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OVERSIGHT OF THE DEPARTMENT OF

HOUSING AND URBAN DEVELOPMENT

HEARING

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

MARCH 11, 2008

Printed for the use of the Committee on Financial Services

Serial No. 110–97

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

DENNIS MOORE, Kansas 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin, 

LINCOLN DAVIS, Tennessee 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

TIM MAHONEY, Florida 

CHARLES A. WILSON, Ohio 

ED PERLMUTTER, Colorado 

CHRISTOPHER S. MURPHY, Connecticut 

JOE DONNELLY, Indiana 

ROBERT WEXLER, Florida 

JIM MARSHALL, Georgia 

DAN BOREN, Oklahoma 

SPENCER BACHUS, Alabama 

DEBORAH PRYCE, Ohio 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

STEVEN C. LATOURETTE, Ohio 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

CHRISTOPHER SHAYS, Connecticut 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

TOM FEENEY, Florida 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

GINNY BROWN-WAITE, Florida 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

STEVAN PEARCE, New Mexico 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

GEOFF DAVIS, Kentucky 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

PETER J. ROSKAM, Illinois 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

DEAN HELLER, Nevada

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III)

C O N T E N T S 

Page 

Hearing held on: 

March 11, 2008 ................................................................................................. 1

Appendix: 

March 11, 2008 ................................................................................................. 51

WITNESSES 

TUESDAY, MARCH 11, 2008

Jackson, Hon. Alphonso, Secretary, U.S. Department of Housing and Urban 

Development ......................................................................................................... 5

APPENDIX 

Prepared statements: 

Brown-Waite, Hon. Ginny ................................................................................ 52

Jackson, Hon. Alphonso ................................................................................... 53

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Frank, Hon. Barney: 

Written responses to questions submitted to Hon. Alphonso Jackson ......... 62

Letter from the American Civil Liberties Union (ACLU), dated March 

10, 2008 .......................................................................................................... 78

Statement of the Municipal Securities Rulemaking Board (MSRB), dated 

March 12, 2008 .............................................................................................. 82

Letter from the National Association of Housing and Redevelopment Officials (NAHRO), dated March 11, 2008 ........................................................ 99

Ellison, Hon. Keith: 

Written responses to questions submitted to Hon. Alphonso Jackson ......... 105

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OVERSIGHT OF THE DEPARTMENT OF 

HOUSING AND URBAN DEVELOPMENT 

Tuesday, March 11, 2008

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The committee met, pursuant to notice, at 10:03 a.m., in room 

2128, Rayburn House Office Building, Hon. Barney Frank [chairman of the committee] presiding. 

Members present: Representatives Frank, Waters, Maloney, 

Velazquez, Watt, Meeks, Moore of Kansas, Capuano, Clay, McCarthy of New York, Baca, Lynch, Scott, Green, Cleaver, Ellison; Bachus, Jones, Biggert, Miller of California, Capito, Feeney, Hensarling, 

Neugebauer, Marchant, McCarthy of California, and Heller. 

The CHAIRMAN. I apologize for the little delay. The hearing will 

come to order. This is the annual hearing on the budget of the Department of Housing and Urban Development, specifically the 

budget that was submitted. We will later this week be voting on 

a somewhat different version, but this is our chance to talk about 

it with the Secretary. Mr. Secretary, welcome. Thank you for accommodating our schedule. 

Secretary JACKSON. Thank you, Mr. Chairman. 

The CHAIRMAN. I want to begin by saying that the budget that 

the President submitted is not disappointing, because I had no expectations, but it is seriously inadequate to the job that this country faces, particularly in light of the subprime crisis. 

Now let me say, Mr. Secretary, we will be asking you about the 

budget, and you are a loyal member of this Administration and I 

do not expect you to share your innermost thoughts, and indeed, 

it would be inappropriate. You are a member of the Administration, and I understand your obligations. It is not my impression 

that this is a budget that reflects what the people who have operating responsibilities of HUD would have liked, and so when I talk 

about its severe shortcomings, I really am describing, I believe, decisions made elsewhere. But we need to talk about the consequences. 

The cutbacks that we see in programs like Community Development Block Grant (CDBG) would have been distressing in any period. They are especially distressing this year when we have at the 

city level in particular the consequences of the subprime crisis and 

the foreclosures. 

I will be speaking later to the National League of Cities and I 

will be expressing my sympathy for the problems not of their making which have landed in their laps. One of the problems they have 

2

now is a good deal of foreclosed property, property that used to pay 

taxes, now not only does not pay taxes, but consumer services; police services, fire services, and building inspection services. 

To propose reductions in Community Development Block Grant 

funding in the face of this is as stark an abdication of what the 

Federal Government’s responsibility ought to be to our partners in 

governance at the local level as I could imagine. 

There are also reductions proposed for the construction of housing for the elderly and for the disabled. These are grave errors, in 

my judgment. One of the things we learned, I believe, from the 

subprime crisis is that a shortage of affordable rental housing has 

consequences beyond simply the denial of opportunity for people to 

live good lives, but there was a push factor into this housing situation. 

Basically, we have a national policy that has decided to fund a 

war in Iraq, a very expensive war, which I thought was a mistake 

from the outset, while making substantial reductions in other programs. One of the jobs of this committee is to help show the consequences of those cuts. I will also be talking to you, Mr. Secretary, 

about a very specific issue, and that is the situation in Mississippi 

concerning money that this committee initiated in a collaboration 

between our colleague from North Carolina, Mr. Watt, and our 

former colleague from Louisiana, Mr. Baker. They took the lead in 

trying to put some money toward alleviating the plight of people, 

particularly lower income people, who were hurt by Hurricane 

Katrina in Mississippi. That has not worked out as we thought, but 

I understand that there may be frankly some flaws in the way we 

did that legislatively and I will be looking to you to see that we—

assuming some disasters will come again—legislate better for it. 

But the basic point of this statement is to say that in the current 

situation with urban America in a difficult situation, with urban 

America bearing the brunt of the national crisis, it really is outrageous that the Administration, to fund its war in Iraq, comes forward with a budget that so substantially underfunds these important urban initiatives. 

Finally, let me say, and I am glad the whole team is here, there 

are some areas of agreement and at 5:00 today, the ranking member and I will be once again going over to the Senate to see if we 

can work out an FHA bill. We are hoping that we can do that. The 

Commissioner is here. That is a collaborative effort that I hope will 

go forward. 

But we cannot, in this hearing, focus on other things to the exclusion of our deep unhappiness. I will just summarize. To cut 

Community Development Block Grants, which has been such an 

important program dating from the days of Richard Nixon, that 

provides such important support to the cities, when they are under 

the extreme stress brought about by the subprime crisis, is one of 

the most blatantly uncompassionate examples of public policy 

imaginable. 

And the one thing that gives me some solace is that it is clear 

to me that it will be ignored by the Budget Committee. It will be 

ignored by the Appropriations Committee, and I think we can confidently predict that in an overwhelmingly bipartisan way, the Appropriations Committee will ignore this budget to a great extent, 

3

and I doubt very much when it comes to the Floor with the President’s priorities repudiated that there will be any substantial Republican effort to restore them. 

The gentleman from Alabama. 

Mr. BACHUS. I thank the chairman for convening this oversight 

hearing of the Department of Housing and Urban Development. 

Let me begin by welcoming Secretary Jackson back to the committee. 

Secretary JACKSON. Thank you. 

Mr. BACHUS. I have always found your testimony to be insightful, 

and I look forward to hearing your assessment of the state of 

America’s housing markets. Immediately after your testimony, I 

will be leaving to address the Conference of State Treasurers, and 

Secretary Paulson speaks right after I do, and then we’re on a 

panel. And even though I don’t mind being late, I don’t want to 

make him late. 

I look forward, as I say, to hearing your testimony and your assessment of the state of America’s housing markets and the role 

that HUD, and particularly the Federal Housing Administration, 

can play in helping to stabilize these markets during the current 

downturn. You have been a forceful advocate for legislation to modernize the FHA, and I know you share my view that it is long past 

time for the Congress to get a bill to the President’s desk that will 

allow FHA to assist more Americans seeking to buy a home or refinance an existing mortgage. 

In recent years, the housing market has fueled this Nation’s 

economy as Americans bought and refinanced homes in record 

numbers. Now nearly 70 percent of American families own their 

own home. But recently we have seen a growing inventory of 

unsold properties that has resulted in falling prices. A sharp rise 

in the number of foreclosures has caused investors to reassess the 

risk inherent in the housing market, which in turn has constricted 

the availability of mortgage credit. 

Many Americans are struggling to make their mortgage payments, and a growing number of homeowners find themselves in a 

negative equity position with the size of their mortgages exceeding 

the current value of their homes. These are difficult times, and it’s 

not surprising that some are beginning to look to the Federal Government for solutions to the serious problems that exist in the 

housing sector. 

As I previously stated, I believe it is important that before we 

authorize any broad new government intervention into the mortgage market we make sure that we’re not creating new moral hazards that we will pay for dearly later, and above all, that we’re 

being fair to all Americans. 

There are millions of homeowners who have carefully budgeted 

and planned to pay for their homes and are doing so, and we 

should think very carefully before we ask them to subsidize those 

who weren’t so careful or are now having second thoughts about financial decisions that were made when everyone believed housing 

prices would climb forever. Whatever action we take should not penalize those homeowners who are making sacrifices to honor their 

obligations and their contract and keep their families in their 

4

homes, or those who are renting while they try to accumulate the 

necessary savings to achieve homeownership. 

It doesn’t seem fair to shift the risk and responsibility that investors, lenders, and borrowers willingly and eagerly assumed when 

home prices were on the way up to the great majority of taxpayers 

who were not party to these mortgage transactions now that prices 

are going down. 

Mr. Secretary, we would welcome your views on what effect a 

multi-billion-dollar Federal program to assume troubled mortgages 

could be expected to have on FHA’s safety and soundness. We also 

hope you will update the committee on your efforts to reform housing programs under HUD’s jurisdiction and make them more efficient and cost-effective, and particularly on your recent initiative to 

reform and simplify implementation of the Real Estate Settlement 

Procedure Act, RESPA. We have obviously been down the RESPA 

reform road in this committee before, and I’m anxious to hear from 

you today how this latest proposal differs from previous efforts. 

Mr. Secretary, we thank you again for being here. I look forward 

to your testimony. 

Secretary JACKSON. Thank you very much. 

The CHAIRMAN. The gentlewoman from California, the Chair of 

the Housing and Community Opportunity Subcommittee, is now 

recognized for 3 minutes. Ms. Waters. 

Ms. WATERS. Thank you very much, Mr. Chairman. I think this 

is an important hearing that we’re having today. We have so many 

important questions that have been generated by members of this 

committee, and it is no secret that there is a great difference of 

opinion about this President’s budget and the direction that many 

of us would like to see our government take on behalf of working 

people and poor people. 

For the 8th straight fiscal year, the Administration’s budget 

slashes programs that provide housing and supportive services to 

our country’s poorest, disabled, and elderly households. It 

underfunds the Section 8 Housing Choice Voucher Program, 

starves local housing authorities of the resources they need to sustain and modernize public housing stock, and cripples the Community Development Block Grant program. 

Allow me to summarize just a few of these proposals. Funding 

levels for HUD 811 supportive housing for the disabled and HUD 

202 supportive housing for the elderly are cut by 32 percent and 

27 percent, respectively. If enacted, these reductions would leave 

these programs at funding levels 40 percent below their Fiscal Year 

2001 appropriations. The budget reduces funding for the maintenance and modernization of aging public housing units of $400 million relative to Fiscal Year 2008. Collectively, the President’s Public Housing and Operating Subsidy requests for public housing 

would cut this essential program by fully one quarter in comparison to its Fiscal Year 2001 appropriation. 

HUD remains determined to continue an unsustainable policy of 

incrementally funding Project-Based Section 8 contracts, which 

threatens the participation of thousands of private owners in the 

program. The budget once again proposes to eliminate the HOPE 

VI program, which the House of Representatives recently voted to 

reauthorize on a bipartisan vote of 271 to 130. 

5

Finally, the budget zeros out the Section 108 local guarantee program and basically ends with the Community Development Block 

Grant program being cut by $657 million compared to last year. If 

enacted, the President’s budget would put CDBG funding at about 

one-half its appropriation in Fiscal Year 2001. 

From a technical budgeting perspective, the analysis I have seen 

suggests that we can’t count on a large recapture in the Section 8 

program to make it easier to bail out as it recaptures—well, let me 

just go to the second point. Second, the Nation is today in a housing crisis unlike any since the Great Depression, much less in comparison to prior fiscal years under President Bush. In light of skyrocketing foreclosure figures across the country, with block after 

block of homes already sitting abandoned in some cities, it simply 

boggles the mind that the President would put before Congress a 

Fiscal Year 2009 budget that disinvents in the Federal affordable 

housing and community development safety first. 

Mr. Chairman, instead of completing my statement, which is 

rather long, I’m going to yield back my time so other members will 

have an opportunity for an opening statement. But I think that the 

sense of where I’m coming from with this budget is captured in the 

limited time that I had to make the presentation. Thank you very 

much. 

The CHAIRMAN. I thank the gentlewoman. We were going to have 

another opening statement from the ranking member of the Housing Subcommittee, but in the interest of time, if there is no objection, we will allow her a couple of extra minutes when she gets to 

her 5-minute question period so that she can preface her 5 minutes 

of questions with an opening statement. If there is no objection, we 

will proceed that way. Mr. Secretary, please go ahead. 

STATEMENT OF THE HONORABLE ALPHONSO JACKSON, SECRETARY, U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 

Secretary JACKSON. Thank you, Chairman Frank. And I want to 

thank you and Ranking Member Bachus and the members of this 

committee for this opportunity to appear here today. 

Mr. Chairman, I am here to present the Fiscal Year 2009 HUD 

budget. But before I do that, Mr. Chairman, I want to thank you 

and the entire committee for the priority given to FHA modernization. And I agree with you, Mr. Chairman, that we need the legislation right away. As you and your Senate colleagues finish work 

on this important legislation, I should mention the Administration’s priority with respect to what’s in the final bill. 

First, the legislation must allow HUD to address the recent explosion of loans where a seller provided buyers with downpayment 

assistance and then is added to the price of the home. These loans 

have a foreclosure rate 2 to 3 times the norm. They are costing 

hardworking Americans their homes, and these types of loans have 

pushed FHA to the brink of insolvency. 

Second, Congress should allow FHA to proceed later this year 

with some flexibility in setting premiums. I assure you, we have no 

intentions of increasing premiums on the bread-and-butter customers. But a few modest changes will strengthen FHA’s ability to 

offer a safe alternate to homeowners who want to refinance out of 

6

high-cost subprime loans and will actually allow us to reduce premiums from our potential homeowners with lower incomes. 

Such legislation would fit in well with the general direction of 

the President’s budget. The proposed budget is fiscally sound, representing a historical investment of $38.5 billion for the programs 

at HUD. This is an increase of more than $3 billion, or 9 percent 

over last year’s budget. The budget is almost $1 billion more than 

our current budget authority. The funding will be timely and on 

target for people served by the Department. We need this budget 

to maintain current homeownership and stimulate new purchases. 

It will help us expand our current efforts. 

And let me put the budget in context. Last year, the President 

and I introduced FHA Secure to help more Americans facing foreclosure to refinance into safe and more secure FHA loans. We did 

this using the current regulatory authority. And we have been able 

to make FHA available to more qualified families. There has been 

a noticeable increase in the number of closings. We believe that 

FHA Secure will help about 300,000 families refinance into affordable FHA insurance. FHA Secure has proven to be extremely valuable. 

Mr. Chairman, you should also know that in only 5 months from 

September 2007 through January 2008, FHA has pumped more 

than $37.5 billion of much-needed mortgage activity into the housing market as of today. More than $14.7 billion of the investment 

came through FHA Secure. FHA modernization would greatly assist our effort. As you know, the economic stimulus package provided a temporary 10-month window. We now announce the new 

loan limits—we announced new loan limits last week. They will 

help hundreds of thousands of people nationwide in this country. 

But this is no substitute for FHA modernization, which would 

raise the loan limit permanently and also provide other important 

changes that would benefit American homeowners. In addition to 

these actions, we also take steps to ensure it is easy for homeowners to understand the fine print when they do sign on the dotted line. That’s why we are committed to RESPA. We’re in the 

process of publishing the Real Estate Settlement Procedure Act 

rules and hope it will bring much needed transparency to the home 

buying process. 

Now the budget will work in concert with these actions. For instance, the proposed budget appropriately increases the funding for 

housing counseling. America needs the President’s request for $65 

million in the budget for housing counseling. These funds, in addition to NeighborWorks America’s $180 million, provide great services to those who reach out. Many Americans facing foreclosure 

would have greatly benefitted from housing counseling. We know 

it works. Last year 96 percent of the households that saw HUDapproved housing counseling and completed the program avoided 

foreclosure. This fund will help partially address the crisis and prevent another such situation in this country. 

We also need to continue government efforts to partner with the 

private sector to help build back the housing market. The HOPE 

NOW Alliance is a good example. HOPE NOW is a private sector 

volunteer industry efforts to address foreclosure through freezing 

interest rates and working directly with financially troubled homeVerDate 0ct 09 2002 18:09 May 19, 2008 Jkt 041728 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\41728.TXT TERRIE
7

owners. I also commend a recent effort by the HOPE VI Alliance 

members to provide temporary pause for homeowners in foreclosure 

proceedings. These actions provide direct assistance to those who 

need it right now. They are the sort of responses providing quick 

help for the homeowners today. 

As in the past, Mr. Chairman, the largest part of the budget is 

for affordable rental housing. Combined, this budget seeks more 

than $29 billion for our rental assistance program, which we expect 

will help more than 4.8 million households. We are mindful of the 

continuing need for more affordable rental housing, especially for 

low- and moderate-income workers still finding themselves priced 

out of the market in many of our cities. We need to maintain the 

units currently available and expand the numbers. The budget will 

help us do that. 

Finally Mr. Chairman, the homeless must not be forgotten. We 

are making strides to cut the number of chronic homeless within 

our continuum of care approach. For the first time ever, we saw a 

decrease in the number of chronic homeless last year, a drop of 12 

percent. We must continue the progress. Our budget once again 

seeks to increase the homeless programs to continue this good 

work. 

Mr. Chairman, I know that you are mindful of the need to help 

our Nation’s homeless veterans. Americans are deeply, profoundly 

grateful for the service and sacrifice these veterans have made. In 

this proposed budget, there is a request for $75 million for our Veterans Affairs Supportive Housing program. Prior to 2008, this Program had not been funded since 1993. Working with the Veterans 

Administration, we will create an additional 9,800 vouchers for Fiscal Year 2009. This will bring the total to approximately 20,000 

homeless veterans being served through housing and social service 

needs. 

Overall, this is a good budget for the Department—balanced, reasonable, approachable, and workable. It will allow us to operate 

within the framework of cooperation and partnership with related 

Federal agencies and other levels of government and nonprofit 

agencies. 

Mr. Chairman, as we proceed through the budget process, I look 

forward to working with you and the members of the committee 

and thank you for listening. 

[The prepared statement of Secretary Jackson can be found on 

page 53 of the appendix.] 

The CHAIRMAN. Thank you, Mr. Secretary. Let me begin with one 

very important point that is very much an issue now. You mentioned in your written testimony, and you also said orally, ‘‘By temporarily increasing FHA loan limits we can back more safe, sound 

mortgages in high-cost States and help homeowners trapped in exotic subprime loans to hold on to their houses.’’ That is now being 

discussed. What would the consequence be if in the FHA modernization bill we did not take action and the loan limit went back 

to what it was, $362,000? What impact would that have going forward? 

Secretary JACKSON. I think, Mr. Chairman, it would have a devastating effect on places like Virginia all the way back to Maine, 

Vermont, Utah, all the way back to California. I was out in CaliVerDate 0ct 09 2002 18:09 May 19, 2008 Jkt 041728 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 K:\DOCS\41728.TXT TERRIE
8

fornia with Governor Schwarzenegger and announced the $729,000. 

The Realtors were overjoyed, because finally we will be able to help 

people within those markets. As of to date, we would not be able 

to help any persons out west or the east coast for that matter if 

we went back to $360,000. 

The CHAIRMAN. Thank you. And I think frankly, having gone to 

the higher limit, if we were now to drop back that would be exactly 

the kind of destabilizing, ‘‘Oh there goes the unreliable government 

again.’’ I should also add that some have argued, ‘‘Oh well, don’t 

help—don’t go to the higher limits,’’ which are median prices; they 

are not for wealthy people in some parts of the country, given the 

house prices. Because people say well, that will come at the expense of the low-income people. But in fact, the Congressional 

Budget Office gives us a positive score when we do that, so that 

in fact generates money that we can use for the increased FHA 

counseling, for instance, that we are all in agreement with. So it 

is exactly the opposite, the argument that if you raise the limits 

you somehow take it away from lower income people. You increase 

the resources within the FHA for that purpose. 

Let me say with regard to the rate setting—and I understand 

your point, and I will tell you this—I’m not going to ask you for 

any extensive comment. If there was no OMB, we would be a lot 

more willing to give you the freedom. But when you are, Mr. Secretary, free at last you come back here, and we will talk about giving you some of that authority. But right now there is something 

over there to stick with, the same motif, and I don’t think we can 

afford you that. 

Let me turn to the issue of Mississippi, because I want to be honest. I was critical when you gave the waiver to the Mississippi, and 

we discussed it; you were available. But I now believe that a large 

part of the problem came with our drafting. And I was pleased, 

frankly, and I’m going enter into the record your letter dated January 25th—or at least I received it on January 25th, I don’t know 

when it was actually sent—to Governor Barbour in which you 

say—as you grant him the permission to divert funds from CDBG 

to a port project. And you say, ‘‘Although economic development is 

important, the port expansion will create jobs and serve as a significant regional economic driver, I remain concerned that this expansion does indeed divert emergency Federal funding from other 

more pressing recover needs, most notably affordable housing.’’ And 

then you mention they try to put some money in. In the future, 

when we do this kind of legislation, would you advise us to be 

more—to give you more discretion to say, ‘‘yes,’’ or ‘‘no,’’ and to in 

fact have some ability to say, ‘‘Well, no. That’s not a good diversion?’’ Would you respond? What would your advice be? And, you 

know, we are going to have emergencies in the future. What should 

we do? 

Secretary JACKSON. As I said to you when I spoke to you, Mr. 

Chairman, and also responding to the chairwoman of the subcommittee’s response, I think it would be a positive step that we 

have more flexibility to approve what occurs. At this specific time, 

the language was very clear. 

9

The CHAIRMAN. I think this is a rare case where what you need 

is more flexibility to disapprove. That’s because as you interpret 

this—and we can have some differences —but I do think— 

Secretary JACKSON. I think I made it very clear in that letter 

that I would prefer that— 

The CHAIRMAN. Right. There is one criticism that I would make 

of the procedure, Mr. Secretary, and that is that we didn’t find any 

record that—it did give you the power to grant the waiver, but they 

didn’t actually ask for a waiver, as we can see it. It just wasn’t 

done in a formal way. The problem there is that, even if we did 

this badly, we want to make it very clear that this is not what 

CDBG was meant to do, and we don’t want to set the precedent 

that this is an appropriate use of Community Development Block 

Grant funds. We would have liked to have the waiver actually document what did and didn’t happen. And I think, even by their own 

admission, the percentages of 50 percent for low- and moderate-income people, 51 percent of the jobs for low- and moderate-income 

people, that Mississippi didn’t comply with that. Now, I agree we 

could have done a better job of giving the ability to resist that. But 

I do think it should have been documented better. 

With that I’m going to turn to the ranking member of the subcommittee who was here, and we are going to give her 3 minutes 

for her opening statement, and then her 5 minutes for questions 

or 7 minutes for a really long question. Ms. Capito. 

Ms. CAPITO. Thank you, Mr. Chairman. And thank you, Mr. Secretary. I’d like to welcome you back to the committee. As the ranking Republican on the Housing and Community Opportunity Subcommittee, I have a particular interest in two programs I want to 

talk about. 

First, I want to commend you for your commitment to the housing for the disabled. The Section 811 program provides assistance 

to expand the supply of housing equipped with supportive services 

for persons with disability. The Fiscal Year 2009 budget requests 

$160 million for the Section 811 program budget, a $35 million increase over the 2008 budget request. This program is especially important to my constituents in the second congressional district of 

West Virginia. It’s my hope we’ll continue to improve this for the 

21st century. 

The other program I’d like to talk about is the President’s budget 

of $540 million for the supportive services for the elderly, the Section 202. Up to $80 million of these grant funds will be targeted 

to the service coordinators who will help elderly residents obtain 

supportive services from the community. Last year, with bipartisan 

support, this House passed H.R. 2930: Section 202 Supportive 

Housing for the Elderly Act of 2007, on a motion to suspend the 

rules. But while we were drafting this legislation, I had heard concerns from many housing advocates in my district about the ability 

of rural States to use all of the funds, because the program included a mandated allocation of a percentage of funds to non-metropolitan areas. For a small State like West Virginia, this could 

mean a loss of four to five units, because it is difficult to find developers willing to work on such small projects in rural communities. 

Thankfully, we were able to correct this problem by moving the 

mandated allocation from the State level to the regional level, and 

10

I thank you for working with us on that. I look forward to continuing the work on ensuring that rural seniors receive the benefits 

of affordable housing, and I urge the Senate to take action on this 

Section 202 legislation. 

I want to applaud the Secretary’s innovative approach to financing Sections 202 and 811. The President’s Fiscal Year 2009 budget 

requests $10 million and $15 million mixed financing demonstration projects for Section 811 and Section 202. These projects will 

remove some barriers from using low-income housing tax credits 

and will help develop more units to serve our most vulnerable populations. Mr. Secretary, again we’re very pleased to have you here, 

and I look forward to working with you. And I’d like to ask you a 

couple of questions if I may. 

Secretary JACKSON. Thank you. 

Ms. CAPITO. First of all, last year in testimony before this committee, there was a bit of a controversy in terms of the late housing 

assistant payments, and I think we did a temporary fix to try to 

patch that up. In your testimony, you described how you’re going 

to be updating your aging IT infrastructure with $313 million of a 

budget request for working capital. Will this help resolve some of 

these problems, and what is the status of that particular issue 

right now? 

Secretary JACKSON. We have come very close to resolving it. We 

have clearly enough funding to go into 2009 to make sure that all 

of the providers are paid on time. It is important that we upgrade 

our capital improvement system. We’re pretty close to being on top 

of this subject, and I think that if we can get monies for our information technology fund we can really address this issue very clearly. But one of the priorities that I have made to not only the chairman here, but also the chairman on the Senate side is that we are 

going to do everything to make sure that there is continuity, so 

that the providers will be paid in a timely manner, and we will not 

have this issue again facing us as we did the last couple of years. 

Ms. CAPITO. I think we were all stunned, and I in particular, to 

realize that you were waiting in the mail for things to arrive and 

things to be date stamped and all those sorts of things when in this 

day of technology so many things, including our tax returns soon, 

are done online. So I appreciate any movement you can do on that 

and keep us up-to-date. 

The CHAIRMAN. That is a very good point. Look, when we get into 

the budget process or the appropriations process, we are often 

tempted to go to some of the administrative accounts to fund the 

things that have more political appeal: ‘‘Oh, let’s cut this thing.’’ 

I’m struck by this. I think we probably—I hope we can have a kind 

of bipartisan alliance on this committee to protect the IT account, 

for example. Because we can predict when an appropriations bill 

comes to the Floor, giving the allocation that somebody is going to 

say, ‘‘Well, let’s do more Section 8,’’ or other things that will have 

some political appeal. And I would look forward to working together. Maybe we can go to our friends on the—the appropriators 

generally do the right thing. And then on the Floor, these things 

are kind of easy pickings. I would hope we could work together and 

agree on the Floor that we would, in a bipartisan way, defend these 

11

unglamorous but very necessary accounts. I thank the gentlewoman. 

Secretary JACKSON. Mr. Chairman, I truly appreciate that. Because right now, we are funded to about 9 months, and this is very 

critical. We have cut down on the number of IT systems that we 

had in HUD, and the quicker we get this resolved, the less problems we are going to have making sure that this does not happen 

to the providers. 

Ms. CAPITO. Thank you. I have one last question then. I had a 

meeting in my home office with some constituents and a developer 

who uses the low-income housing tax credits to develop some very 

nice properties in our State. And they are extremely concerned 

about the credit crunch and how this is—what do I want to say? 

It’s becoming an issue not only in housing and in mortgages but 

into the ability or the willingness of developers to want to jump 

into this. Are you finding that nationwide? And how are you going 

to address this? 

Mr. SECRETARY. Yes. And let me have Brian Montgomery speak 

to that specifically. It is becoming a problem. 

The CHAIRMAN. Commissioner, why don’t you come up? We will 

have the Commissioner speak to it. And I took some of the gentlewomen’s time, so the time will be standard. 

Mr. MONTGOMERY. Yes. There has been a constriction of the use 

of tax credits. It varies State by State. I think a couple of months 

ago, tax credits were probably getting 90 or 93 cents on the dollar. 

I think you’re seeing that down, down to 80 or 82 cents on the dollar. So some States are looking for better uses of the tax credits. 

And I mean the beauty of the program is the fact that States make 

the decision, but you see a shortfall in some States. Other States 

don’t know what to do with it, which is why we propose those two 

demonstration projects to better target via a set-aside, a qualified 

allocation plan, whatever, the use of credits for Sections 202 and 

811 for elderly and disabled housing. 

Ms. WATERS. Let me ask the gentlewoman to yield again, because as the members already know and the staff has been talking, 

we have been collaborating since last January with the Ways and 

Means Committee. And we expect soon to have legislation that will 

take the low-income housing tax credits requirements and those 

that come from the appropriations process, like Sections 811 and 

202, and mesh them better. Everybody I have ever talked to who 

has tried to get them together tears their hair out because the Congress has given them somewhat inconsistent rules, and we hope—

and think this would be virtually unanimous—it will save a lot of 

time and energy in the private sector. We hope fairly soon, and 

we’re just waiting for Joint Tax to give us their reports, to have 

legislation that will make it possible for a developer who is trying 

to use low-income housing tax credits and the appropriations process to have them work together in a much easier, less frictional 

fashion. 

Ms. CAPITO. I think that’s a good collaborative effort, and I certainly support that. And I— 

The CHAIRMAN. Okay. We’ll probably have our piece—it’s going 

to be done—the member should know—Ways and Means is going 

to do their piece, and we will do our piece. I expect it to pass 

12

through markup; I think it will be overwhelmingly supported; and 

then the Rules Committee will merge the two. 

Ms. CAPITO. And finally, I’d just like to make a comment that 

FHA modernization, I think, is something that we can’t keep stuck 

in the mud here. We have—it has broad-based, I think, collaborative feeling that this is a lifeline to some people who are having 

difficulty with their housing. It also is something whose time is 

well past due, and something that we need to do. So I would encourage the members of the committee, and I want to thank HUD 

for their ingenuity and energy in trying to move this forward with 

the rest of us. Thank you. 

Secretary JACKSON. Thank you all. 

The CHAIRMAN. The gentlewoman from California, the Chair of 

the Housing Subcommittee. 

Ms. WATERS. Thank you very much, Mr. Chairman. Mr. Secretary, as you know, the unmet needs in the Gulf Coast are still 

overwhelming. Whether we talk about Mississippi or New Orleans, 

we still have people who are displaced living in other sections of 

the country. Many would like to return. The housing production 

certainly has not been what many of us believe it could have been. 

You recently got some surveys back. As you know, I have been focused on public housing. You got a survey back that talked about 

who wanted to come back and who did not want to come back. And 

in that survey you talked about 35 percent of those who lived in 

public housing didn’t really want to return to public housing. Can 

you explain to me how you intend to accommodate even the 35 percent? What are you going to do with the other 65 percent who may 

be out there on Section 8? And where are you in your dismantlement of public housing units? Have you renovated any of those 

units? And can I get a correct count on the offsite public housing 

that you’re supposed to have, where the numbers change quite 

often, as I try and check on what you have that’s scattered housing? Can you help me understand how you’re meeting these needs? 

And also help me to understand what kind of assurances did you 

have from Governor Barbour about diverting the $600 million to a 

port, when I don’t think the assurances were there to tell you how 

he’s going to met the unmet needs in Mississippi for housing? Can 

you help me understand this? 

Secretary JACKSON. Sure. I think that’s a fair question. Let me 

answer Mississippi first. In approving the $600 million for the port, 

one of the things that we did extract from Governor Barbour and 

the State of Mississippi is an additional $200 million, which brings 

the limit up to $350 million that is used for low- and moderate-income workforce housing. And we’ll be happy to share that with you, 

because it’s very clear— 

Ms. WATERS. Where does the $250 million come from? 

Secretary JACKSON. He had $150 million already in there, and 

we asked for an additional $200 million, which he added to the 

process. So we have $350 million right now for low- and moderateincome workforce housing. 

Ms. WATERS. That’s in phase two? 

Secretary JACKSON. That’s in phase two. Yes. 

Ms. WATERS. $350 million left over? 

13

Secretary JACKSON. That’s what we made—I won’t say we made 

him—asked him to allocate, and he did. 

Ms. WATERS. Go ahead, please. 

Secretary JACKSON. Okay. I can’t tell you the intricacies of the 

studies that we had done. All I know is we tried to be extremely 

fair. We had a very diverse group of people who put the questions 

in place to be used by the University of Texas, and one of the persons was a person who was very intricately involved in bringing 

the lawsuit, so we tried to include everyone. And we wanted to 

make sure that there was no deceptive practice on the part of anybody, that we got as fair and accurate answers as we could. And 

we think we have gotten that. For those persons who want to come 

back, we are going to do everything in our power to make that happen. To date, there is no one who is in public housing or on a 

voucher who does not have a place to stay or live today. And we’re 

going to make sure that occurs until the public housing is rebuilt, 

because I think that would be somewhat cynical if we didn’t do 

that. So I believe we’re doing everything in our power. And lastly, 

let me say this to you. I respect and agree with you that I want 

everyone who wants to come back to have an opportunity to come 

back. I don’t want to deter anyone from coming back to their home. 

Ms. WATERS. Mr. Secretary, why can’t you fill the so-called, 

‘‘scattered housing’’ that you have claimed over the past 2 years 

that you have with people who want to return? 

Secretary JACKSON. If there is anyone who wants to return, we 

are doing everything in our power really to get them back. 

Ms. WATERS. Why can’t you get—how many scattered units do 

you have available? 

Secretary JACKSON. I don’t have the answer right off the top of 

my head. I’ll be happy to get— 

Ms. WATERS. Can you guess? 

Secretary JACKSON. No. I don’t want to make a guesstimate. 

Ms. WATERS. Do you have any units available in any of the other 

public housing, like the Gouest or any of those? Do you have any 

available units? 

Secretary JACKSON. We still, right now, have about a little over 

250 units that are available. All we have to do is move the stove 

in, the air conditioning in. That’s all that’s necessary. 

Ms. WATERS. Mr. Secretary, you have been telling me that you 

have had units available for the past year-and-a-half or so. Why 

can’t you move people back who want to return to those units and 

put them in those units, whether they’re scattered or whether 

they’re in the public housing? 

Secretary JACKSON. Well, I will say this. I think that if you read 

the survey, many of the people do not want to come back to those 

units. 

Ms. WATERS. Let’s just talk about the 35 percent who do want 

to come back. And the units that you have told me that you have 

had available for the past almost 2 years? Why can’t you connect 

people with available units? Whether it’s scattered or whether it’s 

in public housing, it doesn’t matter. Why can’t that happen? 

Secretary JACKSON. I can’t make people do what they don’t want 

to do. I don’t have that authority or that power. We have asked if 

they want to come back. We’re willing to pay for the lease counVerDate 0ct 09 2002 18:09 May 19, 2008 Jkt 041728 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 K:\DOCS\41728.TXT TERRIE
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seling, the lease. We’re willing to do everything. We’re willing to 

move them. But if they do not want to come back I can’t— 

Ms. WATERS. No. I’m only talking about those who want to come 

back. I went to Texas, and I met with groups of people who desperately wanted to come back. I did casework trying to connect 

those people with HANO and HUD to get them back. I can’t seem 

to find a way to get HUD or HANO to take the people who are 

ready, want to come back, and where you claim you have units to 

put them in, to get them connected with those units. What does it 

take? 

Secretary JACKSON. Well, I will say this. We’re doing everything 

in our power. And I would respectfully disagree. 

The CHAIRMAN. If the gentlewoman would yield, let me propose 

this: We are out of here, but when we come back, Mr. Secretary, 

I think we will ask you to send up an Assistant Secretary, somebody with the power here and have a meeting. We will be ready. 

And we would ask you to come up here and when we come back, 

and let’s have a—we will have a special session just on this one 

issue. 

Secretary JACKSON. I’ll be happy to do that. 

The CHAIRMAN. And we will do our documentation when we come 

back in April. 

Secretary JACKSON. Mr. Chairman, and Chairwoman Waters, 

any documentation that you need will be happily provided. 

Ms. WATERS. I appreciate that. You can imagine my frustration 

over the length of time I have been working on this issue. 

The CHAIRMAN. I understand. And I— 

Ms. WATERS. And what I need, which I cannot get, is I cannot 

get documentation of units available, whether they are scattered or 

whether they are in housing developments. I cannot get a description of the process by which they take people who are supposedly 

online or inline to return to tell me how they do that. 

The CHAIRMAN. I think that is a fair point, and I know how long 

we’ve been working. That data should be available. Could we get 

that fairly soon? 

Secretary JACKSON. Absolutely. 

The CHAIRMAN. When we get that fairly soon—I’d like to get it 

within a few days—and depending what it looks like, we may just 

have to have a public hearing on that one topic. But we would like 

to get the data, the gentlewoman’s questions, specifically answered 

as soon as possible. 

Ms. WATERS. The last question, Mr. Chairman, is how many public housing units have you demolished? 

Secretary JACKSON. To date, I can’t tell you that, because we just 

started the process. 

Ms. WATERS. No. The process started about 3 or 4 months ago, 

didn’t it? 

Secretary JACKSON. On one development. Not on all of the developments. 

Ms. WATERS. How many have you destroyed so far? 

Secretary JACKSON. I don’t know, as of to date. 

The CHAIRMAN. So shouldn’t somebody be keeping track of that, 

Mr. Secretary? 

Secretary JACKSON. Well, that’s locally. I can— 

15

The CHAIRMAN. No. But you’re local. You’re the—you run a housing authority. 

Secretary JACKSON. Right. I can get that for you. 

The CHAIRMAN. I’m troubled that you don’t have it, to be honest. 

Secretary JACKSON. No. I really don’t. And I’m not going to tell 

you that I— 

The CHAIRMAN. I understand that. But that would seem to be 

something that—there are a lot of people behind you. We didn’t expect you to have it all in your head, but you have a row of people 

behind you. 

Secretary JACKSON. How many have we demolished? Which one 

is that? At Cooper, Ms. Bloom said that it’s 15 percent of the site 

to date that has been demolished. 

Ms. WATERS. And what about Lafitte? 

Secretary JACKSON. Nothing has been done to— 

Ms. WATERS. What about St. Bernard? 

Secretary JACKSON. St. Bernard has just started. 

Ms. WATERS. How many have been demolished at St. Bernard? 

Secretary JACKSON. I don’t know exactly. 

The CHAIRMAN. Well, Mr. Secretary, we are going to run out of 

time here. But let me just say this. You know we have had some 

differences, and your inability to tell us how many have been demolished, frankly, is going to reinforce the feeling that some of us 

have that there really has not been enough evaluation of these. I 

mean demolishing public housing shouldn’t be done without a lot 

more care. The gentlewoman from Illinois. 

Mrs. BIGGERT. Thank you, Mr. Chairman. Let me ask one—first 

of all—I have a couple of questions, so I’m going to try and rush 

through them. Once again, the Administration has prioritized comprehensive reform of the FHA single-family mortgage program, including a shift in the risk-based premiums, which would allow FHA 

to serve the low- to moderate-income borrowers. Both the House 

and the Senate have approved FHA reform legislation, but they 

take different approaches to authorize in the risk-based premiums. 

The upfront and annual premium caps are very different. And the 

Senate bill has a moratorium for 1 year. Of the two proposals, 

which do you think is the best approach to the FHA modernization? If you can comment on that. And what, if anything, would 

you like to see added to the final FHA reform bill? 

Secretary JACKSON. As I said before, my only concern is with the 

ability for FHA to have risk-based pricing. I think that we will 

work with both the House and the Senate. What we want more 

than anything else, and I think the chairman spoke to that a few 

minutes ago, is the ability to have an acceptable loan limit, so that 

we can touch those parts of the country that we were unable to 

touch until the stimulus package came into being. So that, to me, 

is the most critical part, because having traveled to the West Coast 

last week, I know how elated people were in California and Nevada 

that finally the loan limit had been increased. 

Mrs. BIGGERT. Well, there are several ideas floating around for 

the housing stimulus package, and some proposals suggest expanding FHA Secure. And if the final modernization bill is signed into 

law, could you expand FHA Secure to help more borrowers without 

jeopardizing the financial security of the FHA program? I am worVerDate 0ct 09 2002 18:09 May 19, 2008 Jkt 041728 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 K:\DOCS\41728.TXT TERRIE
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ried about, and it has been talked about, if you need credit subsidy 

or raise premiums should this be passed. 

Secretary JACKSON. And I think that’s a fair question, Congresswoman. We’re not going to do anything that would jeopardize the 

existence of the program. We think that we must be extremely judicious in exercising all of the options that we have to make sure 

that FHA remains a viable alternate to help people pursue their 

dream of homeownership. It has been around for 75 years. We have 

had some down periods. But as I said in my testimony a few minutes ago, we have done almost some $37 billion worth of injection 

of finances into the system since this process has started with the 

downturn. And we think it’s only going to get stronger if we have 

the opportunity to help other homeowners. So I think we will make 

quite a great impression to the economy if given the opportunity 

with the high-loan limit. 

Mrs. BIGGERT. But should Congress be concerned about the 

health of the fund? 

Secretary JACKSON. Well, I think that we should all be concerned 

about the health of the Fund. Do I think the Fund is going to be 

insolvent? I don’t think so, and I hope not. And we’re going to do 

everything in our power to make sure it doesn’t happen. 

Mrs. BIGGERT. Thank you. Then I’m going to come back to my 

issue that has always been of concern to me and that’s the homeless. We have had hearings on this. And the Administration’s 

homeless consolidation proposal does not include children or families in the definition of chronic homelessness, and this has been of 

concern. Aside from the budget considerations, why is it difficult to 

categorize families and children as chronically homeless? And how 

do the living patterns of the homeless families, and particularly 

children lacking permanent housing, compare with homeless single 

individuals? I know what you’re doing for the veterans, and I think 

that this is a very important issue too. But I’m really concerned 

about the families and children. 

Secretary JACKSON. Congresswoman, let the Deputy Secretary 

speak to that issue, please. 

Mr. BERNARDI. Congresswoman, the definition of chronically 

homeless is an individual who has been out on the street for a certain period of time and has had recurring incidents. We believe 

firmly that our budget also takes care of families with children; 50 

percent of the budget goes to families with children. But only the 

chronic homeless is dealing with that, stopping that recidivism, 

getting these hard street individuals off the street permanently, 

providing them not only with emergency housing but then transitional and permanent housing. And in the final analysis, they utilize about 50 percent of the budget. So the goal is to make sure 

that the chronically homeless are—that we reduce that number 

substantially. And we have. I think the Secretary mentioned that 

we reduced that by 12 percent from 2005 to 2006. But at the same 

time our resources are there. And each year in this Administration 

since 2001, we have had a substantial increase in the amount of 

money that we use for homelessness. 

Mrs. BIGGERT. Well, I appreciate your answer, but I think this 

is—you know what came up in the hearing too is whether it could 

be expanded to include people who either double-up or are living 

17

in hotels or motels, because of housing. And McKinney-Vento for 

example, reauthorization, takes a much different view of the definition. And that bill does so. I just don’t know why we can’t expand 

the definition of chronically homeless. 

Secretary JACKSON. Congresswoman, I think you can. I mean 

Congress has the power to expand. And if they do, we will implement it. 

Mrs. BIGGERT. That’s a good answer. Thank you. I yield back. 

Mr. BERNARDI. But if I may, when it comes to families with children, the homelessness there doesn’t last that long, fortunately. In 

many instances transitional housing services are provided, and you 

see those folks move on. It’s the chronically homeless who are constantly there and utilizing the resources. 

Mrs. BIGGERT. Well, I think from the testimony that we have had 

that it’s not—that’s not necessarily true. The concern I have is that 

everybody expects that they are immediately finding a home, but 

in reality in some of the cases that we have— 

The CHAIRMAN. Will the gentlewoman yield? Just to direct you 

to one of—some these predate a foreclosure crisis. And as we know, 

one of the problems with foreclosures is that tenants are evicted. 

You know, there are innocent tenants who are sitting there, and 

their landlord got foreclosed. Is that having an impact on the 

homeless problem? It would intuitively seem to be. That as you increase evictions— 

Secretary JACKSON. Yes. That is clear, because there are renters 

who were not aware that the owners of the homes were in foreclosure. 

The CHAIRMAN. And in some cases, they hare given very little notice. We are trying to deal with that in our bill, but I would think 

in support of what the gentlewoman said that those would be families—that a family would find itself evicted with no preparation, no 

notice; they didn’t know what was going on with the lender. And 

they have 30 days to vacate. And I would guess that would be part 

of this problem. 

Mrs. BIGGERT. And I would just—to yield back—say that I really 

think that—I would argue that homeless children should be our top 

priority. And then I would yield back. 

Secretary JACKSON. Thank you. 

The CHAIRMAN. The gentlewoman from New York, the Chair of 

the Financial Institutions and Consumer Credit Subcommittee. 

Mrs. MALONEY. Thank you. I’d like to ask a few questions about 

one of the most successful programs to help deserving people with 

housing in New York City and probably across the country, which 

is Section 8. You have not asked for the $9 billion that is needed 

to fully fund Project-Based Section 8. And my question is why are 

you just asking for funding through this fiscal year, through September 30th, and why not for the full 12 months? Because owners 

of buildings that would be getting this Section 8 are very nervous, 

will not take it now, because they have no confidence that the program is going to be fully funded. So it appears to me that the policy 

that you’re following is a way to de-fund or unravel Section 8 for 

Project-Based housing. 

Secretary JACKSON. I would respectfully disagree with you, Congresswoman. I think that if you had said that a year ago, you 

18

would have been absolutely correct. We have begun to address that 

issue. And I think the chairman asked that just before you came 

in. We feel very comfortable that every landlord or provider knows 

now that they are going to be paid, and paid timely. 

Mrs. MALONEY. Now how do they know that they are going to be 

paid timely if you’re only funding it through September 30th? 

Secretary JACKSON. No, it is funded to the 2009 period. 

Mrs. MALONEY. It is funded through 2009? 

Secretary JACKSON. Yes. It is. 

Mrs. MALONEY. With how much money? 

Secretary JACKSON. I’m not sure how much money. I think it’s 

totally funded where we will pay every provider. 

Mrs. MALONEY. Can you get us how much you put in the budget? 

Secretary JACKSON. I’ll be more than happy to. 

Mrs. MALONEY. To pay every provider through 2009? 

Secretary JACKSON. I sure will. 

Mrs. MALONEY. Because I feel that it’s estimated to be $9 billion, 

yet it’s not in your budget, as I understand. Or your proposed 

budget. 

Secretary JACKSON. I’ll be happy to get that for you. There’s no 

problem. 

Mrs. MALONEY. And the tenant-based formula. In the tenantbased formula, why is the Department going back to the old formula based on data that is 2 years old? And as I understand it 

from the central staff of the committee, this would result in a loss 

of over 100,000 vouchers across the country, and many of course 

would be in New York City. So why are you basing it on a formula 

that is 2 years old, thereby lowering the number of vouchers? 

Secretary JACKSON. We’re not, Congresswoman. What we have 

done is budget-based. We’re no longer using unit-based costs to— 

Mrs. MALONEY. You no longer use—pardon me? The what? 

Secretary JACKSON. Unit-based. 

Mrs. MALONEY. You no longer use the tenant-based? You’re just 

doing project-based? 

Secretary JACKSON. No. Budget-based. We’re giving the housing 

authority a budget to work with so they’ll have more flexibility in 

how they manage the program. We went off the unit-based pricing 

2 years ago, and that’s what they’re speaking in reference to. 

Mrs. MALONEY. So you no longer fund Tenant-Based Section 8? 

Secretary JACKSON. No. We do, but it’s budget-based. It’s not 

based on units, as it had been the past. 

Mrs. MALONEY. And when you say units, you mean tenants? 

Secretary JACKSON. No. Units. 

Mrs. MALONEY. Excuse me. You know—I don’t see what you’ve 

changed. You say you no longer fund Tenant-Based Section 8, 

where the tenant can shop for the Section 8 housing? 

Secretary JACKSON. We do. 

Mrs. MALONEY. But you’ve changed it to unit-based? 

Secretary JACKSON. No. It was unit-based to the housing authority. They got a number of units. Let’s say that Fort Worth, Texas, 

got 400 units. 

Mrs. MALONEY. So in other words, your Section 8 can only go to 

public housing? 

19

Secretary JACKSON. The Section 8 program is funded and actually administrated by the public housing agency. The tenant-based. 

It’s not administered by anyone else. The project-based is to a 

project that has been developed. 

Mrs. MALONEY. But in New York, at one point, they could take 

a Section 8 voucher and go to any housing project. The tenant 

made the decision of where they went. 

Secretary JACKSON. No. They didn’t go to any housing development. They went to a market-rate apartment somewhere in the 

City of New York. 

Mrs. MALONEY. Exactly. But they made that choice. The tenant 

made that choice. So you have taken it away from the tenant making the choice and giving it the public housing project. Is that what 

you’re saying? 

Secretary JACKSON. No. That’s not what I’m saying. 

Mrs. MALONEY. What are you saying? 

Secretary JACKSON. I’m saying that the program is always administered from the housing authority, period. They have to allocate the voucher to the person. 

Mrs. MALONEY. Right. 

Secretary JACKSON. The person has the flexibility to go shop the 

voucher around to find the apartment that he or she wants to live 

in. 

The CHAIRMAN. And that hasn’t changed? 

The SECRETARY JACKSON. That has not changed. 

Mrs. MALONEY. But have the number—the vouchers have fallen 

by 100,000—according to central staff—that you’re providing. 

Secretary JACKSON. No. Because it’s budget-based, we’re no 

longer having unit-based. We’re not giving the housing authority of 

New York City units. We’re giving them a budget, and they can operate within that budget structure. 

Mrs. MALONEY. Well, I have been told that it will be a loss of 

100,000 vouchers. Whether you call it a unit or a tenant-based or 

a housing authority based, and any cutback in Section 8 is bad 

news for public housing, period. 

Secretary JACKSON. We’ve increased the budget each year, so I 

really feel comfortable that New York, as other areas, can operate. 

And I’ve had this conversation before. 

Mrs. MALONEY. So the number of Section 8 vouchers going to 

New York and other places is increasing this year? 

Secretary JACKSON. We’ve increased the budget by $100 million. 

Mrs. MALONEY. Does that mean 100 more tenants will be able to 

afford housing? 

Secretary JACKSON. It’s according to what section of the country 

you’re in, because you have a higher per capital plan in New York 

than you would have in Dallas, Texas. It’s according to where you 

live. 

Mrs. MALONEY. My time is up, thank you. 

The CHAIRMAN. The gentleman from California. 

Mr. MILLER OF CALIFORNIA. Thank you, Mr. Chairman. I have 

been a developer for over 35 years, and you and I have talked 

about recession, Mr. Secretary. And I think at the time if you have 

a significant housing recession, at that time it’s the worst anybody 

has ever seen, they say. 

20

Near the 1980’s, I remember when the prime rate went to 21 

percent, and you couldn’t get a loan. It was awful. During the 

1990’s, when it was awful also starting in about February/March 

of 2000, it was awful for a long time. And the problem was within 

those recessions we had high unemployment. 

This time it is also bad again, and it’s not surprising that we 

have all-time record foreclosures, because we have all-time record 

homeownership at the same time. And much of the problem we 

face today is in the subprime market, which is expanded. And most 

of those loans should be considered predatory, because when you 

make a loan to somebody you know can’t pay it back, it is problematic. 

Chairman Frank touched on something that he and I worked 

very hard on for a long time, and that is raising conforming in 

high-cost areas and FHA in high-cost areas. And your statement I 

think is most proper saying that this temporary increase will help 

a lot of people out there who are stuck in the exotic loans to be 

able to maintain homeownership. 

That I think is absolutely true, but would not it also be applicable to say doing this permanently would in the long run help a lot 

of people in the future be able to buy a home, understanding that 

FHA and Freddie Mac and Fannie Mae have good underwriting 

standards? They are not going to you know, decrease those in any 

way, shape, or form. Would it be a good program to continue permanently rather than just on a temporary basis? 

Secretary JACKSON. Congressman, yes. And I think I said that to 

the chairman when he asked. 

Mr. MILLER OF CALIFORNIA. I just wanted to hear you say it 

again, because I have been waiting for a long time to hear you say 

that. 

Secretary JACKSON. I agree, I agree. 

The CHAIRMAN. We need you to say it really loud so they hear 

it in the Senate. 

Mr. MILLER OF CALIFORNIA. Some don’t have ears. 

Secretary JACKSON. Absolutely, I think that it would be a major 

plus. And that is why we want it at an acceptable level, and that 

is why we want FHA modernization passed. And I think the stimulus package demonstrates that when we raised it to the limit that 

we did. 

I was out in your State last week, and it was unbelievable when 

I gave the answer to Los Angeles and Orange County, because immediately the Realtors realized that they would be able to refinance into a safe, secure loan with FHA. 

Mr. MILLER OF CALIFORNIA. It has a huge positive impact. In 

fact, Barney and I suffered the banks fighting us for years. And I 

have heard many Presidents and CEO’s of banks saying what a 

great program it is to do this, because when they sell high-cost 

areas they can buy a home in the low-cost areas, but they can’t 

move out of the high-cost to move into a low-cost. 

Another area that I have some concerns with, I remember we all 

fought for the American Dream Downpayment Assistance Program 

that we implemented. And we talked, we gave speeches. And a lot 

of the arguments we heard in favor of that was to pattern it after 

the private sector downpayment assistance program. Now there 

21

seems to be an argument today that program is awful, it’s horrible, 

the foreclosures are extremely high. 

I mean, of the nonprofit downpayment assistance program they 

probably put a million people in homes who wouldn’t have a home 

otherwise. And some argument is being made that perhaps 20 percent of those might be in some problematic stage. That still leaves 

800,000 people in homes who wouldn’t be in the homes. 

But when I met with the Commissioner, I had a concern when 

they said that the foreclosure rate was higher than the nonprofit, 

you know, private sector downpayments assistance programs. And 

I said, ‘‘Can you give me the data showing what percentage are in 

trouble on the private sector versus what percentage are in the 

American Dream Downpayment systems?’’ 

I was supposed to get that, but then about a week later, they 

came back and said, ‘‘Well, the information is not available to us 

to give to you.’’ Can you please explain to me how then HUD believes that the private sector is undergoing extremely high percentage of foreclosures and not American Dream Downpayment Assistance Act when we don’t have the data in HUD differentiating the 

two? 

Secretary JACKSON. I wish I could, but Congressman I cannot 

comment, because this matter right now is under current litigation. 

Mr. MILLER OF CALIFORNIA. I thought those were all settled. 

Secretary JACKSON. No. 

Mr. MILLER OF CALIFORNIA. Oh, so there are two lawsuits that 

have been resolved, but there are still more underway? 

Secretary JACKSON. I cannot comment as the Secretary. 

The CHAIRMAN. Excuse me, Mr. Secretary, but I know that people often say that. Has any judge ordered you not to comment on 

this? 

Secretary JACKSON. Yes, sir. 

The CHAIRMAN. Can I see the order from the judge? 

Mr. MILLER OF CALIFORNIA. They have, they have yes. But I 

didn’t know I couldn’t talk about the program in general. I knew 

I wasn’t going to speak specifically to the litigation, which I wasn’t 

trying to do. My concern is that I believe the private sector is doing 

a good job. And they put a million people in homes who would otherwise not have a home. 

And if we are saying that there is a problem in that sector, if 

we mandate that they have the same identical underwriting standards as HUD uses on the American Dream Downpayment Program, 

if they use the same standards, the same underwriting, the same 

appraisal standards, why would one be problematic when the other 

one is not if they are using the same standard? 

I know you can’t answer this, but this is a real concern for me, 

because I remember hearing speeches when I voted for the American Dream Downpayment Assistance Program that this worked so 

well in the private sector that we need to expand it by having government get involved, because we can put all these people in homes 

who could not otherwise afford a home. Look at how much more 

we can do by involving the government. 

And if we just look at the numbers, I mean it seems like there 

is something we could do. Let me ask you another question then. 

I heard arguments saying that the MMFI and the HUD’s budget 

22

is problematic because of the high foreclosure rate. Is there a minimum capital ratio that is for the MMIF, percentage-wise? 

Secretary JACKSON. Brian. 

Mr. MONTGOMERY. The capital ratio that Congress sets for the 

MMIF fund is 2 percent, and currently we are at about 6 percent. 

Mr. MILLER OF CALIFORNIA. That is what I thought. And my concern Mr. Chairman is, and the information given to me, if we require 2 percent and I checked the data and you had 6 percent, and 

your projections between 2007–2014 that your actual increase 50 

percent. How can there be a problem if we are triple the requirement that we are supposed to have currently? 

I mean, I would honestly expect that the foreclosure rates for 

people who don’t have any money would probably be higher than 

people who have money. So if a person doesn’t have 3 percent 

down, and they want to participate in the American Dream Downpayment Assistance Program, we are going to give them 3 percent. 

Or if they want to participate in the private sector, somebody other 

than the government is going to give them 3 percent. 

And I would, I would actually expect that the foreclosure rates 

would be higher for people who don’t have any money. And Mr. 

Secretary, you and I have talked about helping people get into 

houses. So I really would like the data when you get it, because 

I am having trouble understanding— 

The CHAIRMAN. Well let me, we are going to run out of time, but 

see if they have a response for the gentleman— 

Mr. MILLER OF CALIFORNIA. Oh, okay. I don’t believe you can, 

but okay. 

Secretary JACKSON. We will try to, we will get it to you today. 

The CHAIRMAN. As long as you have a court— 

Secretary JACKSON. You have a 6 percent, that’s— 

The CHAIRMAN. I can’t imagine that a court order would interfere 

with the transmission of factual data. 

Secretary JACKSON. No. 

Mr. MILLER OF CALIFORNIA. You said the funds at risk, you are 

required to have a 2 percent and you have a 6, I don’t see a risk. 

Mr. MONTGOMERY. If I could respond to that, the Credit Reform 

Act requires those loans, a book of business made in that fiscal 

year beyond budget. Yes, over the net present value of those loans, 

over the life of those loans, yes, we have a great capital reserve 

meeting over those 30-year programs. Based on our modeling right 

now, we will keep $21 billion more than we will pay out. 

For credit reform requires again, those books of business beyond 

budget for that year, and this year is where the problem is. 

Mr. MILLER OF CALIFORNIA. Well, I would expect there to be a 

problem— 

The CHAIRMAN. Your time has expired. 

Mr. MILLER OF CALIFORNIA. Oh, that’s too bad, thank you. 

The CHAIRMAN. The gentlewoman from New York. 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. Secretary Jackson, 

local governments rely on CDBG to create fertile environments for 

families and jobs to grow in our communities. The City of New 

York for example, uses it for everything from going after landlords 

and cleaning up the Bronx river to providing funding after the 9/

11 attacks to help businesses and the community to get back on 

23

their feet. However, the President’s budget will cut funding for 

CDBG by nearly 20 percent. How do you expect States and cities 

to continue their economic development activities given the proposed cuts? 

Secretary JACKSON. We have put before you on a number of occasions proposals to revamp the Community Development Block 

Grant to make sure that it addresses the needs of cities that really 

need the program. I don’t doubt for one moment that New York 

needs the program, but there are certain cities around this country 

that don’t. 

And I think it is very important that we begin— 

Ms. VELAZQUEZ. You are telling me that there is no city across 

America that does not need funds to promote economic development? 

Secretary JACKSON. Yes. 

Ms. VELAZQUEZ. And create jobs? 

Secretary JACKSON. Yes, yes. 

Ms. VELAZQUEZ. So why are you cutting the budget for CDBG? 

Secretary JACKSON. I said there are certain cities that from our 

perspective do not need the concentration of Community Development Block Grant Funds. 

Ms. VELAZQUEZ. Which cities? 

Secretary JACKSON. Like Palm Beach, Florida, one of the richest 

cities in the country. 

Ms. VELAZQUEZ. So then why can’t you use the entire, that 

money to increase the investment of resources to continue to promote economic development and job creation at a time when the 

economy is suffering so much? 

Secretary JACKSON. That is a very excellent question. If you— 

Ms. VELAZQUEZ. Yes, because it could respond to the intent of the 

stimulus package. 

Secretary JACKSON. May I answer please? 

Ms. VELAZQUEZ. Yes, sure. 

Secretary JACKSON. If you would pass the proposed legislation 

that we have, we would be able to use the money by specifically 

pinpointing those cities that deserve it most. And that is all we are 

saying, is that the formula that we have had since 1974 does not 

fit the needs of major cities today, and I would like to zero in on 

those cities. 

The best example I can give you is Canton, Ohio, where I know 

you have severe problems, or Dayton, Ohio, which I was just at, 

you have severe problems, or portions of New York City where you 

have severe problems. 

Ms. VELAZQUEZ. Have you proposed legislation to this committee? 

Secretary JACKSON. Yes, I have. 

Ms. VELAZQUEZ. Well, I’ll look into that. Sir, most of our Nation’s 

public housing developments range in age from 40 to 70 years old 

and are getting older everyday. For seniors and families in public 

housing, one more year adds to the cost of needed repairs. 

So these needs are so great that your agency has encouraged 

PHAs to borrow funds from the capital market to pay for their current repair needs. PHAs use public housing Capital Fund grants to 

pay for both the repair needs and the financing. In the President’s 

Fiscal Year 2009 budget however, he is proposing to cut Public 

24

Housing Capital Fund grants by over $400 million. It is a 17 percent decrease from last year. Can you explain why you urge PHAs 

to borrow on one hand and cut their means to borrow with the 

other? 

Secretary JACKSON. Let me say this, that back in the early 

1990’s, we had what we called the Commission on Severely Distressed Public Housing. We came to the conclusion that there were 

88,000 subprime units in this country and they should be demolished. To date, we have demolished 150,000. So a lot of housing authorities have less units than they had. 

And I think that the capital funds that they had, it kept pace 

with that. Also, what is very, very important is this: Many of the 

properties that are in these major cities have increased so much in 

value that they can issue bonds to make sure that the property is 

maintained. And we can still pay the payment back to us to make 

sure that the property sustains itself. 

I think that having done that myself, I don’t have a problem. 

Ms. VELAZQUEZ. So the Federal Government is running away 

from its responsibility— 

Secretary JACKSON. No. 

Ms. VELAZQUEZ. —to provide for capital funds to keep those 

projects. 

Secretary JACKSON. No. I would not say we are moving away 

from our responsibility. I think we have the appropriate amount of 

capital funds going to the major housing authorities in this country. I think that if they use innovativeness and use their bonding 

power, they can address their needs. 

Also, it is important that we are going to asset-based management. You know we have many housing authorities around this 

country that buildings are sitting empty and we are paying people 

for them. 

Ms. VELAZQUEZ. It is okay, you have an excellent question for 

every answer. My last question sir, your agency estimates the percentage of elderly heads of households assisted by HUD to be 35 

percent in New York, 35 percent in Chicago, 34 percent in Boston, 

and 31 percent in Los Angeles. Can you tell me in what ways HUD 

is identifying any program or creating any program to provide services to the aging population within public housing? 

Secretary JACKSON. I am sorry Congresswoman, I really didn’t 

get the question. 

Ms. VELAZQUEZ. There is a growing need, special needs for those 

who live in public housing who are becoming seniors. And they live 

in public housing, they are not on Section 202. So what types of 

programs do you have in place to address the health needs and 

other services that are going to be required by this aging population? 

Secretary JACKSON. Well I will tell you that our responsibility as 

the Department of Housing and Urban Development is to provide 

them housing, decent, safe, and sanitary conditions. We don’t address the medical issues or the issues that might come from living 

in assisted living. That is not something that is within our mandate. 

Ms. VELAZQUEZ. Okay, maybe you need to introduce legislation 

to do that. 

25

The CHAIRMAN. Mr. Secretary, I may have missed something. I 

thought you said there were 88,000 distressed units, of which 

150,000 have been demolished. So we demolished what, 62,000 

non-distressed units? 

Secretary JACKSON. No. What happened, as the years went by, 

more and more units were distressed, and they took that into consideration and began to demolish those units. 

The CHAIRMAN. How many were replaced, do we know? 

Secretary JACKSON. We have had a substantial number of 

those— 

The CHAIRMAN. We don’t know? 

Secretary JACKSON. No. 

The CHAIRMAN. All right. That reinforces my view that there is 

a lack of concern here. When we know more about how many were 

destroyed than we know about how many were replaced, I think 

that is symptomatic of an undervaluing of the existence of the 

units. 

Secretary JACKSON. No sir, I would disagree. 

The CHAIRMAN. Well then, why don’t we know how many were 

replaced? 

Secretary JACKSON. Because we have outstanding right—to date, $1.4 billion dollars in HOPE VI monies that were supposed to do 

those units that have not been used as of today by how— 

The CHAIRMAN. I have seen it, but that doesn’t—you still should 

know how many were replaced if we are concerned about that. We 

are trying to fix up the HOPE VI program. 

Secretary JACKSON. As of to date, 60,000 have been replaced. 

The CHAIRMAN. Well, you got that answer in a hurry, thank you. 

Secretary JACKSON. I got it from my person. 

The CHAIRMAN. Credit, those people are doing something sitting 

back there. The gentleman from Texas. 

Mr. NEUGEBAUER. Thank you. Mr. Secretary, it is good to have 

you here again. And I was glad to hear you say that FHA has underwritten about $37 billion worth of mortgages to help bring some 

additional liquidity. Were all of those loans made to refinance 

subprime loans that were already on the books? 

Mr. MONTGOMERY. Between October 1st and January 1st, the number is about $38 billion that we have injected into the market. 

About $15 billion of that is FHA secure. So $38 billion total, $15 

billion of that is FHA secure. 

Secretary JACKSON. That is the new program that the President, 

the Congressman, and I announced in August. 

Mr. NEUGEBAUER. You know one of the things that I think has 

been kind of interesting and obviously, many of us are ready to get 

the FHA reform bill passed and get to making FHA even more 

than it is today. But I think it is kind of interesting, we have had 

diminished interest in FHA, and now all of a sudden we have a 

bunch of folks who are in trouble and everybody is looking for 

someone to come in and just step in and fill some of those voids. 

My big concern here is that we do not want to diminish the solvency of FHA. I just want to be on the record and be very clear 

to you that as we are underwriting these loans, I hope we are 

learning lessons from the past here. And how we got into this dilemma was the fact that we were not appropriately underwriting 

26

many of these loans. And in many cases, the risk being taken far 

exceeded the potential return on that mortgage. 

So I’m hopeful that as you are looking at those, and certainly I 

think with the additional loan limits, that is going to open up some 

new avenues for you. But I think it’s, we need to be very clear here 

that we have to get back to basics with housing. How we got in the 

housing jam today is that we got very creative in one way but we 

got very careless in another way. 

And I think it’s more the carelessness than the creative. I am not 

opposed to creativity. But when you start not getting appraisals 

and not verifying people’s income and their assets. And I have 

heard this term used, and I think it has been used a lot here lately, 

we are putting people in homes who ordinarily couldn’t afford one, 

and we thought that was a good thing. 

Secretary JACKSON. Right. 

Mr. NEUGEBAUER. But what we do to people when we put them 

in a home that they can’t afford is we set them up for failure. And 

so we have to be very careful here as we make policy in this Congress that we are not putting people in a home that they can’t afford, but that we are giving people an opportunity. And when we 

start talking about downpayment assistance and where we are, basically putting people into a home that have no equity, no skin in 

the game if we would. 

I think we have to be very careful of that. The principle that 

most Americans grew up in is you save up money so that you can 

own a home, and until you do that you live in other forms of housing. And that’s the reason you are the Secretary of Housing, that 

homeownership is one aspect of housing, but we have been talking 

about others. 

Which brings me to my question, what is the status, and we have 

heard a lot about other agencies of what their loan portfolios are. 

What does the FHA portfolio look like? What are your delinquency 

rates? What are your foreclosure rates and are you within your 

statutory requirement? 

Secretary JACKSON. Right. 

Mr. MONTGOMERY. Our foreclosure rate is a little less than 2 percent. A lot of the problems that you are seeing in the subprime 

market you are not seeing within the FHA program. We, our delinquency rate is about 6 or 7 percent, but that also has a lot to do 

with the fact that FHA has excellent loss mitigation programs, 

which is a technical term for foreclosure prevention. 

The last thing that we want to do is foreclose on an FHA borrower, so we have various steps along the way when a borrower 

gets in trouble to prevent them from going to foreclosure. As a matter of fact, families who hit a rough spot and go through the program, 2 years later, 92 percent of them are still in their homes, and 

that is a good record, we think. 

Mr. NEUGEBAUER. And as far as your reserve requirement in 

statutory, what is your number today? 

Mr. MONTGOMERY. The capital reserve requirement is 2 percent, we are at a little more than 6 percent, somewhere around $20 billion. But again, that is not to be confused with what the Credit Reform Act requires. Our long-term outlook is good using the capital 

reserve standard. But again, from the Credit Reform Act, the fact 

27

that we are taking in too many higher-risk loans, that is what 

threatens our solvency for this year. 

Mr. NEUGEBAUER. And when you say you are taking too many, 

do you believe you are taking too many? 

Mr. MONTGOMERY. Well, these are not the refinancings that are 

causing us to go more positive in our credit subsidy. Quite frankly, 

a lot of the conventional FHA refinancings that we are doing right 

now, which we have done 117,000 in the last 5 months, have a decent amount of equity in it. Again, it is more borrowers, purchase 

borrowers who are using the seller-funded activity that are the 

higher-risk loans now. 

They have default rates, or rather claim rates 21⁄2 times higher 

than those who don’t have that type of assistance. 

Mr. NEUGEBAUER. Thank you. 

The CHAIRMAN. If I may, the gentleman pursued a very useful 

line of questioning. And this is the second time, Commissioner, 

that you have noted a pessimism on the Credit Reform Act that 

does not appear to be based in the economic reality of your reserves. And I wonder whether you might be willing to work with 

us on a better appraisal. 

This sounds like a case where if we mark-to-market, it would go 

up rather than down. So I think maybe on a bipartisan basis, we 

might want to work with you to see, because this is the second 

time you have mentioned that the credit, and answer the question 

if you weren’t—other. But it does look like the Credit Reform Act 

may be unduly restrictive and might in fact lead to an argument 

for increases when the economic reality doesn’t require them. 

So I think that is something that if the gentleman from Texas 

is interested in, we will be working on. And I think that was very 

useful, thank you. The gentleman from North Carolina. 

Mr. WATT. Thank you, Mr. Chairman, and welcome Secretary 

Jackson. I just want to raise one line of questions, and then I am 

going to give you an opportunity to explain your overall plan here. 

But I want to raise the totality of the concerns about fair housing 

enforcement activities, and then have you kind of help us understand how this all fits together. 

If I am looking at the budget, we go from $50 million to $51 million for Fair Housing, $50 million to $65 million for Housing Counseling, and $33.5 million to zero for NCBI LISC enterprise. I assume those would be the three programs in which you would have 

the most impact on fair housing. I have information that suggests 

that 13 fair housing groups that were funded previously were not 

funded in the last round of Fair Housing Grants that were made 

and 26 Fair Housing Centers either have closed or are at risk of 

closing due to lack of funding. 

I have concerns about what, in the context of the Mississippi 

transfer of funds to the port, what plans you made for fair housing 

in that context. And then I have something that suggests, or confirms I guess, which you can refute if it’s not the case, that HUD 

changed its Fair Housing Handbook to prohibit employees to say 

that a complaint, or prohibit the filing of anonymous complaints 

about housing. It has to be attributed to somebody now so that 

they can be identified and potentially retaliated against. 

I am just, I know you have a strong commitment to fair housing. 

28

Secretary JACKSON. That is correct. 

Mr. WATT. So there must be something in this context that is a 

plan for aggressive fair housing enforcement. It is just escaping me. 

Secretary JACKSON. Okay, I understand. 

Mr. WATT. Can you use the rest of my time to kind of explain 

what your vision is? And I see you have somebody who is working 

with you on that. So you all help me to understand what your plan 

is. 

Secretary JACKSON. Thanks, Mr. Watt. I would like for Kim 

Kendrick, who is the Assistant Secretary for Fair Housing and 

Equal Opportunity to have a chance to address that issue. 

Mr. WATT. She is prettier than you and probably knows more 

about it too. So I am delighted to have her in. 

Secretary JACKSON. I won’t debate that with you. 

Ms. KENDRICK. Good morning, sir. Well, let me address first the 

number of fair housing groups. You said 13 have lost their funding. 

That is probably correct. But one of the things that we did this 

year, what we have done for the last 3 years is we are now funding 

groups for 3-year cycles. So we have 45 groups that now have funding for 3 years instead of just having groups that are funded at 1 

year. 

One of the problems with just funding groups for 1 year is that 

if they lose their funding then we lose the ability of those groups 

to enforce the Fair Housing Act across the country. So what we 

have decided to do with the money that we have available is to 

fund groups for 3-year cycles. That gives them the ability to stay 

in business for that number of years. As a result of that, because 

we do have a budget, we do unfortunately, lose some of those 

groups. 

Mr. WATT. We don’t appropriate but for 1 year. How do you do 

that? 

Ms. KENDRICK. It is paid for. 

Mr. WATT. So basically that means you have groups that are able 

to do fair housing enforcement. They have the expectation that 

they can do it for 3 years, but that last year they still are going 

to have some insecurity. And then parts of the country that don’t 

have any groups doing fair housing enforcement for any years. So 

I still don’t understand how that gives you a more effective plan. 

Ms. KENDRICK. I don’t think we have two States that, we have 

three States that don’t have any fair housing laws right now. But 

we still have the Federal Fair Housing Act, which means that our 

Federal Fair Housing Act covers the entire Nation. So even though 

we may not have local groups on the ground, we have our own 

HUD groups on the ground there. So we have enforcement powers 

for all 50 States. We don’t have any State where we don’t have any 

enforcement power, so even though we may not have individual fair 

housing, independent fair housing groups, we do have a Federal 

presence in those States. 

Mr. WATT. I don’t know where that comes in this budget then. 

We have a net reduction if I put all three of those categories together; where I would expect fair housing to be most involved, 

there is a net reduction of over $15 million. 

Secretary JACKSON. Congressman, let me say this. When you talk 

about LISC enterprise that was not fair housing, that was an alloVerDate 0ct 09 2002 18:09 May 19, 2008 Jkt 041728 PO 00000 Frm 00032 Fmt 6633 Sfmt 6633 K:\DOCS\41728.TXT TERRIE
29

cation made that, in fact, we were making grants to them to help 

build more affordable housing around the country. And Congress 

insisted that we do this on a competitive basis, and that is done 

on a competitive basis. 

And basically that is what you see. 

Mr. WATT. Well you can’t compete for zero dollars here, though. 

I mean— 

Secretary JACKSON. But that was not for fair housing. 

Mrs. MALONEY. [presiding] The gentleman’s time has expired and 

additional questions can be placed in writing. 

Congressman Capuano. 

Mr. CAPUANO. Thank you, Mr. Secretary for being here. Mr. Secretary, I want to start out by saying that I like some of the budget 

proposals you’ve had. I certainly like the increase in fair housing. 

I really like the increase, the proposed increase in housing counseling and downpayment grants and self-help habitat. There are 

several things here that I like and support. But, of course, I’m not 

going to focus on that, because that’s good job. Now let’s move on 

to the stuff I don’t like. 

On the CDBG block grants, you pointed out Palm Beach, Florida, 

as a potential city that maybe shouldn’t qualify under your judgment, and that’s fair. Do you plan on denying them CDBG block 

grant money this year? 

Secretary JACKSON. No, I don’t have the authority to do that. 

Mr. CAPUANO. So you have no discretion in that matter? 

Secretary JACKSON. No. 

Mr. CAPUANO. So that because you don’t like a few cities, you’re 

now going to cut back 18 percent on every other city in America 

because you don’t have the discretion that you think is right? 

Secretary JACKSON. No. That’s not what I’m saying. I said we 

have proposed legislation before you. 

Mr. CAPUANO. I understand that, but the legislation hasn’t 

passed, and when it passes, that’s fine. I’d like to—are there elderly that you don’t like getting money as well, Section 202 money? 

Secretary JACKSON. No. We have demonstration programs that 

are going on where we’re leveraging the money, and we think that 

all of those developments now are in full swing. I think we have 

about 250 Section 202s and we have about 202 Section 811s in 

progress of being developed right now. 

Mr. CAPUANO. So all seniors and disabled people have appropriate and adequate housing in America? 

Secretary JACKSON. Well, I don’t think we’re going to ever get to 

that point, Congressman. 

Mr. CAPUANO. I don’t think so either. That’s why I don’t support 

a 26 percent and a 32 percent cut in those programs. Have we 

solved all the lead paint problems in America? 

Secretary JACKSON. No we have not. 

Mr. CAPUANO. There’s no lead paint anywhere? 

Secretary JACKSON. No we have not. 

Mr. CAPUANO. But a 20 percent cut. Brownfields—all the 

brownfields in America are all cleaned up? 

Secretary JACKSON. Well, we really feel that that’s not really our 

responsibility, and I’ve said that on a number of occasions here before you. 

30

Mr. CAPUANO. So it’s not our responsibility to make healthy 

neighborhoods? 

Secretary JACKSON. No. I think that is one of the other agency’s 

responsibility. Our responsibility is to provide decent, safe, and 

sanitary housing, and we’re going to continue to do that. 

Mr. CAPUANO. That’s fair enough. I don’t agree with you, but I 

respect the difference of opinion. I want to move on because, I 

mean, we’re going to have some differences of opinion on budgetary 

matters and priorities, and I understand that. But it’s the lack of 

discretion and the ability of discretion that really troubles me, because I think that’s really what it’s all about. Once you get to a 

bottom line, it really does depend on your discretion and the discretion of the people who work for you. And I will tell you that the 

letter to the Governor of Mississippi was troubling to me. I just 

want to ask. When you say that you have little discretion—in your 

letter, you said you have little discretion—does that mean no discretion? Or does that mean little discretion? 

Secretary JACKSON. I think the legislation was very clear. It said 

‘‘we shall.’’ It didn’t say ‘‘we may.’’ 

Mr. CAPUANO. So that you don’t have little discretion. You have 

no discretion? 

Secretary JACKSON. Basically, no discretion. 

Mr. CAPUANO. All right. Because ‘‘little discretion’’ troubles me, 

because I always argue with people that when you have a little discretion, use it. And especially when you go on to say you’re concerned that there may be significant unmet needs of affordable 

housing, which I agree with, but I’d like to know what is it that 

you think that is unmet in the region? 

Secretary JACKSON. Well, I don’t think that everything has been 

provided to low- and moderate-income people that should be provided for housing or infrastructure. So I totally agree with you. But 

had I had my d’ruthers, I probably would have said, sir, I don’t 

think we should be using this money and I would not approve it. 

But I didn’t have that kind of authority. 

Mr. CAPUANO. I appreciate that, but again, when I see the word 

‘‘little discretion,’’ that means there’s something. That means 

there’s something you hang your hat on. And I would prefer, especially if I believe in something, if I have something to hang my hat 

on, unless I know I’m absolutely not going to win, I push for what 

I believe in, and if I lose in court or I lose later on, so be it. But 

if you really felt strongly about it that the people in that area had 

not been fairly met, their needs hadn’t been met, I would have suggested that you should have done what you think is right and let 

the Governor of Mississippi chase us. 

Secretary JACKSON. Well, Congressman, I would say that under 

normal circumstances, that would be the case. But when you ask 

your general counsel what is the authority that you have to authorize this and they tell you that clearly there is none, then you have 

to do exactly what they say. 

Mr. CAPUANO. Well, two things happen. Number one, I’ve had 

general counsel, and when the general counsel tells me that I can 

write a letter that says I have little discretion, that means my general counsel has told me I have something. And then I turn to my 

general counsel and say, well, thank you for your advice. I’m the 

31

boss. This is what we’re going to do. And your general counsel says, 

okay, I understand. As long as I can defend you and I can’t tell you 

you’re breaking the law. And if your general counsel then quits the 

next day, well, then maybe you went a little too far. 

Secretary JACKSON. Well, I think under normal circumstances, I 

would agree with you again. But when the legislation is very clear, 

and that’s what they’re there for is to interpret the legislation that 

you passed, and you all passed this legislation and that’s the interpretation. 

Mr. CAPUANO. Then I would suggest that the next letter you 

write should clearly say, ‘‘I have no discretion,’’ as opposed to little 

discretion. But I also want to talk about the next batch of money. 

Now I will tell you that, you know, I have, hey, let’s talk. I have 

some needs in the Boston harbor, and I’d love to expand it. Can 

we talk? Do you have any extra money that you have some discretion over that, you know, would help low- and moderate-income 

people? It would create jobs. 

Secretary JACKSON. If you’ll pass the legislation, we’ll authorize 

it. 

Mr. CAPUANO. I would if you give me some money. 

Secretary JACKSON. Well, we don’t give money. You give us the 

money. 

Mr. CAPUANO. So if I do that with an earmark to Boston harbor, 

you’re all set? 

Secretary JACKSON. Well, if you pass it, yes. 

Mrs. MALONEY. The gentleman’s time has expired. Additional 

questions can be placed in writing. Congressman Clay. 

Mr. CLAY. Thank you, Madam Chairwoman. Mr. Secretary, good 

morning. 

Secretary JACKSON. Good morning. 

Mr. CLAY. I visited New Orleans with my family in November of 

2007, and the tourist area looks as if nothing had happened to it, 

and that part of the City was still beautiful. Then I toured the devastated areas of the City that was caused by the hurricane. I was 

shocked and appalled by the ghost town that I observed. 

Commercial streets had heavy traffic. However, the shopping 

centers were deserted. There were no grocery stores, no drug 

stores, and not too many schools were open. No Burger Kings, no 

McDonald’s, no Kentucky Fried Chicken. Parking lots were overgrown with grass, and residential streets were deserted. Sometimes 

one house on a block was occupied. Sometimes one would go three 

blocks before seeing an occupied house. There were no children 

playing and very few children to be seen at all. 

What happened? I remember the speech that President Bush 

made at Jackson Square that promised to rebuild the City. What 

happened to all of the promises that he made? And why is over 60 

percent of the pre-hurricane population, why is it still not back in 

New Orleans? What has happened to the billions and billions of 

dollars that were poured into the City for its rebuilding? 

Secretary JACKSON. Congressman, I think that’s a fair question. 

What I can tell you is this: We allocated the money to the State 

of Louisiana. They set up the Louisiana Recovery Authority, which 

was to administer the money. President Bush made it clear to us 

32

that we were not to dictate what occurs in that State; that was the 

Governor’s responsibility. 

To date, they hired an agency called—a group called ICF. They 

were to disburse money, help people get back in their homes. They 

have paid them an extraordinary amount of money, but we have 

not seen the results of what has been accomplished in that process. 

So I can’t sit here and debate with you that as I travel back and 

forth to New Orleans, I can’t debate with you that things are not 

where I want them to be, because they’re not where I want them 

to be. I would think with the amount of money that we allocated 

to Louisiana, they should be further ahead than where they are. 

And I think that the present Governor, Governor Jindahl, will 

tell you that, that we—I won’t say we—for some strange reason, 

the money was not used very well, and I’m not sure what kind of 

audit is being done at this point on the ICF to demonstrate the 

amount of money that they were paid compared to the assistance 

that they gave many of the residents in New Orleans. 

Now with the process of bringing people back home, I can’t speak 

to everyone, but we have done everything in our power for those 

who were on subsidies, whether it was public housing or Section 

8, to get them back. In fact, in many cases, we were paying 150 

percent over market rate, some places 170 percent over market 

rate, because we want to do everything that we can in our power 

to get people back who want to come back home. I think that’s the 

only right thing to do, and the President has instructed us to continue to do that. 

And that’s why we did the survey at the request of Chairwoman 

Waters. She wanted a survey to see who wanted to come back 

home. We did the survey. And we had some of the people who basically were suing us as part of the survey team, because we wanted 

a balanced answer to the question. 

Mr. CLAY. Is that indicative of why the President’s point man 

left? I just read recently where he resigned from, you know, from 

being the liaison to the White House over the reconstruction of the 

Gulf Coast. 

Secretary JACKSON. I can’t tell you specifically, but I can say this 

about my friend, Don Powell. He was very frustrated in working 

with Louisiana, very frustrated. 

Mr. CLAY. I can imagine. Can we move on to Mississippi? There’s 

one issue—and my colleagues have brought up the issue of the 

money for building docks and dredging the harbor, but why was 

$25 million diverted to a project in northern Mississippi that was 

not in the affected area, and how do we account for these dollars? 

Secretary JACKSON. I don’t know exactly what you’re speaking in 

reference to, but if you’ll tell us, I will be happy to get— 

The CHAIRMAN. If the gentleman would yield, it is a Toyota plant 

in northern Mississippi that is getting some money. 

Secretary JACKSON. I will get an answer. Do you have an answer? This is Nelson Bregon— 

Mr. CLAY. Good morning. 

Secretary JACKSON. —the General Assistant Secretary of Redevelopment and Planning. 

Mr. CLAY. Good morning. 

33

Mr. BREGON. We do not have a proposal right now from the State 

of Mississippi to undertake any activity or project related to a Toyota plant. We have heard the same thing you have heard, but the 

State of Mississippi has not provided us with any information. 

They have not put a request through a disaster plan, which is what 

they have to do for us to look and concur with whether in fact this 

is an eligible activity and it meets the other program guidelines. 

The CHAIRMAN. If the gentleman would yield, I did have a meeting with Governor Barbour, and I think the Secretary may have indicated to Governor Barbour that it would make the Secretary’s life 

a little easier if the Governor came and talked to us, and if so, I 

think that was a reasonable—although it would have made all of 

our lives easier, frankly, if Governor Barbour had talked to our colleague, Bennie Thompson, and I think they finally did that, and I 

think the Governor was deficient in not having done that before. 

But when he spoke to me, he told me that as of now, the Toyota 

plant that people have talked about, that the funding there is going 

to come out of some State funds that were freed up by something 

else, and I think some of this conversation—I don’t know what 

originally was planned there. 

But I think some of the conversation that has happened may 

have influenced the decision for it not to come out of these funds 

but to come out of the State funds. So as of now, apparently they 

are talking about State funds for this, although I am not convinced 

that was their original intention. 

Mr. CLAY. Thank you, Mr. Chairman. I yield back. 

The CHAIRMAN. The gentleman from California. 

Mr. BACA. Thank you very much, Mr. Chairman. Mr. Secretary, 

San Bernardino and Riverside County, which is my area, has the 

highest foreclosure rate in the country. As you know, the committee is working on housing stimulus legislation to help stabilize 

the housing market. I have introduced legislation similar to a bill 

introduced by Chairman Dobbs in the Senate that establishes a 

family foreclosure rescue corporation that will buy mortgages from 

the originators and finance loans based on reduced value of properties, making the payments more manageable for the homeowners, and that’s important to all of us to maintain that American 

dream and stabilize and be in your home. 

This proposal is to create a temporary institution to help stop the 

crisis. The concept has support from the conservative American Enterprise Institute and the liberal Center for American Progress. 

What are your thoughts? And would this be something you would 

support? 

Secretary JACKSON. Congressman, I really think that if we can 

get FHA modernization with the high loan limits, at an acceptable 

loan limit, we can address the issues in San Bernardino the same 

as Compton, the same as the others. I really believe that if we can 

reconcile, as the chairman has tried to do with the Senate side, and 

I hope it comes to fruition this afternoon, we can help. 

It was clear when I was in California last week for the announcement of the loan limit at $729,000 that the Realtors were very 

pleased. And immediately they said that they can resolve many of 

the problems that you’ve just talked about if we keep the loan limit 

at an acceptable level. We don’t have to have any other bills. If we 

34

just reconcile FHA modernization, we can address many of the 

issues that you are faced with. 

Mr. BACA. It’s essential, because most of the people right now 

are, you know, facing this crisis, the drama of being displaced, 

being homeless, not having a place to go. And we need to take immediate action, because someone who is in a home will not have 

a home anymore. And when they get these payments, who knows 

what’s going to happen? I just saw some comedian movie the other 

day of some foreclosures that were going on, and they’re going 

around robbing banks or whatever just to survive. And I said, you 

know, we don’t want to get into that kind of a crisis where many 

of our individuals are now looking at how do they stay in their 

home? How do they maintain their mortgage payments that they 

have? And we have one solution, and hopefully that’s another one. 

Another question that I have is that the President’s Fiscal Year 

2009 budget contains an 18.3 percent cut in the CDBG program. 

What is the rationale for a cut of this magnitude? 

Secretary JACKSON. Well, as I— 

Mr. BACA. Question number one. 

Secretary JACKSON. As I said to the Congressman a few minutes 

ago, we believe that there’s a proposal before you all to be able to 

zero in on those cities that are much in need of Community Development Block Grant funds. To date, we’re still operating on a formula that was set in 1974. That formula today is not applicable to 

what is occurring in this country today. 

I mean, we have major cities in this country today that are suffering, whether it’s Dayton, Ohio, whether it’s Canton, whether it’s 

Detroit, where if we could specifically point the money in the direction for 2 or 3 years to bring those cities back, it would be more 

positively—more positive— 

Mr. BACA. Isn’t that saying that we need to increase it, not cut 

it, and redirect the money? I mean, that’s what I’m hearing you say 

at one point. If we need to direct it to those cities that do need it, 

and if there are cities that don’t, then we need to redirect that and 

put the additional funding that is there to assure that it’s there for 

those cities that need it. 

Secretary JACKSON. I don’t disagree. I think we have the funding 

at the level that we have if we can direct it to the cities that are 

most in need. And only you can do that. Our proposal is— 

Mr. BACA. But directing it doesn’t mean that we have a cutback. 

And we have a cutback right now of 18.3 percent, and then there 

also has been a total—and it comes out to 44.9 percent since the 

year 2001. It seems like we continue to cut when there’s still a 

need in other cities. I’m not saying that you’re wrong and some of 

the cities don’t need it. We need to redirect that. But increase the 

funding at a time when we’re going into a recession, that we should 

be able to provide for many of the poor, the disadvantaged, or individuals who need this. 

Secretary JACKSON. I’m not saying that you are wrong, Congressman. What I am saying— 

Mr. BACA. I’m glad you said that. I’m not wrong. Thank you. 

Secretary JACKSON. But I am saying that I think that in the 

budget we have enough money to address the needs if we pass the 

proposed legislation that we’ve presented to you. Second of all, I 

35

guess I would disagree with you. I don’t think we’re going into a 

recession. I think the economy has— 

Mr. BACA. We’re already in a recession. Okay. I’m sorry. I should 

have said we’re already in a recession, not going into one. All right. 

Thank you for clarifying that. 

Secretary JACKSON. Thank you. 

Mr. BACA. The next question that I have— 

The CHAIRMAN. Would the gentleman yield for a second? Mr. Secretary, let me see if I understand you. As I understand the budget, 

it proposes the cut. It doesn’t say change the formula and reallocate. Are you saying that if we were to adopt your change in formula and then took the extra money that was saved by that and 

put it to the other—the remaining cities, that the Administration 

would approve that? 

Secretary JACKSON. No, sir, that’s not what I said. I said— 

The CHAIRMAN. In other words, what you’re proposing is that we 

cut out the cities you don’t think should get it, but that would not 

be of any benefit to the other cities? 

Secretary JACKSON. No. I think what I’m saying is that I think 

we have enough money allocated in the— 

The CHAIRMAN. Right. But the argument that if we cut from 

them, you could reallocate it, that’s not what you’re arguing? 

Secretary JACKSON. No. 

The CHAIRMAN. So that even if we cut out the cities that you 

think don’t need it, that wouldn’t bring another penny to the ones 

that would still be eligible, correct? 

Secretary JACKSON. What I’m saying to you— 

The CHAIRMAN. No, is that yes or no? That your proposal is to 

cut out money from the cities that you think don’t need it, but not 

to provide any more than the budget for the ones that are already 

in it? 

Secretary JACKSON. No. I’m saying to you, Mr. Chairman, that 

we would specifically zero in on those cities that we see are extremely devastated by the downturn and try to— 

The CHAIRMAN. I didn’t see that in—but you’re reducing the 

amount of money by ‘‘X’’ percent. I assume that was based on the 

cities that you thought didn’t deserve it. So then the question is, 

that money then is reduced. What’s left? Where is there money to 

give to anybody else? How do you give more money to the other cities? 

Secretary JACKSON. We think that if we have the $3 billion that’s 

in the budget we can address this with the recalculation of the formula. 

Mr. BACA. But there’s a cutback in the budget. 

The CHAIRMAN. Yes. You’re cutting out the cities that you think 

don’t deserve it, correct? 

Mr. BREGON. Mr. Chairman? 

The CHAIRMAN. Yes. 

Mr. BREGON. The CDBG program distributes the money with a 

formula. 

The CHAIRMAN. No, we know that, sir. 

Mr. BREGON. So it’s not— 

The CHAIRMAN. Excuse me. 

Mr. BREGON. —like we are taking— 

36

The CHAIRMAN. Excuse me. Stop. We know that. 

Mr. BREGON. So— 

The CHAIRMAN. No. Stop. 

Mr. BREGON. But the proposed formula— 

The CHAIRMAN. Please stop, because you’re evading the question, 

and I don’t think people should leave false impressions. The budget 

request is 18 percent below. Now I assume that cut was based on 

the calculation that there are cities that didn’t deserve it. If you 

reduce the amount by taking out from the cities that don’t deserve 

it, that doesn’t give you any ability to reallocate it. You didn’t ask 

for an ability to reallocate based on need. You asked to cut out the 

ones that you thought weren’t needy, but nothing in there goes to 

increase the ones that are needy. 

Mr. BREGON. Yes. I mean, the formula would give more monies 

to communities that have a greater need, and it would— 

The CHAIRMAN. But you’d cut the overall amount? 

Mr. BREGON. Yes. 

The CHAIRMAN. How did you decide to cut 18 percent? 

Mr. BREGON. We know that the gap—we know that when we 

look at the new formula, if we look at the— 

The CHAIRMAN. No. I asked—excuse me, sir. I asked you questions. I’d like answers. 

Mr. BREGON. $400 million. 

The CHAIRMAN. How did you arrive at that amount to cut, based 

on what calculation? 

Mr. BREGON. No. The four hundred— 

The CHAIRMAN. No. How did you decide to reduce? What calculation led you to decide you could save that money? 

Mr. BREGON. Well, that decision was made on a budget— 

The CHAIRMAN. Oh, by OMB? Okay. That’s the answer. 

Mr. BREGON. The formula I’m talking about— 

The CHAIRMAN. So let’s not—all right. Now we know where it is. 

OMB told you that’s all you can have. Let’s not dance around and 

try and put a dress on OMB’s decision. I thank the gentleman. 

Mr. BACA. Thank you. Reclaiming my time. Thank you very 

much for pursuing that, and I think we still have a lot of work because there’s a lot of need out there, and hopefully we can reallocate it to those areas. 

The next question I have concerns the fact that the homeless 

numbers are growing in the Central City Lutheran Mission homeless shelters in San Bernardino in my district. Homelessness, as 

you know, boundaries no country. Thousands of men and women 

and children live in cars, on streets, in shelters, and in parks. In 

fact, a new survey shows that a 39 percent increase since the year 

2003, the rise of foreclosures will ultimately increase the numbers. 

Even though you increased the homeless assistance grant, your 

proposed cuts in community development grants, public housing, 

elderly housing, disabled housing, you also eliminate rural housing 

grants, funding for the LISCs and Enterprise in Section 108 of the 

CDBG loans. So doesn’t the rest of HUD’s budget proposal jeopardize visibility of the housing serving over 1 million extremelylow-income families? 

Secretary JACKSON. No, Congressman, I don’t. I think that we 

have allocated monies based on the needs and from our assessVerDate 0ct 09 2002 18:09 May 19, 2008 Jkt 041728 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 K:\DOCS\41728.TXT TERRIE
37

ment. And also, we have seen the reduction in the homeless population of 12 percent for the first time. We can calculate exactly why 

and what means it takes to get the people off the street. So I think 

that we have tried to be as fair. The budget is— 

Mr. BACA. What does it take to get the people off the streets? 

Secretary JACKSON. Well, there are programs. The best example 

I can give you is the PATH program in Los Angeles, which starts 

basically by taking the person off the street, cleaning them up, 

then giving them the psychological and medical help that they 

need, putting them through a training program, and then looking 

for a job for many of them. They have been very, very successful, 

to the tune of about 85 percent over the last 5 years. 

And I toured that program with Governor Schwarzenegger, I 

guess it was about a year-and-a-half ago, maybe 2 years—absolutely awed by the effect that it has had. I think it’s being replicated throughout the State of California. In fact, Governor 

Schwarzenegger just allocated monies to certain parts of the State 

to strengthen the program. 

Mr. BACA. Well, it’s to have the shelters, and I also believe that, 

you know, we should also implement the kind of programs—I know 

this is done at the local level—is to go around and picking up all 

of the homeless during a certain period of time, taking them to 

these shelters and assuring that those shelters are available, cleaning them up, checking them, doing whatever, and then putting 

them back instead of keeping them out on the streets. These are 

some of the things that maybe cities and others should implement 

as well in terms of a curfew to allow that there will be a bus or 

someone that can go around picking them up. But you have to have 

the transportation to get them to the shelters as well. 

I know that my time has expired. Thank you very much, Mr. 

Chairman. 

The CHAIRMAN. I thank the gentleman. The gentleman from New 

York. 

Mr. MEEKS. Thank you, Mr. Chairman. 

The CHAIRMAN. Mr. Secretary, we have, as you can see, I think 

six more members. If you can give us another 30 or 40 minutes, 

we’ll finish up. We appreciate your indulgence. 

Mr. MEEKS. It is good to see you, Mr. Secretary. 

Secretary JACKSON. It is good to see you. 

Mr. MEEKS. I have concerns about what’s happening with FHIP, 

with the budget in FHIP, the Federal Housing Initiatives Program, 

because it seems to me what is happening there is a significant cut 

at the time when we least can afford it. From what I understand, 

the proposed budget is listed at $26 million, and HUD has called 

for $6 million of that funding level for a study on housing discrimination, leaving an automatic programmatic FHIP funding at just 

$20 million, which is less than the President’s budget for FHIP in 

Fiscal Year 2008, which was $21.8 million. 

So how can the Administration propose, and how, you know, how 

are you dealing with this slashed funding for a program at HUD 

aimed at educating consumers? With the crisis that we’re currently 

having right now with subprime mortgages and subprime lending, 

here’s a program directly aimed at consumers and yet—so that we 

can avoid this—but yet it looks like we’re having the slashing of 

38

the FHIP program. Can you tell me what’s happening there? Do 

you know? 

Secretary JACKSON. Congressman, I’ll let Ms. Kendrick, who is 

the Assistant Secretary for Fair Housing and Equal Opportunity 

address that. 

Ms. KENDRICK. Good afternoon. This is the Fair Housing Initiatives Program. Is that the program? 

Mr. MEEKS. Yes. 

Ms. KENDRICK. The Fair Housing Initiatives Program, I talked a 

little bit about this with Congressman Watt. And one of the things 

that we’re doing in this program to address, because we do have 

a budget and what we’re trying to do is work within that budget, 

because that’s the budget that we’ve been given. And so what we’re 

doing with that budget is we are funding our fair housing groups 

for multiple years. 

We’re also using some of the money, the $1 million, to have a national campaign to address some of the issues you’re talking about 

right now. For example, this year in Fiscal Year 2008, we have a 

$1 million media campaign to address predatory lending, fair lending issues across the Nation. So what we’re doing is we’re using our 

money more wisely so that we can address these issues across the 

Nation instead of just developing these issues with the expertise 

within one group. 

Mr. MEEKS. But what I’m finding is that a quarter of the country’s fair housing centers are closing as a result of the lack of funding, where you reach out to people, where the people are. The 

places where the people need the help, you know, those places are 

going away because of no money. They’re shutting down in our 

communities. 

Ms. KENDRICK. Well, actually, we have 104 organizations that we 

funded last year, and we were able to keep all of those groups except for about 13 of those groups. But what we did, because we 

could not fund those 13 groups, we actually funded another 39 

groups for 3 years, so we don’t have this issue with those groups 

for next year, so depending on appropriations, we will be able to 

fund those 39 groups for another year and then, depending on appropriations again, fund those exact same groups for another year. 

So we will have those groups working 3 years so they are working on the fair housing issues across the Nation instead of coming 

to HUD and writing applications for each of those years. So we 

think that we’re using our money a little bit more smartly. 

Mr. MEEKS. So you’re telling me that the centers across the Nation, the information that I receive, they’re not going to be closed? 

The communities that I’m starting to hear from that are saying 

that there are centers where they were going to for information, 

that they’re going away, you’re telling me that those are—they are 

not going away? They’re still going to be there? 

Ms. KENDRICK. No. Some of those centers will go away, and I’m 

sorry that they will be going away, because they provide important 

functions in this Nation. But we will now have groups who will 

have—they will have 3-year funding so we won’t have to worry 

about those 39 organizations going away next year, nor will we 

have to worry about them going away the following year. 

39

Secretary JACKSON. See, one of the problems, Congressman, and 

I think you’ve asked a very critical question, is continuity. We are 

trying to create continuity, to make sure that there is some constancy in this process, where before they were funded for 1 year 

and they might not have been funded the very next year, and they 

didn’t render the services that they could have performed had we 

been doing it on a— 

Mr. MEEKS. But that’s why I’m concerned about the cutting, because then you could keep those that we have and still focus on the 

continuity if we weren’t having the cutbacks that we’re having, 

which is in fact a decrease in this budget, in this very special effort. If we would keep it funded at least at the level that it was 

and then we can talk about the continuity so we can move on. But 

if you’re cutting funds, and you’re cutting back to have less, then 

it seems to me that it seems as though it is not a priority of HUD 

then to move. 

And I understood, I heard your line of questioning before, so—

but, you know, just to me, given the climate in which we currently 

are in, if ever there’s a time to try to educate a consumer about 

fair housing, it is now. 

Ms. KENDRICK. And I think, Congressman, that that’s what we 

want to do. We want to use our money smarter. We don’t want to 

have the 39 organizations that we funded for 3 years, we don’t 

want them to close next year. We don’t want them to close the year 

after. So, therefore, these groups will be having a constant presence 

in those communities. 

We also have our fair housing staff that works in all 50 States 

that are also addressing fair housing issues. In addition, we have 

opened a fair lending division to address particularly the issues on 

discriminatory lending and predatory lending. So we have a whole 

unit at HUD right now that’s working on these issues, handling 

high profile cases and cases that will have a nationwide impact, not 

just impacts in one little community. 

Mr. MEEKS. I’m out of time. 

Secretary JACKSON. And also, Congressman, which is very impor- tant, we have allocated for the 2009 budget $65 million for housing 

counseling, and they do the same thing. We have 2,300 counseling 

centers around the country. And we’ve also allocated to 

NeighborWorks $180 million, who also does very much the same 

thing. So we’re covering the Nation. There’s just no question about 

it, and it’s very important. 

Mr. MEEKS. So you’re—and I’m going to leave it alone, but you’re 

telling me you’re covering the Nation with less money? 

Secretary JACKSON. No. I just said that— 

Mr. MEEKS. Well, we’re having cutbacks, and we have to eliminate now so that we can have continuity, so we have to have less 

money. 

Secretary JACKSON. No, Congressman. I just said that we have 

gone from $50 million in Housing Counseling, which does the same 

thing in many cases that fair housing does, to $65 million. We’ve 

gone from $120 million to NeighborWorks to $180 million. So we’re 

addressing it. You might see it over here, but we’re addressing it 

over here, too. 

Mr. MEEKS. Thank you. 

40

The CHAIRMAN. The gentleman from Massachusetts. 

Mr. LYNCH. Thank you, Mr. Chairman. Thank you, Mr. Secretary, for appearing before us today. I want to go back—I have a 

similar situation in my district as Mr. Baca was describing, although perhaps not to the degree. But I just had a foreclosure prevention workshop. I put it together in my district at a local high 

school, and we brought in some mortgage experts, some banks. I 

had 400 people show up. I didn’t do a whole lot of outreach, but 

we had 400 people show up, and it indicated to me the size of the 

problem we have. 

A lot of the people who came to that foreclosure prevention workshop in my district were seniors, and a lot of them were veterans. 

But because of the gaps in the Administration’s program, this 

HOPE NOW program and some others, a lot of these folks weren’t 

helped, so they have nowhere to turn, and they are getting thrown 

out of their homes. A lot of them are seniors. Like I said, a lot of 

them are veterans who served this country very well, very proudly. 

And now I see in your budget, the President’s budget, that we’re 

going to cut out $195 million out of Section 202 housing, senior 

housing. And I just think that it’s disgraceful, quite frankly. 

I just—here we have a tidal wave of need. These folks have been 

in their own homes. We’re having an unprecedented collapse in the 

housing industry. These folks are being thrown out of their homes. 

It’s a very emotional time for all these families, and the very people 

they’ve come to ask for help, the people who should be here, are 

people in government. This is why government exists, to help folks 

out when they don’t have any power and no leverage. 

These folks, some of them were living in their houses for 15 or 

20 years, and now they’re basically facing the street. And here we 

are, the President has a policy to basically, you know, pull the net 

out from under them. We’re going to cut in this budget, we’re going 

to cut $195 million out of a senior housing program that’s the core 

of our senior housing program when you have a lot of people being 

forced out of their homes and who otherwise would be relying on 

this for the first time in their lives? 

And also I see this veterans housing piece. And, you know, I just 

came back from my 7th visit to Iraq and Afghanistan, and we’re 

seeing our folks coming back there who deserve our help. A lot of 

them are on their 3rd, 4th, or 5th tour, so they are completely separated from their prior employment. They’re going to need some 

help as well. We have a lot of folks who are World War II veterans, 

or veterans of Korea, Vietnam, or the Gulf War, who need this stuff 

as well. And we’re supposed to be there and to provide some type 

of assistance. And I see cuts. I see cuts, and I see total inadequacy 

on the programs that are being maintained. 

And, sir, I just have to ask you, what were you thinking? What 

is the President thinking in putting this agenda out, given the facts 

that we have right now, given the reality that our people, our constituents, the people that you and I serve, given what they’re facing? How can you come up with a straight face and present this 

budget to the United States Congress? 

Secretary JACKSON. Congressman, I have to respectfully disagree 

with you. We have 210 units—210 projects in the pipeline right 

now for seniors, and I think we have about 215 in the pipeline in 

41

Section 811 for veterans. Secondly, we have allocated $75 million, 

which will create 10,000 more vouchers for veterans as they come 

home. And we expect to continue to do that, because that was a 

commitment that we made to Veterans Affairs. We have not increased the number of vouchers that veterans get since 1993. For 

the first time in our budget, we have that. So we are addressing 

this. We have a number of Section 811/202 projects that are going 

on today that will address the need. 

Lastly, let me say this to you about anybody within your district 

who needs help at this point in time, we have raised the loan limit 

to $729,000. FHA is standing, willing, and ready to work with anyone. I’ve traveled around this country, and I agree with you. I just 

came out of California where there were 1,000 people sitting there. 

And when I told them that the loan limit had been raised in California, they stood up, because probably 800 of those 1,000 people 

could probably make a loan there with FHA, and FHA secure, 

where before we passed the stimulus package. That was not the 

case. We could not deal with the market. 

So I am extremely sympathetic, but I think that the budget addresses that and I can say it with a straight face that we’re 

leveraging the money with developers for the Sections 202 and 811. 

If I had thought for one moment, because I am extremely partial 

toward senior citizens and veterans, so I would not in my mind do 

anything to hamper their abilities to come back into this country 

and have a decent, safe place to live after sacrificing so much for 

us. 

Mr. LYNCH. Well, I have to tell you, that’s not what I see in my 

district. I see on average at my senior, my Section 202 housing developments, senior housing, I probably see between 100 and 200 

people on the waiting list, and those folks on that waiting list 

aren’t getting any younger. And every once in a while, a unit might 

open up. 

Secretary JACKSON. Well— 

Mr. LYNCH. Let me just finish. And I just finished a tour with 

my veterans agents. In Massachusetts, every town has a veterans 

agent to watch out for them. And we’re scrambling right now. 

We’re putting folks in nursing homes and basically warehousing 

them just until we can find a suitable home for a lot of our veterans, and they, quite frankly, they deserve better than that. And 

I just don’t see anything in this budget that offers them hope in 

the near term. And you might have stuff in the pipeline, but my 

folks can’t live in a pipeline. They’re looking for housing right now. 

And it’s a crisis situation. 

And by the way, you know, I probably have in New England, 

probably $3- to $5 billion worth of variable loans that are going to 

reset. Thank God right now the rates are pretty low, but some of 

these mortgages, the spreads are pretty big on them, and it’s going 

to push more people into foreclosure. So, you know, this is not—

this wave is just beginning to hit, and I’m very, very troubled by 

the trend, and I’m also troubled by the information in this budget. 

Mr. Chairman, I know my time has expired. 

The CHAIRMAN. The gentleman from Georgia. 

Mr. SCOTT. Thank you very much, Mr. Chairman, and Mr. Secretary, welcome to the committee. 

42

Secretary JACKSON. Thank you. 

Mr. SCOTT. I appreciate your service. Let me talk about a couple 

of things here. I want to talk about Section 8. I want to talk about 

a major concern of my constituents. I’ve just completed a series of 

town hall meetings in my district, you’re familiar with my district. 

You’ve helped me on a number of occasions there, which I appreciate. 

But these complaints fall into two areas. The first area is that 

there’s a lack of HUD inspections and compliance with inspection 

and code enforcement with Section 8 housing that is in my area. 

The other issue is that municipalities are circumventing the 

HUD concentration rules. In other words, residents in my district 

are alleging that certain local housing authorities are issuing Section 8 vouchers to eligible individuals but then are steering those 

voucher holders to other nearby communities. For example, the Atlanta Housing Authority would issue the voucher, but the individual would be steered into Clayton County or into South Fulton 

County. 

This presents a major issue. So we have two of them here, the 

steering of those into an area, and then when you get them in 

there, the folks are not keeping up their property. They’re not 

forced to do it, and I have a serious problem. So I want to address 

that, and I need your help, somebody on your staff to assign to 

work with my staff so we can make sure this is right. 

Because I asked the question in the meeting, the same question 

I think you’re going to ask me in a minute when you get to respond. Are you sure these are Section 8 housing? Or are they just 

low-income renters from absentee landowners? And they say unequivocally that they’re Section 8. We’ve had a few meetings in the 

office and I came to that conclusion myself. 

Then the next question, is it a myth or is it a reality that as a 

result of all the tearing down of all of the housing projects inside 

the City of Atlanta that these folks are being dumped into nearby 

Clayton County and South Fulton County? And then of course the 

question of whether or not with this unfortunate mounting number 

of foreclosures, are private investors buying these up—houses for 

cheap, as they’re doing, and then renting them out to low-income 

buyers? 

Regardless of what the complications of the matter happen to be, 

my constituents have a problem, and they are blaming the Federal 

Agency—HUD. We have to find out where your Section 8 housing 

is, why and if they’re being targeted out of the City of Atlanta into 

the suburban areas, and how we get a plan developed to go forward. 

Secondly, we need to find who is the front line entity for code enforcement. Because it is a terrible shame in my suburban district 

where people have invested their hard-earned money years back, 

come into a community, paid $300-, $400-, or $500,000 for homes, 

and because of no fault of their own, because Atlanta’s tearing 

down their housing projects, folks have to go someplace, and 

they’re being steered and dumped into an area, and the property 

not being kept up. 

So we have a major, major dilemma that I’d like for you to address on each of those three points if we could, unless you and I 

43

get a plan together where we can go and make sure that these 

houses are being kept up. Could you respond? 

Secretary JACKSON. Yes. Congressman, I agree with you in the 

sense that I can’t tell you specifically about your district. But what 

you’ve just described is similar to what was described to me by 

Commissioner Jack Johnson in Prince Georges County, Maryland, 

with the onset of many of the public housing developments being 

demolished here in the District, and people being shipped there. 

If that is the case, we will work with you wholeheartedly, because I don’t believe that people should go into communities where 

people have worked hard—whether it be police officers, nurses, 

teachers, principals—to acquire their home, and then see people 

come in and not take care of the property. So I will tell you that 

I will have our person in Atlanta, who is the Acting Regional Director, work with you directly. 

And I have no compunction at all coming to deal with the Atlanta Housing Authority, because if they are doing what you allege 

they’re doing, that is the wrong thing. I think they should make 

every effort before they send a person out into one of these communities that they have all of the proper training. One of the things 

that occurred when I was running the Dallas Housing Authority is 

I would not send people out there without having a 3- or 4-time 

counseling session with them for them to understand that they’re 

going into a community that is stabilized, and they should understand their responsibility going into that community. 

Second of all, I think it’s very important that you don’t send people into the community who are going to sit there all day long and 

watch television. You hope that at least people will have a productive job and do something that will be positive and add something 

to the community. So you will get a great deal of sympathy from 

me on this process, because I think it’s wrong to send people into 

communities if they’re going to destroy the community. 

Mr. SCOTT. During my 2-week recess coming up, I want to set 

up a meeting in my district office to address this, so who is that 

person that you will assign to meet with us so we can really go at 

this problem? 

Secretary JACKSON. She will be the acting region—Pat, what is 

it? Pat Hoban Moore. 

Mr. SCOTT. Pat? 

Secretary JACKSON. Hoban, H-o-b-a-n Moore. And I will call her 

and tell her that she should get in touch with you. 

Mr. SCOTT. Okay. We’ll follow up and I’ll have my staff get in 

touch and we’ll set a meeting up. Thank you, sir. 

The CHAIRMAN. The gentleman from Texas. 

Mr. GREEN. Thank you, Mr. Chairman. Thank you for hosting 

the hearing, and thank you, Mr. Secretary, for being here. I want 

to thank Mr. Montgomery, Mr. Secretary, in your presence. He has 

been very helpful, and I am confident that you have in him someone who has your best interests at heart. 

Mr. Secretary, I want to thank you for coming to Houston and 

announcing your initiative to fight discrimination in housing as it 

related to the Katrina evacuees. 

Secretary JACKSON. Right. 

44

Mr. GREEN. I thought that was a good thing to do, and I believe 

that it has been helpful, which is a good segue into the FHIP program, the Fair Housing Initiative Program, that is being cut, $26 

million proposed, $6 million of that will be cut from the program. 

Actually, I guess it’s still a part of the budget, but it goes to a 

study, which means that in the final analysis, as it relates to 

FHIP, in my opinion, there is a cut. 

I know that the Assistant Secretary spoke well as she talked of 

how we can fund 39 programs for 36 months, 3 years, as opposed 

to 52 programs for 36 months, which would be 3 years. And I guess 

that’s where we have a difference in thought, because I’m hopeful 

that we can fund all of the programs, including the Greater Houston Fair Housing Center, which is not receiving any funding this 

year, would like to see that program get some funding. I think the $52 million funding level is one that would allow us 

to do the very same thing that the Assistant Secretary has referenced, but to do it with all of the programs, and that way make 

sure that we get all of the programs doing the thing that they do 

best, which is helping us with housing concerns. And especially the 

Fair Housing Initiative Program, which allows us to do testing. 

Testing is by far the best way for us to impact discrimination in 

housing. 

Secretary JACKSON. That’s correct. 

Mr. GREEN. There really is nothing else that comes close to testing. And we need to pour more of our money into testing because 

we get the empirical evidence to support litigation when necessary, 

negotiation most of the time, and a means by which we can resolve 

problems a good deal of the time. 

My understanding is that we had about 27,000 housing discrimination complaints, of which about 18,000 were resolved. And the 

resolutions, a good many of them, came from these centers that are 

funded. So my appeal to you is this: Let’s try to fund all of them 

as opposed to fund some of them. It’s difficult to select one child 

over another. It’s difficult to select one of these centers over another. Let’s try to fund all of them. And because I know where we 

will end up, I have one question. Here is the question. If we fund—

if we fund to the $52 million level in Congress, will you be sending 

the money back? 

Secretary JACKSON. No. I’m—let me say this to you. One thing 

I have learned from my encounter with the Financial Services 

Committee is that if you allocate monies and say you want it spent, 

I will spend the money. I mean, that’s—see, I understand—I know 

the chairman once got upset with me when I told him that I understand Article I, Section 9, that says Congress is the authorizer and 

the appropriator. So I understand that when you authorize and appropriate, you want us to do what you said to do. 

Mr. GREEN. Well, I’m pleased to hear you say that, and I understand that OMB has an impact on the process. But I’m hopeful that 

you will continue to encourage an expansion, and if we can continue to fund, maybe at some point that we’ll connect and get this 

done. But it is important that we fund these programs. 

Secretary JACKSON. Thank you. 

Mr. GREEN. It is. And because time is of the essence, I will yield 

back the balance of my time. Thank you, Mr. Chairman. 

45

The CHAIRMAN. The gentleman from Missouri. 

Mr. CLEAVER. Thank you, Mr. Chairman. Thank you for being 

here, Mr. Secretary. 

Secretary JACKSON. Thank you. 

Mr. CLEAVER. If we can go back a little to the Governor Barbour 

letter, as a mayor, you would probably expect me to go here, and 

I won’t disappoint you. I have some concern that the CDBG funds 

that Governor Barbour used and reprogrammed, which you did not 

have the authority to direct or redirect. 

When money goes to the State, certainly in Missouri, the Class 

B and C cities are the ones who then competitively apply for those 

dollars through the State as opposed to HUD. And the first class 

cities in our State—St. Louis, Kansas City, Springfield—would get 

the direct CDBG grant. And then there are requirements to the 

CDBG grants, and one, and perhaps the most significant and the 

most irritating, is the requirement for a public hearing. 

And my concern is that when these dollars went directly to Governor Barbour, and then he reprogrammed it to some kind of port 

restoration program, that there was no public hearing, which in 

fact violates the rules of Community Development Block Grant. 

And so, I mean, if there was a public hearing, just so I can tell my 

former colleagues, many of whom are in town now for the winter 

meeting, that the HUD guidelines were in fact followed. 

Secretary JACKSON. Let me say this to you, then I’ll let Nelson 

Bregon go in depth. From my understanding with the legislation, 

no public meeting was required. I mean, we were told what to do 

in the legislation, and it was not a matter, Congressman, of whether we may. They said we shall. And I think if you want to further 

address— 

Mr. BREGON. Congressman, you are correct. There are citizens 

participation requirements in the CDBG program, and those also 

apply to the supplemental appropriation which the State of Mississippi receives. What the Secretary has the authority under the 

waiver authority of the supplemental appropriation was to perhaps 

be more flexible on the public hearing. 

There was a public hearing held in Mississippi, and usually what 

the State does is they give a 30-day notice to the citizens advertising a public hearing. 

Mr. CLEAVER. Okay. 

Mr. BREGON. In this case, that 30-day notice did not occur, but 

they did hold a public hearing, and we have a certification to that 

effect. 

Mr. CLEAVER. Yes. I went into Mississippi. I asked that very 

question. No one could answer it. People did say they were given 

some kind of a notice but that it was a very short notice, and that 

people in Mississippi who hold public office said they knew nothing 

about an actual hearing that took place. Am I correct? 

Mr. BREGON. The State has told us that they have had public 

hearings. We can definitely look into it. We can ask them for copies 

of the transcripts of those hearings and make those available to 

you. 

Mr. CLEAVER. So individuals actually came to the public hearing? 

Mr. BREGON. I don’t know whether individuals actually went to 

the public hearings, but they did advertise a public hearing. They 

46

held a public hearing. Many times, cities have public hearings and 

nobody shows up. So I’m not able to tell you— 

Mr. CLEAVER. I have never— 

Mr. BREGON. And you know as a former mayor— 

Mr. CLEAVER. In 8 years, you can’t get in city hall when there’s 

a CDBG public hearing. And so I’m stunned that in the aftermath 

of the worst storm in U.S. history, that same thing didn’t happen 

if in fact people were notified. My concern is that $600 million was sent into Mississippi for one 

purpose. It ended up being used for another purpose. And the other 

issue is in the letter, the language says the additional $100 million 

brings the State of Mississippi’s total financial obligation—it’s irrelevant. I guess the concern is, the word ‘‘additional.’’ It says, ‘‘This 

additional $100 million.’’ My understanding is that this additional 

$100 million came out of Phase 2 of the Homeowners Assistance 

Program. 

Secretary JACKSON. That’s correct. 

Mr. CLEAVER. Which means that it’s not $100 million additionally. 

Secretary JACKSON. Yes, it is, in the sense that what we were 

trying to do, and I think I explained it to the chairman, we were 

trying to zero in to make sure that we have enough money to make 

sure that low- and moderate-income and working families have an 

opportunity to rebuild, and even rentals, the people who own rental 

housing, have the ability to rebuild. 

I will say this to you, Congressman, as I said to the chairman. 

I’m not disagreeing with you. I just—I did not, as I told the Congressman, I don’t have the authority. 

Mr. CLEAVER. Yes. 

Secretary JACKSON. If I had the authority or the flexibility, I 

probably would have said no. But I didn’t have the authority or the 

flexibility based on what your General Counsel’s office told us. 

Mr. CLEAVER. Well, we need to change that, Mr. Secretary. I 

mean, you need that responsibility, and we need to change that. 

And also, I’m still not real sure, and I don’t want to take up the 

time now, about the public hearing. I mean, something needs to be 

in your discretion—maybe it shouldn’t be a discretion there, that 

a public hearing has to be held and they’re untidy. I mean, you 

know how they go. I mean, I don’t know a mayor in the country 

unless he’s schizophrenic who is happy for a public hearing, but 

that’s the way it happens. 

Secretary JACKSON. That’s true. 

Mr. CLEAVER. Thank you, Mr. Chairman. 

The CHAIRMAN. I don’t think you have to tell the Secretary about 

how sometimes people wish they didn’t have to come to public 

hearings. I think he knows that. 

[Laughter] 

The CHAIRMAN. But let me just take 1 minute before I go to the 

gentleman from Minnesota. We had a request from the American 

Civil Liberties Union to submit a letter to the record in which they 

express their continuing concern that women who are the victims 

of domestic violence in public housing find themselves evicted 

under an, I think, inappropriate interpretation of the one strike 

rule. And I would ask you to take a look at that letter. 

47

Secretary JACKSON. I sure will. 

The CHAIRMAN. And secondly, the National Association of Housing and Redevelopment Officials has submitted a letter which I ask 

unanimous consent to put in the record as well, which I think summarizes the views of many of us, at least on this side. NAHRO believes that the Administration’s 2009 budget request, if adopted, 

would continue a pattern of large-scale disinvestment in our Nation’s irreplaceable inventory of affordable housing and would undermine efforts to sustain vibrant communities. 

Let me just emphasize, because I know the gentleman from Missouri’s questions are absolutely right, part of the problem here, Mr. 

Secretary, and I realize we didn’t draft this legislation. The legislation was drafted in a prior Congress, and if it was up to us, and 

in the future, it will be drafted more clearly to give you that discretion, but part of the problem is it does appear that they didn’t actually formally apply for a waiver, that there was a procedural problem there, and if the had actually been made to apply for the waiver rather than have it granted without formal application, the 

problems that the gentleman from Missouri talked about could 

have been addressed. So even with the little discretion that you 

had, more could have been done to make them go through the 

steps, and that would have at least focused some attention. And 

there we are. 

The gentleman from Minnesota. 

Mr. ELLISON. Mr. Secretary, you were talking a little while ago 

about maintaining the neighborhoods and making sure they continue to look good and trying to avoid things that might promote 

people to misuse property, so I kind want to get your thinking 

around the zero funding for HOPE VI. Could you talk about how 

zeroing out HOPE VI will impact our public housing infrastructure? 

Secretary JACKSON. I think, again Congressman, I think that’s a 

fair question, and let me tell you my concern is right now we still 

have outstanding $1.4 billion in HOPE VI monies that has been 

outstanding for more than probably 8 to 10 years, some of it has 

been. What I have suggested is to recapture that money and allocate it out to those cities who have performed very well, and you 

have a city that has performed very well. So I would have no problems at all making sure that the money is used wisely. 

But we cannot continue to fund a program that has, out of the 

260 or so that we’ve funded, only 75 have been completed since the 

beginning of the program in the early 1990’s. That’s my only concern. And I will tell you that I was part of the Committee that created—the Committee for Severely Distressed Public Housing—that 

created the HOPE VI program. And, in fact, I’ve said it on a number of occasions, we were in Chicago one night when we came up 

with that name, at least I did, Housing Opportunity for People Everywhere. It’s what it stands for. So I believe in the program and 

I don’t want anyone to think that I don’t believe in the HOPE VI 

program. Where it has worked, it has worked well. You have two 

cities—Minneapolis and St. Paul—where it has worked well. But if 

we could get people to spend the money, I’d be the first to go. 

Mr. ELLISON. If I may, Mr. Secretary, thank you for that explanation. I want you to know that I just talked with my folks in MinVerDate 0ct 09 2002 18:09 May 19, 2008 Jkt 041728 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 K:\DOCS\41728.TXT TERRIE
48

neapolis and we’re looking at $223 million in capital needs that 

will become severely distressed if not addressed soon and the Glendale building, which I don’t expect you to know, but you might, 

near Prospect Park, which is a Minneapolis area, there are 182 

units on the verge of being dilapidated and eligible for HOPE VI. 

So I guess my thing is, I guess my question is, is withholding and 

zeroing out the money the only way to make those other jurisdictions spend the money. Do you understand my question? So if the 

problem is that they won’t spend it, don’t you have any carrots and 

sticks to make them do that rather than defund the program? 

Secretary JACKSON. I really wish I had. If I had it, I’d use it 

today or yesterday, because I believe that where this program has 

worked well, there are still great needs. And I wouldn’t doubt when 

you said that you have—I know a couple of your HOPE VI—I 

wouldn’t doubt—I know the executive director. He’s a very fine person. They’d use the money. But I don’t have the ability to recapture 

the money, to redistribute the money. The money sits there, and 

in many cases it’s been, the administrative fees have been used up 

and they can’t bill. 

Mr. ELLISON. Yes, but we still have the zero when it comes to 

the budget number and I just think that it’s a drastic way to solve 

a problem of not making some of these other jurisdictions get after 

spending that money, you know what I mean? I think that what 

ends up happening is you punish the good doers and you don’t really punish the bad doers because they’re really not using the money 

anyway. 

Secretary JACKSON. Now that, I won’t disagree with you. Sometimes I have to sit and think about that situation and there are so 

many cities that I think could really— 

Mr. ELLISON. What if you had some other tools, like you could—

what if you had, for example, just go to those jurisdictions and say, 

you’re not using this money. You might have it withdrawn if you 

don’t use it rather than having—because when you talk about a 

zero dollar figure, that impacts everybody. 

Secretary JACKSON. Well, I will tell you we zero it out each year 

but you all put the money back in each year. 

Mr. ELLISON. I know, but when you zero it out, I mean, what 

does that say? That makes a statement. I mean, a budget is a 

moral document in my opinion. It states what we care about as a 

society; what we think is important and also what we think is not 

important. 

Secretary JACKSON. Well, I would disagree with you. I’m with 

you. I think it’s very important but I have to use judgment and 

that’s my judgment. I think that’s where we disagree. We’re not 

going to disagree about the importance of what the program produces. I can’t argue that with you. 

Mr. ELLISON. Well, Mr. Secretary, I would respectfully just ask 

if you could look at other ways of making people comply with the 

money; use the money they got rather than zeroing it out. Let me 

just ask another question if I have time. People in my area are concerned about rescinded funds being recycled into existing Section 8 

contracts. I have some background I could share with you, but do 

you know what I’m talking about right now? Let me give you a litVerDate 0ct 09 2002 18:09 May 19, 2008 Jkt 041728 PO 00000 Frm 00052 Fmt 6633 Sfmt 6633 K:\DOCS\41728.TXT TERRIE
49

tle background because I didn’t want to read this whole long paragraph if you already knew what I was talking about. 

Secretary JACKSON. Is it the reserve fund? 

Mr. ELLISON. Yes, I think it is the reserve fund. There have been 

a series of letters going back and forth between the public housing 

authorities and my district and Corva Corby and Tim Thompson 

and they’re concerned locally about this concern because they’re 

concerned about how HUD applies recision measures to funds, 

which are covered by section 8(b)(B). Does that give you any more 

clarification? 

Mr. OZDINEC. Good afternoon, Mr. Congressman. 

Mr. ELLISON. Good afternoon, sir. 

Mr. OZDINEC. I’m Milan Ozdinec. I’m the Director of the Office 

of Public Housing and Voucher Programs at HUD. 

Mr. ELLISON. Okay. Do you understand? 

Mr. OZDINEC. Yes, I believe you are talking about the net restricted assets. 

Mr. ELLISON. Yes. 

Mr. OZDINEC. Currently there is about $2.2 billion that sits in 

Housing Authority’s bank accounts as it relates to Section 8. These 

are monies that Congress has previously appropriated and housing 

authorities retain those funds to use for HAP payments and for administrative fees. Last year the Congress in the appropriations 

process used $723 million as an offset for housing authorities. For 

housing authorities that are above their cap, and the Secretary and 

Congresswoman Maloney talked a little earlier about the cap and 

how the budget process works as it relates to how the Congress appropriates the money. Well, in 2008, the Congress instructed us to 

use $723 million in an offset and take that money away, or offset 

that money with housing authorities that have net restricted assets 

that are called unusable. These are housing authorities that have 

leased up to their authorized amount so by law they cannot exceed 

that amount, but yet still have money in their bank accounts. So 

the instruction from the appropriations was to offset that money 

and force the housing authorities to use that money as opposed to 

new appropriations. 

The CHAIRMAN. Let me ask, was that part of what we did to hold 

some people harmless when we did the change in the funding formula? 

Mr. OZDINEC. Mr. Chairman, I’m not sure about holding people 

harmless. Of the $2.2— 

The CHAIRMAN. I mean, the authorities. There was some concern 

about the changes in the formula that we fought about several 

times and I thought there was some effort to use some of those 

funds so that nobody lost out as we went from one year to the next. 

Mr. OZDINEC. Indeed that’s true, because these funds are unusable because— 

The CHAIRMAN. I mean, Dade County, for example, I think was 

our biggest issue about that. 

Mr. OZDINEC. Right, we’ve proposed in the last three budgets, I 

believe, to remove the caps, the authorized caps so that housing authorities could use that net restricted asset to indeed issue more 

vouchers; to go above what they were authorized. If housing authorities were good stewards with the money, if they stabilized 

50

their payment standards, improved their utility allowance, set a 

minimum rent at $10 or $20, they could indeed squeeze efficiencies 

out of their program and we wanted them by— 

The CHAIRMAN. Let me say to the gentleman it is a serious issue 

but it’s one that we need to share with our—the appropriators have 

more to say about it than we do, and we will talk to them about 

it. 

Mr. OZDINEC. And we would love to have that conversation, Mr. 

Chairman. 

The CHAIRMAN. I thank you, Mr. Secretary. And we do all want 

to repeat that the chairwoman is very concerned about the figures 

on New Orleans—whether or not people want to return. We would 

hope to get those before the end of the week and then we will get 

back to you. 

[Whereupon, at 12:38 p.m., the hearing was adjourned.] 

(51)

A P P E N D I X

March 11, 2008

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