paying for them. 

I think per unit, if we’re trying to have more units than we otherwise would have, it would be cheaper to work with them and buy 

out that right rather than to start from scratch, so we will work 

with the Assistant Secretary, and I appreciate that. 

It’s probably going to cost us some money, but I think it would 

be money well spent. As I said, it avoids one of the biggest obstacles we now have with building affordable housing, which is neighborhood resistance, because we’re talking about preserving units 

that were already built. 

I appreciate that, Mr. Secretary. We’re going to take you up on 

that. 

Secretary JACKSON. Thank you. 

The CHAIRMAN. The gentleman from Texas. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. 

Secretary Jackson, last month members of our committee held 

some field hearings in New Orleans, as you may know, and members of the panel toured several of the public housing developments 

that in many cases are uninhabitable at this particular point in 

time. Since Katrina, what progress has been made toward improving these units so that families who wish to return will have a safe 

place to live? 

11

I understand that HUD has partnered with groups like Enterprise and Catholic Charities to redevelop some of this public housing into healthier communities. Why is it taking so long to move 

these plans forward? 

Secretary JACKSON. First of all, as the chairwoman of the subcommittee is well aware, we are in a major lawsuit right now in 

New Orleans, and we cannot—we’ve just gotten the go ahead to 

move forward. Before that, we could not make any moves until the 

judge made a decision. We immediately put almost 1,200 units 

back online, and then we were asked to put another 1,000 units online, which we are doing. And then we talked to the chairwoman 

of the subcommittee and she asked us if we could possibly have 

3,000 units, and we’re in the process of doing that. 

The key to it is that we’re going now from State to State to try 

to find persons who will be willing to come back to the units. Now 

it’s important to know that we’re willing to buy out the leases; 

we’re willing to move them. We’re making sure that if they want 

to come back they can come back, because it is clear to us as to 

many of you who were there that there’s a lot of work to be done 

and there’s not enough people to supply the person-power to get 

that work done. 

We were also asked to look at doing a major survey. We have 

hired a person who is nonpartisan, who is very open with the major 

university to look at bringing people back and why they’re not coming back in great numbers. 

Now lastly you ask, why has it taken so long? Many of the units 

were very much in ill repair, and we tried to repair them; some of 

them were under water, some were not. But at the same time, we 

have a very unique opportunity where we finally have monies to 

redo many of those developments that should have been redone 

years ago. 

It’s important to note that before Katrina we had done Desire, 

which had sat there for almost 20 years; we had done Full Florida; 

and we were almost through with Fischer, so it wasn’t something 

that we agreed to do initially. 

When we took it over, we said that we wanted the quality of life 

for the persons who live in public housing in New Orleans to 

change, and I do not believe, as I said both to Chairman Frank, 

and to Chairwoman Waters of the subcommittee, I do not believe 

that we should alienate low-income people from the rest of society, 

and I think that clearly we must integrate them both socially and 

economically if we have an opportunity. We’ve been presented with 

an opportunity to do that, and that’s the only reason that I want 

to do it. But I will work with the committee to try to get as many 

residents back who want to come back. 

Mr. NEUGEBAUER. Moving to the CDBG question, we also were 

down there and we heard that, as you understand, Congress has 

appropriated nearly $16 billion in CDBG money for the Gulf Coast 

recovery, and some of that money is geared towards bringing some 

of that housing back. But right now only $1.2 million of that money 

has been distributed to families to rebuild. What’s going on there? 

Secretary JACKSON. Congressman, your guess is as good as mine. 

It is clear, we have met with parties who are given the authority 

to make the compensation of these monies to other people. 

12

I will say this. I think it’s a very cumbersome process that 

they’ve created in Louisiana. It’s going to be very difficult from my 

perspective to move quickly and judiciously in this area, and I instructed members of our staff, just yesterday, to talk with the governor’s staff to try to expedite this process. 

As you know, in Mississippi, we’ve allocated 10,000 checks to 

people, and they are in the process of rebuilding. Well, we’ve spent 

almost $100 million in Louisiana, and we have only, I think, given 

out about 500 checks. That is totally unacceptable, and we will continue to work. 

It’s important to note that the President made it very clear that 

each State has the responsibility of addressing the issues. When 

you gave us the money, you gave us great latitude to let the States 

have the right to decide how they were going to spend the money, 

and we’ve tried to do that with Mississippi, Louisiana, and Alabama. 

Mr. NEUGEBAUER. Just one quick FHA question. You know, we 

passed H.R. 5121, the Expanding American Homeownership Opportunities Act of 2006, overwhelmingly; do you think that FHA is a 

safer mortgage product for those subprime borrowers out there 

than, say, the subprime private marketplace? 

Secretary JACKSON. Mr. Congressman, there is no question. All 

we have to do is read the news articles over the last week, and we 

realize that companies like New Century and others have created 

serious problems in this subprime market. The only way that we’re 

going to be able to address that is if we modernize FHA to go back 

and do what it did in 1934, to address the needs of low- and moderate-income people. 

We believe that clearly we can do that; we can do it so that we’ll 

be able to address the needs of our constituents in California, 

which it can’t now; the market has been out-priced. 

I’m convinced that the best way we can go to save low- and moderate-income Americans is to modernize FHA, and I’m very pleased 

that last time the House passed the bill at 416 to 7. I just hope 

that we immediately begin the process again because we believe 

that we cannot continue to let this market do what it’s doing because a lot of people are in foreclosure, and we’re working hard to 

keep people from going into foreclosure. 

You know, some people say, well, we look at a 30-day snapshot, 

and there are a lot of people. Usually we look at 90 days. That’s 

when the real problem happens in this country. If they haven’t 

made it in 90 days, they’re in serious trouble. And I think we have 

a wonder with FHA to cure this problem and cure it very quickly. 

Mr. NEUGEBAUER. Secretary, thank you for those good answers. 

The CHAIRMAN. The gentlewoman from California. 

Ms. WATERS. Thank you, very much. Good morning, Mr. Secretary. It’s good to see you. 

Secretary JACKSON. Good morning. 

Ms. WATERS. And I want to thank you for the work that you 

have done in trying to solve this very difficult problem in Louisiana. I thank you for the time that you spent with me in your 

office and I also thank all of your staff. It is a difficult one, but I 

do think we can solve it, and I do not want to rely even on the supVerDate 0ct 09 2002 11:18 Jun 27, 2007 Jkt 035406 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\35406.TXT HFIN PsN: TERRIE
13

plemental appropriations that we have here because the President 

said he’s going to veto it. 

I don’t want to put anything in there that is not going to pass, 

but I think that based on the work that you have already done and 

that we have done, we can get the residents back who want to 

come back into those rehabilitated units. And I think you already 

have said that you have enough money in your pipeline to be able 

to do that. 

Secretary JACKSON. Yes. 

Ms. WATERS. I think you have already agreed that you would do 

3,000 units; is that right? 

Secretary JACKSON. That’s correct. 

Ms. WATERS. So I think that despite the fact that, you know, the 

lawsuit was filed and the advocacy groups were a little bit unhappy, things are working out. I thank you for your cooperation on 

that, and I want you to know that it needs to be understood that 

we have asked for one-on-one replacement in any redevelopment 

that you do, but we have done nothing to say that you should not 

get together with the city and the residents and plan for our redevelopment. 

We were interested in getting people back in, and we think it’s 

in the best interest of everybody that you do a plan that will incorporate several things, including one-on-one replacement. As Mr. 

Frank has always said, get those new units online before you start 

tearing down the others, and I think everything will work out fine. 

Now having said that, let me back up and ask you about CDBG. 

Do you still have the authority to help direct that money, given 

that you had given it to the governor’s office in both Louisiana and 

Mississippi? Do you still have some way by which you can influence—helping to expedite what they’re doing? 

Secretary JACKSON. Let me say this first before I answer that 

question. I want to publicly thank you very much for interceding 

and trying to resolve the matter in Louisiana because I think without you in the session it might have gotten a little more out of 

whack than what it was, so I really appreciate that, first. 

I am exerting all the moral influence I can to get this money 

spent. When you all passed the legislation it gave the States wide 

latitude with the money. We could send them the money. We had 

to approve their plan, once they submitted the plan. 

We approved their plan, and they had to implement the plan exactly as they said they would. That’s probably the only leverage, if 

they don’t do it, that we have over them. We can say, you’re not 

doing what you agreed to do in your plan, but other than that, the 

first group of monies, it’s—we have very little authority. But in the 

second group, we have quite a bit of authority with the second 

round and the supplement that you have. We have quite a bit more 

authority to impose our will upon them. 

So we’re doing everything in our power. In our office, we have 

met with ICF, we have met with Shell, we have met with the governor’s staff, and we are doing that again today to try to stress that 

it’s very, very important that we compensate these people as quickly as possible. 

Ms. WATERS. Mr. Secretary, in Louisiana I’m wondering, based 

on the number of applications that have been filed, over 109,000 

14

and the very few—when we were there about 775 had been completed. I’m told they’ve added some to that. 

Secretary JACKSON. Right. 

Ms. WATERS. But it seems to me that if there is some way that 

you could use that information to determine that they have not followed their plan because they are not producing in a way that is 

very helpful, they’re not expediting, please take a look at that. 

And two other things I don’t know whether you can look at, but 

we—I discovered that they didn’t know how to do appraisals, I 

don’t think. They basically started out doing appraisals not based 

on the value of the house that was there prior to Katrina, but postKatrina, after the houses had been turned over, blown over. So is 

there some way you could look at that? 

And also, clearing titles. They certainly don’t know how to clear 

a title, and I know that there are some complications there because 

houses have been passed down not in a legal way. You know, 

through the years, the families have done this. But you can’t hold 

up replacing those homes and getting homeowners back if they 

can’t clear titles. So I wish that you and whatever experts you may 

have at your disposal would take a look at appraisals and clearing 

titles and see if you can find a way to use whatever leverage you 

might have to help them expedite this program. 

Now having said that—and it’s wonderful that we are moving 

forward with public housing, and everything I think is going to be 

okay. I have to tell you, I’m still unhappy about CDBG, and a few 

of the other programs that have to get cut, too, and all of the public 

housing I have to pay attention to; we had some cuts there that 

I’m going to try to restore. 

But also, Mr. Secretary, we need social services in all of our public housing developments. I know that’s a vision of yours with redevelopment, but we’re not going to redevelop these thousands upon 

thousands of units within the next 20 years; it’s just not going to 

get done. So we can’t say that those who are not online for regional 

development are not going to get social services. 

What can we do to replace things like the drug intervention program that we had in public housing, that we have lost? What can 

we do for helping to direct people to healthcare services for providing space for some after-school tutoring? 

I know we can do something, and I’d like for you, even if we 

could find more money to do it, you to design something, or if we—

you don’t design something and we find money for it, that you will 

take advantage of it, and that if we can’t find money that you will 

look at what you have and do something to put some social services 

in these housing projects that are not going to be developed any 

time soon. 

Secretary JACKSON. I do not object to anything that you just stated, and I’ll be more than pleased to sit down with you, and sit 

down with the chairman, and try to work through the process. And 

if you find the money, yes, I’ll be more than happy to implement 

programs. 

We have some ideas, and I’ll be pleased to share them with you. 

I am in agreement. I was just in Los Angeles and had a chance to 

see Imperial Court and others, and it disturbs me tremendously 

when I see young kids afraid to walk to school. I think there’s 

15

something we’re going to have to do within our powers to correct 

that, and I’ll work with you wholeheartedly. 

Ms. WATERS. Thank you very much, Mr. Chairman. I yield back. 

The CHAIRMAN. The gentlewoman from Illinios. 

Mrs. BIGGERT. Thank you, Mr. Chairman. Mr. Secretary, the 

HUD’s FY 08 budget calls for removing the voucher cap so that 

unspent balances can be expended on vouchers above the cap. 

Could you explain how this policy move could make the program 

more effective and efficient and allow PHAs to serve more people? 

Secretary JACKSON. Yes. And to get into the details, I’d like for, 

Congresswoman—for my Assistant Secretary to come up and speak 

to that matter. 

Mr. CABRERA. Congresswoman, essentially what we have currently is a budget-based system. And in there, there are— 

Mrs. BIGGERT. Okay. Could you identify your name and title for 

the record, please? I know you’ve just been here, but once again. 

Mr. CABRERA. I’m Assistant Secretary Orlando Cabrera. I’m Assistant Secretary for Public and Indian Housing. 

Currently, as part of the appropriations model, there are caps 

that attach to the allocations that keep public housing authorities 

from exceeding a cap in many circumstances, and that cap affects 

something called the Undesignated Fund Balance. So in our proposal, the cap would be removed and therefore PHAs would be able 

to fully utilize the amount of money that was appropriated to them. 

On top of that, the President’s 2008 budget states essentially 

that it is a prospective re-benchmarking. It is moving forward. So 

we would look at re-benchmarking; re-benchmarking wasn’t the 

issue. The issue is to do it forward from this point in time. 

Mrs. BIGGERT. Thank you. Mr. Cabrizzi, if I could just follow up 

on that. 

This would be 2008, so really the CR that was passed, a lot of 

those vouchers that were within the cap would be removed. For example, in my area we’re losing about $8 million in the different 

counties because they have a cap and they’re not able to access 

that money, so those would be gone and they’d have to start over 

again with having it. 

Mr. CABRERA. Correct. It wouldn’t be because of the cap there—

it’s the House Joint Resolution, the language that was passed. And 

the spending resolution states that money is going to be redirected. 

It’s not that it’s been so much removed based on certain utilization 

rates. Therefore because it didn’t take into account certain issues, 

that’s the net effect. So yes, for example, DuPage County, as I recall, does lose Section 8 allocation. 

Mrs. BIGGERT. Thank you. I called you Mr. Cabrizzi. I meant to 

say Cabrera. 

Mr. CABRERA. It’s all right. I’ve been called worse. 

Mrs. BIGGERT. Thank you. Then, Mr. Secretary, in the current 

draft of the GSE Reform bill, there’s a new affordable housing fund 

language, and this language tasks HUD with reestablishing a formula to allocate funds to States and the Indian tribes, and the language permits the States to determine what organizations will receive these funds. Do you support this new language? 

Secretary JACKSON. Is that in the legislation? 

16

Mrs. BIGGERT. This is in the current draft of the GSE reform bill. 

We have not considered it here, but it’s going to be introduced soon. 

Secretary JACKSON. I have to tell you, I have not seen that language, so I’m not really, Congresswoman, in a position to comment. 

Mrs. BIGGERT. Okay. Maybe you could let us know afterward. 

That would be great. 

Secretary JACKSON. I will be happy to. I will look at the language 

and I will get back to you. 

Mrs. BIGGERT. Because I’d also like to know, should the language 

specify where the affordable housing funds should go within each 

State, and then should HUD play a more expanded role in the affordable housing fund than the bill envisions? If you could get back 

to us on that, I’d appreciate it. 

Then, let’s see, I just have a minute. The Section 8 Disability 

Fund, why doesn’t the Administration support full funding for the 

Section 811 program? 

Secretary JACKSON. We do. At this present time, we have a lot 

of the units in the process of being built, and we believe that the 

allocation that we made will continue the progress that is being 

made. I don’t see this as a cut or not supporting. We do support 

202 and 811, there’s no question about it, because those persons 

who are seniors deserve the best that we can give them, and those 

persons who have certain disabilities deserve the best, and we will 

continue to do that. 

Now I know some will say, ‘‘Well, you cut the program.’’ But initially, when we came in, the program was not moving, Congresswoman; it was at a standstill. To date, we have it back online, we 

are allocating monies, and we will continue to do that. We’ll make 

sure that the program works. 

Mrs. BIGGERT. All right. Thank you. I yield back. 

The CHAIRMAN. The gentlewoman from New York. 

Mrs. MALONEY. I thank the gentleman for yielding and for having this truly important hearing on affordable housing, and I thank 

Secretary Jackson for your help with Starrett City. We are deeply 

grateful; thank you. 

But every day that I pick up a paper now, there’s a new story 

about the crisis and volatility in the subprime market. Today in the 

Wall Street Journal, the headline reads, ‘‘Subprime Fears Spread 

Sending the DOW Down 1.97 Percent.’’ The Washington Post lead 

article today is, ‘‘Mortgage Report Rattles the Markets.’’ And just 

yesterday, Mr. Secretary, the Mortgage Bankers Association reported that the number of risky borrowers who missed payments 

climbed to a 4-year high. 

The number of foreclosures on all homes jumped to the highest 

level in nearly 4 decades, and even homebuyers who relied on loans 

insured by the Federal Housing Administration are having record 

default rates, so we truly have a crisis of affordable housing in this 

country. 

At the same time that we’re facing this housing crisis, funding 

for public and other affordable housing has been cut from the 

President’s budget, and I just cite the CDBG program. It was cut 

$700 million; that’s $58 million to New York City. So my question 

to you is, what is HUD doing to ensure that those who were exVerDate 0ct 09 2002 11:18 Jun 27, 2007 Jkt 035406 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\35406.TXT HFIN PsN: TERRIE
17

posed to predatory mortgage practices are able to refinance or otherwise stay in their homes? 

Secretary JACKSON. Congresswoman, I think that’s a very fair 

question, and let me say this. We are doing everything in our 

power, in our moral persuasion, to try to keep foreclosures from occurring but because many are low- and moderate-income— 

Mrs. MALONEY. But what are you doing to keep the foreclosures 

from occurring? 

Secretary JACKSON. We are asking banks, we are asking others 

to—Fannie Mae, Freddie Mac, to have forbearance, to look at the 

situation. We don’t have the power to dictate to them what they 

should do, but we’re doing everything in our power, and that’s one 

of the reasons that I said earlier that the FHA modernization legislation is so important because if we can do this, we can stop a lot 

of the problems that we’re facing today. 

Mrs. MALONEY. Maybe we’ll move that legislation, but what is 

the Administration doing with regard to providing assistance now 

to the families with FHA-insured loans as they likewise report 

record default rates? 

Secretary JACKSON. I must tell you that we are working every 

day with families who have FHA loans and we have not seen the 

record-breaking number of FHA foreclosures. We see foreclosures 

in the— 

Mrs. MALONEY. Okay. But what are you doing to help them? You 

say you’re working with them, but exactly what are you doing with 

them? 

Secretary JACKSON. We counsel and work with them. We don’t 

foreclose immediately like you’ve seen some of the others do at 30 

days. We go 90 days, 120 days. 

Mrs. MALONEY. 90 to 120 days? That’s good, and what else? 

Secretary JACKSON. That’s all we can do is to try to work with 

them and make sure they work out. We can’t, in essence, provide 

them with money, but we can work with them. And if we can work 

with them, usually 90 to 120 days, we save a lot of families from 

going into foreclosure. 

Mrs. MALONEY. I think this committee would be very interested 

in the numbers you’re seeing in FHA, and if they’re different from 

what’s being reported in the press, I’d like to see that. 

Secretary JACKSON. I’ll be happy to do that, because I must tell 

you, Congresswoman, a lot of things I read in the press it’s beyond 

my comprehension when I— 

Mrs. MALONEY. Okay. Getting back to what we can do, what are 

you doing to help those who lose their homes now have access to 

other sources of affordable housing? Obviously, Mr. Secretary, people would not have been going into risky, subprime loans if the affordable housing was there, and as we all know we cannot have affordable housing without a Federal role. And what we see are repeated cuts in the affordable housing program, so what are we 

going to be doing? 

Some people are estimating—and again, you’re saying the press 

is wrong, and I hope they are wrong, but we have to pay attention 

to what some of these independent groups are reporting. Some of 

them are estimating that 2.2 million Americans will lose their 

homes in this current subprime crisis, and what are we going to 

18

be doing to help those people? If they lose their home, what are we 

going to do; let them sleep on the street? We have to have alternatives for them and should be planning, so what plans do you 

have to respond to this crisis that we’re reading about every day 

in the paper? 

Secretary JACKSON. First of all, Congresswoman, I would disagree with you. I don’t think it’s our responsibility to tell people 

how they want to refinance their home or how they will finance 

their home. I do believe that if we do the FHA modernization— 

Mrs. MALONEY. Well, calling a point of privilege, I wasn’t saying 

that we should tell them how to finance their home or refinance 

their home; I was saying that if they could get into affordable housing, they would not be going into risky loans. I don’t think anyone 

supports people going into loans that they can’t afford; it certainly 

does not help the consumer, would you agree? 

Secretary JACKSON. No, that’s not true, Congresswoman, because 

many people do not want to deal at this present stage with FHA 

because it’s so cumbersome, so they are going into the subprime 

loans. That’s one of the reasons that I am just very, very concerned 

with this process. We want to change that. I agree with you. They 

shouldn’t go into these loans. But many of these persons, like we 

just read in the paper the other day, prey on minorities—blacks 

and Hispanics—and when they sign these notes, they say it’s 3 percent, but when you look at it it’s actually 8 or 9 percent. 

They enter these agreements on their own. Now, we have done 

a lot of investigation through FHA—I mean, I’m sorry, through fair 

housing, equal opportunity—and we’re beginning to come down on 

a number of these subprime lenders. That’s what we can do. But 

we can’t— 

Mrs. MALONEY. Congratulations. Could you give us a report to 

this committee on who you came down on? Did you come down on 

Sentry? It’s reported that they may be going bankrupt. They had 

a story about an 80-year-old woman who had a loan for $800; they 

refinanced it for her, to help her, so that now her payment was 

$4,000. She obviously lost her home. 

Secretary JACKSON. That’s right. 

Mrs. MALONEY. So what are you doing? Seriously, I would love 

to see this in writing, because this is a huge crisis in the country. 

And if you’ve been going after these people, I think we should know 

about it. 

Secretary JACKSON. I’ll be happy to do it—give it to you. 

Mrs. MALONEY. Have you taken steps against Sentry? 

Secretary JACKSON. I can’t tell you specifically against Sentry. I 

don’t know exactly, but I’ll get that information to you very quickly. 

Mrs. MALONEY. Well, my time is up. And all I can say is, millions 

of people are turning their eyes to you and hoping that HUD can 

help with affordable housing; it’s one of the biggest challenges that 

we confront in this country. 

Thank you. 

The CHAIRMAN. The gentlewoman from West Virginia. 

Mrs. CAPITO. Thank you, Mr. Chairman. And I’d like to thank 

Mr. Secretary for being here today. I’d also like to thank you and 

your agency for the help that you have given my local community, 

Charleston, West Virginia, to try to rebuild units and try to work 

19

with the desires of the city and the county which were sort of 

counter to what HUD’s practices were. But we worked it out, and 

I really appreciate it, and that project is moving forward very well 

to provide affordable, safe housing to a lot of West Virginians. 

Secretary JACKSON. Thank you. 

Mrs. CAPITO. I’d like to kind of put my question to what my colleague was talking about in terms of people who are falling prey 

to subprime lenders and are unable to meet those obligations. I 

know that we appropriated a lot of money for housing counseling. 

Can you talk about how that’s rolling out? Are you seeing any results from that? And do you think this is an effective mechanism 

to help people who have fallen into this situation? 

Secretary JACKSON. I really do. And let me say this to you. When 

President Bush was first elected, we were spending about $8 million a year on housing counseling. Today we’re spending close to 

$50 million. And we’ve seen the results, because more people are 

keeping their homes because they understand the nuances of when 

you get a home what is expected and required of you in providing 

the necessary care for that home. 

Also, we’re not putting people in homes, Congresswoman, who 

really can’t afford them. We are saying to them, it might take you 

a year through our program to get you ready for a home, but the 

moment you move in, you will be ready to keep that home and stabilize that home. I believe that clearly that is not the case that the 

Congresswoman talked about in the subprime market. They’re 

going in and really—it’s very disheartening what they’re doing to 

a lot of people because, if you think about it, many of us are well 

educated, and we don’t read all the papers when we sign a loan. 

So many of these people are not going to read the papers either, 

and they sign the loans and they get duped in other words. 

So our position is, is we’re working with housing counseling 

groups around this country. They’ve been very, very accessible. 

We’re working with a lot of faith-based groups around the country 

that are counseling people for housing. And we’ve seen the results. 

People are keeping their homes, the ones that we have worked 

with. We gave you an example of the 21,000 who have gone 

through the housing counseling program and used the American 

Dream Down Payment. They’re stable in their homes, and that’s 

what our job is. 

Mrs. CAPITO. Right. Thank you. One last question on the CBDG. 

Obviously, I don’t support this cutback on the CBDG either, but in 

the notes, you mentioned that they had—that the program had 

gone away from its original mission and there was some question 

as to whether funds were being allocated into the original mission 

of the community block grant, and you wanted to see some changes 

and some competitiveness grants going to those communities that 

were most adept at using their resources. Certainly I live in a community that really relies on this. I just don’t see the justification 

for it. 

Secretary JACKSON. Let me say this to you. I won’t say that the 

program has gone awry. That would really be inaccurate. What we 

have said is that there are certain communities that are receiving 

block grant monies that we really don’t believe should be receiving 

them. 

20

Mrs. CAPITO. Like, for example, because they have higher income 

levels— 

Secretary JACKSON. That’s right. 

Mrs. CAPITO.—or they’re too big, or— 

Secretary JACKSON. Right. They have—it’s a very wealthy community but they have pockets of poverty. Well, my position is, take 

your city, for example, it has more than a pocket of poverty. It has 

great poverty. And I think that if we can reallocate the money to 

where it’s needed most, we can do the most good. You can take the 

chairwoman’s area, some of the areas she represents. I mean, if we 

had block grant monies rather than going to Bellevue, Washington, 

or Palm Beach, Florida, going directly where they should be going, 

I think we’d see better allocations. 

Secondly, if we see a project that is going well and know it’s 

going to take 3, 4, or 5 years to make sure it works, we can use 

this competitive part of the grant to say, okay, Charleston, if you’re 

going to do the port, if you’re going to do this, we’re going to work 

with you for the next 5 years until it gets done. I think that’s what 

we should be doing. We should look in depth. You know, we can 

dot over here and dot over there and really get nothing done, or 

we can concentrate in areas where we really have serious problems 

and get it done. That’s exactly what I’d like to do, and that’s what 

the legislation is asking to do. 

But I don’t think that Bellevue, Washington, should be receiving 

block grant funds, nor do I think my home town, Dallas, should be 

paying housing inspectors with block grant funds. They should be 

paying them out of the city coffer, and they’re not doing it. So, my 

position is, we’re spending a lot of money, and we’re not getting the 

benefit of that money. If we can concentrate the money where it 

should be concentrated, I think we’ll see great things happening. 

And that’s not to say—and I want to make it clear—that’s not to 

say that block grant doesn’t work. I’m the first to say that I’ve seen 

too many great projects from the block grant program. 

Mrs. CAPITO. Thank you, very much. Thank you, Mr. Chairman. 

Mrs. MALONEY. [presiding] Thank you very much. Ms. Velazquez? 

Ms. VELAZQUEZ. Thank you. Mr. Secretary, I just would like to 

acknowledge publicly the work and your role on Starrett City, New 

York. 

Secretary JACKSON. Thank you. 

Ms. VELAZQUEZ. But I would like to ask you regarding the budget, the fact that the budget proposes again this year to limit TANF 

protection vouchers to only occupied units rather than all units in 

a subsidized building. This is at a time when units being lost to 

opt outs and demolition are at historic levels. In New York City, 

more than 5,000 units were lost in 2005, and another 15,000 are 

threatened today. Further, in 2003, HUD’s survey states that 5.1 

households face worst case housing needs. Can you explain the rationale for a policy that reduce the overall supply of affordable 

housing? 

Secretary JACKSON. I can, Congresswoman, but I’d like, if you 

want the specific, to get the Assistant Secretary to give you specifics. 

21

Mr. CABRERA. Congresswoman, our methodology for dealing with 

Section 8 this year is to propose that the caps be relieved and that 

the pot of money which is known as undesignated fund balance be 

made available to PHAs to utilize. Expanding that capacity gives 

PHAs greater flexibility to address a lot of the issues that you’ve 

addressed. 

Ms. VELAZQUEZ. Sir, can you tell me how you plan to replace subsidized housing that is going to be lost as a result of that policy? 

Mr. CABRERA. In the case—the struggle with New York, I think, 

is that in many cases, they have housing that’s really 

Mitchellama—they’re really Mitchellama units. They’re State-subsidized units. And I think what they’re trying to struggle with is 

how to deal with the States, the formerly State-subsidized units in 

a Federal context. That is a policy issue that’s difficult to do. It 

would mean extending Federal appropriation to cover State-subsidized units in a particular way. 

Secretary JACKSON. Let me say this to you, Congresswoman, because I think the question that you raise is so valid. When we have 

the authority, as we did in Starrett City, we will do what we have 

to do to make sure that those units are preserved. But when they 

are State units, we don’t have the authority. That has to be done 

from your governor and from your mayor. 

And so when we have this sale that the chairman alluded to a 

few minutes ago in New York early on in this year, I did pick up 

the phone and talk to the housing commissioner and said I really 

think that this is not a good way to do this by letting this go back 

to private hands when you have many people who still need that 

housing. But that was all I could do is use the moral persuasion, 

because it was left to the city. 

Ms. VELAZQUEZ. But in that case, it’s a Mitchellama, right? 

Secretary JACKSON. Right. 

Ms. VELAZQUEZ. And we have a lot of developments in New York 

City that despite the fact that they are Mitchellama, they also have 

236 mortgages. 

Secretary JACKSON. And when they do— 

Ms. VELAZQUEZ. Those are Federal. 

Secretary JACKSON. I’m saying to you that we will do everything 

in our power, as we did with Starrett City to make sure that it 

doesn’t happen. 

Ms. VELAZQUEZ. Okay. Mr. Secretary, nearly every day we see 

articles and news reports documenting the rising foreclosure and 

delinquency rates. Some of the gains made in homeownership 

among low-income households and minorities are in turn being 

erased. What steps is HUD taking to ensure that these trends do 

not impact families who have or plan to buy a home with assistance from an American Dream Down Payment Act grant or other 

HUD assistance? 

Secretary JACKSON. Congresswoman, as I said to the other Congresswoman from New York, we went from $8 million for housing 

counseling to $50 million, and we are making sure that we work 

with those persons who want the opportunity to own a home so 

that they will understand all of the nuances of what it takes to be 

a homeowner. And we’ve been very successful with a number of the 

22

21,000 who have come through the American Dream Down Payment— 

Ms. VELAZQUEZ. Sir, if you’ll allow me, there is a disparity in 

terms of the money that you are providing for the housing counseling. Yes, there was an increase by 19 percent, but when you 

compare the money that is granted or given to the Dream Down 

Payment Act, that represents an increase of 50 percent. So what 

is HUD doing to ensure that families have access to housing counseling programs? You’re not putting enough money into the housing counseling program. 

Secretary JACKSON. Well, I would say that in 2001 when we 

came into office, you were putting $8 million. Today we’re putting 

$50 million. And I think that that—we are addressing more than 

600,000 families a year with that money compared to addressing 

about 40,000 in 2001. So, maybe from your perspective it’s not 

enough, but I think— 

Ms. VELAZQUEZ. It’s not enough when you could be— 

Secretary JACKSON. Well, but we made— 

Ms. VELAZQUEZ.—you gave an increase of 50 percent to the 

Dream Down Payment Act, and only 19 percent to the housing 

counseling. 

Secretary JACKSON. No, no. See, I think, Congresswoman, you’re 

mixing apples and oranges. The American Dream Down Payment 

is to help people with the closing costs and down payment. It has 

nothing to do with housing counseling. Housing counseling— 

Ms. VELAZQUEZ. Of course, I know that. So, on the one hand, you 

are helping people to buy their homes, but on the other hand, 

you’re not putting enough money to provide housing counseling to 

prevent foreclosure. 

Secretary JACKSON. Well, I guess I disagree with you. 

Ms. VELAZQUEZ. Of course you’re going to disagree with me. 

CBDG is cut by more than $700 million. Under the current distribution formula, New York City will lose $58 million. I understand that HUD is proposing a new formula. Will this make up for 

the cuts, and when can we expect to see this proposal? 

Secretary JACKSON. Let me say this to you. I just answered that 

to the Congresswoman from West Virginia. We have cities that are 

receiving large sums of monies, that I really don’t think should be 

receiving those monies. I think we should concentrate the block 

grant program to those cities most in need where we have the highest rate of poverty, where we have the highest rate of the ability 

to make substantial changes in the quality of life for people. And 

in this case, we are trying to reallocate that based on where we see 

the greatest poverty need, not pockets of poverties in wealthy 

areas. That’s a totally different situation. 

So if we—if the proposal is accepted by Congress and passed, 

then, yes, I think that clearly those areas where the greatest needs 

are will be addressed. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

The CHAIRMAN. The gentleman from California. 

Mr. MILLER OF CALIFORNIA. Thank you, Mr. Chairman. Welcome, 

Secretary Jackson. 

Secretary JACKSON. Thank you. 

23

Mr. MILLER OF CALIFORNIA. And the reason I do that, in 1994 

I know HUD was put on a high risk list. And I know in January, 

you guys were removed from that list, and I think a lot of that is 

due to your leadership. You know, we talk about a lot of things up 

here on the dais. I’ve been involved in the building industry for 

over 35 years, and you and I have had lengthy conversations. 

Oftentimes we talk about subprime, we blur the line between 

that and predatory. We talk about affordable housing, and we’ve 

had lengthy conversations, even in my district, on the difficulties 

of providing affordable housing. But it’s so complex. It’s not just the 

Federal Government. It’s State and local government. There’s so 

many issues involved in affordable housing, and we’re talking 

about risky loans. You know, there’s a real problem in the 

subprime market, but I don’t want to talk about that. I want to 

talk about the jumbo market that many of my people in California 

have been put into because GSEs can’t lend in California. And I 

have a—it’s called a map of misery that Business Week put out, 

and you can’t see it. 

Secretary JACKSON. Right. 

Mr. MILLER OF CALIFORNIA. But the most miserable area in the 

United States is California. 

Secretary JACKSON. That’s correct. 

Mr. MILLER OF CALIFORNIA. And 18.1 percent of all fixed-rate 

loans in 2005 came through the jumbo market. But if you look at 

conforming, 82 percent were fixed-rate loans. So, the problem we 

are facing in California is in the jumbo marketplace because the 

GSEs can’t compete. 

And I thank, Mr. Frank, the chairman, for working with me. 

We’ve been trying for several years to raise, you know, limits in 

high-cost areas and introduce FHA in those high-cost areas. But on 

the jumbo market, 34.9 percent of the loans made in 2005 were interest only, and 23.9 were negative ARMs. There’s a problem there. 

Secretary JACKSON. That’s correct. 

Mr. MILLER OF CALIFORNIA. And that’s a problem we can do 

something about. We need to take and change the way the system 

has been going out there. We need to look at these high-cost areas 

and say how do we provide more opportunity for GSEs to compete 

in those areas and provide a good fixed-rate loan that’s more affordable, more creative in some ways, and even an FHA to help 

people who don’t have the down payment that they need to get into 

homes. 

What’s your opinion on that? Where do think we’ve failed? 

Secretary JACKSON. Well, first of all, let me say this, that you’re 

correct. That’s one of the reasons, I’ll go back, that we need FHA 

modernization legislation, so we can address the needs of persons 

in California. In fact, Congressman, I’d say from Utah all the way 

back to California, from Virginia all the way back to the East 

Coast, we have the same problem. And so if we can modernize 

FHA, we can address that issue, especially for low- and moderateincome persons. 

Now my concern is the same concern that was raised by the 

chairwoman from New York. I’m so afraid of these interest-only 

loans, these subprime loans, and I think that clearly we need to do 

everything we can through moral persuasion to try to keep the 

24

banks, Fannie Mae and Freddie Mac, from foreclosing on these 

loans. 

Many of these persons have been put in a position that they 

didn’t understand when they signed those papers; they did not 

know what they were getting into. So our task is to make sure that 

where there was clearly predatory lending taking place, we take 

every action possible to bring those companies down. But where it 

wasn’t, we need to try to work with the companies and the banks 

and Fannie Mae and Freddie Mac to make sure that they don’t 

foreclose on the loans. 

As I said before, at FHA, we try to go out 90 days to 120 days 

to make sure the person can get back on their feet and afford the 

loan. And I think that’s really what we can do at this point. 

Mr. MILLER OF CALIFORNIA. I applaud you, and I think that’s a 

great way to look at it, and to try to do everything you can to get 

buyers who own homes past that difficult stage to be able to make 

their payments. But in certain States like California, the people I 

represent, and Joe Baca represents, don’t have the opportunity to 

participate in these programs that I think are doing a very good 

job. 

Our people are stuck in a jumbo market, and the conventional 

marketplace, I think, needs to be retained. I’m not arguing that. 

There’s an absolute place for a jumbo market, but there’s a place 

in this country where conforming should be raised because house 

prices went up so much that the people we represent who are paying the same taxes as everybody else in this country can’t benefit 

from these programs that truly provide a lower interest rate, a better opportunity to get in with less down. 

But don’t you think—I mean, we seem to be pointing fingers. I 

think we need to point fingers back at ourself here in Congress. We 

have been arguing this for years. I know Barney has been arguing 

the same thing for years, that we need to provide that opportunity, 

but we have failed in doing that. Don’t you think that the market 

would be in a stronger situation and buyers would be in a better 

position to make their payments if we had afforded more opportunity for them to benefit from these loans? 

Secretary JACKSON. Well, Congressman Miller, I’m not going to 

indict the Congress. 

Mr. MILLER OF CALIFORNIA. I’ll do that for you. 

Secretary JACKSON. I still understand Article I, Section 9, and it 

simply says that all of the appropriators— 

Mr. MILLER OF CALIFORNIA. Let me change the question. Do you 

think that people would be benefitting from these programs if we 

made them more accessible to more parts of this country? 

Secretary JACKSON. I think this. I think it was a year ago that 

I testified that we have tremendous regulatory barriers in many of 

the eastern and western States. That if Congress would make an 

effort to relieve those regulatory barriers, do low-income tax credit 

to give—for developers to come in and develop, yes. Right now in 

California, I think, before the house comes out of the ground, it’s 

about $109- to $120,000. If you do incentives, low-income tax incentives for developers, that could probably be cut by 40 to 50 percent. 

Mr. MILLER OF CALIFORNIA. Let me say on FHA so nobody misunderstands, we make money on FHA. FHA is not a gift. So I’m 

25

not up here proposing any gift to anybody, and even if it cost taxpayers a dollar. But Mr. Chairman, I think we need to focus on 

what we can do as a Congress to benefit the marketplace and create stability, and I would encourage you to move the bills we’ve introduced forward. 

The CHAIRMAN. I thank the gentleman. I just have one question, 

if the members would indulge me. He said he had a map of misery. 

Was that the governor’s redistricting plan for California that 

you’re— 

[Laughter] 

Mr. MILLER OF CALIFORNIA. I wish that’s all it was. It’s a misery 

map on people who bought homes and are suffering today. 

The CHAIRMAN. Well, I appreciate that. And I also—Mr. Secretary, did I understand you correctly to say that you were not 

going to indict Congress? 

Secretary JACKSON. Absolutely not. 

The CHAIRMAN. I think if you could speak for some of your cabinet colleagues, that would be very reassuring to some of my members. 

Mr. MILLER OF CALIFORNIA. Thank you, Secretary Jackson. I appreciate your comments. 

The CHAIRMAN. The gentleman from North Carolina. 

Mr. WATT. Thank you, Mr. Chairman. Welcome, Mr. Secretary. 

It is good to see you again. 

Secretary JACKSON. Thank you. 

Mr. WATT. I want to try to deal, if we have time, with two subjects that you and I go back on quite a ways. First of all, I want 

to thank you and your department for providing to us the information about every HOPE VI project that is in—every city that has 

gotten a HOPE VI grant and money that is in the pipeline, because 

you and I will acknowledge publicly that we’ve talked about how 

to get money out of the pipeline into some usable system. 

And if you look at it in gross, it looks like it may not be as bad 

as you all have made it out to be, but when you look at the specifics of what has happened in some of these localities—and I’m 

sure I will step on some of my colleagues’ toes, including my own, 

as I look at these numbers—we haven’t done too well in some respects. So let me ask you a series of questions related to that. 

Number one, has HUD done a grant-by-grant analysis of where 

every grantee of a HOPE VI grant is, and why if there’s still money 

in the pipeline, it’s still there? 

Secretary JACKSON. Yes. We basically know why the money is 

not spent, where it’s not spent. 

Mr. WATT. Okay. Now I’m looking at this chart, and I’m going 

back to 1993. There’s still $5,548,000 left from 1993. Every single 

one of them says that the unit construction is 100 percent complete, yet there’s money still outstanding. And one of those, so as 

not to pick on anybody else, is Charlotte, North Carolina, which 

has 9 percent still in the pipeline. 

The unit construction is indicated as complete, and the information we’ve been given is that it’s being used for community and 

supportive services in Charlotte. This analysis that you’ve done, 

I’m sure, would indicate all of that. How do we get this out of that 

26

pipeline and officially into some other category so we can consider 

that closed? 

Secretary JACKSON. Just what we suggested a month ago to the 

Appropriations Committee. Clearly, you have the right to recapture 

the money and tell us directly what you want done with the money. 

Mr. WATT. But in this case, it’s being used for something that 

you all have authorized, obviously. What I was told was that it was 

used for community and supportive services. And I assume that 

when you say unit construction 100 percent complete and it’s complete, it’s still being used in connection with a HOPE VI-approved 

undertaking, but it’s still showing money in the pipeline from 1993. 

How can we get it out of that pipeline and into an approved use 

that doesn’t keep it showing up on the books, so to speak? 

Secretary JACKSON. Congressman, I don’t have the specifics 

about the development in Charlotte, but if you want me to, I’ll be 

happy to look at it and get back to you. 

Mr. WATT. Well, what I’d like is to—for you to look at every one 

of these projects that still has money in the pipeline. 

Secretary JACKSON. Well, we have—that’s what I’m saying. 

Mr. WATT. So let me ask a more general question. Do you feel 

that HUD has the sufficient authority at this point to recapture 

money that has been in the pipeline for over 10 years—it would be 

over 10 years, going back to 1995 maybe? 

Secretary JACKSON. No, there’s no capture authority that’s given 

to us in— 

Mr. WATT. So, do you think it would be a good idea for us to put 

in the new HOPE VI reauthorization bill some specific recapture 

provision, and what would you recommend that recapture provision 

say? Because we don’t want to go back and start just recapturing 

any money. There’s money out there. I didn’t see any of these 

things that weren’t at least partially completed, so, we don’t want 

overkill. 

Could we get some language from you all that might help address this in a way that is not just a mechanical way if you’re over 

10 years, then your money automatically gets recaptured, but instead does it on a project-by-project basis? 

Secretary JACKSON. We’ll be happy to work with you, yes, because we’ve suggested some form of recapture. And, so, yes, we 

would be. I think that if we can recapture some of this money and 

allocate it to those housing authorities that have performed very 

well, it will be a positive step. 

Mr. WATT. I think I will run out of time before I get to talk about 

Section 8, but maybe I can submit some questions for the record, 

which I’ve asked you off the record. Anyway, how are we ever going 

to get Section 8 vouchers accepted in parts of the community that 

are not now accepting Section 8 vouchers and it’s distorting—I 

mean, it’s having all kind of negative consequences because a particular segment of the community is just unwilling to take a Section 8 voucher? Do you have any ideas on that? 

Secretary JACKSON. I really don’t, because that’s to each local 

community. When I was in Dallas, I was very fortunate that we 

were able to send vouchers all over the City of Dallas, but in certain areas, there is great resistance. 

27

Mr. WATT. But there has to be some public—I mean, if our whole 

philosophy was to provide public housing, go away with constructing public housing and go to a voucher system that disbursed 

people all over the community, that was the Federal policy— 

Secretary JACKSON. That’s correct. 

Mr. WATT. There ought to be some way to play that Federal policy out. And the question I’m asking is, is HUD giving any thought 

to how that gets played out, not on a local community by local community basis, but are there some policy things we can do in the 

legislation to make that Federal policy be played out in a more effective way? 

Mr. SCOTT. [presiding] The gentleman’s time has long expired, 

but if you could briefly answer that. 

Secretary JACKSON. Yes, I think you do have the power as Congress to legislate it, but we at HUD do not. So our position is, is 

that again, we’ll use all of our moral persuasion to try to— 

Mr. WATT. If—we can legislate, you can propose, and if you have 

some ideas, I think we would like to have those ideas just like we 

would like to have those ideas in how you would— 

Mr. SCOTT. The gentleman— 

Mr. WATT.—put in legislation a recapture provision in HOPE VI. 

Secretary JACKSON. Okay. 

Mr. SCOTT. The gentleman from North Carolina is definitely my 

dear friend, but his time has definitely expired. Thank you. The 

Chair now recognizes the gentlelady from Ohio, Ms. Pryce. 

Ms. PRYCE. Thank you very much, Mr. Chairman, and thank 

you, Mr. Secretary. It’s been a long morning for you, and I will try 

not to be too trying; I really appreciate you being here. But let me 

refocus once again on an issue that was brought up by Ms. Capito, 

Ms. Velazquez, and some others. 

There are many on this committee, I think, who would like to 

really know how the new formula is going to affect their own communities, and the beauty in the past of the CBDG program has 

been in its flexibility. It allows communities to use the money for 

their own community development needs, needs that, you know, 

HUD here in Washington may have no idea what they are. And it’s 

unclear at this point, without seeing the formal legislative proposal, what impact the formula change would have on the effectiveness of the CBDG. 

And so my first question is, is there any data? Have you accumulated data that you can make available to us to help us understand 

how this is actually going to impact our own communities? 

Secretary JACKSON. Yes. The formula changes have been published, so it’s clear what we perceive as the answer to the question. 

So, yes, if you haven’t seen them, we’ll be happy to get them to you. 

Ms. PRYCE. Is it published in legislative language? Do you propose to legislate on this issue? 

Secretary JACKSON. Yes. 

Ms. PRYCE. If you do—what I have seen isn’t legislative language. Do you have legislative language? Do you propose to introduce it? And if so, when will this committee get a look at it so we 

can have our input? 

Secretary JACKSON. I will get back to you. I know we have it in 

language, but I’m not sure whether it is in legislative language yet. 

28

Ms. PRYCE. Okay. But there is data? 

Secretary JACKSON. There is data, yes, ma’am. 

Ms. PRYCE. And you said you have circulated that? 

Secretary JACKSON. Yes, ma’am. 

Ms. PRYCE. Okay. I haven’t seen how that will exactly affect Columbus, Ohio, and so I look forward to digging that up wherever 

it is. And I also—you know, the process through which the Administration is going to make this change is very important to us on 

this committee, especially. 

The chairman has made a focus on affordable housing one of the 

key priorities of this committee and this Congress, and I think that 

the proposed changes coming through HUD really need to be developed here in this committee, as well as in your organization, and 

we’d appreciate that opportunity, Mr. Secretary. 

Secretary JACKSON. No, and I agree with you. I do not think that 

we should operate in a vacuum, and I do not plan to operate in a 

vacuum, because I have a great deal of respect for the Financial 

Services Committee. And so we will work with you, as I’ve told the 

chairman; we will work with him. 

Ms. PRYCE. All right. Thank you. 

Mr. SCOTT. The gentleman from California, Mr. Baca. 

Mr. BACA. Thank you very much. Mr. Secretary, I have a couple 

of questions. The proposed budget of HUD for the year 2008 would 

fund HUD at $35.2 billion, a decrease of $3.14 billion from the current 2007 fiscal year. 

With rising rents, more homeless, more seniors, rising construction costs, and rising housing costs, how can it be that the costs 

will be lowered by $3.14 billion? 

Secretary JACKSON. Well, Congressman— 

Mr. BACA. Especially in California, where we have 37 million 

people now. 

Secretary JACKSON. Congressman, the budget, as you said, is 

$35.2 billion, and that’s an increase of $1.6 billion over our request 

from last year. So we’re not decreasing the budget; we’re increasing 

the budget. 

Mr. BACA. But it’s not based on the inflation or the growth of the 

total population, too, as well, and the need for housing. Even 

though it may appear to be an increase, it’s a slight, but not overall, based on the total population and the demands and the need. 

Secretary JACKSON. Well, I’m not sure what you mean by the 

total population. We think we’ve calculated it based on the population that we serve. 

Mr. BACA. Well, I don’t—I believe that it has, and even with 

California, because even California has a higher number of population than we had before, and there’s a greater need. 

And yet, you know, questions were asked earlier about foreclosures. We’ve had a lot of foreclosures in the area, yet there’s a 

greater need in that immediate area, and the majority of the foreclosures have been in the Hispanic and the African-American communities in that area. 

Because of the adjustable variables in that area, there’s a tremendous need, especially in my county, in San Bernardino County, 

and Riverside County, where there has been a high number of foreVerDate 0ct 09 2002 11:18 Jun 27, 2007 Jkt 035406 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\35406.TXT HFIN PsN: TERRIE
29

closures, more so than probably any other county, and we have the 

lowest income level in the immediate area. 

Secretary JACKSON. I can’t speak specifically, Congressman, 

about your area, but I will say this to you. We believe that this 

budget addresses the needs of the population that we work with 

and serve. 

Now I think the Congresswoman from New York raised the issue 

about foreclosures. We work very, very hard at FHA to make sure 

that we don’t have a large number of foreclosures. But people having dealt with the subprime market over the last 10 years, I share 

your concern, that we have some serious problems and we’re using 

our moral persuasion to work with banks, to work with Fannie 

Mae and Freddie Mac to not foreclose on those loans, to try to help 

these persons get back on their feet and keep their homes. 

Mr. SCOTT. The gentleman’s time has expired. 

Mr. BACA. Just a quick question. It’ll be short. 

Mr. SCOTT. Very quick, very. 

Mr. BACA. All right. Thank you. I’m sponsoring, along with Senator Boxer and other leaders, important national and State antigang legislation. HUD used to fund anti-gang programs directly 

such as the Public Housing Drug Elimination Program, yet no such 

programs now exist. What plans do you have to combat crimes at 

HUD properties? Are there any plans? 

Secretary JACKSON. Congressman, when we did that, in many 

cases, the housing authorities were not necessarily using the 

money for anti-gang, anti-drug problems. They were calculating it 

into their budget. So we didn’t take the money away. We simply 

redubbed the money and put it back in the budget and said if you 

choose the money for this purpose, that’s fine. If you don’t, you 

don’t have to. The key to it is, is they were not using it as they 

should have been in the first place. 

Mr. SCOTT. Thank you, Mr. Secretary. The gentleman from Illinois, Mr. Manzullo. 

Mr. MANZULLO. Thank you. Good morning, Mr. Secretary. 

Secretary JACKSON. Good morning. 

Mr. MANZULLO. About a year ago you announced that HUD 

would be proposing new rules soon to address the Real Estate Settlement Procedures Act, otherwise known as RESPA. To date, there 

has been no new proposal. Is it still your plan to offer a proposed 

RESPA rule, or is it dead? 

Secretary JACKSON. It is not dead. And let me say this to you, 

as I said to you a year ago, I’d much rather do it right than quickly. We’re still talking to a number of the people in the industry and 

trying to come to what I perceive as a consensus. I don’t want to 

introduce a bill and then have the bulk of the population that it 

affects resist the bill like we had done before. 

I think we’re pretty close, Mr. Congressman, to coming up with 

a solution as it relates to RESPA, and I hope that when I come before you next, a month from now, we can resolve this. 

Mr. MANZULLO. Well, you know, when I chaired the Small Business Committee, we held several hearings on RESPA, and I guess 

what was really disconcerting is the fact that on two occasions, 

once just before the Christmas break, and another one during the 

August break, RESPA came up with its proposed rules when MemVerDate 0ct 09 2002 11:18 Jun 27, 2007 Jkt 035406 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 K:\DOCS\35406.TXT HFIN PsN: TERRIE
30

bers of Congress were not in town. I came back, held a hearing the 

first week of January when nobody expected that, and obtained 

from you a promise that a middle-of-the-night, crammed-down-thethroat RESPA rule would not happen again. Do I have your word 

again that you won’t— 

Secretary JACKSON. Absolutely. 

Mr. MANZULLO.—do timing like that? 

Secretary JACKSON. I will not in any way do what was done before. 

Mr. MANZULLO. I appreciate that. How many people at HUD are 

working on this RESPA issue? 

Secretary JACKSON. It comes under the FHA Commissioner and 

the Assistant Secretary for Housing. We have a group called the 

RESPA group, and I think to date it’s composed of about eight people, if I remember correctly. 

Mr. MANZULLO. It’s about eight people? One of the things that 

we would like to see done, but I know it may be difficult when 

we’re working with proposed rules, is maybe just before you’re 

ready to put things down in writing, if there is an open meeting 

with all the parties and Members of Congress to give us an idea 

of what it will look like before it’s rolled out, then perhaps we can 

work on a consensus basis at that point. 

Secretary JACKSON. I would appreciate that very much. 

Mr. MANZULLO. Thank you, very much. 

The CHAIRMAN. The gentleman from Georgia. 

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

let me first of all start out by thanking you for the help that you 

gave to me and to my constituent. We had a very, very serious 

issue with a predatory lending case involving Mr. and Mrs. Leroy 

Tremble in my district, and you came immediately to the phone, 

and got on this. You put your Assistant Secretary, Ms. Kimberly 

Kendrick, onto it, and it was because of your effort and involvement that we saved her home because they got their loan adjustment. 

Secretary JACKSON. Thank you. 

Mr. SCOTT. I want to thank you for that. It wouldn’t have happened without your input. I also want to thank HUD in my home 

district of Fulton County. We had an issue of Section 8. As you 

know, one of the recurring issues is the lack of code enforcement 

that go into Section 8. The property goes down. We were able to 

get some response there. I certainly hope you’ll pass that along to 

the Fulton County housing authority. 

Secretary JACKSON. Thank you, very much. 

Mr. SCOTT. I appreciate that. Now I’d like to ask you three quick 

questions. The first one deals with our veterans. Our veterans are 

coming home from Iraq with extraordinary brain trauma injuries. 

They fall within the category of our disabled, and what concerns 

me is that many of these veterans with disability rely on government assistance for housing. 

Now, the President’s new budget proposed for 2008 allocates $125 million for Section 811 programs. This is the major source of 

funding for rent subsidized housing for people with disabilities, 

which affects our veterans. My concern is that this $125 million 

represents a 47 percent cut in the budget. I want to make sure 

31

you’re aware of that at the very time when we need more, not less, 

especially for our veterans coming, and this is a program chiefly for 

that. It just doesn’t make sense that we are cutting the very funds 

needed to protect and house our veterans who have these disabilities. I wanted to bring that to your attention, and ask if you could 

work with that. What do you think of that, very quickly. I have two 

more questions with my time. 

Secretary JACKSON. Sure. Congressman, we have a lot of housing 

in the 811 in the pipeline. We have allocated monies that we think 

will carry us for the next fiscal year to get those units. We will do 

the same thing. We’re not in any way reneging on our initial belief 

that we have a moral obligation for 811 when persons serve our 

country. That is not the case. But to allocate monies as we have 

in the past and let it sit for year after year after year without being 

obligated just doesn’t make sense. So we are taking a very cautious 

approach, but we have not stopped building houses. We have not 

stopped taking care of the disabled. 

Mr. SCOTT. Okay. The very point is, with a 47 percent cut, the 

Democrats have control now in terms, and we will make our input 

known, and we will strongly resist a 47 percent cut. But I would 

be very interested to work with you as we go forward to make sure, 

even as we go forward, we don’t want any of our veterans, no one 

with a disability, but most assuredly, we made that mistake before, 

with Vietnam veterans sleeping on the street. 

Secretary JACKSON. Right. 

Mr. SCOTT. Even some Iraqi veterans, and from Desert Storm, 

sleeping on the street. We talked about that before. This has to 

stop. And when you look at it in the face of a 47 percent cut—let 

me get on to my next one, which is the Section 8 voucher. 

I have a particular issue that I have heard from complaints from 

some of the housing authorities in many of the towns that I represent. As you know, I represent suburban Atlanta. I represent a 

lot of the towns there. 

They’re having difficulty in being reimbursed for money that they 

must put forward when a recipient uses a Section 8 voucher in 

their city, rather than in the city where it was originally issued. 

What they’re telling me is that the originating cities are not 

being forthcoming in sending reimbursements. Has HUD been 

made aware of this problem? 

Secretary JACKSON. I have not, Congressman. 

Mr. SCOTT. Okay. Well— 

Secretary JACKSON. But I’ll be happy to look into it. And if you’ll 

tell me the cities, I’ll be happy to look into it. 

Mr. SCOTT. Okay. Marietta, also Ostel in Cobb County, and we’ll 

get some of that information to you to be specific. They were just 

in my office just recently talking about the difficulty they’re having 

in being reimbursed again for money that they have to put forward 

when the recipient uses Section 8 vouchers in their city rather than 

in the city where it originally— 

Secretary JACKSON. No, I understand. 

Mr. SCOTT. Yes. Okay. Now the third question, my final question, 

goes to HOPE VI. As you know, that’s a baby with me, and we’re 

going to save that program. That I think is the greatest program 

32

that we have there, and I know that you and I have been working 

with this. 

The HOPE VI housing program has continued to be a target for 

President Bush; I cannot for the life of me understand why. As a 

matter of fact, when I saw him personally, I asked him. And I said, 

‘‘Mr. President, this is your program. This is a program that Jack 

Kemp and the Republican Party put forward. It is the most successful program, and there’s no city that’s been more successful at 

it than my City of Atlanta.’’ 

Secretary JACKSON. No question. 

Mr. SCOTT. And so with that, what are your thoughts on this new 

legislation that has been introduced in the Senate to extend the 

HOPE VI program for 5 years with certain additional criterion? I 

want your thoughts on this new program and the additions included that we feel are improving the program, and addresses some 

of the concerns that you brought out in our last meeting. Would 

you please respond? 

Secretary JACKSON. I have not seen the legislation, but the only 

caveat I’d add to that, Congressman, is this. Over the last 4 years 

of the HOPE VI program, one of the criteria that we required is 

for the housing authorities to try to get a developer who can leverage the package so that we’re not only building units, but we’re 

building commercial space and other space around it. That’s the 

only caveat I’d add today to—and we’ve been pretty successful. 

To date, out of 237 of the HOPE VI programs that we’ve allocated, 65 have been built, so we have about 172 that are still in 

the pipeline that have not been done. But I will tell you, those that 

have been allocated over the last 4 or 5 years are doing very well 

because we put a requirement on them that they work with a developer. And that’s the only caveat I would say if you make the decision or you all make the decision to reinstate the HOPE VI program. Don’t let it go as it did before where the housing authority 

by themselves tried to develop it, because many of them can’t. 

And if you’ll notice in your City of Atlanta, and I must say this 

about Renee Glover, she was wise enough to have developers work 

with her on each one of those developments and they got done very 

quickly, very efficiently. And one thing to be noted, she took a— 

The CHAIRMAN. You need to wrap it up, Mr. Secretary. 

Secretary JACKSON. She took a housing authority that had 1,300 

employees, and now she has 350, and she’s financially solvent. 

The CHAIRMAN. The gentleman from Texas. 

Mr. HENSARLING. Thank you, Mr. Chairman, and welcome, Mr. 

Secretary. 

Secretary JACKSON. How are you doing? 

Mr. HENSARLING. It’s springtime back home, and the Mavericks 

continue to win. 

Secretary JACKSON. And I’m going to try to get to see them pretty soon. 

Mr. HENSARLING. You should. You should. Seventy-five million 

families now are homeowners, almost 70 percent of all Americans. 

Secretary JACKSON. That’s correct. 

Mr. HENSARLING. That is the greatest percentage that we’ve had 

in our Nation’s history. What are the policies that accounted for 

this? You have something to brag about. 

33

Secretary JACKSON. Well, first of all, President Bush, in my 

mind, has been probably the greatest housing homeownership 

president in the history of this country in the sense that even 

though we’ve been in the process of a war, he has not cut back on 

his effort to make sure that every American who wants to own a 

home has an opportunity to own a home. 

And he specifically challenged us, in August of 2002, to create 5.5 

million new minority homeowners, specifically African Americans 

and Hispanics. To date, we’ve created 3.5 million of those homeowners. Clearly, we couldn’t have done it without the housing counseling money being increased. We couldn’t have done it without the 

American Dream Down Payment. We couldn’t have done it without 

HOME. So he’s put in place a number of programs that have 

helped us to increase homeownership in this country. 

Now, to say that, again, I will reiterate, Congressman, that we 

need to pass FHA legislation to address issues in the chairwoman’s 

area of California and the chairman’s area of the East. And I think 

with that, we can increase homeownership even more and take 

many of these low- and moderate-income people out of the 

subprime market that is really hurting us today. 

Mr. HENSARLING. Mr. Secretary, I understand that two of the 

proposals will be to reduce the statutory minimum 3 percent down 

payment and to move to some type of risk-based formula on the 

premium. Speak to me about the correlation of those polices, their 

impact on default rates. 

Secretary JACKSON. Sure. We believe that we have a mechanism, 

Congressman, that we can analyze the risk that’s going to be 

taken—that we will be taking. And it doesn’t mean that we’re 

going to give people loans who can’t afford to retire the mortgage. 

We’re not going to do that. I’ll be happy to send you the analysis 

that we’ve made that we’re going to use, the criteria that we’re 

going to use to make sure that a person who presents some problems might end up getting a loan for 3 or 4 percent, and if they 

end up taking a loan in play for the next 4 years, we’d reduce the 

interest rate. 

For those persons who qualify, they might end up with a 1 percent loan. So we have the criteria in place. I can’t specifically give 

you every detail of it, but I’ll be happy to send it to you. 

Mr. HENSARLING. But to some extent, isn’t the flip side of this 

great homeownership rate we have some fairly alarming default 

rates as well? And I’m—are we really doing right by an American 

family if we help to put them into a home and unfortunately, 18 

months later, they can’t keep that home? 

Secretary JACKSON. Yes, we would be. But let me say this to you, 

Congressman. That’s not what we’re doing at FHA. That’s the problem that we’re facing right now that’s been enumerated by a number of your colleagues here today with that subprime market. Many 

of these persons did not want to deal with FHA, so they went to 

the subprime market. And I must tell you, when you look at the 

amount of paperwork that we have to deal with at FHA, I probably 

wouldn’t want to deal with it either. 

So that’s why we’re trying to modernize it, so we can have the 

flexibility that a bank has or anyone else has to evaluate the loan 

and then make our decision as to whether or not we lend. 

34

Mr. HENSARLING. The Administration is proposing I think doubling the funding for your housing counseling program. Can you 

speak to me about its success? 

Secretary JACKSON. We’ve been very successful. When President 

Bush challenged us to create 5.5 million new minority homeowners, 

one of the things that I said to him is that in order to do that, people must understand what it takes to own a home, what is required 

of them to own a home, and we don’t need to put people in homes 

who are subsequently going to lose those homes. 

We have been very successful over the last 5 years really using 

nonprofit, faith-based organizations to counsel people on homeownership rather than those for-profit areas that had been counseling them. So we’ve had a very, very good rate of not having a 

great deal of foreclosure, because people do understand. They know 

that they’re going to have to have certain requirements in the process of owning a home, and they’re going to have to put monies 

aside for something that might happen to that home. 

Mr. HENSARLING. I’m almost out of time. You may have covered 

this earlier, but the thought behind lifting the cap on the Section 

8 vouchers, is that principally to release funds that these PHAs are 

already sitting on but can’t use? Or what’s the rationale? 

Secretary JACKSON. That’s correct. They’re sitting on it, but they 

can’t use it today. And we’re saying, let them use it. 

Mr. HENSARLING. Okay. Thank you, Mr. Secretary. 

The CHAIRMAN. The gentleman from Texas. 

Mr. GREEN. Thank you, Mr. Chairman. Mr. Chairman, I assure 

you, I consider it a privilege to serve with you and under your leadership. I appreciate the vision you shared earlier and associate myself with it entirely. 

I want to thank the chairwoman of the Housing Subcommittee 

because she did hold field hearings in Louisiana, and she not only 

held the hearings, but we had site visits, and we had an opportunity to have direct communication with the Katrina survivors. It 

means a lot to talk to people and get a first hand understanding 

of what is happening to them. 

I want to thank you, Mr. Secretary, for a number of things, for 

coming to Houston and for announcing that you were going to engage HUD in the fight against discrimination in housing as related 

to the Katrina evacuee’s. 

A number of circumstances developed. I appreciate very much 

the fact that you were there to help persons being discriminated 

against. 

I also would like to thank you for the extension of the 203(k) program as it relates to New Orleans, Louisiana, such that persons 

can have more than 6 months or 12 months to renovate. The extension time has now gone to 18 months. This means a lot to persons 

who are living in Houston and trying to relocate back home to New 

Orleans. 

We have approximately 100,000 persons in the Houston area who 

are survivors, evacuee’s, depending on who is counting, of course; 

approximately 20,000 in the Ninth Congressional District, the District that I have the honor of representing in Congress. 

35

My hope is that you and I will continue to do some additional 

things, to work together so that we can help many of these persons 

and other persons in the City of Houston as well. 

For fear that I will forget, let me start with the inspectors. You 

indicated that CDBG money is being utilized to pay inspectors in 

one city. I have some concern with this. I am concerned that there 

may be other areas where CDBG money is being utilized that perhaps we should look at and see if we can find a way to address. 

If you would, re-visit with me for just a moment the question of 

inspectors, and then if you would, share with me if there are other 

areas comparable to this such that we might have an opportunity 

to address these other areas. 

Secretary JACKSON. Thank you very much, Congressman. 

The Community Development Block Grant funds are very flexible, but I think the desire, if you look at the legislation that you 

all passed back in the 1970’s, it was clear that it was to be used 

to develop economic development within those areas of poverty that 

had not been addressed before. 

If we do that, then it means putting infrastructure in, working 

with areas that are undeveloped that need to be developed, both 

from a housing perspective and an economic development perspective. In many cases, in a lot of cities, that has not been done. 

I never use another city other than the city I am from, Dallas, 

when I talk about this because I know what the inspectors are 

being paid out of block grant money. 

I do not think they should be paid out of block grant money. I 

think that should be a city responsibility. The block grant money 

should be going to places like west Dallas and south Dallas, where 

we have the highest rate of poverty in that City. 

In many cases, you have great bickering that occurs between the 

council and the money is not getting there. 

I can tell you a city that I visited that I saw block grant money 

working at its best, of course, he’s the congressman and no longer 

the mayor. Kansas City was one of the cities that we used as a 

prime example of how block grant money should be spent. 

They did it in the most poverty ridden areas and the development area. That is what I think the block grant money should be 

used for. That is why we want to re-allocate the formula. 

Mr. GREEN. Do you have some other examples of how it is being 

used comparable to what is happening in Dallas? Any other examples we have with inspectors? 

Secretary JACKSON. Yes, sir. 

Mr. GREEN. I do not want you to mention cities. I just need the 

information. I am concerned about this and would like to address 

it. 

Secretary JACKSON. Yes. I know cities that are using it in areas 

that it should not be used in—areas that are not pockets of poverty 

or not close to pockets of poverty. 

Mr. GREEN. Can you provide me with the information on this 

after the hearing perhaps in some codified document? Is that acceptable to you? 

Secretary JACKSON. Yes. 

Mr. GREEN. Let me mention another area. In Houston, we had 

a good number of persons who were living in apartments. They 

36

were assured—the City was assured by FEMA that FEMA would 

pick up the tab for their living in Houston. 

FEMA cut the contracts short, and without a long explanation, 

the persons were then put in a position who were leasing property, 

such that they did not have security deposits, lots of damage was 

done, and we plan to do what we can to correct this problem. 

Is there something that HUD can do in the interim while we are 

working on this to help persons who were involved in this process 

and to lend a helping hand at a time of need? 

Secretary JACKSON. I do not think so, Congressman, to be very 

honest with you. The way the program was designed, FEMA has 

control. They assigned us those persons who were either on a Section 8 voucher or public housing. We have addressed those needs. 

Neither one of those programs have been cut off. We are still funding those today. 

If many of the people who were displaced were not in one of the 

two programs that we administer, there is really not anything that 

we can do. 

Mr. GREEN. I just mention this in closing, which is important. 

We will take it up here. This is important. We talked about counseling. I appreciate counseling persons with reference to homeownership. 

This hurricane has presented a unique circumstance, and we 

have many persons who are suffering. They are really suffering to 

the extent that they cannot talk about what happened to them 

without literally crying. People are depressed and they are hurting. 

I do not know exactly how we can address this. I am mentioning 

it to you because the word ‘‘counseling’’ came up. This is an apples 

and oranges comparison. 

We have to find a way to provide some counseling of a different 

sort, such that these persons who are depressed can receive adequate counseling, too. 

Mr. Chairman, I thank you for the time and I will yield back. 

The CHAIRMAN. Thank you. Mr. Secretary, we have some votes. 

Would it be possible to come back in 45 minutes for us to finish 

up? I appreciate that. We have members, some of our most conscientious members, and I thank you. 

We will go then to vote. We will reconvene as soon as the votes 

are over. It will be about 45 minutes. 

Before you go, Mr. Secretary, with regard to the gentleman from 

Texas, one of the issues that was presented to us in the hurricane 

bill was some proposal to provide some HOME money or something 

for the City of Houston. 

I know you know that the City of Houston, I think, has really 

been extremely decent in helping people. 

Could you designate a staff member to work with the gentleman 

from Texas, the gentleman from California, and I, and we might 

think of something appropriate—we are doing things for Louisiana 

and Mississippi. It does seem to me that Houston has a claim on 

some additional help. If you could work with us on that, we would 

appreciate it. 

Secretary JACKSON. I will make sure, Mr. Chairman. I will have 

Scott Keller do that. 

37

The CHAIRMAN. Thank you. The other thing I would just say is 

this. I met yesterday with the people from the League of Cities, 

and they raised an issue. They are worried about scam artists now 

sort of swooping in on people who are in foreclosure or potential 

foreclosure with a ‘‘we buy homes’’ thing, and people being sort of 

lured into buying homes unnecessarily. They asked me about some 

possible means of getting the word out, and it seems to me that 

you are best able to do that. 

There is a letter that I asked them to send to me so I could share 

it with you. We would like to work with you and the League of Cities for some public service announcements for some way to kind of 

protect people who are vulnerable from being made even more vulnerable. 

There are other things we have to do on the policy side. It did 

seem that HUD was best able to do this. We will be following up 

with your staff on this as well and with the League of Cities. I 

think you would agree that this is something we could work on together. 

Secretary JACKSON. I agree. 

The CHAIRMAN. Thank you. We will reconvene in about 45 minutes. Mr. Secretary, I appreciate your indulgence. 

[Recess] 

The CHAIRMAN. We will reconvene. Mr. Secretary, I appreciate 

you staying around. Some of the members said that they will be 

back. I will ask you only to wait a few more minutes. If none come, 

I will tell you with our thanks that we are through. I apologize for 

the absent members. They were told 12:45. I will give them 5 more 

minutes, if that is okay. If no members show up, we will allow you 

to leave. 

You did get that letter. We will be glad to work with you. The 

League of Cities and I certainly agree that HUD would be the appropriate one to start doing some of these announcements. 

I guess they are particularly worried about Indianapolis—the 

Mayor of Indianapolis said that they were putting up posters all 

over the City. 

Now our colleague from Miami is here. I would ask unanimous 

consent, and I cleared this with the Republicans, so there are no 

objections to allowing him to ask you some questions. 

I will now recognize the gentleman from Miami who will ask you 

some questions on the topic, which will come as no surprise to you, 

Mr. Secretary. 

Mr. Meek? 

Mr. MEEK. Thank you very much, Mr. Chairman. I want to 

thank you and the ranking member for allowing me to be a part 

of the committee today and to ask a question of the Secretary, 

whom I consider a friend. 

Also, Mr. Chairman, I want to thank you and the ranking member for the committee work that has been done thus far as it relates to a number of issues that are facing Americans in the housing arena, and I look forward to seeing a lot more of that. 

Mr. Secretary, it is good to see you and your team again. We 

have been talking for several months now, and as you know, in 

Miami Dade County, we had a number of issues that we have been 

facing. 

38

Last fall, there was a story that broke, ‘‘House of Lies,’’ in the 

Miami Herald, dealing with not only HOPE VI dollars, but Section 

8 mismanagement, but mainly on the housing finance end, where 

a lot of things went wrong. 

There was no accountability. Funds were mismanaged. Managers 

were incompetent or corrupt or both. There was concern that Section 8 was going to people who did not meet the criteria. All of 

those issues were alive and well. 

The Miami Herald has won quite a few awards based on that series. After that, not only myself but members of local government, 

responsible individuals, people of good will, came together and we 

met with you and some of your team here in Washington to inform 

you of the reforms that were going to take place. 

Six members of upper management were fired and removed, and 

there are two investigations that are ongoing. 

I personally asked for the Inspector General of HUD to look into 

the matter, and you encouraged that activity to take place also. 

Also, we had a number of local reforms, working with the advocacy community and those that are displaced. The 1,178 residents 

of Scars Harbor homes that were residents of the HOPE VI Project 

were up in arms, but now are working hand-in-hand with the local 

government in Miami Dade County. 

Mr. Chairman, I am going to enter for the record, for brevity purposes here, so I will not verbally have to go over all this— 

The CHAIRMAN. Without objection, the gentleman may introduce 

anything he wishes. 

Mr. MEEK. Thank you. I would like to introduce the February 

28th letter that the Congressional delegation from Miami Dade 

County put together for Secretary Jackson to consider, not entering 

into a cooperative endeavor agreement with Miami Dade County 

because of the reforms that have taken place signed by myself, Mr. 

Mario Diaz-Balart, Mr. Lincoln Diaz-Balart, and also Ms. 

Wasserman Schultz. 

There are also a couple of articles that have been written. The 

articles that have been written, all the people who have been working, and have come together as a community, I have gone to all of 

these workshops. 

The residents, the advocacy community, the mayor, and the 

county commission all feel that we are on the right track; all of the 

folks are working together. 

The Miami Herald has been the overseer of this and following 

this process similar to the Walter Reed Washington Post story that 

is now causing a number of people over in the Department of Defense to move around. 

I say all of this, Mr. Secretary, to say that I would be the first 

one as a Member of Congress, and the individual who represents 

the people of the HOPE VI Project in Miami Dade County, and also 

a member of the delegation, to be the first to ask for Federal intervention if I did not feel they were taking the necessary steps to 

bring about change. 

The Miami Herald editorial that was just released this week asks 

HUD to slow down because the housing director used to be a 

former employee of HUD, and went into troubled areas. 

39

I raise the question, Mr. Chairman, because out of the last 10 

years, not the Jacksonville office of HUD, not the Miami office of 

HUD, or the Federal office of HUD, found Miami Dade County as 

being a troubled housing agency. 

I would go further to say that I am concerned and I have shared 

with you the concerns that I believe of the activity of HUD in 

Miami Dade County, of a number of officials, the Secretary of Public Housing, who is here today, several meetings he has had there, 

and many of the officials in Miami Dade County feel a little bit out 

of the loop. 

The State prosecutor has contacted me wanting a copy of the 

audit report. I hope she has a copy of it now. 

A number of individuals feel that it has now gone to a level of 

personalities. There is really not a great need for a takeover. 

The mayor has said in a public statement, Mr. Chairman, and 

I am going to be closing in 1 minute, if I am allowed to do so, has 

said that he is willing to work with HUD to work out an agreement 

outside of a cooperative endeavor agreement. 

The other issue that I guess that is of concern here, too, Mr. Secretary, is the fact that HUD did have oversight. It did not happen. 

Many of the issues that were uncovered in your own audit report 

were already uncovered by the Miami Herald and have already 

been addressed, many of them. 

The document has been helpful for reforms, but it has brought 

together the congressional delegation, has brought together, with 

the exception of one member who has not said that she wants or 

is against the takeover, and it has brought together the advocacy 

community, the residents, and Miami Dade Housing. 

We look for a perfect world because we know in housing, we need 

almost a perfect world for it to work for everyone. 

I come again being humble and meek to ask you to please reconsider the letters that have been sent to Miami Dade County to go 

into a cooperative agreement, just to take a look at it. 

I am saying this, Mr. Chairman, in all fairness to the Secretary, 

he has been open. Every time we wanted to meet, he has met with 

the local officials. He has been very forthcoming of his opinion on 

what he would like to do. 

I would ask again and put it into the record of the committee all 

of the attempts and all of the reforms that Miami Dade County has 

made, and there are a number of residents in my District who are 

very, very concerned about taking this out of the public eye, having 

some sort of manager making the decisions over HOPE VI and Section 8 dollars, and a war between Miami Dade County and U.S. 

HUD, which is almost unnecessary. 

It is like lining up 2,000 dominoes and then U.S. HUD comes 

after all this work has been done and thumps a domino and knocks 

all of them down, and now we have to place every last one of them 

back up again. 

I will close with that, Mr. Chairman. Mr. Secretary, I would ask 

again if you would reconsider or work with the Mayor of Miami 

Dade County to see if there can be a management agreement outside the cooperative agreement that would allow Miami Dade 

County to have the governance and work with them if there is an 

independent board spirit that is there, work with them through the 

40

process, but the takeover will smash the dreams and the hopes of 

all the people who are involved, including those of us in Washington. 

Secretary JACKSON. First, thank you, Congressman. I can tell 

you that we are not going to take it over. That is not in any way 

within the spirit of what I think is realistic at this point in time. 

I have not seen the letter, so I cannot tell you today what I am 

going to do, but I can say this to you, that my major concern is just 

with the residents, to make sure that things are done properly. 

I have had a chance to evaluate some of the material in the 

audit, and it is very disturbing. 

I will talk to you before I make the decision. I will make the decision fairly soon. 

Mr. MEEK. Mr. Chairman, I want to thank you for the time. Mr. 

Secretary, you and your team are welcome to personally come down 

and meet with the folks from Miami Dade County before the final 

decision. 

Secretary JACKSON. I am coming down. 

Mr. MEEK. I would love to be there. 

Secretary JACKSON. I am coming down. I will get you the date, 

to meet with both the mayor and the county manager. I have set 

a date. Do you know when it is, Scott? March 22nd, I will be in 

Miami to meet with both the mayor and the county manager. 

Mr. MEEK. I guess I will be there, too. Thank you, sir. Thank 

you, Mr. Chairman. 

The CHAIRMAN. The gentlewoman from Wisconsin. 

Ms. MOORE OF WISCONSIN. Thank you, Mr. Chairman. Thank 

you, Mr. Secretary, for being so patient. 

Secretary JACKSON. Thank you. 

Ms. MOORE OF WISCONSIN. I was listening very carefully to your 

testimony. I do want to thank you and the Administration for acknowledging the need to close the minority housing gap, particularly in the African-American communities as it relates to homeownership. 

You did cite in your testimony, written and verbally, that you 

thought that the best way to create more affordable homeownership opportunities was to help with down payments, which certainly is very helpful, and closing costs through HOME and the 

American Dream Down Payment initiative. 

I guess my question is while these are very helpful instruments, 

because people do have an acute cash flow problem as it relates to 

down payment costs, what the real problem is in terms of staying 

in a house is the long term amortization over 30 years and those 

monthly payments that come due. 

What we have found is that some deep subsidies in these homes 

up front that lowers not only the purchasing costs but lowers the 

financing costs is what is most helpful to people. 

Having said that, we had the GSE reform before us before, which 

would have created an affordable housing fund of $500 million per 

year. 

The Administration was very opposed to that, but that would 

have been a great program to seed deep subsidies, so that someone 

getting into an $85,000 home would perhaps get a $15,000 subsidy. 

41

It would not bring down the housing values to the surrounding 

neighborhoods because you would actually be paying the purchase 

price with the deep subsidy, but a long term amortization would 

make it much more affordable. 

I guess I want you to respond. I think that is a much more aggressive way to prevent defaults and foreclosures as we have seen 

happen. 

I would like to ask you about that and then I want to ask you 

a couple of other questions about elderly housing and disabled 

housing. 

Secretary JACKSON. Sure. I am well aware that one of the terms 

that the chairman has introduced as it relates to the reform of 

GSEs is that there will be an affordable housing amount set aside. 

If Congress does that, then yes, I think it will have a significant 

impact on low- and moderate-income housing. There is just no 

question about it. 

Other than that, I really do not know much about it. I will tell 

you that if we are the persons to implement it, we will do exactly 

what you all tell us to do. If we are not, then I still think it will 

have an impact on low- and moderate-income homeowners. 

Ms. MOORE OF WISCONSIN. Having said that, since you agree 

that it would really be very helpful, I would hope that you would 

use your position as advisor to the President on housing issues to 

really indicate to him how far such an affordable housing fund 

would go toward alleviating the minority homeownership gaps, 

since you indicated earlier in your testimony that you believed he 

has done more than any other President, if I did not hear you incorrectly, toward this end. 

Secretary JACKSON. Yes. 

Ms. MOORE OF WISCONSIN. Perhaps it could be something of a 

legacy for him if he were to do this. 

I want to follow a line of questioning that Mr. Scott had started 

a while back before the break, when he talked about Section 811 

disabled housing cut to the tune of 51.3 percent, and I would like 

to talk about the cut to Section 202, elderly housing, at 37.6 percent. 

I guess I am feeling rather puzzled as to how these budget decisions are made, given the demographics in our country. People are 

living longer with disabilities. We have had our 500th amputee 

come home from the wars of Iraq and Afghanistan. 

Certainly, I am a baby boomer. I am so looking forward to not 

cutting grass and shoveling snow at some point. As we age, we do 

need elderly housing. 

You indicated that the reason—you said to Mr. Scott that you are 

still producing disabled housing but you are being more conservative and not putting those funds in this budget this time because 

you are spreading, I guess, the wealth somewhat. 

What I would submit to you, Mr. Secretary, and want you to respond to, is that there are waiting lists. There are waiting lists in 

my town, and the only reason the waiting lists are not bigger is because we have stopped taking applications for elderly housing and 

disabled housing. 

42

I guess I need to understand that the demographics speak to the 

need to do more elderly and disabled housing, so I am very puzzled 

and baffled as to why that is the case. 

I just want to add as a commentary and want you to respond to, 

it is great that we are doing more for homelessness, for people coming out of prison, wonderful. 

My fear is that we are increasing the expenses toward those activities, decreasing them to people like the elderly and disabled, 

Section 8 housing. We do not want to set up kind of a class warfare 

where when you have done everything right, you get your funds 

cut. You are coming out of prison, you get the help. 

I am concerned about the housing policy, and I would like you 

to respond. 

Secretary JACKSON. First of all, let me say I agree with you, Congresswoman. Nor do I want to set up class warfare because I do 

not think that is the way we should be doing it. We should not sectionalize people and say that ‘‘A’’ gets something at the expense of 

‘‘B.’’ 

What I said, and I still stick to this, is that when we first came 

in, we had a huge backlog of 202/811s that were not being produced, that we had allocated monies for 3, 4, or 5 years earlier. 

We took a slower pace. At this point, we have a number of units, 

elderly units, 811 units, in the pipeline. 

This allocation that we made will be allocated to the next period 

when people come in, notification for availability. If we continue 

down the road that we are continuing on, spending the money at 

a timely rate, then yes, you will see an increase in the budget activity. 

I want to spend the money first. It is the same thing that I made 

with the argument with Congressman Watt about HOPE VI. We 

have done about 65 HOPE VI, but we still have 172 standing out 

there with almost $2 billion. 

Why should we continue to fund it? It is not that I want to cut 

the program. It is not that I do not believe it is serving a phenomenal purpose. It is not that I do not believe that we do not have 

a shortage where we do. 

We have to find developers who are willing to develop these 

projects. To date, it has not been an overwhelming process. We 

have some and we will continue to work with them. 

I can assure you. I am a baby boomer, too. I expect to live 20 

or 30 more years. I am very, very concerned. 

Lastly, I will say this. If there is a population that I am more 

sensitive to than any other population, that is the elderly and the 

physically and mentally handicapped. I think we have an obligation to those soldiers who have given their lives for our freedom, 

to make sure that they have an opportunity to live in decent, safe, 

and sanitary housing. 

I feel the same way about the elderly, those persons who have 

worked all their lives, they might have been able to own a home, 

they might not be able to afford one now. It is our obligation to 

make sure they live in decent, safe, and sanitary developments. 

Ms. MOORE OF WISCONSIN. Mr. Chairman, 30 seconds, I have a 

follow up question from something he said. 

The CHAIRMAN. Very quickly. We are 31⁄2 minutes over. 

43

Ms. MOORE OF WISCONSIN. Yes, sir. You said you cannot find developers who want to do the elderly and disabled housing. Is it because they cannot make any profit out of it? Are we are not providing a deep enough subsidy? What do you attribute that lack of 

interest to? I cannot believe people do not want to make money. 

The CHAIRMAN. The gentleman will answer. 

Secretary JACKSON. I think in today’s market, it is a very lucrative housing market. Developers are developing where they can 

make the most profit. At the same time, we are getting more developers coming in for 202 and 811, but not at the pace and rate that 

I would like to see it. 

The CHAIRMAN. The gentleman from Missouri. 

Mr. CLEAVER. Thank you, Mr. Chairman. I am a baby boomer, 

too. I have no plans of dying at all. 

[Laughter] 

Secretary JACKSON. You are close to God, so you would know. 

Mr. CLEAVER. I have one question. I would like to take this opportunity to just express appreciation to our chairman, Mr. Frank, 

and most especially to the chairwoman of the subcommittee, Ms. 

Waters, who was probably the first elected official outside of Louisiana to come into New Orleans after the hurricanes hit, and for 

the work she did, and I want to express appreciation to you for the 

cooperative spirit with which you have dealt with this whole issue. 

We thank you very much for your cooperation. 

Secretary JACKSON. Thank you. 

Mr. CLEAVER. My only question is with regard to the rural loan 

program. Do you think it is possible to revitalize the rural loan program without enacting any legislation? Are there things that can 

be done administratively to do it? 

Secretary JACKSON. I think it has to be legislative. I do not think 

that we can do it administratively. I will ask. I will tell you what 

I will do, Congressman, to give you a specific answer. We might be 

able to do it administratively, but I am just not sure. 

I will make sure—today is Wednesday—that by Friday, you will 

have an answer. I will talk to your chief of staff and have our Assistant Secretary, Pam Patenaude, get back to you. 

Mr. CLEAVER. Thank you. I yield back the balance of my time. 

The CHAIRMAN. I thank the gentleman. 

Thank you, Mr. Secretary. You have noted your 20 or 30 more 

years. You have spent more of it here than we had a right to ask 

you to, and the hearing is adjourned. 

Secretary JACKSON. Thank you so much. 

[Whereupon, at 1:12 p.m., the hearing was adjourned.] 

(45)

A P P E N D I X

March 14, 2007

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