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OVERSIGHT OF HUD’S HOME PROGRAM 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 3, 2011 

Printed for the use of the Committee on Financial Services 

Serial No. 112–36 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

LARRY C. LAVENDER, Chief of Staff 

(III) 

C O N T E N T S 

Page 

Hearing held on: 

June 3, 2011 ...................................................................................................... 1 

Appendix: 

June 3, 2011 ...................................................................................................... 57 

WITNESSES 

FRIDAY, JUNE 3, 2011 

Heist, James A., Assistant Inspector General for Audit, Office of Inspector 

General, U.S. Department of Housing and Urban Development ..................... 11 

Marquez, Hon. Mercedes M., Assistant Secretary, Community Planning and 

Development, U.S. Department of Housing and Urban Development ............ 10 

APPENDIX 

Prepared statements: 

Heist, James A. ................................................................................................. 58 

Marquez, Hon. Mercedes M. ............................................................................ 68 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Baca, Hon. Joe: 

Written responses to questions submitted to James A. Heist ...................... 102 

Written responses to questions submitted to Hon. Mercedes M. Marquez . 104 

Frank, Hon. Barney: 

Letter from various undersigned housing organizations ............................... 106 

Velazquez, Hon. Nydia M.: 

Letter to Hon. Barney Frank from Thomas M. Menino, Mayor of Boston, 

Massachusetts ............................................................................................... 109 

Letter to Hon. Spencer Bachus and Hon. Barney Frank from the Local 

Initiatives Support Corporation (LISC) et al. ............................................. 111 

Letter to Hon. Spencer Bachus and Hon. Barney Frank from the National 

Association of Home Builders (NAHB) ........................................................ 115 

Letter to Hon. Spencer Bachus and Hon. Barney Frank from NID Housing Counseling Agency ................................................................................. 117 

Letters to various Members of Congress from Michael A. Nutter, Mayor 

of Philadelphia, Pennsylvania ...................................................................... 119 

Letter to Hon. Spencer Bachus and Hon. Barney Frank from Stewards 

of Affordable Housing for the Future (SAHF) ............................................ 131 

Letter to Hon. William Lacy Clay from Francis G. Slay, Mayor of St. 

Louis, Missouri .............................................................................................. 134 

(1) 

OVERSIGHT OF HUD’S HOME PROGRAM 

Friday, June 3, 2011 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 9:30 a.m., in room 

2128, Rayburn House Office Building, Hon. Spencer Bachus [chairman of the committee] presiding. 

Members present: Representatives Bachus, Hensarling, Royce, 

Biggert, Capito, Garrett, Neugebauer, Pearce, Posey, Fitzpatrick, 

Luetkemeyer, Huizenga, Duffy, Hayworth, Renacci, Hurt, Dold, 

Schweikert, Grimm, Canseco, Stivers, Fincher; Frank, Waters, 

Maloney, Gutierrez, Velazquez, Capuano, Hinojosa, Baca, Scott, 

Green, Cleaver, Carson, and Carney. 

Chairman BACHUS. This hearing of the Financial Services Committee will come to order. 

Without objection, all members’ opening statements will be made 

a part of the record. 

And the Chair recognizes himself for an opening statement. 

The HOME Investment Partnership Program is the Federal Government’s largest housing construction program for the poor. Administered by the Department of Housing and Urban Development, 

it is intended to make decent, affordable housing available to lowincome Americans. The Washington Post reports the program is 

‘‘dysfunctional, and hundreds of millions of taxpayer dollars have 

been squandered due to mismanagement, waste, and fraud.’’ 

The purpose of today’s hearing is to provide HUD with an opportunity to respond to these allegations and to explain how taxpayers’ 

money is being protected. 

I will point out that the allegations are of programs and failures 

that go back at least two or three Administrations. So it is not a 

matter from this Administration or even the prior Administration; 

most of it has been in years past. Assistant Secretary Marquez, 

who will testify before us today, started in 2009; is that correct? 

According to the Washington Post report, HOME delivers billions 

of dollars to local housing agencies with what they say are few 

rules or safeguards in place and no reliable way to track how 

money is spent on various projects. We want to hear what HUD is 

doing to ensure program participants are being held accountable, 

and whether new legislative authority is needed to strengthen 

HUD’s ability to manage the HOME Program. 

The HUD Office of Inspector General has likewise reported serious problems with HOME. Over the past 5 years, the IG’s audits 

uncovered failures with HUD’s administration of HOME formula 

2 

block grants and identified numerous other deficiencies in HUD’s 

management of the program. The committee will want to hear from 

HUD what changes have resulted from the IG audit, particularly 

what, if anything, is being done to recover funds if the project is 

not completed or does not meet the program requirements. And I 

can tell you that just from conversations with Members, they obviously want every path pursued to recover money that can be recovered legally. 

Unfortunately, the HOME Program has been exploited by schemers and crooks. Between 2004 and 2011, dozens have been convicted or indicted for criminal misuse of HOME funds, including 

elected officials, directors of housing authorities and nonprofit organizations, developers, landlords, and tenants. Our witnesses at today’s hearing will be asked to explain what is being done to prevent this kind of malfeasance as the program continues. 

These problems, as I said, span multiple Administrations, and I 

have been encouraged in all my conversations with Secretary Donovan and others at HUD—including our witnesses today—that there 

is a determination at the agency to correct these problems. 

Let me mention three steps that must be taken, and I think we 

will hear testimony from Assistant Secretary Marquez that this 

will be pursued: first, that the contracts require repayment for 

failed projects or misspent funds; second, that those who defraud 

the government are pursued vigorously; and third, that eligibility 

requirements for developers are substantially tightened. 

HUD must ensure that every dollar dedicated to affordable housing is used responsibly, and any misused and misappropriated 

funds are promptly repaid. I look forward to hearing from the Assistant Secretary and Assistant Inspector General about the steps 

the Department is taking to ensure taxpayers are adequately protected from waste, fraud, and abuse. 

In my last 24 seconds, let me say, I know there has been an emphasis that the Federal Government has recovered their funds from 

the participating jurisdictions, and I know Prince George’s County 

was described in the paper, but that, I think, does not excuse the 

agency or the Congress from—because that is taxpayer money that 

taxpayers in Prince George’s County or others lost. So I think it is 

our ultimate responsibility in any Federal program not to just have 

the money reimbursed, but to see that it is not misappropriated. 

So, with that, I recognize Mrs. Maloney for 2 minutes. 

Mrs. MALONEY. I thank the chairman for recognizing me and for 

holding this important hearing, and I welcome the panelists today. 

And I would say that HUD’s HOME Program is incredibly important to the City of New York, which I am honored to represent. As 

you stated, Mr. Chairman, it is a block grant program to local communities, and local communities have used that money to leverage 

it with the private sector to build affordable housing. In New York 

City, over 16,000 units have been renovated under the program 

since it began in 1992, and I have examples of how it has helped 

in neighborhoods across the city that I represent. It is an important 

program to the families who are benefiting from these 16,000 units, 

and it also creates jobs to rehab, to build, to design, and these are 

real jobs for real people. It benefits localities, both directly and inVerDate Nov 24 2008 14:56 Sep 08, 2011 Jkt 067931 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 K:\DOCS\67931.TXT TERRIE
3 

directly, and it represents an example of public-private partnership, leveraging dollars to build affordable housing. 

I share the chairman’s concern that any mismanagement should 

be taken care of, or any malfeasance, but it is a good program that 

should continue. And I agree with the words from the New York 

City HPD Commissioner, who wrote back to the Washington Post, 

and he said, ‘‘Many more successes are directly attributable to the 

HOME affordable housing program than there are failed projects.’’ 

So I believe our challenge is to make sure this program continues 

and continues while rehabbing affordable housing, leveraging dollars into our communities, and helping with our economic development. I certainly hope that this does not turn into an attempt by 

my good friends on the other side of the aisle to terminate a very 

worthy program, like they did the FHA program and the HAMP 

program, because this is successful. It is working. 

My time is up. Thank you. 

Chairman BACHUS. I thank the gentlelady. 

Mrs. Biggert is recognized for a minute-and-a-half. 

Mrs. BIGGERT. Thank you, Chairman Bachus, and thank you for 

scheduling this hearing. 

Today, we are investigating HUD’s administration of the HOME 

Program, the government’s largest affordable housing and construction program. Recent press articles point to mismanagement 

of HOME, citing waste, fraud, and abuse of possibly billions of taxpayer dollars. I think it is incredible to think that billions in taxpayer dollars have been handed out with little or no accountability 

and may have failed to help hundreds of thousands of families 

seeking shelter. 

Meanwhile, our over $14 trillion national debt continues to grow. 

And who has HOME money, how much, for what purpose was it 

used? I think the taxpayer dollars have to be accounted for. If 

funds have been misused, or there are unspent dollars, there must 

be recovery, and HUD needs clear benchmarks and real-time data 

to track the progress of HOME funds and projects. 

What scares me is, is this the only HUD program that fails to 

account for taxpayer dollars, and how much CDBG money is accounted for? And is HOME just the tip of the iceberg? 

With that, I look forward to hearing from today’s witnesses and 

holding future hearings on other questionable components of the 

HUD budget. 

I yield back. 

Chairman BACHUS. Thank you. 

Mr. Gutierrez, for 3 minutes. 

Mr. GUTIERREZ. Thank you very much, Mr. Chairman. 

I instruct my staff to carefully read the Washington Post each 

and every day and to make sure they take out all of the articles 

and see the new standard here is the Washington Post. I am 

happy. I like the Washington Post. It just seems that my friends 

on the other side of the aisle are always saying, ‘‘the Washington 

Post, that liberal bastion of Washington, D.C.’’ But I guess when 

it is convenient, the Washington Post is okay, as it is today. 

I also find it curious, since my friends on the other side have always talked about local government; Washington, D.C., has this 

one-size-fits-all, and that we should let local governments, where 

4 

people truly know how to serve the people out in the counties and 

the cities and the villages of America—we shouldn’t let what? That 

is what this program is, and in each and every instance, as reported in this newspaper article, in each and every instance that 

HOME dollars are used, they are used to leverage what municipalities and villages and counties and those that my friends on the 

other side of the aisle are always expressing should be the expression of democracy out in the country. Well, they are. 

Look, $400 million is $400 million, but let us put it in the context 

of $30 billion and what has been spent on this program, and the 

hundreds of thousands of American families who have benefited 

from this program before—so that we have some balance, I think. 

I think what is important, Mr. Chairman, is to put balance, not 

simply to pick up a Washington Post article and say, boy, that really fits my political point of view; let me go use that and rail 

against, without understanding the impact that the program and 

the criticisms can have, without putting in balance the article. 

Because this program was started in 1990, under the George 

Bush Administration when our economy was not in such a good 

place as it is today, and in 20 years, the HOME Program has completed over 1 million units throughout this country, and I think we 

should take that into consideration. 

And let me just paint a picture for everybody so that we know 

as we look at this program, which we certainly should reform, retrofit, improve, make sure that there is more vigilance of the dollars 

certainly, but I hope that people aren’t saying that we need to 

eliminate a wonderful program like this. 

The majority of people who are receiving assistance, who get a 

unit, whether it is a rehab unit or a senior citizen unit that is fixed 

up so they can stay there, or a brand new single-family home, the 

majority of them are families of four, 50 percent area median. So 

I want you to know much that is. That is $37,550. Now, of course, 

Members of Congress make $175,000 or thereabouts, so it is significantly less than we make as Members of Congress, and I think we 

should be cognizant of that. 

And lastly, maybe we should take a few pictures of all of the 

houses in which people get great tax credits under our tax credit 

system for their homes when they file their income tax returns. I 

think people would shudder. Let us make sure that people who 

need homes, like janitors and bus drivers and nurses and other 

people who are out there have a place to live. 

Thank you very much, Mr. Chairman. 

Chairman BACHUS. Thank you. 

Let me say this: I think we all recognized in the past 2 or 3 years 

that homeownership is not for everyone, that there are numbers of 

people who simply cannot afford homeownership, and that low-income housing is a great need, and I wouldn’t want anything about 

this hearing to be construed to say that it has not delivered a benefit. This is simply about some of the failures, and I think we have 

$33 billion worth of projects, and what is in question is $400 million or $500 million. So we are certainly not talking about all the 

projects or most of the projects or a substantial percentage. But we 

can always do better, and that is why I think we are all here, both 

5 

parties, to do, not to—and I promise the Minority that we won’t 

demagogue if you won’t demagogue. 

Mr. Royce? 

Mr. ROYCE. Thank you, Mr. Chairman. 

Listen, we have seen one government boondoggle after another, 

and whether it is at the Federal level or the local level, somebody 

has to say at some point that these government interventions in 

the economy are really heading us down the wrong path. And the 

revelations surrounding the HOME Program, I think, should trouble every one of us: This program fails at basic accounting, basic 

recordkeeping. There is no accountability once the government 

funds are out the door. That is the problem here, and if we don’t 

recognize that failures which appear commonplace throughout the 

HOME Program would be inconceivable in the private sector, then 

we don’t understand some of what is wrong with these government 

programs. 

I believe we must avoid replicating this flawed model. Many aspects of the Housing Trust Fund created several years back were 

based precisely on the HOME Program, and according to HUD’s 

proposed rule on the Trust Fund, most of the eligible activities 

under the Housing Trust Fund and HOME Programs are the same, 

and many of the requirements are similar, if not identical. The best 

way to prevent similar fraud and abuse throughout the Housing 

Trust Fund is simply to eliminate it completely and quit with the 

schemes on bigger and bigger government boondoggles. 

Chairman BACHUS. I thank the gentleman. 

Mr. Green will be recognized shortly. As Mr. Green says, ‘‘God 

is good.’’ 

Mr. GREEN. All the time, Mr. Chairman, and all the time God is 

good, and I am honored to have one more day, Mr. Chairman, to 

try to get it right, and I thank the witnesses for being here. I thank 

you for your clarity, Mr. Chairman. 

I would like to start with some intelligence that I have received 

indicating that the program has a 100 percent repayment rate 

where improper expenditures are identified. I will be asking the 

witnesses about this, but obviously if this is true, then the question 

becomes not whether we can collect and do collect, but how quickly 

can we collect, how efficaciously can we collect, and what can we 

do to make sure that there are no losses. 

I have not read where the Washington Post has indicated that 

the program should be terminated. I don’t think that there is a 

GAO report calling for termination of the program. I can honestly 

see how there is a need to make some changes and to make sure 

that we protect the taxpayer dollars. I think that the Chair has 

made this point, and that I support. 

But I also want to emphasize that the program has been of great 

benefit. It has helped millions of people across the length and 

breadth of the country, directly or indirectly. About 96 percent of 

those who receive funds for rental assistance are persons who are, 

as was indicated, making about $37,550, which is about 50 percent 

of the AMI. This is significant for persons who are working, trying 

to make a living, but who are making a low income. It is significant 

that this program exists for them. 

6 

So I am going to close the way I started this, and that is with 

the comment that I have received intelligence indicating that there 

is a 100 percent repayment rate where improper expenditures have 

been identified. Now, if that is true, or if we are near that, then 

I think that we can do something to improve it, but I don’t think 

we have to end it, and that is where I stand. 

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

time. 

Chairman BACHUS. Thank you. 

Mrs. Capito, for a minute or a minute-and-a-half? 

Mrs. CAPITO. A minute-and-a-half. 

Chairman BACHUS. A minute-and-a-half. 

Mrs. CAPITO. Thank you. 

I would like to thank the chairman for today’s hearing, and since 

the start of this Congress, most of our committee’s time and really 

the entire Congress’ time has been used to ensure that valuable 

taxpayer dollars are being spent in the most effective and efficient 

manner, and so the efforts today are what this hearing is about. 

But the news that was in the Washington Post—and, quite 

frankly, I am willing to look at anything that shows that we can 

be more efficient and more effective with our tax dollars—shows a 

lack of oversight or enforcement in HUD’s HOME Program. 

To respond to my friend from Texas who says 100 percent repayment rate, I hope today that we get the chance to ask the question, 

if that is true, and if, in fact, it is true, is the repayment coming 

from State and local dollars, or is the repayment coming from 

CDBG money, which is Federal money from HUD? I think that is 

a good question for us to ask. 

So I think what we need to look at is, is HUD engaging in best 

practices? How can HUD improve the oversight over these funds 

and expenditure of the funds? Is there waste, fraud, and abuse? We 

always talk about that as a catchword, but I think this is used as 

a perfect example to find those areas and to find a way to end 

those practices and make sure that the allocated funds that are allocated to the local governments and local agencies, that we track 

that money, not that it has just been drawn down, but it has been 

spent on a worthy project, and that people are actually living in 

these facilities, because that is the entire goal of the program. 

So I would like to thank both of our witnesses for coming today, 

and I also would like to thank the chairman for holding this hearing, and I yield back the balance of my time. 

Chairman BACHUS. Thank you. 

Mr. Neugebauer, for a minute-and-a-half. 

Mr. NEUGEBAUER. Thank you, Mr. Chairman. 

I was kind of taken aback by the comment my good friend Illinois made about how Republicans believe in local control and local 

government, and just somehow this is a divergence from that. Absolutely not. But when the Federal Government extorts money 

from the American people, there is a certain accountability at the 

Federal level, and basically that is kind of what this hearing is 

about today. 

It is not about whether the HOME Program is an effective program or not; although I don’t know how you can address whether 

this program is all that effective if, in fact, we don’t know the staVerDate Nov 24 2008 14:56 Sep 08, 2011 Jkt 067931 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\67931.TXT TERRIE
7 

tus of many of these projects. Here is a list of 5,700 projects that 

have been open for over 120 days, yet they have been fully funded. 

Here is another list of projects that—over 1,000 projects. That 

list had 5,700 projects on it. Here is a list with over 1,000 projects 

that have been open for over 5 years. 

And so, I think what is a pattern here that the Oversight and 

Investigations Subcommittee has been bringing out is that we 

passed the Dodd-Frank Act, which was supposed to fill in the gaps. 

What really happened is we are learning that we didn’t necessarily 

need more regulations. We needed regulators doing their job. And 

at this particular point in time, where we are borrowing 42 cents 

for every dollar we spend in this country, it is time that we make 

sure that there is accountability for the dollars we are spending, 

because these are dollars that we actually don’t have and are borrowing from other countries. 

And so, I look forward to this hearing, and, Mr. Chairman, thank 

you for calling this hearing today. 

Chairman BACHUS. Thank you. 

Mr. Gutierrez? 

Mr. GUTIERREZ. Certainly, as I said, we should look at bettering 

the program, but I just heard my friend Mr. Royce said we should 

eliminate the program. I never heard him say we should eliminate 

the program while his district was getting $111 million in order to 

provide affordable housing. 

Mr. ROYCE. Will the gentleman yield? I said the Housing Trust 

Fund. 

Mr. GUTIERREZ. I am sure that you have time on your side. I 

never heard the gentleman raise the issues while his district was 

getting $111 million in HOME dollars in order to create homes in 

his district. As a matter of fact, I never heard the gentleman say 

anything about it when the State of California was getting $966 

million, almost $1 billion over the last—bring a complaint and say, 

this is a terrible program, don’t send it to the State of California. 

So you can look at statistics, and you can look at numbers, and 

I just kind of feel that if you want to criticize a program, you don’t 

wait for the Washington Post. You should be monitoring the dollars, the Federal dollars, in your own congressional district, and 

you don’t need the Washington Post to tell you what to do, because 

the 19th District of Texas received $32 billion in HOME dollars 

over the last 20 years, and the State of Texas received $726 million 

of HOME dollars in order to prepare. 

I am just trying to put this in some context, and that is that people do derive great benefit from this program, so this isn’t a Democrat or a Republican thing. This is about people. And I want in the 

last 2 seconds, this is about a firefighter being able to have a home. 

This is about a paramedic having a home, a police officer having 

a home, a nurse having a home. Now, look, admittedly those people 

make under $60,000 a year, and when you are a Member of Congress making $174,000 with great health care coverage, maybe 

they don’t seem that important to you. 

I yield back the balance of my time. 

Chairman BACHUS. I believe this is a very valuable discussion, 

and, Mr. Royce, would you like 15 seconds to respond? 

8 

Mr. ROYCE. Yes. I think I made it very clear. We are talking 

about the Housing Trust Fund, and we have a very clear record on 

these boondoggles, and I will just close by saying if we recall, Mr. 

Chairman, we are borrowing 42 cents on every dollar we spend 

here. We are borrowing it from China and the rest of the world in 

order to continue these boondoggles, and, frankly, I think the 

Washington Post did us a favor by showing us how some of this 

actually works. 

Thank you. 

Chairman BACHUS. Thank you. 

I thank both you gentlemen. 

Mr. Dold? 

Mr. DOLD. Thank you, Mr. Chairman. 

I certainly want to thank you for holding this important hearing, 

and my good friend and colleague from Illinois. This is about trying 

to make sure that those people and individuals have housing and 

the millions of dollars—actually the billions of dollars that are 

being spent, we want to make sure that they are being spent wisely. Certainly if they are being spent wisely and efficiently, that is 

going to mean better benefits and more homes for those who need 

them, and I think that really needs to be the goal that we are talking about. 

As a small business owner, I know that one thing that is important in any organization—and certainly larger organizations—is 

that we have systems and controls, checks and balances to make 

sure that the resources that are being spent are being spent wisely. 

In this case we have some substantial evidence that we have dollars that are not being followed and, therefore, are not being used 

properly, and that, to me, I think, is one of the great things that 

we need to do in terms of oversight. 

So this hearing, in my opinion, is not about whether any particular Federal housing program should exist or not, or what funding levels any particular program should receive. Instead, I think 

today’s hearing is an opportunity to evaluate HUD’s systems, controls, checks and balances; how is HUD planning, how are they implementing, how are they managing, how are they monitoring to 

complete these projects. 

If HUD isn’t getting this right—and I would argue that they are 

not getting this right at this point in time—then the beneficiaries 

suffer by not receiving the intended benefits that are being made 

by generous American taxpayers, and I think that really needs to 

be the focus of our efforts, because if we spend millions and millions of dollars, and what we have is an empty lot at the end of 

the day, then we are not providing affordable housing for those 

firefighters, for those nurses, for those people that my good friend 

from Illinois has highlighted. And I would argue that, indeed, we 

want those dollars to go further as opposed to we have sent them 

down to local control, and all of the sudden we have lost sight of 

them. 

I welcome the opportunity to dig in further, and I look forward 

to hearing from the witnesses. I thank the chairman again, and I 

yield back. 

Chairman BACHUS. Thank you. 

Mr. Canseco? 

9 

Mr. CANSECO. Thank you, Mr. Chairman. 

We can’t lose sight of what it is that we are doing today, as my 

colleague Mr. Dold just stated, and more importantly, we have to 

look at the big picture. Yesterday, Moody’s issued a warning about 

the credit rating of the United States after Standard & Poor’s had 

done so earlier this year. Our country is truly in uncharted territory when it comes to our fiscal outlook. Therefore, at a time like 

this, it is maddening to see taxpayer money squandered so carelessly by HUD’s HOME Program. 

The Washington Post investigative article and the Inspector General’s report have shown that a significant portion of the money allocated towards the HOME Program has not been accounted for, 

and nobody at HUD seems to care where it is. In the HOME Program, where it was an initiative of the private sector, those involved would be fired. If it were a private-sector project, they would 

be fired or blacklisted or in jail. 

The defenders of the program have allowed them to carry on 

while taxpayers continue to foot the bill. Why? Because these programs have noble-sounding names and stated purposes. So we turn 

a blind eye to their glaring defects for fear of demagogic ridicule. 

This is simply unacceptable, and I hope today’s hearing will shine 

a light on some of the waste, fraud, and abuse perpetuated through 

the HOME Program at the expense of the American taxpayers. 

Thank you very much. 

Chairman BACHUS. Thank you. 

Is there anyone else who wishes to make an opening statement? 

All right. Thank you. 

At this time, it is my pleasure to introduce our witnesses. Our 

first witness is Mercedes Marquez, who is the Assistant Secretary 

for Community Planning and Development for the Department of 

Housing and Urban Development. Prior to assuming this position 

not quite 2 years ago, she headed up the second largest public 

housing authority. Is that what you would you call it, the Los Angeles— 

Ms. MARQUEZ. The Los Angeles Housing Department. 

Chairman BACHUS. Thank you. 

Other than New York, I guess the second largest. So she is obviously well qualified from a management standpoint. And she has 

800 employees, 43 field offices, and she worked in the Clinton Administration and has held positions of authority in the private sector. She is a graduate of Georgetown, with JD and LL.M. degrees, 

and we look forward to her testimony. 

We also have the Assistant Inspector General for Audits at HUD, 

and he has served in increasingly important, responsible positions 

at Agriculture, Interior, and Education prior to being at HUD. He 

is a certified public accountant and Mr.—is it ‘‘Heist?’’ 

Mr. HEIST. ‘‘Heist.’’ 

Chairman BACHUS. ‘‘Heist.’’ I apologize. Being Southern, I struggle with names. He is a certified public accountant and certified 

government financial manager. 

With that, Secretary Marquez, you are recognized. 

10 

STATEMENT OF THE HONORABLE MERCEDES M. MARQUEZ, 

ASSISTANT SECRETARY, COMMUNITY PLANNING AND DEVELOPMENT, U.S. DEPARTMENT OF HOUSING AND URBAN 

DEVELOPMENT 

Ms. MARQUEZ. Good morning. 

Chairman Bachus, members of the committee, thank you for the 

opportunity to testify today regarding HUD’s oversight of the 

HOME Investment Partnerships Program and the Program’s success over the last 20 years. I would also like to present the actual 

facts about HOME that the Washington Post omitted in its May 

15th article. 

As the Assistant Secretary for CPD, I oversee the HOME Program, an anchor of our Nation’s affordable housing finance system. 

HOME is the largest Federal block grant designed exclusively to 

produce affordable housing for low-income families. Signed into law 

by the first President Bush, HOME builds and rehabilitates affordable housing, provides downpayment aid to help families become 

homeowners, and provides rental housing for poor families and for 

those on the verge of becoming homeless. 

HOME has done a good job at that, recently producing its one 

millionth affordable home and providing tenant-based rental assistance to nearly a quarter million families, while meeting our responsibility as a steward of taxpayer funds. Indeed, the Post picture of 

the HOME Program is a far cry from the one I have managed since 

joining the Obama Administration 2 years ago, and during my 5 

years running the L.A. Housing Department. In part, that is because it misstated several key facts. 

Of the over 28,000 HOME projects under way across the country, 

the Post reported that over 700 out of a sample of 5,000 were delayed, but HUD’s own review found that well more than half of 

those properties are completed or are progressing towards completion. Of the properties with delays, most were stalled because of 

the recession. And with data showing that 34 percent of all new 

housing starts from 2007 to 2010 were delayed at least 3 years, 

while only 4 percent of the projects in the Post’s sample are actually delayed, HOME’s success rate during the recession actually 

outpaced the private market. 

Formula block grants are based on the premise that local communities understand their needs better than the Federal Government and provide them with flexibility to design programs based 

on their needs. In exchange for this flexibility, HOME participating 

jurisdictions, or PJs, have the responsibility to manage their specific HOME projects, monitor construction by their developers, and 

take appropriate action when project problems arise. 

However, no program, public or private, is without problems. 

Projects will go awry, and capacity gaps do exist. HUD’s charge in 

managing HOME is to balance this right of home PJs to make 

funding decisions with our fiduciary responsibility as stewards of 

taxpayer funds. 

A key feature of HOME is its early focus on performance data 

and accountability, and the transparency created by publicly available performance reports on HUD’s Web site, report cards for every 

home PJ in the United States, some of which have been provided 

to you. 

11 

Our actions have accelerated since 2009. We are better targeting 

our monitoring efforts through a more rigorous risk-assessment 

system that identifies the highest-risk grantees for on-site monitoring. In January, we implemented automatic cancellation of 

projects that have been in our data system for a year with no 

draws. We have canceled 1,778 projects and freed up $290 million 

of HOME funds for more viable projects. 

We work in partnership with HUD’s Office of Inspector General, 

referring HOME PJs we consider particularly high risk for in-depth 

program audits. We strictly enforce the HOME commitment and 

expenditure deadlines, deobligating nearly $66 million to date. We 

aggressively seek repayment when HOME funds are misspent and 

have collected over $190 million in repaid or forfeited funds. We 

withhold HOME grants from PJs that have used HOME funds for 

ineligible projects or costs. 

HUD’s role is not limited to oversight and enforcement. HUD’s 

Transformation Initiative has provided critical funding for additional financial controls and system changes to improve performance. We provide technical assistance in the form of training and 

direct capacity-building assistance to PJs. 

In 2009, we began an internal review of HOME Program regulations. The proposed regulation, which will be placed into internal 

HUD clearance this month, will strengthen the standard to ensure 

PJs select developers with appropriate capacity and make other 

oversight and monitoring improvements. 

HUD will continue to improve our program oversight through 

monitoring, reporting, system improvements, enforcement, capacity 

building, and other actions. And what that oversight has shown is 

that the vast majority of PJs are doing a good job, meeting spending deadlines and building critically needed housing. And with the 

IG’s continued help, the system is working to find and take action 

on those few PJs that fail to fulfill their responsibility, including 

some of those mentioned in the Washington Post article. 

Thank you for the opportunity to share with you the true story 

of HOME. 

[The prepared statement of Assistant Secretary Marquez can be 

found on page 68 of the appendix.] 

Chairman BACHUS. Inspector General Heist, you are now recognized. 

STATEMENT OF JAMES A. HEIST, ASSISTANT INSPECTOR GENERAL FOR AUDIT, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Mr. HEIST. Good morning. I would like to thank the chairman, 

ranking member, and distinguished members of the committee for 

the opportunity to testify today regarding oversight of HUD’s 

HOME Program. I am Jim Heist, Assistant Inspector General for 

Audits at HUD’S Office of Inspector General (OIG), and I am 

pleased to discuss our audit work regarding HUD’s HOME Program. 

OIG’s mission is to provide independent and objective reporting 

to the Secretary and to the Congress regarding HUD’s programs. 

The HOME Program is the largest Federal block grant to State and 

local governments, designed to create affordable housing for low-inVerDate Nov 24 2008 14:56 Sep 08, 2011 Jkt 067931 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 K:\DOCS\67931.TXT TERRIE
12 

come households. Because HOME is a formula-based grant, funds 

are awarded to the participating jurisdiction noncompetitively on 

an annual basis. The formula is based in part on factors including 

the age of units, substandard occupied units, number of families 

below the poverty rate, and population in accordance with census 

data. 

HOME addresses the need for affordable housing in our country, 

a need that is increasing in the wake of the economic downturn 

and rising unemployment. However, the Office of Inspector General 

has expressed concerns about the controls, monitoring, and information systems related to the HOME Program. Over the past 5 

years, we have conducted 64 audits of the HOME Program at the 

grantee level. We initiated at least 12 of these at the request of the 

Department based on concerns they had expressed to us. Many others were selected based on grantee risk assessments that HUD has 

done and included informal input from HUD staff. 

The most common finding in our audits is a lack of internal controls. This includes subgrantee activities, resale and recapture provisions to enforce HUD’s affordability requirements, incorrectly reporting program accomplishments, and incurring ineligible expenses. There is also a repetitive thread of not always meeting the 

objectives of the program to provide affordable housing or not always meeting local building code requirements. 

In our external audits of HOME funds over the past 5 years, we cited a total of $179 million in questioned costs and $58 million associated with recommendations that funds be put to better use. 

HUD agreed with most of these costs, and to date has recovered 

or realized savings of $93 million, and resolved another $66 million 

by subsequently obtaining documentation from the grantee to support the costs. 

HUD focuses its monitoring activities at the grantee level 

through its field offices. Grantees, in turn, are responsible for monitoring their subgrantees. Our audits have found that, in some instances, little or no monitoring is occurring, particularly at the subgrantee level. 

Another concern we have is with the Integrated Disbursement 

and Information System (IDIS). The system is used by HUD to accumulate and provide data to monitor compliance with home requirements for committing and expending funds. HUD also uses 

the system to generate reports used within and outside HUD, including the public, participating jurisdictions, and the Congress. 

We believe the system cannot produce complete and reconcilable 

audit trails throughout the entire grant life cycle. Moreover, we 

have found that the system is not in compliance with Federal financial management system requirements. OIG has expressed its 

concerns about the data integrity in this system and the impact 

that it has on HUD’s overall financial statements. We believe that 

with a robust, more up-to-date information system, HUD would be 

able to better monitor the HOME Program. 

OIG believes that HOME is an important program, given the 

current economic and housing crisis in our country. The need for 

affordable housing has never been greater than now. There are successful examples of how HOME funds have been used for their intended purposes. Since most of our work, on the other hand, foVerDate Nov 24 2008 14:56 Sep 08, 2011 Jkt 067931 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 K:\DOCS\67931.TXT TERRIE
13 

cuses on high risks in the program, we have highlighted areas 

where improvements need to be made, particularly in the controls 

and monitoring of the program by the Department, as well as in 

the areas of data integrity and systems enhancements. 

We look forward to working with the Department and the Congress in assessing ways to improve the effectiveness of the HOME 

Program. I thank you for the opportunity to speak with you today, 

and I am happy to answer any questions that the committee may 

have. 

Chairman BACHUS. Thank you very much. 

[The prepared statement of Inspector General Heist can be found 

on page 58 of the appendix.] 

Chairman BACHUS. My first question, let me go back to my opening statement, and I mentioned conversations with the agency. One 

concern is that contracts require repayment for failed projects or 

misspent funds. And I know that there was some reference in the 

Washington Post article, and since those articles, that some of the 

contracts didn’t have that legal requirement. 

I would like to ask both our witnesses, are we moving to remedy 

that? I know that participating jurisdictions have a role in that, 

but how is that—what are you doing to ensure that doesn’t happen 

again? 

Ms. MARQUEZ. There are two ways to discuss that. One is, of 

course, that the regulations in the statute require that if there are 

ineligible costs, those must be repaid with non-Federal funds. So 

CDBG funds or any other Federal dollars may not be used. Inevitably, anytime that something must be repaid—in other words, the 

$250 million we are talking about—it is repaid with a tax—really 

tax receipts from the local and State governments. Of course, that 

pains a local and State government more than anything else, because when you have to use your own dollar to repay a Federal dollar, that is a police officer who is not being hired. It is a library 

hour that is cut short. It is a firefighter who does not get overtime. 

And as a result of that, that probably serves as the greatest effort 

possible to keep them in line. 

In this story in the Washington Post, we are really talking about 

2.5 percent, 97.5 percent, but this is a great program, but at a local 

level what you raise, sir, is correct. What we are doing to help the 

jurisdiction—and I am a firm believer that these decisions about 

where this money is spent and how it is spent must be made at 

the local level, and our job is to support them and provide adequate 

oversight, without question. 

Anything can be better, but as a former director of housing myself, I would tell you that there is no way that HUD, anyone in the 

Federal Government, could tell me where that money should be 

spent better than in my local community, and so I run the program 

from that point of view. From a local point of view, how do you ensure that things like that were reported in the Washington Post, 

like that case in Washington, D.C., is true? 

As we move forward with regulations—and you and I—you gave 

me the pleasure of speaking with me about this—what we are 

going to do is help them with model language. What they lack is 

a model agreement, a legal agreement that allows them to put in 

that agreement how it is that they would go back and enforce those 

14 

requirements by law so that they wouldn’t be paying back a Federal dollar, but instead the developer or someone else would be 

paying from their own private funds for anything that didn’t happen. 

In Los Angeles, I did that, so the second largest jurisdiction, I 

changed all of the model legal agreements so that all that was in 

there, because that was never going to happen when I was involved. That is what we are going to be doing to help them. That 

is the level now of help and capacity building that we must provide 

to local agencies to allow them to do their work. 

Chairman BACHUS. Thank you. 

Assistant Secretary, let me tell you, I understand you could make 

an argument that no HUD money was used or no Federal money 

or it was reimbursed. Of course, Mrs. Capito mentioned an interesting thing; did it come out of another program? But I think the 

important thing is that it was taxpayer money. Whether it is 

Prince George’s County, and whether it is 2 percent of the total, 

and we also acknowledge that a lot of private projects fail. You 

have given those concerns, but we are simply talking about no matter how many or how few there were, I think the Washington Post 

article is good, and it sort of gives us an urgency to include that 

language. There were projects where there was no legal requirement, and I think one thing we agree on is that needs to be in 

there, because we don’t want to replace that with local taxpayer 

money. We want the people who received the money to pay for it. 

The second thing I want to mention is tightening up on the 

standards for nonprofits and participating jurisdictions. There obviously ought to be—and I think you have mentioned that since the 

Washington Post. Could you tell me about maybe eligibility standards for developers, whether you are going to propose that be tightened? 

Ms. MARQUEZ. The HUD rule has not been revisited since 1996. 

The development business has changed substantially since then, 

and, in fact, in that period of time, HOME has become a foundation 

stone of the affordable housing finance system. As a result of that, 

what has also happened is that we have gone from a small number 

of nonprofits in 1990 who did this business to actually a very large 

business. In Los Angeles, 50 percent of those developers that received HOME money were actually private developers, so it was a 

very successful program, lots of leverage. 

But what is needed—and we agree with you, sir—is tightening 

of underwriting criteria for developers in general, whether they are 

for-profit or nonprofit, and as we have gone through the rule, as 

I said in my testimony, since 2009, I came in with that agenda because it was my job in Los Angeles to do that there. So we have 

done it before. The Secretary did that in New York. We are very 

clear on how to do it, and those are the types of issues in this new 

regulation that we have been working on that has nothing to do 

with the Washington Post article. It has to do with coming in, that 

the rule hadn’t been redone since 1996. We are working on that 

now. 

Chairman BACHUS. Thank you. This hearing is not abolishing 

the program, although there may be some who want to do that. 

15 

This is not about determining if it—this is just about correcting 

some of the report. 

Mr. Frank, would you like to make an opening statement? 

Mr. FRANK. No thanks, Mr. Chairman. 

Chairman BACHUS. I recognize you for 5 minutes, or Mrs. Maloney or whomever. 

Mr. FRANK. I will do my questions. 

Chairman BACHUS. Okay. 

Mr. FRANK. I appreciate the courtesy, Mr. Chairman. 

I think it is an important hearing, and I want to begin with my 

agreement with the chairman on the reason you are in front of us; 

this is not a hearing aimed at abolishing this program. And I note 

with appreciation the Inspector General’s closing comments in 

which he says that the program ought to continue and be improved, and obviously, we have an obligation to do this. 

There is clearly a pattern that exists over maybe, what, three 

Presidential Administrations, and the problem is in part this, I 

think, and we do run into this tension. We have decided that it is 

better to have the Federal Government work cooperatively with 

State and local governments, particularly local and county entities, 

rather than do it directly, but there is a tension there. There is a 

tension where local governments may resist. I will say also there 

are probably cases, if they went into it, where there was a problem 

in a local area, and HUD moved to correct it, and a Member of the 

House or Senate might have said, leave them alone, stop doing 

that. 

Ms. MARQUEZ. On occasion. 

Mr. FRANK. Thank you. 

I would not be surprised to have that happen, and I don’t say 

that to be critical, in particular because that is partly our job from 

time to time, because HUD isn’t always right either, and the Washington Post isn’t always right. 

But I am saying there is an inherent tension when we decide not 

to have the Federal Government do it, but to have State and local 

governments do it, and that is there. That doesn’t excuse things, 

and we may want to abuse it, but that is clearly problematic. 

I do want to say, having noted that, that the local entities overwhelmingly support this program. In fact, I ask, Mr. Chairman, to 

be able to put into the record a letter addressed to you and to me 

which is actually critical of the Washington Post, says that it distorts HOME’s record by focusing on a very small percentage of 

HOME developments, and it says that they think that it gives an 

inaccurate picture beyond the inaccuracies discussed, but the Post 

failed to report the bigger picture: 381,000 rental units; 428,000 

home buyers; 197,000 rehabilitations; and they say HOME funding 

is a vital piece in financing numerous affordable housing developments. The isolated issues that were the focus of the Post are not 

representative either of the Administration or the outcome of 

HOME funds. Again, this goes from the Clinton Administration, 

through the Bush Administration, and into the Obama Administration. 

But I want to note that among the signatories here are the National Association of Counties, the National Association of Housing 

and Redevelopment Officials, the National Association of Local 

16 

Housing Finance Agencies, the National Association of State Mental Health Program Directors, the National Council of State Housing Agencies, and the U.S. Conference of Mayors. 

So I am glad that we have put out the consensus that this is a 

very important program, the great majority of funds have been 

spent well, but it can be improved. 

And I did then want to ask the Inspector General—and I appreciate the very constructive tone of this—when he—I would note, 

again, that conclusion: OIG believes that HOME is an important 

program which provides affordable housing to low-income Americans. The need for affordable housing has never been greater. 

There are many examples of how HOME funds have been used for 

their intended purpose. The OIG correctly acknowledges it is their 

job to find wrongdoing, and I appreciate his noting that is not— 

Mr. HEIST. That is really just so everybody understands that our 

findings need to be placed in the proper context. 

Mr. FRANK. Thank you. I appreciate you doing that. Not everybody in your line of work does that. 

There was one thing that I was particularly pleased to see where 

you talked about when you found there were problems, and HUD 

appears over time to have been cooperative with you. 

On page 4 you say: Over the past 5 years—again, going back 5 

years is about 50–50 with the 2 Administrations, little more in the 

Bush Administration, but close to even—we cited a total of $179 

million in questioned costs and $58 million associated with recommendations of funds to be put to better use. That is about, what, 

$237 million. HUD agreed with $221 million of these combined 

costs. I am encouraged by that, that over the years, rather than be 

resistant, over the two Administrations, the Bush and Obama Administrations, you made recommendations about $237 million, and 

they agreed with you with well over 90 percent of it. Is that a correct number? Have you been able to work with them? 

Mr. HEIST. That is a fair characterization. It is actually about 95 

percent, and HOME is one program where we—compared to some 

other programs, quite frankly—actually work better with HUD 

than—we do have areas where we agree and where we disagree, 

but I think we each understand our positions, and ultimately, we 

are hoping to accomplish the same thing. 

Mr. FRANK. I am glad you acknowledge we all want to make it 

work better, but I will say again a decision to do this, led by that 

man—this program is the brainchild of Henry B. Gonzalez right up 

here, and he put it through this committee and this House. He 

made the conscious decision to support it on both sides; not to have 

this be a Federal top-down program, but to be a cooperative program that introduces an element of friction. That is not a reason 

for complacency, but it is something we should be aware of in how 

we deal with it. 

Thank you, Mr. Chairman. 

Chairman BACHUS. I am told that we will recess now for some 

votes on the Floor, and the trial of the Washington Post will reconvene at the end of votes. 

[recess] 

17 

Mr. NEUGEBAUER. [presiding]. The hearing will come back to 

order. Mr. Heist, I understand that you are completing—is it 33 

years of service? 

Mr. HEIST. Thirty-five. 

Mr. NEUGEBAUER. Thirty-five, and that you are retiring at the 

end of this month? 

Mr. HEIST. I am. 

Mr. NEUGEBAUER. Thanks for your service. 

Mr. HEIST. Thank you. I appreciate that. It would explain the 

smile on my face. 

Mr. NEUGEBAUER. I hear you. I noticed you were pretty chipper 

today so— 

I now recognize the gentlewoman from Illinois, Mrs. Biggert, 

chairman of the Housing Subcommittee. 

Mrs. BIGGERT. Thank you, Mr. Chairman. 

Ms. Marquez, on page 4 of your written testimony, you mention 

specific percentages of HOME projects that are considered open. Do 

you have a dollar figure for open projects? 

Ms. MARQUEZ. We are going to check that for you. 

Mrs. BIGGERT. Okay. Thank you. And then could you define the 

meaning of open projects and how does an open project differ from 

a project that is progressing toward completion, as you describe on 

page 5 of your testimony? 

Ms. MARQUEZ. An open project is the body of projects that the 

642 PJs are working on at any given time across the country. 

Those projects can change. They can cancel them if they think they 

are not moving toward completion, they can be completed. 

So that is actually the body of work that is open at any given 

time, but I would also say to you that we were concerned when we 

arrived that there were too much laxity in what that was and have 

moved with strong management to make sure that we get a smaller universe so that we can see what that actually is, so that since 

December of 2009, that list of open projects has shrunk, the closed 

projects, by 48 percent. 

Mrs. BIGGERT. Is there a difference then from progressing towards completion? 

Ms. MARQUEZ. Progressing—as I said, open is the universe, so 

progressing towards completion is a subset of where that universe 

of project is. 

Mrs. BIGGERT. Okay. Let’s say that a project started in the midto late 1990s. Could such a project still be open today? 

Ms. MARQUEZ. It could be, and I have some concerns about that. 

Mrs. BIGGERT. Isn’t everything supposed to be completed in 5 

years? 

Ms. MARQUEZ. Thank you for asking that question. This is where 

we get to when you want a program that has a relationship with 

the private sector and you want a program, as we do, as you do 

I know, that leverages dollars. The HOME Program as a whole 

leverages nearly $4 for every HOME dollar that is invested. So that 

means that in a project, if it is following the national average, the 

HOME dollars don’t make up more than 20 percent of it. 

What that means is that when you have a project and 80 percent 

of the project is financed through a private bank, through bonds, 

through tax credits, through other things, the HOME dollars can 

18 

actually be spent but the project is not completed because it is only 

a portion, usually acquisition. And that is what happens when you 

are doing business in the private sector. It is not a situation like 

a public housing dollar where the public housing is paying the full 

percentage of that unit. Here, this is a public-private partnership. 

Mrs. BIGGERT. So does that completed project—does that simply 

mean that all the funds for that project have been spent? So does 

that mean the private dollars and/or just the— 

Ms. MARQUEZ. Yes, it does. 

Mrs. BIGGERT. And the Federal. Okay. So does it mean that people are actually occupying units? 

Ms. MARQUEZ. When something is complete in the system, it 

means that the construction is done, all the money has been drawn 

down, and it is occupied. 

Mrs. BIGGERT. Okay. I looked at some of the recent appropriations for the HOME Program, and I have to say we all know—we 

all think that this program has been very beneficial. What we want 

to make sure is that it is efficient and that we have the correct 

data. 

And I think with Fiscal Year 2008, we had $1.7 billion; in 2009, 

$1.825 billion, and another $2.2 billion of funding in 2009 from the 

stimulus bill; $1.825 billion in 2010; and then another $1.61 billion 

in this year’s CR. So that is about $10 billion for 4 years, and has 

HUD had to recoup any of these funds or has each dollar been accounted for? 

Ms. MARQUEZ. That is a broad question, so I will try to take it 

in turn. It is possible that of all of those dollars, particularly the 

older dollars, that money has been recaptured if there was an ineligible activity or anything like that found. 

Mrs. BIGGERT. Okay. If the dollars have been recouped, are they 

returned to the Treasury, the General Fund or are they recycled 

and handed out to other PJs? 

Ms. MARQUEZ. It depends on how it is recaptured. The statute 

actually calls for the money, when it is something, for instance, 

that is not about fraud, so we are not talking about criminality, but 

when it is a project that was canceled, that money must be repaid, 

when it is ineligible, the money must be repaid with non-Federal 

funds, but the dollar amounts go back to that local jurisdiction in 

their HOME Program per the statute. 

When there is—and it is rare but when it has occurred that there 

would be something that you would call fraud, then we have another set of options, but usually what we would do there is terminate the participation of the jurisdiction. HUD itself, the PCPD 

itself, does not have the authority to send something for criminal 

prosecution. However, we do have the authority to send it to our 

enforcement center and we do, and we also have the authority and 

we do work with our Office of General Counsel to debar someone. 

So from us, it is not HUD that prosecutes you. We could send it 

to the U.S. Attorney and we have done that, but we could debar 

you and put you out of business, and we have also done that on 

occasion. 

Mrs. BIGGERT. Thank you. I think my time has expired. 

Mr. NEUGEBAUER. Thank you. And now the gentleman from Illinois. 

19 

Mr. GUTIERREZ. Thank you so much. I want to just say for the 

record that Congressman Barney Frank is meeting with the EU 

International Coordinator, Michelle Barnett, and that is why he is 

not continuing here with us. 

I would like to just follow up with Mr. Heist. In the Washington 

Post article, in the second paragraph, it says, ‘‘Nationwide, nearly 

700 projects awarded $400 million have been idling for years under 

the HOME Program.’’ You testified that there were $178 million that you felt were questionably used and $58 million that could have a better use, of 

which $93 million you subsequently found that they responded affirmatively for a better use of—I am sorry—to resolve the misuse 

and that $66 million of the $58 million. 

Is that true? Could you explain that to us? 

Mr. HEIST. The statistics you cite refer to our body of audit work 

for the last 5 years and has no relationship with the numbers that 

the Post cited. 

Mr. GUTIERREZ. But I guess I just want to figure out who is— 

because you said in the last 5 years, you have found about 95 percent of everything you have challenged HUD with; is that correct? 

Mr. HEIST. No, what I said was we issue audit findings and we 

are just making recommendations. It was up to the HUD program 

manager to resolve those. I am saying they agree with us 95 percent of the time. 

Mr. GUTIERREZ. They agree with you 95 percent of the time, and when you said $179 million, $93 million you found that they corrected? 

Mr. HEIST. Correct. 

Mr. GUTIERREZ. Okay. And $58 million, under better use, you 

found that a large percentage of that they put better use to that 

money? 

Mr. HEIST. Part of it we will look at a grantee and they just don’t 

have the records to support the expenditure. 

Mr. GUTIERREZ. Okay. But do you have a good relationship with 

HUD? 

Mr. HEIST. With respect to the HOME Program, I would characterize it as very good. 

Mr. GUTIERREZ. Okay. So you have a very good relationship and 

you have found that they have been very responsive when you challenge them from the Inspector General point of view. 

So would you agree with the statement then 700 projects have been stalled, $400 million. 

Mr. HEIST. I don’t have a body of work that would substantiate 

that claim. 

Mr. GUTIERREZ. But your body of work then is the one you initially testified to was $179 million, $93 million they fixed and $58 

million better use, and they fixed most of that, that is your body 

of work? 

Mr. HEIST. That is correct. 

Mr. GUTIERREZ. And you have been doing this for how long? 

Mr. HEIST. I have been in my current position for 10 years. 

Mr. GUTIERREZ. You have been in your current position for 10 

years, and you have been in the Inspector General’s office for how 

long? 

20 

Mr. HEIST. I have been in the Inspector General community for 

35 years. 

Mr. GUTIERREZ. For 35 years. So I think we could establish you 

as a professional witness, right? I am not a lawyer, but I have been 

watching too many lawyer movies—Perry Mason; he is an expert 

on the matter. 

I would like to go now to Secretary Marquez, thank you. Number 

one, you too, for your many years of service to people, whether it 

is here at the Federal or at the City level back in L.A. I just want 

to understand this. 

The program is a block grant program. Would it be correct that if we appropriate $1.6 billion, there is then a mathematical equation used to distribute that money throughout the country? 

Ms. MARQUEZ. Yes. 

Mr. GUTIERREZ. And you don’t have anything to do with that. It 

was there, you use it, and that is what you go by? 

Ms. MARQUEZ. Yes. 

Mr. GUTIERREZ. So the Congress of the United States states this $1.6 billion, and then you as an institution, HUD, distributes that 

money to localities and then they choose the programs? 

Ms. MARQUEZ. Correct. 

Mr. GUTIERREZ. Now, there have been $32 billion so far allocated 

to the program over the last 20 years; is that correct? 

Ms. MARQUEZ. Yes. 

Mr. GUTIERREZ. Since there is a ratio of four to one, would it be 

fair then to say that there is approximately $120 billion that 

doesn’t come from the Federal Government that was used in coordination with these $32 billion? 

Ms. MARQUEZ. The ratio of almost $4 to $1 is based on dollars 

actually spent, right, so it is about $80 billion right now. 

Mr. GUTIERREZ. So when the Washington Post reports or someone reads in the Washington Post, they might be misguided by 

thinking that a project that you, under HOME dollars, put $150 

million in—I am sorry $150,000 in, that was the complete amount 

of the project? 

Ms. MARQUEZ. That would almost certainly be incorrect. 

Mr. GUTIERREZ. Because you appropriate approximately—you 

contribute approximately 20 percent of the dollars? 

Ms. MARQUEZ. Correct. 

Mr. GUTIERREZ. So if a project truly has failed, a bank or a private institution, somebody with private money, lost the other 80 

percent of the money? 

Ms. MARQUEZ. That is one of the reasons why there are so few 

losses in the program. When you have various levels and layers of 

funding, you also have various layers of review. In the last 5 years, 

about 50 percent of the units that have been built, rental units that 

have been built with the HOME contribution are also associated 

with tax credits. Tax credits usually make up 40 to 50 percent of 

the capital in an affordable housing deal. There is a rigorous underwriting review that goes on with tax credits. So not only are 

they underwritten for HOME, they are underwritten for tax credits, they are underwritten for bonds, they are underwritten for private financing. So that is why these projects overwhelmingly are 

sound. 

21 

Mr. GUTIERREZ. The equation is basically four to one. If I have a $100 million project, you guys are going to put about 20 percent 

of that money, the other 80 percent comes from other, but you 

allow local municipalities, villages, commissions, counties to select 

the programs in which they are going to use the HOME dollars in; 

you send it to them? 

Ms. MARQUEZ. I don’t have the authority to allow them. The statute gives them the authority. 

Mr. GUTIERREZ. Let me—because I am going over my time—I 

just want to, could you tell me because we want to make sure that 

even though we are actually gaining hundreds of millions of dollars, indeed, over $100 billion that we—from the private sector that 

we have been able to leverage, could you tell me two things you are 

doing to make sure we get the money back because the Washington 

Post says you can’t get the money back? 

Ms. MARQUEZ. I would say we have been—actually there are several things we have done. One of the most important things I think 

is auto cancelation now on a monthly basis. 

Mr. NEUGEBAUER. Be quick here. 

Ms. MARQUEZ. On a monthly basis, we cancel anything that has 

not been drawn in over a year. So we have canceled now 1,778 

projects for $290 million just since January. 

Mr. GUTIERREZ. Thank you very much. 

Mr. NEUGEBAUER. I now recognize myself for 5 minutes. 

Ms. Marquez, are you familiar with the Kairos project that was 

featured in the Washington Post article? 

Ms. MARQUEZ. I am to the degree that I am the Assistant Secretary and it has been brought to my attention. 

Mr. NEUGEBAUER. Over the last few years, we have looked over 

hundreds of documents, and we found something interesting. We 

found that in March 2010, the Kairos project was on HUD’s books, 

but when we went back and we looked at the November 2010 report, that project had vanished, it was not on the report. 

Can you explain why that happened? 

Ms. MARQUEZ. I cannot specifically tell you why that is. The report—I can tell you that the Kairos project has gone through monitoring by HUD, but it is not unknown to HUD and that we have 

requested repayment. I can tell you that. 

Mr. NEUGEBAUER. Have you received the payment? 

Ms. MARQUEZ. Not yet, but I can also tell you that we have sanctioned the county on their CHDO operations. It is no longer permitted to use the funds. I can tell you that. 

Mr. NEUGEBAUER. So when did you make a request for them to 

return the money? 

Ms. MARQUEZ. We made the request at the end of May. This was 

learned of—this deal was learned of, I believe, from the Washington Post and we acted on it immediately. 

Mr. NEUGEBAUER. So after it was brought to your attention by 

the Washington Post, then you went back to review this project, I 

guess put it back on the books now and are monitoring it; is that 

correct? 

Ms. MARQUEZ. The monitoring—what we found—they had already been through in-depth auditing in 2005 and 2008. There are 

several— 

22 

Mr. NEUGEBAUER. Just for me, could you furnish me records 

showing that you are monitoring that project and letters and correspondence of what was going on? 

Ms. MARQUEZ. Absolutely. 

Mr. NEUGEBAUER. About a week or two after the Post notified 

you, you took action to return this money. I think the point that 

has been made here today, and I think—I don’t want to say some 

people are missing the point. The point is that both of you have 

testified that once you discover that the money has not been used 

appropriately or properly that you go and get the money back. 

Here is the problem. You are not discovering that the projects— 

how many projects do we know that are out there that aren’t performing? And the Inspector General says that you have very poor 

internal controls and that we have 5,700 open projects here that 

are open for more than 120 days and then we have projects, as you 

said, we have 5 years, 1,000 projects. There is a project in Baltimore, Maryland, that was opened—the last disbursement was July 

2, 1997, for $4 million. Do you know the status of that project? 

Ms. MARQUEZ. I will get that to you on Baltimore, but if I could 

respond to your first question, we are talking at any given time 

20,000 open activities for a multi-billion dollar project. We are also 

discussing, as our friend the IG has told you, that initially we were 

looking at 108 delayed projects, 108 out of a million units. We have 

closed all of those. 

Now, in time, we continue to work, right, projects continue. At 

the moment there are 277—just 277 out of thousands and thousands and thousands. 

Mr. NEUGEBAUER. My time is limited. So basically, when we look 

at this picture, we have a project that was closed in November. We 

find out that now maybe it shouldn’t have been closed, it is back 

open and so forth, for $750,000 the taxpayers got back, and that 

is unacceptable. Now, I think one of the things that—when I read 

the testimony and look at all of the research that we have done is 

that basically you say, these are local projects, I get that. But 

again, you have a fiduciary responsibility to make sure that these 

billions of dollars are spent as they were designed by Congress to 

do, and I do not believe that within the organization that you have 

demonstrated that you have the ability. 

Do you know how the Washington Post discovered that some of 

these projects were vacant? Google. And so, the fact that you don’t 

know the status of a lot of these projects is alarming. You say, we 

are relying on the local governments. Obviously not all—and I am 

not trying to categorize all local governments—but some local governments aren’t using those moneys properly or they are not administering it appropriately. 

And you mentioned the private sector. I want to be clear. I came 

from the private sector, and trust me, when I was doing projects, 

building houses and projects, when I asked for money, somebody 

came out and made sure that what I was asking money for, that 

was actually there. I couldn’t just call the bank and say, send me 

some money. 

I just want to go back to one thing because my time is about 

over, maybe it is over. We are talking about the IDIS system. Here 

is a quote from the Inspector General’s report. Grantees and subVerDate Nov 24 2008 14:56 Sep 08, 2011 Jkt 067931 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\67931.TXT TERRIE
23 

grantees are able to update, change, cancel, reopen, increase or decrease project funding without any review by HUD. Grantees and 

subgrantees also self-report the number of family house by the 

projects without comprehensive review by HUD. 

Now, does that sound like that you are doing the job that you 

are supposed to be doing? 

Ms. MARQUEZ. I would actually say that I disagree with that a 

bit. 

Mr. NEUGEBAUER. I would, too, if it was said about me, but the 

Inspector General believes it is true. 

Ms. MARQUEZ. I would respectfully disagree with that. The IDIS 

system is a system that all grantees must use to do business. We 

have to—everyone has to know what they are doing. It has to be 

able to change. Now, every drawdown can be and is tracked by 

grants. We monitor. In fact, in the last 2 fiscal years, HUD has 

monitored 34.5 percent of the jurisdictions; that is 222. We have 

made over 600 findings. That is HUD. That is not the Inspector 

General. So, we are actually quite active with them. 

I would say to you, sir, that I completely agree with you that 

HUD has a fiduciary responsibility, but I would also say that the 

Washington Post report is incorrect in many measures, including 

the reliance on Google. Google tells us that those photographs are 

often 3 years old. They drew on them without knowing. We know 

that well over half of those projects that were cited by the Washington Post are either occupied or well on their way to being occupied. So they are just flat wrong. 

Mr. NEUGEBAUER. I think the question here is not whether 

Google is—pictures were old or new, but some of these projects are 

open—have been open for over 15 years, and so I would think those 

photos are relevant. I think what is relevant here is that HUD does 

not have the appropriate internal control and the systems to appropriately monitor this program or we wouldn’t have discovered these 

particular issues. 

I see my time has expired, and so I now recognize Ms. Velazquez, 

the gentlewoman from New York. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. Mr. Heist, as originally conceived, the HOME Program was intended to provide affordable housing for low-income Americans, an issue that you yourself in your testimony describe as vital given the housing crisis in 

this country. My question to you is, should the problem or problems 

identified by your recent audit overshadow the success of the program at achieving its original goals? 

Mr. HEIST. I can only—I would address that by just suggesting 

that anyone needs to take our findings into context. The systems 

issues that we have reported, we believe, are significant but their 

impact is constrained somewhat. In no way is it endemic of the entire program, and some of the issues with respect to what the system does and enables jurisdictions to do is a function of the program structure itself. 

Ms. VELAZQUEZ. Okay. Fair enough. Assistant Secretary 

Marquez, even before the Post investigation appeared, problems in 

the HOME Program had been identified by internal reviews at 

HUD and remedial actions were taken. 

24 

Do you believe your agency has the ability to identify and remedy problems in the program on its own? 

Ms. MARQUEZ. Absolutely. I think that the evidence in the program, 1 million units provided, 250 million tenants assisted, with 

some absolutely stunning buildings, shows that. I also think that 

this issue is not just—it is not about what the Washington Post 

found or didn’t find. It is our job to monitor every day and we do. 

Ms. VELAZQUEZ. But someone might want to craft legislation to 

terminate the program based on the finding of the Washington 

Post. 

But I have a question for Mr. Heist. In your audit, you made a 

number of recommendations for HUD to improve data collection 

and make information enhancement. Presumably, some of those 

changes will entail the acquisition of new IT, new training for employees, and a transition of existing data to the new system. 

What is a reasonable amount of time for HUD management to 

turn around these recommendations and have adequate systems in 

place? 

Mr. HEIST. A lot of that is dependent upon getting the necessary 

funding. I do know that for a number of years, HUD has been trying to get funding for this system in particular, and only in Fiscal 

Year 2010 I think there is an expectation that certainly within the 

next year, we would start seeing some improvements because now 

they do have that funding and are able to address some of the 

issues, apart from what we have reported on other issues as well, 

but some of them are specifically directed towards our recommendations that we have made over the past couple of years. 

Accounting for program income is a good example. 

Ms. VELAZQUEZ. Madam Secretary, would you care to comment? 

Ms. MARQUEZ. HUD has been requesting funding to improve the 

IDIS system since 1999 and was denied. In 2010, because of the 

transformational issue, it has been approved, it is designed. We 

are, in fact, taking into account, as the OIG said, many of their recommendations. We agree with them. In fact, we agree there is a 

housing crisis in the United States. We can’t waste a single dollar, 

and one of our tools is oversight and enforcement and we take it 

very seriously. 

Ms. VELAZQUEZ. Thank you. Ms. Marquez, both the Post and 

your IG have been critical of your agency’s record of enforcement 

actions and civil penalties for bad actors in the HOME Program. 

Does your agency have adequate resources and expertise to address this need to pursue these measures? And when I ask the 

question, how long it will take for you to implement the recommendations made by the IG, what will be the price tag to that 

and would you please give us a timeline? 

Ms. MARQUEZ. That could be answered in many ways. I will try 

to be right to the point on this. 

There are, as Mr. Bachus had raised, at the local level the ability 

of the local players to pursue in court civilly. Repayment of funds 

has to be done through capacity building and model documents. 

The rule that we are working on now that will be released internally within 1 month addresses those issues, and so within 1 year, 

we will help them with model documentation so that they can take 

folks to courts themselves. 

25 

Ms. VELAZQUEZ. The HOME Program has always operated as a 

block grant with funds being disbursed through intermediaries at 

the local level. 

Would the program be better served if HOME funds were administered directly by HUD instead of by participating jurisdictions? 

Ms. MARQUEZ. I couldn’t imagine such a thing. Everybody has a 

separate market, separate conditions. In most communities, there 

are submarkets. You can never make that decision for a local government or for other players. You just can’t. 

Mr. NEUGEBAUER. I thank the gentlewoman. 

Ms. VELAZQUEZ. Thank you. 

Mr. NEUGEBAUER. The gentleman from Texas, Mr. Canseco. 

Mr. CANSECO. Thank you very much, Mr. Chairman. 

Ms. VELAZQUEZ. Mr. Chairman, would you yield for a second? 

I just would like to ask unanimous consent to enter into the 

record some letters of support from different organizations. 

Mr. NEUGEBAUER. Without objection, it is so ordered. 

Mr. CANSECO. Thank you, Mr. Chairman. Ms. Marquez, the Administration proposed an increase in HUD’s budget for Fiscal Year 

2012 of $747 million more than HUD’s 2010 budget. Did you know 

that? Is that correct? 

Ms. MARQUEZ. Yes. 

Mr. CANSECO. Was this money requested in order to better police 

the HOME Program? 

Ms. MARQUEZ. No. I fully believe that the HOME Program is one 

of the best programs in the Federal Government, and we can always do better, but it is a fine program, and most of what we need 

to do is being done through systems changes. This is a time of 

great need in the country. This is not the time to be to creating 

more bureaucracy. It is the time to use what we have better. 

Mr. CANSECO. So the increase in budget for 2012 was not to help 

the HOME Program? 

Ms. MARQUEZ. It is not that some of it isn’t to help the HOME 

Program, but it is capital dollars to go to jurisdictions, not to stay 

at HUD. 

Mr. CANSECO. Do you think from a taxpayer perspective, it would 

be appropriate for HUD to get the HOME Program under control 

before its budget is ever increased, from a taxpayer program? 

Ms. MARQUEZ. With great respect, the HOME Program is a great 

program now. 

Mr. CANSECO. Did the HOME Program receive any money from 

President Obama’s 2009 stimulus bill? 

Ms. MARQUEZ. I don’t believe HOME dollars, specifically no. 

There was something else called TCAP through the stimulus that 

came in specially to help with tax credit projects because the private tax credit market lost great value, value tax credits, and many 

deals were endangered and so what is called TCAP came in and 

went directly to State housing finance agencies through HUD to 

save many deals, but it is not HOME funding at all. 

Mr. CANSECO. How is that TCAP fund used? 

Ms. MARQUEZ. The TCAP money went to State finance agencies 

with HUD, they competed, and what ended up happening in a very 

good way is that they went forward and actually saved deals that 

26 

were on the brink of failing because the tax credit market fell 

through in value as with the rest of the real estate market. 

Mr. CANSECO. And did any of that money go to the HOME Program? 

Ms. MARQUEZ. They are not HOME dollars, no. 

Mr. CANSECO. They are not HOME dollars. So HOME didn’t get 

anything from the Obama 2009 stimulus nor from TCAP? 

Ms. MARQUEZ. Yes, they are not HOME dollars. 

Mr. CANSECO. Now, I understand that HUD contacted a number 

of participating jurisdictions that had been investigated by the 

Washington Post to inquire about the status of the HOME project. 

Does HUD usually contact this many jurisdictions in such a short 

period of time? 

Ms. MARQUEZ. Absolutely. One of the things that the Post failed 

completely to mention is that the HOME employees throughout the 

country in local jurisdictions, it is their job to have relationships 

with these jurisdictions. They talk to them all of the time. So, yes, 

absolutely we are speaking to them daily. 

Mr. CANSECO. So you contact them on a normal course of business? 

Ms. MARQUEZ. Absolutely. 

Mr. CANSECO. So is it fair to say that the Washington Post article was or was not a catalyst for HUD to actually go out and contact these jurisdictions and HUD would not have contacted them 

otherwise or would have normally contacted them? 

Ms. MARQUEZ. This is what I would say. For Washington, D.C., 

which had a number of projects, we had already referred Washington, D.C., to the IG 2 years earlier for an audit. With Prince 

George’s County, because we had monitored them twice and we 

were very concerned and as you probably know, their executive has 

been arrested for fraud, we would be—we were concerned as well 

for criminal fraud. And so would I call the—would I call a jurisdiction when I read anything that would alarm me, yes, and that is 

absolutely what they must do. But this is something in the normal 

course of business, it would be called a CPD representative calls 

these jurisdictions, their assigned jurisdictions. Every CPD rep has 

their list of jurisdictions that they do business with. 

Mr. CANSECO. Now, when you contact these jurisdictions and 

they give HUD an answer as to what the status is on certain properties, is there any follow-up or examination by HUD to make sure 

that what the jurisdiction told you is actually correct? 

Ms. MARQUEZ. There absolutely is. So for instance, when we requested at the end of May, that in PG County, they repay $1 million, before we did that, we went in to audit them. Everyone has 

the right to due process and we went in to look at their books and 

look at everything. 

Mr. CANSECO. Thank you. My time is almost up, but let me ask 

you this follow-up question to what my colleague Mrs. Biggert 

asked. 

She asked in cases of fraud—and you answered that you have 

other options to investigate fraud for enforcement purposes, but 

you did not say what those options are. Do you mind telling us 

what those options are or what happens to the money with regards 

to that enforcement? 

27 

Ms. MARQUEZ. We have several options. One is to refer it to the 

State Attorney General or to the Department of Justice, and we 

have done that on occasion. Another is if we are seeking repayment 

and someone, for instance, who would not want to repay, we would 

go to our enforcement center, and we have done that on occasion 

and have always been paid. We would also go to the Office of General Counsel and seek debarment, which would essentially take 

someone out of being able to do business with HUD completely if 

they were found to be in violation. We do that as well. We would 

also, and often do, do a joint referral so we could do many of these 

things and immediately bring the Office of Inspector General in immediately to look at those things, and you have heard them testify. 

It is a good relationship. 

Mr. CANSECO. So the HOME Program does have an enforcement 

center? 

Ms. MARQUEZ. HUD has an enforcement center. 

Mr. CANSECO. So you go to the HUD enforcement center? 

Ms. MARQUEZ. Yes. 

Mr. CANSECO. Thank you very much. My time is up. 

Mr. NEUGEBAUER. I thank the gentleman. The ranking member 

of the Oversight and Investigations Subcommittee, the gentleman 

from Massachusetts, Mr. Capuano. 

Mr. CAPUANO. Thank you, Mr. Chairman. Mr. Heist, did you 

read the Washington Post story? 

Mr. HEIST. Yes, I did. 

Mr. CAPUANO. And what was your general opinion of it? 

Mr. HEIST. My observation was that they brought out some examples of misspending and certain projects that were consistent 

with some work that we have done at the local level. We reported 

in the past that HUD data systems have evidence—indicators of 

stalled projects. Actually, CPD has apparently adopted our definition in trying to highlight those cases. I can’t speak to their overall 

conclusions. 

Mr. CAPUANO. Did you find anything in the article that was 

shocking or unknown to you? 

Mr. HEIST. I wouldn’t say shocking, no. Certainly unknown. I 

wasn’t familiar with many of the examples. 

Mr. CAPUANO. The specific examples, but the general concepts 

you were familiar with? 

Mr. HEIST. Correct. 

Mr. CAPUANO. You have been the IG at HUD for 10 years, if I 

remember? 

Mr. HEIST. Inspector General for Audit for 10 years. 

Mr. CAPUANO. In that 10 years, this is not the only program that 

you audited? 

Mr. HEIST. Correct. 

Mr. CAPUANO. How does this program stack up against other programs? 

Mr. HEIST. One thing I would say about the HOME Program is 

that it does have some specific rules and very specific criteria for 

types of activities that are allowed. So in comparison with other 

programs, it is more straightforward to audit. You can point to specific rules, and I think that is part of why we get a relatively high 

28 

amount of support on our recommendations because there are 

clear-cut rules. 

Mr. CAPUANO. That is why I was able to get, at the request of 

the chairman of the subcommittee, mountains of information in a 

relatively short period of time. 

Mr. HEIST. With respect to our audits? 

Mr. CAPUANO. Yes. 

Mr. HEIST. Yes, we have done quite a number of them over the 

years. 

Mr. CAPUANO. In the 10 years you have been doing this, do you 

think the program is getting better or worse or pretty much the 

same? 

Mr. HEIST. I can’t make an overall assessment because we have 

not looked at the program in that light. Our primary focus is to 

identify areas of risk and offer recommendations as to what the Department can do to address those risks. And we have to audit 

against the program structure the way it is, which is a program 

that devolves much of the decision-making authority to the local 

level, and that is what we are auditing against and that is the constraint that we operate under. 

And in any kind of program where you rely on intermediaries to 

carry out— 

Mr. CAPUANO. But you don’t have a general opinion that over the 

last 10 years, it has gotten worse? 

Mr. HEIST. No. 

Mr. CAPUANO. Or what about getting better? Have they been 

more responsive to your suggestions? 

Mr. HEIST. They have been very responsive in the last couple of 

years. We issued a report a couple of years ago that sort of talked 

about some of the systems issues, concerns that we had, and I was 

quite heartened to see that they have implemented a number of 

our recommendations. The notice, for example, that was put out to 

start canceling activities that had not received any activity for a 

year after the funds were committed, they made specific reference 

to our audit work in telling the participating jurisdictions this is 

why we are doing this. 

Mr. CAPUANO. In some situations, IGs and the agencies they 

oversee don’t necessarily have a positive working relationship. 

Would you say that is not the case here? 

Mr. HEIST. With the HOME Program, I would characterize it as 

generally positive. 

Mr. CAPUANO. I know that there is one significant disagreement— 

Mr. HEIST. There are disagreements. 

Mr. CAPUANO. —that you point out. That is fine. The FIFA one, 

in particular. It is a pretty straightforward accounting difference of 

opinion. 

Mr. HEIST. Yes. 

Mr. CAPUANO. Even when you disagree. Because to me—here is 

how I look at it. No program can be perfect. I don’t care what the 

program is. I don’t care who is running it. No program can be perfect. That is why we need IGs to help keep it on the straight and 

narrow. 

29 

The question is, what do you do about things you find? What you 

just told me is that they are relatively cooperative and that they 

do have some disagreements. But your next question is, on the disagreements that you have, specifically the FIFA one, have they at 

least handled the disagreement in a professional manner? 

Mr. HEIST. Certainly, absolutely. 

Mr. CAPUANO. So it is not that they are just ignoring you; they 

are just saying, we respectfully disagree? 

Mr. HEIST. That is absolutely true. 

Mr. CAPUANO. So what I am hearing is, it is a program—and I 

think this hearing is fine. The article raised some serious questions. I read the article as well. It is reasonable and fair for us to 

ask about these things. It is reasonable and fair to get your answers, but from what I am hearing from you, other than the ordinary course of events, and again, there are always some bumps and 

some improvements, I don’t walk away from this at the end of my 

time shocked. I actually feel pretty good that the program seems 

to be working as intended; that you have been overseeing it reasonably well; and that when you find differences of opinion, they tend 

to react in a positive manner, and that when you have disagreements, they are professional about it. So to me, it sounds like the 

system is working. 

And my time is up. So, therefore, I say thank you. 

Mr. NEUGEBAUER. I thank the gentleman, and now the gentleman from Texas, the vice chairman of the full committee, Mr. 

Hensarling. 

Mr. HENSARLING. Thank you, Mr. Chairman. Ms. Marquez, I was 

at another commitment, so I missed your earlier testimony. We 

may be going over some old ground here. I thought I heard you say 

that in your opinion, the HOME Program is one of the most important programs or one of the most effective programs of the Federal 

Government. Did I hear you say that? 

Ms. MARQUEZ. Yes, you did, sir. 

Mr. HENSARLING. Okay. HUD administers what, roughly 90 programs; is that a good ballpark figure? 

Ms. MARQUEZ. I don’t administer them all, so I couldn’t say that, 

but sure. 

Mr. HENSARLING. Okay. I received information from I believe the 

Government Accountability Office. By some measurements, there 

are over 10,000 Federal programs. I believe HUD administers 90, 

more or less. So it is an important claim to make that this is one 

of the most important programs that the Federal Government has. 

As I understand the program, what you measure is the amount of 

money that goes out the door and measure whether it went out in 

5 years. Now, is there something else that you are measuring here 

because if there is, and I did read the testimony, I am missing it. 

So my question is, if that is true, how do you know? How do you 

make the claim that this is one of the most important programs 

that the Federal Government has to offer if your only metric is how 

much money went out the door and did it go out in 5 years? 

Ms. MARQUEZ. The most important metric is one million families 

served through this program and— 

Mr. HENSARLING. And so what does that mean, served? Did they 

receive money? 

30 

Ms. MARQUEZ. What it means is that of the one million units I 

am speaking about, those have actually been built, homes 

rehabbed, homeowners in homes. 

Mr. HENSARLING. Okay. How do you track that information? 

Ms. MARQUEZ. That is tracked in all of the different reporting 

systems that we have shown. It is also tracked through the IG. It 

is tracked through any reporting measure that the government has. 

It is in there. We have several. 

Mr. HENSARLING. This is reporting by the grantees; is that correct? 

Ms. MARQUEZ. Yes, this is a block grant. So what the Congress 

decided under President Bush was that you would trust local government, local decision-makers to use their dollars responsibly, 

that they knew what their needs were, that they knew best how 

to work with private developers and for-profits. 

Mr. HENSARLING. That is not the question, Ms. Marquez. I am 

not trying to assess blame here. But what I am trying to understand is what is the accountability system, your fault, my fault, no 

one’s fault. I am trying to understand. Maybe it was Congress’ wisdom to do this, but frankly, we are in a slightly different era as 

the Nation is going broke as we are borrowing 40 cents on the dollar, much of it from the Chinese, sending the bill to our children 

and grandchildren. Maybe the bar that was set 10 years ago needs 

to be re-examined. So, again, maybe a program that made great 

sense 10 years ago, maybe has to face a little higher hurdle rate. 

Maybe there is a design flaw here, or maybe there isn’t. Again, as 

I am looking at the tracking system, what I am seeing is that you 

have to account for money out the door, getting it out in 5 years, 

and then reports come back that I don’t—and please correct me if 

I am wrong—that are not independently verified from these grantees of the good that they have done, and if there was more independent verification, I don’t think the Washington Post would have 

written the article, and the Washington Post is not exactly known 

as a bastion of conservative thought. It wasn’t Fox News. It was 

the Washington Post. 

Ms. MARQUEZ. I guess that is interesting in this position, isn’t it, 

because the HOME Program is one that empowers local government, and so from that point of view, perhaps the Washington Post 

would rather that we had a one-size-fits-all as the Federal Government for this money. HUD does not agree. We agree that this is 

locally controlled, locally driven. I would say to you that HUD monitors every grantee. In the last 2 years, we have monitored 34.5 

percent of the— 

Mr. HENSARLING. Okay. What does it mean to monitor? How do 

you monitor? 

Ms. MARQUEZ. It means this—we actually go to the place, we go 

to their office, we have a risk assessment. Every year, there is a 

risk assessment. The IG has actually approved the risk assessment 

tool. We take a look at a number of items having to do with risk, 

their performance. You name it, and it is looked at. From that 

point of view, we then prioritize what it is that should be monitored. High-risk grantees come first. 

Mr. HENSARLING. How many of these sites are you actually going 

to? 

31 

Ms. MARQUEZ. We are going to—when I say monitoring, I mean 

our job is to monitor the grantee, the jurisdiction. So we actually 

go to the jurisdiction. Now, it is also true that often within a monitoring visit, you might be there a week looking at all of their documents, a sampling of files, making sure that they have everything 

they are supposed to have. 

Mr. HENSARLING. Aren’t there 25,000 open projects? 

Ms. MARQUEZ. There are approximately right now 20,000 open 

activities, but as I have said, we are talking about billions of dollars and 642 jurisdictions. So 20,000 activities is the business of 

HOME captured in a system so that everyone can look at it. It is 

actually quite transparent, which is why we were able to afford in 

such a quick turnaround all of your requests for data because it is 

actually in the system. It is also why the IG says that the system 

is straightforward to audit because the information is in there and 

it is accessible. 

Mr. HENSARLING. I see my time has expired. Thank you, Mr. 

Chairman. 

Mr. NEUGEBAUER. I thank the gentleman, and now Mr. Hinojosa. 

Mr. HINOJOSA. Thank you, Mr. Chairman. I would like to first 

stress that the title of today’s hearing is, in fact, ‘‘Oversight of 

HUD’s HOME Program’’ and not what some have contended is an 

investigation into the Affordable Housing Program or the deficit or 

debt of the United States. It is obvious to me that during the last 

10 years that we have been at war in Iraq and Afghanistan and 

focused most of our money to the wars and neglected many of the 

domestic programs such as housing. I think that there is smoke 

and mirrors that I am hearing and seeing here in this hearing. 

The title is, ‘‘Oversight of HUD’s HOME Program’’ and unless 

that title is changed, the members contending that it is something 

else are sadly mistaken. HUD’s Assistant Inspector General just 

told members of this committee that he supports the program but 

has had a difference of opinion with the Office of General Counsel. 

They have not called for the program to be eliminated. 

In my congressional district, I have seen the investment and the 

improvements that were made in spite of cutting down the funding 

for this program. Just the City of Harlingen, in the last period from 

2009 through 2011, has received $1,173,000. The City of McAllen 

has received $2 million. The whole county, which is 750,000 in population, has received $81⁄2 million. That is not a lot when you think 

of 750,000 people in that county. 

For those of you unfamiliar with a colonia, because we have a 

very large number of those in my area, it is an unincorporated area 

outside of city limits in which American citizens reside. Those citizens have no running water, no sewage treatment, very little electricity, no paved roads, nothing at all that most of us take for 

granted. They are much worse than what we know to be ghettos. 

The HOME Program is helping to turn around some of these 

colonias, areas that would be decimated if the program were eliminated. 

I hear the other members of the committee asking hard questions, but I think that there was—that in the investigation and the 

program examined by HUD in July of 2010 was not found in violation of the overall HOME objectives. 

32 

Ms. Marquez, I want to ask you a question. Are you familiar 

with the colonias? 

Ms. MARQUEZ. Yes, I am. 

Mr. HINOJOSA. If that is the case, then you have been down 

there, evidently. I want to ask you, can you talk about how the 

HOME funds are being used to help the colonias and also add to 

the answer to my question, how is HOME assisting in the disaster 

recovery across the country? 

Ms. MARQUEZ. Okay. As it relates to the colonias, in this year, 

the Secretary honored my request that oversight of colonias come 

to my office. I have been to pretty much all four States and have 

traveled there. The HOME Program is of enormous help to colonias 

because it is able to leverage other resources. You are right, it is 

at a State level that colonias receive money. So the State of Texas 

receives their HOME allocation, and then the colonias and local 

governments apply to the State for HOME dollars. Because it is not 

a lot of money, it is absolutely essential in colonias that they leverage other dollars, whether it is the CDBG set-aside for colonias, it 

is money from Rural Development or anything else. So without leverage, colonias cannot go forward. 

Mr. HINOJOSA. If you would yield, there is a number here for the 

whole State of Texas. Our State program received $126 million, of 

which I said that a small amount came to Hidalgo County of 81⁄2

million. So continue. 

Ms. MARQUEZ. As I said, you absolutely in a colonia must leverage. There is no other way to move forward there. And so, the 

HOME Program plays an overwhelming help there because virtually everyone who lives in a colonia qualifies for HOME dollars. 

Mr. HINOJOSA. My time has expired, but I wanted to conclude by 

saying that the HOME Program is supported by many organizations that I know of and have met with, such as Habitat for Humanity, the Housing Assistance Council, the National AIDS Coalition, and the National Alliance to End Homelessness. 

With that, I yield back. 

Mr. NEUGEBAUER. I thank the gentleman, and now recognize the 

gentleman from New Mexico, Mr. Pearce. 

Mr. PEARCE. Thank you, Mr. Chairman. I thank both of you for 

being here. 

Secretary Marquez, I notice your document showing the inaccuracies of the Washington Post, and frankly, coming from my side 

of the aisle, I don’t need much encouragement to believe that the 

newspapers might get it wrong occasionally. I would be interested 

if you have a document that is similar about Mr. Heist’s presentation. In other words, the fact that you don’t have an audit program, he says you are unable to produce reports that would facilitate timely identification of fraud, waste, and abuse in the programs. Is that inaccurate, totally inaccurate? 

Ms. MARQUEZ. I guess I would say that on most things, I tend 

to agree with my colleagues at the OIG, but there are some times— 

Mr. PEARCE. So this is inaccurate, that you do, in fact— 

Ms. MARQUEZ. I believe that the systems we have for oversight 

and reporting adequately cover it. However, I would agree with 

them that this is a split. There are things in the IDIS system that 

33 

need improvement, and that is why since 1999, CPD has been requesting funding, and in 2010, has now received funding. 

Mr. PEARCE. You mentioned the in-depth study on the Kairos 

project. It is mentioned somewhere in here, 2005 and 2008. So if 

you did an in-depth study, why didn’t it reach some level to where 

somebody finally blew the whistle? The whistle was blown. You obviously blew the whistle now that the report came out in the newspaper. But if the systems are so straightforward—I have heard 

both of you say that you have straightforward systems. Why didn’t 

the whistle get blown on that? 

Ms. MARQUEZ. We have looked at all their files and I have offered to make them all available in terms of our monitoring. They 

had entered information. There was information in the system. It 

was incorrect. I would note that it is not just on the CPD side that 

this wasn’t caught. The IG didn’t catch it either. So you can’t catch 

everything in a system that is about a million units. 

Mr. PEARCE. How many people—you said you have helped a million people and you have that breakdown here and I appreciate 

that. How many people nationwide, would you guess from your experience, need help? If you have helped a million, is it 10 million, 

20 million, 30 million? 

Ms. MARQUEZ. There is a worst-case housing needs study that 

was released in February by HUD that indicated how severe the 

need for affordable housing is, and it certainly shows that there 

has been an increase of 20 percent in worst-case housing needs for 

renters between 2007 and 2009, which is why no dollar can be 

wasted. 

Mr. PEARCE. But my question is, how many people nationwide 

would you recommend or would you guess fall in the category of 

needing your help, your services? 

Ms. MARQUEZ. What it says in the report is that in 2007, there 

were 5.91 million households who fit within a worst-case housing 

need, and that that has now gone up significantly. 

Mr. PEARCE. Okay. So let’s say it doubled from 5.9 million; let’s 

just say it went to 10 million households. That makes the math 

much easier. Just to put it in perspective, in order to serve the 1 

million people that you served, it has taken not only your $32 billion, but then according to your report, another $80 billion from 

outside private sources. So that is basically $112 billion to take 

care of 1 million people. So when we multiply $112 billion times 

10, we are actually going to need about $1 trillion to handle those 

10 million people. And so when I hear the discussions about how 

effective a program is, I just need to put it into context for myself 

that we need $1 trillion on this path of 112,000 average per person 

that you help. And I do note that rental units, the average per person is $31,000, according to your figures that you have distributed, 

and then I assume that is then amplified by the $80 billion. 

Mr. Heist’s report also talks about District of Columbia; there is 

a significant problem here. He is talking about $6.5 million costs 

charged to the program. Then he talks later about the mobile. He 

says, the City failed to detect or prevent the housing board use of 

$1.1 million. Are these all things that you said you have a really 

nice tight system, these are things you have applied for and you 

have gotten reimbursement for those; is that correct? 

34 

Ms. MARQUEZ. In this case, in Washington, D.C., it was actually 

HUD that requested the audit by the IG before there was a Washington Post story. So it was actually HUD that caught it and asked 

the IG to review, having nothing to do with the Washington Post. 

On the 1 million number, it is not people, it is units, and those 

have affordability periods anywhere from 5—in California, it is up 

to 55 years. So when you are talking about an investment, you are 

not talking about people. You are talking about units over many, 

many years. So who would benefit? Multiples of millions of people 

would benefit from that number. 

Mr. PEARCE. Okay. Mr. Chairman, I see I am over, if I could 

make one closing comment. I notice in the IG report that it says,‘‘ 

43 investigations have been run by the IG, several of which were 

referred to us by HUD’’ which means several were not referred by 

HUD. So as I am hearing a nice tight process and a straightforward audit, I still have a lot of questions. Thank you, Mr. Chairman, for your indulgence. 

Mr. NEUGEBAUER. I thank the gentleman and now another great 

Texan, the gentleman from the Houston area, Mr. Green. 

Mr. GREEN. Thank you, Mr. Chairman, and I thank the ranking 

member for allowing me to proceed as well. I also thank the witnesses for appearing. 

I would like to start with the notion that these really are people 

who are being helped. While we do have units, I think the units 

benefit people, and I have some intelligence that indicates that we 

have preschool teachers who are helped, some of them making 

$28,840, paramedics, firefighters, plumbers, bookkeepers, accountants, mail carriers, lab technicians, highway maintenance workers, 

elementary school teachers, mental health counselors, automotive 

technicians, electricians, and secondary school teachers. So we are 

not just helping people who are down and out without jobs. These 

HOME dollars benefit people who are working hard every day, trying to make ends meet but are also finding it difficult to acquire 

affordable housing in the areas where they live and they are making 80 percent or less of AMI or in some cases 50 percent, below 

50 percent of AMI. 

The program has been a benefit to people in 642 States or local 

participating jurisdictions. Am I to interpret from this that nearly 

every State receives some of these dollars? 

Ms. MARQUEZ. Every State. 

Mr. GREEN. Every State. That would mean that every Member 

has constituents who are benefiting from these dollars. It is not 

something that is partisan. I don’t have just Democrats in the 

State receiving dollars and we don’t have just the Republicans in 

the State receiving the dollars. Every State with all of our constituents receiving some of these dollars. And it is very difficult to paint 

a picture of what life would be like in the absence of a program, 

but is it safe to say that if we didn’t have the programs that are 

developed where the low-income tax credits that are leveraged with 

dollars at a rate of about four to one that teachers, firefighters, 

plumbers, some of these persons that I have called to your attention, many of them might not have the housing that they have currently surely, but also some of them might find themselves homeVerDate Nov 24 2008 14:56 Sep 08, 2011 Jkt 067931 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 K:\DOCS\67931.TXT TERRIE
35 

less? We can’t say to what extent, but some could. Is that a fair 

statement, ma’am? 

Ms. MARQUEZ. It is fair to say that HOME dollars work and leverage not only with private dollars but with other dollars, Section 

8 project-based certificates, to create enormous numbers of units 

for the chronically homeless and others facing homelessness. So it 

is one of HOME’s purposes, leverages that, and as you said, it also 

overwhelmingly, though, provides housing for working people. 

Mr. GREEN. And do people move through these units? Do we 

have some people who will actually find that the unit is of benefit 

to them at their current salary level and then they move on to purchase a home? Is this transitional housing for some people? 

Ms. MARQUEZ. Yes, not in the sense that we would talk about 

someone who is receiving a subsidy, but yes, because it stabilizes 

a family. If you no longer have to make a decision between your 

rent and buying a new winter coat for your child or food or medicine for a senior citizen, it tends to stabilize your family and allows 

you to move forward and it allows you to make more money and 

move out. 

What is important here is the affordability period, that HOME 

requires 5 to 20 years just the home statute of affordability. So it 

is not just there for one family; it is there for many families. 

Mr. GREEN. Mr.—is it ‘‘Heist’’ or ‘‘Heist,’’ which do you prefer? 

Mr. HEIST. ‘‘Heist.’’ 

Mr. GREEN. Mr. Heist, one quick question because my time is 

about to expire. Would you tell us the last time that you audited 

a perfect program, please? 

Mr. HEIST. It is hard. Perfection is hard for anybody to achieve. 

We do have no-finding reports on occasion. 

Mr. GREEN. I see. Have you—do you peruse the newspaper with 

some degree of regularity, sir? 

Mr. HEIST. I am sorry? 

Mr. GREEN. Do you read the newspaper with some degree of regularity? 

Mr. HEIST. Certainly. 

Mr. GREEN. Do you find that police departments from time to 

time will have fraud within them? 

Mr. HEIST. Will have what? 

Mr. GREEN. Let me just make a statement. Police departments 

have fraud. We prosecute criminals. There would be fraud in programs, and criminals ought to be prosecuted. But we ought not let 

criminals prevent us from serving people who are in need of the 

program. Just as we don’t in police departments when we catch 

fraud, find it, we shouldn’t end this program. 

Thank you very much. I yield back. 

Mr. NEUGEBAUER. I thank the gentleman, and now the gentleman from Missouri, Mr. Luetkemeyer. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. Mr. Heist, just 

some quick questions with regard to oversight. 

In your testimony, you say that some of the audits found that 

there was no—in some instance, no monitoring occurred at all particularly in the subgrantee level. What have you found there and 

have there been some changes in processes or procedures to rectify 

the situation? 

36 

Mr. HEIST. I would say one common area that we see is the recipient being responsible for monitoring the subgrantees that it 

passes funds through, particularly local nonprofit groups— 

Mr. LUETKEMEYER. Okay. So what you are saying is that there 

are not enough procedures in place, policies in place to track the 

subgrantee stuff? 

Mr. HEIST. Largely, the policies are in place. It is a question of 

whether the jurisdiction is following them the way HUD expects 

them to follow. 

Mr. LUETKEMEYER. Okay. You make a comment also about the 

nonprofits. I notice—I think it was in your testimony or some of 

the other things you had here where we may have some problems 

with nonprofits from the standpoint that they may not have the expertise that other developers have to be able to utilize those dollars. Did you find that in your findings, that it was more of a problem with the nonprofits than it was the other folks? 

Mr. HEIST. That is something that we find in a number of our 

audits. The nonprofits lack the capacity to deal sometimes, not always, but in some cases. 

Mr. LUETKEMEYER. What do you think would be a solution to 

that problem? Do you think we need to have more oversight, more 

rules, more regulations, more restrictions? How do we solve that 

problem, because I’m not necessarily against the program here, but 

obviously, we have—we are here today because there is a perceived 

problem with oversight, with tracking of this, and we need to find 

a way to come up with some solutions. What kind of solutions do 

you see there that would work? 

Mr. HEIST. Certainly training, helping capacity building. The 

statute contains a provision that 15 percent of the funds be allocated to community-based nonprofits. So there is a recognition 

within the statute that they do play a role, and it is a question of 

how do those groups, what training do they receive. I think it is 

a very important function and role that HUD would play when providing technical assistance. 

Mr. LUETKEMEYER. But we do have to have some sort of additional tracking or some sort of oversight here obviously if we have 

a bigger problem there, wouldn’t you agree? 

Mr. HEIST. The nature of the program is that it is the jurisdiction’s responsibility to oversee those nonprofits. 

Mr. LUETKEMEYER. What happens when a jurisdiction is found to 

be noncompliant or do you see a lot of HUD action taken against 

these folks? Do they restrict the number of projects that they allow 

because there is lack of oversight or lack of cooperation? Do they 

start to provide more oversight over these people then to continue 

to find ways to watch what is going on a little closer? 

Mr. HEIST. Overall, I would characterize the audit resolution for 

this program as higher than others as far as agreeing and recovering the funds. 

Mr. LUETKEMEYER. That certainly gives me great pause for the 

rest of the programs then if we have some problems here we are 

looking at today and not providing oversight over those. 

Mr. HEIST. We don’t always agree, I can tell you. We probably 

disagree more on other programs than we do on this particular one. 

37 

Mr. LUETKEMEYER. Obviously, some of the testimony here and 

some of the responses from the HUD officials, they agree on some 

of the findings that you had here. And so, what about the tracking 

of what goes on here? I know there are a lot of questions with regards to tracking of watching how these things occur, whether we 

are getting the right information, whether we are in contact 

enough to provide the oversight. What would your findings show? 

Mr. HEIST. Our findings show that some of the systems issues 

impede the ability to monitor, to track the flow of funds, the proper 

matching of disbursements with the original obligation that set up 

the project. Those are issues that we believe need to be addressed 

on a continuum to improve the oversight. 

Mr. LUETKEMEYER. When you see this going as a result of this 

hearing, do you see continued improvement of oversight? Do you 

have a list of suggestions? Do you have a report that you are going 

to put out? Do you have a working group that is in place? Where 

do you see and where do you think this is going to go as a result 

of this? 

Mr. HEIST. This is something that we look at annually when we 

audit HUD’s financial statements. And we have looked at it more 

in depth over the last couple of years because of some issues that 

we developed and I think the trend is towards the positive, largely. 

Again, there are areas where we disagree, but it is something that 

we will be looking at closely as we proceed with that effort. 

Mr. LUETKEMEYER. Thank you very much. I see my time is up. 

Thank you very much, Mr. Chairman. 

Mr. NEUGEBAUER. I thank the gentleman. And now the gentlewoman from California, Ms. Waters. 

Ms. WATERS. Thank you very much. I would like to welcome our 

witnesses here today, particularly Ms. Marquez. I am so pleased 

you are at HUD. I am from Los Angeles, and you are from Los Angeles where you ran our Housing Department’s HOME Program. 

You have a great reputation. As a matter of fact, you are known 

as being a tough enforcer of the rules and the laws, and I have a 

great appreciation for that. So I am very pleased that you are here 

and I think you are a wonderful addition to HUD. 

Let me see if I can put this in its proper perspective. What is 

the size of the HOME Program in terms of funding now? How 

much money are we talking about? 

Ms. MARQUEZ. In 2011, we are talking about $1.6 billion. 

Ms. WATERS. And the audit was for what period of time? 

Ms. MARQUEZ. Well— 

Ms. WATERS. The information that has been shared with us 

through the— 

Ms. MARQUEZ. Through the Post article? 

Ms. WATERS. Yes, the Post article. I am sorry. 

Ms. MARQUEZ. That took a snapshot in time. It took a snapshot 

in time, looking at open activities at a snapshot in time. Here we 

are talking about a 20-year program that over time has had 

760,000 open activities in 20 years. 

Ms. WATERS. So what percentage of the dollars that have been 

spent on the program, I guess in the snapshot, could be identified 

as problematic? 

38 

Ms. MARQUEZ. They incorrectly identified what turns out to be 

about 2.5 percent, but it wasn’t accurate. 

Ms. WATERS. What is the accurate— 

Ms. MARQUEZ. I would say that as we took a look at it—actually, 

the Washington Post declined to give us their actual data. We 

asked for it and they declined. So we did what we could do to 

mimic it. And as we went through, we found that instead of having 

700 stalled projects, that well over half are either completed and 

occupied or well on their way to being occupied and that a small 

percentage are stalled and mainly due to the recession. 

So it is just incorrect. 

Ms. WATERS. I was a little bit late coming in today. I had a Judiciary Committee hearing that is going on. So I don’t know if you 

have been able to explain this to the other members who may have 

had questions so that they can understand the small percentage of 

problems that this program may have had. Have you been asked 

these questions by either side of the aisle? 

Ms. MARQUEZ. I think I have. 

Ms. WATERS. I see. And have you attempted to correct the Washington Post on their misinformation? 

Ms. MARQUEZ. I think that we have overall. When you have produced 1 million units with large affordability periods all over the 

country when the IG sitting next to me who we speak to all the 

time testifies that we have a very solid working relationship and 

that we regularly refer matters because we also don’t tolerate 

fraud, waste, and abuse, I think we have debunked what the Washington Post had to say. 

Ms. WATERS. Mr. Heist, if I may, what other programs do you 

have the responsibility for other than the HOME Program? 

Mr. HEIST. There are many. We have responsibility over all HUD 

programs. Single family mortgages, Section 8 rental assistance, 

and the Community Development Block Grant Program are some 

of the more significant. We also have a significant workload in Recovery Act funds that were provided to the Department of Housing 

and Urban Development. 

Ms. WATERS. It is a big operation over there, and I am sure that 

we will find that there are problems from time to time in various 

operations of HUD. How does this HOME Program compare with 

other programs you have reviewed? 

Mr. HEIST. As far as the Administration, probably better than 

most, I think in large part because the criteria are a little bit more 

structured and straightforward. You have specific activities and criteria that these jurisdictions can spend funds on, which makes it 

more straightforward to us to audit and kind of easier, with fewer 

grey areas, I think where we have a lot of our disagreements is 

where we differ on our interpretations of what the statutes says 

they are allowed to do or not allowed to do. And we just don’t have 

as much of that. Then, there is a program where we have a reasonably good working relationship at the staff level both in headquarters and the field. 

Ms. WATERS. Again, as I said, I was a little bit late coming in. 

Have you had an opportunity to say what you just said to me to 

the other members of this committee and your testimony on questioning here today, letting them know that this is not—there are 

39 

no big issues here with this program and that you work well together and that it is structured well? Have you had an opportunity 

say that today? 

Mr. HEIST. Yes, I have. 

Ms. WATERS. Mr. Chairman, I always appreciate efforts that are 

put forth in this committee to find out information, but I certainly 

wish that we could spend this time on some really troubled areas. 

About the same time the story about the HOME Program broke in 

the Washington Post, reports were surfacing about a HUD Inspector General audit of the 5 largest mortgage services. This audit reportedly concluded that the servicers had been defrauding the government by filing for FHA insurance payments to cover losses on 

foreclosed homes, using defective and faulty documents. I would 

hope that we can get to some really serious issues like this and not 

kind of use up our time on something like this where the Post article is just incorrect and perhaps we should dig a little deeper before 

we take everybody’s time to— 

Mr. NEUGEBAUER. I thank the gentlewoman. I do want to point 

out that the Inspector General does not have good things to say 

about your follow-up in your accounting. When you look at that report, that is not a glowing report and you can certainly have a professional relationship. But, Ms. Marquez, I think it is disingenuous 

to tell us that you don’t have any problems when in fact the Inspector General has pointed out problems and in fact we have seen 

through the Washington Post article that there were problems. So 

I think—and I don’t know that you actually know how many 

projects are open or closed or in compliance because if you have inadequate internal controls, that would lead people to believe that 

you don’t actually have accurate information. And so— 

Ms. WATERS. Will the gentleman yield? 

Mr. NEUGEBAUER. Let me be clear that— 

Ms. WATERS. Will the gentleman yield? I don’t know whose time 

we are on. My time was up a long time ago. 

Mr. NEUGEBAUER. I was going to recognize the gentleman from 

New York, Mr. Grimm. 

Mr. GRIMM. And I yield back to you for whatever amount of time 

you need. 

Mr. NEUGEBAUER. That is all right. I just made a little sideline 

comment there. You are recognized for 5 minutes. 

Mr. GRIMM. Thank you. First of all— 

Ms. WATERS. Will the gentleman yield? I am sorry. 

Mr. GRIMM. Yes, ma’am. I will yield. 

Ms. WATERS. Thank you very much, and I won’t take much time. 

After my comments, the chairman took more time to raise some serious questions of Ms. Marquez and I am wondering if the Chair 

will allow her to respond prior to your taking your time. 

Mr. NEUGEBAUER. It is the gentleman’s time. 

Ms. WATERS. Before his time, you took time to raise questions 

that were not responded to. 

Mr. GRIMM. I will—Ms. Marquez, if you would like, please take 

30 seconds to respond. 

Ms. MARQUEZ. I would respectfully disagree. I think that our reporting systems can always be improved, but they are quite solid. 

A system that shows that $30 billion over 20 years where 97.5 perVerDate Nov 24 2008 14:56 Sep 08, 2011 Jkt 067931 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 K:\DOCS\67931.TXT TERRIE
40 

cent showed good shape, where the IG is on the record here testifying just like me that this is a good program that is straightforward and it is easy to monitor speaks to that. 

I would finally say, thank you, Congresswoman. You know me 

well. ‘‘Disingenuous’’ would never be the word I would use to describe me. 

Mr. GRIMM. If I could, Mr. Heist, I do believe that I heard your 

testimony earlier today that although you are not obligated to get 

rid of this program and I don’t think this is what this is about 

today, but there were definitely some concerns that you had and 

you outlined them in your report, is that not true? 

Mr. HEIST. That is correct. 

Mr. GRIMM. Okay. Ms. Marquez, you mentioned before that the 

investigation by your agency was started prior to the actual Post 

story being printed. Is that correct? 

Ms. MARQUEZ. What I believe I said, sir, is that there are several 

instances here and as it relates to both the Washington Post story 

to Washington, D.C., and as it relates to Prince George’s County. 

In the Washington, D.C., instance, we had actually requested the 

IG to go and do an audit way before the Washington Post story. 

Mr. GRIMM. And here is my question. Prior to being printed but 

prior to the inquiries because the reporters were looking— 

Ms. MARQUEZ. Completely unrelated. It is our business to monitor. And so we were doing our business. And in the course of doing 

business, we referred to the IG. 

Mr. GRIMM. Thank you. One of the things I just want to emphasize, and maybe it is because I am a fresh set of eyes, being new 

here as a Member of Congress, I think there is a couple of things 

that can get lost. One of the things that was striking to me today 

was, Mr. Heist, you mentioned that you were not shocked, it wasn’t 

shocking what you read in the Post. And as someone who has 

served in the Federal Government for 16 years, I completely understand why you wouldn’t be shocked because I believe—this is just 

my opinion. I don’t speak for my colleagues. One of the problems 

we have in the Federal Government and local governments 

throughout this country is we have become immune to mismanagement, to waste, to fraud, to abuse at—even though as a percentage 

of the whole it may be small, it should always be shocking. And 

the reason it should be shocking is because we have heard a lot of 

testimony and some very good statements on the other side of the 

aisle that I agree with, how important programs are for those that 

need low-income housing and people are struggling and needing a 

place to live. 

I don’t disagree. But we also have to remember all those who are 

struggling to pay their mortgages who are working two and three 

jobs to pay for these programs. These programs are paid for by 

other hardworking Americans and to think that some of their tax 

dollars, any amount of their tax dollars will be wasted or will be 

abused has to be shocking for all of us because if they stop paying 

those taxes and they stop providing these safety nets, then the indigent, the poor, the needy, where do they get it from? They don’t 

get it from us here in Congress. We appropriate, we allocate, we 

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working American, every hardworking citizen who is paying their 

taxes. 

So I want to emphasize again that I think it is just systemic, and 

I am guilty as anyone else to not realize that we should always be 

shocked by any amount of waste and fraud or abuse or anything 

and we have to remember that when it is not our money, it is easy 

to say, it is a small percentage, it is not so bad. 

So I just want to keep that in context and remind everyone that 

there are a lot of hardworking people struggling out there and 

those are the people who really provide these safety nets and I 

think we always need to be respectful of that. 

Mrs. BIGGERT. [presiding]. The time of the gentleman has expired. The gentleman from Missouri, Mr. Cleaver, is recognized for 

5 minutes. 

Mr. CLEAVER. Thank you, Madam Chairwoman. I agree with the 

gentleman’s comments. The Congress is funding airplanes that the 

Air Force doesn’t want and we are also giving tax cuts to corporations whose quarterly profits are above $14 billion. So I agree, we 

all ought to be upset when dollars are wasted. Thank you for being 

here, Madam Secretary. And I can speak experientially, I think, in 

support of what Ms. Waters just said. I have sat in the room when 

you have spoken very straight to my city with housing problems, 

created since I left the mayor’s office, I may add. But one of the 

things I think that is important here that we can’t overlook, these 

are block grants and it is one of the things that I think Republicans and Democrats both agree on, that block grants are good. If 

you talk to any man, Republican or Democrat or Governor, we like 

that and the main reason is it is self-determination, the communities make the decision on how block grants are spent. And I want 

to ask the question, what happens when HUD comes across fraud 

and waste? What is the process? 

Ms. MARQUEZ. At HUD, our Secretary and myself—and, yes, I 

have traveled with you and you have seen some hard talk about 

real solutions—have a zero tolerance for fraud, waste, and abuse. 

So one of the reasons why in the last 2 years, the number of referrals to the IG have gone up, is in reflection of that. We don’t want 

that to happen. And like Mr. Grimm, I am shocked. That is just 

not okay. We have huge needs in this country and we can’t waste 

dollars. So we refer to the IG, we go to our enforcement center, we 

will send it to the Department of Justice if that is what is required, 

we can go to the State attorney general’s office and we can move 

to debar someone, remove them from being able to do business if 

we are talking about fraud. Overwhelmingly, though, we are not 

talking about fraud. We are talking about more in the realm of 

what I think Mr. Pearce was talking about in terms of capacity 

with nonprofits and others. And there our responsibility—if you 

want to ensure that money is well spent, it is not just about enforcing on the backside—and I respect that that is the job of the IG 

and it is part of my job. I see us as two wings of the same hawk 

in that response. But it is also my job to help them get it right. 

And that is about capacity building. HUD has completely revamped 

its capacity building business in the last 2 years. At CPD it is 

called the one CPD. We are now focused on place-based, marketbased solutions. We need it to join our grantees where they are 

42 

working in the real world with leverage to understand how to better do business. We are also entering into brand new training programs with CHDOs and nonprofits because we recognize weaknesses over the years and there is, as the IG said, a 15 percent setaside for CHDOs. We have to help them use it well. And so it is 

not just about enforcement and oversight, incredibly important and 

we take it seriously, no tolerance, but it also about helping people 

get it right in the first place, making sure that the first invested 

dollar is well spent and well leveraged so that you don’t take it 

back because when you take back a dollar, it is not invested as 

well. So you want to get your biggest bang for the buck the first 

time. 

I come from that place, right? It is my job to make sure they do 

it well, not to make the decision for them, but to be supportive as 

well as taking my role of oversight seriously, and I can tell you in 

Los Angeles it was me who put the poor commissioner in default. 

And it appeared on the front pages of the L.A. Times and I said 

to my staff and I believe I had this discussion with Congresswoman 

Waters, this is a test of the emergency broadcast system. Are people going to let me get it done? I prosecuted him because in my 

city, I had those documents in my contracts, right, the way we 

want to help them do it now, that allowed me to take them to 

court. I got back every penny, including interest. I did not forgive 

one cent and it came right back to the program out of his money, 

not city money, his personal funds, and we invested it back in affordable housing. So that is how I look at this. 

Mr. CLEAVER. I think that is—the New York Times used—and I 

quote—the term ‘‘bungled deal.’’ And I think people misunderstand 

that and there is a difference between bungled deal and improper 

expenditure. And I think my time has run out. But at some point 

I wish that the committee understood the difference between bungled deals and improper expenditure. 

Mrs. BIGGERT. The gentleman’s time has expired. The gentlelady 

from New York, Dr. Hayworth, is recognized for 5 minutes. 

Dr. HAYWORTH. Thank you, Madam Chairwoman. And I thank 

you, Ms. Marquez, for your comments regarding market-based solutions. I think that makes sense. Whether a bungled deal is through 

the best of intentions or whether or not something has actually— 

whether precious taxpayer dollars have been wasted, we do have 

to make the case that the more dollars that are left in a marketbased solution, the better off we are, which argues indeed for us 

to look very carefully at how best to mobilize the power of our marketplace to assure that opportunity for jobs which actually enable 

people to pay for their housing of course in the marketplace in that 

the incentivized and motivated and energetic marketplace takes 

place and it is—I was just doing a quick calculation and it is going 

to be striking for all of us. But $30 billion in funds over I think 

20 years, Ms. Marquez? 

Ms. MARQUEZ. Yes. 

Dr. HAYWORTH. 2.5 percent managed not optimally for whatever reason unfortunately is gone. But that is actually $750 million of 

taxpayer funding. And at $100,000 apiece, that would be 7.5 million jobs. So it just points out to all of us who care about these 

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43 

payers and allocate funds. And that is what—we all want the same 

things for the people who need it most. And my goal as a member 

of this conference is to make sure that we are providing the opportunities that people need. So 71⁄2 million jobs is an awful lot of jobs. 

I appreciate everything we can do to work together to bring the 

marketplace ever more to bear on this problem so that we don’t 

have to have an enormous taxpayer expenditure that probably we 

could eventually work our way out of. 

And I thank you. I yield back my time. 

Mrs. BIGGERT. The gentlelady yields back. The gentleman from 

Delaware, Mr. Carney, is recognized for 5 minutes. 

Mr. CARNEY. Thank you, Madam Chairwoman. And thank you to 

the two of you for coming to our hearing today to shed some greater light on the subject. When you get down to this end of the podium here, a lot has been said, and a lot of questions have been 

asked. But it is difficult for me as a new Member to separate fact 

from fiction. Although I think we have had an opportunity to do 

that, put the program in some perspective, it has been a very successful program in my home State of Delaware, certainly an essential component of our overall affordable housing plan. And I have 

heard a lot of talk on both sides of the aisle about how important 

it is to help folks. You talked about the need that you are meeting 

and you talked a little bit about the unmet need and there is a tremendous unmet need out there. 

Could you characterize this program in terms of meeting that 

need? The thing that worries me the most about incidents of fraud 

and abuse is that it gives fuel to the fire of those who want to 

eliminate these programs and we have heard that from the other 

side, at least one member who said we ought to eliminate this program. So that upsets me as well as the misuse of taxpayer dollars. 

Could you talk to me, though, about how important this program 

is in terms of meeting that unmet need and the math of that since 

we are only meeting about 10 percent I think is the math I heard? 

Ms. MARQUEZ. I would think that the best way to understand the 

HOME Program within the current marketplace and the way that 

we do work is that the HOME Program is an anchor of the Nation’s 

affordable housing finance system. Without the capital that is provided through HOME, you would have really very little with which 

to leverage tax credits. So all of these private dollars would have 

no avenue into investment— 

Mr. CARNEY. These projects combine tax credits with HOME 

money, with private money. There have been numbers thrown 

around. What is the amount of private money that is leveraged by 

HOME money? 

Ms. MARQUEZ. It is a combination—I can tell you this—of the 

dollars that have been spent in the HOME Program over the 20 

years, they have leveraged nearly $4 to $1 of about $80 billion 

spent. 

Mr. CARNEY. That is a pretty good investment by— 

Ms. MARQUEZ. By any measure, it is great leverage. Of that, in 

any rental deal, in any new rental affordable housing that is being 

built, tax credits generally play somewhere in the area providing 

40 to 50 percent of the capital but the HOME dollars are the gap. 

44 

Mr. CARNEY. Right, the gap funding. So this is an essential part. 

I understand— 

Ms. MARQUEZ. No gap, no project. 

Mr. CARNEY. No gap, no project, no units, unmet needs get greater and all the rest of it. So it kind of takes us down to the standard 

that we have, takes me down to the standard that we have—what 

I am going to call the error rate, the fraud and abuse rate, which 

could be bungled deals, as Mr. Cleaver mentioned, or kind of inappropriate expenditures and there is a big difference there. We have 

bungled deals in the private sector. Most of these are privately run 

projects, right? 

Ms. MARQUEZ. They are a combination. But at this point, it is a 

more even mix between nonprofits and for-profits. 

Mr. CARNEY. But that partnership, the local partnership with the 

private industry, with the Fed is an important component of this 

program? 

Ms. MARQUEZ. Absolutely. 

Mr. CARNEY. As our ranking member said, it does create tensions 

and potential problems with the subgrantees and the grantees. And 

I would ask Mr. Heist if he could indicate where those biggest risks 

are. You talked about risk assessment with the subgrantees, with 

the private contractors. Where do you see the biggest problems, the 

biggest waste or misuse of funds? 

Mr. HEIST. I would say in the area of the capacity of subgrantees 

that have to actually oversee the projects. So the oversight over the 

time— 

Mr. CARNEY. So subgrantees are not local housing authorities, 

right? 

Mr. HEIST. They are not housing authorities. They are city governments typically. 

Mr. CARNEY. City governments. I think it is the State housing 

authority in my State. 

Ms. MARQUEZ. And Delaware— 

Mr. CARNEY. We are very small. So it is the subgrantees, right? 

So they are private businesses for nonprofit organizations, correct? 

Mr. HEIST. Nonprofits. 

Mr. CARNEY. So that gets to something that I heard for the first 

time in the last answer, the 15 percent set-aside to what are these 

nonprofits. Is that a problem? Is that an issue that we should look 

at? I understand the importance of those entities, but if they don’t 

have the capacity, we have to be really careful about wasting 

money there frankly. 

Ms. MARQUEZ. We agree. It is not wasting money. What has happened, I believe, over the last—I don’t know—15 years, regardless 

of party, is that as we decided that all decision making should be 

made at the local level. We also misunderstood that local decision 

making and authority is not the same thing as local expertise. And 

we have to help; part of what the Federal Government can do is 

oversight and help. 

Mr. CARNEY. My time is up. So your capacity building initiative 

is really, really important? 

Ms. MARQUEZ. Absolutely. 

Mr. CARNEY. I want to thank you for the work that you do for 

a need that is tremendous out there. 

45 

Mrs. BIGGERT. The gentleman’s time has expired. 

The gentleman from Ohio, Mr. Stivers, is recognized for 5 minutes. 

Mr. STIVERS. Thank you, Madam Chairwoman. I appreciate the 

witnesses coming here today to talk about the HOME Program. 

And it seems that there is some overlap in our Federal housing 

programs. Ms. Marquez, can you address the ways that the HOME 

and CDBG funds address housing needs that are not addressed by 

any other Federal programs? 

Ms. MARQUEZ. The HOME funds are very specific in their ability 

to be used. They can do rental, new construction or rehab, you can 

do homeownership assistance, helping people buy a new home, you 

can do rehab for owners in homes so they already own their home 

and then you help them rehab to stay there. You can also provide 

rental assistance to renters, and over the 20 years, about 250,000 

renters have been helped. CDBG has many, many more uses, but 

also restrictions as it relates to housing so that you cannot acquire 

land with CDBG for housing. You can’t do acquisition, which is, of 

course, the important thing that you need to do to do affordable 

housing, is you have to be able to acquire land. So the HOME Program does that. The other difference is having to do with affordability and restrictions. The HOME Program has very clear affordability housing restrictions and a different set of eligibility. It is 

stringent in the way that the IG responded, that is very straightforward. 

CDBG is used for a wide variety of things. Interestingly, a State 

CDBG program—for instance, overwhelmingly State governments 

use their CDBG for infrastructure. 

Mr. STIVERS. Right. And I am familiar with the CDBG program. 

But I guess I will get back to my more basic point which I don’t 

think you have answered. Have you inventoried the programs for 

housing to look at overlap between all of the housing programs that 

you administer to ensure that we don’t have multiple programs 

doing the same thing? Frankly, it would be easier to administer 

fewer programs that—if you have two programs doing the same 

thing, why don’t you combine them into one? Have you done any 

kind of inventory like that of your programs? 

Ms. MARQUEZ. Actually, we have looked a little bit. In the 2012 

budget, there is an example of it, for instance. And that is where 

we have asked that the SHOP program that has some overlap with 

the HOME Program actually should be collapsed into HOME because you can use HOME funds for it. So in a time when tough 

decisions have to be made, that is one we made and one we corrected. 

Mr. STIVERS. Thank you for that. And I will ask Mr.—is it 

‘‘Heist?’’ Is that how you say your name? I don’t want to say it 

wrong. With regard to the HOME Program, are there internal controls lacking in the HOME Program? And if so, are there—what 

are the consequences and is there a plan inside to modify those internal controls because frankly, especially if we are going to collapse other programs into HOME, as I was just told, that is really 

important that we have the proper internal controls. 

Mr. HEIST. There are internal control issues with respect to the 

manner in which funds are tracked as far as the obligations and 

46 

then following through with the commitments and disbursements 

and the ability to more timely identify projects which are lagging. 

We issued a report about 2 years ago that looked at this in some 

depth. And CPD has been taking a number of steps to improve the 

way they use the system. There are still limitations that need to 

be addressed that are going to require—as was stated earlier— 

availability of funding. One, for example, the controls over making 

sure that the grantee—if they have program income they are supposed to use that first before they draw down funds from Treasury. 

HUD did not have a good way of monitoring that and tracking 

that. That is a recommendation we made about a year or so ago, 

and it is dependent upon systems funding which they received in 

fiscal year 2010 and are working towards those system improvements. There are other areas where we think they can go further. 

Mr. STIVERS. Great. I am going to ask one last question of Ms. 

Marquez, and I hope you will take those internal control issues 

very seriously. It sounds like you have, and I appreciate it, Mr. 

Heist. 

The final thing I wanted to ask about is after the Washington 

Post article, you guys created a document called, ‘‘Setting the 

Record Straight’’ in which you talked about that only 2.5 percent 

of the funds are used inappropriately. And I am just curious if you 

think there is an acceptable level of loss or leakage or failure with 

a program like this? And clearly, we all understand it may not be 

zero. 

Ms. MARQUEZ. I guess I would say that our goal, while it is unattainable, is to be perfect. So we have a zero tolerance policy. I am 

working towards eliminating any problem wherever I can and that 

is my job to do, to strive for. I know I won’t reach it. But that is 

my job to do. 

Mr. STIVERS. Thank you. My time has expired. 

Mrs. BIGGERT. The gentleman’s time has expired. The gentlelady 

from New York, Mrs. Maloney, is recognized for 5 minutes. 

Mrs. MALONEY. Thank you very much. And I thank both of the 

panelists. I would like to ask Assistant Secretary Marquez, I understand that there was a Washington Post article and I read it 

and everybody is talking about it, and the New York City HPD 

looked at the 44 projects—and I am talking about New York City’s 

HPD—that the article identified as stalled. And the New York City 

HPD determined that actually only three projects were truly 

stalled. And apparently, the Post had counted projects as stalled 

where the developer had started digging the foundation and then 

found something wrong when they went into the ground or they received a stop work order from the buildings department. All of 

these things are outside of the control of the developer. 

So my question to you, Ms. Marquez, is do you believe the article 

was accurate in the portrayal of projects that it deemed to be 

stalled? And can you describe HUD’s oversight process for stalled 

projects? 

Ms. MARQUEZ. I do not believe that the Washington Post article 

was accurate. In fact, I am certain that it was not. We have done 

many, many things as it relates to stalled projects. We are also 

concerned about it. The most important thing is you have to understand where you are. In development, we are talking about the real 

47 

world, we are talking about really hard to place issues here. It is 

more difficult to do affordable housing development than it is to do 

marketplace development. 

In my written testimony, I provided a chart that went through 

all the different steps of what developers go through. To do affordable housing development, you have some special things. You have 

more environmental issues that have to be looked at, you have Section 3 issues on employment that have to be looked at. There are 

Davis-Bacon wages that have to be met. There is affirmative refurthering housing requirements that have to be met. In the end, it 

takes about a year longer. We have gone a long way to ensure and, 

as I have testified earlier, we are ready to release a rule within 

about a month that strengthens our oversight, that makes both— 

at different levels. One at a grantee level, what we would require 

more of them on their underwriting. At a project level, different 

levels of reporting so that we will know more. And also, at a systems level, so that we are making fixes all the way through. 

The HUD rule has not been amended since 1996, and there has 

been a cry in the industry for a very long time for it. When I arrived, having come from Los Angeles, I understood what these 

weaknesses were and I came in and within one month asked the 

staff to please begin the review. Now, we are toward the end of it. 

And within a month, it will be released internally. 

Mrs. MALONEY. As you well know, rents in New York City are 

extremely high and the HOME Program has rehabbed over 16,000 

units in the City I am honored to represent since it started in 1990 

under George Bush number one. Can you talk a bit about the benefits from HOME, what it means to the families? What are the income limits for families living in the HOME units? What are the 

housing needs? What is the typical rent burden for HOME eligible 

families and HOME assistance versus unassisted units? Give us a 

sense of what it means to working people. 

Ms. MARQUEZ. The statute limits eligibility at 80 percent of the 

area median income. However, a review of the 20-year program 

shows that well over half of the dollars are actually focused in on 

folks at 50 percent or below a median income. So this is a program 

that overwhelmingly targets working class people, not folks who 

are on some other form of assistance. These are working people. 

These folks have to make choices. In a city like New York, where 

rents are so high and if you are not lucky enough to have been in 

a rent-controlled unit for a very long time, you can find yourself living way out of the center. Homes that are built by HOME, whether 

they are rental or homeownership, allow folks to be close to the 

center for transit. We know if folks can live closer to their jobs, 

they pay less of their dollars on these other types of expenses, and 

as a result, end up helping their families more, and this is what 

is important about the HOME Program. 

Mrs. MALONEY. And I understand from my local housing agency 

that in New York City, $1 of HOME funding leverages $3.11 and 

other private and public sources of funding. And in your opinion, 

would there be such significant private investment to develop affordable housing without the HOME funding that serves as a leverage? 

48 

Ms. MARQUEZ. We would be in grave danger, I believe. It forms 

the basis of our affordable housing finance system in this country. 

Mrs. MALONEY. And very, very briefly. My time is up. How many 

jobs do you think this country would lose, or maybe you could put 

it in the record because my time is up, if this program is abolished? 

Ms. MARQUEZ. There are many types of jobs that would be lost, 

along the real estate industry, in construction, in banks. All over. 

I would have—I don’t want to make a guess at this. It is a national 

program. That would be inappropriate of me. But we would be 

happy to enter something into the record later. 

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

Madam Chairwoman. 

Mrs. BIGGERT. Thank you. I think that we will try and do a quick 

second round if people would be willing to be brief. And I recognize 

myself for 5 minutes. 

Ms. Marquez, we just put up on the screen over here, which is 

the—if you can see it, it is the HUD’s homes for sale listing. I think 

there are 18,000 homes that are listed. It is not something you 

have to read. It looks like the Multiple Realtors Listing. Why can’t 

CPD track the projects and process if you can do the HUD homes 

for sale? 

Ms. MARQUEZ. I am sorry. One more time? 

Mrs. BIGGERT. Why can’t CPD track the projects in progress just 

like you can track the multiple listings, the homes that HUD has 

for sale? 

Ms. MARQUEZ. This gets right back to what a block grant is. This 

listing is an FHA listing. This is actually housing that is controlled 

by HUD. In a block grant program, the statute invests authority 

and decision-making at the local level. I again would say to you 

that I feel that we do track them. We can do better. 

Mrs. BIGGERT. I have this, which is your tracking and it is the 

delayed activities and you have some—just home buyer, home 

buyer, activities in the city. Sometimes it says unknown, the State, 

and then the commitment date, the total amount committed and 

amount disbursed and the percentage disbursed by the date and 

then the last disbursement, which is fine. But it just seems like 

there should be—can’t the locals provide you with this kind of 

thing that makes it—there is more data, there are more benchmarks. Wouldn’t that be easier than to be able to track all of the 

properties that are involved? 

Ms. MARQUEZ. The HOME Program is involved in active real estate development as opposed to a listing of a home that was owned 

by someone else and now is built and has to be sold as a single 

family home. This is actually real estate development. Deals are 

assessed, we decide—a jurisdiction decides that they don’t want to 

go forward, they take them out. So we are talking apples and oranges here. 

Mrs. BIGGERT. Every project that the HOME has and every 

project that HUD—with FHA. Why can’t you show something like 

that and have the real end of it? In fact, we have these pictures 

where 5 years later, there is still a hole in the ground where a 

project was said to have been in progress. And it just seems like 

we would have a much better idea of what is going on and there 

49 

wouldn’t be these projects that go on for years that haven’t reached 

completion. 

Ms. MARQUEZ. There are always projects as we spoke about. 

There is no perfection. 

Mrs. BIGGERT. There are always houses for sale, too. 

Ms. MARQUEZ. Yes, but we own those. We are talking about local 

government, local decision-making. We are not talking about the 

Federal Government taking over the HOME Program and deciding 

for a local government what to invest in. 

Mrs. BIGGERT. How hard is it to take a picture and post it and— 

other HUD programs do it and DOJ does it. 

Ms. MARQUEZ. These are foreclosed homes. 

Mrs. BIGGERT. I know what they are. I am just asking, why can’t 

there be more data with your program? 

Ms. MARQUEZ. I think there is lots of data with our program. If 

there is something in particular, ma’am, that you would like me to 

consider, I am happy to do that but there is lots of data. 

Mrs. BIGGERT. For example, can’t you post online from a scale of 

1 to 5 the progress on a program? In other words, as you are moving ahead and— 

Ms. MARQUEZ. We do. 

Mrs. BIGGERT. I don’t see it on here. 

Ms. MARQUEZ. We actually have many reports that are online. 

There are progress reports on the HOME Web site that are tracked 

that provide reports every month. As a result of those reports that 

come out every month, we actually deobligate dollars every month. 

Mrs. BIGGERT. Is there a report something like this that the DOJ 

does? 

Ms. MARQUEZ. Here we have on page 7 and 8 of my testimony, 

I list 8 different reports that are published either monthly or quarterly that make clear the progress that deals are making. And as 

I had said earlier, we also feel that we can do better. So that as 

we go forward with the new rule, we are going to tighten at the 

jurisdiction level, at the project level, and at the assistance level. 

Mrs. BIGGERT. Are you reporting building progress or funds 

spent? 

Ms. MARQUEZ. Both, actually. In this report here, the snapshot, 

it actually not only talks about the jurisdiction, but it also talks 

about their different projects. We are tracking. But again, it is the 

power in HOME is actually invested at the local level. 

Mrs. BIGGERT. And I agree with that. But it just seems that your 

data stops when it gets there and then we don’t have any idea how 

the project develops. Local control is great, but it would seem that 

they would account to you where they are in the scheme of things 

and transparency that people can see that. 

Ms. MARQUEZ. In essence, they do. When your staff has an opportunity to spend a little bit more time with this, they will look at 

these sheets and they will tell you— 

Mrs. BIGGERT. Those aren’t transparent, are they? We got those 

from you. 

Ms. MARQUEZ. They are online. They are on our Web site. Everyone can look at them. 

Mrs. BIGGERT. Okay. I think we need something more transparent. I guess we will just disagree. 

50 

The gentlelady from California? 

Ms. WATERS. Thank you very much, Madam Chairwoman. In 

terms of reporting, I am looking at page 7 and I see that you have 

the HOME performance snapshot report, the dashboard report, the 

open activities report, the vacant units report, the expiring funds 

report, the PJ analysis report, the auto cancelation final draw report. You have a lot of reports here. You are reporting on everything. I don’t know if—do you have this information of all the reports that are identified here on page 7? I just went through them. 

It may be instructive to take a look at these reports. 

Mrs. BIGGERT. Will the gentlelady yield? I am looking at the 

snapshot report and it has program progress and the number of 

funds committed but it doesn’t give any—it is just numbers. It 

doesn’t—who does it apply to? 

Ms. WATERS. Let me just take a look at what this snapshot report does. 

Ms. BIGGERT. I yield back. 

Ms. WATERS. This quarterly report tracks the progress of individuals, participating jurisdictions and ranks them against others for 

eight performance factors. It is an important tool in helping to 

evaluate the performance of participating jurisdictions by ranking 

them and providing a context for accomplishments. It includes a 

special red flags report indicating particularly poor performance in 

any of the five areas related to HOME assistance rental or production. And then they talk about Attachment 2. 

So I think the report does what it is supposed to do. Maybe what 

you are looking for is in another one of the reports. 

Mrs. BIGGERT. If the gentlelady will yield, what I am looking for 

is each project. This gives us a percentage of what is happening, 

but it is not each project, like the picture of the building that they 

are building or something that ties it to. 

Ms. WATERS. So what you are looking for is a State-by-State report— 

Mrs. BIGGERT. State-by-State, project-by-project— 

Ms. WATERS. A funded project and its progress? I am sure that 

information is available. That would be quite a— 

Ms. MARQUEZ. Actually in the open activities report, that is also 

listed on page 7, it is on our Web site. And that actually gives you 

a track of progress of individual HOME projects. 

Mrs. BIGGERT. As identifying with address or— 

Ms. MARQUEZ. Probably, because otherwise—that is how they 

would have to enter in later all of the beneficiary data. So it is 

there. I am sorry. I misspoke. On privacy for individuals, I am not 

allowed. But it has a marker. You could call the jurisdiction and 

know—you could ask us and know. I guess what is important is 

that this is on our Web site for everyone to look at that tracks 

progress by project. 

Ms. WATERS. Reclaiming my time if I may. This is an open activities report that you are referring to now? 

Ms. MARQUEZ. Yes, ma’am. 

Ms. WATERS. Thank you. Let me just move to another little area 

that I wanted to clear up. First of all, I am sorry that Mr. Grimm 

is not here because I wanted to engage in a little bit about whether 

or not he should be shocked when we read something in the WashVerDate Nov 24 2008 14:56 Sep 08, 2011 Jkt 067931 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 K:\DOCS\67931.TXT TERRIE
51 

ington Post. And Mr. Heist, I don’t want you to feel bad about not 

being shocked. I am shocked by what the Washington Post does not 

report on like the Kaplan schools that they own that are causing 

so much pain in communities like mine where people are using 

their Pell grants and other dollars that are provided by the Federal 

Government to be educated only to find out that the institution is 

not capable of doing that. 

Having said that, Ms. Marquez, the Washington Post article that 

motivated the committee to have this hearing noted that even 

when HUD learns of a botched deal, Federal law does not give the 

agency the authority to demand repayment. The agency can only 

ask agencies to voluntarily return money. 

Could you explain to me what they are talking about? 

Ms. MARQUEZ. That is just another instance of being incorrect. 

I have been asked, I think, a number of times. There are many 

things that HUD can do and that HUD does do. We have a 100 

percent record of having money returned. We have the option of 

going to our enforcement center. We have the option of going to the 

Attorney General. We have the option of going to the Justice Department. We can debar people and we have done all of those 

things. We have also terminated—we have stopped their grants 

completely. We have just in the last—since 2003, there are 8 jurisdictions that we terminated their involvement because of their performance. 

So, we have taken many actions. Many actions are available to 

us. 

Ms. WATERS. Let me just be clear. The representation in the 

Washington Post that says Federal law does not give the agency 

the authority to demand repayment, you have just described any 

number of ways— 

Ms. MARQUEZ. That is correct. 

Ms. WATERS. —that you can deal with any problems that occur 

in these agencies and you have the tools that you need to get 

money back; is that correct? 

Ms. MARQUEZ. I believe that we do. 

Ms. WATERS. Thank you. I yield back. 

Mrs. BIGGERT. The gentlelady yields back. 

The gentleman from Texas, Mr. Canseco, is recognized for 5 minutes. 

Mr. CANSECO. Thank you, Madam Chairwoman. Just very briefly, Ms. Marquez. HUD—just to clarify here, your program has 

block grants to municipalities or to cities and then they do their 

work according to certain plans set out by HUD; is that correct? 

Ms. MARQUEZ. They do their work according to plans that they 

have drawn up and submitted and there are regulations and there 

is— 

Mr. CANSECO. Plans that your Department has approved? 

Ms. MARQUEZ. Correct. 

Mr. CANSECO. Do you follow the progress of those plans? 

Ms. MARQUEZ. Yes, we do. In fact, there is an annual report 

called the CAPR where they enforce. This is call the consolidated 

plan where they report what they want to do as a community, their 

HOME dollars, their CDBG dollars, their ESG dollars. A whole 

bunch of things are reported through there. 

52 

Mr. CANSECO. In other words—I don’t want to put words in your mouth. So if you allocate $1 million for 100 families, homes or habitats, you follow that progress; is that correct? 

Ms. MARQUEZ. When HOME dollars fund a program, not a 

project, right? So they receive the dollars and are—they decide how 

to use them, but they also have the right under the law to change 

their mind. So they often amend their plan and we follow as we 

monitor; we take a look at everything they have said they are going 

to do. 

Mr. CANSECO. Understandably. If at the end of the day, it was 

intended for 100 families and only 25 families get fitted into that 

home or move in, do you monitor that? 

Ms. MARQUEZ. Do you mean if they said they were going to find 

100 homes for—private homes for a family, do we monitor? Essentially, you would be asking in the CONPLAN did you do it and 

they report every year on their activities and one of these reports 

actually keeps you up to date on it. 

Mr. CANSECO. So the report does not come in where they completed their project, where they said they were going to house 100 

families and they in effect only housed 25 families, the report 

would come in weak. And do you ask for that money back? Do you 

get that money back? Or what happens to that money? 

Ms. MARQUEZ. As I said, we fund a program, not projects. So a 

project of 100 homes is a project, not a program. They have the 

right to reprogram that dollar. For instance, if they were facing 

just a massive recession like the one that we have just gone 

through and it no longer makes sense to do homeownership because of things like the list of foreclosures, and instead they decided because there are many more renters in the country, we need 

to move the money now to renting, that would be appropriate and 

okay for them to do. 

Mr. CANSECO. So in other words, once those dollars go out the 

door from your office, they can do with it what they want? 

Ms. MARQUEZ. They cannot do with it what they want. They 

have to meet the regulations and the uses of the HOME Program, 

and as the IG has said, they are very straightforward uses, and we 

monitor against them. 

Mr. CANSECO. If there are any funds that were not used, how do 

you monitor the use of those funds, to ask for funds back? 

Ms. MARQUEZ. There are two requirements. One is in the statute, 

a 2-year requirement that they obligate those funds, and then by 

regulation—actually, the statute was silent on this, we added it— 

there is a 5-year requirement on expenditure. We have reports in 

the IDIS system that actually track where they are cumulatively 

on their appropriation of their program on the 2-year and 5-year 

basis. 

Mr. CANSECO. And is it a written report or is it also a site inspection report? Or how do you monitor this other than by reading the 

written report that you get from them? 

Ms. MARQUEZ. The expenditure of funds is actually, if you 

haven’t expended it, there is nothing to go look at. You haven’t expended it. So that comes through a formula accounting program in 

the system, but we do monitor the grantees, and as I said, in the 

last 2 years, we have monitored 34.5 percent of them. We actually 

53 

go to the jurisdiction’s office. We have an assessment tool that we 

do yearly that is actually something that is approved by the IG, 

that they agree with. We go through that monitoring. They actually 

use the risk assessment, too. We go through that. We take a look 

at a sample of files, and it is very usual that in an in-place monitoring, they would actually do a site visit to a project. 

Mr. CANSECO. Are there times when you don’t do site visit followup? 

Ms. MARQUEZ. I am sure there are. If we don’t feel that one is 

necessary, I am sure they may not, but it is—what I understand 

is it is more usual than not that as part of the monitoring of a jurisdiction, there would be a site visit to a project. 

Mr. CANSECO. Thank you very much. I yield back. 

Mrs. BIGGERT. Thank you. Mr. Stivers, do you have any questions? 

Mr. STIVERS. Yes. 

Mrs. BIGGERT. The gentleman is recognized for 5 minutes. 

Mr. STIVERS. Thank you, Madam Chairwoman, and I want to follow up on some questions that the gentleman from Texas was asking. How do you choose who you go and inspect with the onsite visits? Is it based on the snapshot report, so that they report and they 

look good on the five factors, then you don’t go see them or is it 

based on some other criteria? Is it random? 

Ms. MARQUEZ. It is not random. 

Mr. STIVERS. Okay. 

Ms. MARQUEZ. The risk assessment tool takes into account the 

grant size, the complexity of activities, what we think about the 

CHDO capacity in the area, the adequacy of oversight, is this a 

CHDO, a place that has a lot of failures or not, the staff capacity, 

their ability to underwrite, and project process. So all of these 

things and other factors go into a risk assessment. 

Mr. STIVERS. Great, and what goes into the decision to do a physical on-site visit of a project or not? 

Ms. MARQUEZ. There—what we are looking at there is when they 

go on and do a sample of files, when they look at them, if there 

is something in that that they don’t feel is right they will go look, 

similar to what the IG does. When they go and poke around, if they 

think something is wrong, they dig in a little deeper. So do we. 

Mr. STIVERS. So you visited about a third of your grantees last 

year, and there were two-thirds that you didn’t visit on a rotating 

basis of every 3 years. Am I to assume that you will visit everyone 

or you will continue to use this snapshot and visit the same people 

year after year? 

Ms. MARQUEZ. We make it a point to make sure that within 3 

years, we are continually monitoring—that you get a monitoring 

visit onsite, at least one every 3 years, but as I said much earlier, 

maybe even this morning, what we did—what we do there is that 

we have—most of our staff works and lives in the field, not in 

Washington, D.C. Each CPD representative is responsible for a 

number of grantees. They have a personal business relationship 

with them. They are constantly talking to them. So it is not just 

that you see them once every 3 years, when they go onsite to do 

the formal monitoring. Someone else has said, and I think this is 

54 

true, often it is HUD employees who catch the problem early, before it is a problem and help them address it and fix it. 

Mr. STIVERS. Great, and just a minute ago, you talked about reprogramming money. Is there some report that comes back to you 

when someone wants to reprogram money or is there some—obviously, you said as long as it meets the guidelines, they really don’t 

have to request it, they can just do it, but is there some way you 

know when someone reprograms money? 

Ms. MARQUEZ. With this thing called the consolidated plan, with 

all of the money in it that they do this report to us, if they are 

going to substantially change an activity, so if they said we are 

going to do homeownership and they decided that because of the 

economy, that wasn’t a good idea, and they should now do rental, 

they would actually have to file a plan amendment with HUD and 

we would review it. You cannot just decide. You have committed. 

Mr. STIVERS. Mr. Heist, do you know of any issues or problems 

with the reprogramming of money? 

Mr. HEIST. That is not something that we have looked at, no. 

Mr. STIVERS. Okay. Thank you. A minute ago, you were talking 

about Davis-Bacon. So every project that is done under the HOME 

mantra is a Davis-Bacon program and pays essentially a higher 

amount than market wages that pays what is legislatively called 

prevailing wage although it is not really the prevailing wage in the 

marketplace? 

Ms. MARQUEZ. It actually depends on how many units it is. So 

if it is 11 units or more, Davis-Bacon applies. 

Mr. STIVERS. Thank you. And then lastly, earlier you said that 

you had a zero tolerance for failed projects, but there are a little 

over 4,200 projects that have taken their final draw but still are 

open that are on your—what report do you call that—your final 

draw report. So how many of those will be closed—they are at least 

120 days beyond taking their final draw, but their program is not— 

everything is not done, and I understand occasionally you will take 

your final draw before you finish the project, but what is the oldest 

project on that list as we sit here today? 

Ms. MARQUEZ. Actually, I couldn’t answer that question. I would 

be happy to— 

Mr. STIVERS. I would love to know. Would you have a guess? 

Would it be no older than 2 years? Would it be no older than 5 

years? 

Ms. MARQUEZ. I would be wrong to take a guess, but I can tell 

you within the last 4 months, we have reduced that list of final 

draw projects by 25 percent. 

Mr. STIVERS. And your goal is to get it to what number? 

Ms. MARQUEZ. That I couldn’t say. These are real things and real 

final draw. As I said, this is actually real estate that is being built, 

and we are facing the worst real estate crisis in my life, and so this 

is something that is real about delays. And as I said earlier, in the 

private market they were facing a 34 percent delay in the last 3 

years, where the HOME Program faced a 4 percent delay. So by 

all standards, that is not bad. 

Mr. STIVERS. Thank you. My time is up. 

Mrs. BIGGERT. The gentleman’s time has expired. Just one quick 

question. Mr. Heist, have you asked the Comptroller General for a 

55 

legal opinion on the accounting issue of the numbers of yours that 

remain open? 

Mr. HEIST. Yes, we have. 

Mrs. BIGGERT. When do you expect to receive that opinion? 

Mr. HEIST. We just sent it to them a couple of weeks ago. We 

have met with them over the past couple of years informally, so 

they understand the issue and we helped—they have actually provided assistance to us to help frame the issue better so they could 

give us a good answer. 

Mrs. BIGGERT. Could you briefly describe exactly what you are 

asking for? 

Mr. HEIST. It is an issue of the level at which HUD is required 

to track the obligation, then commitment, then disbursement of 

funds. We are essentially—and that is the heart of the disagreement that we have with HUD—that we believe it should be tracked 

at the fund year level, every year you get an allocation of HOME 

funds. HUD uses a cumulative method where they compare all the 

expenditures against the obligations since the inception of the program. That is what we disagree with, the application of that method, and I would—in fact, we are meeting with GAO probably within 

the next week or two, and then they will meet with HUD, they will 

meet with HUD General Counsel, HUD CFO’s office, and I would— 

I hate to say how long. I think it will be matter of months, I am 

sure. 

Mrs. BIGGERT. Why is this important? 

Mr. HEIST. Because I think—it is why we believe that the system 

is not in compliance with financial management standards, and it 

has a potential impact on the statement of their outstanding obligations on their financial statements, and depending on how you 

interpret the statute, it could affect the amount of money that 

comes back to Treasury as these projects are canceled, as the funding lapses. 

Several years ago, the funding for this program was switched 

from a no year indefinite appropriation period to a 3-year, and with 

that comes the consequence of after 5 years of the funds being 

available, they are automatically canceled by Treasury and swept 

back. This would potentially impact the amounts that would be 

subject to cancelation. 

Mrs. BIGGERT. Thank you. And with that, let me just say I think 

this has been a really important hearing and I thank the witnesses. It is important because I think the role of this committee 

is to provide oversight and protect taxpayers’ investments, and it 

is also important to ensure that the taxpayer dollars are being used 

for their intended purposes. And while we may disagree on some 

of the conclusions and findings, I think that we can all agree that 

this is an important program, that there is room for improvement 

with the Administration and the accounting. So this hearing is part 

of the process of identifying what should happen, and what 

changes. 

With that, the Chair notes that some members may have additional questions for this panel which they may wish to submit in 

writing, and so, without objection, the hearing record will remain 

open for 30 days for members to submit written questions to these 

witnesses and to place their responses in the record. 

56 

And again, I thank the witnesses, and it has been a really, I 

think, good hearing and I thank you for the time that you have 

spent with us, and with that, this hearing is adjourned. 

[Whereupon, at 12:55 p.m., the hearing was adjourned.] 

(57) 

A P P E N D I X 

June 3, 2011 

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