Housing Assistance: Opportunities Exist to Increase Collaboration and Consider Consolidation
Published: 2012-08-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The federal government plays a major role in providing housing assistance to homebuyers, renters, and state and local governments. It incurred about $170 billion in obligations for federal assistance and estimated forgone tax revenue in fiscal year 2010. However, fiscal realities raise questions about the efficiency of multiple housing programs and activities across federal agencies with similar goals, products, and sometimes parallel delivery systems. This report assesses the (1) extent to which there is overlap or fragmentation in selected housing programs, (2) federal collaborative efforts, and (3) implications of consolidating selected housing programs.
For this report, GAO updated and expanded prior work and collected and analyzed new data, focusing on the largest programs in terms of funding. In addition to addressing these objectives, GAO developed a catalog of federal programs and activities that support rental housing and homeownership and identified what is known about the purpose, cost, eligibility, and populations served. The catalog (GAO-12-555SP) is an electronic supplement to this report.
section_title: What GAO Found
paragraphs: Housing assistance is fragmented across 160 programs and activities. Overlap exists for some products offered, service delivery, and geographic areas served by selected programsparticularly in the Department of Agricultures (USDA) Rural Housing Service (RHS) and Department of Housing and Urban Developments (HUD) Federal Housing Administration (FHA). For instance, RHS, FHA, and the Department of Veterans Affairs (VA) all guarantee mortgage loans for homeowners. According to fiscal year 2009 data (the most recent available), FHA served a larger number of households than RHS in all areas, including a larger number of low- and moderate-income households in rural areas. Although selected HUD, USDA, and Department of the Treasury (Treasury) multifamily programs had overlapping purposes, the products, areas served, and delivery methods differed. For example, HUD, RHS, and Treasury provide financing for development and rehabilitation of multifamily housing for low- and moderate-income households, but RHS-financed properties were more concentrated in rural areas and HUDs and Treasurys tax credit properties were more concentrated in urban and suburban areas.
Opportunities exist to increase collaboration among the agencies and potentially realize efficiencies. In February 2011, the Administration announced a task force to evaluate the potential for coordinating or consolidating homeownership loan programs at HUD, USDA, and VA. But the task forces efforts have not yet incorporated key collaborative practices GAO identified. Practices such as identifying goals and resources and defining strategies and outcomes will be important as the task force moves forward. HUD, USDA, and Treasury also have been working to consolidate and align requirements in rental housing programs through the Rental Policy Working Group. Although its efforts have been consistent with many key collaborative practices, the group has not taken full advantage of opportunities to reinforce agency accountability for collaborative efforts through the agencies annual and strategic plans, or expanded its guiding principles to evaluate areas requiring statutory action to generate savings and efficiencies. Also, in 2005 and in 2011, GAO recommended coordinating reviews of tax expenditures and related spending programs. Such reviews could help reduce overlap and inconsistencies and direct scarce resources to the most effective or efficient methods to deliver federal support.
Consolidating programs carries certain implications for users, existing programs, personnel, portfolios, and associated information systems. Nevertheless, GAO suggested in 2000 that Congress consider requiring USDA and HUD to examine the benefits and costs of merging programs serving similar markets and providing similar products. Since then, certain aspects of the RHS and FHA homeownership programs have shown evidence of growing similarity, such as RHS shift toward loan guarantees. However, the current statutory framework imposes additional challenges on the agencies ability to further consolidate similar programs. Thus, any evaluations of which programs, products, systems, and processes to retain, revise, consolidate, or eliminate would involve complex analyses, trade-offs, and difficult policy decisions. The task force offers opportunities for these agencies to identify potential areas for consolidation or greater coordination and which actions would require statutory change.
section_title: What GAO Recommends
paragraphs: To enhance evaluation of coordination or consolidation of single-family programs, HUD, the Office of Management and Budget (OMB), USDA, and VA should adopt a more rigorous approach for their task force that incorporates collaborative practices. To further improve initiatives to consolidate and align requirements in multifamily programs, HUD, USDA, and Treasury should document their efforts in annual and strategic plans. As part of these collaborative efforts, these agencies also should identify specific programs for consolidation, including those requiring statutory changes. HUD, USDA, and VA generally agreed with the recommendations; however, HUD and OMB stated that actions should wait until after the housing markets stabilize. GAO noted that achieving efficiencies and cost savings also were important.

section_title: Letter
paragraphs: The federal government has played a major role in supporting housing  since the 1930s. It administers programs that assist homebuyers, renters,  and state and local governments. The goals of these efforts include  encouraging homeownership and providing affordable rental housing for  low-income families. Millions of Americans have benefited, whether by  taking out a federally guaranteed mortgage, deducting mortgage interest  or real estate taxes on federal tax returns, or receiving a rental subsidy. In  fiscal year 2010, the federal government incurred about $170 billion in  obligations for housing-related programs and estimated revenue forgone   Tax expenditures may be viewed as spending  through tax expenditures.programs channeled through the tax system, because they are federal  revenue forgone due to exclusions, exemptions, deductions, credits,  deferrals, and preferential rates. They represented $132 billion (about 78  percent) of the federal government’s fiscal year 2010 support for housing  assistance. Obligations for spending and loan programs that support  homeownership and rental housing accounted for the other $38 billion  (about 22 percent).
In the current housing crisis, support for homeownership has expanded  dramatically, and nearly all mortgage originations have had direct or  indirect federal support through guarantee programs, support for the  housing enterprises Fannie Mae and Freddie Mac, or direct loans and  grants. In addition, the federal role now includes a range of programs  designed to help homeowners avoid foreclosure or to lower mortgage  payments by such means as modifying and refinancing loans.
This report is one of a series of reports that responds to your request to  examine a variety of issues relating to federal support for housing— particularly through programs or activities administered by the  Departments of Housing and Urban Development (HUD), Agriculture  (USDA), Veterans Affairs (VA), and the Treasury—and identify options to  reduce costs or increase program efficiency. This report assesses (1)  programs and activities the federal government uses to support rental  housing and homeownership; (2) the extent to which overlap or  fragmentation exists in the goals, products, geographic coverage, service  delivery mechanisms, and recipient income levels of selected housing  programs and activities of HUD, USDA, VA, and Treasury; and (3) the  extent to which federal efforts have increased coordination for selected  housing programs and activities, and the implications of further  coordinating or consolidating selected housing programs or activities.
See GAO, Rural Housing: Options for Optimizing the Federal Role in Rural Housing  Development, GAO/RCED-00-241 (Washington, D.C.: Sept. 15, 2000). housing services to similar beneficiaries as well as Treasury’s largest tax  expenditures in terms of overall funding. We collected and analyzed data  on the goals, terms, eligibility, product delivery structures, geographic  locations, and populations benefiting from selected agency housing  programs. We analyzed the locations of properties or units assisted using  USDA-developed characterizations of rural and urban areas. We  identified those housing programs that could have similar or overlapping  objectives or provide similar services or that were fragmented across  missions. To address the third objective, we collected and analyzed  available information on efforts that USDA, HUD, Treasury, and VA had  undertaken to increase coordination of or collaboration on selected  housing programs. We also reviewed prior GAO and other reports and  collected and analyzed information from the housing industry and officials  at USDA, HUD, and the Office of Management and Budget (OMB) on the  implications of options for further coordination or consolidation. Appendix  I contains a detailed description of our scope and methodology.
We conducted this performance audit from July 2011 through August  2012, in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
subsections: section_title: Federal Housing Assistance
paragraphs: The federal government funds multiple programs that subsidize housing  construction and rehabilitation, assist homebuyers and renters, and  provide assistance to state and local governments through a variety of  spending and loan programs, tax expenditures, regulatory requirements,  and other activities aimed at promoting housing.
Federal housing assistance generally was created in response to the  Great Depression. However, the largest current activity (in terms of  forgone revenue) associated with homeownership—the mortgage interest  deduction—was introduced in 1913, when the federal income tax was  enacted. Further assistance was created in the 1930s, when most rural  residents worked on farms and rural areas generally were poorer than  urban areas. Accordingly, Congress authorized separate housing  assistance for rural areas and made USDA responsible for administering  it. Specifically, in 1937 the Bankhead-Jones Farm Tenant Act authorized  USDA to provide long-term, low-interest loans to farm tenants and  sharecroppers so that they could purchase and repair farms, including  homes on farms. The Housing Act of 1949 authorized new rural lending  programs through USDA and made farm owners eligible for assistance  for dwellings and other farm buildings if the farm was located on land  capable of producing at least $400 worth of agricultural commodities  annually. Amendments added in 1961 made nonfarm properties eligible  for single-family loans and created the farm labor housing program. A  1962 amendment created the rural rental housing program.Housing Administration (FHA) began providing mortgage insurance in  1934, and the first public housing program was authorized in 1937. FHA  became part of HUD when HUD was created in 1965.
In 2012, HUD and Treasury administer some of the largest programs,  with USDA and VA providing specific assistance to rural communities and  veterans. In addition, the government-sponsored enterprises—Fannie  Mae and Freddie Mac—have supported the mortgage market by helping  to create a secondary market for mortgage loans. Financial regulators are  responsible for ensuring that regulated institutions comply with consumer  financial protections or otherwise serve the communities in which they  operate.
Federal housing assistance generally can be categorized as follows:
Homeownership programs, often called single-family housing  programs, provide mortgage insurance, loan guarantees, direct loans  for homeowners, and grants or loans for home repairs or  modifications.
Rental housing programs, often called multifamily programs, provide  loans, interest rate subsidies, loan guarantees, tax incentives, or a  combination of these to promote the development and rehabilitation of  privately owned rental properties.
Rental assistance programs, which make rents affordable to eligible  households by paying the difference between the unit’s rent and 30  percent of a household’s adjusted income. These programs include  (1) tenant-based rental assistance that provides vouchers for eligible  tenants to rent privately owned apartments or single-family homes  and can be applied to different properties if tenants move; and (2)  project-based rental assistance that is attached to specific properties  and available to tenants only when they are living in units at these  properties.
Public housing offers units for eligible tenants in properties owned and  administered by public housing authorities.
Tax expenditures, such as exclusions, exemptions, deductions  (including the mortgage interest deduction), credits, deferrals, and  preferential rates, can promote homeownership or the development of  privately owned rental housing through the federal tax code.
The federal government uses varying income thresholds for different  housing programs to identify target populations or set eligibility  requirements. Although some federal housing programs do not have  specific income eligibility requirements, such as VA’s Home Loan  Guaranty program for veterans, many of HUD’s and USDA’s multifamily  programs and Treasury’s Low-Income Housing Tax Credit (LIHTC)  program have specific income eligibility requirements. The most common  income thresholds used for the programs are:  very low-income—no more than 50 percent of the area’s median  income (AMI); low-income—no more than 80 percent of AMI; and moderate-income—no more than 115 percent of AMI.
section_title: Defining Fragmentation, Overlap, and Duplication
paragraphs: Fragmentation refers to those circumstances in which more than one  federal agency (or more than one organization in an agency) is involved  in the same broad area of national interest. Overlap occurs when  programs have similar goals, devise similar strategies and activities to  achieve those goals, or target similar users. Duplication occurs when two  or more agencies or programs engage in the same activities or provide  the same services to the same beneficiaries. In some instances, it may be  appropriate for multiple agencies or entities to be involved in the same  programmatic or policy area due to the nature or magnitude of the federal  effort.
section_title: Multiple Agencies Provide Housing Assistance
paragraphs: Twenty different entities administered 160 programs, tax expenditures,  and other tools that supported homeownership and rental housing in  fiscal year 2010, reflecting the fragmentation in federal housing delivery.  See e-supplement (GAO-12-555SP) for the list of programs, tax  expenditures, other tools, and their related budgetary information. We  identified 11 primary purposes for the activities (see fig. 1). Of the 11  purposes (categories) identified, 3 generally relate to support for  homeownership (including purchasing a home), 4 to support for rental  housing and tenants, and 4 to both. Within each category, multiple  agencies administer programs that serve the same purpose, illustrating  the fragmentation of homeownership and rental housing programs.
The most commonly identified purpose was assistance for buying, selling,  or financing a home. This category includes single-family mortgage  programs that provide mortgage insurance or guarantees administered  through HUD, USDA, and VA. As we have noted, the mortgage interest  deduction represented the single largest activity—in terms of annual  forgone revenue—associated with homeownership. In fiscal year 2010,  the estimated revenue loss for the mortgage interest deduction was  almost $80 billion. The most widely used housing tax expenditure, in  terms of number of participants, was the deduction for state and local  property taxes.nearly 40 million taxpayers claimed this deduction on their 2009 returns.
In the secondary market, originators of mortgage loans package them into securities and  sell the securities to investors. federally guaranteed mortgages issued by certain mortgage lenders. In  turn, these lenders—generally banks and thrifts—use the proceeds to  originate additional mortgages.
The federal government increased its support for homeownership in  response to the current housing crisis, providing emergency assistance or  other extraordinary support to the housing market and homeowners  through a number of initiatives. Most of the activities we identified as  emergency assistance were intended to support homeownership. For  example, Treasury and the Federal Reserve System purchased  mortgage-backed securities issued by Fannie Mae and Freddie Mac to  help support the availability of mortgage credit for prospective  homebuyers or homeowners wishing to refinance. And, HUD and  Treasury administer programs that provide financing assistance to  struggling homeowners—such as the Making Home Affordable program,  which reduces borrowers’ monthly mortgage payments.
Regulatory requirements also support homeownership by establishing  standards for residential mortgage lending, among other things. For  example, the Real Estate Settlement Procedures Act of 1974 requires  lenders to disclose mortgage closing documents to homebuyers and  sellers. Financial Protection Bureau, or CFPB), the federal financial regulators,  and HUD are involved in the examination and enforcement of this and  other regulatory requirements. The Federal Financial Institutions  Examination Council, a formal interagency body, also plays a role by  prescribing uniform principles, standards, and report forms for the federal  examination of financial institutions.
Real Estate Settlement Procedures Act of 1974, 12 U.S.C. §§ 2601-2617. produce and preserve affordable rental housing. Some of HUD’s  multifamily loan guarantee programs are estimated to produce more  revenue than expenditures. These estimates are reviewed annually, and  because the underlying loans may have terms of up to 40 years, their  ultimate cost is uncertain. Further, HUD and USDA have multiple  programs that support low-income households by providing assistance to  rental property owners to cover all or a portion of the tenant’s rent.
Finally, many activities support homeownership and rental housing both  directly and indirectly. For example, HUD administers multiple block grant  programs that provide state and local governments with flexible funding to  address community development needs, including support of  homeownership or rental housing. And one regulatory requirement—the  Community Reinvestment Act (CRA)—supports the financing of  homeownership and the creation of affordable rental housing, among  other things. Another regulatory requirement, the Fair Housing Act,  protects homebuyers and renters from discrimination.
section_title: Overlap Exists in Both Single- and Multifamily Housing Programs
paragraphs: To identify housing programs that had a potential for overlap, we used  findings from our prior work that examined programs that offer similar  housing services to similar beneficiaries. These programs included  selected HUD and USDA single- and multifamily programs, VA’s single- family housing loan guarantee program, and Treasury’s LIHTC. We also  included Treasury’s mortgage interest and property tax deductions  because they are the largest programs in terms of overall funding. We  compared agency goals, products offered, geographic areas served,  service delivery, and, for single-family programs, recipients’ income  levels. Evidence of overlap existed across many of these dimensions for  the single-family products offered by HUD, USDA, VA, and Treasury, but  important differences also existed. Although selected HUD, USDA, and  Treasury multifamily housing programs had overlapping purposes, the  products, areas served, and delivery methods differed to varying degrees.
subsections: section_title: Some Single-Family Programs Overlap
subsections: section_title: Agency Goals
paragraphs: Seven single-family programs administered by HUD, USDA, VA, and  Treasury overlap in their broad purpose of supporting homeownership,  but only HUD has an explicit housing priority and strategic goal (see table  1). Federal agencies outline long-term goals and objectives in their  strategic plans and annual goals in their performance plans. In addition, in  the fiscal year 2013 President’s Budget, agencies identified a limited  number of 2-year agency priority goals that align with the long-term goals  and objectives in their strategic plans. Agency priority goals target areas  in which agencies want to achieve near-term performance through  focused attention of senior leadership. HUD included the prevention of  foreclosures as a priority goal. As of April 2012, USDA, VA, and Treasury  had not highlighted homeownership among their agency priority goals.  Under its strategic goal to strengthen the nation’s housing market, HUD  uses its single-family guaranteed loan program to meet its subgoal of  creating financially sustainable homeownership opportunities. Under its  broad strategic goal of assisting rural communities, USDA uses its single- family loan and grant programs to increase the number of  homeownership opportunities available in rural areas. VA’s guarantee for  home mortgages is one among many entitlements that veterans earn.  The program falls under VA’s broad strategic goal of improving the quality  and accessibility of health care, benefits, and memorial services while  optimizing value. Finally, although the mortgage interest and property tax  deductions are the two tax expenditures most widely used by  homeowners, Treasury does not have stated goals for these, or most  other, tax expenditures. However, these tax expenditures are generally  recognized as reducing the after-tax costs of financing and maintaining a  home.
The selected single-family guaranteed loan programs of HUD (FHA),  USDA’s Rural Housing Service (RHS), and VA overlap, but differences  exist among the products, and only USDA offers certain direct loans to  finance the purchase of homes for low- and very low-income families (see   FHA, VA, and RHS guarantee 30-year fixed-rate mortgages  table 2).requiring little or no down payment from borrowers and charge up-front  fees that generally vary from 1.75 to 2.15 percent. The government  guarantee makes all of these loans eligible for inclusion in Ginnie Mae- guaranteed mortgage-backed securities. All the products require that the  borrowers occupy the home and permit borrowers to use loan proceeds  to purchase a home or refinance an existing loan.
The products also have some important distinctions. For example,
VA loan guarantees are an entitlement available only to veterans who  have served in a branch of the armed services and received an  honorable discharge, certain currently serving members of the  Reserves or National Guard, and spouses of veterans under certain  circumstances.
RHS loan guarantees are limited by income and geography.
FHA requires at least a 3.5-percent down payment, while RHS and  VA require none.
Additionally, loan guarantee programs vary in the extent to which the  agencies cover potential losses of the lender or other mortgage holder.  FHA provides 100-percent coverage of eligible losses when borrowers  default. This guarantee covers the unpaid principal balance, interest  costs, and certain costs of foreclosure and conveyance. USDA’s  guarantee provides coverage for eligible losses of up to 90 percent of the  original principal, including unpaid principal and interest; principal and  interest on USDA-approved advances for protection and preservation of  the property; and the costs associated with selling the foreclosed  property. One of the most significant differences among these products is  the loss coverage offered by VA, which covers from 25 to 50 percent of  the original principal.
Of the agencies, only USDA (RHS) offers single-family housing programs  specifically for low- and very low-income families. RHS offers two unique  products: a subsidized direct loan for the purchase of single-family  housing, with interest rates as low as 1 percent, to low-income borrowers  unable to qualify for credit elsewhere, and a home repair program that  offers grants or loans (with interest rates of 1 percent) to very low-income  rural residents. RHS may subsidize the interest on single-family direct  loans, depending on the borrower’s income.
As shown in table 1, two of the largest tax expenditures that provide  assistance to homeowners are the mortgage interest and property tax  deductions, with about half of all homeowners receiving housing  assistance through them. Taxpayers who itemize their deductions may  deduct mortgage interest and property taxes on their principal residence  and a second residence. Deductions are adjustments from adjusted gross  income (AGI). Whether or not a taxpayer itemizes deductions depends  on whether the sum of these deductions plus any other itemized  deductions exceeds the limits on the standard deduction. Taxpayers are  subject to certain limits on the total amount of mortgage interest that can  be claimed. The total amount of mortgage debt for which interest may be  claimed cannot exceed $1 million. In addition, taxpayers may deduct  interest payments on up to $100,000 of home equity debt. There are no  dollar limits on the amounts of property taxes that can be deducted.  Taxpayers with higher incomes are subject to additional limitations on use  of these two deductions.
Data from selected single-family programs show some overlap in the  income and location of households served. Among the single-family loan  guarantee programs, all served moderate- and low-income populations,  although only USDA’s program restricts eligibility on the basis of income.  USDA limits borrower income to 115 percent of AMI. Although FHA and  VA do not have this restriction, 1,291,000 or 74 percent of FHA borrowers  and at least 130,000 VA borrowers also fell into this income category in  fiscal year 2009 (see fig. 2). In part because of the number of borrowers it serves, FHA guaranteed more loans to borrowers with incomes at or  below 115 percent of AMI than RHS and VA combined.
Further, although RHS may serve only borrowers with incomes at or  below 80 percent of AMI in its direct single-family loan program, FHA also  serves this group of borrowers. Specifically, 50 percent of FHA borrowers  in fiscal year 2009 had incomes at or below 80 percent of AMI.  However, RHS single-family direct loans may be combined with other  resources to help reach very low-income families that may not have the  income or down payment often needed to qualify for other financing. For  example, these loans may be used in self-help housing projects in which  future owners help build their own houses. The “sweat equity” reduces  the cost of construction and the overall loan amount.
The loan guarantee programs overlapped in rural areas. USDA  characterizes locations as rural or urban using different measures. Our  analysis showed overlap in areas served using three different USDA  characterizations for geographic areas. Section 520 of the Housing Act of  1949, as amended, defines the terms “rural” and “rural area” for the rural  housing programs that are the focus of this report. The definition is largely  based on population, but also considers other factors, such as proximity  to metropolitan areas and access to mortgage credit. As of 2011, 97  percent of the land area of the United States and 37 percent of the  population were eligible for rural housing programs (see fig. 3). Eligible  areas will be adjusted based on the results of the 2010 Census. As we  reported in 2004, the definition can lead to inconsistent eligibility  determinations.
Although RHS offers its single-family products only in eligible rural areas,  and FHA and VA programs are not restricted to any geographic location,  FHA and VA also guaranteed a substantial number of loans in RHS-  eligible areas. While a larger percentage of RHS borrowers with  guaranteed loans were located in more remote rural areas compared with  FHA and VA borrowers, FHA served a larger number of borrowers in  these areas. Table 3 characterizes the location of single-family  guaranteed loans relative to their distance from the boundaries separating  RHS-eligible and -ineligible areas. For example, 50 percent of the RHS  single-family guaranteed loans were located inside or within 10 miles of  ineligible areas and 23 percent were located more than 25 miles from  ineligible areas. FHA and VA loans were concentrated in or close to RHS- ineligible areas; 89 percent of both FHA and VA loans were for properties  inside or within 10 miles of RHS-ineligible areas, and 4 percent were for  properties located more than 25 miles from RHS-ineligible areas. FHA  guaranteed more loans than RHS in all location categories, including  more than twice as many loans as RHS in areas more than 50 miles from  RHS-ineligible areas.
USDA’s Economic Research Service categorizes zip codes by degree of  rurality into four types—urban, suburban, small-town rural, and isolated  rural. While 89 percent of FHA’s and 86 percent of VA’s single-family  loan guarantees were in urban or suburban zip codes, both agencies also  guaranteed a substantial number of single-family loans in rural zip codes  (see table 4). FHA guaranteed more loans than RHS in all zip code types.  Further, FHA guaranteed more than 210,000 loans in rural zip codes,  while RHS guaranteed 59,000 loans, or about half of its loans, in rural zip  codes. Although a greater percentage of the RHS-guaranteed loans were  in rural zip codes compared with FHA and VA loans, more than half the  RHS-guaranteed loans were in urban and suburban zip codes.
The Economic Research Service also has developed a rural-urban  continuum that categorizes U.S. counties by degree of rurality.this continuum, we distinguished four types of counties—metropolitan,  urbanized nonmetropolitan, rural nonmetropolitan, and completely rural  nonmetropolitan. FHA and VA also guaranteed a substantial number of  loans in nonmetropolitan or what could be considered more rural counties  (see fig. 4.) Additionally, FHA guaranteed more loans than RHS in both  metropolitan and completely rural nonmetropolitan counties. Specifically,  FHA guaranteed a greater number of loans than RHS in all the  nonmetropolitan categories. And although a greater percentage of RHS- guaranteed loans were in nonmetropolitan counties compared with FHA  and VA loans, more than half of its loans were in metropolitan counties.
section_title: Opportunities Exist to Improve Collaboration and Effectiveness but Would Involve Trade- offs
paragraphs: HUD, USDA, VA, and Treasury have collaborated on efforts in their  housing programs, but opportunities exist to improve collaboration and  effectiveness. Specifically, the Single Family Housing Task Force has not  yet developed a formal approach to help guide its collaboration efforts.  And, although the Rental Policy Working Group has followed best  practices and increased collaboration on selected multifamily rental  housing programs, its efforts have not been as effective as possible.  Consolidation or increased coordination of some programs and activities  could be beneficial, but also entails significant challenges and  implications that we discuss below.
subsections: section_title: No Formal Approach to Guide Single-Family Collaboration Efforts
paragraphs: As of April 2012, a number of federal efforts to coordinate housing  programs were at various stages of implementation, including a task force  established to evaluate the potential for coordinating or consolidating  single-family loan programs. Overall, the task force’s efforts have not  incorporated key principles on effective collaboration. In February 2011,  the Administration reported to Congress that it would establish a task  force to evaluate the potential for coordinating or consolidating the single-  The members of the task  family loan programs at HUD, USDA, and VA.force include senior-level officials from each of the three agencies and  OMB officials. According to the officials, besides naming members, no  dedicated funding or other resources had been devoted to the task force  as of April 2012.
We have reported that federal agencies often face a range of barriers  when they attempt to collaborate with other agencies, including missions  and goals that are not mutually reinforcing, concerns about controlling  jurisdiction over missions and resources, and incompatible procedures,  processes, data, and computer systems. In an October 2005 report, we  identified eight key practices that can help enhance and sustain  collaboration among federal agencies. The key practices are (1) define  and articulate a common outcome; (2) establish mutually reinforcing or  joint strategies; (3) identify and address needs by leveraging resources;  (4) agree on agency roles and responsibilities; (5) establish compatible  policies; (6) develop mechanisms to monitor, evaluate, and report on  results; (7) reinforce agency accountability for collaborative efforts  through agency plans and reports; and (8) reinforce individual  accountability for collaborative efforts through performance management  systems. While these practices can facilitate greater collaboration, we  recognize that other practices also may do so. Furthermore, the specific  ways in which agencies implement these practices may differ in the  context of the specific collaboration challenges agencies face. For  example, joint activities can range from occasional meetings between  employees in which the roles and responsibilities of the respective  agencies are reaffirmed, to more structured task teams operating over a  period of time. But absent effective collaboration, routine interagency  meetings could result in limited information being communicated and few  joint agreements reached or implemented.
In comparing the single-family task force’s efforts with key collaboration  practices, we found that the agencies have not taken steps that are  consistent with the practices. For example, other than the announcement  of the task force, member agencies said that they had yet to identify goals  or expected outcomes, and could not provide strategies each agency  might utilize. The task force can benefit from identifying and agreeing on  goals, and evaluating the goals against realistic expectations of how to  achieve them. The task force also has not yet identified resources needed  to accomplish its goals; agreed on roles or responsibilities; taken steps to  establish compatible policies, procedures or other means to operate; or  made clear how they would be made accountable for collaborative efforts  and report on results. In addition to our key practices, the Government  Performance and Results Act Modernization Act of 2010 (GPRAMA),  establishes a new framework for agencies to improve government  performance by taking a more crosscutting and integrated approach to  key issues. GPRAMA requirements could lead to improved coordination  and collaboration among agencies. For instance, GPRAMA requires each  agency to identify the organizations and program activities—both internal  and external to the agency—that contribute to each agency’s goals.  However, according to HUD and USDA officials, much of the single-family  task force’s efforts to date have been informal. For instance, the officials  noted that senior agency officials met biweekly in teleconferences to  share information and best practices on housing policy and programs and  discussed current economic issues affecting the housing market and  ways to streamline the housing programs in a coordinated manner.
According to HUD and OMB officials, aside from the biweekly meetings, a  benchmarking effort associated with the single-family task force recently  was established. Specifically, OMB will collect and analyze data on direct  and guaranteed housing loan programs as a way to develop greater  insight into best practices, potential overlap, and synergies among the  housing programs. According to HUD, as of April 2012, no milestones or  resource estimates were available for the task force and no results were  expected until a more formal approach for the task force was established.  Additionally, agency officials stated that no further collaborative efforts  among single-family housing programs were planned. OMB and HUD  officials stated that over the past few years, agency attention has been  focused on trying to improve the overall condition of the housing market,  making it difficult to turn attention to interagency efforts for program  coordination or consolidation. HUD officials also noted that the ongoing  housing crisis has been a complicating factor in addressing the broader  issue of housing finance reform, and mostly has overshadowed the issue.
Nonetheless, in addition to focusing on the ongoing housing crisis and the  level of government support for the housing market, it is also important to  focus some attention on the way that government support for housing is  delivered and strike the appropriate balance between these issues. The  task force was established to explore ways in which programs can be  better coordinated or consolidated to serve homeowners more effectively.  Part of that analysis is the assessment of coordination and consolidation  of HUD, USDA, and VA programs. By incorporating key practices on  collaboration and developing a more formal approach for the single-family  task force, HUD, USDA, VA, and OMB can evaluate the potential for  coordinating or consolidating single-family loan programs, and possibly  generate savings and efficiencies while better serving homeowners. They  also may be able to help drive further collaboration, establish  complementary goals and strategies for achieving results, and increase  transparency (by reporting on their collaborative efforts). As the task force  moves forward, developing a formal approach for the task force’s  collaborative efforts could help the agencies establish the guidance and  direction needed to systematically bring about a productive working  relationship and further help improve single-family loan programs.
section_title: Opportunities Exist to Increase Effectiveness of Multifamily Collaboration Efforts
paragraphs: HUD, USDA, and Treasury officials have been working to align the  requirements of some multifamily housing programs through the Rental  Policy Working Group. Although the efforts of the working group have  been consistent with a majority of our key practices, the group has yet to  take additional steps to reinforce agency accountability for collaborative  efforts.
In response to the need for better-coordinated multifamily housing policy,  in July 2010 the White House’s Domestic Policy Council established the  interagency Rental Policy Working Group. The working group consists of  the White House Domestic Policy Council, National Economic Council,  OMB, HUD, USDA, and Treasury. The purpose of the working group is to  better align rental requirements across programs, and thereby increase  the effectiveness of federal rental policy and improve participant  outcomes. According to working group documents, the group established  guiding principles, which centered on administrative changes that could  help respond to the concerns of external stakeholders (rental housing  owners, developers, and managers, and state and local housing agency  officials); required minimal statutory action; were realizable at little or no  cost or through education, outreach, or the issuance of new guidance or  rules; and helped create cost and time savings for all parties.
The working group solicited recommendations for improved rental policy  coordination from external stakeholders. Within the working group,  interagency teams considered the recommendations, reviewed current  policies, and identified opportunities for greater federal alignment,  increased overall programmatic efficiency, and reduced costs and  regulatory burdens. Stakeholders have noted that inefficiencies can arise  when a multifamily housing project has multiple layers of assistance (such  as subsidies, tax expenditures, or mortgage insurance) from one or more  federal agencies. To help address those inefficiencies, the working group  identified 10 key areas or initiatives for alignment and further study, based  on recommendations from rental housing owners, developers, and  managers, and state and local officials (see table 9). Overall, the  initiatives are aimed at reducing unnecessary program regulations,  lessening administrative barriers so that developers and property owners  more easily can participate in programs, reducing duplicative  administrative actions to reduce costs for agencies and program  participants, and increasing coordination to allow better targeting of  agency resources.
For two initiatives, HUD, USDA, and other federal and state housing  agencies have pilot programs under way in several states to test the  alignment activities before national implementation. Specifically, two  pilots will assess the feasibility of the proposed changes to physical  inspections and subsidy layering reviews and identify steps for better  coordination and information-sharing for potential replication on a national  scale. As of April 2012, the participating state HFAs and federal agencies  had signed memorandums of understanding (MOU) detailing roles and  responsibilities. The working group plans to develop recommendations  from the pilot findings.
In comparing the Rental Working Group’s efforts against the key practices  that we previously identified to help agencies effectively collaborate, we  found that HUD, USDA, and Treasury have taken steps that are  consistent with a majority of the practices. In particular, the agencies,  through the Rental Policy Working Group, defined and articulated a common outcome; established mutually reinforcing or joint strategies in soliciting  suggestions from federal, state, local, and private officials; allocated resources and identified key initiatives, including estimating  the resources and time frames necessary for implementation; agreed on roles and responsibilities, including designating a  responsible lead office and participating offices to help implement the  alignment activities; established compatible policies and procedures and collected and  analyzed information that led to the prioritization and development of  the recommendations for rental policy alignment; developed mechanisms to monitor, evaluate, and report on their  efforts, established milestones for alignment activities, and launched  pilots to test some alignment activities; and used performance-management systems to strengthen individual  accountability for results for some senior agency executives.
Finally, in some cases, the agencies used a more formal approach to  collaboration, such as an MOU, to specify the roles and responsibilities of  those involved in the alignment effort.
Although the efforts of the Rental Policy Working Group are consistent  with the majority of our key practices, the working group has not yet taken  additional steps to reinforce agency accountability for collaborative  efforts. Methods to build accountability for collaborative efforts include  documenting those efforts (and associated goals, strategies, roles and  responsibilities, actions or measures to be taken, and timelines) in the  agencies’ annual and strategic plans. Our review of the agencies’ recent  annual and strategic plans found that none of the agencies in the working  group had included their collaborative efforts. By not including their  collaborative efforts in the plans, the agencies have not taken full  advantage of opportunities to further build accountability for actions  already taken, or underway. For example, they have missed opportunities  to underscore the importance of their collaborative efforts agencywide.
Furthermore, the Rental Policy Working Group efforts did not include any  plans to deal with statutory changes that could help increase overall  programmatic efficiency and reduce costs and regulatory burdens once  the administrative changes were implemented. To achieve more  immediate results, the Working Group started with those actions that  required no statutory action. However, the working group’s long-term  collaborative efforts could be enhanced if it were to include areas beyond  administrative changes. According to USDA and Treasury, the Working  Group’s efforts helped inform proposals in the President’s fiscal year  2013 budget (for legislative changes to the LIHTC program). By not  expanding its guiding principles to include statutory changes, the  agencies may miss additional opportunities to highlight those areas in  which statutory action could help respond to additional stakeholder  concerns and generate savings and efficiencies in housing programs.  Such information about statutory changes also could help to provide  relevant and useful information to policy makers as they consider overall  improvements to HUD, USDA, and Treasury housing programs.
section_title: Coordinated Reviews of Housing Tax Expenditures and Related Programs Would Be Beneficial
paragraphs: As we recommended in September 2005 and reiterated in March 2011,  coordinated reviews of tax expenditures and related housing spending  programs with similar goals could help assess the relative effectiveness  of tax expenditures in terms of their benefits and costs, and help  policymakers reduce overlap and inconsistencies and direct scarce  resources to the most-effective or least-costly methods to deliver federal  support. As of April 2012, OMB had not used its budget and performance  review processes to systematically review tax expenditures and promote  integrated reviews of related tax and spending programs. GPRAMA could  serve as a vehicle for furthering interdepartmental coordination of housing  programs, including tax expenditures. As noted previously, in February  2012, the Administration announced 14 interim crosscutting policy areas,  and some goals specifically identify tax expenditures as contributing  activities.
The combination of the LIHTC program with other federal, state, or local  funding sources helps underscore the importance of assessing the  effectiveness, costs, and benefits of tax expenditures in relation to  housing programs. In 2007, we reported that using federal funds to  leverage nonfederal funds can be a useful tool for financing affordable  housing and that public and private-sector officials generally regarded it   However, we also reported that leveraging at the project level  favorably.can be challenging and inefficient, partly because federal, state, and local  funding sources often have different application and other requirements  and deadlines. As discussed previously, the Rental Policy Working Group  was created in part to address these varying requirements.
For this report, we interviewed developers and industry representatives,  who estimated that leveraging different funding sources and the  associated requirements and the time needed to put together the multiple  funding sources necessary to make projects feasible increased project  costs. For example, one multifamily developer told us that it typically took  from 3 to 4 years to begin construction and leveraging the various funding  sources typically added 5-10 percent to project costs. He stressed that  the biggest factor in extending project lengths was the time needed to  secure multiple funding sources, navigate and comply with multiple  requirements, and align funding cycles. He added that obtaining LIHTCs  also can slow the process because a project might not receive credits one  year or might require more than one year’s worth of credit allocations  from the state before it was feasible.
The 2007 report also concluded that better information about combining  multiple federal sources and amounts—from both tax and spending  programs—for rental housing projects could be useful in identifying areas  for agencies to coordinate program measurement. Although Treasury  tracks taxpayer compliance with LIHTC program rules and HUD collects  some information on a few other types of federal subsidy an LIHTC  project might receive, neither agency collects leveraging data nor reports  a leverage measure for the program. Basic financial information about the  multiple sources and amounts—from tax and spending programs—a  housing project received could be useful in identifying areas for agencies  to coordinate in measuring performance for programs that have  overlapping purposes. As we reported in 2008, while HUD and Treasury  reported leverage measures that described the ratio of all other funds  (federal, state, local, and private) compared with a specific program’s  funds, alternative measures describing total federal investment provided  considerably different results and could be of value to policymakers.
To provide more accurate, relevant, and useful information to Congress  and others, our 2008 report recommended that OMB provide guidance to  help agencies determine how to calculate, describe, and use leverage  measures in a manner consistent with their programs’ design; and  reevaluate the use of such measures and disclose their relevance to  program goals and in future performance reviews of housing programs. At  the time, there was no agency-specific or government-wide guidance on  what agencies should disclose about the leverage measures they  reported or how to calculate them for specific programs. Although OMB  has used leveraging as a program output measure in the past, as of April  2012, OMB had not taken action to issue guidance for agencies  calculating leverage measures. Better measures of the total federal  support and mix of funding would be helpful in better understanding how  tax expenditures contribute to rental housing project outcomes and  identifying areas of overlap for further coordination.
Furthermore, additional data could help assess how tax expenditures  benefit homeownership compared with programs with similar goals. This  information is currently not always collected on tax returns unless IRS  needs the information or collection was legislatively mandated. We  recommended in 2009 and 2010 that IRS collect property addresses  (which can differ from a taxpayer’s mailing address) to improve  enforcement of mortgage interest deductions. Collecting this information  from taxpayers or lenders also could facilitate analysis of who benefits  from the mortgage interest and property tax deductions as well as other  housing tax provisions. As of April 2012, IRS had not yet taken action to  collect property address information.
section_title: Consolidating Single- Family Loan Guarantee Programs Could Improve Programs and Produce Savings
paragraphs: Consolidation or greater coordination of RHS and HUD single-family loan  programs that serve similar markets and provide similar products may  offer opportunities for savings in the long term. For example, program  consolidation could improve service delivery, especially when programs  with similar objectives and markets are brought together and conflicting  requirements and overlap reduced. Consolidation could achieve savings  to the extent that agency overhead and, potentially, staffing were  reduced. Further, consideration of program consolidation could create  opportunities to reassess the various RHS and HUD single-family  programs or activities and eliminate programs that are overlapping, or  outdated, or whose costs no longer justify federal spending. However,  consolidation also presents a number of challenges that we discuss later  in the report. We first reported in 2000 that overlap exists among products  offered and markets served by FHA, RHS, and others and questioned the  need for maintaining separate programs for rural areas. Additionally, we  noted the potential for administrative savings by consolidating programs  that provided similar products and served similar markets. For instance,  FHA and RHS offer similar guaranteed single-family products and operate  in the same areas. With VA, which offers a guaranteed loan program,  FHA and RHS encourage lenders to make loans by guaranteeing them  against losses they might incur if borrowers defaulted on their mortgages.  As discussed earlier, lenders in FHA and RHS programs use FHA’s  mortgage scorecard in evaluating borrowers for mortgages. However,  RHS’s program offers more generous terms than FHA’s program (such as  no down payment and lower overall mortgage insurance premiums). And  RHS’s single-family direct loans have no counterparts in FHA or VA. Also,  VA loan guarantees are an entitlement only available to veterans, certain  members of the Reserves and National Guard, and spouses of certain  veterans. RHS guaranteed loans are limited by borrower income and  location. Despite the differences, we noted that FHA, RHS, and VA all  serve a significant share of low- to moderate-income households.
We suggested in September 2000 that Congress consider requiring HUD  and USDA to examine the benefits and costs of merging those programs  that serve similar markets and provide similar products. Recognizing the  statutory restrictions that exist on both agencies’ programs, as a first step  we suggested that Congress consider requiring HUD and USDA to  explore merging their single-family guaranteed lending programs and  multifamily portfolio management programs, taking advantage of the best  practices of each and ensuring that targeted populations were not  adversely affected. Congress held hearings on the report in 2003 but no  further actions have been taken.
Our analyses have shown evidence of overlap in certain aspects of the  FHA and RHS single-family programs. First, RHS increasingly has moved  from direct to guaranteed loans. The number of guaranteed single-family  loans first exceeded the number of direct single-family loans in 1995, and  the trend has intensified since 2008. In fiscal year 2010, RHS made more  than 28,100 single-family direct loans and grants and guaranteed more  than 130,000 single-family loans. Since 2011, the Administration has  requested large cuts in RHS direct loan programs. For example, the 2012  President’s Budget did not request any funding for Section 504 direct  repair loans and requested a 67 percent reduction for Section 502 direct  loans. The budget request stated that the shift in direction acknowledges  that the single-family direct loan program has struggled to make a  measurable impact due to flat funding levels and a labor-intensive review  process. According to RHS officials, after the implementation of early-out  and buy-out authority at the beginning of fiscal year 2012, RHS had about  900 full-time equivalent staff managing its direct loan program, and about  400 staff managing its larger guaranteed loan program.
Second, the Administration has proposed that RHS use direct  endorsement lenders to approve guaranteed loans. Specifically, the 2011  and 2012 President’s Budgets proposed that RHS use direct  endorsement lenders in its guaranteed loan program to make RHS more  efficient and allow time to transition the staff managing guaranteed loans  to other priorities. endorsement lenders to approve mortgage applications without first  submitting paperwork to HUD. As of September 2011, it had about 3,700  such lenders.
section_title: Greater Coordination or Consolidation of Certain HUD and RHS Multifamily Activities Could Help Improve Programs
paragraphs: The 2013 President’s budget did not propose that RHS use direct endorsement lenders. on participants and the benefit of aligning the requirements of these  programs.
HUD and RHS face similar challenges in managing their portfolio of  affordable rental properties. Properties assisted by both agencies are  aging and need new investments for capital improvements. Also, some  property owners may decide to leave the programs and convert their  properties to market rate and no longer be subject to rent and tenant  income requirements. In response to these challenges, RHS offers  incentives that provide equity investments and favorable loan financing to  property owners seeking to recapitalize their properties or at risk of exiting  the program. Similarly, HUD has various financing tools that offer  incentives to property owners to remain in the program. When property  owners do exit the program, HUD and RHS offer special rental assistance  to households to help ensure that their rents remain affordable.
Further, similarities in guaranteed multifamily loans indicate the need for  greater coordination. For instance, among multifamily loan programs,  RHS programs (whether direct or guaranteed) are more prevalent in rural  areas than the much larger FHA multifamily guaranteed loan program.  However, RHS has been moving toward guaranteed multifamily loans,  primarily as a leveraged source of funds when preserving its direct loan  properties. Moreover, the 2013 President’s budget proposes funding for  Section 538 guaranteed loans but not for Section 515 direct loans.  According to RHS officials, the only new Section 515 direct loans being  made are for preserving existing properties. As discussed earlier,  properties with RHS loans also tended to be much smaller than properties  with FHA loans, suggesting that RHS and its products have served a  unique market segment and that RHS may have a product model that  could be useful for FHA. Over the years, HUD has proposed variations of  guaranteed loans for small properties, such as in more rural areas where  HUD properties are smaller and more comparable in size to RHS  properties. For example, HUD announced demonstration programs in  1997 and 2006 for variations of small project guaranteed loans.
More recently, the Rental Policy Working Group discussed existing  programs that HUD might use for smaller properties, including RHS’  Section 538 guarantee program. The discussions resulted in the Rental  Policy Working Group developing a proposal for the 2013 budget that  would allow HUD to implement flexibilities with its Section 542(b) risk- share program to make risk-share loans to refinance, rehabilitate, and  recapitalize small properties. The proposal would allow HUD to use this  existing program to expand availability of capital to small properties. If  successful, this program could be used in urban and rural areas, as HUD  has no geographic restrictions. While statutory action would be needed  for HUD to implement the changes to its Section 542(b) risk-share  program, the working group focused on this effort because it required only  minor statutory changes.
section_title: Consolidation or Increased Coordination Presents Immediate Challenges and Has Longer-Term Implications
paragraphs: Consolidation presents a number of challenges in the short and long  term. These include overcoming statutory barriers; assessing products to  be offered; establishing effective delivery structures; aligning resources,  policies, and requirements; and ensuring continuing oversight and  performance of existing commitments. Potential for savings in the long  term must be weighed carefully against the immediate challenges and  against the potential implications of consolidation for agency goals and  objectives and households served. We previously reported on questions  agencies should consider when evaluating whether to consolidate and  noted that identifying and agreeing on specific consolidation goals and  realistic expectations for their achievement are the key to any  consolidation effort.groups should not rule out studying the potential for consolidation if the  potential for long-term savings through better alignment of resources and  delivery structures outweighs the challenges and long-term costs. For  example, VA’s housing program is an entitlement earned by veterans and  RHS’s guaranteed program is only available to low- and moderate- income households in rural areas. And HUD operates the Good Neighbor  Next Door program, which restricts eligibility by profession (for example,  to teachers and law enforcement officers).
But the fact that programs serve different targeted  Several of the immediate challenges that would stem from any  consolidation efforts have long been a concern for the agencies. In 2000,  when we first recommended that Congress consider requiring USDA and  HUD to examine the benefits and costs of merging programs such as  their single-family guaranteed programs, USDA noted that such a merger  could be detrimental to rural areas, which could lose a federal voice. In  addition, HUD noted that without legislative changes, any efforts to merge  the programs likely would result in a more cumbersome delivery system.  In May 2011 testimony before the House Financial Services  Subcommittee on Insurance, Housing, and Community Opportunity, some  industry experts said a proposed consolidation plan merited further  discussion, but others stated the proposal could negatively affect USDA’s  efforts to deliver its other rural development programs. In September, the  RHS Administrator testified that while RHS and HUD shared an important  commitment to meeting the housing needs of rural America, she opposed  the proposed consolidation plan. She said that RHS housing services  uniquely served rural communities by working in “synergy” with other rural  development programs.
Since then, RHS officials and several housing industry officials with whom  we spoke also have raised concerns about consolidating RHS and HUD  programs. They have argued that rural housing assistance is a part of the  community development package that USDA’s rural development  agencies (RHS, Rural Utilities Service, and Rural Business Cooperative  Service) can offer and that consolidating RHS programs into HUD would  disrupt the interrelationship between the three rural development  agencies in USDA. RHS officials pointed to the human capital challenges  that would arise from any consolidation. For example, they noted that  training would be an issue because product requirements, information  systems, and agency processes and procedures differ between HUD and  RHS. In addition, they questioned whether any consolidation would help  improve the delivery of service to rural areas. RHS officials and industry  officials expressed concern that rural guaranteed single- and multifamily  programs would get “lost” in HUD. Some RHS and industry officials also  noted that program consolidation would not address the gap in access to  affordable housing credit for those individuals who could not qualify for  HUD or other conventional single-family loans.
While training and information systems are important considerations for  any consolidation or increased coordination between the agencies,  consolidation or increased coordination does not necessarily require that  product terms be aligned. FHA already offers multiple products with  different terms and conditions. And although FHA does not have the  extensive delivery structure RHS uses to perform loan origination under  its now diminishing direct loan program, the continuing need for this RHS  product has been questioned by USDA and OMB. Moreover, the more  similar the products become, the stronger the argument for a  consolidated delivery structure. In the long term, this could present an  opportunity for the agencies to take advantage of the best features of  each agency’s structure.
In relation to concerns about the level of focus on rural housing in HUD,  HUD currently serves a larger number of homeowners in rural areas than  RHS serves, and HUD administration officials told us that they considered  HUD an agency that served housing needs in all communities—urban,  suburban, and rural. Also, while RHS housing programs align with several  of HUD’s priority goals, USDA currently does not have priority goals for  housing, and housing programs have not been a high priority in USDA.  For multifamily housing, we first reported in 2002 that RHS could not  prioritize the long-term rehabilitation needs of the properties in its Section  515 direct loan portfolio. The fiscal year 2013 budget is the first in which  the agency is requesting funding for a permanent (in place of a current  demonstration program) multifamily preservation and revitalization  program for its rural rental housing portfolio. As described earlier, we  reported in 2004 that RHS did not have access to the same wage  matching data as HUD to assure that rental payments under the Section  521 rental assistance program were accurate. USDA proposed legislation  to access Department of Health and Human Services data for wage  matching purposes in the fiscal year 2013 budget. In addition, the  administrative and reporting structure of rural housing programs among  USDA components has varied. As we reported in 2000, the position of  RHS Administrator is at the same organizational level as the State Rural  Development Offices, which can develop their own program delivery  systems. As a result, state offices still report to the Under Secretary for  Rural Development rather than the RHS Administrator on housing issues.  The state offices also have developed various interpretations rather than  uniform standards on issues ranging from rent calculations to loan  prepayment.
Combining programs would not eliminate the need for managing existing  commitments. Both FHA and RHS have loan guarantees with terms of as  much as 40 years. In the single-family programs, both agencies have  systems in place for monitoring the performance of existing mortgages  and ensuring that loan servicers and contractors carry out functions  related to loss mitigation, foreclosure, and property management, as well  as systems for holding lenders accountable in the loan origination  process. The continuing need for these functions would necessitate  careful planning and alignment to permit consolidation.
Consolidating or coordinating existing programs and activities also raise  important implications because of costs, and the potential impact on  people and agency mission. When consolidation or increased  coordination results in significant shifts of people, space, technology and  systems, several issues arise. As an example, simply moving staff and  responsibilities could increase costs and not result in any process  improvements. Ensuring long-term benefits from cost savings and  improved operations will require careful consideration of the  responsibilities and staffing resources needed for the combined  operation. For example, if the single-family loan programs of RHS and  HUD were to be consolidated, it would be necessary to specify the impact  on employees, including changes in roles and responsibilities, processes  and procedures, individual accountability, and day-to-day operations.  There also would be transition issues to consider, such as costs of leases  and unoccupied federal property, or moving expenses for employees  transferred to new sites. Consolidation or increased coordination also  may have implications for borrowers, lenders, developers, and other  industry participants. For instance, some borrowers and lenders who may  have worked extensively with particular programs could experience  increased costs in the short term for adapting existing program  administration, personnel, processes, and systems.
Whether through consolidation or further coordination, RHS, FHA, and VA  have opportunities to assess the potential for learning from the practices  of each other. RHS did this when its guarantee program was created. For  instance, RHS officials told us that they had examined FHA’s system  when they established their guaranteed program and decided it would be  more cost-effective to require lenders to dispose of properties. Thus,  unlike FHA, RHS relies on lenders to take title of foreclosed properties  and manage and market them. But, RHS and FHA have not taken steps  to further explore the relative benefits and costs of each other’s  approaches. This and other areas may represent an opportunity for the  agencies to explore how to take advantage of their respective best  practices, while minimizing the adverse impact on targeted populations.
Finally, combining management of the portfolio of existing multifamily  projects might require reassessing methods for overseeing and  monitoring these projects. Some noted that in RHS, staff were  responsible for a particular portfolio of multifamily projects and offered a  direct point of communication for these projects. They pointed out that  HUD, which provides funding for far more projects, did not have staff  responsible for individual projects. Also, payment structures for RHS- direct multifamily loans are linked and are offset by RHS rental assistance  payments. Combining RHS and HUD rental assistance programs would  require assessing the implications of aligning payment methods for the  two programs.
section_title: Conclusions
paragraphs: The federal government plays an important role in encouraging  homeownership and ensuring the availability of decent, safe, and  affordable rental housing through a variety of single- and multifamily  programs that provide rental assistance, public housing, and tax  expenditures. Numerous agencies administer these fragmented  programs, and recent assessments have shown that some programs  overlap (that is, provide similar products and serve similar populations).
Ongoing fiscal constraints and the accompanying move toward greater  use of guaranteed lending and leveraging of federal funds with other  public and private funding sources have called into question the feasibility  of maintaining the current fragmented structure for providing support to  housing and, in particular, the overlap in certain housing programs.  Policymakers and agencies have been tasked with continuing to meet  affordable housing needs while protecting taxpayer investments.  Consolidation and improved collaboration can offer an effective means of  realizing necessary cost savings and eliminating unnecessary overlap.
While consolidation and improved coordination efforts are underway, they  could be improved and expanded to help ensure that agencies do not  miss opportunities to generate savings and efficiencies in their housing  programs. A recently created task force may help evaluate the potential  for coordinating or consolidating the single-family housing loan programs  at HUD, USDA, and VA and the agencies have been working to  consolidate and align certain requirements in multifamily housing  programs through the Rental Policy Working Group. However, the single- family task force has not yet specified its goals or expected outcomes,  roles and responsibilities, resources, or a means of monitoring or  reporting on results and reinforcing agency accountability for collaborative  efforts. Incorporating these key practices for effective collaboration would  help the task force and HUD, USDA, and VA establish the guidance and  direction needed to systematically bring about a productive working  relationship. With a more effective collaborative approach, the agencies  also can generate opportunities to evaluate the potential for improving,  coordinating, or consolidating single-family housing loan programs.  Certain aspects of the single-family programs show great potential for  consolidation—as we have reported, overlap exists in products offered,  service delivery, and geographic areas served. Therefore, the task force  agencies could productively focus on the products offered, delivery  structure, and systems and resources that support the programs as part  of any assessment of coordination and consolidation of the programs. For  instance, agencies could consider whether and how to align product  terms and conditions, and how to optimize service delivery methods. Or,  they could move beyond administrative change, and assess what might  be accomplished in terms of coordination or consolidation through  statutory changes. Such assessments represent valuable first steps and  would serve as resources for the agencies.
The Rental Policy Working Group, which has followed a majority of our  key collaboration practices, already has taken steps to identify specific  areas in which to align sometimes conflicting and redundant  requirements. But it focused on actions that require minimal or no  statutory changes, or minimal or no costs. Overlap in multifamily  programs exists in the overall purpose of programs, delivery structures,  and provision of project-based rental assistance. However, any  consolidation of multifamily programs would require statutory changes.  There is more the Rental Policy Working Group can do to build on its  success. For example, it could expand its guiding principles to include  areas in which statutory action across individual agencies and programs  may be needed to help increase overall programmatic efficiency and save  additional taxpayer dollars. It could take additional steps to reinforce  agency accountability for collaborative efforts by documenting  collaborative efforts in its strategic and annual plans. In addition to the  two efforts highlighted above, and as we previously recommended,  coordinated reviews of tax expenditures with related spending programs  could help reduce overlap and inconsistencies and direct scarce  resources to the most effective or least costly methods to deliver federal  support.
Options to increase collaboration or to effect consolidation in HUD and  USDA’s single- and multifamily loan programs that serve similar markets,  provide similar products, or have similar delivery structures could  enhance the efficiency of and improve the programs overall. But as we  have noted, they are not without a number of human capital, information  technology, and other significant challenges and implications. We first  reported on these options in 2000. The potential exists for greater  collaboration or consolidation, including considering statutory action, if  applicable. Policy makers face difficult decisions on the structure and  funding of housing programs and activities across federal agencies.  Although Congress ultimately would have to decide, agencies could  further this effort by exploring the potential benefits and costs of  consolidating overlapping programs. Such analyses represent a key step  on the path to determining the viability of consolidation. The analyses also  can support the Administration’s efforts to reform the government’s role in  housing finance.
section_title: Recommendations for Executive Action
paragraphs: To enhance task force efforts to evaluate the potential for coordination or  consolidation of single-family housing programs and activities, the  Secretaries or other designated officials of HUD, USDA, and VA, and the  Director of OMB should take steps to establish a more rigorous approach  to collaboration. For example, as a first step, agencies could define and  articulate goals or common outcomes and identify opportunities that can  be addressed or problems solved through their collaborative efforts.  Enhancing the task force’s efforts also could entail establishing and  implementing a written agreement; specifying roles and responsibilities;  establishing mechanisms to monitor, evaluate, and report on results; and  reinforcing accountability for collaborative efforts.
To further improve HUD, USDA, and Treasury’s efforts through the Rental  Policy Working Group to consolidate and align certain requirements in  multifamily housing programs, the Rental Working Group should take  steps to document collaborative efforts in strategic and annual plans to  help reinforce agency accountability for these efforts.
To build on task force and working group efforts already underway to  coordinate, consolidate, or improve housing programs, and help inform  Congress’s decision-making process, the Secretaries or other designated  officials of HUD, Treasury, USDA, and VA should evaluate and report on  the specific opportunities for consolidating similar housing programs,  including those that would require statutory changes.
section_title: Agency Comments and Our Evaluation
paragraphs: GAO provided a draft of this report for review and comment to the  Consumer Financial Protection Bureau, Department of the Interior,  Department of Labor, Farm Credit Administration, Federal Deposit  Insurance Corporation, Federal Financial Institutions Examination  Council, Federal Housing Finance Agency, Board of Governors of the  Federal Reserve System, HUD, IRS, National Credit Union  Administration, NeighborWorks America, Office of the Comptroller of the  Currency, OMB, Treasury, USDA, and VA. HUD’s Acting Assistant  Secretary for Housing-Federal Housing Commissioner, USDA’s Under  Secretary for Rural Development, and VA’s Chief of Staff provided written  comments, which we address below and which are reprinted in  appendixes II, III, and IV, respectively. OMB staff provided a general  comment by e-mail. The Department of Interior, Federal Financial  Institutions Examination Council, Board of Governors of the Federal  Reserve System, HUD, IRS, Treasury, USDA, and VA provided technical  comments, which we incorporated as appropriate. The Farm Credit  Administration, Federal Deposit Insurance Corporation, National Credit  Union Administration, NeighborWorks America, and Office of the  Comptroller of the Currency stated they had no comments. Finally, the  Consumer Financial Protection Bureau, Department of Labor, and  Federal Housing Finance Agency provided no comments.
HUD stated that the report accurately reflected HUD’s collaborative  efforts and agreed with the report’s recommendations. However, in  response to the recommendation that HUD and the other agencies  establish a more rigorous approach to collaboration, HUD noted the  importance of assessing the timing of implementing the recommendation  because the relevant agencies have been fully focused on the ongoing  recovery of the housing market. OMB staff expressed a similar concern.  HUD further stated that it will consult with other interested parties to  establish a framework through which to respond to our recommendation  and noted that an approximate time frame might involve waiting until after  February 2014. As we stated in the report, in addition to focusing on the  ongoing housing crisis and government support for the housing market,  focusing on achieving efficiencies and cost savings and the delivery of  government support for housing is important. By incorporating key  practices on collaboration and developing a more formal approach to the  single-family task force, HUD, USDA, VA, and OMB can evaluate the  potential for coordinating or consolidating single-family loan programs,  and possibly generate savings and efficiencies while better serving  homeowners. As we noted in the report, whether through consolidation or  further coordination, RHS, FHA, and VA have opportunities to assess the  potential for learning from the practices of each other.
VA concurred with the recommendation to enhance the single-family task  force’s efforts. VA said that the agency welcomed opportunities to  coordinate with other agencies and share best practices and looked  forward to refining and improving its own program by applying other  agencies’ best practices. VA concurred in principle with our  recommendation on identifying opportunities to evaluate and report on  opportunities for consolidation as long as the efforts were coordinated  and not unilateral, adding that unilateral actions could waste resources  and have other negative effects. We modified the recommendation to  make it clear that we were referring to efforts through the interagency task  force and working group and not unilateral evaluations. In addition, VA  reiterated its position that while collaborating and coordinating with other  housing programs could be beneficial, combining VA’s unique home loan  guaranty program with other housing programs would go against the  statutory intent that established an earned benefit for veterans.
USDA generally agreed with our recommendations, stating that  collaborative efforts already under way should reduce duplication of  efforts by stakeholders working with multiple agencies as well as  “bureaucratic red tape, processing times, and ultimately program costs.”  USDA also provided a summary of the agency’s positions on a number of  other issues. First, USDA stated that RHS’s single-family guaranteed loan  program has been performing better than FHA’s loan programs because  RHS controlled risk by tightening underwriting and performing preclosing  reviews. RHS has reported lower delinquency rates than FHA, and  concluded that these differences were due to the tighter controls.  However, RHS’s analysis does not control for other factors that could  explain differences between the agencies’ delinquency and default rates.  Second, RHS suggests that borrowers of its guaranteed loans could not  afford FHA-guaranteed loans, but it has not conducted the analysis  needed to make this judgment. RHS’s lower fees and lack of down  payment could divert prospective borrowers from programs such as  FHA’s, which could offer further evidence of the overlap in federal  mortgage products. Finally, USDA reiterated its position that rural  communities have a unique set of challenges and that rather than  duplicating other federal programs, USDA’s housing programs address  unique needs. However, we found that HUD also serves rural areas  through its single- and multifamily programs. Further, RHS’ greater  reliance on guaranteed single-family lending has lessened the differences  between RHS and FHA single-family loan programs; for example, more  than half of the new RHS-guaranteed single-family loans made in 2009  were in urban or suburban areas.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies to the appropriate  congressional committees, the Secretary of Agriculture, the Secretary of  Housing and Urban Development, the Acting Director of the Office of  Management and Budget, the Secretary of Veterans Affairs, the  Secretary of the Treasury, and other interested parties. In addition, the  report will be available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions concerning this report, please  contact me at (202) 512-8678 or sciremj@gao.gov, or Jim White at (202)  512-9110 or whitej@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Key contributors to this report are listed in appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report assesses (1) programs and activities the federal government  uses to support rental housing and homeownership; (2) the extent to  which overlap or fragmentation exists in the goals, products, geographic  coverage, service delivery mechanisms, and recipient income levels of  selected housing programs and activities of the Departments of Housing  and Urban Development (HUD), Agriculture (USDA), Veterans Affairs  (VA), and Treasury; and (3) the extent to which federal efforts have  increased coordination for selected housing programs and activities, and  implications of further coordinating or consolidating selected housing  programs or activities.
For purposes of this study, we defined duplication, overlap, and  fragmentation.
Duplication occurs when two or more agencies or programs engage in  the same activities or provide the same services to the same  beneficiaries.
Overlap occurs when multiple programs have similar goals, devise  similar strategies and activities to achieve those goals, or target  similar users.
Fragmentation occurs when more than one federal agency (or more  than one organization within an agency) is involved in the same broad  area of national interest.
subsections: section_title: Programs and Activities the Federal Government Uses to Support Rental Housing and Homeownership
paragraphs: To identify federal agencies’ support for housing in fiscal year 2010, we  compiled an inventory of direct spending programs, tax expenditures, and  other activities, such as regulatory requirements—to which we collectively  refer as “activities”—related to housing. To identify programs, we first  collected information on programs categorized as housing programs from  the Catalog of Federal Domestic Assistance. We also reviewed the fiscal  year 2012 President’s Budget; program documentation from HUD, USDA,  and VA; studies by the Congressional Research Service, Congressional  Budget Office (CBO), and other housing groups; and the Compendium of  Federal Single Family Mortgage Programs and Related Activities. We  collected descriptive information about each program, including (1) the  administering or implementing agencies or entities; (2) type of assistance  provided; (3) eligibility of recipients in terms of geographic or income  restrictions; and (4) other relevant nonfederal entities involved in  administering, distributing, or delivering federal assistance, if any.
We compared the programs among the sources described above to  create an inventory of federal support for housing. We excluded certain  programs that can support housing but were covered in our other recent  reports on duplication, overlap, and fragmentation. For example, the  inventory does not include housing counseling programs that we covered  in 2012 Annual Report: Opportunities to Reduce Duplication, Overlap,  and Fragmentation, Achieve Savings, and Enhance Revenue,  GAO-12-342SP (Washington, D.C.: Feb. 28, 2012), or homeless housing  programs that we discussed in two March 2011 reports—Opportunities to  Reduce Potential Duplication in Government Programs, Save Tax  Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: Mar.  1, 2011); and List of Selected Federal Programs That Have Similar or  Overlapping Objectives, Provide Similar Services, or Are Fragmented  Across Government Missions, GAO-11-474R (Washington, D.C.: Mar. 18,  2011). Additionally, we excluded Federal Trade Commission and  Department of Justice enforcement efforts related to certain consumer  protections. In some cases, names of programs were inconsistent among  the various sources we reviewed. As a result, our usage either conformed  with program names as cited in past GAO reports or with agency  documents.
Our list of 15 housing tax expenditures is based on lists of tax  expenditures and estimates of their cost compiled annually by Treasury  and the Joint Committee on Taxation (JCT). Both Treasury and JCT list  tax expenditures by budget function. We compiled a preliminary list of tax  expenditures for fiscal year 2010 listed under the “housing” subfunction of  the commerce and housing budget function, and added other housing- related provisions listed under other budget functions. Our universe  included expired tax expenditures listed by either Treasury or JCT that  had estimated revenue losses for fiscal year 2010.
While the tax expenditure lists were generally similar, Treasury and JCT’s  method for reporting specific tax expenditures differed slightly. For the 15  tax expenditures we listed, both Treasury and JCT listed nine under the  housing budget subfunction. Treasury and JCT each reported another tax  expenditure, but grouped the expenditures under different functions. Two  tax expenditures were listed only by JCT, and another only by Treasury.  Furthermore, we identified one tax expenditure that both Treasury and  JCT reported under the veterans’ benefits and services budget function,  but which appeared to support housing activities. We also identified  another tax expenditure that neither Treasury nor JCT reported annually,  but which JCT identified in a separate report on housing tax incentives.
We did not include in our list two tax expenditures Treasury reported  under the housing budget subfunction because JCT did not list one and  listed the other under the “other business” subfunction. We also did not  include a tax expenditure that JCT reported under housing, but Treasury  reported under the community development function. As a final step, we   Officials  compared our list with similar lists of housing tax expenditures.from Treasury and the Internal Revenue Service (IRS) also reviewed our  final list of housing tax expenditures before publication of  ,  GAO-12-555SP the e-supplement to this report that lists the tax expenditures as part of all  federal housing activities.
To identify regulatory requirements, we included financial regulators  (whose responsibilities include helping ensuring that regulated institutions  comply with consumer financial protections) and regulators of  government-sponsored enterprises (government agencies that provide  oversight and supervision of government-sponsored enterprises) and  focused on those regulations affecting participants in the housing market,  including lenders, consumers, and others involved in homeownership and  rental housing. For example, we included the Farm Credit Administration  because Farm Credit System associations are authorized to engage in  rural housing lending under the agency’s regulations. We also include as  an administering entity the Federal Financial Institutions Examination  Council, which is a formal interagency body that prescribes uniform  principles, standards, and report forms for the federal examination of  financial institutions and makes recommendations to promote uniformity  in the supervisions of financial institutions. We relied on our recent reports  related to federal mortgage lending laws: Mortgage Reform: Potential  Impacts of Provisions in the Dodd-Frank Act on Homebuyers and the  Mortgage Market, GAO-11-656 (Washington, D.C.: July 19, 2011); and  Mortgage Foreclosures: Documentation Problems Reveal Need for  Ongoing Regulatory Oversight, GAO-11-433 (Washington, D.C.: May 2,  2011).
To summarize federal support for homeownership and rental housing, we  reviewed descriptive information about each activity. To characterize the  primary purpose for each, we identified 11 categories that illustrate the  primary public policy goals associated with each activity, and used the  best available information to make a determination. In selecting the  categories, we focused on the title, mission, objective, or goal of each  activity and made a judgmental determination about common groupings  for the activities. We also shared the categories and related descriptions  with the responsible agencies. The 11 purposes that we identified are  listed below:
Assistance for buying, selling, or financing a home – assistance to  individuals who are purchasing or refinancing a home or a preferential  tax treatment on the sale of a home. Also, certain assistance to  homeowners who are having difficulty making their mortgage  payments.
Assistance for homeowners – assistance to current homeowners to  improve or change their properties, or tax expenditures that allow  homeowners to deduct costs associated with homeownership.
Increasing the availability of mortgage loans – actions taken to  provide additional liquidity in the housing market, allowing private and  government lenders to make additional mortgage loans.
Assistance for financing rental housing – financial assistance for the  production or preservation of rental housing.
Assistance for rental property owners – financial assistance to owners  of rental properties for units rented to low-income tenants, or tax  expenditures that reduce the after-tax costs associated with owning  and maintaining rental property.
Rental assistance for tenants – payments on behalf of tenants to  reduce their rent payments.
Operation/management of rental housing – financial assistance to  current owners of rental housing for the operation or management of  rental housing.
Regulatory requirement – regulations affecting participants in the  housing market, including lenders, consumers, and others who buy,  sell, or rent housing.
Supports housing and other activities – activities that support any of  the above activities under rental housing and homeownership. Also,  activities in other areas in which the federal government is involved  that have indirect effects on housing.
Regulator of government-sponsored enterprises – government  agencies that provide oversight and supervision of government- sponsored enterprises.
Emergency assistance to housing market or current homeowners –  actions taken to stabilize the housing market or provide financial  assistance to homeowners to make their mortgages more affordable;  or to provide temporary assistance through the tax code for  homeowners.
We used a two-step process to independently assign each activity a  primary purpose based on the descriptions listed above, but because  many of the activities we reviewed have multiple purposes, we further  characterized the type of housing assistance for each activity as related  to (1) homeownership, (2) rental housing, or (3) homeownership and  rental housing (both). First, an initial determination was made about the  primary purpose and type of housing supported for each activity. Second,  each determination was independently reviewed to verify the category  assignments. When needed, the activity and category in question were  discussed. For the tax expenditures, we also compared our selections  with how others, including the Congressional Research Service, CBO,  and JCT had described the purpose or activity for housing-related tax  expenditures. Finally, we shared the inventory with the responsible  agencies and incorporated their comments as appropriate.
We also identified the type of assistance associated with each activity in  our inventory. In some cases, the agencies provided program dollars to  an entity such as a nonprofit or local government that administered the  funds to serve the primary targeted recipient. For the purposes of this  report, we used “type of assistance” as it relates to the primary targeted  recipient. Generally, the programs in our inventory provided the following  types of assistance:
Grant – to any other governmental or nongovernmental entity, or
Direct payment – to property owner, homeowner, tenant;
Direct loan – from government agency direct to borrower;
Guaranteed loan – through approved private lenders;  Insured loan – through approved private lenders;
Block grant – to other nonfederal governmental entities that have  flexibility on use of funds;
Tax exclusions, exemptions, or deductions;
Tax credits; and
Deferrals of tax.
The inventory also contains budgetary information for each activity we  identified for fiscal year 2010. To determine the budgetary obligations for  spending programs, we reviewed the fiscal year 2012 President’s Budget  and agencies’ budget justifications for fiscal year 2012, which contained  the actual obligations for fiscal year 2010. To determine the revenue loss  estimates for tax expenditures in fiscal year 2010, we reviewed the  annual lists of tax expenditures Treasury and JCT compiled. Some of the  activities in our inventory incurred no obligations in fiscal year 2010 for a  number of reasons; for example, the activity was not part of the federal  budget or was inactive in that year. We determined the data and  information collected related to each activity and fiscal year 2010  budgetary information to be sufficiently reliable for the purposes of this  report. We confirmed information found in the President’s Budget for  fiscal year 2012, agencies’ budget justifications, and agency  documentation with agency officials.
section_title: Extent to Which Overlap or Fragmentation Existed in Selected Housing Programs or Activities
paragraphs: To determine the extent to which overlap or fragmentation occurred in the  selected housing programs or activities of HUD, USDA, VA, and  Treasury, we updated and expanded the work from our 2000 report on  opportunities and barriers to reducing overlap and fragmentation in   We focused  delivering single-family and multifamily housing programs.on selected single-family and multifamily programs at HUD, USDA, and  VA, and on Treasury’s Low-Income Housing Tax Credit (LIHTC) program  and the mortgage interest and property tax deductions as of 2010. We  identified housing programs that may have similar or overlapping  objectives, provide similar services to similar beneficiaries, or are  fragmented across missions. For single-family programs, we included the  federal loan guarantee programs from USDA, VA, and the largest of  HUD’s program; the direct loan programs at USDA; and Treasury’s two  largest tax expenditures that provide assistance to homeowners.  Specifically, the single-family programs included in our scope were
One- to Four-Family Home Mortgage Insurance (Section 203(b));
Rural Housing Single Family Loans - guaranteed (Section 502
Rural Housing Single Family Loans - direct (Section 502 direct);
Very Low-Income Direct Repair Loans and Grants (Section 504);
VA Home Loan Guaranty;
Mortgage Interest Deduction; and
Property Tax Deduction.
For multifamily housing programs, we included programs that finance  multifamily housing and programs that provide project-based rental  assistance. As USDA has fewer housing programs, we selected these  first, then selected the active programs at HUD and Treasury with similar  purposes. For example, while HUD administers many programs that  provide loan guarantees for multifamily housing, we selected HUD’s  Section 221(d)(3) and (d)(4) programs because they are most similar to  USDA’s Section 538 loan guarantee and because they had the most loan  activity of HUD’s programs. The other selected HUD, USDA, and  Treasury programs are similar in that they require that the owner keep the  properties available to the eligible populations or keep the rents  affordable or both. Finally, USDA’s Section 521 provides rental  assistance to property owners for units rented to low-income tenants.  Similarly, HUD’s project-based rental assistance provides payments to  property owners for the same purpose; therefore, we decided to select  HUD’s project-based rental assistance (Section 8, Section 202, Section  811, and other rental supplement programs). We excluded some large  HUD multifamily housing programs from this analysis because there were  no similar housing programs at USDA. For example, the public housing  and housing choice voucher programs were excluded. Specifically, the  multifamily programs included in our scope were
Supportive Housing for the Elderly (Section 202);
Supportive Housing for Persons with Disabilities (Section 811);
Mortgage Insurance for Rental and Cooperative Housing (Sections  221(d)(3) and (d)(4));
Project-Based Rental Assistance;
Multifamily Direct Rural Rental Housing Loans (Section 515);
Farm Labor Housing Loans and Grants (Sections 514 and 516);
Rural Rental Housing Guaranteed Loans (Section 538);
Rural Rental Assistance Payments (Section 521); and
Low-Income Housing Tax Credit.
We collected and analyzed information and data on the goals, program  details, eligibility, product delivery, geographic locations, and populations  benefiting from agency housing programs. We identified those housing  programs that may have similar or overlapping objectives, provide similar  services, or are fragmented across missions. Overlap and fragmentation  may not lead to actual duplication, and some degree of overlap and  duplication may be justified.
We categorized locations based on three different USDA-developed  characterizations of rural and urban, and analyzed agency data from the  selected programs based on these characterizations. To do so, we  geocoded (that is, mapped the geographic coordinates of) the addresses  of properties supported by selected programs of HUD, USDA, VA, and  Treasury. By comparing the frequency of properties or units within the  type of county or zip code, we could assess the degree to which the three  agencies operated in the same types of locations or operated within  certain distances of the similar areas. We used MapInfo—a geographic  information system designed to prepare maps and graphs that allow  users to easily visualize connections between data and geography. For  single-family loan analyses, we used a single year of data—active loans  that were made in 2009 because they constituted the most recent data.  For HUD and USDA multifamily programs, we used the portfolio as of  February and May 2012, respectively. For Treasury’s LIHTC program, we  used data on projects placed in service from 1998 through 2007 because  they were the most reliable and complete data available and included  LIHTC projects that remain within the 15-year tax credit compliance  period.
We analyzed the geocoded properties and units supported by the  selected programs in three ways:
We obtained RHS’ program eligibility map from USDA and analyzed  the land mass and population that are represented by these areas.  We used the geocoded locations of the single-family guaranteed  loans to determine whether the properties were within RHS ineligible  areas or calculated the distance to the nearest ineligible area.
We analyzed the geocoded locations of the single-family and  multifamily properties using the four-category version of the Economic  Research Service’s rural urban commuting area codes. We reported  in 2005 that categorization of smaller areas provides a more precise  delineation of rural than the county-based rural-urban continuum.
We distinguished four county categories by collapsing the nine  categories in the Economic Research Service’s rural-urban  continuum. We analyzed the geocoded locations of the single-family  and multifamily properties using this categorization.
Additionally, we analyzed borrower income and location data for the HUD  and VA single-family guaranteed loan programs and compared borrower  income with county-level data on area median income (AMI). For RHS’s  single-family guaranteed loans, we used the program eligibility limit of 115  percent of AMI for borrower income and loan-level location data. We  analyzed the locations of properties using the rural-urban continuum.
To determine how RHS’s field structure has changed over time and  determine the work breakdown by location within RHS programs, we  analyzed field office location and full-time equivalent assignment data  from RHS. Also, to determine the difference in the trends between the  guaranteed and direct loan programs, we analyzed single-family historical  loan data from RHS and Housing Assistance Council data. To assess the  reliability of the data we used for geographic and income analysis, we  conducted reasonableness checks, including testing the electronic data  files for any missing or illogical data, reviewed existing information about  data quality, interviewed officials familiar with the data, and corroborated  key information. On the basis of this review, we determined that the data  used were sufficiently reliable for purposes of our analysis.
Furthermore, to perform our analysis of how different income levels and  geographic areas claim the deductions for mortgage interest expenses  and property taxes, we reviewed IRS zip code data for tax year 2008 (the  latest zip code data available). The IRS zip code data include information  for every zip code for which 250 or more returns were filed. Variables  include the total number of tax returns filed, ranges of adjusted gross  income (AGI) reported on those returns, and the total amounts of property  taxes and mortgage interest deducted (as claimed on Form 1040  Schedule A, lines 6 and 10, respectively).
To analyze how the two deductions are used by different income levels,  we compared the share of total returns in each AGI range to the share of  total mortgage interest and property tax deductions in each range. We  also reviewed analysis by JCT about the distribution of tax expenditures  for the mortgage interest and property tax deductions by income class in  2009. To analyze how taxpayers in different geographic locations used  the deductions, we used the IRS data to calculate and compare the  mortgage interest and property tax deductions claimed on tax returns  from each state relative to each state’s share of total returns. We also  used IRS zip code data to analyze use of the mortgage interest and  property tax deductions in rural and urban areas.
Using IRS data to analyze the geographic use of housing tax  expenditures has some limitations. The IRS data reported by state and by  zip code are based on the mailing address as reported by the taxpayer.  However, some taxpayers may have used the address of a tax lawyer,  accountant, or a place of business. Such addresses each could have  been located in a state or zip code different than the state or zip code in  which the taxpayer resided. Furthermore, taxpayers report the total dollar  amount of mortgage interest or property taxes claimed, but do not report  whether they were taking the deduction on their main home, a second  home, or both.
Finally, to determine what previous studies had found about usage of  housing-related tax expenditures in various geographic locations, we  conducted a literature review for studies on the geographic distribution of  the mortgage interest and property tax deductions. We identified and  reviewed four studies that had used IRS tax return or Census data to  analyze the geographic distribution of the mortgage interest and property  tax deductions.
section_title: Extent to Which Federal Efforts Increased Coordination for Selected Programs and Activities and Implications of Greater Coordination or Consolidation
paragraphs: To determine the extent to which federal efforts have increased  coordination for selected housing programs and activities, we collected  and analyzed information, where available, on the efforts taken by HUD,  USDA, VA, and Treasury to increase coordination or collaboration on  selected housing programs. We reviewed documentation describing the  efforts and obtained input from agency officials, including the Office of  Management and Budget, on the single-family task force, White House  Rural Council, and Rental Policy Working Group. We reviewed our prior  work on interagency collaboration and key practices that can help  enhance and sustain collaborative efforts, and compared the agencies’  efforts with our eight key collaboration practices to determine the extent to  which the efforts were consistent with our key practices. As no law or  regulation requires collaboration between HUD, USDA, VA, and Treasury,  we relied on established practices and our views in examining  consistency.
We identified selected housing programs and activities that may benefit  from greater coordination or consolidation as first stated in our 2000  report on housing programs and our prior work on tax expenditures, and  supplemented that with the recent analysis of fragmentation and overlap  described here. To identify some of the challenges and implications of  coordinating or consolidating selected housing programs or activities, we  reviewed prior GAO and other reports, and collected and analyzed  information from housing industry, HUD, USDA, and Office of  Management and Budget officials on potential proposals for mitigating  duplication, overlap and fragmentation, and some of the challenges and  implications of increased coordination or consolidation.
We conducted this performance audit from July 2011 through August  2012, in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Housing and Urban Development
section_title: Appendix III: Comments from the U.S. Department of Agriculture
section_title: Appendix IV: Comments from the Department of Veterans Affairs
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Mathew J. Scirè, (202) 512-8678 or sciremj@gao.gov  James R. White, (202) 512-9110 or whitej@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the individuals named above, Andy Finkel, Assistant  Director; MaryLynn Sergent, Assistant Director; Michelle Bowsky; Emily  Chalmers; Andrea Dawson; Karen Jarzynka-Hernandez; Mark Kehoe;  Anar Ladhani; John McGrail; John Mingus; Marc W. Molino; Alise  Nacson; Barbara Roesmann; Erinn Sauer; Carrie Watkins; and Edwin  Yuen made key contributions to this report.