United States General Accounting Office

GAO Report to Congressional Committees

October 1998 MULTIFAMILY

HOUSING

Progress Made in

Establishing HUD’s

Office of Multifamily

Housing Assistance

Restructuring

GAO/RCED-99-5

GAO United States

General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-280458 

October 27, 1998

Congressional Committees

The Department of Housing and Urban Development’s (HUD) permanent

“mark-to-market” program was recently established to restructure HUD’s

multifamily portfolio of insured Section 8 housing projects by resetting

rents to market levels and reducing mortgage debt if necessary to permit a

positive cash flow.1

 The Departments of Veterans Affairs and Housing and

Urban Development, and Independent Agencies Appropriations Act of

19982

 authorized the program and established the Office of Multifamily

Housing Assistance Restructuring (OMHAR) within HUD to administer it.

Currently, the rents for many of the HUD-assisted and -insured multifamily

housing projects substantially exceed the market level, which results in

higher subsidies under the Section 8 program. HUD received $3.8 billion for

Section 8 project-based subsidies in fiscal year 1998.

The act requires us to audit the operations of OMHAR annually during the

first 2 fiscal years following the date of enactment and as appropriate after

that. This initial report reviews the status of OMHAR’s development,

focusing on (1) its organization and staffing and how it relates to HUD’s

overall structure, (2) whether it is on schedule to meet its key operational

and reporting requirements, (3) the procedures and systems it will use to

oversee the mark-to-market program’s implementation, (4) the status of

projects included in the three mark-to-market demonstration programs

and how HUD is using information gathered from these programs, and

(5) the actions it has taken to obtain information and feedback from

parties that will be affected by the mark-to-market program.

Results in Brief Because a Director for the Office of Multifamily Housing Assistance

Restructuring was not appointed until October 21, 1998, HUD had not made

final decisions at the time of our review on the Office’s staffing and

organization or on how the Office would relate to HUD’s overall structure.

In addition to the 10 staff currently assigned to work on the

mark-to-market program, HUD’s preliminary plans call for hiring

approximately 75 staff—most of whom would be hired from outside the

Department—for the Office of Multifamily Housing Assistance

Restructuring. The act provides the Director special compensation

1

HUD’s Section 8 program provides rental subsidies for low-income families. These subsidies are

linked to either the apartment (project-based) or the resident (tenant-based).

2

Referred to in this report as “the act” (P.L. 105-65, Oct. 27, 1997).

Page 1 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

authority to pay employees of the Office at a higher level than other HUD

employees in order to obtain the skills and expertise needed to accomplish

the program’s purposes.

HUD has made considerable progress toward meeting its key operational

requirements for implementing the mark-to-market program. For example,

HUD issued interim regulations for the program on September 11, 1998, and

expects to complete such important tasks as developing an operating

procedures manual in October 1998, when the program is mandated to

begin. However, because of delays in obtaining contract support and the

sheer volume of tasks that HUD needs to complete, some of these tasks

either have been or will be completed behind their original schedule. For

example, HUD initially planned to publish the interim program regulations

by August 1998 and final regulations by October 1998. However, the

interim regulations were not published until September 11, 1998, and the

final regulations are not expected to be published until 3 months after the

Director’s appointment.

The HUD officials responsible for the mark-to-market program are in the

process of establishing or planning several procedures and systems

designed to oversee the implementation of the program. These include

(1) a system for measuring the performance of the entities responsible for

carrying out restructuring transactions on HUD’s behalf, (2) an

Internet-based system to track the actions taken by these entities in

carrying out mark-to-market functions, and (3) an audit guide to test these

entities’ compliance with the program’s requirements and objectives. In

addition, mark-to-market officials were planning procedures to oversee

specific components of the program, such as the processes that

administrative entities use to decide new rents for restructured properties,

determine projects’ rehabilitation needs, and restructure project

mortgages. HUD deserves credit for focusing on oversight procedures prior

to the program’s implementation. However, as of October 14, 1998, most of

these procedures and systems were still being developed.

The amount of information that HUD can use to assess the outcomes under

the three restructuring approaches being tested under the demonstration

program is limited because a relatively small number of transactions to

restructure Section 8 projects have been completed. Furthermore, all but

four of the completed transactions were processed under one of the three

restructuring approaches being tested. Nevertheless, according to HUD

mark-to-market officials, they have used information from the

demonstrations to identify, evaluate, and improve upon, as necessary, the

Page 2 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

processes used by HUD field offices and third parties in carrying out

restructuring activities. For example, HUD has used information from the

demonstration program to help develop process flow charts and operating

procedures for the permanent program.

In accordance with legislative requirements, HUD mark-to-market staff

have taken actions to obtain information and feedback from affected

parties. Specifically, they (1) have developed program guidance that

includes steps to involve affected parties including tenants and

neighborhood associations, at various points in the restructuring process,

such as when a project’s rehabilitation needs are being determined, and

(2) have held three public forums to obtain recommendations from

organizations representing affected parties (such as state and local

housing finance agencies, tenants, and project owners) on implementing

certain legislative provisions. In addition to the legislatively required

actions, HUD invited organizations representing project owners and

managers, tenant groups, nonprofit organizations, lenders, coalitions of

local and state government agencies, and other advocacy groups to submit

ideas and comments on developing the program and to participate in

meetings to discuss these issues.

Background Approximately 8,500 projects that have been financed with Federal

Housing Administration (FHA)-insured mortgages are also supported by

project-based Section 8 housing assistance payments contracts.3

 In 1996, a

HUD contractor estimated that for approximately 63 percent of these

multifamily projects, the rents are higher than those of comparable

unassisted rental units in the same housing rental market, which increases

the costs of the Section 8 program to the federal government. However, if

the Section 8 assistance is reduced, owners of many of the FHA-insured

housing projects are likely to default on their mortgage payments,

resulting in substantial claims to the FHA General Insurance Fund. In

addition to the cost of insurance claims, defaults on mortgage payments

could leave tenants without adequate affordable housing.

The original project-based Section 8 contracts that were entered into in

the 1970s and 1980s were typically for 15, 20, or 40 years and began

expiring in the early 1990s. The Congress and HUD have worked together to

3

FHA mortgage insurance protects lenders from financial losses stemming from borrowers’ defaults on

the mortgage loans. When a default occurs on an insured loan, a lender may “assign” the mortgage to

HUD and receive payment from FHA for an insurance claim. In addition to mortgage insurance, many

FHA-insured multifamily properties receive some form of subsidy from HUD, such as Section 8 rental

subsidies tied to some or all units (Section 8 project-based assistance).

Page 3 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

renew expiring contracts for 1 year. As its long-term Section 8 contracts

expire and its 1-year contracts are renewed annually, HUD estimates that its

annual renewal costs will increase steadily. For example, HUD estimated

that if no actions were taken, the annual cost of renewing project-based

Section 8 contracts would rise to over $7 billion—or approximately

one-third of HUD’s current total budget—by 2007. To address these

escalating costs, the Congress appropriated $30 million to conduct a

mark-to-market demonstration program in fiscal year 1996. This

demonstration was intended to test various methods of restructuring the

financing of insured Section 8 properties, generally by adjusting rents to

market levels and reducing the mortgage debt to reflect any decline in net

operating income resulting from the rent adjustment. Near the end of fiscal

year 1996, the Congress repealed the demonstration program but

authorized a new demonstration for fiscal 1997.

To deal with Section 8 contract expirations occurring in fiscal year 1999

and thereafter, the Congress legislated a permanent mark-to-market

program in October 1997.4

 This legislation also extended the fiscal year

1997 demonstration program through fiscal 1998 with modifications as a

transitional program while HUD developed regulations to implement the

permanent program. The intended goals of the permanent mark-to-market

program are to reduce the costs of expiring Section 8 contracts, address

financially and physically troubled projects, correct management and

ownership deficiencies, and preserve the affordability and availability of

low-income rental housing. (See app. I for an overview of the

mark-to-market process.)

The act directed HUD to select capable entities to carry out restructuring

under the mark-to-market program on behalf of the federal government.

These entities are referred to as participating administrative entities (PAE).

Entities eligible to apply to become PAEs include public agencies, such as

state housing finance agencies, local housing agencies, nonprofit

organizations, and these entities in partnership with each other or with

private entities. The act specifies selection criteria such as experience in

working directly with tenant organizations and other community-based

organizations; experience with multifamily housing financing and

restructuring; a history of stable, financially sound, and responsible

administrative performance; and financial strength.

4

The Multifamily Assisted Housing Reform and Affordability Act of 1997 was enacted in title V of P.L.

105-65. Subtitle A of the 1997 act contains the FHA-Insured Multifamily Housing Mortgage and Housing

Assistance Restructuring Program.

Page 4 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

Staffing and

Organizational

Decisions Not Final

Because of Delays in

Appointing an

OMHAR Director

The act established OMHAR as an entity within HUD and required the Office

to be under the management of a presidentially appointed and

Senate-confirmed Director. Section 572(a) of the act specifies that not

later than 60 days after its enactment (Oct. 27, 1997), the President should

submit a nomination for the Director for OMHAR to the Senate. However,

the Director was not nominated until September 29, 1998. The Senate

confirmed the nomination on October 21, 1998.

The act authorizes the Director to hire personnel to carry out OMHAR’s

functions. However, because the Director was not appointed until

October 21, 1998, HUD staff began formulating organization and staffing

plans for OMHAR in the Director’s absence. HUD anticipates very targeted

hiring of staff for OMHAR with expertise to carry out critical policy

development, oversight, and decision-making functions. Section 574(a),(b)

of the act allows the Director to pay OMHAR’s employees (1) without regard

to certain provisions of pay schedules used to hire most federal employees5

 and (2) comparably to the officers and employees of the Federal Deposit

Insurance Corporation. In effect, this authority allows the Director to

compensate OMHAR employees at a higher level than other HUD employees

to obtain the skills and expertise needed to accomplish the program’s

purposes.

HUD plans to hire these staff in phases. OMHAR will have approximately 75

to 85 staff at its peak; however, this number may increase if additional

hiring authority is obtained. Some HUD personnel are expected to be

detailed to OMHAR, but according to mark-to-market officials, most will be

hired from outside HUD. For the first quarter of fiscal year 1999, the 10

existing HUD staff working on the mark-to-market program will be detailed

to OMHAR and additional support will be provided by HUD staff with

collateral assignments. HUD envisions that these senior core staff will be

assisted by 10 staff hired for 1-year terms. HUD intends on hiring additional

staff with 4-year terms in three phases—at the end of October and

December 1998 and the end of February 1999. Of the 75 additional staff

expected to be hired during fiscal year 1999, approximately 15 will be

distributed among five HUD field offices,6

 and the remainder will be located

in headquarters.

5

These provisions relate to classification and General Schedule pay rates and are set forth in title 5 of

the U.S. Code.

6

These five field offices will be referred to as OMHAR hubs. At the time of our review, HUD had not yet

decided which five field offices would be designated as OMHAR hubs.

Page 5 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

Because mark-to-market is a relatively short-term effort—authority for

both the program and OMHAR terminates on September 30, 20017

—HUD

plans to focus staff resources on inherently governmental functions and

will generally not hire internal staff to carry out commercial functions that

are readily obtainable through private-sector vendors. Instead, HUD

expects to obtain capacity for such functions through contracts to support

internal staff. While HUD’s plan to oversee the contractors is not yet final,

HUD anticipates having several staff dedicated to managing the contractors.

These staff would include the chief of a newly created office of contracts,

compliance, and controls; three contract analysts/government technical

representatives; a records management analyst; two internal review

specialists; and a clerical support staff member. Figure 1 illustrates

OMHAR’s proposed organizational structure.

7

The mark-to-market program established by the act is referred to as the “permanent” program in the

sense that it is not a “demonstration” program. However, under section 579 of the act, authority for the

permanent program terminates in 2001.

Page 6 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

Figure 1: OMHAR’s Proposed Organizational Structure

Secretary 

HUD Commissioner 

FHA

OGC

HUD 

Director 

OMHAR 

Executive Assistant

Principal Deputy 

Director 

OMHAR 

Staff Assistant

Deputy Director 

Program Management 

and Administration 

Staff Assistant

Deputy Director 

Restructuring 

Staff Assistant

External 

Consultants 

(as needed) 

Office of Budget, 

Finance, 

Personnel and MIS

Office of Contracts, 

Compliance and 

Controls

Office of Program 

Evaluation

Office of 

Community 

Relations

Office of PAE 

Management 

and Program 

Oversight

Office of Office of 

Program 

Development

HUD 

Program 

Offices

HUD 

Enforcement 

Center

HUD 

Assessment 

Center

HUD 

Headquarters

HUD 

Hub

Manager

Section 8 

Processing 

Center

Field 

Office Hub

Field 

Office Hub Field 

Office Hub

Field 

Office Hub

Field

Coordination

Field 

Office Hub

Page 7 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

Housing experts involved with mark-to-market issues, including

representatives of advocacy groups, whom we contacted were concerned

that a Director of OMHAR had not yet been appointed at the time of our

discussions. For example, one representative was concerned that the

delay in the Director’s appointment limited the Director’s opportunity to

participate directly in developing the program’s regulations. In addition,

according to some representatives, the delay in appointing the Director

and implementing the program sent a negative message to stakeholders

about the administration’s support of the program. In response to this

concern, HUD mark-to-market officials said that the administration has

been supportive of the program and has provided access to any resources

necessary to prepare for its implementation.

HUD Has Made

Progress in Preparing

for Mark-To-Market

Program, but Some

Key Tasks Are Behind

HUD’s Original

Schedule

As mandated in the act, HUD is required to implement the mark-to-market

program for Section 8 contracts expiring in fiscal year 1999 (beginning

Oct. 1, 1998) and thereafter. Despite delays in hiring a management studies

contractor and a voluminous number of tasks to complete, HUD has made

considerable progress toward this end. For example, HUD has published

interim regulations for the mark-to-market program and is expecting to

develop an operating procedures manual and to select its partners (the

PAEs) to perform the restructurings in October 1998.

However, in spite of HUD’s efforts, some of these tasks either have been or

will be completed behind their original schedule. For example, in

May 1998, HUD had planned to issue the program’s interim regulations by

August and to have final regulations in place by October 1998. Now, HUD

expects to have only the interim regulations in place by October 1998.

Final regulations are to be developed 3 months after the OMHAR Director’s

appointment. Also, while HUD originally planned to begin briefing PAEs on

their responsibilities in September 1998, because of delays in selecting the

PAEs, briefings are not scheduled to begin until October. Of eight key tasks,

such as preparing briefing manuals and conducting technical assistance

briefings for field office staff, HUD had completed one as of September 8,

1998, the most recent date for which this information was readily

available. The remaining seven were in progress, although three of these

were behind HUD’s original schedule. Appendix II provides a more detailed

description of HUD’s progress in carrying out eight key tasks needed to

implement the mark-to-market program.

In addition to the operational tasks that HUD must perform, the act places

some reporting and other requirements related to the mark-to-market

Page 8 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

program on HUD. For example, the act requires the OMHAR Director to

report certain information to the Secretary of HUD and for the Secretary to

submit information on OMHAR’s operations to the Congress and the Office

of Management and Budget. (See app. III for information on the

mark-to-market reporting requirements.) The act also requires that prior to

issuing final regulations, HUD seek recommendations on the

implementation of the mark-to-market program from individuals and

organizations affected by the program and convene at least three public

forums so that those individuals and organizations can express their views

concerning the proposed disposition of the recommendations. This

requirement is discussed in greater detail later in this report.

While most representatives of the groups involved with mark-to-market

issues whom we contacted were generally complimentary of

mark-to-market officials’ efforts to implement the program, many

expressed concerns about the delays HUD has experienced in issuing the

program’s regulations and soliciting and selecting its administrative

partners. For example, there were concerns that the delay in publishing

the interim regulations could limit the time that affected parties have to

review and comment on them before they become effective and that

entities that are eligible to serve as PAEs might not be able to develop a

sufficient understanding of the regulations before having to decide if they

want to participate in the program. According to HUD mark-to-market

officials, the public will have 45 days to comment on the interim

regulations, which they believe is a sufficient amount of time. Although the

regulations become effective 30 days after publication, which will be

before the end of the comment period, these officials said that the

comments received will be considered in developing the program’s final

regulations. Furthermore, these officials said that the published notice

soliciting PAEs contains an adequate description of the scope of work for

entities to decide whether they want to participate.

HUD’s Procedures to

Oversee

Mark-To-Market

Program’s

Implementation Are

Under Development

Because HUD is responsible for establishing effective management controls

over the program’s implementation, the HUD officials developing the

mark-to-market program were establishing or planning several procedures

and systems to oversee its implementation.8

 However, as of October 14,

1998, most of these procedures and systems were not yet in place, and

many of the related details remained to be developed.

8

The legislation gives the Secretary of HUD the responsibility for carrying out mark-to-market

operations until a Director for OMHAR is appointed.

Page 9 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

HUD Is Developing

Controls Over Program

Operations and

Compliance

Among other things, management controls can include (1) controls over

program operations, which are policies and procedures that management

implements to reasonably ensure that a program meets its objectives, and

(2) controls over compliance with laws and regulations, which are policies

and procedures to reasonably ensure that resources are used consistent

with laws and regulations.9

 Because many of the functions necessary

under the mark-to-market program will be carried out by the PAEs rather

than by HUD, it will be particularly important for HUD to establish

procedures ensuring that all the parties involved are carrying out their

responsibilities in ways that meet the program’s objectives and are in

compliance with the program’s requirements. To its credit, HUD has

focused on developing oversight procedures prior to the program’s

implementation.

In general, to oversee the operations of the HUD field offices and PAEs in the

mark-to-market program, HUD is developing a plan for centralized review

and oversight. Within its general oversight system, HUD has either

developed or is planning three key components to help ensure that field

offices and PAEs carry out the program in a way that meets its objectives

and is in compliance with requirements: (1) performance measures to

judge the effectiveness of PAEs’ activities and a system of compensating

PAEs, (2) an Internet-based tracking system to monitor and analyze actions

taken by HUD field offices and PAEs in carrying out mark-to-market

functions, and (3) an oversight and audit guide to test compliance with the

program’s requirements and objectives. As of October 14, 1998, HUD was

still in the process of developing all three of these components. The

components and their status are presented in table 1.

9

Government Auditing Standards, 1994 Revision (GAO/OCG-94-4, June 1994).

Page 10 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
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Table 1: Key Components of HUD’s Oversight of Field Offices’ and PAEs’ Activities in the Mark-To-Market Program

Task Purpose Performed by Status

Performance measures to judge

the effectiveness of PAEs’

activities and a system for

compensating PAEs

To allow HUD to assess PAEs’

performance and compensate

them accordingly.

—HUD may provide incentives to

reward superior performance

(§513(a)(2)(I)) or may terminate

its agreement with a PAE for

failure to comply with

requirements (§513(a)(2)(F)).

—HUD is to compensate PAEs

for all reasonable expenses

incurred as necessary to perform

their duties under the act

(§513(a)(2)(H)).

Developed by HUD officials

responsible for

mark-to-market, with

assistance from HUD’s

management studies

contractor, who is to make

recommendations for

improvements to the fee

structure used under the

demonstration program.

According to mark-to-market

officials, procedures to judge

the effectiveness of third

parties’ activities will be

included in an oversight and

audit guide, which was not yet

final as of October 14, 1998.

The compensation structure

was also not final as of that

date.

Internet-based tracking system

to monitor actions taken by HUD

field offices and PAEs in

carrying out mark-to-market

functions

To allow HUD to track

transactions completed by its

field offices and PAEs, including

project- and loan-related

information, and analyze the

social, economic, and

administrative implications of

restructuring.

—HUD is to report annually to the

Congress on the actions taken

under the mark-to-market

program and on the status of

eligible projects (§520(a)).

The tracking system was

developed by a HUD

contractor. Another contractor,

the management studies

contractor, then evaluated the

system and recommended

changes.

As of October 14, 1998, HUD

was in the process of

implementing a system for use

under the fiscal year 1998

demonstration program. At that

time, HUD was also working

with the management studies

contractor to identify changes

necessary for the permanent

program and expected the

system to be ready for

assigning projects to PAEs,

tracking PAEs’ fees, and

tracking projects under the

permanent program in

November 1998.

Oversight and audit guide to

test compliance with program’s

requirements and objectives

To identify internal control

objectives and tests that can be

used to determine if the

program’s goals, objectives, and

requirements are being met.

According to mark-to-market

officials, the guide will allow all

parties involved in the

restructuring process to know

that their work will be reviewed

and to be aware of exactly what

they will be held accountable for

doing.

Developed by HUD’s

management studies

contractor.

This guide was still under

development as of October 14,

1998.

Note: All section citations refer to P.L. 105-65.

Page 11 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

HUD Is Developing

Procedures to Monitor

Program’s Key

Components

In addition to the processes described in table 1 for HUD’s general

oversight of field offices’ and PAEs’ performance under the mark-to-market

program, HUD is responsible for monitoring several specific components of

the program as they are implemented. These components include

(1) screening owners and projects to determine their eligibility for

restructuring, (2) setting projects’ rents, (3) determining projects’

rehabilitation needs, (4) restructuring projects’ mortgages, (5) recapturing

Section 8 funds, (6) reviewing restructured properties, and (7) using

technical assistance funds. As of October 14, 1998, HUD had developed

procedures to oversee two of these components but was still in the

process of developing oversight procedures for the other five. The

program’s components and the description and status of HUD’s procedures

to oversee their implementation are presented in appendix IV.

Data on Completed

Restructurings Are

Limited, but

Demonstrations Have

Provided Information

on Process

HUD’s ability to evaluate the results of the various restructuring approaches

allowed under the mark-to-market demonstration programs is limited

because a relatively small number of demonstration transactions have

been fully completed. The Congress authorized these demonstrations for

fiscal years 1996-98 to explore approaches for restructuring the financing

of and reducing the Section 8 assistance provided for properties eligible

for the mark-to-market program. Despite the fact that relatively few

transactions have been fully completed, HUD mark-to-market officials

believe that the experience and process of carrying out the

demonstrations have yielded information useful for implementing the

permanent program.

Demonstrations Were

Established for Fiscal

Years 1996-98 to Test

Mark-To-Market

Approaches

In April 1996, the Congress passed legislation authorizing the fiscal year

1996 mark-to-market demonstration—a voluntary program. The repeal of

this demonstration near the end of fiscal year 1996 did not nullify any

agreements or proposals that had already been considered under the

program, and HUD continued to process proposals that had been received

prior to its termination.10 For project-based Section 8 contracts expiring in

fiscal years 1997 and 1998, the Congress again authorized optional

demonstration programs to explore approaches to restructuring the debt

secured by these properties while minimizing adverse impacts on tenants,

10The fiscal year 1996 demonstration program was repealed by section 212 of the Departments of

Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act

of 1997 (P.L. 104-204, approved Sept. 26, 1996).

Page 12 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
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owners, and communities.11 As authorized by the legislation, restructuring

transactions were performed by HUD field offices, by HUD in partnership

with state and local housing finance agencies (HFA), and by HUD in joint

ventures with nonprofit entities. As of October 2, 1998, the latest date for

which information was readily available, HUD had executed contracts with

25 HFAs and entered into 4 joint venture agreements with nonprofit entities

to restructure projects under the demonstrations.

Relatively Few

Demonstration

Transactions Have Been

Completed

As of October 2, 1998, nearly 300 properties were participating in the

demonstration programs. Restructuring had been completed for 42 of

these properties, and all but 4 (which were processed under a joint

venture arrangement) of these had been processed by HUD staff. None of

the restructurings had been completed under HFA arrangements as of that

date. Consequently, information that HUD could use to assess outcomes

under the various restructuring approaches has been limited. Table 2

shows the number of projects participating in each component of the

demonstrations and their status.

11Sections 211 and 212 of the Departments of Veterans Affairs and Housing and Urban Development,

and Independent Agencies Appropriations Act of 1997 (P.L. 104-204, approved Sept. 26, 1996) and

section 522(b) of the Departments of Veterans Affairs and Housing and Urban Development, and

Independent Agencies Appropriations Act of 1998 (P.L. 105-65, enacted Oct. 27, 1997).

Page 13 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
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Table 2: Number and Status of Projects Participating in Mark-To-Market Demonstration Programs

Demonstration program

Number of

participating

projects

Party responsible for processing

restructuring transactions Status of participating projects

Fiscal year 1996 36a HUD, with assistance from a contract

financial adviser.

As of September 30, 1997, five

project-restructuring transactions had

been completed under the 1996

demonstration.b

Fiscal year 1997 120 As of October 2, 1998,

—22 projects were assigned to a joint

venture arrangement;

—17 projects were assigned to HFAs;

and

—approximately 81 projects were

assigned to HUD field offices.

As of October 2, 1998, 33 project

transactions had been completed under

the HUD field office component of the

1997 demonstration, and 4 had been

completed under the joint venture

component.

Fiscal year 1998 126 As of October 2, 1998,

—23 projects were assigned to a joint

venture arrangement;

—52 projects were assigned to HFAs;

and

—approximately 51 projects were

assigned to HUD field offices.

As of October 2, 1998, no project

transactions had been completed under

the fiscal year 1998 demonstration.

Total 282 projects

participating

42 restructuring transactions completed

aHUD received 110 voluntary proposals from owners to participate in the fiscal year 1996

demonstration. Of these, HUD rejected 21 as either ineligible or incomplete. HUD rejected 53 of

the remaining 89 proposals because the project’s financing arrangements precluded mortgage

restructuring, the proposal did not meet the program’s objectives, or the proposal did not

demonstrate a resolution approach that was different from proposals already in process. HUD

accepted the remaining 36 proposals with specific modifications and conditions.

bFive other projects originally submitted under the 1996 program were completed under the 1997

program. Owners of 14 projects elected not to participate further in the demonstration. As of

September 8, 1998, the remaining 12 projects were held in abeyance because they were

financed with certain bonds, and the bond issuers had to agree to the restructuring. These 12

would no longer be eligible to be restructured under the 1996 demonstration program. According

to HUD mark-to-market officials, if the owners of these projects choose to pursue restructuring,

they could currently be considered for participation in the 1998 demonstration.

Source: HUD.

Page 14 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

Activities Under

Demonstrations Have

Provided Information on

Mark-To-Market Process

Despite the relatively few demonstration transactions that have been fully

completed, according to HUD mark-to-market officials, they have used

information from the demonstrations to identify, evaluate, and improve, as

necessary, the processes used by HUD field offices and third parties in

carrying out restructuring activities. Specifically, information from the

demonstrations was used to help develop process flow charts and an

operating procedures manual for the permanent mark-to-market program.

These charts and the manual were compiled by mark-to-market officials,

with assistance from HUD’s management studies contractor, by reviewing

and documenting HUD’s policy and program requirements under the

demonstrations, identifying weak policies and procedures in the process,

and recommending improvements in the program’s design and delivery.

In addition, a front-end risk assessment of the fiscal year 1997

demonstration program identified some concerns, which HUD

mark-to-market officials told us that they had considered in establishing

the permanent program. For instance, the front-end risk assessment noted

that concerns over potential tax liabilities kept many owners from

participating in the program, owing either to an inability or an

unwillingness to handle the tax consequences or a resistance to

participating until anticipated changes to the tax legislation became

known.12 (See app. II for more information on resolution of the tax issue.)

The 1997 front-end risk assessment also identified communication and the

coordination of HUD’s functions as an area of concern. For instance, the

risk assessment stated that HUD’s information technology staff ideally

should have been involved in developing information systems for the fiscal

year 1997 demonstration program earlier in the process to ensure that all

departmental documentation and other information technology

requirements were met. The risk assessment concluded that, in general,

the program’s staff should be representative of all applicable areas of HUD

or should involve appropriate personnel from the earliest stages of the

process to avoid the need to substantially modify processes late in the

program. According to HUD mark-to-market officials, they have applied this

“lesson learned” by involving other areas within HUD’s Office of Multifamily

Housing, such as Section 8 and Multifamily Claims staff, and other HUD

offices, such as the Office of Policy Development and Research and the

Office of General Counsel, throughout the development of the permanent

program.

12The demonstration program did not include legislative provisions offering property owners any relief

from the tax liabilities that could be incurred in the restructuring process.

Page 15 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

According to mark-to-market officials, the demonstration programs also

provided other information useful for working out the details of the

permanent program. For instance, mark-to-market officials believe that

their efforts in developing agreements with state and local HFAs laid the

foundation for HFAs’ participation in the permanent program as PAEs.

Similarly, issues raised by the nonprofit partners under the joint venture

arrangements have been instructive as mark-to-market officials consider

details and policies under the permanent program, such as issues related

to adjusting rents to market levels without mortgage restructuring and the

compensation structure for nonprofit partners.

With respect to the lessons learned from the component of the

demonstration program carried out by HUD field offices, mark-to-market

officials said that they have compiled an ongoing question-and-answer

document to respond to the issues raised by the field offices involved.

These mark-to-market officials said that they have communicated with the

field offices to discuss the advantages and disadvantages of certain

approaches and to develop responses to the questions. According to these

officials, this effort has assisted in developing the permanent program by

giving them a better understanding of the potential effects of policy

decisions on the participating field offices.

HUD Has Obtained

Input From Affected

Parties and Developed

Plans for Their

Continued

Involvement

Under the mark-to-market legislation, HUD must establish procedures to

provide an opportunity for parties affected by restructuring to participate

in the process. The act also requires HUD to hold at least three public

forums to obtain recommendations on the implementation of certain

legislative provisions. In accordance with these requirements, HUD’s

program guidance includes steps for involving affected parties in the

restructuring process, and, on October 1, 1998, mark-to-market staff held

the three required public forums. In addition, in preparing to implement

the program, HUD has sought input from a variety of groups representing

those affected by the program.

Program’s Guidance

Includes Opportunities for

Participation by Affected

Parties

Section 514(f) of the act requires HUD to establish procedures to provide an

opportunity for tenants, neighborhood residents, local government, and

other affected parties to participate in the restructuring process. These

procedures must require consultation with affected parties in connection

with, at a minimum, a project’s mortgage restructuring and rental

Page 16 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

assistance sufficiency plan,13 any proposed sale or transfer of the project

to another entity, and the rental assistance assessment plan developed to

determine whether to renew the project’s Section 8 assistance with

project-based or tenant-based assistance. The act further directs that, to

the extent practicable and consistent with the need to accomplish the

restructuring of Section 8 projects in an efficient manner, the procedures

should give all such parties an opportunity to provide the PAE with

comments in writing, in meetings, or in another appropriate manner.

HUD has addressed this legislative requirement by outlining procedures in

the program’s draft operating procedures manual for affected parties’

participation. The manual identifies several points when affected parties

must be given the opportunity to participate. For instance, the manual

requires a PAE to conduct at least one consultation meeting before a

project’s physical needs assessment is completed. The consultation

meeting is to provide the PAE with an opportunity to receive oral

presentations and comments and respond to tenants’ and communities’

concerns regarding the mortgage restructuring and rental assistance

sufficiency plan, the rental assistance assessment plan, and any proposed

sale or transfer of the project. In addition, within 10 days of the PAE’s

completion of the proposed rental assistance assessment plan, the owner

must send a notice and provide an opportunity to comment to the project’s

residents, a local government representative, a representative of the public

housing authority, and representatives of neighborhood residents or other

affected parties, as determined by the PAE.

Section 514 of the act also authorized up to $10 million annually in funding

for tenant groups, nonprofit organizations, and public entities for building

the capacity of tenant organizations, technical assistance, and tenant

services. HUD has designated a portion of these funds to enhance

opportunities for affected parties to participate in the mark-to-market

process through the Outreach and Training Grants (OTAG) program. Under

the program, $6 million is available to provide technical assistance for

tenants of eligible mark-to-market projects so that the tenants can

(1) participate meaningfully in the mark-to-market program and (2) affect

decisions about the future of their housing. Grant funds can be used for,

among several other activities, organizing residents of eligible low-income

13Each project undergoing restructuring is required to have a mortgage restructuring and rental

assistance sufficiency plan, which provides the details of a project’s restructuring.

Page 17 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

housing so that tenants can effectively participate in the mark-to-market

process.14

HUD Has Held Required

Public Forums

The act also specifically requires that, in addition to obtaining public

comments before publishing the program’s final regulations, HUD seek

recommendations from various parties on how it should implement the

legislative provisions governing the selection of PAEs and requiring that

certain Section 8 contracts be renewed as project-based assistance. To

seek views concerning HUD’s proposed disposition of these

recommendations, the legislation requires HUD to convene at least three

public forums involving organizations representing state and local HFAs,

other potential PAEs, tenants, project owners and managers, state and local

governments, and mortgagees. HUD held these forums on October 1, 1998,

in New York, Chicago, and San Francisco; these locations were selected

because, in part, of the levels of contract expirations in these areas.

However, when the forums were held, the process of selecting PAEs—one

of the forum topics on which HUD was soliciting recommendations—was

already under way. According to HUD mark-to-market officials, interested

parties had extensive opportunities to provide input prior to the start of

the PAE selection process.

HUD Has Obtained Input

From Affected Parties in

Preparing to Implement

the Program

Going beyond these legislative requirements, on December 18, 1997, HUD’s

Office of Multifamily Housing began a consultation process with

representatives from a wide variety of national advocacy groups interested

in HUD’s implementation of the permanent mark-to-market program.

Organizations representing owners and managers of FHA-insured assisted

housing, tenant groups, nonprofit organizations, lenders, coalitions of

local and state government agencies, and other advocacy groups were

invited to submit ideas and comments on developing the new program.

HUD received concept papers from housing groups representing several

interested parties and from February 2 through 27, 1998, held 13 full-day

meetings to discuss various issues related to mark-to-market’s

implementation. According to HUD mark-to-market officials, the

information presented during these consultations was used in developing

the mark-to-market program and considered by the Department in drafting

the program’s interim regulations.

14In addition, $1 million in fiscal year 1998 and, subject to appropriations, $8 million in fiscal 1999 is

available under HUD’s Intermediary Technical Assistance Grant program. Under this program,

intermediaries provide technical assistance funds to subrecipients, including grantees under the

Outreach and Training Grants program, to, among other things, help tenants participate meaningfully

in the mark-to-market process and have input into and set priorities for project repairs.

Page 18 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

In addition to the concept papers and meetings, mark-to-market officials

have also coordinated separately with the National Council of State

Housing Agencies and individual housing finance agencies to obtain

feedback from them regarding HFAs’ involvement in the mark-to-market

program. For instance, in May 1998, the mark-to-market official

responsible for the HFA component of the 1997 and 1998 demonstration

programs met with the Council to obtain HFAs’ views on the compensation

structure for their participation in the program. According to

mark-to-market officials, they have been meeting with HFAs on a

continuing basis to discuss the program and hear their concerns because

their involvement as PAEs is key to the program’s success.

The representatives of groups involved with mark-to-market issues whom

we contacted generally believed that HUD’s efforts to obtain input on the

program’s implementation were productive. However, three of these

representatives were concerned that, since the meetings in February, HUD

had not given any indication of its tentative decisions on the issues

discussed. Some of these representatives said that, without knowing HUD’s

intentions prior to the Department’s publication of the interim regulations

for public comment, their groups may be less able to provide meaningful

input on the program’s implementation, particularly if the interim

regulations govern the program for a period of time. According to HUD

mark-to-market officials, it would have been inappropriate to solicit

information from the public during the process of writing the regulations.

Accordingly, at the meetings in February, mark-to-market officials notified

participants that there would be no further discussions until the

regulations were completed and that any further comments would have to

be submitted during the comment period.

Agency Comments We provided HUD with a draft of this report for its review and comment.

HUD agreed that our report accurately described the Department’s efforts

in developing and implementing the mark-to-market program. HUD stated

that our review was helpful to the Department in confirming that it was

focusing its attention and efforts on issues that needed to be addressed.

HUD also noted that it had developed an extremely aggressive work plan to

accomplish the development and implementation of the mark-to-market

program and that while some key tasks were accomplished later than

provided for in its original schedule, a small but efficient core group of

mark-to-market staff members have accomplished several significant work

items, even in the absence of a Director. HUD suggested some minor

Page 19 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

technical changes, which we have incorporated. The complete text of

HUD’s comments appears in appendix V.

Scope and

Methodology

Section 577 of the act requires us to audit the operations of OMHAR annually

for the first 2 fiscal years following the date of enactment (Oct. 27, 1997).

For this assignment, our work focused on the status of OMHAR’s

development and HUD’s plans for implementing the permanent

mark-to-market program. To carry out the assignment’s objectives, we

interviewed the HUD officials responsible for mark-to-market operations

and reviewed documentation related to their plans for developing OMHAR

and implementing the program, including their work plans, time frames,

and draft program guidance. We also discussed HUD’s efforts to develop

OMHAR and prepare for the program’s implementation with representatives

of groups involved with issues related to mark-to-market, including two

independent housing consultants, the National Council of State Housing

Agencies, the National Leased Housing Association, the National Housing

Law Project, the National Alliance of HUD Tenants, and the National

Housing Conference. Because OMHAR was not yet established and HUD’s

plans for implementing the permanent mark-to-market program were still

being developed, we did not attempt to evaluate the effectiveness of

OMHAR’s operations or HUD’s implementation plans.

We performed our work at HUD in Washington, D.C., from March through

September 1998 in accordance with generally accepted government

auditing standards.

We are sending copies of this report to the Secretary of Housing and

Urban Development. We will make copies available to others on request.

Please call me at (202) 512-7631 if you or your staff have any questions.

Major contributors to this report are listed in appendix VI.

Judy A. England-Joseph

Director, Housing and Community

 Development Issues

Page 20 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
B-280458 

List of Committees

The Honorable Connie Mack

Chairman

The Honorable John F. Kerry

Ranking Minority Member

Subcommittee on Housing Opportunity

 and Community Development

Committee on Banking, Housing,

 and Urban Affairs

United States Senate

The Honorable Christopher S. Bond

Chairman

The Honorable Barbara A. Mikulski

Ranking Minority Member

Subcommittee on VA, HUD, and

 Independent Agencies

Committee on Appropriations

United States Senate

The Honorable Rick A. Lazio 

Chairman

The Honorable Joseph P. Kennedy II

Ranking Minority Member

Subcommittee on Housing and

 Community Opportunity

Committee on Banking and

 Financial Services

House of Representatives

The Honorable Jerry Lewis

Chairman

The Honorable Louis Stokes

Ranking Minority Member

Subcommittee on VA, HUD,

 and Independent Agencies

Committee on Appropriations

House of Representatives

Page 21 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Contents

Letter 1

Appendix I 

Overview of the

Mark-To-Market

Process

24

Appendix II 

Summary and Status

of Operational Tasks

Needed to Implement

the Mark-To-Market

Program

28

Appendix III 

Summary of HUD’s

Reporting

Requirements for the

Mark-To-Market

Program

32

Appendix IV 

HUD’s Procedures for

Monitoring Key

Components of the

Mark-To-Market

Program

34

Page 22 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Contents

Appendix V 

Comments From the

Department of

Housing and Urban

Development

39

Appendix VI 

Major Contributors to

This Report

42

Tables Table 1: Key Components of HUD’s Oversight of Field Offices’

and PAEs’ Activities in the Mark-to-Market Program

11

Table 2: Number and Status of Projects Participating in

Mark-to-Market Demonstration Programs

14

Table III.1: Summary of HUD’s Reporting Requirements for the

Mark-to-Market Program

32

Figure Figure 1: OMHAR’s Proposed Organizational Structure 7

Abbreviations

AFR applicable federal rate

FERA front-end risk assessment

FHA Federal Housing Administration

FMR fair market rent

GAO General Accounting Office

HFA housing finance agency

HUD Department of Housing and Urban Development

IRS Internal Revenue Service

MAHRAA Multifamily Assisted Housing Reform and Affordability Act

of 1997

MRRAS mortgage restructuring and rental assistance sufficiency

(plan)

OMHAR Office of Multifamily Housing Assistance Restructuring

OTAG Outreach and Training Grant

PAE participating administrative entity

RFQ Request for Qualifications

Page 23 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix I 

Overview of the Mark-To-Market Process

As the Department of Housing and Urban Development (HUD) plans to

implement it, the process to be used under the permanent mark-to-market

program has nine phases: (1) screening owners and projects for eligibility,

(2) assigning projects for restructuring, (3) preserving affordable housing,

(4) collecting data, (5) underwriting, (6) approving the loan, (7) closing,

(8) distributing postclosing documents, and (9) servicing and monitoring.

This appendix describes the key activities that are to occur during each of

the nine phases, as outlined in HUD’s draft operating procedures manual.

1. Screening Owners and Projects for Eligibility: The first phase of the

restructuring process is determining a project’s eligibility. To be eligible to

participate in the mark-to-market program, a project must be financed by a

Federal Housing Administration (FHA)-insured or Secretary-held mortgage,

receive project-based assistance, and have rents that exceed comparable

market rents.1 HUD has established additional criteria for determining if a

project is eligible to (1) renew its Section 8 contract at market rents and

restructure the project’s debt, (2) renew its Section 8 contract at market

rents without restructuring the project’s debt, or (3) renew its Section 8

contract at the lesser of the project’s current rents with an operating cost

adjustment factor, budget-based rents with an operating cost adjustment

factor, or base rents with an operating cost adjustment factor.2 HUD will

extend the Section 8 contracts for projects with contracts that are due to

expire while they are in the mark-to-market “pipeline,” such as projects

undergoing eligibility determinations, or while they are participating in the

development of a mortgage debt restructuring plan. Under these

circumstances, a project’s Section 8 contract may be extended at the

project’s current contract rent for up to 9 months, with the option of a

further extension of 3 months.

A project may not be restructured, and its contract may not be renewed if

its owner has engaged in material adverse financial or managerial actions

or omissions with regard to the project or other federally assisted,

financed, or insured projects. Furthermore, a project may not be

restructured if its condition is too poor to be rehabilitated at a reasonable

cost or if the owner fails to comply with the requirements for

1

Under the legislation, some projects are exempt from restructuring; these include projects for the

elderly and homeless and projects financed with state or local government financing (P.L. 105-65, sec.

514(h)). A bill, H.R. 4194, would amend this provision to specify that state- or local-financed projects

would be exempt only if restructuring is incompatible with the terms of the financing or illegal under

applicable law.

2

An operating cost adjustment factor allows for rent adjustments to ensure adequate coverage for

inflationary conditions. The operating cost adjustment factor is determined annually by the Secretary

of HUD.

Page 24 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix I 

Overview of the Mark-To-Market Process

restructuring. Such projects are to be directed into HUD’s enforcement

program.

2. Assigning Projects for Restructuring: During the second phase of the

mark-to-market process, HUD assigns multifamily projects to its

administrative partners, who will actually perform the restructuring,

which are referred to as participating administrative entities (PAE). Assets

are first assigned to state and local housing finance agencies (HFA) that

HUD has selected as PAEs. After this first round of assignments, non-HFA

entities that HUD has selected to be PAEs can bid for the rights to

restructure projects that remain.

3. Preserving Affordable Housing: One of the goals of the act is to preserve

the affordability and availability of low-income rental housing through

mortgage restructuring. As part of the restructuring process, a mortgage

restructuring and rental assistance sufficiency plan is to be developed for

each project. The development of this plan is expected to take, on average,

9 months. One element of the mortgage restructuring and rental assistance

sufficiency plan is a rental assistance assessment plan, which the PAE

develops to determine whether Section 8 assistance should be renewed as

project-based or tenant-based assistance. The plan must also include a use

restriction whereby the project’s owner agrees to maintain affordability

for at least 30 years.3

 Other elements required in the mortgage

restructuring and rental assistance sufficiency plan, which will be

developed in later phases, include a new rent subsidy level, a plan to

restructure the debt, and a plan to finance the rehabilitation needs of the

project.

4. Collecting Data: During the fourth phase of the process, the PAE collects

and assesses project-specific data from project owners, lenders, servicers,

or other third parties to be used during the underwriting and loan approval

phases. The PAE is also to collect and analyze market studies, appraisals,

and physical needs assessments to determine market rents, expenses, and

the projects’ rehabilitation needs.

3

In exchange for an agreement to restructure the mortgage, the owner must agree to two affordability

requirements: (1) the project must remain affordable for at least 30 years, and (2) the owner may not

refuse to lease a reasonable number of units to rent certificate and voucher holders (P.L. 105-65, sec.

514(e)(6)and (9)). In addition, section 515 (b) of the act specifies that owners must accept a

project-based contract if offered this assistance. To maintain affordability, HUD is requiring that

project rents remain at either of the following levels: (1) rents are such that 20 percent of all units in

the project are affordable to residents with incomes at 50 percent of median income, or (2) rents are

such that 40 percent of all units in the project are affordable to residents with incomes at 60 percent of

median income.

Page 25 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix I 

Overview of the Mark-To-Market Process

5. Underwriting: Once the data collection is complete, the fifth phase in

the mark-to-market process is underwriting. During the underwriting

phase, the size of the restructured first and the new second mortgage will

be determined. The existing project mortgage will be restructured to

provide a first mortgage that is sustainable at restructured market rents.

The second mortgage may not exceed the difference between the

restructured or new first mortgage and the current unpaid principal

balance and must be an amount that can reasonably be expected to be

repaid. The term of the second mortgage shall equal the term of the first

mortgage. However, the only payments that need to be made on the

second mortgage before repayment of the first are an amount equal to

75 percent of excess project income.

6. Approving the Loan: The sixth phase of the process is the loan’s

approval. It is in this phase that the PAE reviews the mortgage restructuring

and rental assistance sufficiency plan to ensure that all required HUD forms

have been filled out completely and accurately and then delivers the plan

to the OMHAR hub for approval.4

7. Closing: After the OMHAR hub grants approval of the plan, the seventh

phase of the process is loan closing. Closing is the phase during which

HUD, the PAE, the owner, and affected lenders or servicers fulfill the legal

requirements for (1) executing the mortgage restructuring and rental

assistance sufficiency plan, (2) restructuring the project’s debt, and

(3) renewing the project’s Section 8 contract.

8. Distributing Postclosing Documents: During the eighth phase of the

process, the postclosing documents are distributed to the parties (such as

servicers, asset managers, and Section 8 contract administrators) who are

responsible for loan servicing and asset management functions after

restructuring.

9. Servicing and Monitoring: The ninth phase is loan servicing and

monitoring. During this phase, servicers, asset managers, escrow agents,

Section 8 contract administrators, and monitors have responsibilities to

oversee the loans. The servicers of the first and second mortgages are

responsible for the cash management function, which includes billing and

collecting payments, and accurately accounting for and reporting

payments. The asset managers of the first and second mortgages are

responsible for ensuring that the underlying collateral is maintained in

4

HUD anticipates that five field offices will have mark-to-market responsibilities. These field offices

will be referred to as OMHAR hubs.

Page 26 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix I 

Overview of the Mark-To-Market Process

decent condition. The asset managers of the second mortgage are also

responsible for ensuring that only eligible expenses have been deducted

from project revenue to maximize excess project income, which can be

used to pay off the second mortgage. The escrow agents are responsible

for managing the accounts that will be used to finance the immediate

rehabilitation needs of the projects, identified through the restructuring

process. The Section 8 contract administrators are responsible for

ensuring that the projects are maintained in decent, safe, and sanitary

conditions by the projects’ owners. Monitors, referred to as restructuring

use agreement monitors, are responsible for ensuring that the owners or

future purchasers of the projects maintain the affordability and use

restrictions agreed to during the restructuring process.

Page 27 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix II 

Summary and Status of Operational Tasks

Needed to Implement the Mark-To-Market

Program

Task Purpose Performed by Status

Issue interim and final regulations To implement the

mark-to-market program. The

final regulations are required to

be issued by the later of

October 27, 1998, or 3 months

after the Director of OMHAR

has been appointed

(§522(a)(1)(2)).

OMHAR’s Director to issue

both; however, the Secretary of

HUD is required to issue the

interim regulations if a Director

is not appointed

Behind original schedule. The

interim regulations were

published September 11, 1998,

and became effective 30 days

later. HUD had originally

expected to issue the interim

regulations by August 1998 so

that the final regulations could be

issued in October 1998.

According to mark-to-market

officials, now the final regulations

are not expected to be published

until 3 months after the

appointment of the OMHAR

Director.

Solicit and select third parties,

referred to as PAEs

To allow HUD to work with

PAEs, which will actually

restructure the mortgages and

rental assistance payments of

eligible multifamily projects

(§513(a)(1)).

HUD Behind original schedule. HUD

published the Request for

Qualifications (RFQ) to solicit

PAEs on August 17, 1998. HUD

had originally planned to publish

the RFQ in June 1998 in order to

have the PAEs selected by

August 1998. HUD will select the

PAEs in two phasesa and, as of

September 8, 1998, expected to

complete the selection process

by October 29, 1998.

Conduct technical assistance

briefings for the PAEs on the

mark-to-market process

To familiarize the PAEs with the

restructuring process and their

responsibilities, which include

determining owners’ eligibility,

determining rent levels,

restructuring loans,

underwriting new or modified

loans, managing the closing

process, distributing

documents after closing, and

servicing the loans.

HUD, with assistance from

management studies

contractor

Behind original schedule. The

briefing sessions for PAEs will

begin in October 1998. HUD had

originally planned to begin

briefing the PAEs in September

1998.

Develop an operating procedures

manual

To set forth a uniform process

for restructuring FHA-insured

Section 8 projects.

HUD, with assistance from

management studies contractor

As of September 8, 1998, the

operating procedures manual

was in draft form, but sections of

the draft were expected to be

ready for departmental clearance

by September 11, 1998.

(continued)

Page 28 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix II 

Summary and Status of Operational Tasks

Needed to Implement the Mark-To-Market

Program

Task Purpose Performed by Status

Enter into portfolio restructuring

agreements with PAEs

To establish the obligations

and requirements of the PAEs

in developing mortgage

restructuring and rental

assistance sufficiency plans in

accordance with the act

(§513(a)(1)). Also, to identify

the eligible multifamily housing

projects for which a PAE is

responsible and to clarify the

duties that a PAE will typically

perform.

HUD HUD will enter into portfolio

restructuring agreements with the

PAEs as soon as possible after

they are selected. However, the

time period for completing this

process will depend on the length

of time involved in negotiating the

agreements.

Prepare briefing manuals and

conduct technical assistance

briefings for HUD field officeb staff

on the permanent program

To instruct the field offices on

their responsibilities, which

include coordinating the flow

of cases to PAEs and Section

8 contract administrators,

determining projects with

Section 516 violationsc that

require enforcement action,

and monitoring the

performance of the PAEs.

HUD’s management studies

contractor

As of September 8, 1998, HUD

expected the briefing manuals to

be completed by the end of

September, so that the briefing

sessions could commence in

October 1998, after the PAEs are

selected.

Request a revenue ruling from the

Internal Revenue Service (IRS) on

the tax liabilities for owners

participating in the

mark-to-market program

To obtain a favorable tax ruling

regarding potential tax

consequences for project

owners whose mortgages are

restructured.d

HUD In late 1997, HUD initiated

discussions with the Treasury

Department to obtain a ruling on

the proper income tax treatment

of the components of the

mortgage refinancing

contemplated in section 517(a) of

the act, which provides for a

restructured or new first mortgage

that is sustainable at market rents

and a second mortgage that is an

amount equal to the difference

between the restructured first

mortgage and the indebtedness

under the existing insured

mortgage. The act specifies that

interest charged on the second

mortgage cannot exceed the

applicable federal rate (AFR).

Since (1) section 7872 of the

Internal Revenue Code, in

general, defines a below-market

loan as any loan on which the

interest rate charged is less than

the AFR and

(continued)

Page 29 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix II 

Summary and Status of Operational Tasks

Needed to Implement the Mark-To-Market

Program

Task Purpose Performed by Status

(2) section 7872(b) provides that

the borrower of a below-market

term loan is to be treated as

having received cash from the

lender in an amount equal to the

excess of the amount loaned over

the present value of all payments

required under the loan, the ruling

was required to determine if a

project’s owner, whose second

mortgage bears interest below

the AFR, would be responsible for

paying taxes on this amount.

In August 1998, IRS ruled on this

request, holding that the second

mortgage loans made in

accordance with the Multifamily

Assisted Housing Reform and

Affordability Act of 1997 are

exempt from section 7872 of the

Internal Revenue Code. In the

ruling, IRS concluded that the

legislative history of section 7872

indicates that most

government-subsidized loans,

such as government-insured

residential mortgage loans, were

intended to be exempted from

section 7872 and that the factors

justifying an exemption of second

mortgages under the 1997 act

were similar to the factors

justifying the exemption of

government-subsidized loans.

Furthermore, IRS concluded that

the interest arrangements of the

second mortgage loans were not

structured with a principal

purpose of avoiding federal tax.

Prepare a front-end risk

assessment (FERA) report for the

permanent mark-to-market

program

To identify risks related to

fraud, waste, and abuse of

federal resources and to

document both the existing

program controls and

management’s plans for

implementing additional

controls that mitigate the

identified risks.

A HUD contractor HUD received proposals in

response to the Request for

Contract Services for the FERA on

August 17, 1998. As of

September 8, 1998, review of

these proposals was complete,

and the contract was expected to

be awarded by September 11,

1998. The FERA was expected to

be finished 60 days after the

selection of a contractor.

(Table notes on next page)

Page 30 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix II 

Summary and Status of Operational Tasks

Needed to Implement the Mark-To-Market

Program

Note: All section citations refer to P.L. 105-65.

aThe act provides selection criteria for PAEs based on their experience and capacity and requires

that HUD give priority to public agencies during the selection process (§513(b)(1)). Accordingly,

during the first phase of the selection process, HUD will review and consider only responses from

state or local HFAs. HFAs that are not selected in the first phase may resubmit their proposals by

responding to the specific deficiencies identified. During the second phase, HUD will review

proposals from rejected HFAs from the first phase and all non-HFA entities. The non-HFAs will

usually only be considered for jurisdictions in which no HFA exists or is qualified.

bBriefing sessions will be held for staff in the five OMHAR hubs. In addition, HUD scheduled a

session for October 6, 1998, to discuss the Section 8 renewal policy with field office staff in its

multifamily program centers and multifamily hubs.

cSection 516 violations refer to projects that are ineligible for either Section 8 contract renewal or

debt restructuring because the owner has engaged in material adverse financial or managerial

actions or omissions or because the project’s poor condition cannot be remedied in a

cost-effective manner (§516(a)).

dWith a favorable tax ruling, owners would not incur tax liabilities as a result of the restructuring

process.

Page 31 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix III 

Summary of HUD’s Reporting Requirements

for the Mark-To-Market Program

The Multifamily Assisted Housing Reform and Affordability Act of 1997

(MAHRAA) requires the OMHAR Director to report certain information to the

Secretary of HUD and requires the Secretary of HUD to submit information

on OMHAR’s operations to the Congress and the Office of Management and

Budget. Table III.1 provides a summary of the reports required by the

legislation and the status of actions taken by HUD. For these mandated

reports, it is HUD’s interpretation of the act that the reporting requirements

become effective once the permanent mark-to-market program is

operational. The table also includes information on three other required

reports: one on equity-sharing partnerships and the two others on

demonstration program activity. As the table shows, HUD is in the process

of issuing a report on the possible ways that equity-sharing partnerships

may be used as options in implementing the mark-to-market program and

has submitted reports on the 1996 and 1997 demonstration programs.

Table III.1: Summary of HUD’s Reporting Requirements for the Mark-To-Market Program

Report’s description Date and/or frequency required Status

OMHAR’s Director must submit a report to the

Secretary of HUD regarding the activities,

determinations, and actions of the Director.

Semiannually (§573(b)) According to HUD’s interpretation of the

act, this report will be initiated once the

OMHAR Director is in place.a

The Secretary of HUD must report figures to

the Congress identifying (1) each project for

which the participating administrative entity

has developed a rental assistance plan that

determines that the tenants generally

supported tenant-based assistance but under

which the assistance was renewed with

project-based assistance and (2) each

project for which the participating

administrative entity has developed a plan

under which the assistance is renewed as

tenant-based assistance.

Semiannually, starting April 27, 1998, for 2

years and annually thereafter (§520(b))

According to HUD’s interpretation of the

act, this reporting requirement becomes

effective once the permanent

mark-to-market program is operational, by

the later of October 1998 or appointment

of the OMHAR Director.a

To ensure compliance with the legislation, the

Secretary of HUD must conduct reviews and

report to the Congress on actions taken under

the legislation and on the status of eligible

multifamily housing projects.

Annually (§520(a)) According to HUD’s interpretation of the

act, this reporting requirement becomes

effective once the permanent

mark-to-market program is operational, by

the later of October 1998 or appointment

of the OMHAR Director.a

The Secretary of HUD must submit a copy of

the financial operating plans and forecasts for

OMHAR to the Office of Management and

Budget. These annual plans and forecasts

are supposed to be included in the federal

budget and in HUD’s congressional

justifications for each fiscal year.

Annually, before the beginning of each

fiscal year (§575(a))

HUD is planning to prepare this report for

the beginning of fiscal year 1999 to be

included in the federal budget for fiscal

year 2000 and HUD’s congressional

justifications.

(continued)

Page 32 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix III 

Summary of HUD’s Reporting Requirements

for the Mark-To-Market Program

Report’s description Date and/or frequency required Status

The Secretary of HUD must submit a report

on the results of OMHAR’s operations to the

Office of Management and Budget.

Quarterly and at the end of each fiscal

year (§575(b))

HUD is planning to prepare this report for

the beginning of fiscal year 1999 to be

included in the federal budget for fiscal

year 2000 and HUD’s congressional

justifications.

The Secretary of HUD must submit a report to

the Congress on possible ways that

equity-sharing partnerships may be used as

options in implementing the mark-to-market

program if the prohibition is lifted.

February 15, 1998 (directed by the

conference report of P.L. 105-65)

As of September 8, 1998, this report was

circulating through the Department for

concurrence and signature. In their formal

comments on our report draft on October

2, 1998, HUD officials said that the internal

clearance of the equity-sharing report had

been completed and letters transmitting

the report to the Congress were being

prepared.

The Secretary of HUD must submit reports to

the Congress describing and assessing the

status of the projects in the demonstration

programs.

Semiannually for the 1996 demonstration

(P.L. 104-134, §210(g)); quarterly for the

1997 and 1998 demonstrations (P.L.

104-204, §212(m)(1)(A))

HUD issued reports for the 1996 and 1997

demonstrations through the fourth quarter

of 1997. HUD submitted the last report,

covering demonstration program activities

through the fourth quarter of fiscal year

1997, on March 28, 1998.

The Secretary of HUD must submit a final

report on the demonstration programs upon

their completion.

Not later than 6 months after the end of the

demonstration program (P.L. 104-134,

§210(g); P.L. 104-204, §212(m)(1)(B))

HUD is planning to prepare these reports

for the 1996 and 1997 demonstration

programs. As of September 8, 1998, HUD

was in the process of updating its data to

obtain the information needed for these

reports.

Note: Except where noted, all section citations refer to P.L. 105-65.

aSubsequent to our review, the nominee for OMHAR Director (who had been nominated by the

President on Sept. 29, 1998) was confirmed by the Senate on October 21, 1998.

Page 33 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix IV 

HUD’s Procedures for Monitoring Key

Components of the Mark-To-Market

Program

Program component

Explanation or related

legislative provision(s) Performed by Monitoring procedures

Screening of owners and

projects to determine eligibility

for restructuring

To be eligible for

restructuring, a project must

meet certain legislatively

mandated criteria, including

the following:

—It must consist of more

than four dwelling units.

—It must have rents that, on

an average per-unit or

per-room basis, exceed the

rents of comparable

properties in the same

market area.

—It must receive

project-based Section 8

assistance.

—It must have a

HUD-insured or HUD-helda

mortgage.

In addition, under the

legislation, a project is

ineligible for restructuring if

—the owner has engaged in

material adverse financial or

managerial actions or

omissions or

—the property is in poor

condition that cannot be

remedied in a cost-effective

manner. 

HUD is to establish an

administrative review

process to appeal any final

decision regarding rejection

of an owner or project for

restructuring.

(§512(2), 516(a),

516(b)(2)(C))

HUD field offices initially

screen projects to determine

their eligibility on the basis of

information provided by the

owners, field office staff,

third-party appraisers working

for the field offices, and HUD’s

Assessment and Enforcement

Offices. Field offices are to

make their screening

determinations on the basis of

legislative criteria, which are

identified in HUD’s

mark-to-market draft operating

procedures manual. Field

offices assign eligible projects

to OMHAR, which will then

assign the projects to PAEs for

further processing. For

projects with contract rents

below the owners’ estimate of

market rents, field offices are

to review the owners’ estimate,

based on their knowledge of

the market area. Assistance

from HUD appraisal staff or a

third-party review should be

obtained if there is any doubt

as to the actual market rents.

—Directors in HUD’s multifamily

hubs and program centersb are

required to authorize, by

signature, the initial eligibility

determination for each project.

—For projects identified as

having below-market rents, field

office supervisory review is

required to confirm that contract

rents are actually below market.

—For projects identified as

potentially ineligible because of

poor condition or adverse

owner determination, the field

offices and/or PAEs must

recommend potential remedies

to OMHAR; OMHAR makes

determinations regarding

whether to assign such projects

to PAEs for restructuring or to

deny the owners the right to

restructure. 

—Owners have 30 days to

dispute decisions of the field

offices regarding project

eligibility with respect to poor

condition or adverse owner

determination. At the end of this

period, OMHAR may affirm,

modify, or reverse decisions.

(continued)

Page 34 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix IV 

HUD’s Procedures for Monitoring Key

Components of the Mark-To-Market

Program

Program component

Explanation or related

legislative provision(s) Performed by Monitoring procedures

Rent-setting process Section 8 contracts may be

renewed as either

project-based or

tenant-based. 

—Project-based renewals

are mandatory for projects

located in tight rental

markets, that have a

predominant number of units

occupied by the elderly or

disabled, or that are held by

a nonprofit cooperative

ownership housing

corporation or trust.c

Restructured rents are to be

based on equivalent market

rents charged for at least two

comparable properties in the

same market area. If rents

based on two comparable

properties cannot be

determined, rents can be set

equal to 90 percent of the

fair market rent (FMR).d

—PAEs can approve

exception rentse up to 120

percent of FMR for no more

than 20 percent of all units

covered by the portfolio

restructuring agreement

between the PAE and HUD

with contracts that expire in

a fiscal year.f

(§515(c)(1), 515(c)(2)(A),

514(g)(1), 514(g)(2))

The PAE, in consultation with

the owner, determines whether

to renew Section 8 assistance

as project-based or

tenant-based. On the basis of

its assessment of comparable

rents and input from an

appraiser and the project

owner, the PAE also

determines restructured rent

levels. If the PAE determines

that a project would have

negative net operating income

at market-level rents, the PAE

may issue a “Finding of

Special Need” and calculate

exception rents for the

property.

—After the PAE, in consultation

with the owner and lender,

develops the draft mortgage

restructuring and rental

assistance sufficiency (MRRAS)

plan for a project, including the

determination of project-based

or tenant-based Section 8

assistance and the restructured

rent levels, the OMHAR hub

must review the draft plan and

will either approve or reject it.g

—According to mark-to-market

officials, oversight of the

exception rent authority is being

worked on and will be

addressed in the oversight and

audit guide, which was still

being developed as of October

14, 1998.

(continued)

Page 35 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix IV 

HUD’s Procedures for Monitoring Key

Components of the Mark-To-Market

Program

Program component

Explanation or related

legislative provision(s) Performed by Monitoring procedures

Determination of rehabilitation

needs

The physical needs of each

project must be evaluated.

Rehabilitation may be paid

from project accounts not

required for project

operations, increases in

budget authority for Section

8 assistance contracts,

capital grants, or through the

debt-restructuring

transaction. 

—HUD may make grants for

the capital costs of

rehabilitation to owners of

projects if the owners

demonstrate that capital

grant assistance is needed

for rehabilitation of the

projects and that project

income is not sufficient to

support such rehabilitation.

Rehabilitation will be only for

the purpose of restoring the

project to a nonluxury

standard adequate for the

rental market intended at the

original approval of the

project-based assistance.

Each owner or purchaser of

a project to be rehabilitated

under mark-to-market must

contribute, from nonproject

resources, at least 25

percent of the amount of

rehabilitation assistance

received.h

(§514(e)(3), 517(b)(7), 531)

The owner or purchaser of a

project must evaluate its

rehabilitation needs and take

actions as necessary to

rehabilitate and maintain the

project in decent, safe

condition. The PAE, with

support from a qualified

inspector, must review the

owner’s evaluation and

conduct an independent

assessment of the project’s

rehabilitation needs. The PAE

is ultimately responsible for

determining the rehabilitation

actions necessary to maintain

the project in decent and safe

condition, for determining their

cost, and for identifying the

source(s) of funding. HUD can

delegate to state and local

governments the responsibility

for administering capital grants.

—The PAE must submit a draft

mortgage restructuring and

rental assistance sufficiency

plan, which includes the

determination of a project’s

rehabilitation needs, to the

OMHAR hub. The OMHAR hub

must review the draft plan and

will either approve or reject it. 

—According to mark-to-market

officials, details on capital

grants will be generally

discussed in the operating

procedures manual.

Instructions for the oversight of

the grant funds will be

addressed in the oversight and

audit guide, which was still

being developed as of October

14, 1998.

(continued)

Page 36 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix IV 

HUD’s Procedures for Monitoring Key

Components of the Mark-To-Market

Program

Program component

Explanation or related

legislative provision(s) Performed by Monitoring procedures

Restructuring of mortgages Each project’s restructuring

plan must include

—a restructured or new first

mortgage, sustainable at the

restructured rent levels; and

—a second mortgage no

greater than the difference

between the restructured or

new first mortgage and the

indebtedness under the

existing mortgage, in an

amount that can reasonably

be expected to be repaid.

The size of a project’s

restructured first mortgage

and second mortgage must

be determined. (§517(a))

The PAE, in consultation with

the owner and lender,

determines the size of the

restructured first mortgage and

second mortgage.

The PAE submits the project’s

mortgage restructuring and

rental assistance sufficiency

plan, which includes the PAE’s

conclusions regarding the new

first mortgage and second

mortgage, to the OMHAR hub.

Depending upon the details of

the MRRAS plan, the OMHAR

hub will perform either an

administrative review or a

technical review, after which it

can accept or reject the plan.i

Recaptured Section 8 funds HUD will recapture budget

authority not required for

contracts amended or

terminated as part of

restructuring and use it to

provide housing assistance

for the same number of

families that were covered

by that contract for its

remaining term; any budget

authority saved by shifting to

project-based or

tenant-based assistance will

be rescinded. (§523(c))

Within HUD’s Office of

Multifamily Housing, the Office

of Program Management and

Oversight will be responsible

for administering recaptured

Section 8 budget authority.

According to mark-to-market

officials, the procedures for

monitoring this function will be

defined in the oversight and

audit guide, which was still

being developed as of October

14, 1998.

Annual reviews of all

restructured properties

At least annually, PAEs

qualified as Section 8

contract administrators must

review the status of all

restructured projects,

including on-site inspections

to determine compliance

with housing codes and

other requirements of the

legislation and restructuring

agreements. (§519(b))

PAEs that are qualified to be

Section 8 contract

administrators are responsible

for annual project reviews. If a

PAE is not qualified to be a

Section 8 contract

administrator, either HUD or a

qualified state or local housing

agency will be responsible for

this required review.

According to mark-to-market

officials, these procedures will

be addressed in the oversight

and audit guide, which was still

being developed as of October

14, 1998. In general, HUD

currently intends to require the

PAEs to submit monthly reports

and to have HUD field staff

conduct semiannual monitoring

reviews.

(continued)

Page 37 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix IV 

HUD’s Procedures for Monitoring Key

Components of the Mark-To-Market

Program

Program component

Explanation or related

legislative provision(s) Performed by Monitoring procedures

Technical assistance funds HUD can provide up to $10

million annually in funding to

tenant groups, nonprofit

organizations, and public

entities for capacity-building

and technical assistance in

furthering the purposes of

the mark-to-market program.

(§514(f)(3))

HUD will select grantees on a

competitive basis either to

provide direct technical

assistance or to act as

intermediaries by

administering a program of

technical assistance grants to

subrecipients.

Grantees and intermediaries

must submit quarterly

performance reports to

OMHAR. HUD will ensure that

this reporting requirement is

met by including provisions in

the grant agreement and

addressing this issue in the

oversight and audit guide,

which was still being developed

as of October 14, 1998.

Note: All section citations refer to P.L. 105-65.

aA “HUD-held” mortgage is one for which HUD has paid an insurance claim and is now, in effect,

the lender.

bHUD’s multifamily housing services are delivered through 18 hubs located in 18 cities, with staff

stationed in 33 program centers.

cCurrently, the act appears to require that all three conditions (i.e., located in a tight rental market,

predominant number of units occupied by the elderly or disabled, and held by a nonprofit

cooperative ownership housing corporation or trust) be met for project-based renewal to be

mandatory. However, a bill, H.R. 4194, would amend this provision so that only one of three need

be met for mandatory project-based renewal.

dIn general, the fair market rent for an area is the amount that would be needed to pay the gross

rent (shelter rent plus utilities) of privately owned, decent, safe, and sanitary rental housing of a

nonluxury nature with suitable amenities.

eUnder section 514(g)(3) of the act, a project eligible for an exception rent will receive a rent

calculated on the actual and projected costs of operating the project, at a level that provides

income sufficient to support a budget-based rent that consists of the debt service of the project;

operating expenses, including contributions to reserves and the costs of maintenance and

necessary rehabilitation; allowance for potential operating losses due to vacancies and failure to

collect rents; allowance for a reasonable rate of return to the project owner; and other expenses

determined by the PAE to be necessary for the project’s operation.

f

Upon a finding of special need, HUD can waive the 120-percent rent limit for up to 5 percent of

all units subject to restructuring in any fiscal year and can waive the 20-percent limit on number of

units.

gIn addition, section 515(c)(2)(C) of the act requires each PAE to report regularly to the OMHAR

Director, identifying (1) each project for which the tenants of the project generally supported

tenant-based assistance but for which the assistance was renewed as project-based and

(2) each project for which assistance is planned to be renewed using tenant-based assistance.

hPAEs may provide an exception from the 25-percent contribution requirement for housing

cooperatives.

i

OMHAR hubs are to perform administrative reviews of plans considered “conforming,” which are

plans with the following characteristics: (1) the new first mortgage is at least 60 percent of the

existing mortgage’s unpaid principal balance, (2) rehabilitation costs are no more than $5,000 per

unit, (3) the PAE is not involved as a lender or as a provider of any credit enhancement for the

project’s mortgage, and (4) no conflicts of interest exist among the parties involved in the

restructuring. Plans that do not have all four of these characteristics are considered

“nonconforming.” OMHAR hubs are to perform technical reviews of nonconforming plans.

Page 38 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix V 

Comments From the Department of Housing

and Urban Development

Page 39 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix V 

Comments From the Department of Housing

and Urban Development

Now on p. 1.

Now on p. 5.

Now on p. 8.

Page 40 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix V 

Comments From the Department of Housing

and Urban Development

Now on p. 14.

Now on p. 31, footnote b.

Now on p. 33.

Page 41 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
Appendix VI 

Major Contributors to This Report

Housing and

Community

Development Issue

Area

Richard A. Hale

Sally S. Moino

Leigh K. Ward

Office of the General

Counsel

John T. McGrail

(385712) Page 42 GAO/RCED-99-5 HUD’s Office of Multifamily Housing Restructuring
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