DEPARTMENT OF 

HOUSING AND URBAN 

DEVELOPMENT

Opportunities to Improve 

Management of Mortgage 

Insurance and Rental 

Assistance Programs

Statement of Mathew J. Scirè, Director 

Financial Markets and Community Investment

Testimony 

Before the Subcommittee on Transportation, 

Housing and Urban Development, and Related 

Agencies, Committee on Appropriations, House 

of Representatives

For Release on Delivery 

Expected at 10:00 a.m. EDT

Thursday, March, 14, 2013

GAO-13-439T

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-13-439T, a testimony

before the Subcommittee on Transportation, 

Housing and Urban Development, and 

Related Agencies, Committee on 

Appropriations, House of Representatives

March 2013

DEPARTMENT OF HOUSING AND URBAN 

DEVELOPMENT

Opportunities to Improve Management of Mortgage 

Insurance and Rental Assistance Programs

Why GAO Did This Study

HUD operates programs that provide 

mortgage insurance to homebuyers 

and subsidize the rents of low-income 

households. In recent years, HUD’s 

FHA has experienced dramatic growth 

in its insurance portfolio. Expenditures 

for HUD’s rental voucher program also 

have risen substantially. Through the 

MTW demonstration program, HUD 

has sought to reduce costs and 

achieve greater cost-effectiveness in 

federal expenditures for rental housing. 

This testimony discusses (1) the 

financial condition of FHA’s insurance 

fund and FHA’s risk management, (2) 

the costs of the voucher program and 

options to increase its efficiency, and 

(3) HUD’s efforts to evaluate and 

monitor the MTW program. 

This testimony draws from GAO 

reports on FHA’s insurance fund and 

oversight capacity (GAO-10-827R and 

GAO-12-15), HUD’s voucher program

(GAO-12-300), and HUD’s MTW

program (GAO-12-490). GAO also 

reviewed updated information on the 

insurance fund and voucher subsidy 

reserves as of the end of 2012. 

What GAO Recommends

GAO has made a number of 

recommendations to improve FHA’s 

risk management, and FHA has taken 

some actions. GAO also 

recommended that HUD consider 

proposing to Congress options for 

improving the efficiency of the voucher 

program. HUD neither agreed nor 

disagreed and has not yet proposed 

such options. In addition, GAO 

recommended that HUD improve MTW 

information and monitoring. HUD

partially agreed with these

recommendations and has taken initial 

steps to improve performance data.

What GAO Found

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

Administration (FHA) faces financial and risk-management challenges. For the 

fourth straight year, capital reserves for FHA’s Mutual Mortgage Insurance Fund

are below the statutory minimum. Also, declining balances in the fund’s capital 

reserve account have heightened the possibility that FHA will require additional 

funds to have sufficient reserves for all future insurance claims on its existing 

portfolio. Further actions could help to restore FHA’s financial soundness. For 

example, GAO previously concluded that Congress or HUD needs to determine 

the economic conditions the fund would be expected to withstand without 

drawing on Department of the Treasury funding. With regard to risk 

management, FHA has made or plans improvements. For example, FHA 

implemented an initiative in 2009 to strengthen internal controls and risk 

assessment for single-family housing and created a risk office in 2010. However, 

FHA has only recently begun to integrate these activities and conduct annual risk 

assessments in accordance with HUD guidance. Without integrated and updated 

risk assessments that identify emerging risks, as GAO recommended, FHA lacks 

assurance that it has identified all its risks. 

Congress and HUD have taken steps to limit cost increases in the Housing 

Choice Voucher (voucher) program while maintaining assistance for existing 

program participants. Nonetheless, between 2003 and 2010, program 

expenditures grew about 9 percent (after adjusting for inflation), mainly due to 

rising rents, declining household incomes, and decisions to expand the number 

of assisted households. GAO identified options that, if implemented effectively, 

could reduce the need for new appropriations, cut expenditures, or increase the 

number of households assisted. These options include (1) reducing the subsidy 

reserves (unspent funds) of state and local housing agencies that administer the 

program, (2) streamlining administrative requirements, and (3) implementing rent 

reforms and consolidating voucher administration. These options would also 

involve trade-offs, such as higher rent burdens for low-income households. 

Opportunities exist to improve how HUD evaluates and monitors the Moving to 

Work (MTW) program, which is intended to give state and local housing agencies 

flexibility to design and test innovative strategies for providing housing 

assistance. HUD’s guidance does not specify that performance information 

collected from participating housing agencies be outcome-oriented, and HUD has 

not identified performance indicators for the program. In addition, HUD has not 

developed a systematic process for identifying lessons learned from the program, 

which limits HUD’s ability to promote useful practices for broader implementation. 

HUD also has not taken key monitoring steps set out in internal control 

standards, such as issuing guidance that defines program terms or assessing 

compliance with all the program’s statutory requirements. As a result, HUD lacks 

assurance that agencies are complying with statutory requirements. Also, without 

more complete information on program effectiveness and compliance, it will be 

difficult for Congress to know whether an expanded MTW program would benefit 

additional agencies and the residents they serve. Consistent with GAO 

recommendations, HUD has begun to revise guidance on MTW performance 

reporting.

View GAO-13-439T. For more information, 

contact Mathew Scirè at (202) 512-8678 or 

Sciremj@gao.gov.
Page 1 GAO-13-439T 

United States Government Accountability Office

Washington, DC 20548

Chairman Latham, Ranking Member Pastor, and Members of the 

Subcommittee:

I am pleased to be here today to discuss our work on the Department of 

Housing and Urban Development’s (HUD) programs, including the singlefamily mortgage insurance programs that the Federal Housing 

Administration (FHA) administers and HUD’s Housing Choice Voucher 

(voucher) and Moving to Work (MTW) programs. To help provide access 

to mortgage financing, FHA insures private lenders against borrower 

defaults on mortgages that meet FHA criteria. FHA insures almost all of 

its single-family mortgages under the Mutual Mortgage Insurance Fund 

(insurance fund). To help very low-income households afford rental 

housing in the private market, the voucher program pays landlords 

subsidies that generally equal the difference between the unit’s rent and 

30 percent of the household’s income. The MTW program, among other 

purposes, is intended to give participating state and local housing 

agencies flexibility to design and test innovative strategies for providing 

housing assistance and achieving cost-effectiveness.

Today’s constrained budget environment makes it especially important 

that HUD manage these programs as efficiently and effectively as 

possible. Our reviews of these programs have highlighted opportunities 

for management improvements. My statement today is based on four 

GAO reports: a September 2010 report on FHA’s financial condition, a 

November 2011 report on FHA’s risk assessment and human capital 

management, a March 2012 report on the voucher program, and an April 

2012 report on the MTW program.1

 

1

See GAO, Mortgage Financing: Opportunities to Enhance Management and Oversight of 

FHA’s Financial Condition, 

Specifically, I will discuss (1) the 

financial condition of FHA’s insurance fund and FHA’s risk management, 

(2) the costs of the voucher program and options to increase its 

efficiency, and (3) HUD’s efforts to evaluate and monitor the MTW 

program.

GAO-10-827R (Washington, D.C.: Sept. 14, 2010); Federal 

Housing Administration: Improvements Needed in Risk Assessment and Human Capital 

Management, GAO-12-15 (Washington, D.C.: Nov. 7, 2011); Housing Choice Vouchers: 

Options Exist to Increase Program Efficiencies, GAO-12-300 (Washington, D.C.: Mar. 19, 

2012); and Moving to Work Demonstration: Opportunities Exist to Improve Information and 

Monitoring, GAO-12-490 (Washington, D.C.: Apr. 19, 2012). 

 
 

Page 2 GAO-13-439T 

To do this work, we analyzed actuarial reviews of the insurance fund and 

federal budget documents, and interviewed FHA officials, staff from 

FHA’s actuarial review contractor, and housing market researchers. We 

also analyzed data on FHA’s business volume, market share, workload, 

and staff and contractor resources. We reviewed documentation on the 

proposed structure and functions of FHA’s Office of Risk Management 

and Regulatory Affairs and the Office of Single Family Housing’s internal 

quality control initiative. Further, we reviewed documentation related to 

workforce and succession planning. For this testimony, we also reviewed 

updated information on the insurance fund’s condition as of September 

30, 2012. For our study of the voucher program, we reviewed and 

analyzed appropriations legislation, budget documents, and HUD’s 

annual guidance on the allocation of the program’s appropriation to state 

and local housing agencies. We used HUD data to analyze subsidy 

reserves and the implications of three types of programmatic reform 

options for the voucher program: increasing minimum rents, changing the 

percentage of income tenants pay toward rent, and requiring tenants to 

pay a percentage of fair market rent. For this testimony, we also reviewed 

updated information on housing agency subsidy reserves as of December 

31, 2012. For MTW, we reviewed the annual reports (as of January 2012) 

for 30 state and local housing agencies, compared HUD’s guidance on 

the type of performance information participating agencies should report 

with the GPRA (Government Performance and Results Act) 

Modernization Act of 2010 (GPRA Modernization Act), and reviewed 

documentation of HUD’s monitoring activities.2

We performed the work on which this statement was based 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.

Our prior reports each 

include a detailed description of our scope and methodology.

 

2

According to HUD data, as of January 2012, 35 agencies were in the MTW program. Of 

these, 30 had submitted an annual report to HUD and the other 5 had not been in the 

program long enough to report on their accomplishments. 
 

Page 3 GAO-13-439T 

FHA’s single-family mortgage programs have played a prominent role in 

mortgage financing in the wake of the 2007-2009 financial crisis, the 

housing downturn, and the contraction of the conventional mortgage 

market. In 2012, FHA insured about $227 billion in single-family 

mortgages, and the overall insurance portfolio was about $1.1 trillion.

The Omnibus Budget Reconciliation Act of 1990 required HUD to take 

steps to ensure that the insurance fund attained a capital ratio of at least 

2 percent by November 2000 and maintained at least that level 

thereafter.3

Under the Federal Credit Reform Act of 1990 (FCRA), FHA and other 

federal agencies must estimate the net lifetime costs—known as credit 

subsidy costs—of their loan insurance or guarantee programs and include 

the costs to the government in their annual budgets. Credit subsidy costs 

represent the net present value of expected lifetime cash flows, excluding 

administrative costs.

The capital ratio is the fund’s economic value divided by the 

insurance-in-force (outstanding insurance obligations). The act also 

required an annual independent actuarial review of the economic net 

worth and soundness of the insurance fund. The annual actuarial review 

is now a requirement in the Housing and Economic Recovery Act of 2008, 

which also requires an annual report to Congress on the results of the 

review.

4

 

3

Pub. L. No. 101-508.

When estimated cash inflows (such as borrower 

insurance premiums) exceed expected cash outflows (such as insurance 

claims), a program is said to have a negative credit subsidy rate and 

generates offsetting receipts that reduce the federal budget deficit. When 

the opposite is true, the program is said to have a positive credit subsidy 

rate—and therefore requires appropriations. Generally, agencies must 

produce annual updates of their subsidy estimates—reestimates—on the 

basis of information about actual performance and estimated changes in 

future loan performance. FCRA recognized the difficulty of making credit 

subsidy estimates that mirrored actual loan performance and provides 

4

For a mortgage insurance program, cash inflows consist primarily of fees and premiums 

charged to insured borrowers and proceeds from sales of foreclosed properties, and cash 

outflows consist mostly of payments to lenders to cover the cost of claims. 

Background 

Single-Family Mortgage 

Programs
 

Page 4 GAO-13-439T 

permanent and indefinite budget authority for reestimates that reflect 

increased program costs.5 Upward reestimates increase the federal 

budget deficit unless accompanied by reductions in other government 

spending or an increase in receipts.

In recent years, HUD’s voucher program annually helped provide 

affordable rental housing to about 2 million households with very or 

extremely low incomes.6 Approximately 2,400 state and local housing 

agencies administer the voucher program on HUD’s behalf. Under the 

program, an assisted household pays 30 percent of its monthly adjusted 

income or the housing-agency established minimum rent—up to $50—

toward its monthly rent. The remainder of the rent— the difference 

between (1) the lesser of the unit’s gross rent (rent plus utilities) or a local 

“payment standard” and (2) the household’s payment—is paid through a 

HUD-subsidized “voucher.” The payment standard is based on the HUDdetermined fair market rent for the locality, which HUD annually estimates 

for metropolitan and nonmetropolitan areas.7

Each year, Congress appropriates funding for subsidies for renewal 

(existing) and incremental (new) vouchers and administrative expenses. 

HUD then allocates the program funding to housing agencies, which are 

expected to use all allocated subsidy funding for authorized program 

expenses. However, if housing agencies’ allocated amounts exceed the 

total cost of their program expenses in a given year, their unused subsidy 

funds must be maintained in subsidy reserve accounts. HUD also pays 

administrative fees to housing agencies based on the number of units 

leased (vouchers used) as of the first of each month. As with subsidy 

Participating housing 

agencies can set payment standards (that is, pay subsidies) between 90 

and 110 percent of the fair market rent for their areas.

 

5

Budget authority is the authority federal law provides to enter into financial obligations 

that will result in immediate or future outlays involving federal funds. Permanent budget 

authority is available as the result of previously enacted legislation and is available without 

further legislative action. Indefinite budget authority is budget authority that, at time of 

enactment, is for an unspecified amount.

6

Very low-income households are those with incomes at or below 50 percent of the area 

median income; extremely low-income households are those with incomes at or below 30 

percent of the area median income.

7

Under 42 U.S.C. 1437f(c)(1), HUD annually must publish fair market rents for the 

voucher program. See related regulations at 24 C.F.R. Part 888.

Housing Choice Voucher 

Program
 

Page 5 GAO-13-439T 

funding, if the appropriated amount does not fully cover agencies’ fees, 

HUD will reduce the amount of funding each housing agency receives to 

fit within the appropriated amount.

The voucher program is not an entitlement program; thus, the amount of 

budget authority Congress provides through annual appropriations limits 

the number of households that the program can assist. Historically, 

appropriations for the voucher program (or for other housing programs) 

have not been sufficient to assist all households that HUD identified as 

having worst-case housing needs—households with very low incomes 

that pay more than 50 percent of their incomes in rent, live in substandard 

housing, or both.

HUD implemented the MTW demonstration program in 1999.8 As of 

February 2013, 35 housing agencies were participating.9 To put in place 

the innovations intended under the program’s authorizing legislation, 

agencies may request waivers of certain provisions in the United States

Housing Act of 1937, as amended.10

The act that created the program requires participating agencies to 

address three purposes and meet five requirements. The purposes are to 

(1) reduce costs and achieve greater cost-effectiveness in federal 

housing expenditures, (2) give families with children incentives to obtain 

employment and become self-sufficient, and (3) increase housing choices 

for low-income families.

For example, housing agencies may 

combine the funding they are awarded annually from different programs—

such as public housing capital funds, public housing operating funds, and 

voucher funds—into a single, authoritywide funding source.

In making these changes, MTW agencies must (1) serve substantially the 

same total number of eligible low-income families that they would have 

served had funding amounts not been combined; (2) maintain a mix of 

families (by family size) comparable to those they would have served 

 

8

The program as authorized by the Omnibus Consolidated Rescissions and 

Appropriations Act of 1996. Pub. L. No. 104-134, 110 Stat. 1321, 1321-281. 

9

While 39 housing agencies are authorized to participate in the program, 35 have signed 

contracts with HUD and are actively participating.

1042 U.S.C. 1437 et seq.

Moving to Work Program
 

Page 6 GAO-13-439T 

without the demonstration; (3) ensure that at least 75 percent of 

households served are very low income; (4) establish a reasonable rent 

policy to encourage employment and self-sufficiency; and (5) assure that 

the housing provided meets HUD’s housing quality standards.

The insurance fund’s capital ratio dropped sharply in 2008 and fell below 

the statutory minimum in 2009, when economic and market developments 

created conditions that simultaneously reduced the fund’s economic value 

(the numerator of the ratio) and increased the insurance-in-force (the 

denominator of the ratio).11

 

11Unless otherwise noted, references to years are fiscal years. 

According to annual actuarial reviews of the 

insurance fund, the capital ratio fell from about 7 percent in 2006 to 3 

percent in 2008 and below 2 percent in 2009 (see fig. 1). In 2012, the 

ratio fell below zero to negative 1.44 percent.

The Condition of 

FHA’s Fund Has 

Worsened, and FHA’s 

Risk Assessment 

Mechanisms Are Not 

Fully in Place

FHA’s Insurance Fund Has 

a Negative Capital Ratio
 

Page 7 GAO-13-439T 

Figure 1: Estimates of the Fund’s Capital Ratio, 2001-2012

In its November 2012 report to Congress, HUD cited several reasons for 

the declines from 2011 to 2012. These included the following:

• First, the estimates of house price appreciation for the 2012 actuarial 

study were significantly lower than those used for 2011. The 

difference accounted for an estimated $10.5 billion reduction in the 

value of the insurance fund compared with the actuary’s 2011 

projection of what the fund’s economic value would be at the end of 

2012.

• Second, the continued decline in interest rates causes a substantial 

loss of revenue. Premium revenues from an existing portfolio go down 

when more borrowers pay off their mortgages to refinance into lower 

rates. The capital ratio calculation does not include those borrowers 

who refinance into new FHA-insured loans. In addition, actuarial 

projections include higher claim expenses when interest rates stay 

low because borrowers who are unable to refinance become more 

willing to default. The effects of continued low interest rates resulted in 

a reduction of $8 billion in the estimated economic value of the 

insurance fund (versus the previous year’s projections).

• Third, FHA directed the actuary to adjust the way losses from 

defaulted loans and reverse mortgages were reflected in the 

economic value of the insurance fund. This resulted in an estimated 
 

Page 8 GAO-13-439T 

$10 billion reduction to the economic value, compared with the 2011 

projections.

As the capital ratio declined, the insurance fund’s condition also 

worsened from the federal budgetary perspective. FHA annually 

estimates the subsidy costs of new activity for its loan insurance program 

and also reestimates, or annually updates, prior subsidy cost estimates. 

Historically, FHA estimated that its loan insurance program was a 

negative subsidy program. On the basis of these estimates, FHA 

accumulated substantial balances in a capital reserve account, which 

represents amounts in excess of those needed for estimated credit 

subsidy costs and helps cover reestimates reflecting unanticipated 

increases to those costs (such as higher-than-expected claims). Funds 

needed to cover estimated subsidy costs are accounted for in the 

insurance fund’s financing account.12 In recent years, FHA has 

transferred billions of dollars annually from the capital reserve account to 

the financing account, reflecting increases in estimated credit subsidy 

costs (upward subsidy reestimates). As a result, balances in the capital 

reserve account fell dramatically, from $19.3 billion at the end of 2008 to 

an estimated $3.3 billion at the end of 2012 (see fig. 2). At the end of 

2012, the financing account held approximately $35.1 billion.

 

12Balances in the capital reserve and financing accounts may not equal the insurance 

fund’s economic value, as defined in the actuarial review, in part because FCRA requires 

the Office of Management and Budget to use certain economic assumptions. The 

independent actuarial review may not use the same assumptions. 
 

Page 9 GAO-13-439T 

Figure 2: End-of-Year Balances in the Fund’s Capital Reserve Account, 2002–2012

If the capital reserve account were to be depleted due to additional 

upward reestimates, FHA would need to draw on permanent and 

indefinite budget authority to have sufficient reserves for all future 

insurance claims on its existing portfolio. The President’s budget for 2013 

contained a $9.3 billion upward reestimate in FHA’s credit subsidy costs 

for the insurance fund. The budget indicated that the reestimate would 

deplete FHA’s capital reserve account in 2012, potentially causing FHA to 

draw on $688 million in permanent and indefinite budget authority. 

However, according to FHA, the agency ultimately did not need to draw 

on this authority because of premium increases and higher-thananticipated loan volumes. In its 2012 report to Congress, HUD noted that 

information (the insurance fund valuation) in the forthcoming President’s 

budget for 2014 will determine the adequacy of the capital balance in the

insurance fund and thus the need to draw on permanent and indefinite 

budget authority in the current fiscal year. The President’s budget is 

expected to be released in the spring of 2013.

The 2012 actuarial analysis projects that the capital ratio will be positive 

by 2014 and return to above the statutory 2 percent minimum in 2017. 

This forecast was based on assumptions such as the level of future 

lending activity and house prices for multiple years, which are difficult to 
 

Page 10 GAO-13-439T 

predict. The forecast also assumed no changes in policy or other actions 

by FHA that might accelerate “recovery” time.

FHA plans policy changes that may accelerate increases to the ratio, 

including premium increases. For example, effective April 1, 2013, FHA 

announced that it will increase the annual insurance premiums most new 

borrowers pay between 0.05 and 0.10 percentage points. The annual 

premium for loans of $625,500 or more will be set at the statutory 

maximum of 1.5 or 1.55 percent, depending on the loan-to-value ratio.

13

Further actions could help to restore FHA’s long-term financial soundness 

and define its future role. For example, we previously concluded that 

Congress or HUD needs to determine the economic conditions the 

insurance fund would be expected to withstand without borrowing from 

Treasury (drawing on permanent and indefinite budget authority).

Effective June 3, 2013, for new loans FHA also announced that it will 

require borrowers to continue to pay annual premiums, regardless of loan 

value. Previously, premiums could be eliminated after loans (principal 

amounts) declined to 78 percent of their original value.

Considering the importance of defining the economic conditions FHA 

should withstand, as well as continuing uncertainty over the resolution of 

Fannie Mae and Freddie Mac and the potential impact of their resolution 

on FHA, in February 2013 we included FHA in a high-risk area called 

“modernizing the U.S. financial regulatory system and the federal role in 

housing finance.”14

 

13The loan-to-value ratio is the loan amount divided by the value of the home at mortgage 

origination.

14Every 2 years, we provide Congress with an update on our High-Risk Program, which 

highlights major areas that are at high risk for fraud, waste, abuse, or mismanagement, or 

need broad reform. We previously had identified “modernizing the U.S. financial regulatory 

system” as a high-risk area and included a discussion of concerns about the resolution of 

Fannie Mae and Freddie Mac. See GAO, High-Risk Series: An Update, GAO-13-283

(Washington, D.C.: Feb. 14, 2013).
 

Page 11 GAO-13-439T 

In November 2011, we reported on several weaknesses in FHA’s riskassessment efforts.15

• FHA’s risk-assessment strategy was not integrated throughout the 

organization. Although a consultant’s report recommended that FHA 

integrate risk assessment and reporting throughout the organization, 

the Office of Single Family Housing’s 2009 quality control initiative 

(designed to strengthen internal controls and risk assessment) and 

the Office of Risk Management’s activities remained separate 

efforts.

Specifically, we noted that:

16

• Contrary to HUD guidance, the Office of Single Family Housing had 

not conducted an annual, systematic review of risks to its program 

and administrative functions since 2009. According to an official in this 

office, management intended to conduct an annual assessment but 

changes in senior leadership in the office and the few staff available to 

perform assessments (because of attrition and increased workload)

hampered these efforts.

FHA officials noted that until the Office of Risk Management 

(which was created in 2010) set up a governance process, such 

integration would not be possible. FHA officials stated they were 

making every effort to help ensure that Office of Risk Management 

activities complemented program office activities.

• The Office of Single Family Housing’s risk-assessment efforts did not 

include procedures for anticipating potential risks presented by 

changing conditions. The consultant’s report proposed a reporting 

process and templates for identifying emerging risks. Office of Risk 

Management officials told us that once they were operational, risk 

committees would determine the exact design and content of these 

reports and templates.

We concluded that all these factors limited FHA’s effectiveness in 

identifying, planning for, and addressing risk. Based on the consultant’s 

findings, as well as our internal control guidance and HUD guidance, we 

recommended that FHA (1) integrate the internal quality control initiative 

 

15GAO-12-15. 

16To provide assistance in developing a risk management strategy and organizational 

structure and establishing risk management policies and processes, FHA hired a 

consultant to produce a comprehensive report and recommend best practices for its 

operation. The consultant’s December 2010 report outlined a consolidated framework for 

the risk assessment activities carried out in different parts of the organization. McKinsey & 

Company, Building the ORM Organization, Close-out Materials, a report prepared at the 

request of the Department of Housing and Urban Development, December 2010. 

Actions to Improve Risk 

Assessment and Human 

Capital Management Are 

Still in Process
 

Page 12 GAO-13-439T 

of the Office of Single Family Housing into the processes of the Office of 

Risk Management, (2) conduct an annual risk assessment, and (3) 

establish ongoing mechanisms—such as using report templates from the 

consultant’s report—to anticipate and address risks that might be caused 

by changing conditions.17

FHA has begun addressing recommendations made by the consultant. 

For instance, in June 2012 it finalized the delegations of authority needed 

for the Office of Risk Management and Regulatory Affairs to establish and 

maintain risk-management policies, activities, and controls for FHA. It 

also formed a Single Family Credit Risk Committee and an Operational 

Risk Committee.

HUD agreed with our recommendations.

18

FHA also has begun addressing our November 2011 recommendations 

by taking the following actions:

• FHA has begun integrating its quality control initiatives into the 

processes of the Office of Risk Management. For example, the Office 

of Risk Management and Regulatory Affairs is reviewing the results of 

quality control activities as it prepares baseline operational risk 

assessments. 

• FHA developed a plan for conducting an inaugural annual risk 

assessment (including preparing baseline operational risk 

assessments) for the Office of Single Family Housing.

• As previously noted, FHA has created committees to address credit 

and operational risks. The charters for both committees indicate that 

they are to discuss and address emerging risks. And, as part of the 

annual risk-assessment process mentioned above, FHA plans to 

identify emerging risks.

However, some of the initiatives taken in response to our 

recommendations have not been completed or put fully in place. For 

example, FHA does not expect to complete its inaugural risk assessment 

until September 2013. These initiatives are critical to FHA’s efforts to 

assess and manage risk.

 

17GAO, Internal Control Management and Evaluation Tool, GAO-01-1008G (Washington, 

D.C.: August 2001).

18Credit risk is risk related to borrower default or lender default. Operational risk is risk 

related to people, processes, technology, external events, and reputation.
 

Page 13 GAO-13-439T 

Our November 2011 report also identified weaknesses in FHA’s human 

capital management. Specifically, we noted that

• leading organizations use workforce planning practices that include 

defining critical skills and skill gaps, but FHA’s approach did not have 

mechanisms for doing so or a current workforce plan.19

• contrary to our internal control standards and HUD guidance, FHA 

also did not have a current succession plan.20

We concluded that without a more comprehensive workforce planning 

process that included succession planning, FHA’s ability to systematically 

identify future workforce needs and plan for upcoming retirements was 

limited. We recommended that FHA develop workforce and succession 

plans for the Office of Single Family Housing. HUD agreed with our 

recommendations.

We noted that 

succession planning was particularly important because, as of July 

2011, almost 50 percent of Single Family Housing staff at 

headquarters were eligible to retire in the next 3 years. The 

percentage of staff eligible to retire at the homeownership centers was 

even higher—63 percent. Additionally, while single-family loan volume 

grew significantly from 2006 to 2010, staffing levels for the Office of 

Single Family Housing remained relatively constant.

Since our November 2011 report, FHA has developed a workforce 

analysis and succession plan that identifies gaps in critical competencies 

and additional steps that need to be taken, although the timing of many of 

these steps is not specified. Completing these steps remains critical to 

ensuring that the agency has adequate staff to effectively oversee its 

mortgage insurance programs.

 

19GAO, Human Capital: Key Principles for Effective Strategic Workforce Planning, 

GAO-04-39 (Washington, D.C.: Dec. 11, 2003). 

20GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1 

(Washington, D.C.: November 1999). 
 

Page 14 GAO-13-439T 

We reported in March 2012 that appropriations for the voucher program 

increased from $14.8 billion in 2005 to $18.4 billion in 2011 (about 24 

percent).21

Several factors affected voucher program costs from 2003 to 2010, 

including (1) increases in subsidy costs for existing vouchers, (2) subsidy 

costs for new vouchers, and (3) administrative fees paid to housing 

agencies. After adjusting for inflation,

HUD disburses appropriated funds to housing agencies for 

program expenses such as subsidy payments to landlords and 

administrative costs. From 2003 through 2010, housing agencies’ 

expenditures increased from approximately $11.7 billion to $15.1 billion 

(about 29 percent). After adjusting for inflation, total expenditures grew by 

8.8 percent over this period.

• subsidy costs for existing vouchers grew 2.4 percent. Two factors 

generally explain this growth—increasing rents and decreasing 

incomes. First, rents outpaced inflation. As rents increase, HUD and 

housing agencies must pay larger subsidies to cover the increases, 

assuming no changes to household incomes. Second, tenant incomes 

declined. Specifically, the median annual income of voucher-assisted 

households fell about 3 percent (from about $11,000 to $10,700, in 

2011 dollars). As incomes decline, assisted households pay less 

towards rent, requiring larger subsidies to cover the difference 

between rents and tenant payments.

• subsidy costs for new vouchers grew 4.4 percent, accounting for half 

the overall constant dollar increase in expenditures. Congress 

increased the size of the program by adding new vouchers for groups 

such as homeless veterans and nonelderly disabled households.

• administrative fees paid to housing agencies grew about 2 percent, 

although the fees housing agencies have received over the years

have been less than the amount for which they were eligible due to 

reductions in appropriations. Housing agencies noted that the cost of 

doing business increased. For example, higher gasoline prices 

contributed to higher inspection costs, especially for housing agencies 

administering vouchers over large areas.

 

21GAO-12-300. In 2005 Congress created a specific budget account (Tenant-based 

Rental Assistance) for the voucher program. Prior to this, Congress provided a combined 

appropriation for both the voucher and Project-based Section 8 programs through the 

Housing Certificate Fund. As a result, it is not possible to distinguish the voucher 

program’s appropriations and outlays from those of the Project-based Section 8 programs 

prior to 2005.

Opportunities Exist to 

Increase Efficiencies 

in HUD’s Voucher 

Program 
 

Page 15 GAO-13-439T 

The design and goals of the voucher program also contributed to overall 

program costs. The voucher program has various features to give priority 

to the poorest households, and serving these households requires greater 

subsidies. For instance, housing agencies must lease 75 percent of their 

new vouchers to extremely low-income households. Despite increases in 

program costs, our work and other published studies have found that 

vouchers generally were more cost-effective in providing housing 

assistance than federal programs designed to build or rehabilitate lowincome housing.22

Since 2003, Congress and HUD have taken some actions to limit the 

extent of increases, while maintaining assistance for existing program 

participants. For example, in 2003, Congress changed the voucher 

program’s funding formula to tie renewal funding for vouchers to actual 

costs and leasing rates, rather than the number of authorized vouchers 

(used or unused). Also, each year since 2004, Congress has provided 

administrative fees that were at least 6 percent lower than the 2003 rate.

HUD has also taken steps to increase program efficiencies. For example, 

according to HUD reports, steps taken by the agency have reduced 

improper payments (subsidy over- and underpayments) from $1.1 billion 

in 2000 to $440 million in 2009. These steps include providing housing 

agencies with fraud detection tools, such as the Enterprise Income 

Verification system, which makes tenant income and wage data available 

to housing agencies. This system was fully implemented in 2005. In 2010, 

HUD began studying the administrative fee structure for the voucher 

program to ascertain how much it costs a housing agency to run an 

efficient program. Because the study is ongoing, the extent to which it will 

identify ways to improve efficiency is not yet clear.

We identified several options that if implemented effectively, could reduce 

voucher program costs or allow housing agencies to assist additional 

households. Each option would require congressional action to 

implement. These options, which include rent reform and administrative 

 

22However, many of these studies noted that production programs provide benefits, 

including supportive services, that the voucher program typically does not provide. For 

example, see GAO, Federal Housing Assistance: Comparing the Characteristics and 

Costs of Housing Programs, GAO-02-76 (Washington, D.C.: Jan. 31, 2002). 

Steps Congress and HUD 

Took to Manage Cost 

Increases

Options to Reduce 

Program Costs or Increase 

Efficiencies
 

Page 16 GAO-13-439T 

consolidation, also involve difficult policy decisions that will affect some of 

the most vulnerable members of the population and alter long-standing 

program priorities and practices.

Improved information on the level of subsidy reserve funding housing 

agencies should maintain could aid budget decisions and reduce the 

need for new appropriations. Housing agencies have accumulated 

subsidy reserves (unspent funds) that Congress could use to (1) reduce 

program appropriations (through a rescission and offset) and potentially 

meet other needs or (2) direct HUD to assist more households.23

HUD has requested the authority to offset and, in some cases, 

redistribute “excess” reserves (those beyond what is needed to fund 

defined contingencies). But HUD has not developed specific or consistent 

criteria defining what constitutes excess reserves or how it would 

redistribute funding among housing agencies. For example, HUD officials 

told us that housing agencies should retain approximately 8.5 percent (or 

1 month’s worth) of their annual funding allocations in reserves. However, 

in its 2010 and 2011 budget proposals, HUD defined excess reserves as

those above 4 and 6 percent, respectively, of allocated amounts.

Housing 

agencies may under-lease or receive more funding than they can spend 

in a year. Unless rescinded and offset, housing agencies can keep 

unused subsidy funding in reserve accounts and spend it (for authorized 

expenses) in future years. As of December 31, 2012, 2,178 housing 

agencies had a total of approximately $1.2 billion in subsidy reserves.

In our March 2012 report, we concluded that providing Congress with 

better information on subsidy reserves could help ensure that disbursed 

funds would be used to assist households rather than remain unused.24

 

23A rescission is legislation enacted by Congress that cancels the availability of budget 

authority previously enacted before the authority would otherwise expire. 

We recommended that HUD provide information to Congress on (1) the 

estimated amount of excess subsidy reserves and (2) criteria for how it 

will redistribute excess reserves among housing agencies. HUD neither 

agreed nor disagreed with our recommendations. However, HUD officials 

24We have previously indicated that agency reporting about key areas such as financial 

management or program reforms should inform congressional decision making. See GAO, 

Government Performance: GPRA Modernization Act Provides Opportunities to Help 

Address Fiscal, Performance, and Management Challenges, GAO-11-466T (Washington 

D.C., Mar. 16, 2011). 

Improve Information on 

Subsidy Reserves of Housing 

Agencies 
 

Page 17 GAO-13-439T 

subsequently told us that, upon request, they provide information to 

HUD’s Appropriations Committee on subsidy reserve levels, including 

balances above certain minimum reserve levels. We will continue to 

monitor the agency’s progress in implementing our recommendations.

As we indicated in our March 2012 report, in various budget requests for 

2004 through 2012, HUD requested the authority to put in place reforms 

that could decrease voucher program subsidy costs, administrative costs, 

or both. These reforms include streamlining complex and burdensome 

requirements and improving the delivery and oversight of rental 

assistance. For example, housing agencies must re-examine household 

income and composition at least annually. HUD wants to extend the time 

between re-examinations from 1 year to 3 years and between unit 

inspections from 1 year to 2 years. According to one program 

administrator, annual re-examinations and inspections account for more 

than 50 percent of administrative costs in the voucher programs the 

agency administers. Although some of the changes needed to simplify 

and streamline the voucher program would require congressional action, 

HUD’s forthcoming study of the program’s administrative fee structure 

and the experiences of housing agencies in the MTW program may 

provide insight into specific reforms to ease administrative burden.

We recommended in our March 2012 report that HUD consider proposing 

to Congress options for streamlining and simplifying the administration of 

the voucher program and making corresponding changes to the 

administrative fee formula to reflect any new or revised administrative 

requirements.25

 

25In that report, we noted that efforts to identify specific reforms are in line with the goals 

of the Government Performance and Results Act of 1993 (GPRA), which Congress 

enacted, in part, to inform its decision making by helping to ensure that agencies provide 

objective information on the relative effectiveness and efficiency of their programs and 

spending. GPRA, § 2(b)(5). The GPRA Modernization Act of 2010 updated the federal 

government’s performance measurement framework established in GPRA. 

We stated that such proposals should be informed by 

results of HUD’s ongoing administrative fee study and the experience of 

the MTW program. HUD neither agreed nor disagreed with our 

recommendations. As of March 2013, HUD had not made such proposals 

to Congress. 

Implement Administrative 

Reform
 

Page 18 GAO-13-439T 

If implemented, rent reform (that is, changes to the calculation of 

households’ payment toward rent) and the consolidation of voucher 

administration under fewer housing agencies could yield substantial cost 

savings, allow housing agencies to serve additional households if 

Congress were to reinvest annual cost savings in the voucher program, or 

both. Furthermore, these options are not mutually exclusive; that is, cost 

savings or additional households served could be greater if both options 

were implemented.

Because about 90 percent of voucher program funds are used to pay 

subsidies, decreasing the subsidy (or, alternatively stated, increasing the 

household contribution toward rent) will yield the greatest costs savings. 

As shown in table 1, our March 2012 report estimated the effect of 

several options that change the minimum rents households must pay or 

different formulas for calculating what tenants pay. For example, 

increasing minimum rents to $75 would yield an estimated $67 million in 

annual cost savings or allow housing agencies to serve an estimated 

8,600 additional households. Requiring assisted households to pay 30 

percent of their gross income (rather than net income) in rent would yield 

an estimated annual savings of $513 million or allow housing agencies to 

serve an estimated 76,000 additional households.

Table 1: Estimated Annual Effect of Selected Rent Reform Options on Program 

Costs and Number of Voucher-Assisted Households Served

Reform option

Estimated annual 

cost savings

Estimated additional 

households served a

Increase minimum rents to

$50

b, c

$11 million d 1,400

75 67 million 8,600

100 124 million 16,000

150 318 million 43,000

200 602 million 85,000

250 1.1 billion 167,000

300 1.8 billion 287,000

Require households to pay

35 percent of adjusted income in rent

e

$1.1 billion 164,000

30 percent of gross income in rent 513 million 76,000

35 percent of the fair market rent 927 million f 136,000

Source: GAO analysis of HUD data.

Implement Rent Reform and 

Consolidate Voucher 

Administration
 

Page 19 GAO-13-439T 

a

To estimate the effect of these options on program costs and households assisted, we analyzed 

household characteristic and rent data as of December 2010. These estimates illustrate the relative 

effects of the options if fully implemented in one year. Actual implementation of such options likely 

would be done gradually and not all of the savings or efficiencies would be realized in the first year.

b

We assumed that all households paid the greater of the minimum rent or 30 percent of adjusted 

income. Our minimum rent calculations did not take into account any payment households received 

for utility assistance.

c

On January 31, 2012, the House Subcommittee on Insurance, Housing, and Community Opportunity 

released a revised draft of the Section 8 Savings Act entitled the Affordable Housing and SelfSufficiency Improvement Act of 2012. The draft bill proposes implementing a minimum rent of at least 

$69.45 (adjusted annually). We estimated that this increase would save approximately $56 million 

annually or could be used to serve an additional 7,100 households if Congress chose to reinvest the 

savings.

d

We assumed all applicable households paid $50 in rent. As previously discussed, although housing 

agencies are permitted to set a minimum rent of up to $50, not all do and many offer hardship 

exemptions from the requirement.

e

For the adjusted and gross income options, we did not impose a minimum rent requirement.

f

While each of these options could reduce costs or create administrative 

efficiencies—each also involves trade-offs. Under each option, some 

households would have to pay more in rent than they currently pay. From 

2 to 92 percent of households would experience an increase in their 

monthly payment: setting a minimum rent of $50 would affect the fewest 

households and increasing rent to 35 percent of adjusted income would 

affect the most. The options also would have varying effects on different 

types of households (such as families with children, persons with 

disabilities, and the elderly). We noted disparities by geographic area 

(such as high-cost versus low-cost rental markets) as well. For example, 

setting household rental payments based on a percentage of the 

applicable fair market rent would place greater burdens on households in 

high-cost areas.

For this option, we evaluated the effect of requiring households to pay 12, 15, 20, 30, and 35 percent 

of the fair market rent and no minimum rent. Only the 35 percent option resulted in cost savings or 

additional households served on an annual basis—all other percentages resulted in cost increases 

and fewer households served.

We concluded in our March 2012 report that consolidating voucher 

program administration under fewer housing agencies could yield a more 

efficient oversight and administrative structure and cost savings for HUD 

and housing agencies. HUD spends considerable resources in 

overseeing the more than 2,400 housing agencies that administer the 

voucher program. According to a 2008 HUD study, the department 

dedicated from more than half to two-thirds of its level of oversight to 10 

percent of its units (generally, housing agencies that administered 400 or 

fewer vouchers and about 5 percent of total program funds). According to 

agency officials, consolidating voucher administration under fewer 

agencies would decrease HUD’s oversight responsibilities. However, 
 

Page 20 GAO-13-439T 

current information on the magnitude of these savings was not available

when we conducted our 2012 review. 

As we reported in April 2012, HUD has not identified standard 

performance data and indicators needed to evaluate the MTW program.

26

Housing agencies in the MTW program report annually on their activities, 

which include efforts to reduce administrative costs and encourage 

residents to work. However, the usefulness of this information is limited 

because, in some cases, it is not outcome-oriented. For example, for 

similar activities designed to promote family self-sufficiency, one MTW 

agency reported only the number of participants, which is generally 

considered an output, and another did not provide any performance 

information. In contrast, a third agency reported on the average income of 

program graduates, which we consider an outcome. To be consistent with 

the GPRA Modernization Act, HUD’s guidance on reporting performance 

information should indicate the importance of outcome-oriented

information.27

Our April 2012 report also noted that HUD has not identified the 

performance data that would be needed to assess the results of similar 

MTW activities or of the program as a whole. Researchers and others 

have noted the limitations of the program’s initial design in terms of 

evaluation. Specifically, it lacks standard performance data. Obtaining 

performance information from demonstration programs that are intended 

to test whether an approach (or any of several approaches) can obtain 

positive results is critical.

Without more specific guidance on the reporting of 

performance information—for example, to report quantifiable and 

outcome-oriented information—HUD cannot be assured of collecting 

information that reflects the outcomes of individual activities.

28

 

26

This information helps determine whether the 

program has led to improvements consistent with its purposes. HUD 

started collecting additional data from MTW agencies (including 

household size, income, and educational attainment), but has not yet 

analyzed the data. And since 2009, HUD required agencies to provide 

GAO-12-490. 

27Pub. L. No. 111-352, 124 Stat. 3866 (2011). The GPRA Modernization Act amends 

GPRA, Pub. L. No. 103-62, 107 Stat. 285 (1993). 

28GAO, Program Evaluation: Improving the Flow of Information to the Congress, 

GAO/PEMD-95-1 (Washington, D.C.: Jan. 30, 1995). 

Opportunities Exist to 

Improve Information 

on and Monitoring of 

the MTW Program
 

Page 21 GAO-13-439T 

information on the impact of activities, including benchmarks and metrics, 

in their annual MTW reports. While these reports are informative, they do 

not lend themselves to quantitative analysis because the reporting 

requirements do not call for standardized data, such as the number of 

residents who found employment. Whether these data are sufficient to 

assess similar activities and the program as a whole is not clear, and 

HUD has not identified the data it would need for such an assessment.

HUD also has not established performance indicators for the MTW 

program. The GPRA Modernization Act requires that federal agencies 

establish efficiency, output, and outcome indicators for each program 

activity as appropriate.29 Internal control standards also require the 

establishment of performance indicators.30

The shortage of analysis and performance indicators has hindered 

comprehensive evaluation efforts, although such evaluations are key to 

determining the success of any demonstration program. We 

recommended that HUD (1) improve its guidance to MTW agencies on 

providing performance information in their annual reports by requiring that 

such information be quantifiable and outcome-oriented, (2) develop and 

implement a plan for quantitatively assessing the effectiveness of similar 

activities and for the program, and (3) establish performance indicators 

for the program. HUD generally agreed with our recommendations. 

Consistent with our recommendations, HUD has taken initial steps to 

revise performance reporting requirements for MTW agencies, but these 

requirements had not yet been finalized as of March 2013.

As we noted in 2012, specific 

performance indicators for the MTW program could be based on the three 

statutory purposes of the program. For example, agencies could report on 

the savings achieved (reducing costs). However, without performance 

indicators HUD cannot demonstrate the results of the program.

Furthermore, as we indicated in our 2012 report, while HUD has identified 

some lessons learned on an ad hoc basis, it does not have a systematic 

process in place for identifying such lessons. As previously noted, 

obtaining impact information from demonstration programs is critical.31

 

29Pub. L. No. 111-352, 124 Stat. 3866 (2011).

30GAO/AIMD-00-21.3.1.

31GAO/PEMD-95-1. 
 

Page 22 GAO-13-439T 

Since 2000, HUD has identified some activities that could be replicated by 

other housing agencies. For example, a HUD-sponsored contractor 

developed five case studies to describe some of the issues involved in 

implementing the MTW demonstration. However, these and subsequent 

efforts have shortcomings. In most cases, the practices were chosen 

based on the opinions of HUD or contracted staff and largely involved 

anecdotal (or qualitative) data rather than quantitative data. Also, HUD 

has not established criteria, such as demonstrated performance, for 

identifying lessons learned or made regular efforts to review and identify 

lessons learned. Because HUD does not currently have a systematic 

process for identifying lessons learned, it is limited in its ability to promote 

useful practices that could be implemented more broadly. Thus, we 

recommended that HUD create a process to systematically identify 

lessons learned. In response to this recommendation, HUD stated that 

once its revised reporting requirements were implemented, the resulting 

data would inform an effort to establish lessons learned.

HUD has policies and procedures in place to monitor MTW agencies but 

could do more to ensure that MTW agencies demonstrate compliance 

with statutory requirements and to identify possible risks relating to each 

agency’s activities. For example, as noted in our 2012 report, HUD has 

not issued guidance to participating agencies clarifying key program 

terms, including definitions of the purposes and statutory requirements of 

the MTW program. Internal control standards require the establishment of 

clear, consistent goals and objectives.32

 

32

Agencies also must link each of 

their activities to one of the three program purposes cited in the MTW 

authorizing legislation. However, HUD has not clearly defined what the 

language in some of these purposes means, such as “increasing housing 

choices for low-income families.” HUD officials told us that they plan to 

update their guidance to MTW agencies to more completely collect 

information related to the program’s statutory purposes and requirements. 

They acknowledged that the guidance could be strengthened. As a first 

step, they noted that they planned to require agencies to define “selfsufficiency” by choosing one of the definitions provided by HUD or 

creating their own. Without clarifying key terms and establishing a 

process for assessing compliance with statutory requirements, HUD lacks 

assurance that agencies are complying with the statute.

GAO/AIMD-00-21.3.1. 

HUD Could Strengthen 

Monitoring Policies and 

Procedures
 

Page 23 GAO-13-439T 

Additionally, our 2012 report indicated that HUD only recently assessed 

agencies’ compliance with two self-certified requirements (to serve 

substantially the same total number of eligible low-income families that 

they would have served had funding amounts not been combined and 

ensure that at least 75 percent of households served are very low 

income).33 Further, HUD has not assessed compliance with the third selfcertified requirement (to maintain a comparable mix of families). Internal 

control standards require control activities to be in place to address 

program risks.34 In addressing these risks, management should formulate 

an approach for assessing compliance with program requirements.35

Furthermore, as we reported in 2012, HUD has not annually assessed 

program risks, despite its own requirement to do so, and has not 

developed risk-based monitoring procedures. HUD’s internal control 

standards require program offices to perform an annual risk assessment 

of their programs or administrative functions using a HUD riskassessment worksheet.

Without a process for systematically assessing compliance with statutory 

requirements, HUD lacks assurance that agencies are complying with 

them.

36

Finally, our 2012 report indicated that HUD does not have policies or 

procedures in place to verify the accuracy of key information that 

agencies self-report, such as the number of program participants and the 

average income of program graduates. Internal control standards and 

guidance emphasize the need for federal agencies to have control 

activities in place to help ensure that program participants report 

By not performing annual risk assessments or 

tailoring its monitoring efforts to reflect the perceived risk of each MTW 

agency, HUD lacks assurance that it has properly identified and 

addressed risks that may prevent agencies from addressing program 

purposes and meeting statutory requirements. HUD also lacks assurance 

that it is efficiently using its limited monitoring resources.

 

33MTW agencies must self-certify compliance with three of the five statutory program 

requirements. 

34GAO/AIMD-00-21.3.1. 

35GAO-01-1008G. 

36HUD, Office of the Chief Financial Officer, Departmental Management Control Program, 

Handbook 1840.1 Rev-3 (Washington, D.C.: 1999). 
 

Page 24 GAO-13-439T 

information accurately.37 For example, HUD staff do not verify selfreported performance information during their reviews of annual reports 

or annual site visits. GAO guidance on data reliability recommends 

tracing a sample of data records to source documents to determine 

whether the data accurately and completely reflect the source 

documents.38

To improve HUD’s oversight over the MTW program, we recommended in 

April 2012 that HUD (1) issue guidance that clarifies key program terms, 

such as the statutory purposes and requirements MTW agencies must 

meet; (2) develop and implement a systematic process for assessing 

compliance with statutory requirements; (3) conduct an annual risk 

assessment for MTW and implement risk-based monitoring policies and 

procedures; and (4) implement control activities to verify the accuracy of a 

sample of the performance information that MTW agencies self-report. 

HUD partially agreed with our recommendations, citing potential 

difficulties in verifying MTW performance data. HUD also described steps 

it was taking to improve its guidance to MTW agencies and implement 

risk-based monitoring procedures. As of March 2013, this guidance had 

not yet been finalized. Without more complete information on program 

effectiveness and compliance, it will be difficult for Congress to know 

whether an expanded MTW program would benefit additional agencies 

and the residents they serve.

Because HUD does not verify the accuracy of any reported 

performance information, it lacks assurance that this information is 

accurate. To the extent that HUD relies on this information to assess 

program compliance with statutory purposes and requirements, its 

analyses are limited.

Mr. Chairman, Ranking Member Pastor, and Members of the 

Subcommittee, this concludes my prepared statement. I would be happy 

to respond to any questions that you may have at this time.

 

37GAO/AIMD-00-21.3.1 and GAO-01-1008G. 

38GAO, Assessing the Reliability of Computer-Processed Data, GAO-09-680G

(Washington, D.C.: July 2009). 
 

Page 25 GAO-13-439T 

For further information about this testimony, please contact me at 202-

512-8678 or sciremj@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this statement. Individuals making key contributions to this testimony 

include Daniel Garcia-Diaz, Director; Paige Smith, Assistant Director; 

Steve Westley; Assistant Director; Stephen Brown; Emily Chalmers; 

William Chatlos; Cory Marzullo; John McGrail; Marc Molino; Lisa Moore; 

Daniel Newman; Lauren Nunnally; José R. Peña; Josephine Perez; Beth 

Reed Fritts; Barbara Roesmann; and Andrew Stavisky.

GAO Contact and 

Staff 

Acknowledgments 

(250720)
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
The Government Accountability Office, the audit, evaluation, and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and 

policies; and provides analyses, recommendations, and other assistance 

to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

The fastest and easiest way to obtain copies of GAO documents at no 

cost is through GAO’s website (http://www.gao.gov). Each weekday 

afternoon, GAO posts on its website newly released reports, testimony, 

and correspondence. To have GAO e-mail you a list of newly posted 

products, go to http://www.gao.gov and select “E-mail Updates.”

The price of each GAO publication reflects GAO’s actual cost of 

production and distribution and depends on the number of pages in the 

publication and whether the publication is printed in color or black and 

white. Pricing and ordering information is posted on GAO’s website, 

http://www.gao.gov/ordering.htm. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 

TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 

MasterCard, Visa, check, or money order. Call for additional information.

Connect with GAO on Facebook, Flickr, Twitter, and YouTube. 

Subscribe to our RSS Feeds or E-mail Updates. Listen to our Podcasts. 

Visit GAO on the web at www.gao.gov. 

Contact:

Website: http://www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Katherine Siggerud, Managing Director, siggerudk@gao.gov, (202) 512-

4400, U.S. Government Accountability Office, 441 G Street NW, Room 

7125, Washington, DC 20548

Chuck Young, Managing Director, youngc1@gao.gov, (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, DC 20548

GAO’s Mission

Obtaining Copies of 

GAO Reports and 

Testimony 

Order by Phone

Connect with GAO

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Congressional 

Relations 

Public Affairs

Please Print on Recycled Paper.