a

GAO

United States Government Accountability Office

Report to Congressional Committees

June 2006 HUD 

HOMEOWNERSHIP 

PROGRAMS

Data Limitations 

Constrain Assessment 

of the American 

Dream Downpayment 

Initiative

GAO-06-677
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

June 2006

HUD HOMEOWNERSHIP PROGRAMS

Data Limitations Constrain Assessment 

of the American Dream Downpayment 

Initiative 

Highlights of GAO-06-677, a report to 

congressional committees 

While at an all-time high level, 

homeownership remains out of 

reach for many Americans,

especially low-income families and 

minorities. In 2003, Pub. L. No.

108-186 created the American 

Dream Downpayment Initiative

(ADDI) to help low-income, firsttime homebuyers cover the upfront costs of buying a home (up to 

the greater of $10,000 or 6 percent

of the purchase price) and 

authorized funding through fiscal 

year 2007. The Department of

Housing and Urban Development 

(HUD) allocates ADDI funds to

over 400 jurisdictions (e.g., states, 

cities, and counties). Pub. L. No.

108-86 directed GAO to perform a 

state-by-state analysis of ADDI’s 

impact. This report discusses (1) 

HUD-reported information on 

ADDI expenditures and assisted

households, and the limitations on

the quality of these data and (2) the 

views of officials from selected

jurisdictions on factors that 

affected their ability to use their 

funds and on the program’s impact. 

What GAO Recommends

GAO recommends that, if Congress

reauthorizes ADDI beyond fiscal

year 2007, HUD develop and 

implement controls and issue 

guidance—seeking funds to do so,

if necessary—that would ensure 

that the expenditures and 

accomplishments attributed to

ADDI are accurate. HUD did not

comment on our recommendations

but disagreed with the report’s 

assessment of the implications of 

the agency’s data limitations. 

Based on data collected through its Integrated Disbursement and 

Information System (IDIS), HUD reported that through December 31, 2005, 

jurisdictions had spent $98.5 million of the $211 million appropriated for 

ADDI, helping more than 13,000 families—nearly half of which were 

minorities—become homeowners. At the state level, reported expenditures 

ranged from $0 to $10.3 million, and the number of projects (assisted 

households) ranged from 0 to 985. However, because of data limitations in 

IDIS and HUD’s inconsistent guidance to jurisdictions on data entry, these 

figures include an unknown number of non-ADDI projects that provided 

down-payment assistance to first-time homebuyers. As a result, the 

expenditures and accomplishments attributable to ADDI are not known. 

HUD officials said that it was not feasible to create a control for ADDI in 

IDIS by the time the program began and that to do so now would be costly. 

Although most of the 40 jurisdictions GAO contacted have used some 

portion of their ADDI grants, officials from many jurisdictions said that the 

combination of high housing prices and the low incomes of eligible families 

made it challenging to spend their funds. In higher-cost areas, such as Los 

Angeles, California, jurisdictions must combine numerous subsidies with 

ADDI funds to bridge the gap between home prices and homebuyers’ 

mortgages. However, in lower-cost areas, such as Grand Rapids, Michigan, 

ADDI alone is sufficient to make up the difference (see fig.). Officials from 

the jurisdictions GAO contacted indicated that ADDI has not had a 

significant impact on local homeownership rates because the program has

been modestly funded and is relatively new. In addition, some jurisdictions 

reported difficulties in serving populations that the program targeted for 

outreach, such as recipients of rental housing assistance. 

Difference between the Median Purchase Price and Median Mortgage for Homes Purchased 

with ADDI Assistance in Los Angeles, CA and Grand Rapids, MI

0 50 100 150 200 250 300

Grand

Rapids

Los

Angeles

Dollars in thousands

Source: GAO.

Median purchase price (excluding closing costs)

Median mortgage amount

264.0

141.7

86.0

85.0

www.gao.gov/cgi-bin/getrpt?GAO-06-677.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact David G. Wood 

at (202) 512-8678 or woodd@gao.gov. 
Page i GAO-06-677 HUD Homeownership Programs

Contents

Letter 1

Results in Brief 4

Background 5

HUD Reported That Participating Jurisdictions Spent About Half of 

Their ADDI Allocations, but These Data Contain an Unknown 

Number of Non-ADDI Projects 11

Many Selected Participating Jurisdictions Cited Challenges in 

Spending ADDI Funds and Viewed the Program’s Impact as 

Limited 19

Conclusions 26

Recommendations for Executive Action 27

Agency Comments and Our Evaluation 27

Appendixes

Appendix I: Scope and Methodology 31

Appendix II: Summary of Review of Literature on Barriers to 

Homeownership 35

Appendix III: Comparison of Selected Rules Applicable to Fiscal Year 2003 

ADDI Funds to Those for Fiscal Year 2004-2007 Funds 39

Appendix IV: Statistics That HUD Reported for ADDI through December 

31, 2005 40

Appendix V: Profiles of ADDI Programs in Four Jurisdictions 43

Appendix VI: Comments from the Department of Housing and Urban 

Development 50

Appendix VII: GAO Contact and Staff Acknowledgments 54

Tables Table 1: Homeownership Rates by Race/Ethnicity and Income 

Band, 2001 6

Table 2: Comparison of Selected ADDI Rules for Different Fiscal 

Years 39

Table 3: State-by-State ADDI Expenditures and Accomplishments 

Reported by HUD through December 31, 2005 41

Table 4: Selected Characteristics of ADDI Recipients in the City of 

Los Angeles, as of January 2006 45

Table 5: Selected Characteristics of ADDI Recipients in the City of 

Grand Rapids, as of February 2006 46
Contents

Page ii GAO-06-677 HUD Homeownership Programs

Table 6: Selected Characteristics of ADDI Recipients in the State of 

Texas Program, as of February 2006 47

Table 7: Subsidies Available to Homebuyers in the City of 

Sacramento by Income Level or Voucher Program 48

Figures Figure 1: Percentage of National Total of Low-Income Renters and 

ADDI Allocations by State for Fiscal Years 2003-2006 8

Figure 2: HUD-Reported State ADDI Expenditures through 

December 31, 2005 12

Figure 3: HUD-Reported Income of Assisted Households, April 

2004-December 2005 14

Figure 4: Number of Selected Jurisdictions Reporting Misidentified 

ADDI Projects and Total Percentage of Misidentified 

Projects, as of December 31, 2005 18

Figure 5: Difference between the Median Purchase Price and 

Median Mortgage for Homes Purchased with ADDI 

Assistance in Los Angeles, CA, and Grand Rapids, MI 21

Figure 6: Jurisdictions with ADDI Allocations of $50,000 or Less, 

Fiscal Years 2003-2006 23

Figure 7: Example of a Homebuyer’s Financing Package 

Incorporating ADDI and LAHD Programs 44
Contents

Page iii GAO-06-677 HUD Homeownership Programs

Abbreviations

ADDI American Dream Downpayment Initiative

CDBG Community Development Block Grant

FHA Federal Housing Administration

HAF Homebuyer Assistance Fund

HAP Homebuyer Assistance Program

HRA Housing and Redevelopment Agency

HOME HOME Investment Partnerships program

HUD Department of Housing and Urban Development

IDIS Integrated Disbursement and Information System

LAHD Los Angeles Housing Department

PSID Panel Study of Income Dynamics

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Page 1 GAO-06-677 HUD Homeownership Programs

United States Government Accountability Office

Washington, D.C. 20548

A

June 30, 2006 Letr

The Honorable Richard C. Shelby

Chairman

The Honorable Paul S. Sarbanes

Ranking Minority Member

Committee on Banking, Housing, and Urban Affairs

United States Senate

The Honorable Michael G. Oxley

Chairman

The Honorable Barney Frank

Ranking Minority Member

Committee on Financial Services

House of Representatives

Although the national homeownership rate has reached an all-time high of 

69 percent, homeownership is out of reach for many Americans, especially 

low-income families and minorities. Recognizing that homeownership has 

the potential to help families achieve long-term financial stability and 

revitalize and stabilize communities, the federal government has long 

sought to make ownership more affordable for American families. Most 

recently, Congress in 2003 passed the American Dream Downpayment Act 

(Act), which created the American Dream Downpayment Initiative (ADDI) 

under the Department of Housing and Urban Development’s (HUD) HOME 

Investment Partnerships (HOME) program. The purpose of ADDI is to help 

eligible low-income households become homeowners by providing funds 

for a down payment, closing costs, and, if necessary, rehabilitation work 

done in conjunction with a home purchase.1

 The Act authorized funds for 

ADDI for fiscal years 2004 through 2007.2

1

Pub. L. No. 108-186. To be eligible for ADDI funds, households must be both low-income 

and first-time homebuyers, as defined by 42 U.S.C. § 12704. Eligibility does not indicate that 

the household is creditworthy or capable of obtaining a mortgage with or without ADDI or 

other assistance. 

2

Prior to the Act, the Consolidated Appropriations Resolution of 2003 (Pub. L. No. 108-7) 

authorized and appropriated $74.5 million in fiscal year 2003 funds specifically for downpayment assistance under an existing program. The fiscal year 2003 funds generally can be 

used for the same purposes as funds authorized by the Act and are considered ADDI funds 

as a practical matter. However, some of the rules governing the fiscal year 2003 funds 

significantly differ from the rules for funds appropriated for subsequent fiscal years. 
Page 2 GAO-06-677 HUD Homeownership Programs

Like the HOME program as whole, ADDI provides formula-based grants to 

participating jurisdictions (i.e., states, cities, counties, or consortiums of 

cities and counties), which can administer these grants on their own, or 

with or through third parties or subgrantees. However, ADDI funds are 

subject to certain restrictions that do not apply to other HOME funds. The 

jurisdictions may use ADDI grants only for down-payment, closing cost, 

and rehabilitation assistance to low-income, first-time homebuyers who are 

purchasing homes priced within limits under HUD’s Section 203(b) singlefamily mortgage insurance program, which vary by location. In contrast, 

jurisdictions may use other HOME funds to purchase, construct, or 

rehabilitate affordable housing for rent or ownership by low-income 

households, or provide down-payment assistance or direct rental 

assistance to low-income households. Unlike other HOME funds used for 

homeownership assistance, the amount of ADDI assistance per homebuyer 

is limited to $10,000 or 6 percent of the purchase price, whichever is 

greater.3

 However, jurisdictions can combine ADDI assistance with other 

funding sources (including other HOME funds) to assist eligible 

households.

HUD maintains information about ADDI projects in a central database. 

More specifically, HUD requires participating jurisdictions to enter 

information for each household (project) they assist into HUD’s Integrated 

Disbursement and Information System (IDIS)—which collects information 

on activities funded by a number of grant programs (including the HOME 

program) administered by HUD’s Office of Community Planning and 

Development. For example, the jurisdictions enter for each project the 

amount of assistance provided and certain characteristics of the assisted 

households. HUD uses the data in IDIS to monitor participating 

jurisdictions and to generate reports. One of these is the ADDI 

Accomplishment Report, which provides information on ADDI program 

expenditures and reported accomplishments for each jurisdiction. In 

general, HUD considers ADDI funds and other HOME funds used for downpayment assistance to be expended when a participating jurisdiction 

3

Projects using other HOME funds are subject to the HOME per-unit subsidy limits 

established under Section 221(d)(3)(ii) of the National Housing Act (12 U.S.C. § 

17151(d)(3)(ii)). The subsidy limit varies by participating jurisdiction, and by property type 

and size within a jurisdiction. For example, the maximum per-unit subsidy for a threebedroom, single-family home in Chicago, Illinois, was approximately $175,000 in 2005. In 

comparison, the maximum amount of assistance that ADDI could have provided was 

$16,500 (6 percent of $275,200, the HUD purchase price limit for a single-family home in 

Chicago). 
Page 3 GAO-06-677 HUD Homeownership Programs

disburses funds to an eligible homebuyer and indicates the project status as 

“complete” in IDIS. 

The Act directed GAO to perform a state-by-state analysis of the impact of 

ADDI grants. To do this, we first obtained IDIS data on the amount of ADDI 

funds that HUD allocated to each state’s participating jurisdictions and the 

amount they used to assist homebuyers. However, we found significant 

limitations with the quality of these data. Accordingly, this report discusses 

(1) HUD-reported information on ADDI expenditures and assisted 

households from the program’s inception through December 31, 2005, and 

the limitations on the quality of these data and (2) the views of officials 

from selected jurisdictions on factors that affected their ability to use ADDI 

funds and on the program’s impact.

To address these objectives, we reviewed the laws, regulations, and agency 

guidance relevant to ADDI. We also analyzed the data from HUD’s ADDI 

Accomplishment Report and reviewed guidance and other documentation 

for IDIS. We performed limited electronic testing on HUD’s ADDI data to 

detect obvious errors and checked the reliability of the HUD-reported 

ADDI expenditure data against information from 33 selected participating 

jurisdictions. We visited 13 participating jurisdictions—four states, 6 cities, 

and three consortiums—that we selected to cover different geographic 

regions, housing markets, and jurisdiction types. Also, we interviewed 

officials from a selection of 27 additional jurisdictions—nine states, 11 

cities, three counties, and four consortiums—designed to cover the four 

types of jurisdictions and those with relatively high and low funding 

allocations and expenditure levels, according to HUD’s data.4

 We did not 

generalize the results of our interviews to the entire population of 

jurisdictions that received an ADDI allocation because we contacted only a 

small selection of jurisdictions. Further, the limitations of HUD’s data did 

not allow us to draw any conclusions about the program’s 

accomplishments.

Appendix I contains a more detailed description of our scope and 

methodology and a list of the jurisdictions we contacted. We conducted our 

work in Washington, D.C., and Chicago, Illinois, from July 2005 through 

4

While we contacted or visited a total of 40 jurisdictions, we excluded 7 of them from our 

reliability check of HUD’s ADDI expenditure data because our contacts occurred while we 

were still developing our methodology.
Page 4 GAO-06-677 HUD Homeownership Programs

June 2006, in accordance with generally accepted government auditing 

standards. 

Results in Brief Based on data in IDIS from participating jurisdictions nationwide, HUD 

reported that through December 31, 2005, the jurisdictions had expended 

$98.5 million of the $211 million appropriated for ADDI and had helped 

more than 13,000 low-income households—nearly half of which were 

minorities—become homeowners. At the state level, reported expenditures 

ranged from $0 (South Dakota) to $10.3 million (California), and the 

number of assisted households ranged from 0 (South Dakota) to 985 

(Ohio). IDIS data also indicated, among other things, that about one-third 

of the assisted households earned less than 50 percent of the median 

income for their areas, and the remaining two-thirds earned 50 to 80 

percent. However, because of internal control weaknesses in HUD’s 

process for designating ADDI projects in IDIS, these figures actually 

include an unknown number of non-ADDI HOME projects that provided 

down-payment assistance to first-time homebuyers.5

 Specifically, (1) IDIS 

does not contain a discrete control to distinguish ADDI projects from nonADDI HOME projects and (2) HUD did not provide clear and consistent 

guidance to jurisdictions on how to distinguish between the two in IDIS. As 

a result, the expenditures and accomplishments attributable to ADDI are 

not known and the data HUD reports for the program, including the 

characteristics of the assisted households, do not represent exclusively 

ADDI projects. HUD officials said that they did not create a discrete ADDI 

control in IDIS because a reengineering of IDIS was nearly complete when 

the program was enacted, redesigning IDIS would have taken several years 

and would not have been cost-effective given ADDI’s modest size and 

limited authorization period, and the first-time homebuyers receiving ADDI 

and other HOME funds are from the same population. 

Although most of the jurisdictions we contacted (representing about 9 

percent of all jurisdictions that received an ADDI allocation since the 

program began) have used some portion of their ADDI grants, jurisdiction 

officials cited several factors that affected their ability to spend their funds 

and indicated that the program’s impact has been limited. For example, 

officials from many of these jurisdictions said that a combination of high 

housing prices, the low incomes of eligible families, and the program’s per5

Throughout this report, we use the term “non-ADDI HOME” to refer to HOME projects that 

provided down-payment assistance to first-time homebuyers and did not use ADDI funds.
Page 5 GAO-06-677 HUD Homeownership Programs

household assistance limits made it challenging to expend their funds. 

Officials from some of the higher cost selected jurisdictions told us that 

many eligible households often cannot afford to purchase even less 

expensive homes without large amounts of assistance to reduce their 

mortgage loans to affordable levels. In the City of Los Angeles, for instance, 

the difference between the median purchase price (excluding closing 

costs) and the median mortgage amount for homes purchased with ADDI 

assistance was approximately $122,000. To help bridge such large gaps, 

many of the selected jurisdictions have developed homeownership 

programs that provide multiple subsidies, including ADDI funds, to eligible 

homebuyers. Some of these programs are complex, utilizing several 

sources of assistance, and can be time consuming to implement because 

jurisdiction officials need to assess a family’s eligibility for each subsidy. 

Though ADDI has helped low-income households become homeowners, 

officials from the large majority of jurisdictions we contacted said that the 

program was too modestly funded and new to have had a significant impact 

on local homeownership rates. In addition, officials from several 

jurisdictions we contacted said that they have had difficulties serving 

certain populations that the program targeted for outreach, including 

recipients of rental housing assistance (due to lack of sufficient income to 

become homeowners, even with down payment assistance) and residents 

of mobile home parks (due to difficulties in marketing the program to 

them).

To ensure that ADDI expenditures and accomplishments are accurately 

reported, we recommend that if Congress authorizes ADDI beyond fiscal 

year 2007, the Secretary of HUD (1) develop and implement a discrete 

control in IDIS that distinguishes ADDI projects from non-ADDI HOME 

projects, seeking funds to do so if necessary, and (2) issue guidance to 

participating jurisdictions on how to use this control to enter consistent 

data on ADDI projects into IDIS. We obtained comments on a draft of this 

report from HUD. HUD did not comment on our recommendations but 

disagreed with the report’s emphasis on data limitations and our 

assessment of the effect of these limitations on management and oversight 

of the program. HUD’s comments are discussed in the Agency Comments 

and Our Evaluation section, and its written comments appear in appendix 

VI.

Background According to numerous studies, the most significant barrier to 

homeownership is having money for a down payment and closing costs. 

Other related studies also have shown that, on average, low-income and 
Page 6 GAO-06-677 HUD Homeownership Programs

minority families have lower levels of accumulated wealth (savings) than 

higher-income and nonminority families. (See app. II for a summary of 

studies on barriers to homeownership). This disparity is reflected in the 

gap in homeownership rates between the different populations (see table 

1).6

Table 1: Homeownership Rates by Race/Ethnicity and Income Band, 2001

Sources: HUD and U.S. Census Bureau.

Note: Income band is the percentage of national median income.

Signed into law in December 2003, the American Dream Downpayment Act 

amended the Cranston-Gonzalez National Affordable Housing Act to create 

ADDI, which, according to HUD, aims to increase the homeownership rate, 

especially among lower income and minority households.7

 The Act 

authorized up to $200 million annually for fiscal years 2004 through 2007 

for down-payment, closing cost, and limited rehabilitation assistance for 

low-income families—those earning no more than 80 percent of the median 

income for their area, adjusted for family size—who are first-time 

homebuyers.8

 Prior to the Act, the Consolidated Appropriations Resolution 

of 2003 authorized and appropriated $74.5 million in fiscal year 2003 funds 

specifically for down-payment assistance under the HOME program. (As 

explained in app. III, some of the rules for allocating and using fiscal year 

6

The homeownership rate is the number of households that own their homes divided by the 

total number of households. 

Income band

Category

Race/ethnicity <50% 

50-

79.9%

80-

99.9%

100-

120% >120%

All 

households

White 59.2% 68.4% 75.2% 79.6% 88.1% 74.2%

Black 33.4 51.7 59.4 63.2 76.2 48.5

Hispanic 28.2 44.4 55.2 59.0 76.9 46.4

Asian 28.4% 48.1% 51.6% 63.3% 72.3% 53.2%

7

42 U.S.C. § 12821. 

8

A first-time homebuyer is an individual and his or her spouse who has not owned a home 

during the 3-year period prior to purchase of a home with ADDI assistance; or a displaced 

homemaker or single parent who, even if while married, owned a home with his or her 

spouse or resided in a home owned by the spouse. 42 U.S.C. § 12704. 
Page 7 GAO-06-677 HUD Homeownership Programs

2003 ADDI funds are significantly different from the rules for funds 

appropriated for subsequent fiscal years). Participating jurisdictions could 

not expend ADDI funds until April 2004, when HUD issued interim 

regulations for the program. 

Down-payment assistance is one of the multiple uses of HOME funds. Since 

the HOME program was created in 1990, total spending on down-payment 

assistance reached nearly $1.6 billion as of January 2006. For fiscal years 

2001 through 2004, annual commitments for down-payment assistance 

under the HOME program (including ADDI since 2004) were relatively 

steady, averaging $156 million, but grew to nearly $203 million in fiscal year 

2005.9

 In creating ADDI, Congress effectively set aside a portion of total 

HOME funding specifically for low-income, first-time homebuyers. ADDI 

appropriations peaked in fiscal year 2004 at $87 million, dropping to $49.6 

million in fiscal year 2005 and to $24.8 million in fiscal year 2006. 

Like the rest of the HOME program, ADDI is administered by participating 

jurisdictions, which receive funding allocations from HUD. Beginning with 

the fiscal year 2004 appropriation, HUD has allocated ADDI funds to the 

states based on the percentage of the national total of low-income renters 

residing in each state (as explained in app. III, ADDI funds provided in the 

fiscal year 2003 appropriation were distributed differently). The aggregate 

funding amounts for fiscal years 2003 through 2006, by state, are shown in 

figure 1. 

9

HUD did not have data on annual expenditures specifically for down-payment assistance 

prior to 2004. Commitment means that the jurisdiction has executed a legally binding 

agreement with a state recipient, subrecipient, or contractor to use a specific amount of 

HOME funds for a project. 24 C.F.R. 92.2. We obtained the figures on HOME expenditures 

and commitments from “acquisitions” data in HUD’s National Production Report. According 

to HUD officials, these data are the only consistent measure of HOME down-payment 

assistance over time. We did not assess the reliability of these data. Since March 2004, HUD 

has captured down-payment assistance as a separate field in IDIS. 
Page 8 GAO-06-677 HUD Homeownership Programs

Figure 1: Percentage of National Total of Low-Income Renters and ADDI Allocations by State for Fiscal Years 2003-2006 

Sources: GAO, 2000 Census, and HUD (data); Art Explosion (map).

.4

.5

.5

.5

.6

.7

.8

.9

.9

1.0

1.0

1.1

1.3

1.3

1.3

1.4

1.6

1.8

2.0

2.1

2.2

2.2

2.9

2.9

3.0

3.1

3.3

3.4

3.5

3.6

3.7

3.9

4.2

4.5

4.6

4.6

4.7

5.3

5.3

6.2

6.3

6.5

6.5

7.0

9.5

9.7

10.4

11.7

17.2

21.0

30.5

Dollars in millions

Funding amounts (2003-2006) Percentage of low-income households residing in rental housing (out of national total)

Percentage of low-income 

households residing in 

rental housing

(out of national total)

2.1% -3.0%

1.1% - 2.0%

Less than 1.0%

3.1% - 4.0%

4.1% - 5.0%

0 5 10 15 20 25 30 35 More than 5.0%

Wyo.

Vt.

Alaska

Del.

N.Dak.

S.Dak.

Mont.

Idaho

N.H.

Maine

D.C.

Hawaii

R.I.

W.Va.

N.Mex.

Utah

Nebr.

Nev

Miss.

Ark.

Kans.

Iowa

S.C.

Okla.

Conn.

Oreg.

Ky.

Ala.

Minn.

La.

Colo.

Ariz.

Md.

Tenn.

Mo.

Wisc.

Ind.

Va.

Wash.

Mass.

N.C.

Ga.

N.J.

Mich.

Pa.

Ohio

Ill.

Fla.

Tex.

N.Y.

Calif.
Page 9 GAO-06-677 HUD Homeownership Programs

A similar calculation, using the total numbers of low-income renters within 

each state, determines the amounts participating jurisdictions receive. 

Participating jurisdictions must have a population of at least 150,000 or 

otherwise qualify for an allocation of greater than $50,000 under the ADDI 

formula to receive program funding. The difference between a state’s 

overall allocation and the total amount allocated to qualifying cities, 

counties, and consortiums (as well as any allocation a jurisdiction 

declines) within that state is administered by the state. Four hundred fortyfive jurisdictions received an ADDI allocation in one or more fiscal years 

from 2003 through 2006. Jurisdictions must commit ADDI funds within 2 

years of the date HUD obligates ADDI allocations and expend those funds 

within 5 years of that date.10

As a condition for receiving an ADDI funding allocation, HUD requires 

participating jurisdictions to include ADDI funds in their annual 

consolidated plans, which outline policies for addressing housing needs in 

their areas. Specifically, jurisdictions must describe how they plan to use 

ADDI funds; how they plan to conduct targeted outreach to recipients of 

rental housing assistance (through HUD’s public housing and Housing 

Choice Voucher programs, for example) and residents of manufactured 

housing (e.g., mobile homes); and what actions they will take to ensure the 

suitability of families receiving ADDI assistance to undertake and maintain 

homeownership (e.g., through homebuyer counseling).11 Jurisdictions 

typically administer their ADDI funds in one of three ways: (1) on their 

own; (2) in partnership with one or more third parties, such as nonprofit 

organizations or mortgage lenders; or (3) through subgrantees who 

administer the program on their behalf. ADDI regulations prohibit the use 

of ADDI funds for program administration costs; however, jurisdictions 

may use a portion of their other HOME funds for this purpose.

10Beginning with HUD’s fiscal year 2002 appropriation (Pub. L. No. 107-73), a time limit was 

imposed on each year’s total HOME appropriation. Funds that HUD has not obligated 

(including funds deobligated for a jurisdiction’s failure to commit or expend them) by the 

required date must be returned to the Department of the Treasury. Prior to fiscal year 2002, 

the appropriations acts permitted HUD to recapture, reallocate, and reobligate HOME funds 

until expended. 

11HUD offers rental assistance to low-income renters primarily through the public housing 

and Housing Choice Voucher programs. Under each program, HUD makes up the difference 

between a unit’s monthly rental cost (or for public housing, the operating cost) and the 

tenant’s payment, which is generally equal to 30 percent of the tenant’s adjusted monthly 

income. 
Page 10 GAO-06-677 HUD Homeownership Programs

ADDI appropriations for fiscal year 2004 and later provide eligible families 

up to $10,000 or 6 percent of the purchase price of a home, whichever is 

greater, to apply toward a down payment and closing costs for the 

purchase of single-family housing (including one- to four-unit family 

dwellings, condominiums, cooperatives, and manufactured housing or a 

manufactured housing lot) that does not exceed HUD’s purchase price 

limits. Except for the fiscal year 2003 appropriation, ADDI funds also may 

be used for rehabilitation in conjunction with the purchase of a home. 

However, a participating jurisdiction’s rehabilitation assistance may not 

exceed 20 percent of its annual ADDI allocation. Jurisdictions can give 

ADDI assistance to eligible families in several forms, including interest- or 

noninterest-bearing loans or direct grants. Whatever the form of assistance, 

HUD regulations require that assistance be repaid, in full or in part, upon 

the sale of the home if the sale occurs within the “affordability period” 

(generally 5 to 10 years, depending on the amount of assistance).12

Jurisdictions may combine ADDI funds with other subsidies—such as 

other HOME funds, Community Development Block Grant (CDBG) funds, 

Section 8 homeownership vouchers, or state and local funds—to make 

ownership more affordable for eligible households.13

1224 C.F.R. 92.254. The affordability period may extend to 15 years if a homebuyer receives 

$40,000 or more in ADDI and other HOME funds. 

13The CDBG program is a HUD formula grant program that provides communities with 

resources to address a wide range of community development needs. CDBG funds may be 

used to provide direct homeownership assistance, including interest rate subsidies and 

down-payment and closing cost assistance, to low- and moderate-income families. The 

Section 8 Homeownership Voucher program allows eligible recipients of Housing Choice 

Vouchers to use their monthly subsidies to make payments on a mortgage. Assistance is 

available for 10 to 15 years, depending on the terms of the first mortgage. 
Page 11 GAO-06-677 HUD Homeownership Programs

HUD Reported That 

Participating 

Jurisdictions Spent 

About Half of Their 

ADDI Allocations, but 

These Data Contain an 

Unknown Number of 

Non-ADDI Projects

HUD reported that from the program’s inception through December 31, 

2005, participating jurisdictions had expended roughly half of the $211 

million in ADDI appropriations and assisted more than 13,000 low-income 

households—nearly half of which were minorities—with a home 

purchase.14 According to HUD, these data represent projects that met the 

agency’s definition of ADDI projects in IDIS. However, because of 

weaknesses in HUD’s internal controls for ADDI reporting, these data are a 

mix of ADDI and an unknown number of non-ADDI HOME projects; 

consequently, the expenditures and accomplishments attributable to ADDI 

are not known. More specifically, IDIS does not contain a discrete control 

to distinguish ADDI projects from non-ADDI HOME projects, and HUD 

provided inconsistent guidance to jurisdictions on how to distinguish 

between the two in IDIS. HUD officials said that it was not feasible to 

implement a discrete ADDI control in IDIS by the time ADDI began 

operating and that to do so now would be costly. 

HUD Reported That 

Jurisdictions Expended 

About $99 Million through 

December 31, 2005, and 

That Nearly Half of the 

Households Were Minorities 

According to HUD’s ADDI Accomplishment Report, through December 31, 

2005, jurisdictions had expended $98.5 million of the $211 million 

appropriated for ADDI through fiscal year 2005 and assisted 13,300 

households, 48 percent of which were minorities. At the state level, 

reported expenditures ranged from $0 (South Dakota) to $10.3 million 

(California), and the number of assisted household ranged from 0 (South 

Dakota) to 985 (Ohio). HUD’s Accomplishment Report indicated that half 

of the states expended more than $1 million each (see fig. 2). Appendix IV 

provides HUD-reported ADDI expenditures and accomplishments for each 

state. However, as discussed in the next section of this report, the ADDI 

data HUD reported are a mix of ADDI and non-ADDI HOME projects due to 

internal control weaknesses. 

14The $211 million in appropriations is the sum of the appropriations for fiscal years 2003 

($74.5 million), 2004 ($87 million), and 2005 ($49.6 million).
Page 12 GAO-06-677 HUD Homeownership Programs

Figure 2: HUD-Reported State ADDI Expenditures through December 31, 2005 

a

Includes Puerto Rico, which received funding only for fiscal year 2003, in the $500,000 to $999,999 

range.

HUD collects various data on households assisted through the HOME 

program, including ADDI, through IDIS. These data indicate, among other 

things, that from April 2004 (the month ADDI activity began) through 

December 31, 2005:

• 32 percent of the households assisted by ADDI were single-parent 

families.

• 20 percent of the mortgages used to purchase homes with ADDI 

assistance were insured by HUD’s Federal Housing Administration 

(FHA).

• About one-third of the assisted households earned less than 50 percent 

of the median income for their areas, and the remaining two-thirds 

earned 50 to 80 percent (see fig. 3).

$5,000,000 to $10,499,999 

$1,000,000 to $4,999,999 

$500,000 to $999,999 

$100,000 to $499,999 

Less than $100,000 

ADDI expenditures Number of states (Total: 51)a

11 

14 

20 

1 

5 

Sources: GAO and HUD.
Page 13 GAO-06-677 HUD Homeownership Programs

• 76 percent of the assisted households received some form of homebuyer 

counseling. (Jurisdictions are encouraged but not required to provide 

homebuyer counseling for ADDI or other HOME projects).15

Through its new Outcome Performance Measurement System, HUD plans 

to collect additional information on households assisted by HOME and the 

other formula grant programs funded by the agency’s Office of Community 

Planning and Development. The system, which is scheduled for full 

implementation in fiscal year 2007, will aggregate, at the national and local 

level, information on the outcomes of the projects funded by the programs. 

Among other things, HUD will use the system to collect information on the 

number of HOME-assisted (including ADDI-assisted) households that 

previously received rental housing assistance.

15HUD’s data on the characteristics of assisted households for this period are not directly 

comparable to the agency’s ADDI Accomplishment Report because of differences in the 

number of projects reported. We did not check the reliability of the characteristics data; 

however, we found that a small number of these records did not indicate household income. 

HUD does not collect, or require, jurisdictions to collect information on the performance of 

non-FHA-insured mortgages used by HOME-assisted households because the agency is not 

required to do so and because of impediments the agency and jurisdictions would encounter 

in collecting these data from private market lenders.
Page 14 GAO-06-677 HUD Homeownership Programs

Figure 3: HUD-Reported Income of Assisted Households, April 2004-December 2005

Internal Control 

Weaknesses Allow NonADDI HOME Projects to Be 

Credited to ADDI

According to HUD officials, the agency initiated a wide-ranging redesign of 

IDIS in 2002 and, as part of these efforts, added new data elements (firsttime homebuyer and down-payment costs) in anticipation of the possibility 

that Congress would eventually pass a down-payment assistance program 

of some kind. HUD released the redesigned IDIS in March 2004, shortly 

before the implementation of ADDI. According to HUD officials, because 

HUD was unable to anticipate all of the program features in the final law, 

the agency decided to establish rules in IDIS that used the new data 

elements and provided guidance to jurisdictions on entering data that were 

intended to capture information on ADDI projects to the extent possible. 

However, these rules are not sufficient to allow HUD to clearly distinguish 

ADDI projects from non-ADDI projects, and HUD’s guidance to 

jurisdictions was inconsistent. Accordingly, HUD’s internal controls for 

ADDI reporting do not meet GAO’s Standards for Internal Control in the 

Federal Government because HUD cannot be certain that the ADDI 

expenditure and accomplishment data it reports are representative of 

.5% not indicated 

0-30% of area median income 

30-50% of area median income 

50-60% of area median income 

60-80% of area median income 

6.9% 

25.4% 

23.3% 

43.9% 

Sources: GAO and HUD.
Page 15 GAO-06-677 HUD Homeownership Programs

ADDI projects.16 GAO’s Standards call for controls that would 

appropriately classify projects so that the collected information maintains 

its relevance, value, and usefulness for controlling operations and making 

decisions. 

No Mechanism to Distinguish 

ADDI from Non-ADDI HOME 

Projects

According to HUD officials, the agency did not create a control in IDIS that 

would distinguish ADDI from non-ADDI HOME projects for several reasons 

as follows: 

• The most recent IDIS reengineering effort was nearing completion by 

the time ADDI was enacted. 

• It was not feasible to redesign IDIS to separately track ADDI projects by 

the time the ADDI program began operating (HUD estimated several 

years for redesign). 

• ADDI is part of the HOME program, and the first-time homebuyers 

receiving ADDI and other HOME funds are from the same population.

• To develop and implement such a control would not have been costeffective given ADDI’s modest size and the limited period (4 years) for 

which it was authorized.17

HUD officials said that, for these reasons, they faced a choice of not 

capturing any data on ADDI or implementing procedures that would 

capture data on projects that met the basic criteria for the program (i.e., 

down-payment assistance to first-time homebuyers) but that also included 

non-ADDI HOME projects. HUD officials stated that they recognized the 

limitations of these procedures but said that, under the circumstances, they 

made the best available choice. The officials said that the agency has no 

plans to update IDIS to include a discrete control for ADDI and estimated 

that to do so would be costly.

In lieu of creating such a control, HUD established rules in IDIS under 

which the agency credits ADDI with all of a jurisdiction’s completed HOME 

16GAO issued these standards as required by 31 U.S.C. §3512(c). Also see GAO, Standards 

for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: 

November 1999) and GAO, Internal Control Management and Evaluation Tool, GAO-01-

1008G (Washington, D.C.: August 2001).

17We did not independently estimate the cost of implementing such a control.
Page 16 GAO-06-677 HUD Homeownership Programs

projects that provided down-payment assistance to first-time homebuyers 

in amounts within the ADDI per-household limits—up to the point at which 

the jurisdiction’s ADDI allocations are exhausted.18 After a jurisdiction’s 

ADDI allocations are exhausted, HUD credits any remaining project 

assistance and all additional first-time homebuyer projects to other HOME 

funds. 

In its HOME monitoring handbook, HUD acknowledged that, as a result of 

the IDIS limitation relating to ADDI designations, the agency’s ADDI data 

contains a mix of ADDI and non-ADDI HOME projects. Specifically, the 

handbook states that the projects HUD credits to ADDI may not be the 

same projects that jurisdictions intended to use their ADDI funds for and 

classified them as such in their records. Consequently, the agency 

instructed HUD staff who monitor jurisdictions’ administration of HUD 

programs to assess for compliance with ADDI requirements only those 

projects that jurisdictions designated as ADDI in their records and to 

assess all other projects for compliance with HOME requirements, 

regardless of whether HUD credited them to ADDI. 

Inconsistent Guidance on Data 

Entry

The guidance HUD provided to jurisdictions for entering ADDI project data 

into IDIS is inconsistent and permits jurisdictions to enter inaccurate data. 

As a result, HUD cannot ensure that the data for all HOME projects that 

jurisdictions enter into IDIS are accurate and complete. According to 

GAO’s Standards, agencies should provide clear and consistent guidance 

on data entry to prevent inaccuracies.

HUD instructed jurisdictions to use the “first-time homebuyer” field when 

entering data in IDIS to distinguish between ADDI and non-ADDI HOME 

projects (entering “yes” to credit ADDI and “no” to credit other HOME 

funds). However, in the same guidance, HUD wrote that jurisdictions 

should enter “yes” in the first-time homebuyer field even when they use 

other HOME funds to assist a first-time homebuyer because HUD uses this 

field to capture accomplishment data on all first-time homebuyers whether 

or not jurisdictions assisted them with ADDI funds. 

18HUD credits each project to one year of ADDI allocation only. If a project provides an 

amount of down-payment assistance that exceeds the ADDI per-household limit, HUD 

credits the assistance to a jurisdiction’s fiscal year 2003 ADDI allocation first (which is 

subject to the HOME maximum per-unit subsidy). If a project has both down-payment and 

rehabilitation assistance, HUD credits the assistance to a jurisdiction’s ADDI allocations for 

fiscal year 2004 and later.
Page 17 GAO-06-677 HUD Homeownership Programs

The latitude jurisdictions have to enter “no” in the first-time homebuyer 

field in IDIS, even when they in fact are assisting this type of homebuyer, 

reduces HUD’s ability to reliably measure first-time homebuyer activity 

under the HOME program. HUD’s new Outcome Performance 

Measurement System—which will be integrated into IDIS and fully 

implemented in fiscal year 2007—will include a “direct financial assistance 

to homebuyers” indicator that, among other things, is intended to measure 

the number of first-time homebuyers assisted with HOME funds. Because 

the system will use the first-time homebuyer field in IDIS, this indicator 

may inaccurately reflect the number of first-time homebuyers. More 

specifically, if jurisdictions enter “no” for first-time homebuyer projects in 

order to credit their other HOME funds instead of their ADDI funds, the 

indicator will be artificially low. HUD officials said that they could not 

foresee many circumstances where this would occur and that any negative 

impact on data accuracy will probably be minimal; consequently, the 

agency does not plan to revise its guidance to jurisdictions. However, HUD 

does not have a means of determining how often jurisdictions might enter 

“no” to spend HOME funds that would otherwise expire or to avoid 

crediting projects to ADDI that were administered by subgrantees that did 

not receive ADDI funds. 

Extent of Inaccurate Data Is 

Unknown

Although the full extent to which HUD is designating non-ADDI HOME 

projects as ADDI projects is unknown, the jurisdictions we contacted 

identified many examples where this was occurring. We contacted 33 

(about 7.5 percent) of the 445 jurisdictions that received an ADDI 

allocation since the program began to check the reliability of project 

expenditures in HUD’s ADDI Accomplishment Report as of December 31, 

2005. We excluded three jurisdictions from our analysis because they had 

unreliable local records or documented IDIS data entry errors. Of the 

remaining 30 jurisdictions, 13 told us that some percentage of their projects 

were, according to their records, non-ADDI HOME projects (see fig. 4). The 

other 17 jurisdictions did not identify any non-ADDI HOME projects in 

HUD’s report. In total, the 30 jurisdictions indicated that 29 percent of the 

reported projects were non-ADDI HOME projects. 
Page 18 GAO-06-677 HUD Homeownership Programs

Figure 4: Number of Selected Jurisdictions Reporting Misidentified ADDI Projects 

and Total Percentage of Misidentified Projects, as of December 31, 2005

Note: We excluded three selected jurisdictions from the population of the 33 we contacted because of 

unreliable local records or documented IDIS data entry errors. 

The City of Baltimore and the State of Pennsylvania provide examples 

where HUD designated non-ADDI projects as ADDI. Specifically:

• HUD included, as ADDI expenditures and accomplishments, five 

Baltimore projects totaling $25,000 that actually were “settlement 

expense grants” funded through a portion of the city’s HOME allocation. 

The city does not fund these grants with its ADDI allocation and has 

internal tracking mechanisms independent from IDIS to differentiate its 

ADDI and settlement expense grant expenditures. HUD credited these 

projects to ADDI because these projects met the agency’s IDIS rules for 

crediting ADDI (that is, the city recorded down-payment assistance to a 

first-time homebuyer for the purchase of a home and changed the 

project status to “complete”). 

• In Pennsylvania, 4 out of a potential pool of 75 subgrantees had applied 

for and received a portion of the state’s ADDI allocation as of January 

2006. Although the state’s records for these subgrantees showed only 

two ADDI projects with $20,000 in total ADDI expenditures, HUD’s 

ADDI Accomplishment Report showed 196 additional ADDI projects, 

nonADDI 

HOME 

(463) 

ADDI 

(1,156) 

28.6% 

71.4% 

Sources: GAO and selected jurisdictions.

Percentage 

of non-ADDI 

HOME projects 

HUD reported 

as ADDI 

Number of 

non-ADDI 

HOME 

projects 

identified by 

jurisdictions

Number of 

jurisdictions

0%

1-30%

31-60%

61-100%

17 

5 

4 

4 

 Total: 30 

0 

38

136 

289 

463

Total projects the 

 30 jurisdictions 

 identified as: 
Page 19 GAO-06-677 HUD Homeownership Programs

totaling $1.6 million. These additional projects reflect the non-ADDI 

HOME activity of subgrantees that did not receive ADDI funds. 

Moreover, officials from 12 of the 33 jurisdictions we contacted told us that 

HUD’s ADDI Accomplishment Report, as of December 31, 2005, did not 

include some of these jurisdictions’ ADDI projects.19 One potential reason 

for this is that the jurisdictions may not have changed the status of their 

ADDI projects to “complete” in IDIS as of that date. However, of the 307 

projects the jurisdictions identified as ADDI, over half (168 projects) did 

not appear either in HUD’s Open Activities Report (which contains 

information on all HOME projects that jurisdictions entered but did not 

indicate as “complete” in IDIS) or the ADDI Accomplishment Report as of 

February 28, 2006. HUD most likely credited these 168 projects to the 

jurisdictions’ other HOME funds. Of the remaining projects, 103 were 

included in the ADDI Accomplishment Report, and 36 were in the Open 

Activities Report.20

Many Selected 

Participating 

Jurisdictions Cited 

Challenges in Spending 

ADDI Funds and 

Viewed the Program’s 

Impact as Limited 

Although most of the jurisdictions we contacted (representing about 9 

percent of all jurisdictions that received an ADDI allocation since the 

program began) have used some portion of their ADDI grants, jurisdiction 

officials cited several factors that affected their ability to spend their funds 

and indicated that the program’s impact has been limited. Officials from 

many of these selected jurisdictions told us that high housing prices 

coupled with the low-incomes of ADDI-eligible families have made it 

difficult to use ADDI funds to assist the families. In addition, officials in the 

jurisdictions we contacted generally indicated that ADDI thus far has not 

had a significant impact on homeownership rates in their jurisdictions 

because the program is new and has received modest levels of funding. 

Finally, several of the jurisdictions reported difficulties in assisting certain 

populations—for example, recipients of rental housing assistance because 

they lack income to become homeowners, even with assistance.

19Eighteen of the selected participating jurisdictions reported no missing ADDI projects. We 

excluded three jurisdictions from the 33 we contacted because of unreliable local records or 

documented IDIS data entry errors.

20HOME rules require jurisdictions to enter project completion data into IDIS within 120 

days of making a final draw of funds for a project. 24 C.F.R. 92.502(d)(1). If jurisdictions do 

not change the status of a project in IDIS to “complete” despite the fact that they have drawn 

all the funds for these projects, these projects will not appear on the ADDI Accomplishment 

Report but should appear in the Open Activities Report.
Page 20 GAO-06-677 HUD Homeownership Programs

High Housing Prices 

Coupled with Low Incomes 

Have Made It Difficult to 

Assist Eligible Households 

with ADDI Funds in Many 

Selected Jurisdictions

Although most of the 40 participating jurisdictions we contacted have been 

able to use some portion of their ADDI funding to assist eligible families in 

their areas, officials from many of these jurisdictions said that a 

combination of high housing prices, low family incomes, and the perhousehold limit on ADDI assistance have made it challenging. For example, 

according to officials from the City of Los Angeles, as of March 2006, the 

city had spent only about 22 percent of its total ADDI allocation for fiscal 

years 2003 through 2005 due to these factors. Officials from a number of 

higher-cost jurisdictions we contacted—including the cities of Los Angeles 

and Sacramento, California; Boston, Massachusetts; New York, New York; 

and Washington, D.C.—told us that eligible families in their jurisdictions 

have had difficulties finding homes they could afford. For instance, an 

official from the City of Sacramento, California, said that the city receives 

monthly reports of the multiple listing service—the local organizations 

through which real estate brokers share information about properties for 

sale—to identify homes that ADDI-eligible homebuyers could purchase. 

The official said that in February 2006 there were only 45 single-family 

homes listed that the jurisdiction considered affordable to ADDI-eligible 

homebuyers, an insignificant number relative to the number of low-income 

homebuyers in Sacramento, according to that official. Similarly, an official 

from the City of Boston noted that the number of homes for sale within 

HUD’s purchase price limits was small relative to the number of ADDIeligible households residing in the city.

In addition, officials from some of the higher-cost participating 

jurisdictions with whom we spoke said that because of the large disparity 

between incomes and housing prices, many eligible families cannot afford 

to purchase even these less expensive homes without large amounts of 

assistance to reduce their mortgage loans to affordable levels. For 

example, the median purchase price (excluding closing costs) of homes 

purchased by ADDI-assisted households in Los Angeles was $264,000. 

However, the median mortgage for these households was about $142,000, 

leaving a gap of about $122,000 that needed to be filled by a combination of 

homebuyers’ savings and homeownership assistance. In contrast, officials 

in most of the lower-cost jurisdictions we spoke with said that the 

corresponding gaps in their areas were smaller than in other areas of the 

country. For example, in Grand Rapids, Michigan, the gap for ADDI-
Page 21 GAO-06-677 HUD Homeownership Programs

assisted families was about $1,000 (see fig. 5).21 Appendix V provides more 

information about the use of ADDI funds in, and challenges faced by, four 

of the jurisdictions that we contacted. 

Figure 5: Difference between the Median Purchase Price and Median Mortgage for 

Homes Purchased with ADDI Assistance in Los Angeles, CA, and Grand Rapids, MI

Although officials from most of the jurisdictions with whom we spoke said 

that they combined at least one other subsidy with ADDI funds, regardless 

of the market conditions in their areas, jurisdictions in more expensive 

areas—where the differences between home prices and mortgages were 

substantial—generally used more complicated mechanisms to maximize 

the amount of assistance given to eligible homebuyers. Officials from 

higher-cost jurisdictions we spoke with also said that ADDI was not the 

primary source of down-payment assistance for their homebuyer programs 

and, because of the program’s per-household assistance limit, was treated 

more as a supplement to larger funding sources, such as other HOME 

funds. For example, officials of the City of Los Angeles said they typically 

21We did not obtain information on closing costs from the jurisdictions we contacted. 

Because we did not include these costs in the purchase price of the homes, our analysis may 

understate the actual gaps between median home prices and mortgage amounts but 

illustrates the relative difference between higher-cost and lower-cost locations.

0 50 100 150 200 250 300

Grand

Rapids

Los

Angeles

Dollars in thousands

Source: GAO.

Median purchase price (excluding closing costs)

Median mortgage amount

264.0

141.7

86.0

85.0
Page 22 GAO-06-677 HUD Homeownership Programs

combine more than seven different subsidies—including ADDI, other 

HOME, and state down-payment assistance such as CalHome and 

California Housing Finance Agency loans—with other HOME funds 

constituting the largest of the subsidies.22 Some of these programs are 

complex and can be time-consuming to implement because officials need 

to assess a family’s eligibility for each subsidy. 

Officials from several other jurisdictions we spoke with in which the gap 

was not substantial said they did not need to combine subsidies to make 

homeownership a reality for the families they assisted. For example, 

officials from the cities of Grand Rapids, Michigan; Indianapolis, Indiana; 

and the State of Texas said that the down-payment assistance offered 

through ADDI generally was sufficient to bridge the gap between home 

prices and the mortgages for which lower-income families qualified. 

ADDI Has Not Had a 

Significant Impact on the 

Homeownership Rates of 

Selected Participating 

Jurisdictions Due to Modest 

Funding Levels and the 

Newness of the Program

According to officials in most of the 40 jurisdictions we contacted, ADDI’s 

impact has been limited because the program is new and modestly funded. 

Consistent with this view, HUD data indicates that approximately 40 

percent of the jurisdictions that were allocated ADDI funds for fiscal year 

2005 received $50,000 or less.23 The percentage increased to 67 percent in 

fiscal year 2006 (see fig. 6).24

22In November 2002, California voters passed Proposition 46, The Housing and Emergency 

Shelter Trust Fund Act of 2002, which created a $2.1 billion dollar bond that funds different 

down-payment assistance programs. Both the CalHOME program and the California 

Housing Finance Agency’s down-payment assistance loans are funded, to some extent, 

through Proposition 46 bonds. 

23Jurisdictions that receive an ADDI allocation have the ability to decline the funds, which 

then revert to the state in which the participating jurisdiction is located. However, HUD’s 

data do not reflect allocations that were declined. 

24As previously noted, the annual amount Congress has appropriated for ADDI has declined 

since the inception of the program. For example, the ADDI appropriation for fiscal year 2006 

is about half of the amount appropriated for fiscal year 2005. 
Page 23 GAO-06-677 HUD Homeownership Programs

Figure 6: Jurisdictions with ADDI Allocations of $50,000 or Less, Fiscal Years 2003-

2006

Statements by and information from officials in the jurisdictions that we 

contacted indicated that, because of modest funding levels for ADDI and 

the newness of the program, ADDI thus far has had no significant impact 

on homeownership rates in those areas. This was particularly true for 

jurisdictions we contacted in higher cost areas where the disparity between 

the incomes of eligible households and housing prices was large, and the 

households thus needed large subsidies. For example, the City of Modesto, 

California, received approximately $36,000 in ADDI funds in fiscal year 

2005 and about $18,000 in fiscal year 2006. A city official said that the 

typical gap between the purchase price of a home and an eligible family’s 

mortgage was about $70,000 and that Modesto’s total ADDI allocation was 

not sufficient to assist many, if any, eligible families in the area. Relatively 

small allocations also affected lower-cost jurisdictions we contacted. For 

example, the City of Amarillo, Texas, received approximately $35,000 in 

ADDI funding in fiscal year 2005 and approximately $17,000 in fiscal year 

2006. With an average grant amount of approximately $9,000 per ADDI0 

50 

100 

150 

200 

250 

300 

350 

400 

450 

2003 2004 2005 2006 

Jurisdictions

Fiscal year 

More than $50,000 

Less than or equal to $50,000 

Sources: GAO and HUD.

18%

82%

12%

88%

41%

59%

67%

33%
Page 24 GAO-06-677 HUD Homeownership Programs

assisted household, Amarillo likely will serve four households with its 

fiscal year 2005 ADDI allocation and fewer with its fiscal year 2006 

allocation. In addition, several of the officials in the jurisdictions we 

contacted noted that the program is still relatively new and that they could 

not begin spending their funding allocations until April 2004, after HUD 

issued interim regulations for ADDI. Some officials also stated that, 

because they needed time to develop local policies and procedures to 

implement the regulations, their ADDI programs were not in full operation 

until some months after this date. For these reasons, it may be some time 

before a sufficient number of households are assisted so to have an 

appreciable impact on homeownership rates, particularly at current 

funding levels.

HUD officials concurred that ADDI’s impact on homeownership rates has 

been limited but also noted that, as a result of ADDI, jurisdictions that did 

not previously use any of their HOME funds for down-payment assistance 

are now doing so. The officials said that, in contrast, some jurisdictions 

that did use a portion their HOME funds for down-payment assistance prior 

to ADDI may now be using their ADDI allocations as a substitute for 

(instead of a supplement to) these funds, thus limiting the marginal impact 

of the program. Officials in a small number of the jurisdictions we 

contacted said that, to varying degrees, they were using their ADDI funds in 

this manner. 

Some Selected Jurisdictions 

Experienced Problems 

Assisting Recipients of 

Rental Housing Assistance 

and Other Populations

Officials from a number of the 40 jurisdictions we contacted said that they 

have experienced difficulties in using ADDI to assist certain populations, 

including those that ADDI targeted for outreach—specifically, recipients of 

rental housing assistance and residents of manufactured housing. For 

example, most of the jurisdictions we contacted said that it was 

particularly hard to provide assistance to recipients of rental housing 

assistance (e.g., Housing Choice Voucher households and residents of 

public housing) because these households typically have very-low incomes 

and insufficient savings to purchase a home. For example, as of March 

2006, the average income of a public housing resident was about $11,000. 

Even with ADDI or other subsidies, such households may be unable to 

purchase homes because their incomes are insufficient to accommodate 

mortgage payments.

However, some of the participating jurisdictions we contacted have been 

able to help a limited number of public housing tenants and Housing 

Choice Voucher recipients become homeowners by combining ADDI 
Page 25 GAO-06-677 HUD Homeownership Programs

assistance with other programs. For example, the City of Sacramento, 

California, administers HUD programs under which the city rehabilitates 

and sells existing public housing and other subsidized units to current 

residents who are able to afford them. Buyers of these units receive ADDI 

assistance, along with other subsidies, including assistance through the 

Section 8 Homeownership Voucher program. 

Although serving rural areas is not a specific ADDI requirement, officials 

from some participating jurisdictions we spoke with, particularly those that 

are states, told us that they have faced difficulties serving rural areas 

because they lacked existing housing, and the costs associated with 

building new housing were high. For example, North Dakota officials told 

us that the supply of housing in rural areas of the state was limited and that 

market conditions made it economically infeasible to build new homes for 

low-income families. 

However, a few of the state-level jurisdictions we contacted have been able 

to assist families that live in rural areas. For example, Texas law requires 

the state participating jurisdiction to serve areas that are not HUDdesignated participating jurisdictions (i.e., cities, counties, and 

consortiums that receive ADDI funds directly from HUD).25 State officials 

said that, in practice, the state serves mostly rural areas with its ADDI 

program. Officials added that they are able to serve rural areas in the state 

because the cost of housing, including new construction, is relatively low. 

For example, in the City of Temple, Texas, the cost of a typical new singlefamily home ranges from $50,000 to $80,000. 

Finally, officials from some jurisdictions we spoke with cited several 

difficulties in assisting residents of manufactured housing. For example, 

some officials, particularly those from state-level jurisdictions we 

contacted, said that they found it hard to locate all of the mobile home 

parks in their areas, which limited their ability to market ADDI to this 

population. Other officials noted that mobile home park residents are often 

already homeowners and, therefore, do not meet the program’s eligibility 

requirements. In addition, officials who had tried to conduct outreach to 

mobile home parks that include residents who are not owners said that 

25Section 2306.111(c) of the Texas Government Code requires that the state participating 

jurisdiction allocate 95 percent of its HOME funds (including ADDI) to areas that are not 

HUD-designated participating jurisdictions, meaning that most of the state’s HOME/ADDI 

funding is awarded to rural communities.
Page 26 GAO-06-677 HUD Homeownership Programs

park owners often discouraged efforts to market homeownership programs 

to their tenants.

Conclusions Congress established ADDI under the multipurpose HOME program, and 

authorized funding through fiscal year 2007, to provide a dedicated stream 

of funding to help low-income households overcome a principal barrier to 

homeownership—covering the up-front costs of buying a property. 

Obtaining accurate data on ADDI expenditures and the numbers and 

characteristics of assisted households would be an essential first step in 

assessing the program’s impact. Although HUD, in anticipation of Congress 

authorizing a down-payment assistance program, changed its existing 

information system—IDIS—to collect such information, the agency was 

unable to anticipate all features of ADDI, and this change to IDIS was 

insufficient to collect information exclusively on ADDI projects. Due partly 

to the program’s modest size and limited authorization period, HUD 

decided not to create a discrete control for ADDI and instead went forward 

with procedures for designating ADDI projects in IDIS that had recognized 

limitations. As a result, HUD’s current procedures for collecting ADDI 

project information in IDIS allow non-ADDI HOME projects to be included 

in the expenditures and accomplishments attributed to the program. It is, 

therefore, difficult to draw any conclusions about what ADDI has 

accomplished, and Congress lacks reliable information on which to base 

decisions about the program’s reauthorization. However, because creating 

new data controls for ADDI in IDIS would require an investment of 

resources, to do so would be prudent only if ADDI is authorized beyond 

fiscal year 2007.

Even if HUD had more reliable data on ADDI expenditures and projects, it 

might be too early to assess their impact given the relatively short amount 

of time that the program has been operating—about 2 years. However, the 

market conditions and financing constraints described by the 40 

jurisdictions we contacted (about 9 percent of the jurisdictions that 

received ADDI funds), and the likelihood that these conditions and 

constraints exist in many other areas, suggest that ADDI faces a number of 

challenges that could limit its impact. First, while most of these 

jurisdictions were using their ADDI allocations, the allocations were likely 

too small to assist enough families to significantly increase homeownership 

rates. Second, in jurisdictions where the gap between home prices and the 

mortgages affordable to eligible families is greater than the ADDI perhousehold limits, ADDI will have an impact only to the extent that other 

sources of homeownership assistance are available to use in conjunction 
Page 27 GAO-06-677 HUD Homeownership Programs

with ADDI funds, and officials are able to effectively use such 

combinations. Finally, absent concerted efforts by jurisdictions to combine 

different sources of subsidies, the use of ADDI as a tool to help recipients 

of rental housing assistance become homeowners may be limited because 

the very low incomes of this population pose a major obstacle to 

homeownership. Nevertheless, consistent with long-standing federal 

efforts to make homeownership more affordable for American families, 

ADDI ensures that a broad range of participating jurisdictions use a portion 

of their total HOME allocations to help low-income families become firsttime homeowners.

Recommendations for 

Executive Action

To ensure that ADDI expenditures and accomplishments are accurately 

reported, we recommend that, if Congress authorizes ADDI beyond fiscal 

year 2007, the Secretary of HUD take the following two actions:

• develop and implement a discrete control in IDIS that distinguishes 

ADDI projects from non-ADDI HOME projects, seeking funds to do so if 

necessary; and

• issue guidance to participating jurisdictions on how to use this control 

to enter consistent data on ADDI projects into IDIS.

Agency Comments and 

Our Evaluation

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

provided comments in a letter from the General Deputy Assistant Secretary 

for Community Planning and Development (see app. VI). HUD did not 

comment on our recommendations but made several comments about 

other aspects of our draft report.

First, HUD stated that the title of the draft report was “misleading 

considering the findings and recommendations in the report.” Specifically, 

HUD agreed with a statement in the draft report’s Conclusions section 

stating that it might be too early to assess the impact of ADDI given the 

relatively short time the program has been in operation and believed that 

the title of the report should have captured the essence of this statement. 

Although this statement was one of several points in our conclusion, the 

more fundamental issue we raised—discussed in both the Conclusions 

section and the body of the draft report—was that HUD lacked accurate 

data on ADDI expenditures and accomplishments. Because accurate data 

are essential for program evaluation, as well as program management and 
Page 28 GAO-06-677 HUD Homeownership Programs

oversight, our draft report recommended that, if the program is 

reauthorized, HUD develop and implement controls and issue guidance 

that would ensure that data attributed to ADDI are accurate. We continue 

to believe that the title of our report accurately represented this 

fundamental issue and the reasoning behind the report’s recommendation.

Second, HUD said that the cost of changing IDIS to separately capture 

ADDI projects “could not be justified at the time of ADDI’s rollout in 2004 

by any reasonable cost/benefit analysis” and that the agency had explained 

this in great detail to GAO officials during the course of the review. HUD 

estimated the cost of such a change to be at least $1 million. However, HUD 

did not provide us with a cost/benefit analysis or, in fact, any analysis or 

detailed estimate of costs or benefits either during the course of our review 

or in its comment letter. HUD commented further that in a May 2006 

meeting, GAO officials had agreed that the agency’s decision not to invest 

funds and divert resources to create a discrete ADDI control appeared to 

be justified from HUD’s perspective. Contrary to HUD’s assertion, we did 

not agree in this meeting that HUD’s decision was justified. Because HUD 

provided no evidence of any cost/benefit analysis, we are not able to 

determine whether any steps HUD took to assess the costs and benefits of 

revising IDIS were reasonable and thus whether its decision was justified. 

However, our draft report acknowledged the rationale behind HUD’s 

decision and indicated that, according to HUD, creating a discrete ADDI 

control would require a significant investment of resources. Finally, HUD 

stated that (1) the agency’s reasons for not creating a discrete ADDI control 

needed to be discussed in the beginning of the report to provide a clearer 

understanding of the agency’s actions and (2) our draft report did not 

recognize one of these reasons—specifically, that the agency did not know 

whether ADDI would receive funding beyond 2007. Our draft report 

presented HUD’s overall view on the feasibility of creating a discrete ADDI 

control in both the Highlights and Results in Brief sections at the front of 

the report. In addition, our draft report did cite ADDI’s authorization period 

as one of the agency’s reasons. However, in response to HUD’s comments, 

we added language to both the Highlights and the Results in Brief sections 

of the final report to further explain the agency’s rationale.

Third, HUD stated that it disagreed with the draft report’s contention that 

the ADDI expenditures and accomplishments the agency reported are not 

representative of ADDI projects. In support of this statement, HUD cited an 

analysis—using data in IDIS—from which the agency concluded that “the 

population served by ADDI set-aside funds and other HOME funds are, for 

all intents and purposes, one and the same.” Because HUD’s analysis is 
Page 29 GAO-06-677 HUD Homeownership Programs

based on data compiled using the same flawed procedures discussed in our 

report, we do not believe that HUD has presented a sound basis for this 

conclusion. In addition, our draft report did not state that HUD’s data “are 

not representative of ADDI projects.” Rather, it said that due to internal 

control weaknesses, HUD’s data include an unknown number of non-ADDI 

HOME projects and that the agency, therefore, cannot be certain of the 

extent to which the data represent ADDI projects. HUD also cited 

jurisdictions’ practice of combining ADDI and other HOME funds as 

evidence that the populations served by ADDI and other HOME funds are 

essentially the same. However, this practice merely shows that other 

HOME funds may be used to assist first-time homebuyers and does not 

demonstrate that all first-time homebuyers served by other HOME funds 

share the same characteristics as those served by ADDI. Further, even if 

both ADDI and non-ADDI HOME funds serve similar populations, HUD is 

responsible for complying with federal internal control standards that call 

for controls to appropriately classify projects—in this case projects that 

are funded from programs with different allocation formulas and 

requirements. 

Fourth, HUD stated that it “rejects the contention that the [ADDI] 

information collected is not relevant, of value, and useful for controlling 

operations and making decisions” and that the agency is “using such 

information operationally to, among other things, aggressively track and, as 

appropriate, take necessary actions toward improving the performance of 

sixty-seven participating jurisdictions that have yet to expend any of their 

ADDI funds.” Although our review found many instances where HUD’s IDIS 

data overstated and potentially understated jurisdictions’ ADDI 

expenditures, our draft report did not contend that HUD’s data have no 

value. However, because of the limitations, we believe it is unlikely that 

these data capture the total population of jurisdictions that have yet to 

expend any of their ADDI funds. 

Finally, HUD disagreed with statements in our draft report that data 

limitations prevented GAO from assessing ADDI’s impact and 

accomplishments and stated that GAO’s methodology was not adequate to 

respond to the congressionally mandated study of ADDI. As we stated in 

the draft report, accurate data on ADDI expenditures and accomplishments 

would be an essential first step in assessing the program, and HUD lacks 

accurate data. Collecting such data would have required us to contact all 

445 jurisdictions that have received ADDI funds since the program’s 

inception, as well as any third parties or subgrantees that administered 

these jurisdictions’ ADDI programs. We determined that such an approach 
Page 30 GAO-06-677 HUD Homeownership Programs

would have been prohibitively expensive and an inefficient use of funds, 

particularly given that it would not have produced a supporting information 

system for future data collection. Further, we kept the relevant 

congressional committees apprised of our scope, methodology, and 

research objectives throughout the review, including the limitations in 

HUD’s data that affected our work.

We are sending copies of this report to the Secretary of HUD and other 

interested congressional committees. We also will make copies available to 

others upon request. In addition, the report will be available at no charge 

on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-8678 or woodd@gao.gov. Contact points for our 

Office of Congressional Relations and Public Affairs may be found on the 

last page of this report. Key contributors to this report are listed in 

appendix VII.

David G. Wood

Director, Financial Markets

and Community Investment
Page 31 GAO-06-677 HUD Homeownership Programs

Appendix I

Scope and Methodology AAppenednxidexiIs

To obtain information on American Dream Downpayment Initiative (ADDI) 

expenditures and assisted households through December 31, 2005, we 

obtained and analyzed data from the Department of Housing and Urban 

Development’s (HUD’s) ADDI Accomplishment Report and Open Activities 

Report. To assess the reliability of the data in HUD’s ADDI Accomplishment 

Report, which is generated from the agency’s Integrated Disbursement and 

Information System (IDIS), we (1) performed limited electronic testing of 

data elements contained in HUD’s ADDI Accomplishment Report to detect 

obvious errors; (2) reviewed existing information about the data and HUD’s 

rules for crediting ADDI in IDIS; (3) interviewed officials from HUD’s 

Office of Community Planning and Development about ADDI program 

requirements, the agency’s IDIS controls, and guidance to jurisdictions on 

the procedures for entering ADDI project information into IDIS; and (4) 

performed some checks of the HUD-reported ADDI expenditure data 

against records from a selection of 33 jurisdictions—11 states, 13 cities, 

three counties, and six consortiums. We visited 13 of these participating 

jurisdictions—4 states, 6 cities, and three consortiums—that we 

judgmentally selected to cover different geographic regions, housing 

markets, and jurisdiction types. We interviewed officials from the 20 

remaining jurisdictions—7 states, 7 cities, three counties, and three 

consortiums— which was a stratified, random sample designed to cover 

the four types of jurisdictions and those with relatively high and low 

funding allocations and expenditure levels, according to HUD’s data as of 

December 31, 2005. 

We also reviewed laws, regulations, and agency guidance relevant to ADDI 

and the HOME Investment Partnerships (HOME) program, as well as 

guidance and documentation for HUD’s IDIS. We also consulted GAO’s 

Standards for Internal Control in the Federal Government and Internal 

Control Management and Evaluation Tool. We used these standards to 

assess whether HUD’s internal controls for ADDI reporting were sufficient 

to ensure that the agency was accurately reporting ADDI expenditures and 

accomplishments. We did not assess the reliability of HUD’s Open 

Activities Report or the additional IDIS data that HUD provided us on the 

characteristics of the households the agency attributed to ADDI from April 

2004 through the end of December 2005.

We were not able to determine the reliability of the expenditures or number 

of assisted households that HUD reported for the ADDI program as of 

December 31, 2005, because of certain limitations. Specifically:
Appendix I

Scope and Methodology

Page 32 GAO-06-677 HUD Homeownership Programs

• IDIS lacks a discrete control to distinguish ADDI projects from nonADDI HOME projects;

• HUD’s guidance gives jurisdictions latitude to enter inaccurate data into 

IDIS; 

• Data reported by HUD may not capture all ADDI projects; and 

• We contacted a small percentage (7.5 percent) of the 445 jurisdictions 

that received an ADDI allocation, since the program began, to check the 

reliability of HUD’s ADDI data. 

Nevertheless, in order to provide descriptive information about the ADDI 

program and highlight the problems we identified with IDIS, we present the 

ADDI data as reported by HUD. These were the only data available from 

HUD on the ADDI activities of participating jurisdictions nationwide. Due 

to these limitations, these figures need to be interpreted and used 

cautiously. 

To describe the views of officials from selected jurisdictions on factors that 

affected their ability to use ADDI funds and on the program‘s impact, we 

obtained information from a total of 40 jurisdictions (the 33 noted 

previously plus seven others—two states, four cities, and one 

consortium—that we contacted while we were still developing our 

methodology) through site visits, phone interviews, or document requests 

(see list below). 1

 Specifically, we visited 13 of these jurisdictions and 

interviewed officials from the remaining 27. We asked these officials about 

their administration of ADDI, including outreach activities and the extent 

to which they used third parties or subgrantees; whether they had a downpayment assistance program prior to ADDI and any federal, state, and local 

sources of homeownership assistance they use in addition to ADDI; the 

housing market conditions in their jurisdictions; and the demographics of 

the populations they assist. We also asked them about their views on 

ADDI’s impact on homeownership rates, the amount of ADDI funds they 

receive relative to demand for the program, and the ADDI per-household 

assistance limits. For the 13 jurisdictions we visited, we also obtained data 

and documentation on the different subsidies they used to promote 

1

Because we were still developing our methodology when we contacted the seven 

jurisdictions, we did not include them in our reliability check of HUD’s ADDI expenditure 

data.
Appendix I

Scope and Methodology

Page 33 GAO-06-677 HUD Homeownership Programs

homeownership and the characteristics of ADDI-assisted households. To 

supplement the information from the selected jurisdictions, we also 

analyzed nationwide data from HUD on the ADDI allocations each 

jurisdiction received for fiscal years 2003 through 2006.

During the course of our work, we contacted the following 40 ADDI 

jurisdictions:

Cities

Amarillo, Texas

Austin, Texas

Baltimore, Maryland

Boston, Massachusetts

Chicago, Illinois

Grand Rapids, Michigan

Indianapolis, Indiana

Inglewood, California

Los Angeles, California

Minneapolis, Minnesota

Modesto, California

New York City, New York

Philadelphia, Pennsylvania

Pittsburg, Pennsylvania

Sacramento, California

Seattle, Washington

Washington, D.C.

Counties

Hamilton County, Ohio

Montgomery County, Ohio

Will County, Illinois 

Consortiums

Alameda County Consortium, California

Barnstable County Consortium, Massachusetts

Butler County Consortium, Ohio

Cuyahoga County Consortium, Ohio

Dakota County Consortium, Minnesota
Appendix I

Scope and Methodology

Page 34 GAO-06-677 HUD Homeownership Programs

Hennepin County Consortium, Minnesota

St. Louis County Consortium, Missouri

States

California

Florida

Maryland

Massachusetts

Michigan

Minnesota

New Mexico

North Dakota

Ohio

Oklahoma

Pennsylvania

Texas

Washington

We did not generalize the results of our interviews to the entire population 

of jurisdictions that received an ADDI allocation because we contacted 

only a small selection of jurisdictions. Further, the internal control 

problems associated with HUD’s data did not allow us to make any 

conclusions about the program’s accomplishments.

We performed our work from July 2005 through June 2006, in accordance 

with generally accepted government auditing standards.
Page 35 GAO-06-677 HUD Homeownership Programs

Appendix II

Summary of Review of Literature on Barriers 

to Homeownership ApendxiI

Several academics have identified barriers to homeownership among all 

types of households, evaluated the relative importance and magnitude of 

these barriers, and hypothesized on the extent to which relaxation of these 

barriers (or constraints) could increase homeownership among certain 

populations, as well as the overall homeownership rate. The literature we 

reviewed most commonly cited a lack of wealth (i.e., liquid assets for a 

down payment and closing costs), a lack of income (i.e., liquid assets to 

make monthly mortgage payments and to pay for home maintenance and 

repair), and poor credit as barriers to homeownership, with lack of wealth 

being the most significant, especially among minority households.1

Englehardt (1994) noted that housing prices affect potential buyers in many 

ways but most significantly through the down-payment requirement.2

 He 

found that the higher the house price, the greater the amount of the down 

payment required, and the greater the barrier to homeownership. 

According to Englehardt, intergenerational transfers (i.e., the transfer of 

wealth from parents to their children) effectively negate this wealth 

constraint, allowing households to purchase homes sooner than they 

otherwise would if they had to save for the down payment on their own. In 

a subsequent study, Mayer and Englehardt (1996) noted that the percentage 

of the down payment coming from gifts is negatively related to income and 

wealth and positively related to median house price.3

 Combined with data 

showing, among other things, that the percentage of the down payment 

coming from gifts is increasing and that the percentage from savings is 

decreasing, the study suggests that some buyers are having an increasingly 

difficult time saving for a down payment. 

Stegman, Quercia, McCarthy, and Rohe found an increasing disparity 

between the growth in income of lower-income families and an increase in 

1

As our report notes, the American Dream Downpayment Assistance Initiative was designed 

to give low-income households money for a down payment and closing costs, thus helping 

to address this primary barrier to ownership. 

2

G. Englehardt, “House Prices and the Decision to Save for Downpayments,” Journal of 

Urban Economics, vol. 36 (1994): 209-237. 

3

C. Mayer and G. Englehardt, “Gifts, Downpayments, and Housing Affordability,” Journal of 

Housing Research, vol. 7, no. 1 (1996): 59-77. 
Appendix II

Summary of Review of Literature on Barriers 

to Homeownership

Page 36 GAO-06-677 HUD Homeownership Programs

the operating costs of homes over time.4 Using data from the Federal 

Housing Administration and the U.S. Census Bureau’s Annual Housing 

Survey, the authors found that the cost of operating a single-family home in 

the past decade rose at an annual rate of 11.5 percent, while household 

incomes (for all households) grew at an annual rate of 7.7 percent between 

1974 and 1980. Based on this national information, they concluded that, on 

average, families with low incomes in 1974 could carry a market-rate 

mortgage of no more than a $43,900 (in 1990 dollars), meaning that they 

would have needed capital grants of $10,600 to buy a house priced at 75 

percent of the median price for a given area. Very-low income households 

faced an even larger constraint and required deeper subsidies 

(approximately $39,000). 

Finally, Haurin, Hendershott, and Wachter (1997) found that households 

that are constrained because of low income or wealth have a substantially 

reduced probability of owning a home.5

 They concluded that the severity of 

constraints faced by the households will not affect the homeownership rate 

unless an intervention (such as down-payment assistance) eliminates the 

constraint. These findings and those of Englehardt; Mayer and Englehardt; 

and Stegman, Quercia, McCarthy, and Rohe are consistent with our finding 

that, in jurisdictions with high housing costs, large subsidies are required to 

finance the gap between homebuyers’ mortgage amounts and the high 

prices of homes. 

4

M. Stegman, R. Quercia, G. McCarthy, and W. Rohe, “Using the Panel Study of Income 

Dynamics (PSID) to Evaluate the Affordability Characteristics of Alternative Mortgage 

Instruments and Homeownership Assistance Programs,” Journal of Housing Research, vol. 

2, no. 2 (1991): 161-211. 

5

D. Haurin, P. Hendershott, and S. Wachter, “Borrowing Constraints and the Tenure Choice 

of Young Households,” Journal of Housing Research, vol. 8, no. 2 (1997): 137-155. 
Appendix II

Summary of Review of Literature on Barriers 

to Homeownership

Page 37 GAO-06-677 HUD Homeownership Programs

Several additional studies highlight the impact of the “wealth constraint” on 

minority households.6

 For example, Gyourko, Linneman, and Wachter note 

that among wealth-constrained households (i.e., those households with 

insufficient net worth to meet down payment and closing cost 

requirements), whites own at systematically higher rates than minorities, 

suggesting that minorities not only are less likely to own than whites, but 

that they are also disproportionately wealth constrained. The authors 

found that, in 1983, wealth-constrained whites owned homes at roughly 

double the 10.3 percent rate of wealth-constrained minorities. 

Finally, several studies suggest that small amounts of down-payment 

assistance or other similar subsidies could substantially increase the 

homeownership rate among low-income and minority households in 

particular.7

 However, the findings in these studies generally are not based 

on results from controlled field studies and should not be construed as 

definitive evidence of the impact down-payment assistance programs. For 

example, Listokin, Wyly, Schmitt, and Voicu (2001) estimated the portion of 

renters who would qualify for homeownership with mortgages that permit, 

among other things, low down payments. They estimated that 9.2 percent 

of all renters could afford a modestly priced home with a standard 

mortgage without any down-payment assistance, but that the estimated 

percentage would increase to 16.2 percent with an asset supplement (i.e., 

down-payment assistance). Comparatively, the authors estimated that the 

share of black renters who could afford a modestly priced home with a 

standard mortgage was 2.7 percent. The authors found that the only way to 

substantially increase that percentage would be through an asset 

6

See J. Gyourko, P. Linneman, and S. Wachter, “Analyzing the Relationships Among Race, 

Wealth, and Home Ownership in America,” Journal of Housing Economics, vol. 8 (1999): 

63-89 and D. Listokin, E. Wyly, B. Schmitt, and I. Voicu, “The Potential and Limitations of 

Mortgage Innovation in Fostering Homeownership in the United States,” Housing Policy 

Debate, vol. 12, no. 3 (2001): 465-513. Also see the following Department of Housing and 

Urban Development studies: Z. Di and X. Liu, “The Importance of Wealth and Income in the 

Transition to Homeownership.” U.S. Department of Housing and Urban Development 

Office of Policy Development and Research, (2005) and C. Herbert, D. Haurin, S. Rosenthal, 

and M. Duda, “Homeownership Gaps Among Low-Income and Minority Borrowers and 

Neighborhood,” U.S. Department of Housing and Urban Development Office of Policy 

Development and Research, (2005). 

7

See Di and Liu (2005); C. Herbert and W. Tsen, “The Potential of Downpayment Assistance 

for Increasing Homeownership Among Minority and Low-Income Households,” U.S. 

Department of Housing and Urban Development Office of Policy Development and 

Research, (2005); and Listokin, Wyly, Schmitt, and Voicu (2001). 
Appendix II

Summary of Review of Literature on Barriers 

to Homeownership

Page 38 GAO-06-677 HUD Homeownership Programs

supplement; they estimated that a $10,000 supplement would increase the 

percentage to 29.8 percent. 
Page 39 GAO-06-677 HUD Homeownership Programs

Appendix III

Comparison of Selected Rules Applicable to 

Fiscal Year 2003 ADDI Funds to Those for 

Fiscal Year 2004-2007 Funds ApendxiI

The rules governing the allocation and use of American Dream 

Downpayment Initiative (ADDI) funds for fiscal year 2003 differ somewhat 

from those for fiscal years 2003 through 2007. Table 2 summarizes the 

similarities and differences for selected rules.

Table 2: Comparison of Selected ADDI Rules for Different Fiscal Years

Source: HUD.

Note: Project “soft-costs” are reasonable and necessary costs incurred by the homebuyer or 

participating jurisdiction associated with the financing of single-family housing (inspection fees, for 

example).

a

“Need” is the percentage of low-income households residing in rental housing based on census data.

b

As participating jurisdictions use HOME funds, they incur a match liability—25 cents for each dollar of 

HOME funds spent—that must be satisfied by the end of each federal fiscal year. 

c

The purpose of the Uniform Relocation Act is to provide uniform, fair, and equitable treatment of 

persons whose real property is acquired or who are displaced in connection with federally funded 

projects. Tenants displaced because their dwelling was purchased using fiscal year 2003 ADDI funds 

are eligible for relocation assistance and payments.

Rule Fiscal year 2003 funds Fiscal year 2004-2007 funds

Funding formula Needa for, and prior commitment to, 

assistance to homebuyers.

Needa by state; then, by local participating jurisdiction. 

Funds only to local jurisdictions with populations of more 

than 150,000 or that qualify for an allocation greater than 

$50,000.

Ineligible participating 

jurisdictions

None. The Commonwealth of Puerto Rico and local participating 

jurisdictions in Puerto Rico.

Eligible homebuyers Low-income, first-time homebuyers

Eligible uses of funds Down-payment assistance. Down-payment assistance and rehabilitation done in 

conjunction with a home purchase. Rehabilitation must be 

completed within 1 year of purchase.

Administrative costs Cannot be used for administrative costs

Assistance caps Subject to HOME Investments 

Partnerships program (HOME) maximum 

per-unit subsidy.

The greater of $10,000 or 6 percent of the home’s purchase 

price; also subject to HOME maximum per-unit subsidy 

when used in combination with HOME funds.

Matching requirementb Applies. Does not apply.

Uniform Relocation Act 

requirementsc

Applies. Does not apply.
Page 40 GAO-06-677 HUD Homeownership Programs

Appendix IV

Statistics That HUD Reported for ADDI 

through December 31, 2005 ApendxiIV

The amount of expenditures, assisted households, and assisted minority 

households reported by the Department of Housing and Urban 

Development (HUD) varied by state (see table 3). According to HUD’s data,

• The amount of American Dream Downpayment Initiative (ADDI) 

expenditures ranged from a low of $0 (South Dakota) to a high of $10.3 

million (California).

• The number of assisted households ranged from a low of 0 (South 

Dakota) to a high of 985 (Ohio). Texas assisted the most minority 

households (607).

• Excluding fiscal year 2003 ADDI funds (because they are subject to 

different per-household assistance limits than funds for subsequent 

years), the average and median assistance per household were $6,871 

and $6,840, respectively. For minority households, the comparable 

figures were $7,123 and $7,000. The amount of assistance provided 

ranged from less than $1,000 to $28,748.

However, as discussed in the body of this report, these figures, including 

data in the following table, represent a mix of ADDI and an unknown 

number of non-ADDI HOME projects.
Appendix IV

Statistics That HUD Reported for ADDI 

through December 31, 2005

Page 41 GAO-06-677 HUD Homeownership Programs

Table 3: State-by-State ADDI Expenditures and Accomplishments Reported by HUD through December 31, 2005

State

Down-payment 

assistance

Rehabilitation 

assistance

Total ADDI 

assistance

Total number of 

households

Number of minority 

households within total 

number of households

Ala. $2,525,806 $0 $2,525,806 258 101

Alaska 462,288 0 462,288 43 14

Ariz. 729,421 0 729,421 89 57

Ark. 181,208 0 181,208 30 20

Calif. 10,325,690 3,774 10,325,690 685 469

Colo. 1,345,807 0 1,345,807 243 78

Conn. 821,996 0 821,996 54 40

D.C. 713,779 0 713,779 54 52

Del. 8,050 0 8,050 1 0

Fla. 5,505,023 0 5,505,023 590 355

Ga. 3,754,127 4,350 3,758,477 596 424

Hawaii 520,612 0 520,612 44 30

Idaho 647,900 0 647,900 197 24

Ill. 4,327,641 0 4,327,641 447 288

Ind. 2,913,858 0 2,913,858 669 149

Iowa 102,099 0 102,099 10 8

Kans. 1,750,611 19,708 1,770,319 244 64

Ky. 1,895,810 0 1,895,810 241 75

La. 1,070,606 0 1,070,606 152 120

Maine 595,544 0 595,544 81 6

Mass. 3,069,062 12,731 3,081,793 467 199

Md. 2,565,254 0 2,565,254 346 242

Mich. 2,972,693 10,917 2,979,171 334 170

Minn. 397,308 0 397,308 55 11

Miss. 534,564 0 534,564 32 17

Mo. 3,385,899 2,200 3,388,099 572 206

Mont. 698,906 0 698,906 63 7

N.C. 4,637,120 0 4,637,120 684 385

N.Dak. 532,353 8,852 541,205 152 5

N.H. 819,865 0 819,865 80 6

N.J. 1,368,659 0 1,368,659 169 123

N.Mex. 753,146 0 753,146 99 68

N.Y. 5,151,769 110,351 5,262,120 697 273

Nebr. 954,591 25,495 980,086 111 11
Appendix IV

Statistics That HUD Reported for ADDI 

through December 31, 2005

Page 42 GAO-06-677 HUD Homeownership Programs

Sources: GAO and HUD.

Note: According to HUD officials and explanatory documents on the agency’s Web site, down-payment 

assistance plus rehabilitation assistance should equal total ADDI assistance on the above report; 

however, we found that the report contains three cases where rehabilitation assistance was excluded 

from total ADDI assistance.

Nev. 879,620 0 879,620 140 113

Ohio 5,457,679 26,137 5,483,816 985 399

Okla. 452,666 0 452,666 228 167

Oreg. 312,956 0 312,956 48 7

Pa. 2,733,890 10,524 2,744,414 428 132

Puerto Rico 716,517 0 716,517 48 48

R.I. 409,944 0 409,944 43 24

S.C. 1,806,087 0 1,806,087 521 228

S.Dak. 0 0 0 0 0

Tenn. 3,330,401 0 3,330,401 453 189

Tex. 5,898,550 10,288 5,908,838 776 607

Utah 239,619 0 239,619 115 15

Va. 3,530,851 13,704 3,540,055 385 233

Vt. 155,142 0 155,142 8 1

W.Va. 215,958 0 215,958 21 5

Wash. 1,665,382 0 1,665,382 164 35

Wisc. 1,926,957 97,365 2,024,322 313 53

Wyo. $362,915 $0 $362,915 35 2

Total $98,134,199 $356,396 $98,477,882 13,300 6,355

(Continued From Previous Page)

State

Down-payment 

assistance

Rehabilitation 

assistance

Total ADDI 

assistance

Total number of 

households

Number of minority 

households within total 

number of households
Page 43 GAO-06-677 HUD Homeownership Programs

Appendix V

Profiles of ADDI Programs in Four 

Jurisdictions ApendxiV

We contacted 40 participating jurisdictions that were awarded American 

Dream Downpayment Initiative (ADDI) grants in fiscal years 2003 through 

2005. We describe below ADDI programs in 4 of the 40 jurisdictions we 

contacted—Los Angeles, California; Grand Rapids, Michigan; the State of 

Texas; and Sacramento, California. We selected these four jurisdictions to 

illustrate how the program is operating in relatively high-cost and low-cost 

locations and is being used to assist targeted or hard-to-reach populations.

Los Angeles, California According to the National Association of Home Builders/Wells Fargo 

Housing Opportunity Index, Los Angeles was the most expensive city to 

live in the United States in 2005.1

 The disparity between the annual income 

of an eligible low-income family—one earning 80 percent or less of the area 

median income—and the purchase price of homes represents one of the 

most significant obstacles to homeownership for first-time homebuyers in 

Los Angeles. For example, the median purchase price of homes purchased 

by ADDI-assisted households in Los Angeles was $264,000, while the 

median mortgage amount was about $142,000. As a result of this large gap, 

the Los Angeles Housing Department (LAHD) administers a complex 

homebuyer assistance program, in which more than seven subsidies can be 

combined to assist eligible first-time, low-income homebuyers.

LAHD offers several programs to low-income, first-time homebuyers who 

need assistance to purchase a home in the city. Using HOME Investment 

Partnerships (HOME) program funds, LAHD offers purchase assistance of 

up to $90,000 to eligible homebuyers. LAHD also provides eligible 

homebuyers with ADDI funds—$10,000 or up to 6 percent of the purchase 

price of a home, whichever is greater—to help cover the cost of the down 

payment and closing costs. Both programs offer the assistance as 30-year, 

deferred zero-interest loans, which are payable upon the sale or transfer of 

the property. Homebuyers are required to complete at least 8 hours of 

homebuyer education from one of LAHD’s approved providers to obtain 

these loans and must contribute a minimum of 3 percent of the sales price 

from their own savings toward the down payment. Homebuyers may 

contribute as little as 1 percent toward the down payment by attending 12 

hours of homebuyer education training. As shown below, the LAHD loans 

are combined with state and other subsidies to maximize the benefits of the 

1

The index ranks metropolitan areas based on their affordability. Affordability is calculated 

based on the share of homes sold in an area that would have been affordable to a family 

earning the median income in that area.
Appendix V

Profiles of ADDI Programs in Four 

Jurisdictions

Page 44 GAO-06-677 HUD Homeownership Programs

subsidies and make homeownership in the city affordable for eligible 

families (see fig. 7). 

Figure 7: Example of a Homebuyer’s Financing Package Incorporating ADDI and LAHD Programs

As of January 2006, LAHD had assisted 32 low-income, first-time 

homebuyers with ADDI funds. Of the 32 homebuyers who received ADDI 

funds, all used more than one subsidy, 25 were minorities, and 23 earned 60 

percent or more of the area median income (see table 4).

Purchase price

Estimated buyer’s closing costs

Total cost

Borrower’s down payment

Mortgage

Total borrower’s contribution

ADDI loan

LAHD loan (i.e., other HOME down-payment assistance)

Additional 1: State funding 1

subsidies 2: State funding 2

3: Private funding

 4: Nonprofit funding 1

 5: Nonprofit funding 2

Total amount of down-payment assistance

$336,300 

8,212 

$344,512 

$5,056 

151,100 

$156,156 

$20,178

90,000 

30,000 

20,178

15,000 

10,000 

3,000 

$188,356 

Amount 

needed 

to close 

Downpayment 

assistance 

Borrower’s

contribution 

Homebuyer’s financing package Down-payment assistance 

2% 

47% 

16% 

11% 

11% 

8% 

5% 

Source: Los Angeles Housing Department data. 
Appendix V

Profiles of ADDI Programs in Four 

Jurisdictions

Page 45 GAO-06-677 HUD Homeownership Programs

Table 4: Selected Characteristics of ADDI Recipients in the City of Los Angeles, as of January 2006

Sources: GAO and City of Los Angeles.

Grand Rapids, Michigan According to the National Association of Home Builders/Wells Fargo 

Housing Opportunity Index, the City of Grand Rapids was among the 15 

most affordable metropolitan areas to live in the United States in 2005. 

According to the city’s 2005-2010 Consolidated Housing and Community 

Development Plan, the city’s overall homeownership rate in 2000 was about 

60 percent. However, within the areas generally targeted for its homebuyer 

assistance programs, the homeownership rate was less than 48 percent. 

The city’s consolidated plan also states that most renters with incomes of 

51 to 80 percent of the city’s area median income have the ability to secure 

housing through the private market. However, these households still face 

two impediments to homeownership: (1) down payments and closing costs 

and (2) the availability of quality housing within their price range. 

The Grand Rapids Community Development Department integrated the 

ADDI program into its existing Homebuyer Assistance Fund (HAF) 

program, which is funded with other HOME grants. HAF offers a zerointerest, deferred payment loan of up to $5,000 for down-payment and 

closing cost assistance to first-time, low-income homebuyers. These loans 

are forgivable after 5 years. Eligible homebuyers are informed of the HAF 

program through various means, including participating mortgage lenders. 

To be considered for a HAF loan, eligible homebuyers must be approved 

for a mortgage loan from 1 of 15 participating lenders, contribute at least 1 

percent of the sales price toward the down payment, have assets that do 

not exceed $5,000, and complete a homebuyer education course. Of 41 

families who received assistance through ADDI, as of February 2006, 37 

were minorities (see table 5). 

ADDI assistance

Additional public and 

private assistance

Homebuyer cash 

contribution Purchase price

First mortgage 

amount

Range $10,920-$25,200 $25,683-$192,319 $1,850-$22,400 $182,000-$420,000 $80,700-$256,854

Median $15,840 $122,788 $5,460 $264,000 $141,700

Average $15,465 $119,850 $6,425 $257,758 $146,992
Appendix V

Profiles of ADDI Programs in Four 

Jurisdictions

Page 46 GAO-06-677 HUD Homeownership Programs

Table 5: Selected Characteristics of ADDI Recipients in the City of Grand Rapids, as of February 2006

Sources: GAO and City of Grand Rapids.

State of Texas Due to lower incomes (residents of nonmetropolitan areas earn 

approximately $13,000 less annually than residents of metropolitan areas) 

and lack of access to resources (such as bonds, large tax bases, and 

investment capital) in less populous areas, the State of Texas gives special 

programmatic consideration to lower-income individuals and households 

residing in rural areas. For example, Section 2306.111(c) of the Texas 

Government Code requires that the state participating jurisdiction allocate 

95 percent of its HOME (including ADDI) funds to areas that are not other 

HUD-designated participating jurisdictions. Combined with its annual 

ADDI allocation, the state dedicated approximately $6.7 million to its 

Homebuyer Assistance Program (HAP) for fiscal year 2006.

The Texas Department of Housing and Community Affairs administers HAP 

through 20 subgrantees that are selected through a competitive process. 

Families apply for down-payment assistance through these subgrantees. 

Selected families receive 10-year forgivable loans that cannot exceed the 

greater of $10,000 or 6 percent of the purchase price of a home. Of the 42 

homebuyers who received ADDI funds through HAP, as of February 2006, 

32 were minorities, 24 had mortgages insured by HUD’s Federal Housing 

Administration, 21 purchased homes in rural areas, and 8 earned less than 

60 percent of the area median income. The average amount of ADDI 

assistance per household was approximately $6,500 (see table 6). 

ADDI assistance Income 

Homebuyer cash 

contribution Purchase price First mortgage amount

Range $3,698-$5,000 $16,497-$47,776 $500-$2,824 $64,900- $110,500 $63,491-$109,388

Median $5,000 $26,487 $999 $86,000 $84,996

Average $4,846 $28,282 $1,157 $87,177 $85,737
Appendix V

Profiles of ADDI Programs in Four 

Jurisdictions

Page 47 GAO-06-677 HUD Homeownership Programs

Table 6: Selected Characteristics of ADDI Recipients in the State of Texas Program, as of February 2006

Sources: GAO and State of Texas.

Sacramento, California The Sacramento Housing and Redevelopment Agency (HRA) administers 

two HUD programs through which it targets its homeownership programs, 

including ADDI, to recipients of rental housing assistance (e.g., Housing 

Choice Voucher households and residents of public housing)—the Section 

5(h) and Section 32 homeownership programs.2

 

• Under the Section 5(h) homeownership program, public housing 

authorities (agencies that administer HUD’s federal rental housing 

assistance programs) can sell units and developments that, because of 

their location or other factors, are no longer efficient for the housing 

authority to operate. Residents of these developments are given first 

priority to purchase the units. Housing authorities may use other HUD 

assistance, including ADDI funds, to help finance the purchase and sale 

of these units. 

• Similar to the Section 5(h) program, the Section 32 homeownership 

program permits public housing authorities to make public housing 

units available for purchase by low-income families, including recipients 

of federal rental housing assistance. The program also permits housing 

authorities to give capital funds to public housing residents to purchase 

homes (down-payment and closing cost assistance, subordinate 

financing, or below-market financing) or use capital funds to acquire 

homes that will be sold to low-income families. Housing authorities may 

use other HUD assistance, including ADDI funds, to help finance the 

purchase and sale of these units. 

Under the Sacramento HRA’s homebuyer program, eligible homebuyers can 

layer up to four subsidies, depending on their annual income, to use toward 

ADDI assistance

Additional public and 

private assistance

Homebuyer cash 

contribution Purchase price

First mortgage 

amount

Range $3,100-$10,000 $0-$5,275 $0-$19,862 $40,900-$163,200 $25,000-$160,678

Median $5,200 $0 $0 $97,450 $91,397

Average $6,470 $526 $1,025 $94,942 $90,237

2

Regulations under 24 C.F.R. Part 906 govern both programs. 
Appendix V

Profiles of ADDI Programs in Four 

Jurisdictions

Page 48 GAO-06-677 HUD Homeownership Programs

the purchase of a condominium or single-family home in the City or County 

of Sacramento (see table 7). Total assistance available to a family can range 

up to $40,000. According to an official from the Sacramento HRA, about 75 

percent of homebuyers obtain one or more subsidies. 

Table 7: Subsidies Available to Homebuyers in the City of Sacramento by Income Level or Voucher Program 

Source: Sacramento HRA.

Note: HUD’s Homeownership Voucher program allows recipients of Housing Choice Vouchers to use 

their monthly subsidies to make payments on a mortgage. Assistance is available for 10 to 15 years, 

depending on the terms of the first mortgage. Program participants must be first-time homebuyers, 

have full-time employment, and make a minimum income (based on HUD guidelines).

a

The First-Time Homebuyer program and Target Area Homebuyer program provide homebuyers with 

down-payment and closing cost assistance (30-year deferred payment loan). The maximum amount of 

assistance available under each of the programs is $5,000, and recipients must be first-time 

homebuyers (recipients do not need to be first-time homebuyers in case of the Target Area program), 

low-income (or low or moderate in the case of the Target Area program) homebuyers. Both of these 

programs are partly funded by HUD’s Community Development Block Grant and HOME programs.

b

To receive ADDI funds, a homebuyer must meet the criteria set forth in the American Dream 

Downpayment Act. Assistance is in the form of a 10-year forgivable loan.

c

The Mortgage Assistance program and the CalHome Mortgage Assistance program offer 30-year 

deferred payment loans that are used to reduce the amount of the purchaser’s first mortgage. The 

amount of assistance for which a homebuyer can qualify cannot exceed $20,000 (Mortgage 

Assistance program) or $25,000 (CalHOME). Recipients must be low-income, first-time homebuyers, 

and the assistance can be used to purchase a home in eligible areas of the City and County of 

Sacramento.

Income level Subsidies available

Less than 60 percent of area median income or property located 

in a targeted area

Eligible families may layer up to four of the following programs:

• First-Time Homebuyer program or

• Target Area Homebuyer programa

• ADDIb

• Mortgage Assistance program or

• CalHome Mortgage Assistance programc

• Mortgage Certificate Credit programd

60 to 80 percent of area median income Eligible families may layer up to three of the programs listed above.

Homeownership Voucher program participants Recipients of Section 8 Homeownership Vouchers may combine 

their assistance with the following three programs:

• First-Time Homebuyer programa

• ADDIb

• CalHome Mortgage Assistance programc
Appendix V

Profiles of ADDI Programs in Four 

Jurisdictions

Page 49 GAO-06-677 HUD Homeownership Programs

d

The Mortgage Credit Certificate program reduces the amount of federal income tax a recipient pays, 

making more income available to qualify for a mortgage and make monthly mortgage payments. 

Under its Section 5(h) program, Sacramento HRA is in the process of 

rehabilitating and selling 73 scattered vacant houses and units. As of April 

2006, 4 families who were recipients of federal rental housing assistance 

and 12 who were not had purchased homes under this program. All 16 

families received ADDI assistance. In addition, Sacramento HRA is 

currently in the process of implementing a Section 32 program. Under this 

program, the city will rehabilitate and sell 200 existing housing units and 

plans to use ADDI to make these units more affordable to potential buyers.
Page 50 GAO-06-677 HUD Homeownership Programs

Appendix VI

Comments from the Department of Housing 

and Urban Development ApendxiVI
Appendix VI

Comments from the Department of Housing 

and Urban Development

Page 51 GAO-06-677 HUD Homeownership Programs
Appendix VI

Comments from the Department of Housing 

and Urban Development

Page 52 GAO-06-677 HUD Homeownership Programs
Appendix VI

Comments from the Department of Housing 

and Urban Development

Page 53 GAO-06-677 HUD Homeownership Programs
Page 54 GAO-06-677 HUD Homeownership Programs

Appendix VII

GAO Contact and Staff Acknowledgments ApendxiVI

GAO Contact David G. Wood (202) 512-8678

Staff 

Acknowledgments

In addition to the individual named above, Steve Westley, Assistant 

Director; Heather T. Atkins; William R. Chatlos; John T. McGrail; Marc 

Molino; Josephine Perez; Barbara Roesmann; Cory Roman; and Sidney H. 

Schwartz also made key contributions to this report.

(250255)
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