HOUSING 

ASSISTANCE

Opportunities Exist to 

Increase 

Collaboration and 

Consider 

Consolidation

Report to Congressional Requesters

August 2012

GAO-12-554

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-554, a report to 

congressional requesters

August 2012

HOUSING ASSISTANCE

Opportunities Exist to Increase Collaboration and 

Consider Consolidation

Why GAO Did This Study

The federal government plays a major 

role in providing housing assistance to 

homebuyers, renters, and state and local 

governments. It incurred about $170 

billion in obligations for federal 

assistance and estimated forgone tax 

revenue in fiscal year 2010. However, 

fiscal realities raise questions about the 

efficiency of multiple housing programs 

and activities across federal agencies 

with similar goals, products, and 

sometimes parallel delivery systems. 

This report assesses the (1) extent to 

which there is overlap or fragmentation in 

selected housing programs, (2) federal 

collaborative efforts, and (3) implications 

of consolidating selected housing 

programs. 

For this report, GAO updated and 

expanded prior work and collected and 

analyzed new data, focusing on the 

largest programs in terms of funding. In 

addition to addressing these objectives, 

GAO developed a catalog of federal 

programs and activities that support 

rental housing and homeownership and 

identified what is known about the 

purpose, cost, eligibility, and populations 

served. The catalog (GAO-12-555SP) is 

an electronic supplement to this report.

What GAO Recommends

To enhance evaluation of coordination or 

consolidation of single-family programs, 

HUD, the Office of Management and

Budget (OMB), USDA, and VA should 

adopt a more rigorous approach for their 

task force that incorporates collaborative 

practices. To further improve initiatives 

to consolidate and align requirements in 

multifamily programs, HUD, USDA, and 

Treasury should document their efforts in 

annual and strategic plans. As part of 

these collaborative efforts, these 

agencies also should identify specific 

programs for consolidation, including

those requiring statutory changes. HUD, 

USDA, and VA generally agreed with the

recommendations; however, HUD and 

OMB stated that actions should wait until 

after the housing markets stabilize. GAO 

noted that achieving efficiencies and cost 

savings also were important. 

What GAO Found

Housing assistance is fragmented across 160 programs and activities. Overlap 

exists for some products offered, service delivery, and geographic areas served 

by selected programs—particularly in the Department of Agriculture’s (USDA)

Rural Housing Service (RHS) and Department of Housing and Urban 

Development’s (HUD) Federal Housing Administration (FHA). For instance, RHS, 

FHA, and the Department of Veterans Affairs (VA) all guarantee mortgage loans 

for homeowners. According to fiscal year 2009 data (the most recent available), 

FHA served a larger number of households than RHS in all areas, including a 

larger number of low- and moderate-income households in rural areas. Although 

selected HUD, USDA, and Department of the Treasury (Treasury) multifamily 

programs had overlapping purposes, the products, areas served, and delivery 

methods differed. For example, HUD, RHS, and Treasury provide financing for 

development and rehabilitation of multifamily housing for low- and moderateincome households, but RHS-financed properties were more concentrated in 

rural areas and HUD’s and Treasury’s tax credit properties were more 

concentrated in urban and suburban areas.

Opportunities exist to increase collaboration among the agencies and potentially 

realize efficiencies. In February 2011, the Administration announced a task force 

to evaluate the potential for coordinating or consolidating homeownership loan 

programs at HUD, USDA, and VA. But the task force’s efforts have not yet 

incorporated key collaborative practices GAO identified. Practices such as 

identifying goals and resources and defining strategies and outcomes will be 

important as the task force moves forward. HUD, USDA, and Treasury also have 

been working to consolidate and align requirements in rental housing programs 

through the Rental Policy Working Group. Although its efforts have been 

consistent with many key collaborative practices, the group has not taken full 

advantage of opportunities to reinforce agency accountability for collaborative 

efforts through the agencies’ annual and strategic plans, or expanded its guiding 

principles to evaluate areas requiring statutory action to generate savings and 

efficiencies. Also, in 2005 and in 2011, GAO recommended coordinating reviews 

of tax expenditures and related spending programs. Such reviews could help

reduce overlap and inconsistencies and direct scarce resources to the most 

effective or efficient methods to deliver federal support.

Consolidating programs carries certain implications for users, existing programs, 

personnel, portfolios, and associated information systems. Nevertheless, GAO 

suggested in 2000 that Congress consider requiring USDA and HUD to examine 

the benefits and costs of merging programs serving similar markets and 

providing similar products. Since then, certain aspects of the RHS and FHA 

homeownership programs have shown evidence of growing similarity, such as 

RHS’ shift toward loan guarantees. However, the current statutory framework 

imposes additional challenges on the agencies’ ability to further consolidate 

similar programs. Thus, any evaluations of which programs, products, systems, 

and processes to retain, revise, consolidate, or eliminate would involve complex 

analyses, trade-offs, and difficult policy decisions. The task force offers 

opportunities for these agencies to identify potential areas for consolidation or 

greater coordination and which actions would require statutory change. View GAO-12-554. For more information, 

contact Mathew Scirè at (202) 512-8678 or 

sciremj@gao.gov, or James White at (202) 

512-9110 or whitej@gao.gov.
Page i GAO-12-554 Housing Assistance

Letter 1 

Background 3

Multiple Agencies Provide Housing Assistance 6

Overlap Exists in Both Single- and Multifamily Housing Programs 10

Opportunities Exist to Improve Collaboration and Effectiveness 

but Would Involve Trade-offs 48

Conclusions 66

Recommendations for Executive Action 68

Agency Comments and Our Evaluation 68

Appendix I Objectives, Scope, and Methodology 72

Appendix II Comments from the Department of Housing and Urban 

Development 84

Appendix III Comments from the U.S. Department of Agriculture 86

Appendix IV Comments from the Department of Veterans Affairs 89

Appendix V GAO Contact and Staff Acknowledgments 92

Tables

Table 1: Selected HUD, USDA, VA, and Treasury Single-Family 

Products and Related Agency Goals, as of 2012 12

Table 2: Comparison of Selected FHA, VA, and RHS Single-Family 

Housing Programs 14

Table 3: Number and Percentage of Single-Family Loan 

Guarantees, by Distance from RHS Ineligible Areas (Fiscal 

Year 2009) 21

Table 4: Number and Percentage of Single-Family Loan Guarantees 

by Zip Code Type (Fiscal Year 2009) and 2010 U.S. 

Population 22

Contents
Page ii GAO-12-554 Housing Assistance

Table 5: Comparison of Field Office and Staff Numbers and 

Functions for Selected Single-Family Guarantee Programs 

at FHA, RHS, and VA, as of April 2012 29

Table 6: Selected HUD, USDA, and Treasury Multifamily Programs 

and Related Goals, as of Fiscal Year 2012 33

Table 7: Comparison of Selected HUD, USDA, and Treasury 

Programs That Finance Multifamily Housing 35

Table 8: Comparison of Selected HUD and USDA Multifamily 

Guaranteed Loan Programs 37

Table 9: Rental Policy Working Group’s Alignment Initiatives, as of 

December 2011 52

Figures

Figure 1: Housing Activities and Programs, by Purpose and Agency, 

Fiscal Year 2010 7

Figure 2: Borrower Income Relative to AMI for Active Federal 

Single-Family Loan Guarantees, Fiscal Year 2009 18

Figure 3: RHS Eligible and Ineligible Areas, as of 2011 20

Figure 4: Percent, Number, and Location of Single-Family Loan 

Guarantees for Selected Programs, Fiscal Year 2009 23

Figure 5: Percent, Number, and Location of Single-Family Loan 

Guarantees for Borrowers with Incomes at or below 115 

Percent of AMI, Fiscal Year 2009 24

Figure 6: Percent, Number, and Location of RHS Direct Loans and 

Grants, Fiscal Year 2009 25

Figure 7: Number of New RHS Direct and Guaranteed SingleFamily Loans, 1961-2011 31

Figure 8: Percent, Number, and Location of Selected Multifamily 

Properties 41

Figure 9: Percent, Number, and Location of Units in Selected 

Multifamily Properties 43

Figure 10: Percent, Number, and Location of Selected Rental 

Assistance Units 44
Page iii GAO-12-554 Housing Assistance

Abbreviations

AGI adjusted gross income 

AMT Alternative Minimum Tax 

AMI area median income 

CBO Congressional Budget Office

CFPB Consumer Financial Protection Bureau

CRA Community Reinvestment Act

FHA Federal Housing Administration

Ginnie Mae Government National Mortgage Association

GPRAMA Government Performance and Results Act Modernization 

 Act of 2010

HFA housing finance agency 

HUD Department of Housing and Urban Development

IRS Internal Revenue Service 

JCT Joint Committee on Taxation

LIHTC Low-income Housing Tax Credit 

MOU memorandum of understanding 

OMB Office of Management and Budget

REO real estate-owned 

RHS Rural Housing Service

VA Department of Veterans Affairs

USDA U.S. Department of Agriculture

View GAO-12-555SP Key Components

Housing Assistance: Opportunities Exist to Increase Collaboration and 

Consider Consolidation (GAO-12-555SP), an e-supplement to 

GAO-12-554

This is a work of the U.S. government and is not subject to copyright protection in the 

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Page 1 GAO-12-554 Housing Assistance

United States Government Accountability Office

Washington, DC 20548

August 16, 2012

The Honorable Judy Biggert

Chairman 

Subcommittee on Insurance, Housing, 

 and Community Opportunity 

Committee on Financial Services

House of Representatives

The Honorable Shelley Moore Capito

Chairwoman

Subcommittee on Financial Institutions 

 and Consumer Credit

Committee on Financial Services

House of Representatives

The federal government has played a major role in supporting housing 

since the 1930s. It administers programs that assist homebuyers, renters, 

and state and local governments. The goals of these efforts include 

encouraging homeownership and providing affordable rental housing for 

low-income families. Millions of Americans have benefited, whether by 

taking out a federally guaranteed mortgage, deducting mortgage interest 

or real estate taxes on federal tax returns, or receiving a rental subsidy. In 

fiscal year 2010, the federal government incurred about $170 billion in 

obligations for housing-related programs and estimated revenue forgone 

through tax expenditures.1

 

1

For loan programs, these obligations represent the expected credit subsidy costs for loan 

commitments made in fiscal year 2010. These estimates are revised in subsequent years, 

and the ultimate cost will not be known until the loans mature. Obligations we reported for 

fiscal year 2010 may include funds appropriated in the American Recovery and 

Reinvestment Act of 2009 but do not include other types of emergency or extraordinary 

assistance.

Tax expenditures may be viewed as spending 

programs channeled through the tax system, because they are federal 

revenue forgone due to exclusions, exemptions, deductions, credits, 

deferrals, and preferential rates. They represented $132 billion (about 78 

percent) of the federal government’s fiscal year 2010 support for housing 

assistance. Obligations for spending and loan programs that support 

homeownership and rental housing accounted for the other $38 billion 

(about 22 percent).

 
Page 2 GAO-12-554 Housing Assistance

In the current housing crisis, support for homeownership has expanded 

dramatically, and nearly all mortgage originations have had direct or 

indirect federal support through guarantee programs, support for the 

housing enterprises Fannie Mae and Freddie Mac, or direct loans and 

grants. In addition, the federal role now includes a range of programs 

designed to help homeowners avoid foreclosure or to lower mortgage 

payments by such means as modifying and refinancing loans.

This report is one of a series of reports that responds to your request to 

examine a variety of issues relating to federal support for housing—

particularly through programs or activities administered by the 

Departments of Housing and Urban Development (HUD), Agriculture 

(USDA), Veterans Affairs (VA), and the Treasury—and identify options to 

reduce costs or increase program efficiency.2

To address the first objective, we developed a catalog of spending and 

loan programs, tax expenditures, and other activities federal agencies 

and financial regulators use to support homeownership and rental 

housing and identified what was known about the purpose and obligations 

of these programs and expenditures in 2010. To address the second 

objective, we updated and expanded the work from our 2000 report on 

opportunities for and barriers to reducing overlap in certain 

homeownership and rental housing programs.

This report assesses (1) 

programs and activities the federal government uses to support rental 

housing and homeownership; (2) the extent to which overlap or 

fragmentation exists in the goals, products, geographic coverage, service 

delivery mechanisms, and recipient income levels of selected housing 

programs and activities of HUD, USDA, VA, and Treasury; and (3) the 

extent to which federal efforts have increased coordination for selected 

housing programs and activities, and the implications of further 

coordinating or consolidating selected housing programs or activities.

3

 

2

See GAO, Housing Choice Vouchers: Options Exist to Increase Program Efficiencies, 

Specifically, we used 

findings from our prior work that examined programs offering similar 

GAO-12-300 (Washington, D.C.: Mar. 19, 2012); Moving to Work Demonstration: 

Opportunities Exist to Improve Information and Monitoring, GAO-12-490 (Washington, 

D.C.: Apr. 19, 2012); and Rural Housing Service: Efforts to Identify and Reduce Improper 

Rental Assistance Payments Could Be Enhanced, GAO-12-624 (Washington, D.C.: May 

31, 2012). 

3

See GAO, Rural Housing: Options for Optimizing the Federal Role in Rural Housing 

Development, GAO/RCED-00-241 (Washington, D.C.: Sept. 15, 2000).
Page 3 GAO-12-554 Housing Assistance

housing services to similar beneficiaries as well as Treasury’s largest tax 

expenditures in terms of overall funding.4

We conducted this performance audit from July 2011 through August

2012, in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

We collected and analyzed data 

on the goals, terms, eligibility, product delivery structures, geographic 

locations, and populations benefiting from selected agency housing 

programs. We analyzed the locations of properties or units assisted using 

USDA-developed characterizations of rural and urban areas. We 

identified those housing programs that could have similar or overlapping 

objectives or provide similar services or that were fragmented across 

missions. To address the third objective, we collected and analyzed 

available information on efforts that USDA, HUD, Treasury, and VA had 

undertaken to increase coordination of or collaboration on selected 

housing programs. We also reviewed prior GAO and other reports and 

collected and analyzed information from the housing industry and officials 

at USDA, HUD, and the Office of Management and Budget (OMB) on the 

implications of options for further coordination or consolidation. Appendix 

I contains a detailed description of our scope and methodology.

The federal government funds multiple programs that subsidize housing 

construction and rehabilitation, assist homebuyers and renters, and 

provide assistance to state and local governments through a variety of 

spending and loan programs, tax expenditures, regulatory requirements, 

and other activities aimed at promoting housing.

Federal housing assistance generally was created in response to the 

Great Depression. However, the largest current activity (in terms of 

 

4

We excluded HUD’s public housing and housing choice voucher programs because there 

are no equivalent programs administered by other federal agencies.

Background 

Federal Housing 

Assistance 
Page 4 GAO-12-554 Housing Assistance

forgone revenue) associated with homeownership—the mortgage interest 

deduction—was introduced in 1913, when the federal income tax was 

enacted. Further assistance was created in the 1930s, when most rural 

residents worked on farms and rural areas generally were poorer than 

urban areas. Accordingly, Congress authorized separate housing 

assistance for rural areas and made USDA responsible for administering 

it. Specifically, in 1937 the Bankhead-Jones Farm Tenant Act authorized 

USDA to provide long-term, low-interest loans to farm tenants and 

sharecroppers so that they could purchase and repair farms, including 

homes on farms. The Housing Act of 1949 authorized new rural lending 

programs through USDA and made farm owners eligible for assistance 

for dwellings and other farm buildings if the farm was located on land 

capable of producing at least $400 worth of agricultural commodities 

annually.5 Amendments added in 1961 made nonfarm properties eligible 

for single-family loans and created the farm labor housing program. A 

1962 amendment created the rural rental housing program.6

In 2012, HUD and Treasury administer some of the largest programs, 

with USDA and VA providing specific assistance to rural communities and 

veterans. In addition, the government-sponsored enterprises—Fannie 

Mae and Freddie Mac—have supported the mortgage market by helping 

to create a secondary market for mortgage loans. Financial regulators are 

responsible for ensuring that regulated institutions comply with consumer 

financial protections or otherwise serve the communities in which they 

operate.

The Federal 

Housing Administration (FHA) began providing mortgage insurance in 

1934, and the first public housing program was authorized in 1937. FHA 

became part of HUD when HUD was created in 1965.

Federal housing assistance generally can be categorized as follows:

• Homeownership programs, often called single-family housing 

programs, provide mortgage insurance, loan guarantees, direct loans 

 

5

P.L. 81-171, July 15, 1949.

6

Sections 803 and 804, P.L. 87-70 (June 30, 1961); P.L. 87-723, Section 4(b) Sept. 28, 

1962). 
Page 5 GAO-12-554 Housing Assistance

for homeowners, and grants or loans for home repairs or 

modifications.7

• Rental housing programs, often called multifamily programs, provide 

loans, interest rate subsidies, loan guarantees, tax incentives, or a 

combination of these to promote the development and rehabilitation of 

privately owned rental properties.8

• Rental assistance programs, which make rents affordable to eligible 

households by paying the difference between the unit’s rent and 30 

percent of a household’s adjusted income. These programs include 

(1) tenant-based rental assistance that provides vouchers for eligible 

tenants to rent privately owned apartments or single-family homes 

and can be applied to different properties if tenants move; and (2) 

project-based rental assistance that is attached to specific properties 

and available to tenants only when they are living in units at these 

properties.

• Public housing offers units for eligible tenants in properties owned and 

administered by public housing authorities.

• Tax expenditures, such as exclusions, exemptions, deductions 

(including the mortgage interest deduction), credits, deferrals, and 

preferential rates, can promote homeownership or the development of 

privately owned rental housing through the federal tax code.

The federal government uses varying income thresholds for different 

housing programs to identify target populations or set eligibility 

requirements. Although some federal housing programs do not have 

specific income eligibility requirements, such as VA’s Home Loan 

Guaranty program for veterans, many of HUD’s and USDA’s multifamily 

programs and Treasury’s Low-Income Housing Tax Credit (LIHTC) 

program have specific income eligibility requirements. The most common 

income thresholds used for the programs are:

 

7

Single-family housing generally refers to properties with four or less units. We use singlefamily programs and homeownership programs interchangeably throughout this report.

8

Multifamily housing generally refers to properties with five or more units. We use 

multifamily programs and rental housing programs interchangeably throughout this report.
Page 6 GAO-12-554 Housing Assistance

• very low-income—no more than 50 percent of the area’s median 

income (AMI);

• low-income—no more than 80 percent of AMI; and

• moderate-income—no more than 115 percent of AMI.

Fragmentation refers to those circumstances in which more than one 

federal agency (or more than one organization in an agency) is involved 

in the same broad area of national interest. Overlap occurs when 

programs have similar goals, devise similar strategies and activities to 

achieve those goals, or target similar users. Duplication occurs when two 

or more agencies or programs engage in the same activities or provide 

the same services to the same beneficiaries. In some instances, it may be 

appropriate for multiple agencies or entities to be involved in the same 

programmatic or policy area due to the nature or magnitude of the federal 

effort.

Twenty different entities administered 160 programs, tax expenditures, 

and other tools that supported homeownership and rental housing in 

fiscal year 2010, reflecting the fragmentation in federal housing delivery. 

See e-supplement (GAO-12-555SP) for the list of programs, tax 

expenditures, other tools, and their related budgetary information. We 

identified 11 primary purposes for the activities (see fig. 1). Of the 11 

purposes (categories) identified, 3 generally relate to support for 

homeownership (including purchasing a home), 4 to support for rental 

housing and tenants, and 4 to both. Within each category, multiple 

agencies administer programs that serve the same purpose, illustrating 

the fragmentation of homeownership and rental housing programs.

Defining Fragmentation, 

Overlap, and Duplication

Multiple Agencies 

Provide Housing 

Assistance 
Page 7 GAO-12-554 Housing Assistance

Figure 1: Housing Activities and Programs, by Purpose and Agency, Fiscal Year 2010

Note: Some of these programs/activities incurred no obligations in fiscal year 2010 because, among 

other reasons, they were not part of the federal budget or were inactive during the year.

a

Some activities may have multiple purposes.

b

The Federal Open Market Committee, a nonregulatory component of the Federal Reserve System, 

undertook the activities. In November 2008, the Committee announced the purchase of up to $500 

billion (later raised to $1.25 trillion) of mortgage-backed securities issued by Fannie Mae and Freddie

Mac, or guaranteed by the Government National Mortgage Association (Ginnie Mae) to support 

mortgage and housing markets and the broader economy. Its authorization did not require a 

determination that emergency conditions existed. Therefore, the Federal Reserve does not consider 

this assistance “emergency,” but we have labeled it as such for purposes of this report because it was 

an outgrowth of the current housing crisis.
Page 8 GAO-12-554 Housing Assistance

The most commonly identified purpose was assistance for buying, selling, 

or financing a home. This category includes single-family mortgage 

programs that provide mortgage insurance or guarantees administered 

through HUD, USDA, and VA.9 As we have noted, the mortgage interest 

deduction represented the single largest activity—in terms of annual 

forgone revenue—associated with homeownership. In fiscal year 2010, 

the estimated revenue loss for the mortgage interest deduction was 

almost $80 billion.10 The most widely used housing tax expenditure, in 

terms of number of participants, was the deduction for state and local 

property taxes.11

As well as supporting homeowners directly, the federal government 

supports homeownership indirectly through the secondary mortgage 

market that helps increase the availability of mortgage loans.

According to Internal Revenue Service (IRS) estimates, 

nearly 40 million taxpayers claimed this deduction on their 2009 returns.

12 Fannie 

Mae and Freddie Mac facilitate the flow of mortgage credit by purchasing 

mortgages from primary mortgage lenders such as banks or thrifts.13

 

9

Mortgage insurance or guarantees are available to eligible homebuyers. They protect the 

lender or other mortgage holder, because the federal government commits to pay part or 

all of a loan’s outstanding principal and interest to a lender or other mortgage holder if the 

borrower defaults. FHA offers mortgage insurance and USDA’s Rural Housing Service 

(RHS) and VA have loan guarantees. Because “insurance” and “guarantee” have the 

same meaning in the context of our review, we use guarantee throughout this report.

The 

Government National Mortgage Association (Ginnie Mae), an agency 

within HUD, also facilitates the flow of mortgage credit by guaranteeing 

the timely payment of principle and interest on securities backed by 

10A revenue loss is the amount of revenue that the government forgoes as the result of 

each special provision in the tax code. Revenue loss is estimated for each tax expenditure 

separately by comparing the revenue raised under current law with the revenue that would 

have been raised if the provision did not exist (assuming that taxpayer behavior and all 

other tax and spending provisions remain constant). A revenue loss estimate does not 

represent the amount of revenue that would be gained if a particular tax expenditure were 

repealed, because repeal of the expenditure probably would change taxpayer behavior in 

some way that would affect revenue.

11The mortgage interest and property tax deduction tax expenditures accounted for about 

half of all housing assistance in fiscal year 2010. Summing tax expenditure estimates 

does not take into account interactions among individual provisions.

12In the secondary market, originators of mortgage loans package them into securities and 

sell the securities to investors.

13Fannie Mae and Freddie Mac must meet affordable housing goals for both single- and 

multifamily housing.
Page 9 GAO-12-554 Housing Assistance

federally guaranteed mortgages issued by certain mortgage lenders. In 

turn, these lenders—generally banks and thrifts—use the proceeds to 

originate additional mortgages. 

The federal government increased its support for homeownership in 

response to the current housing crisis, providing emergency assistance or 

other extraordinary support to the housing market and homeowners 

through a number of initiatives. Most of the activities we identified as 

emergency assistance were intended to support homeownership. For 

example, Treasury and the Federal Reserve System purchased 

mortgage-backed securities issued by Fannie Mae and Freddie Mac to 

help support the availability of mortgage credit for prospective 

homebuyers or homeowners wishing to refinance.14

Regulatory requirements also support homeownership by establishing 

standards for residential mortgage lending, among other things. For 

example, the Real Estate Settlement Procedures Act of 1974 requires 

lenders to disclose mortgage closing documents to homebuyers and 

sellers.

 And, HUD and 

Treasury administer programs that provide financing assistance to 

struggling homeowners—such as the Making Home Affordable program, 

which reduces borrowers’ monthly mortgage payments.

15

The federal government also provides support for the creation of rental 

housing and for tenants. The single largest activity in terms of annual 

forgone revenue associated with the production of affordable rental 

housing is the LIHTC program, which is administered by IRS and state 

housing finance agencies (HFA). In fiscal year 2010, forgone revenue 

from the LIHTC program was estimated at approximately $5.65 billion. 

HUD and USDA also administer multiple multifamily loan programs to 

The Bureau of Consumer Financial Protection (Consumer 

Financial Protection Bureau, or CFPB), the federal financial regulators, 

and HUD are involved in the examination and enforcement of this and 

other regulatory requirements. The Federal Financial Institutions 

Examination Council, a formal interagency body, also plays a role by 

prescribing uniform principles, standards, and report forms for the federal 

examination of financial institutions.

 

14Mortgage-backed securities represent claims to the cash flows from pools of mortgage 

loans, such as mortgages on residential property. 

15Real Estate Settlement Procedures Act of 1974, 12 U.S.C. §§ 2601-2617. 
Page 10 GAO-12-554 Housing Assistance

produce and preserve affordable rental housing. Some of HUD’s 

multifamily loan guarantee programs are estimated to produce more 

revenue than expenditures. These estimates are reviewed annually, and 

because the underlying loans may have terms of up to 40 years, their 

ultimate cost is uncertain. Further, HUD and USDA have multiple 

programs that support low-income households by providing assistance to 

rental property owners to cover all or a portion of the tenant’s rent.

Finally, many activities support homeownership and rental housing both 

directly and indirectly. For example, HUD administers multiple block grant 

programs that provide state and local governments with flexible funding to 

address community development needs, including support of 

homeownership or rental housing. And one regulatory requirement—the 

Community Reinvestment Act (CRA)—supports the financing of 

homeownership and the creation of affordable rental housing, among 

other things.

16 Another regulatory requirement, the Fair Housing Act, 

protects homebuyers and renters from discrimination.17

To identify housing programs that had a potential for overlap, we used 

findings from our prior work that examined programs that offer similar 

housing services to similar beneficiaries. These programs included 

selected HUD and USDA single- and multifamily programs, VA’s singlefamily housing loan guarantee program, and Treasury’s LIHTC. We also 

included Treasury’s mortgage interest and property tax deductions 

because they are the largest programs in terms of overall funding. We 

compared agency goals, products offered, geographic areas served, 

service delivery, and, for single-family programs, recipients’ income 

levels. Evidence of overlap existed across many of these dimensions for 

the single-family products offered by HUD, USDA, VA, and Treasury, but 

important differences also existed. Although selected HUD, USDA, and 

Treasury multifamily housing programs had overlapping purposes, the 

products, areas served, and delivery methods differed to varying degrees.

 

16CRA requires regulators to evaluate periodically each insured depository institution’s 

record in helping meet the credit needs of its entire community. That record is taken into 

account in considering an institution’s application for deposit facilities, including mergers 

and acquisitions. Investing in certain community development projects can help banks 

earn positive consideration toward their CRA regulatory ratings. 12 U.S.C. §§ 2901 – 

2908. 

17Fair Housing Act, 42 U.S.C. §§ 3601–3619.

Overlap Exists in 

Both Single- and 

Multifamily Housing 

Programs
Page 11 GAO-12-554 Housing Assistance

Seven single-family programs administered by HUD, USDA, VA, and 

Treasury overlap in their broad purpose of supporting homeownership, 

but only HUD has an explicit housing priority and strategic goal (see table 

1). Federal agencies outline long-term goals and objectives in their 

strategic plans and annual goals in their performance plans. In addition, in 

the fiscal year 2013 President’s Budget, agencies identified a limited 

number of 2-year agency priority goals that align with the long-term goals 

and objectives in their strategic plans. Agency priority goals target areas 

in which agencies want to achieve near-term performance through 

focused attention of senior leadership. HUD included the prevention of 

foreclosures as a priority goal. As of April 2012, USDA, VA, and Treasury 

had not highlighted homeownership among their agency priority goals. 

Under its strategic goal to strengthen the nation’s housing market, HUD 

uses its single-family guaranteed loan program to meet its subgoal of 

creating financially sustainable homeownership opportunities. Under its 

broad strategic goal of assisting rural communities, USDA uses its singlefamily loan and grant programs to increase the number of 

homeownership opportunities available in rural areas. VA’s guarantee for

home mortgages is one among many entitlements that veterans earn.18

The program falls under VA’s broad strategic goal of improving the quality 

and accessibility of health care, benefits, and memorial services while 

optimizing value. Finally, although the mortgage interest and property tax 

deductions are the two tax expenditures most widely used by 

homeowners, Treasury does not have stated goals for these, or most 

other, tax expenditures.19

 

18In addition to veterans, certain currently serving members of the National Guard or 

Reservists and spouses of certain veterans also may be eligible for a VA-guaranteed 

mortgage.

However, these tax expenditures are generally 

19Over the years, Congress has eliminated the deductions for certain nonbusiness taxes 

and types of interest, but exceptions for home mortgage interest and home property taxes 

remain. See GAO, Home Mortgage Interest Deduction: Despite Challenges Presented by 

Complex Tax Rules, IRS Could Enhance Enforcement and Guidance, GAO-09-769 

(Washington, D.C.: Jul. 29, 2009) and Congressional Research Service, Tax 

Expenditures: Compendium of Background Material on Individual Provisions, S. Prt. 111-

58, (Washington, D.C.: Dec. 30, 2010).

Some Single-Family 

Programs Overlap

Agency Goals
Page 12 GAO-12-554 Housing Assistance

recognized as reducing the after-tax costs of financing and maintaining a 

home.20

Table 1: Selected HUD, USDA, VA, and Treasury Single-Family Products and Related Agency Goals, as of 2012

Agency Program Related strategic goal

Selected programs that provide assistance for buying, selling, or financing a home

HUD/FHA One- to -Four-Family Home Mortgage 

Insurance (Section 203(b))

Strengthen the nation’s housing market to bolster 

the economy and protect consumers. 

USDA/RHS Rural Housing Single Family Loans -

Guaranteed (Section 502 guaranteed)

Assist rural communities to create prosperity so 

they are self-sustaining, repopulating, and 

economically thriving. Rural Housing Single Family Loans -Direct 

(Section 502 direct)

VA VA Home Loan Guaranty Improve the quality and accessibility of health 

care, benefits, and memorial services while 

optimizing value.

Selected programs that provide assistance to homeowners

USDA/RHS Very Low-Income Direct Repair Loans and 

Grants (Section 504)

Assist rural communities to create prosperity so 

they are self-sustaining, repopulating, and 

economically thriving. 

Treasury Mortgage interest deduction None. 

Property tax deduction

Source: GAO analysis of agency strategic and performance plans.

The selected single-family guaranteed loan programs of HUD (FHA), 

USDA’s Rural Housing Service (RHS), and VA overlap, but differences 

exist among the products, and only USDA offers certain direct loans to 

finance the purchase of homes for low- and very low-income families (see 

table 2).21

 

20Joint Committee on Taxation, “Present Law, Data, and Analysis Relating to Tax 

Incentives for Homeownership,” JCX-50-11 (Washington, D.C.: Sep. 30, 2011). 

FHA, VA, and RHS guarantee 30-year fixed-rate mortgages 

requiring little or no down payment from borrowers and charge up-front 

fees that generally vary from 1.75 to 2.15 percent. The government 

guarantee makes all of these loans eligible for inclusion in Ginnie Maeguaranteed mortgage-backed securities. All the products require that the 

21Although they do not offer direct loan programs, both FHA and VA may offer direct loans 

in limited situations as part of disposition programs for real estate-owned properties (such 

as foreclosed homes).

Agency Products
Page 13 GAO-12-554 Housing Assistance

borrowers occupy the home and permit borrowers to use loan proceeds 

to purchase a home or refinance an existing loan.22

The products also have some important distinctions. For example,

• VA loan guarantees are an entitlement available only to veterans who 

have served in a branch of the armed services and received an 

honorable discharge, certain currently serving members of the 

Reserves or National Guard, and spouses of veterans under certain 

circumstances.

• RHS loan guarantees are limited by income and geography.

• FHA requires at least a 3.5-percent down payment, while RHS and 

VA require none.

Additionally, loan guarantee programs vary in the extent to which the 

agencies cover potential losses of the lender or other mortgage holder. 

FHA provides 100-percent coverage of eligible losses when borrowers 

default. This guarantee covers the unpaid principal balance, interest 

costs, and certain costs of foreclosure and conveyance.23

 

22FHA, VA, and RHS permit seller concessions and the financing of up-front insurance 

premiums, which effectively reduce the home buyer’s out-of-pocket costs for a guaranteed 

mortgage. Seller concessions are costs a seller pays on behalf of the borrower when 

purchasing a home. FHA permits seller concessions of up to 6 percent, VA permits up to 4 

percent, and RHS does not limit the amount of seller concessions. 

USDA’s 

guarantee provides coverage for eligible losses of up to 90 percent of the 

original principal, including unpaid principal and interest; principal and 

interest on USDA-approved advances for protection and preservation of 

the property; and the costs associated with selling the foreclosed 

property. One of the most significant differences among these products is 

the loss coverage offered by VA, which covers from 25 to 50 percent of 

the original principal.

23We previously reported that if FHA’s guarantee were reduced, lenders likely would make 

fewer FHA loans and charge higher interest rates. Any such change would be more likely 

to disproportionately affect higher-risk borrowers. See GAO, Homeownership: Potential 

Effects of Reducing FHA’s Insurance Coverage for Home Mortgages, GAO/RCED-97-93 

(Washington, D.C.: May 1, 1997).
Page 14 GAO-12-554 Housing Assistance

Table 2: Comparison of Selected FHA, VA, and RHS Single-Family Housing Programsa 

Loan guarantees Direct loans or grants

Agency FHA VA RHS RHS RHS 

Program One- to Four-Family 

Home Mortgage 

Insurance (Section 

203(b))

VA Home Loan 

Guaranty

Rural Housing SingleFamily Loans -

Guaranteed (Section 

502 guaranteed)

Rural Housing 

Single-Family 

Loans - Direct 

(Section 502 direct)

Very Low-Income 

Direct Repair 

Loans and 

Grants (Section 

504)

Maximum term 30 years 30 years and 32 

days

30 years 33 years, 

38 years for 

borrowers with 

income below 60% 

of AMI

30 years for 

manufactured 

homes

20 years (loans)

Required down 

payment 

3.5% 0% 0% 0% 0% b

Up-front 

guarantee fee 

(mortgage 

insurance)

b

1.75% 2.15% 2.0% c N/A N/A

Annual 

guarantee fee 

(mortgage 

insurance)

1.25% for $625,500 

or less

1.5% for more than 

$625,500 

0% 0.3% N/A N/A

Guarantee or 

other terms

100% Varies by loan 

amount, ranging 

from 25 to 50%

Up to 90% of original 

loan amount

Payment 

assistance, which 

may reduce the 

interest paid on the 

mortgage to as low 

as 1%, is available 

based on the 

borrower’s income 

as a percent of AMI

Direct loan or 

grant

Fixed rate of 1% 

for loans

Limits on loan or 

grant size 

Vary by locality, 

ranging from 

$271,050 to 

$729,750 for singleunit properties

No VA-imposed 

limits, but lenders 

may limit loans to 

what they can 

sell to secondary 

markets

d

Housing must be 

modest in size, design, 

and cost

e

f

Housing must be 

modest in size, 

design, and cost

Total loan 

amount(s) may 

not exceed 

$20,000

g

Grants are 

limited to lifetime 

assistance of 

$7,500
Page 15 GAO-12-554 Housing Assistance

Loan guarantees Direct loans or grants

Agency FHA VA RHS RHS RHS 

Eligible uses Funds can be used 

to buy, build, or 

refinance 

Funds can be 

used to buy, 

build, improve, or 

refinance 

Funds can be used to 

buy, build, or refinance 

Funds can be used 

to build, repair, 

renovate, or 

relocate a home, or 

to purchase and 

prepare sites, 

including providing 

water and sewage 

facilities

Funds can be 

used to repair, 

improve, or 

remodel to 

address 

accessibility for 

individuals with 

disabilities

Eligibility and 

restrictions

House must be 

owner-occupied

House must be 

owner-occupied

Borrower must 

qualify for 

veteran benefit

House must be owneroccupied

Property must be in an 

eligible rural area

Borrower income may 

not exceed 115% of 

AMI

House must be 

owner-occupied

Property must be in 

an eligible rural 

area

Borrower income 

may not exceed 

80% of AMI

Borrowers must be 

unable to qualify for 

other financing

40% of funding 

must go to 

borrowers with 

incomes at or 

below 50% of AMI

House must be 

owner-occupied

Property must be 

in an eligible 

rural area

For grants, 

property must 

have health or 

safety issues or 

be inaccessible 

for household 

members with 

disabilities

Borrower or 

grantee income 

may not exceed 

50% of AMI

Grantees must 

be 62 or older

Households 

assisted in fiscal 

year 2010, to the 

nearest 

thousand

1,547,000 314,000 133,000 18,000 4,000 loans and 

6,000 grants

Source: GAO analysis of agency documentation.

a

The mortgage product terms do not apply to loans used for refinancing.

b

RHS direct loan borrowers with assets above program limits must use excess assets toward their 

down payment.

c

Veterans using the benefit for the first time and with no down payment pay 2.15 percent in up-front 

fees. However, up-front fees range from 0 to 3.3 percent depending on the type of veteran and the 

size of the down payment.

d

The maximum FHA loan limit for single-unit properties in high-cost exception areas is $1,094,625.
Page 16 GAO-12-554 Housing Assistance

e

VA does not impose a maximum amount that an eligible veteran may borrow using a VA-guaranteed 

loan. However, VA uses loan limits to establish the maximum possible guarantee on a loan. For 2012, 

the maximum guarantee amount available for loans over $144,000 was 25 percent of the VA loan 

limit. For counties in the contiguous United States, the limits range from $417,000 to $625,500, 

depending on the median county home price. The limits may be higher in Alaska, Guam, Hawaii, and 

the U.S. Virgin Islands. Lenders can make loans in excess of these VA loan limits if they choose, but 

they will not receive a 25-percent guarantee.

f

RHS limits vary based on local home prices. Generally, the limit is 115 percent of the median price 

for single-family homes in the area, as determined by HUD. The maximum loan for any area may not 

be less than $271,050 and may not exceed $625,500.

g

Of the agencies, only USDA (RHS) offers single-family housing programs 

specifically for low- and very low-income families. RHS offers two unique 

products: a subsidized direct loan for the purchase of single-family 

housing, with interest rates as low as 1 percent, to low-income borrowers 

unable to qualify for credit elsewhere, and a home repair program that 

offers grants or loans (with interest rates of 1 percent) to very low-income 

rural residents. RHS may subsidize the interest on single-family direct 

loans, depending on the borrower’s income.

RHS determines the direct loan limit for eligible rural areas based on local home prices. The 

maximum loan can range from under $100,000 in low-cost areas to more than $400,000 in high-cost 

areas.

As shown in table 1, two of the largest tax expenditures that provide 

assistance to homeowners are the mortgage interest and property tax 

deductions, with about half of all homeowners receiving housing 

assistance through them.24 Taxpayers who itemize their deductions may 

deduct mortgage interest and property taxes on their principal residence 

and a second residence. Deductions are adjustments from adjusted gross 

income (AGI).25

 

24GAO analysis of homeownership data from the Bureau of the Census and Statistics of 

Income data from IRS; and Congressional Research Service, The Mortgage Interest and 

Property Tax Deductions: Analysis and Options, R41596 (Washington, D.C.: Jan. 18, 

2011). 

Whether or not a taxpayer itemizes deductions depends 

on whether the sum of these deductions plus any other itemized

25AGI is equal to gross income less qualifying adjustments to income, including some 

deductions. According to estimates from IRS (Statistics of Income), generally about onethird of taxpayers itemize deductions. 
Page 17 GAO-12-554 Housing Assistance

deductions exceeds the limits on the standard deduction.26 Taxpayers are 

subject to certain limits on the total amount of mortgage interest that can 

be claimed. The total amount of mortgage debt for which interest may be 

claimed cannot exceed $1 million. In addition, taxpayers may deduct 

interest payments on up to $100,000 of home equity debt. There are no 

dollar limits on the amounts of property taxes that can be deducted. 

Taxpayers with higher incomes are subject to additional limitations on use 

of these two deductions.27

Data from selected single-family programs show some overlap in the 

income and location of households served. Among the single-family loan 

guarantee programs, all served moderate- and low-income populations, 

although only USDA’s program restricts eligibility on the basis of income. 

USDA limits borrower income to 115 percent of AMI. Although FHA and 

VA do not have this restriction, 1,291,000 or 74 percent of FHA borrowers 

and at least 130,000 VA borrowers also fell into this income category in 

fiscal year 2009 (see fig. 2).28

 

26Taxpayers can itemize personal deductions or take a standard deduction. For tax year 

2008, the standard deduction amounts generally were as follows: for single or married 

filing separately, $5,450; married filing jointly or qualifying widow(er), $10,900; and head of 

household, $8,000. For tax years 2008 and 2009, an additional deduction for property 

taxes permitted nonitemizers to increase their standard deduction by up to $500 ($1,000 if 

married filing jointly).

In part because of the number of borrowers 

it serves, FHA guaranteed more loans to borrowers with incomes at or 

below 115 percent of AMI than RHS and VA combined.

27For tax year 2008, certain itemized deductions (including mortgage interest and property 

taxes) were limited if a taxpayer’s AGI exceeded $159,950 ($79,975 if married filing 

separately). Higher-income taxpayers also may be subject to the Alternative Minimum Tax 

(AMT), which can limit the dollar value of certain itemized deductions, including the 

property tax deduction. Both the AGI limit and AMT affect whether the amounts claimed 

result in a tax reduction and federal revenue losses. The President’s fiscal year 2013 

budget request proposes to limit the tax rate at which higher-income taxpayers can 

itemize deductions to a maximum of 28 percent. The proposal would affect married 

taxpayers filing jointly with incomes over $250,000 (or over $200,000 for single filers), and 

it is estimated to raise $27 billion in fiscal year 2013. 

28For FHA and VA, we obtained borrowers’ incomes from loan data and compared the 

income data with the AMI for the area. For RHS loans, the adjusted income (with 

adjustments for family size) of borrowers must not exceed 115 percent of AMI. Income 

information was not available in fiscal year 2009 data for about 97,600 VA borrowers.

Income Levels and Geography
Page 18 GAO-12-554 Housing Assistance

Figure 2: Borrower Income Relative to AMI for Active Federal Single-Family Loan 

Guarantees, Fiscal Year 2009

Further, although RHS may serve only borrowers with incomes at or 

below 80 percent of AMI in its direct single-family loan program, FHA also 

serves this group of borrowers. Specifically, 50 percent of FHA borrowers 

in fiscal year 2009 had incomes at or below 80 percent of AMI.29

However, RHS single-family direct loans may be combined with other 

resources to help reach very low-income families that may not have the 

income or down payment often needed to qualify for other financing. For 

example, these loans may be used in self-help housing projects in which

future owners help build their own houses. The “sweat equity” reduces 

the cost of construction and the overall loan amount.30

The loan guarantee programs overlapped in rural areas. USDA 

characterizes locations as rural or urban using different measures. Our 

analysis showed overlap in areas served using three different USDA 

 

29Further, 25 percent of FHA borrowers had incomes at or below 50 percent of AMI. 

30OMB performance and accountability reports have cited RHS’s single-family direct loan 

program and two self-help programs (one in HUD and one in RHS) that offer 

preconstruction financing as an effective way to leverage limited single-family resources.

OMB has cited the combination as effective at promoting affordability and minimizing loan 

costs by using a unique construction method that promotes strong communities by 

building close bonds among future neighbors. 
Page 19 GAO-12-554 Housing Assistance

characterizations for geographic areas. Section 520 of the Housing Act of 

1949, as amended, defines the terms “rural” and “rural area” for the rural 

housing programs that are the focus of this report. The definition is largely 

based on population, but also considers other factors, such as proximity 

to metropolitan areas and access to mortgage credit.31 As of 2011, 97 

percent of the land area of the United States and 37 percent of the 

population were eligible for rural housing programs (see fig. 3). Eligible 

areas will be adjusted based on the results of the 2010 Census. As we 

reported in 2004, the definition can lead to inconsistent eligibility 

determinations.32

 

31Any open country or any place, town, village, or city that is not (except in the cases of 

Pajaro, California, and Guadalupe, Arizona) part of or associated with an urban area and 

that (1) has a population not in excess of 2,500 inhabitants, or (2) has a population in 

excess of 2,500 but not in excess of 10,000 if it is rural in character, or (3) has a 

population in excess of 10,000 but not in excess of 20,000, and (A) is not contained within 

a standard metropolitan statistical area, and (B) has a serious lack of mortgage credit for 

lower- and moderate-income families, as determined by the Secretaries of USDA and 

HUD. Any area classified as “rural” or a “rural area” prior to October 1, 1990, and 

determined not to be “rural” or a “rural area” as a result of data received from or after the 

1990 or 2000 decennial census shall continue to be so classified until receipt of data from 

the 2010 decennial census, if such area has a population in excess of 10,000 but not in 

excess of 25,000, is rural in character, and has a serious lack of mortgage credit for lowerand moderate-income families. 

32See GAO, Rural Housing: Changing the Definition of Rural Could Improve Eligibility 

Determinations, GAO-05-110 (Washington, D.C.: Dec. 3, 2004).
Page 20 GAO-12-554 Housing Assistance

Figure 3: RHS Eligible and Ineligible Areas, as of 2011

Although RHS offers its single-family products only in eligible rural areas, 

and FHA and VA programs are not restricted to any geographic location, 

FHA and VA also guaranteed a substantial number of loans in RHSeligible areas. While a larger percentage of RHS borrowers with 

guaranteed loans were located in more remote rural areas compared with

FHA and VA borrowers, FHA served a larger number of borrowers in 

these areas. Table 3 characterizes the location of single-family 

guaranteed loans relative to their distance from the boundaries separating 
Page 21 GAO-12-554 Housing Assistance

RHS-eligible and -ineligible areas. For example, 50 percent of the RHS 

single-family guaranteed loans were located inside or within 10 miles of 

ineligible areas and 23 percent were located more than 25 miles from 

ineligible areas. FHA and VA loans were concentrated in or close to RHSineligible areas; 89 percent of both FHA and VA loans were for properties 

inside or within 10 miles of RHS-ineligible areas, and 4 percent were for 

properties located more than 25 miles from RHS-ineligible areas. FHA 

guaranteed more loans than RHS in all location categories, including 

more than twice as many loans as RHS in areas more than 50 miles from 

RHS-ineligible areas.

Table 3: Number and Percentage of Single-Family Loan Guarantees, by Distance from RHS Ineligible Areas (Fiscal Year 2009) 

Single-family loan 

guarantee programs

Located in an 

RHS-ineligible 

area

Located within 

10 miles of an 

RHS-ineligible 

area

Located from 10 to 

25 miles from an 

RHS-ineligible 

area

Located from 25 

to 50 miles from 

an RHS-ineligible 

area

Located more than 

50 miles from an 

RHS-ineligible 

area

FHA Section 203(b) 1,323,066

(72%)

319,010 

(17%)

118,408 

(6%)

49,818 

(3%)

21,391 

(1%)

VA Home Loan Guaranty 219,457 

 (65%)

80,560 

(24%)

23,922 

(7%)

9,887 

(3%)

3,867 

(1%)

RHS Section 502 - 

guaranteed

3,010a 57,731 

(2%) (48%)

33,155 

(27%)

18,921 

(16%)

8,059 

(7%)

Source: GAO analysis of agency data.

a

Boundaries for ineligible areas change periodically, and these loans were likely in eligible areas in 

2009, when the loans were made.

USDA’s Economic Research Service categorizes zip codes by degree of 

rurality into four types—urban, suburban, small-town rural, and isolated 

rural.33

 

33USDA’s Economic Research Service categorizes zip codes by degree of rurality using 

measures of population density, urbanization, and daily commuting. A zip code may 

include both RHS-eligible and -ineligible areas.

While 89 percent of FHA’s and 86 percent of VA’s single-family 

loan guarantees were in urban or suburban zip codes, both agencies also 

guaranteed a substantial number of single-family loans in rural zip codes 

(see table 4). FHA guaranteed more loans than RHS in all zip code types. 

Further, FHA guaranteed more than 210,000 loans in rural zip codes, 

while RHS guaranteed 59,000 loans, or about half of its loans, in rural zip 

codes. Although a greater percentage of the RHS-guaranteed loans were 

in rural zip codes compared with FHA and VA loans, more than half the 

RHS-guaranteed loans were in urban and suburban zip codes.
Page 22 GAO-12-554 Housing Assistance

Table 4: Number and Percentage of Single-Family Loan Guarantees by Zip Code Type (Fiscal Year 2009) and 2010 U.S. 

Population

Single-family loan guarantee programs Urban Suburban Small Town Rural Isolated Rural

FHA Section 203(b) 1,407,987

(77%)

212,783

(12%)

128,769

(7%)

82,128

(4%)

RHS Section 502 - guaranteed 27,777

(23%)

34,090

(28%)

32,829

(27%)

26,177

(22%)

VA Home Loan Guaranty 243,141

(72%)

48,838

(14%)

31,644

(9%)

14,051

(4%)

U.S. Population 151,206,774

(49%)

102,575,782

(33%)

33,445,439

(11%)

21,511,936

(7%)

Source: GAO analysis of agency data.

The Economic Research Service also has developed a rural-urban 

continuum that categorizes U.S. counties by degree of rurality.34

 

34Rural-urban continuum codes form a classification scheme that distinguishes 

metropolitan counties by the population of their metropolitan area, and nonmetropolitan 

counties by degree of urbanization and adjacency to a metropolitan area or areas. A 

county may include both RHS eligible and ineligible areas.

Using, 

this continuum, we distinguished four types of counties—metropolitan, 

urbanized nonmetropolitan, rural nonmetropolitan, and completely rural 

nonmetropolitan. FHA and VA also guaranteed a substantial number of 

loans in nonmetropolitan or what could be considered more rural counties 

(see fig. 4.) Additionally, FHA guaranteed more loans than RHS in both 

metropolitan and completely rural nonmetropolitan counties. Specifically, 

FHA guaranteed a greater number of loans than RHS in all the 

nonmetropolitan categories. And although a greater percentage of RHSguaranteed loans were in nonmetropolitan counties compared with FHA 

and VA loans, more than half of its loans were in metropolitan counties.
Page 23 GAO-12-554 Housing Assistance

Figure 4: Percent, Number, and Location of Single-Family Loan Guarantees for Selected Programs, Fiscal Year 2009

RHS limits eligibility for its single-family guaranteed loan program by 

geography and borrower income. When considering both these factors 

together using the rural-urban continuum, FHA guaranteed more loans to 

borrowers with incomes at or below 115 percent of AMI in all areas, 

including in completely rural nonmetropolitan areas, than RHS and VA 

combined (see fig. 5). Further, when considering only FHA borrowers with 

incomes at or below 80 percent of AMI (the eligibility constraint in RHS’s 

direct loan program), in 2009 FHA guaranteed more loans in all areas 

than RHS, including in rural nonmetropolitan and completely rural 

nonmetropolitan areas.
Page 24 GAO-12-554 Housing Assistance

Figure 5: Percent, Number, and Location of Single-Family Loan Guarantees for Borrowers with Incomes at or below 115 

Percent of AMI, Fiscal Year 2009

For RHS’s Section 504 program, the loans and grants were far more 

concentrated in rural areas. More than half of Section 504 Direct Repair 

Loans and Grants were made in nonmetropolitan counties in fiscal year 

2009, with 14 percent made in completely rural counties (see fig.6). In 

contrast, the geographic distribution of loans made by RHS in the Section 

502 single-family direct loan program was comparable with the 

distribution of loans in its Section 502 single-family guaranteed loan 

program. More than half of the loans were made in metropolitan counties, 

16 percent in urbanized nonmetropolitan counties, 24 percent in rural 

nonmetropolitan counties, and less than 5 percent in completely rural 

nonmetropolitan counties.
Page 25 GAO-12-554 Housing Assistance

Figure 6: Percent, Number, and Location of RHS Direct Loans and Grants, Fiscal Year 2009

While data from single-family programs show some overlap in income 

levels and geographic areas served, higher-income households were 

more likely to benefit from the mortgage interest and property tax 

deductions. Higher-income households are generally more likely to 

itemize and claim the mortgage interest and property tax deductions, 

because they have larger amounts to claim. Moreover, they also have 

received greater tax savings from the two deductions. For tax year 2008 

(the most recent data available), taxpayers with an AGI of $100,000 or 

more accounted for 13 percent of all returns but claimed nearly half (47 

percent) of all mortgage interest and property tax deductions.35 In 

contrast, taxpayers with an AGI of less than $100,000 represented 

approximately 87 percent of all tax returns in 2008 but accounted for 53 

percent of mortgage interest and property tax deductions.36

 

35To perform our analysis of the relationship between income level and geographic area

and mortgage interest and property tax deductions, we reviewed zip code data from IRS 

(Statistics of Income) for tax year 2008. See appendix I for more details. 

As taxpayer 

36The average AGI reported on 2008 individual tax returns was approximately $58,000.
Page 26 GAO-12-554 Housing Assistance

income increases, the value of the tax deductions generally increases 

because higher-income taxpayers have higher marginal tax rates. For 

example, a taxpayer in the 35-percent tax bracket claiming $10,000 in 

mortgage interest would realize a tax savings of $3,500, compared with

$2,500 for a taxpayer in the 25-percent bracket.

While both deductions are available nationwide, the share of deductions 

claimed was higher for urban areas. For tax year 2008, returns from 

urban zip codes represented 82 percent of all returns but accounted for 

91 percent of total mortgage interest and property tax deductions claimed, 

whereas returns from rural zip codes represented 18 percent of all returns 

but 9 percent of total mortgage interest and property tax deductions 

claimed.37 For tax year 2008, tax returns from 10 states—California, 

Colorado, Connecticut, Illinois, Maryland, Massachusetts, New Jersey, 

New York, Virginia, and Washington—accounted for approximately half 

(51 percent) of all mortgage interest and property tax deduction dollars 

claimed but represented 37 percent of all returns. Other researchers also 

have estimated that tax expenditures for homeowners, such as the 

mortgage interest and property tax deductions, were more likely to be 

claimed, and in larger amounts, by taxpayers in major metropolitan areas, 

including along the Northeast and the West coasts.38

Delivery structures for single-family loans and loan guarantee programs 

vary somewhat for FHA, RHS, and VA. For guaranteed single-family loan 

programs, FHA, RHS, and VA use lenders and servicers to originate and 

service loans, but the roles and responsibilities of these entities differ 

 

37IRS tax return data reported by zip code are based upon the mailing address the 

taxpayer reported, which can differ from the taxpayer’s place of residence and any second 

residence claimed.

38Peter Brady, Julie-Anne Cronin, and Scott Houser, “Regional Differences in the 

Utilization of the Mortgage Interest Deduction,” Public Finance Review, 31, no. 4 (July 

2003): 327-366; Adam J. Cole, Geoffrey Gee, and Nicholas Turner, “The Distributional 

and Revenue Consequences of Reforming the Mortgage Interest Deduction,” National Tax 

Journal, 64, no. 4 (December 2011): 977-1,000; Joseph Gyourko and Todd Sinai, “The 

Spatial Distribution of Housing-Related Ordinary Income Tax Benefits,” Real Estate 

Economics, 31, no. 4 (2003): 527-575; and Todd Sinai, and Joseph Gyourko, “The 

(Un)Changing Geographical Distribution of Housing Tax Benefits: 1980 to 2000,” Tax 

Policy and the Economy, 18 (2004): 175-208.

Delivery Structures
Page 27 GAO-12-554 Housing Assistance

across agencies.39 FHA approves lenders to participate in its mortgage 

insurance programs for single-family homes. As of September 2011, 

almost 3,700 lending institutions had been approved, virtually all of them 

as direct endorsement lenders (lenders that can determine eligibility for 

FHA mortgage insurance and underwrite loans without FHA’s prior 

review).40 VA determines lenders’ eligibility and grants certain lenders 

automatic authority.41 RHS also has a process for approving lenders, 

although the lenders cannot independently determine eligibility for a 

guarantee. RHS reviews and pre-approves every guaranteed loan 

application. FHA and RHS also allow lenders to select the property 

appraiser, but VA has a panel of approved appraisers and assigns them 

on a rotating basis.42

The agencies also assign servicers different roles in foreclosure 

processing. FHA, RHS, and VA assign foreclosure mitigation to the 

servicers; however, VA takes extra measures to avoid foreclosure, 

including reinstating loans and servicing them in-house. While all three 

agencies pay the associated costs for protecting the asset during the 

foreclosure process, FHA and VA take ownership of the property and use 

contractors to market and manage real estate-owned (REO) portfolios.43

 

39The lender or other mortgage holder may service its own loans or pay a fee for another 

organization to service its loans. Mortgage servicing involves administrative activities such 

as collecting monthly mortgage payments and maintaining escrow accounts for property 

taxes and hazard insurance. Mortgage servicers also are generally responsible for loss 

mitigation and conducting foreclosure proceedings.

Servicers are responsible for liquidating the REO properties for RHSguaranteed loans. RHS does not take ownership of properties but pays 

servicers for certain associated costs and plays a role in approving 

servicers’ plans for selling individual properties. For its direct loans, RHS 

performs all functions in-house, including the origination and servicing of 

loans and managing and marketing of REO properties. RHS performs 

40Underwriting refers to a risk analysis that uses information collected during the 

origination process to decide whether to approve a loan. 

41Lenders with automatic authority can determine eligibility for VA mortgage insurance 

and underwrite loans without VA’s prior review.

42RHS allows the lender to select any licensed or certified appraiser, while FHA maintains 

a roster of approved appraisers from which a lender selects an appraiser.

43Servicers do not convey properties to FHA immediately following a foreclosure sale.

Servicers maintain the properties until any redemption periods have expired. In contrast, 

servicers convey properties to VA shortly after a foreclosure sale.
Page 28 GAO-12-554 Housing Assistance

nearly all of this work at its field offices and centralized servicing center in 

St. Louis, Missouri.

The agencies also use different information systems to perform similar 

tasks and to allow lenders and servicers access to internal systems. FHA, 

VA, and RHS electronically verify borrowers’ creditworthiness using 

automated underwriting systems. FHA and RHS systems interface with 

FHA’s Technology Open to Approved Lenders mortgage scorecard, 

which assists lenders in the underwriting process for single-family 

guaranteed loans. FHA’s mortgage scorecard works in conjunction with 

various automated underwriting systems and evaluates the overall 

creditworthiness of applicants and the associated risk level of loans.

Agencies determine which automated systems lenders may use in the 

underwriting process. FHA reviews automated underwriting systems 

developed by third parties to interface with its mortgage scorecard.44

FHA, RHS, and VA deliver, administer, and oversee programs and 

products through organizational structures consisting of headquarters and 

field locations, but the number of offices each agency devotes to its 

single-family program vary significantly. For example, to perform functions 

related to guaranteeing single-family loans, FHA uses a more centralized 

structure with about 800 field staff in 4 homeownership centers, while 

RHS employs a decentralized structure with more than 400 field staff 

spread across 278 state and local field offices and its centralized 

servicing center (see table 5). FHA, RHS, and VA perform similar 

functions in the field offices, but differences exist. All three agencies 

monitor lenders from the field offices, but FHA approves lenders in 

headquarters, while RHS and VA approve lenders to originate loans in 

VA 

has approved five automated underwriting systems developed by third 

parties. RHS has developed its own system in-house and customized it to 

also verify program eligibility. The agencies also use different data 

systems to track loan information. Through FHA’s system, lenders and 

servicers can access internal FHA systems for loan origination and 

servicing, as well as for lender approval and monitoring. VA uses its 

application for loan servicing, loss mitigation, and claims processing. RHS 

uses its system for loan origination and servicing, as well as servicer 

claims and disposition of property.

 

44FHA established a protocol for third parties to use in developing automated systems to 

interface with its mortgage scorecard. FHA relies on third-party interfaces in the loan 

endorsement process. 
Page 29 GAO-12-554 Housing Assistance

the field. FHA and VA both use contractors for certain functions, such as 

the management and marketing of foreclosed properties, and oversee the 

contracts. RHS reviews servicer-prepared plans for selling foreclosed 

properties, while the servicers manage and market them. RHS reviews 

these plans both at field offices and its centralized serving center in St. 

Louis, Missouri, although it has been moving toward performing this 

function centrally.

Table 5: Comparison of Field Office and Staff Numbers and Functions for Selected Single-Family Guarantee Programs at FHA, 

RHS, and VA, as of April 2012

Single-family 

guarantee 

programs 

Number of 

field offices

Field/headquarters

full-time equivalents Functions performed at field offices

RHS 502 - 

guaranteed

279 a 429/11 • Reviews and pre-approves requests for RHS mortgage 

guarantees

• Approves and monitors lenders

• Provides guidance to servicers for loss mitigation

• Reviews servicer plans for loss mitigation and property 

disposition

• Processes and pays loss claims

FHA Section 203(b) 4 799/212b • Processes requests for FHA mortgage guarantees

• Oversees and monitors lenders

• Oversees appraisers

• Oversees the management and marketing of homes acquired 

through foreclosure

• Provides technical services, including training

• Provides customer service to lenders and borrowers

VA Home Loan 

Guaranty

8 767c • Determines eligibility and underwrites loans

• Approves, oversees, and monitors lenders, appraisers, and 

servicers

• Reviews appraisals and establishes the value of properties

• Oversees the management and marketing of homes acquired 

through foreclosure

• Provides assistance to borrowers and servicers during the 

foreclosure process

• Provides customer service to lenders, servicers, and 

borrowers 

Source: GAO analysis of agency documentation.

a

For the purpose of this table, all nonheadquarters offices are considered field offices, including 

RHS’s centralized service center in St. Louis.

b

Full-time equivalent staff work on all FHA single-family programs.
Page 30 GAO-12-554 Housing Assistance

c

The largely decentralized field structure at RHS has not kept pace with its 

shift towards guaranteed lending. RHS administration of direct loans is 

labor-intensive, requiring one-on-one interactions with rural residents. The 

direct program’s lending peaked in the mid-1970s, but as we reported in 

2000, its budget levels declined and the use of guaranteed loans over 

direct loans increased.

Full-time equivalent staff at VA represent the total staff for all housing benefits programs in both 

headquarters and field offices.

45 Since then, the move away from labor-intensive 

direct loans to guaranteed loans has accelerated (see fig. 7). In 1999, 

RHS made about 15,800 Section 502 direct loans, down from the 1976 

peak of more than 133,000 loans. With the exception of increases in fiscal 

years 2009 and 2010 due to increased funding from the American 

Recovery and Investment Act of 2009, the trend has continued.46 In 

contrast, RHS single-family guaranteed loans grew more than 200 

percent from fiscal years 1999 to 2011.

 

45GAO/RCED-00-241. 

46Pub. L. No. 111-5, 123 Stat.115.
Page 31 GAO-12-554 Housing Assistance

Figure 7: Number of New RHS Direct and Guaranteed Single-Family Loans, 1961-2011

Partly due to the decrease in direct loans, RHS substantially has reduced 

the size of its field structure in terms of offices and staff. In 2000, we 

reported that about 6,500 employees administered rural development 

programs (which include RHS) through USDA headquarters offices, 47 

state headquarters offices, 815 area and local offices, and the centralized 

servicing center in St. Louis. The number of area and local field offices 

dropped to about 480 in 2011, a 41 percent reduction from 2000. The 

Administration has proposed cutting an additional 43 field offices in fiscal 

year 2012. In 2012, following the implementation of early-out and buy-out 

authority, the number of rural development staff had dropped to about 

5,350, an 18 percent reduction from 2000.

For tax expenditures, the deductions for mortgage interest and property 

taxes resemble entitlement programs in that they typically make funds 

available to all qualified claimants (through reduced taxes), regardless of 

how many claim the deductions, how much they claim collectively, or how 

much these claims reduce federal revenue. Because these are tax 

expenditures, IRS is responsible for enforcing the deduction rules and 

providing guidance to aid taxpayer compliance. Specifically, IRS matches 

mortgage interest information from lenders with taxpayer-reported 

amounts, conducts routine examinations by correspondence, undertakes 

special compliance projects for limited segments of taxpayers, and 
Page 32 GAO-12-554 Housing Assistance

conducts ongoing compliance studies based on random samples of 

returns.47 IRS examinations of the property tax deduction usually take 

place as part of a broader examination of inconsistent claims across an 

individual tax return. Whereas IRS receives mortgage interest information 

from lenders through statements known as information returns (Form 

1098), local governments are not required to provide information on 

property taxes paid.48

We reviewed nine fragmented multifamily programs administered by 

HUD, USDA, and Treasury (see table 6). Although they have overlapping 

broad purposes to fund multifamily housing, only HUD has a priority goal 

and strategic goal specific to multifamily housing. That is, HUD has a 

priority goal to preserve affordable rental housing and a strategic goal to 

meet the need for quality affordable rental homes. USDA does not have a 

specific priority goal related to multifamily housing but under its broad 

strategic goal of assisting rural communities has a performance measure 

to track the number of affordable rental opportunities. Treasury does not 

have any priority or strategic goals or performance measures that identify 

or track tax expenditures related to multifamily housing. Nonetheless, 

seven of the selected HUD, USDA, and Treasury programs have the 

shared purpose of financing the development of new rental units or 

preserving existing units through refinancing or rehabilitation.49

 

47GAO-09-769. 

48See GAO, Real Estate Tax Deduction: Taxpayers Face Challenges in Determining What 

Qualifies; Better Information Could Improve Compliance, GAO-09-521 (Washington, D.C.: 

May 13, 2009).

49HUD and USDA have additional tools specifically for preserving multifamily housing. 

HUD’s mark-to-market program is its principal tool for keeping low-income housing 

projects that were financed through HUD’s multifamily programs affordable by 

restructuring the loans while reducing the long-term costs of federal rental assistance and 

monthly mortgage payments. USDA’s Multifamily Housing Revitalization Demonstration 

Program allows restructuring of RHS Section 514, 515, and 516 loans and provides grants 

to extend the affordable use of the projects without displacing tenants due to increased 

rent costs. Additionally, HUD and USDA (RHS) offer rental assistance vouchers to 

households living in properties whose owners have opted out of the multifamily programs.

Multifamily Housing 

Programs Have Similar 

Purposes but Many 

Differences

Agency Goals
Page 33 GAO-12-554 Housing Assistance

Additionally, HUD and USDA administer project-based rental assistance 

programs, which provide rental subsidies to property owners that provide 

housing for low-income households.50

Table 6: Selected HUD, USDA, and Treasury Multifamily Programs and Related Goals, as of Fiscal Year 2012

Agency Program Related strategic goal

Selected programs that finance multifamily housing

HUD Supportive Housing for the Elderly (Section 

202) 

Meet the need for quality affordable rental 

homesa

Supportive Housing for Persons with 

Disabilities (Section 811) 

Mortgage Insurance for Rental and 

Cooperative Housing (Sections 221(d)(3) and 

(d)(4)) 

USDA Multifamily Direct Rural Rental Housing Loans 

(Section 515)

Assist rural communities to create prosperity 

so they are self-sustaining, repopulating, and 

economically thriving Farm Labor Housing Loans and Grants 

(Sections 514 and 516)

Rural Rental Housing Guaranteed Loans 

(Section 538)

Treasury Low-Income Housing Tax Credit (LIHTC) None

Selected programs that provide rental assistance 

USDA Rural Rental Assistance Payments (Section 

521)

Assist rural communities to create prosperity 

so they are self-sustaining, repopulating, and 

economically thriving

HUD Project-based rental assistance Meet the need for quality affordable rental 

homes

Source: GAO analysis of agency strategic and performance plans.

a

a

The seven selected financing programs administered by HUD, USDA, 

and Treasury provide financial incentives to private entities to develop or 

rehabilitate multifamily housing for lower-income households. These 

programs offer various types of assistance to housing developers, 

A related agency priority goal is to preserve affordable rental housing, as identified in HUD’s fiscal 

year 2012-2013 Annual Performance Plan.

 

50HUD operates a variety of project-based rental assistance programs through which it 

pays subsidies to private owners of multifamily housing. These subsidies are generally 

paid through contracts under Sections 202 and 811, project-based Section 8, Section 236 

Rental Assistance Payment, and the Rent Supplement programs. For the purposes of this 

report, the “project-based rental assistance” program encompasses all these contracts. 

Agency Products
Page 34 GAO-12-554 Housing Assistance

including direct loans, capital advances, tax credits, and guaranteed 

loans.

The five programs described in table 7 differ in terms of tenant and 

geographic eligibility. For example, tenant income limits are at the very 

low-income threshold for HUD capital advances, $5,500 above the lowincome threshold for USDA direct loans, and range from 50 to 60 percent 

of AMI for Treasury’s LIHTC program. Furthermore, three of the five 

programs target specific populations. HUD has a program open only to

tenants age 62 or older and a program open only to tenants with 

disabilities. USDA’s Farm Labor Housing program is limited to tenants 

with a certain amount of income from farming or processing industries. In 

terms of geographic eligibility, the USDA Multifamily Direct Rural Rental 

Housing Loan program is limited to eligible rural areas. The HUD 

programs, the LIHTC program, and USDA’s Farm Labor Housing 

programs are available nationwide. For the LIHTC program, each state 

receives its tax credit allocation based on population. The state HFA, 

which is responsible for administering the program, may set geographic 

and other preferences in its allocation plan for competitively awarding tax 

credits to developers. However, all five financing programs require that 

properties remain limited to specified income populations for an extended 

period (generally 30 years or more). 
Page 35 GAO-12-554 Housing Assistance

Table 7: Comparison of Selected HUD, USDA, and Treasury Programs That Finance Multifamily Housing 

Agency Program name

Type of 

assistance Income eligibility

Targeted 

population

Location 

requirement Terms and restrictions

HUD Supportive 

Housing for the 

Elderly (Section 

202) 

Capital 

advance

Very low-income a 62 years or 

older

At least 15 

percent of funds 

must be used in 

nonmetropolitan 

areas

Interest-free advance

Housing must remain 

available to eligible 

population for at least 40 

years or advance must be 

repaid

Supportive 

Housing for 

Persons with 

Disabilities 

(Section 811) 

Capital 

advance

Very low-income a Persons with 

disability only

No Interest-free advance

Housing must remain 

available to eligible 

population for at least 40 

years or advance must be 

repaid

USDA Multifamily 

Direct Rural 

Rental Housing 

Loans (Section 

515)

Direct loan Capped at $5,500 

above the lowincome level

None Eligible rural area Interest as low as 1 

percent

Term up to 30 years

Amortized up to 50 years

Housing must remain 

available to eligible 

population for the term of 

the loan, unless 

prepayment of loan is 

allowed, which may 

remove requirements on 

tenants’ income eligibilityb

Farm Labor 

Housing Loans 

and Grants 

(Sections 514 

and 516)

Direct loan or 

grant

Capped at $5,500 

above the lowincome level

c Persons 

employed in 

farm labor or 

processing 

industries, and 

farm labor 

retirees 

Section 514 and 

516 assistance 

may be used for 

off-farm housing

On-farm housing 

may receive only 

Section 514 

assistance

Interest as low as 1 

percent

For farm labor housing 

loans, term and 

amortization up to 33 

years

For Section 514 loans, 

housing must remain 

available to eligible 

population for the term of 

the loan; for Section 516 

grants, for 50 years
Page 36 GAO-12-554 Housing Assistance

Agency Program name

Type of 

assistance Income eligibility

Targeted 

population

Location 

requirement Terms and restrictions

Treasury Low-Income 

Housing Tax 

Credit

Tax credit Properties must set 

aside either 20 

percent or more of 

units for households 

with incomes at or 

below 50 percent of 

AMI or 40 percent or 

more of units for 

households at or 

below 60 percent of 

AMI

Annual tenant rents 

are limited to a 

maximum of 30 

percent of either the 

50 or 60 percent of 

AMI limits selected 

for the property

None No Housing must remain 

available to eligible 

population for at least 30

years 

Source: GAO analysis of agency documentation.

a

Section 202 and 811 programs also provide rental assistance payments for all or some of the units in 

a property.

b

In those instances in which prepayment is allowed (generally, older projects), the period for which 

housing must remain available for targeted populations depends on several factors, including the 

owner’s acceptance or rejection of USDA incentive offers to preserve the property for the targeted 

populations.

c

The selected HUD and USDA guaranteed loans, which also can be used 

to develop or rehabilitate multifamily housing, exhibit some overlap in 

general terms and conditions (see table 8). Both programs guarantee 40-

year, fixed-rate loans; limit the dollar amount that can be borrowed for 

each unit; and designate maximum property values that can be financed. 

Both RHS and FHA charge an annual fee for loans, and RHS also 

charges an up-front fee. The insurance coverage is the same or nearly 

the same, with both FHA’s 221(d)(4) and RHS’s 538 loan guarantee 

programs covering 90 percent of lender or other mortgage holder losses. 

However, these guarantee programs differ in property and tenant 

eligibility requirements. FHA-guaranteed loans can be used for any 

property nationwide and have no tenant income limits, while RHS loan 

guarantees are limited to rental properties in eligible rural areas that serve 

moderate-income tenants. Nonetheless, more than half of the properties 

financed under the FHA-guaranteed loan program also receive payments 

through HUD’s rental assistance programs and therefore are subject to 

certain rental assistance affordability rules.

Assistance under Section 514 constitutes direct loans and under Section 516, grants.
Page 37 GAO-12-554 Housing Assistance

Table 8: Comparison of Selected HUD and USDA Multifamily Guaranteed Loan Programs 

Agency and 

program Eligibility, terms, and restrictions

HUD – Mortgage 

Insurance for Rental 

and Cooperative 

Housing (Sections 

221(d)(3) and (d)(4))

Eligibility (tenant income, 

location)

• No limit on tenant income, but more than half of the properties are 

subject to income limitations because they also receive HUD projectbased rental assistance

• No limit on location

Loan terms • Maximum 40 years

• Amortization up to 40 years

• Must be fixed-interest

• Requires compliance with wage standards under the Davis-Bacon Acta 

Guarantee • Nonprofit sponsors or cooperatives using 221 (d)(3) - up to 100 percent 

of losses

• Profit-motivated and all other sponsors using 221 (d)(4) - up to 90 

percent of losses

Up-front fee • 0 percent

Annual fee • 0.45 percent for 221 (d)(3) loans in conjunction with LIHTC

• 0.8 percent for all other 221 (d)(3) loans

• 0.45 percent for all 221 (d)(4) loans

Loan limits per unit • Nonprofit sponsors or cooperatives using 221 (d)(3) - $60,632 b

• Profit-motivated and all other sponsors using 221 (d)(4) - $53,720

Loan-to-value limit • From 83.3 to 95 percent

USDA - Rural Rental 

Housing Guaranteed 

Loans (Section 538)

Eligibility (tenant income, 

location)

• Tenant income at move-in may not exceed 115 percent of AMI, no 

further verification of income required

• Average rents, including tenant-paid utilities, cannot exceed 30 percent 

of 100 percent of AMI, and no single unit can exceed 30 percent of 115 

percent of AMI.

• Property must be in an eligible rural area

Loan terms • Minimum - 25 years, maximum - 40 years

• Amortization up to 40 years

• Must be fixed-interest

• Does not require compliance with wage standards under the DavisBacon Acta

Guarantee • Up to 90 percent of lossesc

Up-front fee • 1.0 percentd

Annual fee • 0.5 percent

Loan limits per unit • $52,676 b

Loan-to-value limit • For-profit borrowers - 90 percent of the lesser of the total development 

cost or property value

• For nonprofit or public borrowers - 97 percent of the lesser of total 

development cost or appraised value

Source: GAO analysis of agency documentation.
Page 38 GAO-12-554 Housing Assistance

a

The Davis-Bacon Act requires that all laborers and mechanics employed by contractors and 

subcontractors must be paid at least the prevailing wage rate, including fringe benefits, in the local 

area in which they are employed, as determined by the Secretary of Labor. In addition, contractors 

are required to pay these workers weekly and submit weekly certified payroll records to the 

contracting or administering agency. 40 U.S.C. 3141-3144, 3146-3148. 

b

Loan limits vary by size of the unit, the type of structure, and the location of the project. Values listed 

are for one-bedroom units in nonelevator buildings.

c

The guarantee amount, up to 90 percent of the loan amount, is negotiated between the lender and 

USDA.

d

Most of these seven programs share a common purpose—to finance the 

development or rehabilitation of multifamily housing—and may be 

combined with other federal sources of funding, state and local 

government funding, and private financing.

One percent of total loan amount multiplied by the percent of the guarantee.

51 HUD, USDA, and industry 

experts have noted that combining funds from multiple multifamily 

housing programs generally has been useful in making sufficient 

financing available to develop rental housing. As a result, agencies 

encourage developers to obtain financing from multiple programs. For 

example, USDA direct and guaranteed multifamily loan programs give 

priority in project selection to applicants that demonstrate the intention to 

also use other funding sources, such as LIHTCs or housing and 

economic development programs administered by HUD. Similarly, the 

LIHTC program is often combined with other funding sources for 

multifamily housing development. For example, the California Tax Credit 

Allocation Commission gives priority to LIHTC project applications that 

have a funding commitment of at least $1 million from either USDA’s 

Farm Labor Housing loan (Section 514) or grant (Section 516) program. 

According to the National Council for State Housing Agencies, nearly all 

state HFAs reported combining LIHTCs with other federal subsidies in 

2009.52

 

51While leveraging can be broadly defined as combining multiple sources of funds (such 

as federal, state, local, or private funds), it is also defined as using one source of funds to 

attract additional sources of funds. For example, a low-income housing development in 

which the federal government’s initial investment attracted, or was the impetus for, 

additional private or other investment could be seen as a project that involved leveraging. 

See GAO, Leveraging Federal Funds for Housing, Community, and Economic 

Development, GAO-07-768R (Washington, D.C.: May 25, 2007).

52National Council of State Housing Agencies, State HFA Factbook: 2009 NCSHA Annual 

Survey Results (Washington, D.C.: 2011).
Page 39 GAO-12-554 Housing Assistance

To guard against the potential for duplication or oversubsidization, 

projects financed through multiple federal programs are subject to certain 

requirements. For example, under LIHTC, projects receiving other federal 

subsidies receive less in tax credits than projects not otherwise 

subsidized by the federal government. Additionally, developers of 

affordable housing awarded multiple sources of public funding often must

undergo multiple subsidy layering reviews, which are a statutory 

requirement to assure that federal resources are neither duplicative or 

wasteful when applied to affordable rental housing. However, combining 

financing from fragmented programs has created some inconsistencies 

and overlapping administrative requirements that can cause unnecessary 

complexity and cost. For instance, the multiple subsidy layering reviews 

can cause delays and add costs to projects that are preparing to start 

construction. As discussed in the next section of this report, the White 

House’s Domestic Policy Council established the Rental Policy Working 

Group in early 2010 to respond to the need for better coordination and 

alignment of the various rental housing programs to reduce burden on 

program participants.

The final two multifamily programs we compared are project-based rental 

assistance programs at HUD and USDA (see table 6). Both rental 

assistance programs pay rental subsidies to property owners through 

contracts, limiting tenants’ rent payments to 30 percent of adjusted 

income, and limiting eligibility to tenants with incomes not exceeding 80 

percent of AMI.53 USDA’s Section 521 rental assistance contracts are 

only with owners of properties financed with USDA’s Section 515 direct 

loans or off-farm labor housing properties financed with Sections 514 or 

516. HUD’s current project-based rental assistance contracts are only 

with owners of properties developed and rehabilitated through various 

HUD multifamily programs, USDA’s Section 515 program, state financing 

programs, and the LIHTC program. Expansion of HUD’s project-based 

rental assistance program is currently limited to properties receiving 

financing through Section 202 and 811 programs; however, property 

owners can continue to receive rental assistance as long as they fulfill 

program requirements and renew their contracts.

 

53As we have seen, some contracts may limit eligibility to tenants with incomes not 

exceeding 50 percent of AMI, such as those associated with properties financed with 

Sections 202 and 811.
Page 40 GAO-12-554 Housing Assistance

Multifamily properties financed with the selected USDA direct and 

guaranteed loan programs were more concentrated in rural areas, while 

properties financed with capital advances and guaranteed loans through 

the selected HUD programs and tax credits under the LIHTC program 

were concentrated primarily in urban and suburban areas. We compared 

the locations of all properties financed through the selected HUD, USDA, 

and Treasury programs using the USDA (Economic Research Service) 

categorization of zip codes—urban, suburban, small town rural, and 

isolated rural (see fig. 8). Seventy-one percent of the properties financed 

with the selected USDA financing programs were located in rural zip code 

types, which include small town rural and isolated rural.54 Meanwhile, 25 

percent of properties financed with the selected HUD programs and the 

LIHTC program were in rural zip codes. In examining the number of 

properties in rural areas that were financed with these programs, we 

found that USDA financed a greater number with its Section 515 direct 

loans, than the selected HUD programs or the LIHTC program. As 

described earlier, these financing programs can be combined, so 

properties financed with any of these programs also may have received 

financing through other programs. Therefore, the number of properties 

and units in figures 8 and 9 should not be summed. Additionally, this 

analysis represents only selected HUD programs that finance the 

development or rehabilitation of multifamily properties; HUD administers a 

number of other financing programs that support multifamily housing.55

 

54USDA did not provide unit-level data on grants made under Section 516; therefore, none 

of the properties or units financed by these grants are included in the geographic analysis. 

55Other HUD financing programs also support multifamily housing, such as Risk Sharing 

Programs, Qualified Participating Entities (Section 542(b)), and Housing Finance Authority 

Risk Sharing (Section 542(c)). See e-supplement (GAO-12-555SP) for descriptions of 

programs. 

Geographic Areas Served
Page 41 GAO-12-554 Housing Assistance

Figure 8: Percent, Number, and Location of Selected Multifamily Properties

Note: Data on HUD programs are as of February 2012. Data on USDA programs are as of May 2012. 

Data on LIHTC projects are for projects placed in service from 1998 to 2007.

The average size of the properties varied, depending on the program and 

the location of the property. Properties in more rural areas contained a 
Page 42 GAO-12-554 Housing Assistance

smaller number of units. For example, in urban zip codes, properties 

financed with HUD’s Section 221(d)(3) and (d)(4) guaranteed loans 

contained an average of 135 units. However, HUD properties in the 

isolated rural zip codes were significantly smaller, with an average of 55 

units. Similarly, for LIHTC projects, the average number of units per 

project was 94 in urban zip codes and 34 in the isolated rural zip codes. 

Meanwhile, properties financed with USDA’s programs generally were 

smaller, regardless of location, than those financed with the selected 

HUD programs or the LIHTC program. Properties financed with USDA’s 

Section 515 direct loans contained an average of 41 units in urban zip 

codes and an average of 25 units in isolated rural zip codes.

Although the average number of units in properties varied, with USDA 

properties having the smallest number of units, data show that USDA’s 

support was stronger in rural areas (see fig. 9). About 70 percent of all the 

units financed with the selected USDA properties were in rural zip codes, 

while 15 and 14 percent of units financed by the selected HUD programs 

and the LIHTC program, respectively, were in these areas.56

 

56We also conducted a geographic analysis of HUD, USDA, and LIHTC data and 

distinguished four types of counties—metropolitan, urbanized nonmetropolitan, rural 

nonmetropolitan, and completely rural nonmetropolitan—using another classification 

scheme from the Economic Research Service (rural-urban continuum codes). Similarly, 

our analysis found that USDA funded more properties and units with the selected USDA 

programs in the three nonmetropolitan county types than the selected HUD programs and 

the LIHTC program.
Page 43 GAO-12-554 Housing Assistance

Figure 9: Percent, Number, and Location of Units in Selected Multifamily Properties

Note: Data on HUD programs are as of February 2012. Data on USDA programs are as of May 2012. 

Data on LIHTC projects are for projects placed in service from 1998 to 2007.

Figure 10 shows that a large share—69 percent—of units receiving rental 

assistance through USDA’s Section 521 were also in rural zip code types 
Page 44 GAO-12-554 Housing Assistance

(small town rural and isolated rural), while a smaller share—18 percent—

of units receiving HUD project-based rental assistance were in rural zip 

codes. 57 However, HUD-assisted units were more prevalent in rural zip 

codes than USDA-assisted units. While USDA provided rental assistance 

to 176,957 units in rural zip codes, HUD provided assistance to 235,828

units in rural zip codes.58

Figure 10: Percent, Number, and Location of Selected Rental Assistance Units

Note: Data on HUD programs are as of February 2012. Data on USDA programs are as of May 2012.

 

57According to USDA officials, properties would not receive rental assistance through both 

USDA’s and HUD’s project-based rental assistance programs. However, properties 

financed with USDA’s multifamily mortgage direct loans may receive rental assistance 

through HUD.

58We also conducted a geographic analysis of data on project-based rental assistance at 

HUD and USDA and distinguished four types of counties—metropolitan, urbanized 

nonmetropolitan, rural nonmetropolitan, and completely rural nonmetropolitan—using 

another classification scheme (rural-urban continuum codes) from the Economic Research 

Service. Similarly, our analysis found a larger share of units assisted with USDA’s Section 

521 in the three nonmetropolitan county types than units assisted with HUD’s projectbased rental assistance. However, HUD assisted a larger number of units in these county 

types than USDA.
Page 45 GAO-12-554 Housing Assistance

The extent of overlap in delivery structures also varied, depending in part 

on what products or tools the programs used to support or finance 

multifamily housing. The six HUD and USDA multifamily financing 

programs we reviewed had broadly similar delivery structures. For HUD’s 

capital advances (Sections 202 and 811) and USDA’s direct loans and 

grants (Section 515 and Sections 514 and 516), nonprofit and certain forprofit organizations submit funding requests in response to a notice of 

funding availability.59

Treasury’s LIHTC program is jointly administered by IRS and the state 

HFAs. The credit is an indirect federal financing source and resembles a 

grant program in that state HFAs are responsible for allocating the credit 

on a competitive basis to owners of qualified low-income rental projects. 

Owners, typically partnerships, obtain equity to fund the project through 

capital contributions. In exchange for the capital contributions, investors 

receive a partnership interest entitling them to claim the tax credits and 

HUD’s and USDA’s national, regional, and field 

offices share responsibility for the processing, reviewing, and approval of 

funding applications. Additionally, field office staff generally oversee and 

monitor the properties. For HUD- and USDA-guaranteed loans, 

developers of rental housing obtain loans through approved lenders; 

however, the lender approval and loan application processes differ. FHA 

has a process to approve lenders for the Sections 221(d)(3) and (d)(4) 

multifamily loan guarantees. As of June 2012, FHA had approved 88 

lenders to participate in its Multifamily Accelerated Processing program 

for several of its multifamily loan programs, including Section 221(d)(3) 

and (d)(4). Through the accelerated program, lenders submit applications 

for FHA-guaranteed loans to HUD’s multifamily field offices, which make 

eligibility determinations for the borrowers and the properties being 

financed. If eligibility requirements are met, the lender underwrites the 

loan and submits an agreement to the field office for approval and loan 

closing. In contrast, RHS allows lenders approved by FHA and other 

government entities to participate in its Section 538 guaranteed loan 

program (Rural Rental Housing). Lenders submit applications for RHSguaranteed loans to USDA field offices in response to the notice of 

funding availability, and staff select proposals based on eligibility 

requirements and scoring criteria. USDA field offices then process 

applications and review the lenders’ underwriting, and lenders finalize 

approved loans.

 

59For-profit organizations must have a limited profit partnership.

Delivery Structures
Page 46 GAO-12-554 Housing Assistance

other tax benefits associated with ownership in the project to offset 

federal income taxes. Once the project is placed in service, the partners 

can claim the annual credit for 10 years. HFAs monitor the projects for 

compliance with federal LIHTC requirements for household income, rents, 

and project habitability. IRS is responsible for issuing regulations on HFA 

compliance with monitoring requirements and taking steps to ensure that 

HFAs allocate no more credit than they were authorized and that 

taxpayers claim no more in LIHTCs than they are eligible to claim.60

The selected project-based rental assistance programs at HUD and 

USDA are similar in that they provide direct payments to rental property 

owners on behalf of tenants for a designated number of units. At HUD 

and USDA, the payments are subject to contracts with property owners, 

generally for 1 year. Under both programs, rental property owners have 

certain responsibilities for ensuring that households meet program 

eligibility requirements and for calculating households’ payments. 

However, the programs differ in contract administration. Most of HUD’s 

contracts with rental property owners are managed through performancebased contract administrators—typically, public housing authorities or 

state HFAs—that are responsible for overseeing, monitoring, and 

processing rental assistance payments.

Noncompliance with federal LIHTC requirements in the first 15 years may 

result in IRS denying claims for the credit in the current year or 

recapturing funds for the credit claimed in prior years. HFAs are also 

responsible for overseeing compliance over the entire LIHTC extended 

use period, which is at least 30 years. Noncompliance after the 15-year 

LIHTC compliance period is not reported to IRS, but may result in action 

under state or local law.

In contrast, USDA’s national, state, and local offices share responsibility 

for monitoring contracts and processing rental assistance payments. 

Further, both HUD and USDA’s rental assistance programs must review 

their programs annually to identify and reduce significant improper 

payments; however, their methods differ. For example, HUD uses an 

automated system that matches income and wage data from the 

Department of Health and Human Services and the Social Security 

Administration with information reported by the tenants to help verify that 

 

60Although not an administering agency, HUD collects data from state HFAs and 

maintains a database of LIHTC property-level data.
Page 47 GAO-12-554 Housing Assistance

tenants are accurately disclosing all income sources and amounts to 

property owners and housing agencies. However, USDA does not use 

such a system. According to USDA officials, they do not have the 

authority to access such information from the other agencies. We 

previously suggested that Congress grant RHS authority to access data 

from the Department of Health and Human Services. Recently, we 

restated that suggestion and recommended that RHS develop proposed 

legislation that, if enacted, would give RHS access to Social Security 

Administration data.61

As we have seen, HUD and USDA administer their multifamily financing 

and rental assistance programs through staff located in their 

headquarters and field offices. The HUD multifamily programs we 

reviewed are administered mostly through staff located in HUD’s 51 field 

offices. According to USDA, it administers the selected multifamily direct 

loan programs through staff in 362 state and local field offices and the 

multifamily guaranteed loan program through staff in 83 state and local 

field offices.

RHS has proposed similar legislation as part of the 

fiscal year 2013 budget.

In addition to the staff needed to administer its multifamily housing 

financing and rental assistance programs, HUD and USDA must utilize 

information technology in administering these programs. For example, 

HUD and USDA maintain separate databases that track similar 

information on compliance status for all their subsidized properties. 

Specifically, HUD and USDA track financial, physical, and management 

compliance information for properties that are financed through their 

programs. Also, HUD and USDA maintain databases that track payment 

information for agency-guaranteed loans and rental assistance under 

project-based rental assistance contracts.

 

61See GAO, Rural Housing Service: Updated Guidance and Additional Monitoring Needed 

for Rental Assistance Distribution Process, GAO-04-937 (Washington, D.C.: Sept. 13, 

2004); and GAO-12-624. 
Page 48 GAO-12-554 Housing Assistance

HUD, USDA, VA, and Treasury have collaborated on efforts in their 

housing programs, but opportunities exist to improve collaboration and 

effectiveness. Specifically, the Single Family Housing Task Force has not 

yet developed a formal approach to help guide its collaboration efforts. 

And, although the Rental Policy Working Group has followed best 

practices and increased collaboration on selected multifamily rental 

housing programs, its efforts have not been as effective as possible. 

Consolidation or increased coordination of some programs and activities 

could be beneficial, but also entails significant challenges and 

implications that we discuss below.

As of April 2012, a number of federal efforts to coordinate housing 

programs were at various stages of implementation, including a task force 

established to evaluate the potential for coordinating or consolidating 

single-family loan programs.62 Overall, the task force’s efforts have not 

incorporated key principles on effective collaboration. In February 2011, 

the Administration reported to Congress that it would establish a task 

force to evaluate the potential for coordinating or consolidating the singlefamily loan programs at HUD, USDA, and VA.63

We have reported that federal agencies often face a range of barriers 

when they attempt to collaborate with other agencies, including missions 

The members of the task 

force include senior-level officials from each of the three agencies and

OMB officials. According to the officials, besides naming members, no 

dedicated funding or other resources had been devoted to the task force 

as of April 2012.

 

62In another example, the President signed an Executive Order on June 9, 2011, 

establishing the White House Rural Council. The council was established in part to 

coordinate the Administration’s efforts in rural America to (1) streamline and improve the 

effectiveness of programs serving rural America; (2) engage stakeholders on issues and 

solutions in rural communities; and (3) promote and coordinate private-sector 

partnerships. The council consists of department and agency heads from 25 federal 

entities, including the Secretary of Agriculture who serves as chairman. Since the council’s 

establishment, members hosted nearly 200 roundtable discussions in rural communities. 

The council also issued a report, “White House Rural Council Feedback from Rural 

America,” which provides an overview of what was learned during visits to rural parts of 

the country. According to the Rural Council’s chairman, the council is expected to 

ultimately address the issues identified in its report. 

63The task force stems from the Administration’s plan for reforming the government’s role 

in housing finance, and is discussed in a report to Congress, “Reforming America’s 

Housing Finance Market,” released in February 2011.

Opportunities Exist to 

Improve 

Collaboration and 

Effectiveness but 

Would Involve Tradeoffs

No Formal Approach to 

Guide Single-Family 

Collaboration Efforts
Page 49 GAO-12-554 Housing Assistance

and goals that are not mutually reinforcing, concerns about controlling 

jurisdiction over missions and resources, and incompatible procedures, 

processes, data, and computer systems. In an October 2005 report, we 

identified eight key practices that can help enhance and sustain 

collaboration among federal agencies. The key practices are (1) define 

and articulate a common outcome; (2) establish mutually reinforcing or 

joint strategies; (3) identify and address needs by leveraging resources; 

(4) agree on agency roles and responsibilities; (5) establish compatible 

policies; (6) develop mechanisms to monitor, evaluate, and report on 

results; (7) reinforce agency accountability for collaborative efforts 

through agency plans and reports; and (8) reinforce individual 

accountability for collaborative efforts through performance management 

systems.64

In comparing the single-family task force’s efforts with key collaboration 

practices, we found that the agencies have not taken steps that are 

consistent with the practices. For example, other than the announcement 

of the task force, member agencies said that they had yet to identify goals 

or expected outcomes, and could not provide strategies each agency 

might utilize. The task force can benefit from identifying and agreeing on 

goals, and evaluating the goals against realistic expectations of how to 

achieve them. The task force also has not yet identified resources needed 

to accomplish its goals; agreed on roles or responsibilities; taken steps to 

establish compatible policies, procedures or other means to operate; or 

made clear how they would be made accountable for collaborative efforts 

and report on results. In addition to our key practices, the Government 

Performance and Results Act Modernization Act of 2010 (GPRAMA), 

establishes a new framework for agencies to improve government 

While these practices can facilitate greater collaboration, we 

recognize that other practices also may do so. Furthermore, the specific 

ways in which agencies implement these practices may differ in the 

context of the specific collaboration challenges agencies face. For 

example, joint activities can range from occasional meetings between 

employees in which the roles and responsibilities of the respective 

agencies are reaffirmed, to more structured task teams operating over a 

period of time. But absent effective collaboration, routine interagency 

meetings could result in limited information being communicated and few 

joint agreements reached or implemented.

 

64See GAO, Results-Oriented Government: Practices That Can Help Enhance and 

Sustain Collaboration among Federal Agencies, GAO-06-15 (Washington, D.C.: Oct. 21, 

2005). 
Page 50 GAO-12-554 Housing Assistance

performance by taking a more crosscutting and integrated approach to 

key issues.65

According to HUD and OMB officials, aside from the biweekly meetings, a 

benchmarking effort associated with the single-family task force recently 

was established. Specifically, OMB will collect and analyze data on direct 

and guaranteed housing loan programs as a way to develop greater 

insight into best practices, potential overlap, and synergies among the 

housing programs. According to HUD, as of April 2012, no milestones or 

resource estimates were available for the task force and no results were 

expected until a more formal approach for the task force was established. 

Additionally, agency officials stated that no further collaborative efforts 

among single-family housing programs were planned. OMB and HUD 

officials stated that over the past few years, agency attention has been 

focused on trying to improve the overall condition of the housing market, 

making it difficult to turn attention to interagency efforts for program 

coordination or consolidation. HUD officials also noted that the ongoing 

housing crisis has been a complicating factor in addressing the broader 

issue of housing finance reform, and mostly has overshadowed the issue.

GPRAMA requirements could lead to improved coordination 

and collaboration among agencies. For instance, GPRAMA requires each 

agency to identify the organizations and program activities—both internal 

and external to the agency—that contribute to each agency’s goals. 

However, according to HUD and USDA officials, much of the single-family 

task force’s efforts to date have been informal. For instance, the officials 

noted that senior agency officials met biweekly in teleconferences to 

share information and best practices on housing policy and programs and 

discussed current economic issues affecting the housing market and 

ways to streamline the housing programs in a coordinated manner.

Nonetheless, in addition to focusing on the ongoing housing crisis and the 

level of government support for the housing market, it is also important to 

focus some attention on the way that government support for housing is 

delivered and strike the appropriate balance between these issues. The 

task force was established to explore ways in which programs can be 

better coordinated or consolidated to serve homeowners more effectively. 

Part of that analysis is the assessment of coordination and consolidation 

of HUD, USDA, and VA programs. By incorporating key practices on 

 

65Pub. L. No. 111-352, 124 Stat. 3866 (2011). GPRAMA amends the Government 

Performance and Results Act of 1993, Pub. L. No. 103-62, 107 Stat. 285 (1993).
Page 51 GAO-12-554 Housing Assistance

collaboration and developing a more formal approach for the single-family 

task force, HUD, USDA, VA, and OMB can evaluate the potential for 

coordinating or consolidating single-family loan programs, and possibly 

generate savings and efficiencies while better serving homeowners. They 

also may be able to help drive further collaboration, establish 

complementary goals and strategies for achieving results, and increase 

transparency (by reporting on their collaborative efforts). As the task force 

moves forward, developing a formal approach for the task force’s 

collaborative efforts could help the agencies establish the guidance and 

direction needed to systematically bring about a productive working 

relationship and further help improve single-family loan programs.

HUD, USDA, and Treasury officials have been working to align the 

requirements of some multifamily housing programs through the Rental 

Policy Working Group. Although the efforts of the working group have 

been consistent with a majority of our key practices, the group has yet to 

take additional steps to reinforce agency accountability for collaborative 

efforts.

In response to the need for better-coordinated multifamily housing policy, 

in July 2010 the White House’s Domestic Policy Council established the 

interagency Rental Policy Working Group. The working group consists of 

the White House Domestic Policy Council, National Economic Council, 

OMB, HUD, USDA, and Treasury. The purpose of the working group is to 

better align rental requirements across programs, and thereby increase 

the effectiveness of federal rental policy and improve participant 

outcomes. According to working group documents, the group established 

guiding principles, which centered on administrative changes that could 

help respond to the concerns of external stakeholders (rental housing 

owners, developers, and managers, and state and local housing agency 

officials); required minimal statutory action; were realizable at little or no 

cost or through education, outreach, or the issuance of new guidance or 

rules; and helped create cost and time savings for all parties.

The working group solicited recommendations for improved rental policy 

coordination from external stakeholders. Within the working group, 

interagency teams considered the recommendations, reviewed current 

policies, and identified opportunities for greater federal alignment, 

increased overall programmatic efficiency, and reduced costs and 

regulatory burdens. Stakeholders have noted that inefficiencies can arise 

when a multifamily housing project has multiple layers of assistance (such 

as subsidies, tax expenditures, or mortgage insurance) from one or more 

Opportunities Exist to 

Increase Effectiveness of 

Multifamily Collaboration 

Efforts 
Page 52 GAO-12-554 Housing Assistance

federal agencies. To help address those inefficiencies, the working group 

identified 10 key areas or initiatives for alignment and further study, based 

on recommendations from rental housing owners, developers, and 

managers, and state and local officials (see table 9). Overall, the 

initiatives are aimed at reducing unnecessary program regulations, 

lessening administrative barriers so that developers and property owners 

more easily can participate in programs, reducing duplicative 

administrative actions to reduce costs for agencies and program 

participants, and increasing coordination to allow better targeting of 

agency resources.

Table 9: Rental Policy Working Group’s Alignment Initiatives, as of December 2011

Key initiative Issue Lead agency Proposed alignment

Physical inspections A property that has multiple federal funding 

sources may be subject to multiple physical 

inspections using multiple standards.

USDA

a

One periodic and regularly occurring federal 

physical inspection acceptable to all federal 

funding sources and the local and state 

agencies to which appropriate authority has 

been delegated.

Income reporting and 

definitions

Various federal programs to support 

affordable housing have slightly differing 

requirements for income certifications and 

require property managers and owners to 

submit information on different forms or 

through different processes, which may lead 

to inconsistencies in determinations of income 

and rents or administrative burden.

Treasury-IRS Increased education and outreach, 

development of a common form for tenant 

income certification, and promotion of a 

single (annual) recertification that would

allow owners to coordinate recertifications 

to satisfy the requirements of all programs 

at once. 

Financial reporting Properties with funding from different federal 

programs may have to submit duplicative 

financial statements and have multiple audits 

prepared according to different audit 

standards.

USDA (shortterm alignment), 

HUD (long-term 

alignment)

Modify existing requirements or exempt 

USDA and HUD jointly subsidized 

properties from certain requirements, and 

standardize financial reporting 

requirements. 

Common energyefficiency 

requirements

Federal programs that help produce and 

preserve rental housing vary widely in terms 

of their energy-efficiency requirements. 

HUD Adapt a new framework for addressing the 

complexity of energy-efficiency 

requirements that includes a common 

baseline or minimum standard that does not 

preclude programs from implementing more 

rigorous standards. The framework would 

be based on (1) new construction or gut 

rehabilitation with grants, (2) other new 

construction or gut rehabilitation, (3) 

substantial rehabilitation, (4) moderate or 

other rehabilitation, and (5) energy retrofits. 

Appraisal primer Federal law indirectly requires the use of the 

Uniform Standards of Professional Appraisal 

Practice as the basis for real estate appraisal 

work; however, federal and state housing 

agencies’ capabilities and methods for 

enforcement vary.

HUD Develop and publish a primer intended to 

be freely available (in print and on the web) 

and widely distributed, and promote this 

learning tool among agencies and industry 

participants.
Page 53 GAO-12-554 Housing Assistance

Key initiative Issue Lead agency Proposed alignment

Market study 

standards

There is no national standard of practice for 

market studies and no broadly acknowledged 

“keeper” of such standards.

HUD Coordinate USDA and HUD guidance on 

market studies. In addition, provide ongoing 

support and assistance to the National 

Council of Affordable Housing Market 

Analysts and other industry advocates, and 

promote market study literacy among 

housing and community development 

practitioners.

Subsidy layering 

review

The Housing and Economic Recovery Act of 

2008 encouraged the federal government to 

standardize its subsidy layering review 

processes, but consistency is still lacking. 

USDA Agree on a standard set of subsidy layering 

data and collect the data in a standard 

format. Additionally, establish a process 

and timeline to immediately share data and 

findings among all state and federal 

entities. 

Capital needs 

assessment

Federal agencies and programs currently 

have different requirements for what 

constitutes a valid capital needs assessment.

HUD The participating federal agencies will direct 

and procure the development and 

implementation of a new, single template 

tool for federal and state agencies that 

administer rental housing program funds 

that require capital need assessments.

Data sharing on 

owner defaults 

New participants to most HUD and USDA 

multifamily program must disclose information 

on any instances of prior noncompliance with 

agency requirements, including defaults, 

debarments, and results of physical 

inspections and management reviews. While 

an automated system is used to track this 

information, only HUD staff have direct 

access to the system. 

HUD Grant USDA access to HUD’s database 

and include USDA’s compliance information 

in the database. 

Fair housing 

compliance 

enforcement

In 1997, HUD and USDA signed a 

memorandum of understanding (MOU) to 

cooperate formally in the processing of USDA 

civil rights cases, joint investigations of civil 

rights issues, sharing of documents, the 

conciliation or informal resolution of cases, 

and the development of sanctions. In 2000, 

Treasury, HUD, and the Attorney General of 

the United States signed a Fair Housing Act 

MOU to improve Fair Housing Act 

enforcement, educational outreach, and IRS 

agency guidance addressing significant civil 

rights concerns in the LIHTC program. 

HUD Renew and follow more closely the existing 

Fair Housing MOUs from 1997 and 2000 

that largely have not been followed and 

remain dormant. 

Source: White House Rental Policy Working Group December 2011 Report.

a

This refers to all multifamily rental properties that receive a combination of federal assistance (such 

as low-interest loans, loan guarantees, grants, or tax credits) and state and local assistance.
Page 54 GAO-12-554 Housing Assistance

For two initiatives, HUD, USDA, and other federal and state housing 

agencies have pilot programs under way in several states to test the 

alignment activities before national implementation.66

In comparing the Rental Working Group’s efforts against the key practices 

that we previously identified to help agencies effectively collaborate, we 

found that HUD, USDA, and Treasury have taken steps that are 

consistent with a majority of the practices. In particular, the agencies, 

through the Rental Policy Working Group,

Specifically, two 

pilots will assess the feasibility of the proposed changes to physical 

inspections and subsidy layering reviews and identify steps for better 

coordination and information-sharing for potential replication on a national 

scale. As of April 2012, the participating state HFAs and federal agencies 

had signed memorandums of understanding (MOU) detailing roles and 

responsibilities. The working group plans to develop recommendations 

from the pilot findings.

• defined and articulated a common outcome;

• established mutually reinforcing or joint strategies in soliciting 

suggestions from federal, state, local, and private officials;

• allocated resources and identified key initiatives, including estimating 

the resources and time frames necessary for implementation;

• agreed on roles and responsibilities, including designating a 

responsible lead office and participating offices to help implement the 

alignment activities; 

• established compatible policies and procedures and collected and 

analyzed information that led to the prioritization and development of 

the recommendations for rental policy alignment;

 

66States participating in the pilot assessing physical inspection alignment are Michigan, 

Minnesota, Ohio, Oregon, Washington and Wisconsin. States participating in the pilot 

assessing alignment of subsidy layering reviews are Michigan, Nevada, North Carolina, 

Ohio, Pennsylvania, South Carolina, and Wisconsin. 
Page 55 GAO-12-554 Housing Assistance

• developed mechanisms to monitor, evaluate, and report on their 

efforts, established milestones for alignment activities, and launched 

pilots to test some alignment activities; and

• used performance-management systems to strengthen individual 

accountability for results for some senior agency executives.

Finally, in some cases, the agencies used a more formal approach to 

collaboration, such as an MOU, to specify the roles and responsibilities of 

those involved in the alignment effort.

Although the efforts of the Rental Policy Working Group are consistent 

with the majority of our key practices, the working group has not yet taken 

additional steps to reinforce agency accountability for collaborative 

efforts. Methods to build accountability for collaborative efforts include 

documenting those efforts (and associated goals, strategies, roles and 

responsibilities, actions or measures to be taken, and timelines) in the 

agencies’ annual and strategic plans. Our review of the agencies’ recent 

annual and strategic plans found that none of the agencies in the working 

group had included their collaborative efforts. By not including their 

collaborative efforts in the plans, the agencies have not taken full 

advantage of opportunities to further build accountability for actions 

already taken, or underway. For example, they have missed opportunities 

to underscore the importance of their collaborative efforts agencywide.

Furthermore, the Rental Policy Working Group efforts did not include any 

plans to deal with statutory changes that could help increase overall 

programmatic efficiency and reduce costs and regulatory burdens once 

the administrative changes were implemented. To achieve more 

immediate results, the Working Group started with those actions that 

required no statutory action. However, the working group’s long-term 

collaborative efforts could be enhanced if it were to include areas beyond 

administrative changes. According to USDA and Treasury, the Working 

Group’s efforts helped inform proposals in the President’s fiscal year 

2013 budget (for legislative changes to the LIHTC program). By not 

expanding its guiding principles to include statutory changes, the 

agencies may miss additional opportunities to highlight those areas in 

which statutory action could help respond to additional stakeholder 

concerns and generate savings and efficiencies in housing programs.

Such information about statutory changes also could help to provide 

relevant and useful information to policy makers as they consider overall 

improvements to HUD, USDA, and Treasury housing programs.
Page 56 GAO-12-554 Housing Assistance

As we recommended in September 2005 and reiterated in March 2011, 

coordinated reviews of tax expenditures and related housing spending 

programs with similar goals could help assess the relative effectiveness 

of tax expenditures in terms of their benefits and costs, and help 

policymakers reduce overlap and inconsistencies and direct scarce 

resources to the most-effective or least-costly methods to deliver federal 

support. As of April 2012, OMB had not used its budget and performance 

review processes to systematically review tax expenditures and promote 

integrated reviews of related tax and spending programs. GPRAMA could 

serve as a vehicle for furthering interdepartmental coordination of housing 

programs, including tax expenditures. As noted previously, in February 

2012, the Administration announced 14 interim crosscutting policy areas, 

and some goals specifically identify tax expenditures as contributing 

activities.

The combination of the LIHTC program with other federal, state, or local 

funding sources helps underscore the importance of assessing the 

effectiveness, costs, and benefits of tax expenditures in relation to 

housing programs. In 2007, we reported that using federal funds to 

leverage nonfederal funds can be a useful tool for financing affordable 

housing and that public and private-sector officials generally regarded it 

favorably.67

For this report, we interviewed developers and industry representatives, 

who estimated that leveraging different funding sources and the 

associated requirements and the time needed to put together the multiple 

funding sources necessary to make projects feasible increased project 

costs. For example, one multifamily developer told us that it typically took 

from 3 to 4 years to begin construction and leveraging the various funding 

sources typically added 5-10 percent to project costs. He stressed that 

the biggest factor in extending project lengths was the time needed to 

secure multiple funding sources, navigate and comply with multiple 

requirements, and align funding cycles. He added that obtaining LIHTCs 

also can slow the process because a project might not receive credits one 

However, we also reported that leveraging at the project level 

can be challenging and inefficient, partly because federal, state, and local 

funding sources often have different application and other requirements 

and deadlines. As discussed previously, the Rental Policy Working Group 

was created in part to address these varying requirements.

 

67See GAO-07-768R. 

Coordinated Reviews of 

Housing Tax Expenditures 

and Related Programs 

Would Be Beneficial
Page 57 GAO-12-554 Housing Assistance

year or might require more than one year’s worth of credit allocations 

from the state before it was feasible.

The 2007 report also concluded that better information about combining 

multiple federal sources and amounts—from both tax and spending 

programs—for rental housing projects could be useful in identifying areas 

for agencies to coordinate program measurement. Although Treasury 

tracks taxpayer compliance with LIHTC program rules and HUD collects 

some information on a few other types of federal subsidy an LIHTC 

project might receive, neither agency collects leveraging data nor reports 

a leverage measure for the program. Basic financial information about the 

multiple sources and amounts—from tax and spending programs—a 

housing project received could be useful in identifying areas for agencies 

to coordinate in measuring performance for programs that have 

overlapping purposes. As we reported in 2008, while HUD and Treasury 

reported leverage measures that described the ratio of all other funds 

(federal, state, local, and private) compared with a specific program’s 

funds, alternative measures describing total federal investment provided 

considerably different results and could be of value to policymakers.68

To provide more accurate, relevant, and useful information to Congress 

and others, our 2008 report recommended that OMB provide guidance to 

help agencies determine how to calculate, describe, and use leverage 

measures in a manner consistent with their programs’ design; and 

reevaluate the use of such measures and disclose their relevance to 

program goals and in future performance reviews of housing programs. At 

the time, there was no agency-specific or government-wide guidance on 

what agencies should disclose about the leverage measures they 

reported or how to calculate them for specific programs. Although OMB 

has used leveraging as a program output measure in the past, as of April 

2012, OMB had not taken action to issue guidance for agencies 

calculating leverage measures. Better measures of the total federal 

support and mix of funding would be helpful in better understanding how 

tax expenditures contribute to rental housing project outcomes and 

identifying areas of overlap for further coordination.

 

68See GAO, HUD and Treasury Programs: More Information on Leverage Measures’ 

Accuracy and Linkage to Program Goals Is Needed in Assessing Performance, 

GAO-08-136 (Washington, D.C.: Jan. 18, 2008).
Page 58 GAO-12-554 Housing Assistance

Furthermore, additional data could help assess how tax expenditures 

benefit homeownership compared with programs with similar goals. This 

information is currently not always collected on tax returns unless IRS 

needs the information or collection was legislatively mandated. We 

recommended in 2009 and 2010 that IRS collect property addresses 

(which can differ from a taxpayer’s mailing address) to improve 

enforcement of mortgage interest deductions.69 Collecting this information 

from taxpayers or lenders also could facilitate analysis of who benefits 

from the mortgage interest and property tax deductions as well as other 

housing tax provisions. As of April 2012, IRS had not yet taken action to 

collect property address information.

Consolidation or greater coordination of RHS and HUD single-family loan 

programs that serve similar markets and provide similar products may

offer opportunities for savings in the long term. For example, program 

consolidation could improve service delivery, especially when programs 

with similar objectives and markets are brought together and conflicting 

requirements and overlap reduced. Consolidation could achieve savings 

to the extent that agency overhead and, potentially, staffing were 

reduced. Further, consideration of program consolidation could create 

opportunities to reassess the various RHS and HUD single-family 

programs or activities and eliminate programs that are overlapping, or 

outdated, or whose costs no longer justify federal spending. However, 

consolidation also presents a number of challenges that we discuss later 

in the report. We first reported in 2000 that overlap exists among products 

offered and markets served by FHA, RHS, and others and questioned the 

need for maintaining separate programs for rural areas. Additionally, we 

noted the potential for administrative savings by consolidating programs 

that provided similar products and served similar markets. For instance, 

FHA and RHS offer similar guaranteed single-family products and operate 

in the same areas. With VA, which offers a guaranteed loan program, 

FHA and RHS encourage lenders to make loans by guaranteeing them 

against losses they might incur if borrowers defaulted on their mortgages. 

As discussed earlier, lenders in FHA and RHS programs use FHA’s 

mortgage scorecard in evaluating borrowers for mortgages. However, 

RHS’s program offers more generous terms than FHA’s program (such as 

 

69See GAO-09-769 and Tax Administration: Expanded Information Reporting Could Help 

IRS Address Compliance Challenges with Forgiven Mortgage Debt, GAO-10-997 

(Washington, D.C.: Aug. 31, 2010).

Consolidating SingleFamily Loan Guarantee 

Programs Could Improve 

Programs and Produce 

Savings
Page 59 GAO-12-554 Housing Assistance

no down payment and lower overall mortgage insurance premiums). And 

RHS’s single-family direct loans have no counterparts in FHA or VA. Also, 

VA loan guarantees are an entitlement only available to veterans, certain 

members of the Reserves and National Guard, and spouses of certain 

veterans. RHS guaranteed loans are limited by borrower income and 

location. Despite the differences, we noted that FHA, RHS, and VA all 

serve a significant share of low- to moderate-income households.

We suggested in September 2000 that Congress consider requiring HUD 

and USDA to examine the benefits and costs of merging those programs 

that serve similar markets and provide similar products. Recognizing the 

statutory restrictions that exist on both agencies’ programs, as a first step 

we suggested that Congress consider requiring HUD and USDA to 

explore merging their single-family guaranteed lending programs and 

multifamily portfolio management programs, taking advantage of the best 

practices of each and ensuring that targeted populations were not 

adversely affected. Congress held hearings on the report in 2003 but no 

further actions have been taken.

Our analyses have shown evidence of overlap in certain aspects of the 

FHA and RHS single-family programs. First, RHS increasingly has moved 

from direct to guaranteed loans. The number of guaranteed single-family 

loans first exceeded the number of direct single-family loans in 1995, and 

the trend has intensified since 2008. In fiscal year 2010, RHS made more 

than 28,100 single-family direct loans and grants and guaranteed more 

than 130,000 single-family loans. Since 2011, the Administration has 

requested large cuts in RHS direct loan programs. For example, the 2012 

President’s Budget did not request any funding for Section 504 direct 

repair loans and requested a 67 percent reduction for Section 502 direct 

loans. The budget request stated that the shift in direction acknowledges 

that the single-family direct loan program has struggled to make a 

measurable impact due to flat funding levels and a labor-intensive review 

process. According to RHS officials, after the implementation of early-out 

and buy-out authority at the beginning of fiscal year 2012, RHS had about 
Page 60 GAO-12-554 Housing Assistance

900 full-time equivalent staff managing its direct loan program, and about 

400 staff managing its larger guaranteed loan program.70

Second, the Administration has proposed that RHS use direct 

endorsement lenders to approve guaranteed loans. Specifically, the 2011 

and 2012 President’s Budgets proposed that RHS use direct 

endorsement lenders in its guaranteed loan program to make RHS more 

efficient and allow time to transition the staff managing guaranteed loans 

to other priorities.71 FHA’s loan guarantee program relies upon direct 

endorsement lenders to approve mortgage applications without first 

submitting paperwork to HUD. As of September 2011, it had about 3,700 

such lenders.

As previously discussed, although RHS properties are more concentrated 

in rural areas than HUD’s, overlap also exists in RHS’s and HUD’s 

multifamily guaranteed loan programs, and certain aspects of these 

programs offer the potential for greater coordination or consolidation. For 

instance, there is some overlap in the overall purpose of programs—

financing the development or rehabilitation of multifamily housing. Both 

HUD and RHS administer rental assistance programs, which provide 

rental subsidies to low-income households that rent units in specific 

properties. In addition, for HUD and RHS guaranteed loans, developers of 

rental housing obtain loans through approved lenders. The headquarters 

and field staff of both agencies generally share responsibilities for the 

reviewing, approving, and processing of applications; performing 

oversight; and monitoring of properties. However, HUD and RHS’s 

multifamily programs differ in their property and tenant eligibility 

requirements. Both are also managed differently, and often these 

differences create inconsistent rules that lead to costs and regulatory 

burdens for program participants, who can receive assistance from both 

agencies. The Rental Policy Working Group’s efforts described earlier in 

this report recognize the burden that multiple multifamily programs place 

 

70RHS has been looking for other ways to improve the efficiency of its direct loan program. 

It has been conducting a pilot with various nonprofit groups to see if the most laborintensive portion of the direct loan process—finding eligible families—can be contracted 

out. If the pilot is successful, RHS field office staff would no longer be responsible for 

reviewing the 10-20 loan applications that it takes to find an applicant with a qualifying 

credit history or to work with families to improve applicants’ credit ratings. 

71The 2013 President’s budget did not propose that RHS use direct endorsement lenders.

Greater Coordination or 

Consolidation of Certain 

HUD and RHS Multifamily 

Activities Could Help 

Improve Programs
Page 61 GAO-12-554 Housing Assistance

on participants and the benefit of aligning the requirements of these 

programs.

HUD and RHS face similar challenges in managing their portfolio of 

affordable rental properties. Properties assisted by both agencies are 

aging and need new investments for capital improvements. Also, some 

property owners may decide to leave the programs and convert their 

properties to market rate and no longer be subject to rent and tenant 

income requirements. In response to these challenges, RHS offers 

incentives that provide equity investments and favorable loan financing to 

property owners seeking to recapitalize their properties or at risk of exiting 

the program. Similarly, HUD has various financing tools that offer 

incentives to property owners to remain in the program. When property 

owners do exit the program, HUD and RHS offer special rental assistance 

to households to help ensure that their rents remain affordable.

Further, similarities in guaranteed multifamily loans indicate the need for 

greater coordination. For instance, among multifamily loan programs, 

RHS programs (whether direct or guaranteed) are more prevalent in rural 

areas than the much larger FHA multifamily guaranteed loan program. 

However, RHS has been moving toward guaranteed multifamily loans, 

primarily as a leveraged source of funds when preserving its direct loan 

properties. Moreover, the 2013 President’s budget proposes funding for 

Section 538 guaranteed loans but not for Section 515 direct loans. 

According to RHS officials, the only new Section 515 direct loans being 

made are for preserving existing properties. As discussed earlier, 

properties with RHS loans also tended to be much smaller than properties 

with FHA loans, suggesting that RHS and its products have served a 

unique market segment and that RHS may have a product model that 

could be useful for FHA. Over the years, HUD has proposed variations of 

guaranteed loans for small properties, such as in more rural areas where 

HUD properties are smaller and more comparable in size to RHS 

properties. For example, HUD announced demonstration programs in 

1997 and 2006 for variations of small project guaranteed loans.

More recently, the Rental Policy Working Group discussed existing 

programs that HUD might use for smaller properties, including RHS’ 

Section 538 guarantee program. The discussions resulted in the Rental 

Policy Working Group developing a proposal for the 2013 budget that 

would allow HUD to implement flexibilities with its Section 542(b) risk-
Page 62 GAO-12-554 Housing Assistance

share program to make risk-share loans to refinance, rehabilitate, and 

recapitalize small properties.72 The proposal would allow HUD to use this 

existing program to expand availability of capital to small properties. If 

successful, this program could be used in urban and rural areas, as HUD 

has no geographic restrictions. While statutory action would be needed 

for HUD to implement the changes to its Section 542(b) risk-share 

program, the working group focused on this effort because it required only 

minor statutory changes.

Consolidation presents a number of challenges in the short and long 

term. These include overcoming statutory barriers; assessing products to 

be offered; establishing effective delivery structures; aligning resources, 

policies, and requirements; and ensuring continuing oversight and 

performance of existing commitments. Potential for savings in the long 

term must be weighed carefully against the immediate challenges and 

against the potential implications of consolidation for agency goals and 

objectives and households served. We previously reported on questions 

agencies should consider when evaluating whether to consolidate and 

noted that identifying and agreeing on specific consolidation goals and 

realistic expectations for their achievement are the key to any 

consolidation effort.73

Several of the immediate challenges that would stem from any 

consolidation efforts have long been a concern for the agencies. In 2000, 

But the fact that programs serve different targeted 

groups should not rule out studying the potential for consolidation if the 

potential for long-term savings through better alignment of resources and 

delivery structures outweighs the challenges and long-term costs. For 

example, VA’s housing program is an entitlement earned by veterans and 

RHS’s guaranteed program is only available to low- and moderateincome households in rural areas. And HUD operates the Good Neighbor 

Next Door program, which restricts eligibility by profession (for example, 

to teachers and law enforcement officers). 

 

72The Section 542(b) risk-share program was developed as a demonstration program to 

test innovative mortgage insurance and reinsurance products to provide affordable 

multifamily housing through a partnership between qualified participating entities or their 

approved lenders and HUD.

73See GAO, Streamlining Government: Questions to Consider When Evaluating 

Proposals to Consolidate Physical Infrastructure and Management Functions, 

GAO-12-542 (Washington, D.C.: May 23, 2012).

Consolidation or Increased 

Coordination Presents 

Immediate Challenges and 

Has Longer-Term 

Implications 
Page 63 GAO-12-554 Housing Assistance

when we first recommended that Congress consider requiring USDA and 

HUD to examine the benefits and costs of merging programs such as 

their single-family guaranteed programs, USDA noted that such a merger 

could be detrimental to rural areas, which could lose a federal voice. In 

addition, HUD noted that without legislative changes, any efforts to merge 

the programs likely would result in a more cumbersome delivery system. 

In May 2011 testimony before the House Financial Services 

Subcommittee on Insurance, Housing, and Community Opportunity, some 

industry experts said a proposed consolidation plan merited further 

discussion, but others stated the proposal could negatively affect USDA’s 

efforts to deliver its other rural development programs. In September, the 

RHS Administrator testified that while RHS and HUD shared an important 

commitment to meeting the housing needs of rural America, she opposed 

the proposed consolidation plan. She said that RHS housing services 

uniquely served rural communities by working in “synergy” with other rural 

development programs.

Since then, RHS officials and several housing industry officials with whom 

we spoke also have raised concerns about consolidating RHS and HUD 

programs. They have argued that rural housing assistance is a part of the 

community development package that USDA’s rural development 

agencies (RHS, Rural Utilities Service, and Rural Business Cooperative 

Service) can offer and that consolidating RHS programs into HUD would 

disrupt the interrelationship between the three rural development 

agencies in USDA. RHS officials pointed to the human capital challenges 

that would arise from any consolidation. For example, they noted that 

training would be an issue because product requirements, information 

systems, and agency processes and procedures differ between HUD and 

RHS. In addition, they questioned whether any consolidation would help 

improve the delivery of service to rural areas. RHS officials and industry 

officials expressed concern that rural guaranteed single- and multifamily 

programs would get “lost” in HUD. Some RHS and industry officials also 

noted that program consolidation would not address the gap in access to 

affordable housing credit for those individuals who could not qualify for 

HUD or other conventional single-family loans.

While training and information systems are important considerations for 

any consolidation or increased coordination between the agencies, 

consolidation or increased coordination does not necessarily require that 

product terms be aligned. FHA already offers multiple products with 

different terms and conditions. And although FHA does not have the 

extensive delivery structure RHS uses to perform loan origination under 

its now diminishing direct loan program, the continuing need for this RHS 
Page 64 GAO-12-554 Housing Assistance

product has been questioned by USDA and OMB. Moreover, the more 

similar the products become, the stronger the argument for a 

consolidated delivery structure. In the long term, this could present an 

opportunity for the agencies to take advantage of the best features of 

each agency’s structure.

In relation to concerns about the level of focus on rural housing in HUD, 

HUD currently serves a larger number of homeowners in rural areas than 

RHS serves, and HUD administration officials told us that they considered 

HUD an agency that served housing needs in all communities—urban, 

suburban, and rural. Also, while RHS housing programs align with several 

of HUD’s priority goals, USDA currently does not have priority goals for 

housing, and housing programs have not been a high priority in USDA. 

For multifamily housing, we first reported in 2002 that RHS could not 

prioritize the long-term rehabilitation needs of the properties in its Section 

515 direct loan portfolio. The fiscal year 2013 budget is the first in which 

the agency is requesting funding for a permanent (in place of a current 

demonstration program) multifamily preservation and revitalization 

program for its rural rental housing portfolio. As described earlier, we 

reported in 2004 that RHS did not have access to the same wage 

matching data as HUD to assure that rental payments under the Section 

521 rental assistance program were accurate. USDA proposed legislation 

to access Department of Health and Human Services data for wage 

matching purposes in the fiscal year 2013 budget. In addition, the 

administrative and reporting structure of rural housing programs among 

USDA components has varied. As we reported in 2000, the position of 

RHS Administrator is at the same organizational level as the State Rural 

Development Offices, which can develop their own program delivery 

systems. As a result, state offices still report to the Under Secretary for 

Rural Development rather than the RHS Administrator on housing issues. 

The state offices also have developed various interpretations rather than 

uniform standards on issues ranging from rent calculations to loan 

prepayment.

Combining programs would not eliminate the need for managing existing 

commitments. Both FHA and RHS have loan guarantees with terms of as 

much as 40 years. In the single-family programs, both agencies have 

systems in place for monitoring the performance of existing mortgages 

and ensuring that loan servicers and contractors carry out functions 

related to loss mitigation, foreclosure, and property management, as well 

as systems for holding lenders accountable in the loan origination 

process. The continuing need for these functions would necessitate 

careful planning and alignment to permit consolidation.
Page 65 GAO-12-554 Housing Assistance

Consolidating or coordinating existing programs and activities also raise 

important implications because of costs, and the potential impact on 

people and agency mission. When consolidation or increased 

coordination results in significant shifts of people, space, technology and 

systems, several issues arise. As an example, simply moving staff and 

responsibilities could increase costs and not result in any process 

improvements. Ensuring long-term benefits from cost savings and 

improved operations will require careful consideration of the 

responsibilities and staffing resources needed for the combined 

operation. For example, if the single-family loan programs of RHS and 

HUD were to be consolidated, it would be necessary to specify the impact 

on employees, including changes in roles and responsibilities, processes 

and procedures, individual accountability, and day-to-day operations. 

There also would be transition issues to consider, such as costs of leases 

and unoccupied federal property, or moving expenses for employees 

transferred to new sites. Consolidation or increased coordination also 

may have implications for borrowers, lenders, developers, and other 

industry participants. For instance, some borrowers and lenders who may 

have worked extensively with particular programs could experience 

increased costs in the short term for adapting existing program 

administration, personnel, processes, and systems.

Whether through consolidation or further coordination, RHS, FHA, and VA 

have opportunities to assess the potential for learning from the practices 

of each other. RHS did this when its guarantee program was created. For 

instance, RHS officials told us that they had examined FHA’s system 

when they established their guaranteed program and decided it would be 

more cost-effective to require lenders to dispose of properties. Thus, 

unlike FHA, RHS relies on lenders to take title of foreclosed properties 

and manage and market them. But, RHS and FHA have not taken steps 

to further explore the relative benefits and costs of each other’s 

approaches. This and other areas may represent an opportunity for the 

agencies to explore how to take advantage of their respective best 

practices, while minimizing the adverse impact on targeted populations.74

Finally, combining management of the portfolio of existing multifamily 

projects might require reassessing methods for overseeing and 

 

74We currently have ongoing work focusing on REO management and disposition 

strategies of various federal agencies that may help determine which strategy represents 

a best practice in managing REOs. 
Page 66 GAO-12-554 Housing Assistance

monitoring these projects. Some noted that in RHS, staff were 

responsible for a particular portfolio of multifamily projects and offered a 

direct point of communication for these projects. They pointed out that 

HUD, which provides funding for far more projects, did not have staff 

responsible for individual projects. Also, payment structures for RHSdirect multifamily loans are linked and are offset by RHS rental assistance 

payments. Combining RHS and HUD rental assistance programs would 

require assessing the implications of aligning payment methods for the 

two programs.

The federal government plays an important role in encouraging 

homeownership and ensuring the availability of decent, safe, and 

affordable rental housing through a variety of single- and multifamily 

programs that provide rental assistance, public housing, and tax 

expenditures. Numerous agencies administer these fragmented 

programs, and recent assessments have shown that some programs 

overlap (that is, provide similar products and serve similar populations).

Ongoing fiscal constraints and the accompanying move toward greater 

use of guaranteed lending and leveraging of federal funds with other 

public and private funding sources have called into question the feasibility 

of maintaining the current fragmented structure for providing support to 

housing and, in particular, the overlap in certain housing programs. 

Policymakers and agencies have been tasked with continuing to meet 

affordable housing needs while protecting taxpayer investments. 

Consolidation and improved collaboration can offer an effective means of 

realizing necessary cost savings and eliminating unnecessary overlap.

While consolidation and improved coordination efforts are underway, they 

could be improved and expanded to help ensure that agencies do not 

miss opportunities to generate savings and efficiencies in their housing 

programs. A recently created task force may help evaluate the potential 

for coordinating or consolidating the single-family housing loan programs 

at HUD, USDA, and VA and the agencies have been working to 

consolidate and align certain requirements in multifamily housing 

programs through the Rental Policy Working Group. However, the singlefamily task force has not yet specified its goals or expected outcomes, 

roles and responsibilities, resources, or a means of monitoring or 

reporting on results and reinforcing agency accountability for collaborative 

efforts. Incorporating these key practices for effective collaboration would 

help the task force and HUD, USDA, and VA establish the guidance and 

direction needed to systematically bring about a productive working 

Conclusions 
Page 67 GAO-12-554 Housing Assistance

relationship. With a more effective collaborative approach, the agencies 

also can generate opportunities to evaluate the potential for improving, 

coordinating, or consolidating single-family housing loan programs. 

Certain aspects of the single-family programs show great potential for 

consolidation—as we have reported, overlap exists in products offered, 

service delivery, and geographic areas served. Therefore, the task force 

agencies could productively focus on the products offered, delivery 

structure, and systems and resources that support the programs as part 

of any assessment of coordination and consolidation of the programs. For 

instance, agencies could consider whether and how to align product 

terms and conditions, and how to optimize service delivery methods. Or, 

they could move beyond administrative change, and assess what might 

be accomplished in terms of coordination or consolidation through 

statutory changes. Such assessments represent valuable first steps and 

would serve as resources for the agencies.

The Rental Policy Working Group, which has followed a majority of our 

key collaboration practices, already has taken steps to identify specific 

areas in which to align sometimes conflicting and redundant 

requirements. But it focused on actions that require minimal or no 

statutory changes, or minimal or no costs. Overlap in multifamily 

programs exists in the overall purpose of programs, delivery structures, 

and provision of project-based rental assistance. However, any 

consolidation of multifamily programs would require statutory changes. 

There is more the Rental Policy Working Group can do to build on its 

success. For example, it could expand its guiding principles to include 

areas in which statutory action across individual agencies and programs 

may be needed to help increase overall programmatic efficiency and save 

additional taxpayer dollars. It could take additional steps to reinforce 

agency accountability for collaborative efforts by documenting 

collaborative efforts in its strategic and annual plans. In addition to the 

two efforts highlighted above, and as we previously recommended, 

coordinated reviews of tax expenditures with related spending programs

could help reduce overlap and inconsistencies and direct scarce 

resources to the most effective or least costly methods to deliver federal 

support.

Options to increase collaboration or to effect consolidation in HUD and 

USDA’s single- and multifamily loan programs that serve similar markets, 

provide similar products, or have similar delivery structures could 

enhance the efficiency of and improve the programs overall. But as we 

have noted, they are not without a number of human capital, information 

technology, and other significant challenges and implications. We first 
Page 68 GAO-12-554 Housing Assistance

reported on these options in 2000. The potential exists for greater 

collaboration or consolidation, including considering statutory action, if 

applicable. Policy makers face difficult decisions on the structure and 

funding of housing programs and activities across federal agencies. 

Although Congress ultimately would have to decide, agencies could 

further this effort by exploring the potential benefits and costs of 

consolidating overlapping programs. Such analyses represent a key step 

on the path to determining the viability of consolidation. The analyses also 

can support the Administration’s efforts to reform the government’s role in 

housing finance.

To enhance task force efforts to evaluate the potential for coordination or 

consolidation of single-family housing programs and activities, the 

Secretaries or other designated officials of HUD, USDA, and VA, and the 

Director of OMB should take steps to establish a more rigorous approach 

to collaboration. For example, as a first step, agencies could define and 

articulate goals or common outcomes and identify opportunities that can 

be addressed or problems solved through their collaborative efforts. 

Enhancing the task force’s efforts also could entail establishing and 

implementing a written agreement; specifying roles and responsibilities; 

establishing mechanisms to monitor, evaluate, and report on results; and 

reinforcing accountability for collaborative efforts.

To further improve HUD, USDA, and Treasury’s efforts through the Rental 

Policy Working Group to consolidate and align certain requirements in 

multifamily housing programs, the Rental Working Group should take 

steps to document collaborative efforts in strategic and annual plans to 

help reinforce agency accountability for these efforts.

To build on task force and working group efforts already underway to 

coordinate, consolidate, or improve housing programs, and help inform 

Congress’s decision-making process, the Secretaries or other designated 

officials of HUD, Treasury, USDA, and VA should evaluate and report on 

the specific opportunities for consolidating similar housing programs, 

including those that would require statutory changes.

GAO provided a draft of this report for review and comment to the 

Consumer Financial Protection Bureau, Department of the Interior, 

Department of Labor, Farm Credit Administration, Federal Deposit 

Insurance Corporation, Federal Financial Institutions Examination 

Council, Federal Housing Finance Agency, Board of Governors of the 

Recommendations for 

Executive Action

Agency Comments 

and Our Evaluation
Page 69 GAO-12-554 Housing Assistance

Federal Reserve System, HUD, IRS, National Credit Union 

Administration, NeighborWorks America, Office of the Comptroller of the 

Currency, OMB, Treasury, USDA, and VA. HUD’s Acting Assistant 

Secretary for Housing-Federal Housing Commissioner, USDA’s Under 

Secretary for Rural Development, and VA’s Chief of Staff provided written 

comments, which we address below and which are reprinted in 

appendixes II, III, and IV, respectively. OMB staff provided a general 

comment by e-mail. The Department of Interior, Federal Financial 

Institutions Examination Council, Board of Governors of the Federal 

Reserve System, HUD, IRS, Treasury, USDA, and VA provided technical 

comments, which we incorporated as appropriate. The Farm Credit 

Administration, Federal Deposit Insurance Corporation, National Credit 

Union Administration, NeighborWorks America, and Office of the 

Comptroller of the Currency stated they had no comments. Finally, the 

Consumer Financial Protection Bureau, Department of Labor, and 

Federal Housing Finance Agency provided no comments. 

HUD stated that the report accurately reflected HUD’s collaborative 

efforts and agreed with the report’s recommendations. However, in 

response to the recommendation that HUD and the other agencies 

establish a more rigorous approach to collaboration, HUD noted the 

importance of assessing the timing of implementing the recommendation 

because the relevant agencies have been fully focused on the ongoing

recovery of the housing market. OMB staff expressed a similar concern. 

HUD further stated that it will consult with other interested parties to 

establish a framework through which to respond to our recommendation 

and noted that an approximate time frame might involve waiting until after 

February 2014. As we stated in the report, in addition to focusing on the 

ongoing housing crisis and government support for the housing market, 

focusing on achieving efficiencies and cost savings and the delivery of

government support for housing is important. By incorporating key 

practices on collaboration and developing a more formal approach to the 

single-family task force, HUD, USDA, VA, and OMB can evaluate the 

potential for coordinating or consolidating single-family loan programs, 

and possibly generate savings and efficiencies while better serving 

homeowners. As we noted in the report, whether through consolidation or 

further coordination, RHS, FHA, and VA have opportunities to assess the 

potential for learning from the practices of each other.

VA concurred with the recommendation to enhance the single-family task 

force’s efforts. VA said that the agency welcomed opportunities to 

coordinate with other agencies and share best practices and looked 

forward to refining and improving its own program by applying other 
Page 70 GAO-12-554 Housing Assistance

agencies’ best practices. VA concurred in principle with our 

recommendation on identifying opportunities to evaluate and report on 

opportunities for consolidation as long as the efforts were coordinated 

and not unilateral, adding that unilateral actions could waste resources 

and have other negative effects. We modified the recommendation to 

make it clear that we were referring to efforts through the interagency task 

force and working group and not unilateral evaluations. In addition, VA

reiterated its position that while collaborating and coordinating with other 

housing programs could be beneficial, combining VA’s unique home loan 

guaranty program with other housing programs would go against the 

statutory intent that established an earned benefit for veterans. 

USDA generally agreed with our recommendations, stating that 

collaborative efforts already under way should reduce duplication of 

efforts by stakeholders working with multiple agencies as well as 

“bureaucratic red tape, processing times, and ultimately program costs.” 

USDA also provided a summary of the agency’s positions on a number of 

other issues. First, USDA stated that RHS’s single-family guaranteed loan 

program has been performing better than FHA’s loan programs because 

RHS controlled risk by tightening underwriting and performing preclosing 

reviews. RHS has reported lower delinquency rates than FHA, and 

concluded that these differences were due to the tighter controls. 

However, RHS’s analysis does not control for other factors that could 

explain differences between the agencies’ delinquency and default rates. 

Second, RHS suggests that borrowers of its guaranteed loans could not 

afford FHA-guaranteed loans, but it has not conducted the analysis 

needed to make this judgment. RHS’s lower fees and lack of down 

payment could divert prospective borrowers from programs such as 

FHA’s, which could offer further evidence of the overlap in federal 

mortgage products. Finally, USDA reiterated its position that rural

communities have a unique set of challenges and that rather than 

duplicating other federal programs, USDA’s housing programs address 

unique needs. However, we found that HUD also serves rural areas 

through its single- and multifamily programs. Further, RHS’ greater 

reliance on guaranteed single-family lending has lessened the differences 

between RHS and FHA single-family loan programs; for example, more 

than half of the new RHS-guaranteed single-family loans made in 2009 

were in urban or suburban areas. 

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the appropriate 

congressional committees, the Secretary of Agriculture, the Secretary of 
Page 71 GAO-12-554 Housing Assistance

Housing and Urban Development, the Acting Director of the Office of 

Management and Budget, the Secretary of Veterans Affairs, the 

Secretary of the Treasury, and other interested parties. In addition, the 

report will be available at no charge on the GAO website at 

http://www.gao.gov.

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

contact me at (202) 512-8678 or sciremj@gao.gov, or Jim White at (202) 

512-9110 or whitej@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Key contributors to this report are listed in appendix V.

Mathew J. Scirè

Director, Financial Markets 

 and Community Investment

James R. White

Director, Tax Issues Strategic Issues
Page 72 GAO-12-554 Housing Assistance

This report assesses (1) programs and activities the federal government 

uses to support rental housing and homeownership; (2) the extent to 

which overlap or fragmentation exists in the goals, products, geographic 

coverage, service delivery mechanisms, and recipient income levels of 

selected housing programs and activities of the Departments of Housing

and Urban Development (HUD), Agriculture (USDA), Veterans Affairs 

(VA), and Treasury; and (3) the extent to which federal efforts have 

increased coordination for selected housing programs and activities, and 

implications of further coordinating or consolidating selected housing 

programs or activities.

For purposes of this study, we defined duplication, overlap, and 

fragmentation.

• Duplication occurs when two or more agencies or programs engage in 

the same activities or provide the same services to the same 

beneficiaries. 

• Overlap occurs when multiple programs have similar goals, devise 

similar strategies and activities to achieve those goals, or target

similar users. 

• Fragmentation occurs when more than one federal agency (or more 

than one organization within an agency) is involved in the same broad 

area of national interest.

To identify federal agencies’ support for housing in fiscal year 2010, we 

compiled an inventory of direct spending programs, tax expenditures, and 

other activities, such as regulatory requirements—to which we collectively 

refer as “activities”—related to housing. To identify programs, we first 

collected information on programs categorized as housing programs from 

the Catalog of Federal Domestic Assistance. We also reviewed the fiscal 

year 2012 President’s Budget; program documentation from HUD, USDA, 

and VA; studies by the Congressional Research Service, Congressional 

Budget Office (CBO), and other housing groups; and the Compendium of 

Federal Single Family Mortgage Programs and Related Activities.1

 

1

Federal Housing Inspectors General, Compendium of Federal Single Family Mortgage 

Programs and Related Activities (November 2011), 

We 

http://www.fhfaoig.gov. 

Appendix I: Objectives, Scope, and 

Methodology 

Programs and Activities 

the Federal Government 

Uses to Support Rental 

Housing and 

Homeownership 
Page 73 GAO-12-554 Housing Assistance

collected descriptive information about each program, including (1) the 

administering or implementing agencies or entities; (2) type of assistance 

provided; (3) eligibility of recipients in terms of geographic or income 

restrictions; and (4) other relevant nonfederal entities involved in 

administering, distributing, or delivering federal assistance, if any.

We compared the programs among the sources described above to 

create an inventory of federal support for housing. We excluded certain 

programs that can support housing but were covered in our other recent 

reports on duplication, overlap, and fragmentation. For example, the 

inventory does not include housing counseling programs that we covered 

in 2012 Annual Report: Opportunities to Reduce Duplication, Overlap, 

and Fragmentation, Achieve Savings, and Enhance Revenue, 

GAO-12-342SP (Washington, D.C.: Feb. 28, 2012), or homeless housing 

programs that we discussed in two March 2011 reports—Opportunities to 

Reduce Potential Duplication in Government Programs, Save Tax 

Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar. 

1, 2011); and List of Selected Federal Programs That Have Similar or 

Overlapping Objectives, Provide Similar Services, or Are Fragmented 

Across Government Missions, GAO-11-474R (Washington, D.C.: Mar. 18, 

2011). Additionally, we excluded Federal Trade Commission and 

Department of Justice enforcement efforts related to certain consumer 

protections. In some cases, names of programs were inconsistent among 

the various sources we reviewed. As a result, our usage either conformed 

with program names as cited in past GAO reports or with agency 

documents.

Our list of 15 housing tax expenditures is based on lists of tax 

expenditures and estimates of their cost compiled annually by Treasury 

and the Joint Committee on Taxation (JCT).2

 

2

Office of Management and Budget, Analytical Perspectives, Budget of the U.S. 

Government, Fiscal Year 2012, Table 17-1 (Washington, D.C.: 2011); and JCT, Estimates 

of Federal Tax Expenditures for Fiscal Years 2010-2014, JCS-3-10 (Washington, D.C.: 

Dec. 15, 2010).

Both Treasury and JCT list 

tax expenditures by budget function. We compiled a preliminary list of tax 

expenditures for fiscal year 2010 listed under the “housing” subfunction of 

the commerce and housing budget function, and added other housingrelated provisions listed under other budget functions. Our universe 

included expired tax expenditures listed by either Treasury or JCT that 

had estimated revenue losses for fiscal year 2010.
Page 74 GAO-12-554 Housing Assistance

While the tax expenditure lists were generally similar, Treasury and JCT’s 

method for reporting specific tax expenditures differed slightly. For the 15 

tax expenditures we listed, both Treasury and JCT listed nine under the 

housing budget subfunction. Treasury and JCT each reported another tax 

expenditure, but grouped the expenditures under different functions. Two 

tax expenditures were listed only by JCT, and another only by Treasury.

Furthermore, we identified one tax expenditure that both Treasury and 

JCT reported under the veterans’ benefits and services budget function, 

but which appeared to support housing activities. We also identified 

another tax expenditure that neither Treasury nor JCT reported annually, 

but which JCT identified in a separate report on housing tax incentives.

We did not include in our list two tax expenditures Treasury reported 

under the housing budget subfunction because JCT did not list one and 

listed the other under the “other business” subfunction.3 We also did not 

include a tax expenditure that JCT reported under housing, but Treasury 

reported under the community development function. As a final step, we 

compared our list with similar lists of housing tax expenditures.4

GAO-12-555SP

Officials 

from Treasury and the Internal Revenue Service (IRS) also reviewed our 

final list of housing tax expenditures before publication of , 

the e-supplement to this report that lists the tax expenditures as part of all 

federal housing activities.

To identify regulatory requirements, we included financial regulators 

(whose responsibilities include helping ensuring that regulated institutions 

comply with consumer financial protections) and regulators of 

government-sponsored enterprises (government agencies that provide 

oversight and supervision of government-sponsored enterprises) and 

focused on those regulations affecting participants in the housing market, 

including lenders, consumers, and others involved in homeownership and 

rental housing. For example, we included the Farm Credit Administration 

 

3

We did not include the exclusion of imputed net rental income, which is the amount that 

owner-occupiers would have paid to rent a home, less nondeductible costs such as 

depreciation and maintenance expense. It is not subject to tax. Treasury lists the 

exclusion of imputed net rental income as a tax expenditure, and estimated the 

expenditure at $41 billion for fiscal year 2010. However, JCT does not list the exclusion as 

a tax expenditure, because it views measuring and taxing net imputed rental income as 

administratively infeasible.

4

Congressional Budget Office, An Overview of Federal Support for Housing (Washington, 

D.C.: Nov. 3, 2009); and The Pew Charitable Trusts, Subsidyscope.org (Washington, 

D.C.). Accessed on Dec. 20, 2011, and retrieved from http://www.subsidyscope.org. 
Page 75 GAO-12-554 Housing Assistance

because Farm Credit System associations are authorized to engage in 

rural housing lending under the agency’s regulations. We also include as 

an administering entity the Federal Financial Institutions Examination 

Council, which is a formal interagency body that prescribes uniform 

principles, standards, and report forms for the federal examination of 

financial institutions and makes recommendations to promote uniformity 

in the supervisions of financial institutions. We relied on our recent reports 

related to federal mortgage lending laws: Mortgage Reform: Potential 

Impacts of Provisions in the Dodd-Frank Act on Homebuyers and the 

Mortgage Market, GAO-11-656 (Washington, D.C.: July 19, 2011); and 

Mortgage Foreclosures: Documentation Problems Reveal Need for 

Ongoing Regulatory Oversight, GAO-11-433 (Washington, D.C.: May 2, 

2011).

To summarize federal support for homeownership and rental housing, we 

reviewed descriptive information about each activity. To characterize the 

primary purpose for each, we identified 11 categories that illustrate the 

primary public policy goals associated with each activity, and used the 

best available information to make a determination. In selecting the 

categories, we focused on the title, mission, objective, or goal of each 

activity and made a judgmental determination about common groupings 

for the activities. We also shared the categories and related descriptions 

with the responsible agencies. The 11 purposes that we identified are 

listed below:

• Assistance for buying, selling, or financing a home – assistance to 

individuals who are purchasing or refinancing a home or a preferential 

tax treatment on the sale of a home. Also, certain assistance to 

homeowners who are having difficulty making their mortgage 

payments.

• Assistance for homeowners – assistance to current homeowners to 

improve or change their properties, or tax expenditures that allow 

homeowners to deduct costs associated with homeownership.

• Increasing the availability of mortgage loans – actions taken to 

provide additional liquidity in the housing market, allowing private and 

government lenders to make additional mortgage loans.

• Assistance for financing rental housing – financial assistance for the 

production or preservation of rental housing.
Page 76 GAO-12-554 Housing Assistance

• Assistance for rental property owners – financial assistance to owners 

of rental properties for units rented to low-income tenants, or tax 

expenditures that reduce the after-tax costs associated with owning 

and maintaining rental property.

• Rental assistance for tenants – payments on behalf of tenants to 

reduce their rent payments.

• Operation/management of rental housing – financial assistance to 

current owners of rental housing for the operation or management of 

rental housing.

• Regulatory requirement – regulations affecting participants in the 

housing market, including lenders, consumers, and others who buy,

sell, or rent housing.

• Supports housing and other activities – activities that support any of 

the above activities under rental housing and homeownership. Also, 

activities in other areas in which the federal government is involved 

that have indirect effects on housing.

• Regulator of government-sponsored enterprises – government 

agencies that provide oversight and supervision of governmentsponsored enterprises.

• Emergency assistance to housing market or current homeowners – 

actions taken to stabilize the housing market or provide financial 

assistance to homeowners to make their mortgages more affordable; 

or to provide temporary assistance through the tax code for 

homeowners.

We used a two-step process to independently assign each activity a 

primary purpose based on the descriptions listed above, but because 

many of the activities we reviewed have multiple purposes, we further 

characterized the type of housing assistance for each activity as related 

to (1) homeownership, (2) rental housing, or (3) homeownership and 

rental housing (both). First, an initial determination was made about the 

primary purpose and type of housing supported for each activity. Second, 

each determination was independently reviewed to verify the category 

assignments. When needed, the activity and category in question were 

discussed. For the tax expenditures, we also compared our selections 

with how others, including the Congressional Research Service, CBO, 

and JCT had described the purpose or activity for housing-related tax 
Page 77 GAO-12-554 Housing Assistance

expenditures. Finally, we shared the inventory with the responsible 

agencies and incorporated their comments as appropriate.

We also identified the type of assistance associated with each activity in 

our inventory. In some cases, the agencies provided program dollars to 

an entity such as a nonprofit or local government that administered the 

funds to serve the primary targeted recipient. For the purposes of this

report, we used “type of assistance” as it relates to the primary targeted

recipient. Generally, the programs in our inventory provided the following 

types of assistance:

• Grant – to any other governmental or nongovernmental entity, or 

individual;

• Direct payment – to property owner, homeowner, tenant;

• Direct loan – from government agency direct to borrower;

• Guaranteed loan – through approved private lenders;

• Insured loan – through approved private lenders;

• Block grant – to other nonfederal governmental entities that have 

flexibility on use of funds;

• Regulation;

• Tax exclusions, exemptions, or deductions;

• Tax credits; and

• Deferrals of tax.5

The inventory also contains budgetary information for each activity we 

identified for fiscal year 2010. To determine the budgetary obligations for 

spending programs, we reviewed the fiscal year 2012 President’s Budget 

and agencies’ budget justifications for fiscal year 2012, which contained 

 

5

JCS-3-10; and Congressional Research Service, Tax Expenditures: Compendium of 

Background Material on Individual Provisions, S. Prt. 111-58 (Washington, D.C.: Dec. 30, 

2010). 
Page 78 GAO-12-554 Housing Assistance

the actual obligations for fiscal year 2010. To determine the revenue loss 

estimates for tax expenditures in fiscal year 2010, we reviewed the 

annual lists of tax expenditures Treasury and JCT compiled. Some of the 

activities in our inventory incurred no obligations in fiscal year 2010 for a 

number of reasons; for example, the activity was not part of the federal 

budget or was inactive in that year. We determined the data and 

information collected related to each activity and fiscal year 2010 

budgetary information to be sufficiently reliable for the purposes of this 

report. We confirmed information found in the President’s Budget for 

fiscal year 2012, agencies’ budget justifications, and agency 

documentation with agency officials.

To determine the extent to which overlap or fragmentation occurred in the 

selected housing programs or activities of HUD, USDA, VA, and 

Treasury, we updated and expanded the work from our 2000 report on 

opportunities and barriers to reducing overlap and fragmentation in 

delivering single-family and multifamily housing programs.6

• One- to Four-Family Home Mortgage Insurance (Section 203(b));

We focused 

on selected single-family and multifamily programs at HUD, USDA, and 

VA, and on Treasury’s Low-Income Housing Tax Credit (LIHTC) program 

and the mortgage interest and property tax deductions as of 2010. We 

identified housing programs that may have similar or overlapping 

objectives, provide similar services to similar beneficiaries, or are 

fragmented across missions. For single-family programs, we included the 

federal loan guarantee programs from USDA, VA, and the largest of 

HUD’s program; the direct loan programs at USDA; and Treasury’s two 

largest tax expenditures that provide assistance to homeowners. 

Specifically, the single-family programs included in our scope were

• Rural Housing Single Family Loans - guaranteed (Section 502 

guaranteed);

• Rural Housing Single Family Loans - direct (Section 502 direct);

• Very Low-Income Direct Repair Loans and Grants (Section 504);

 

6

GAO/RCED-00-241. 

Extent to Which Overlap 

or Fragmentation Existed 

in Selected Housing 

Programs or Activities
Page 79 GAO-12-554 Housing Assistance

• VA Home Loan Guaranty;

• Mortgage Interest Deduction; and

• Property Tax Deduction.

For multifamily housing programs, we included programs that finance 

multifamily housing and programs that provide project-based rental 

assistance. As USDA has fewer housing programs, we selected these 

first, then selected the active programs at HUD and Treasury with similar 

purposes. For example, while HUD administers many programs that 

provide loan guarantees for multifamily housing, we selected HUD’s 

Section 221(d)(3) and (d)(4) programs because they are most similar to 

USDA’s Section 538 loan guarantee and because they had the most loan 

activity of HUD’s programs. The other selected HUD, USDA, and 

Treasury programs are similar in that they require that the owner keep the 

properties available to the eligible populations or keep the rents 

affordable or both. Finally, USDA’s Section 521 provides rental 

assistance to property owners for units rented to low-income tenants. 

Similarly, HUD’s project-based rental assistance provides payments to 

property owners for the same purpose; therefore, we decided to select 

HUD’s project-based rental assistance (Section 8, Section 202, Section 

811, and other rental supplement programs). We excluded some large 

HUD multifamily housing programs from this analysis because there were 

no similar housing programs at USDA. For example, the public housing 

and housing choice voucher programs were excluded. Specifically, the 

multifamily programs included in our scope were

• Supportive Housing for the Elderly (Section 202);

• Supportive Housing for Persons with Disabilities (Section 811);

• Mortgage Insurance for Rental and Cooperative Housing (Sections 

221(d)(3) and (d)(4));

• Project-Based Rental Assistance;

• Multifamily Direct Rural Rental Housing Loans (Section 515);

• Farm Labor Housing Loans and Grants (Sections 514 and 516);

• Rural Rental Housing Guaranteed Loans (Section 538);
Page 80 GAO-12-554 Housing Assistance

• Rural Rental Assistance Payments (Section 521); and

• Low-Income Housing Tax Credit.

We collected and analyzed information and data on the goals, program 

details, eligibility, product delivery, geographic locations, and populations 

benefiting from agency housing programs. We identified those housing 

programs that may have similar or overlapping objectives, provide similar 

services, or are fragmented across missions. Overlap and fragmentation 

may not lead to actual duplication, and some degree of overlap and 

duplication may be justified.

We categorized locations based on three different USDA-developed 

characterizations of rural and urban, and analyzed agency data from the 

selected programs based on these characterizations. To do so, we 

geocoded (that is, mapped the geographic coordinates of) the addresses 

of properties supported by selected programs of HUD, USDA, VA, and 

Treasury. By comparing the frequency of properties or units within the 

type of county or zip code, we could assess the degree to which the three 

agencies operated in the same types of locations or operated within 

certain distances of the similar areas. We used MapInfo—a geographic 

information system designed to prepare maps and graphs that allow 

users to easily visualize connections between data and geography. For 

single-family loan analyses, we used a single year of data—active loans 

that were made in 2009 because they constituted the most recent data. 

For HUD and USDA multifamily programs, we used the portfolio as of 

February and May 2012, respectively. For Treasury’s LIHTC program, we 

used data on projects placed in service from 1998 through 2007 because 

they were the most reliable and complete data available and included 

LIHTC projects that remain within the 15-year tax credit compliance 

period. 

We analyzed the geocoded properties and units supported by the 

selected programs in three ways:

• We obtained RHS’ program eligibility map from USDA and analyzed 

the land mass and population that are represented by these areas. 

We used the geocoded locations of the single-family guaranteed 

loans to determine whether the properties were within RHS ineligible 

areas or calculated the distance to the nearest ineligible area.

• We analyzed the geocoded locations of the single-family and 

multifamily properties using the four-category version of the Economic 
Page 81 GAO-12-554 Housing Assistance

Research Service’s rural urban commuting area codes. We reported 

in 2005 that categorization of smaller areas provides a more precise 

delineation of rural than the county-based rural-urban continuum.7

• We distinguished four county categories by collapsing the nine 

categories in the Economic Research Service’s rural-urban 

continuum. We analyzed the geocoded locations of the single-family 

and multifamily properties using this categorization.

Additionally, we analyzed borrower income and location data for the HUD 

and VA single-family guaranteed loan programs and compared borrower 

income with county-level data on area median income (AMI). For RHS’s 

single-family guaranteed loans, we used the program eligibility limit of 115 

percent of AMI for borrower income and loan-level location data. We 

analyzed the locations of properties using the rural-urban continuum.

To determine how RHS’s field structure has changed over time and 

determine the work breakdown by location within RHS programs, we 

analyzed field office location and full-time equivalent assignment data 

from RHS. Also, to determine the difference in the trends between the 

guaranteed and direct loan programs, we analyzed single-family historical 

loan data from RHS and Housing Assistance Council data. To assess the 

reliability of the data we used for geographic and income analysis, we 

conducted reasonableness checks, including testing the electronic data 

files for any missing or illogical data, reviewed existing information about 

data quality, interviewed officials familiar with the data, and corroborated 

key information. On the basis of this review, we determined that the data 

used were sufficiently reliable for purposes of our analysis.

Furthermore, to perform our analysis of how different income levels and 

geographic areas claim the deductions for mortgage interest expenses 

and property taxes, we reviewed IRS zip code data for tax year 2008 (the 

latest zip code data available). The IRS zip code data include information 

for every zip code for which 250 or more returns were filed. Variables 

include the total number of tax returns filed, ranges of adjusted gross 

income (AGI) reported on those returns, and the total amounts of property 

taxes and mortgage interest deducted (as claimed on Form 1040 

Schedule A, lines 6 and 10, respectively).

 

7

GAO-05-110. 
Page 82 GAO-12-554 Housing Assistance

To analyze how the two deductions are used by different income levels, 

we compared the share of total returns in each AGI range to the share of 

total mortgage interest and property tax deductions in each range. We 

also reviewed analysis by JCT about the distribution of tax expenditures 

for the mortgage interest and property tax deductions by income class in 

2009.8 To analyze how taxpayers in different geographic locations used 

the deductions, we used the IRS data to calculate and compare the 

mortgage interest and property tax deductions claimed on tax returns 

from each state relative to each state’s share of total returns. We also 

used IRS zip code data to analyze use of the mortgage interest and 

property tax deductions in rural and urban areas.9

Using IRS data to analyze the geographic use of housing tax 

expenditures has some limitations. The IRS data reported by state and by 

zip code are based on the mailing address as reported by the taxpayer. 

However, some taxpayers may have used the address of a tax lawyer, 

accountant, or a place of business. Such addresses each could have 

been located in a state or zip code different than the state or zip code in 

which the taxpayer resided. Furthermore, taxpayers report the total dollar 

amount of mortgage interest or property taxes claimed, but do not report 

whether they were taking the deduction on their main home, a second 

home, or both.

Finally, to determine what previous studies had found about usage of 

housing-related tax expenditures in various geographic locations, we 

conducted a literature review for studies on the geographic distribution of 

the mortgage interest and property tax deductions. We identified and 

reviewed four studies that had used IRS tax return or Census data to 

analyze the geographic distribution of the mortgage interest and property 

tax deductions.

 

8

JCS-3-10; and JCT, Present Law, Data, and Analysis Related to Tax Incentives for 

Homeownership, JCX-50-11 (Washington, D.C.: Sept. 30, 2011).

9

Categorization of zip codes as urban or rural was based on the Rural-Urban Commuting 

Area codes, a classification scheme that utilizes the standard Bureau of Census urbanized 

area and urban cluster definitions in combination with work commuting information to 

characterize all the nation’s census tracts by their rural and urban status and relationships.
Page 83 GAO-12-554 Housing Assistance

To determine the extent to which federal efforts have increased 

coordination for selected housing programs and activities, we collected 

and analyzed information, where available, on the efforts taken by HUD, 

USDA, VA, and Treasury to increase coordination or collaboration on 

selected housing programs. We reviewed documentation describing the 

efforts and obtained input from agency officials, including the Office of 

Management and Budget, on the single-family task force, White House 

Rural Council, and Rental Policy Working Group. We reviewed our prior 

work on interagency collaboration and key practices that can help 

enhance and sustain collaborative efforts, and compared the agencies’ 

efforts with our eight key collaboration practices to determine the extent to 

which the efforts were consistent with our key practices. As no law or 

regulation requires collaboration between HUD, USDA, VA, and Treasury, 

we relied on established practices and our views in examining 

consistency.

We identified selected housing programs and activities that may benefit 

from greater coordination or consolidation as first stated in our 2000 

report on housing programs and our prior work on tax expenditures, and 

supplemented that with the recent analysis of fragmentation and overlap 

described here. To identify some of the challenges and implications of 

coordinating or consolidating selected housing programs or activities, we 

reviewed prior GAO and other reports, and collected and analyzed 

information from housing industry, HUD, USDA, and Office of 

Management and Budget officials on potential proposals for mitigating 

duplication, overlap and fragmentation, and some of the challenges and 

implications of increased coordination or consolidation.

We conducted this performance audit from July 2011 through August

2012, in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

Extent to Which Federal 

Efforts Increased 

Coordination for Selected 

Programs and Activities 

and Implications of 

Greater Coordination or 

Consolidation 
Appendix II: Comments from the Department 

of Housing and Urban Development

Page 84 GAO-12-554 Housing Assistance

Appendix II: Comments from the Department 

of Housing and Urban Development
Appendix II: Comments from the Department 

of Housing and Urban Development

Page 85 GAO-12-554 Housing Assistance
Appendix III: Comments from the U.S. 

Department of Agriculture

Page 86 GAO-12-554 Housing Assistance

Appendix III: Comments from the U.S. 

Department of Agriculture
Appendix III: Comments from the U.S. 

Department of Agriculture

Page 87 GAO-12-554 Housing Assistance
Appendix III: Comments from the U.S. 

Department of Agriculture

Page 88 GAO-12-554 Housing Assistance
Appendix IV: Comments from the Department 

of Veterans Affairs

Page 89 GAO-12-554 Housing Assistance

Appendix IV: Comments from the 

Department of Veterans Affairs 
Appendix IV: Comments from the Department 

of Veterans Affairs

Page 90 GAO-12-554 Housing Assistance
Appendix IV: Comments from the Department 

of Veterans Affairs

Page 91 GAO-12-554 Housing Assistance
Appendix V: GAO Contact and Staff 

Acknowledgments

Page 92 GAO-12-554 Housing Assistance

Mathew J. Scirè, (202) 512-8678 or sciremj@gao.gov

James R. White, (202) 512-9110 or whitej@gao.gov. 

In addition to the individuals named above, Andy Finkel, Assistant 

Director; MaryLynn Sergent, Assistant Director; Michelle Bowsky; Emily 

Chalmers; Andrea Dawson; Karen Jarzynka-Hernandez; Mark Kehoe; 

Anar Ladhani; John McGrail; John Mingus; Marc W. Molino; Alise 

Nacson; Barbara Roesmann; Erinn Sauer; Carrie Watkins; and Edwin 

Yuen made key contributions to this report.

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact

Staff 

Acknowledgments 

(250608)
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