DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Statement of Regulatory Priorities
The regulatory plan for the Department of Housing and Urban Development (HUD) for fiscal year (FY) 2012 highlights the most significant regulations and policy initiatives that HUD seeks to complete during the upcoming fiscal year. As the Federal agency that serves as the Nation's housing agency, HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD strives to meet the challenges of this mission by focusing on people and places through policies and initiatives that address the unique conditions and needs of communities. For example, HUD recognizes that the "American Dream" no longer refers to a singular vision of success, such as owning a home, and, therefore, through programs such as HUD's Housing Counseling program, HUD assists individuals and families to make decisions about owning or renting that are financially appropriate to the individual or family.[1] HUD also has been placing greater focus on improving locational outcomes for households receiving rental assistance. HUD's Choice Neighborhood initiative provides funding for plans that link housing to schools, jobs, and affordable transportation in order to transform neighborhoods of concentrated poverty into sustainable mixed-income communities with well-functioning services, public assets, and access to opportunity. HUD's Neighborhood Stabilization Program helps communities acquire, rehabilitate, and resell foreclosed and abandoned properties in order to more quickly prevent decline in neighborhoods hard-hit by the foreclosure process.
In addition to meeting the challenges of HUD's mission through revitalized policies and initiatives, President Obama challenged all agencies to identify opportunities to significantly improve near-term performance. These opportunities were incorporated as key outcome measures into HUD's strategic plan, representing challenging, near-term, high-impact outcomes that reflect HUD's commitment to addressing some of the most fundamental housing and community challenges facing America. Building on the directions to improve performance, but on a longer-term basis, President Obama issued Executive Order 13563 entitled "Improving Regulation and Regulatory Review." Executive Order 13563 supplements and reaffirms the rulemaking principles of Executive Order 12866 "Regulatory Planning and Review," which include identifying regulatory approaches that reduce burden, considering the costs and benefits of rules, and encouraging public participation, but also directs agencies to undertake a retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal such regulations as appropriate. The Executive order recognizes the significant role that regulations play in protecting public health, welfare, safety, and the environment, and in promoting economic growth, innovation, competitiveness, and job creation, but also that regulations cannot remain stagnant. Agencies must frequently review regulations to ensure that they are meeting the challenges of today and not addressing conditions, whether housing, health, business, labor, or environmental, that are no longer reflected in today's economy. In this regard, Executive Order 13563 directed agencies to undertake periodic retrospective review of their regulations, and to develop, prepare, and post their plans for retrospective review of rules. HUD's plan and that of all agencies can be found at http://www.whitehouse.gov/21stcenturygov/actions/21st-century-regulatory-system. HUD's semiannual agenda of regulations includes the rules highlighted in HUD's retrospective review of rules plans.
The rules highlighted in HUD's regulatory plan for FY 2011 reflect both HUD's continuing efforts to fulfill its mission and improve performance, including by addressing regulations that necessitate update and modification. HUD's FY 2011 regulatory plan reflects HUD's retrospective review of the regulations governing one of HUD's major mortgage insurance programs. Another rule highlighted in this regulatory plan revises the regulations of another significant program to address the unique conditions and needs of participants in one of HUD's major assistance programs. The third rule related to a significant HUD program is designed to implement flexibility provided by a recently enacted statute.
Priority: Create Financially Sustainable Homeownership Opportunities.
HUD's HECM program was established by statute to assist in alleviating economic hardship caused by the increasing costs of health, housing, and other needs at a time in life when one's income is reduced. The HECM program, administered through HUD's Federal Housing Administration (FHA), enables older homeowners to withdraw some of the equity in their home in the form of monthly payments for life or a fixed term, or in a lump sum, or through a line of credit. In addition, the HECM mortgage can be used to purchase a primary home when the borrower is 62 years of age or older and is able to use cash in hand, money from the sale of assets, or money from an allowable FHA funding source to pay the difference between the reverse mortgage and the sales price plus closing costs for the property.
To be eligible for a HECM mortgage, current homeowners must be 62 years of age or older, own their home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse mortgage. Homeowners can only have one HECM at any one time and the home must be their principal residence. In addition, the HECM can be used to purchase a primary home if the borrower is able to pay the difference between the HECM and the sales price and closing costs for the property. The borrower remains the owner of the home and may sell it and move at any time, keeping the sales proceeds that exceed the mortgage balance. A borrower cannot be forced to sell the home to pay off the mortgage, even if the mortgage balance grows to exceed the value of the property, unless they fail to perform an obligation of the mortgage.
As the Nation's population has increased in age, the attraction of the HECM has increased as well. In 1990, there were approximately 157 HECMs. By 2008, there were more than 112,000 HECMs. The situation that HUD has confronted recently with increasing frequency is that HECM homeowners are not paying property taxes, insurance, and other property charges. Payment of these items is the responsibility of the homeowner, and failure to pay places the homeowner in default of its obligations under the mortgage and makes the homeowner vulnerable to loss of his or her home. FHA-approved lenders are responsible for keeping all tax and insurance payments current, in compliance with the HECM regulations. If homeowners stop making payments, lenders are allowed to access any remaining home equity to pay taxes and insurance premiums. Once homeowner funds are exhausted, lenders are legally required to advance their own funds for such payments and seek reimbursement from homeowners.
With the same recognition that homeownership may not be the best choice for every individual or family, a HECM may not be the best choice for every senior homeowner. The security that the HECM program was designed to bring to seniors may be lost if the senior homeowner cannot maintain payment of taxes and insurance payments.
Regulatory Action: Strengthening the Home Equity Conversion Mortgage (HECM) Program To Promote Sustained Homeownership.
To address this growing issue in the HECM program, HUD proposes to require FHA-approved mortgagees that originate HECM mortgages to perform a financial capacity and credit history assessment of prospective HECM mortgagors prior to loan approval and closing. Mortgagees will be required to evaluate whether the HECM mortgagor's cash flow and credit history support the mortgagor's ability to comply with the obligations of the HECM and are sufficient to meet recurring living expenses. The proposed rule would also cap the amount of insurance benefits paid in connection with a claim involving amounts advanced by the mortgagee on behalf of a HECM mortgagor who fails to pay such property charges when the HECM proceeds have been exhausted, and establish a new property inspection requirement to insure that homes secured with a HECM mortgage are adequately maintained and meet applicable property standards.
These changes to the HECM program are necessary to ensure that senior homeowners do not enter a program seeking security in their later life only to find themselves without a home. Additionally, without such changes, the HECM program will place the FHA Insurance Fund at significant risk, with the possible result being the unavailability of HECMs in the future.
Priority: Improve the Quality of Affordable Rental Housing.
In an era when more than one-third of all American families rent their homes, the current housing market does not create and sustain a sufficient supply of affordable rental homes, especially for low-income households. In many communities, affordable rental housing does not exist without public support. Despite significant improvements in housing quality in recent decades, much of America's rental housing stock is not energy efficient or even accessible to people with disabilities, and pockets of severely substandard housing remain across the country. Even before the recent recession, the number of households with severe housing cost burdens had increased substantially since 2000, and homelessness among families with children is a growing problem throughout our Nation. When it comes to strong, safe, and healthy communities, lower-cost rental housing is particularly scarce. As the lead Federal housing agency, HUD will work with its Federal, State, local, and private partners to meet affordable and quality rental housing needs for all.[2] In this regard, HUD will strengthen the indicators by which HUD measures the performance of public housing agencies in administering its Section 8 rental assistance program, referred to as the Housing Choice Voucher program.
HUD's Housing Choice Voucher program is the Federal Government's major program for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. Since housing assistance is provided on behalf of the family or individual, participants are able to find their own housing, including single-family homes, townhouses, and apartments. The participant is free to choose any housing that meets the requirements of the program and is not limited to units located in subsidized housing projects. Housing choice vouchers are administered locally by public housing agencies (PHAs). The PHAs receive Federal funds from HUD to administer the voucher program. A family that is issued a housing voucher is responsible for finding a suitable housing unit of the family's choice where the owner agrees to rent under the program. Rental units must meet minimum standards of health and safety, as determined by the PHA.[3]
Through HUD's Section Eight Management Assessment Program (SEMAP), HUD measures the performance of PHAs in their administration of the Housing Choice Voucher program in key areas. The areas of review indicate whether PHAs are helping eligible families to afford decent rental units at a reasonable subsidy cost. SEMAP requires PHAs to undertake an annual Housing Quality Standard (HQS) inspection of units.
Regulatory Action: Tenant-Based Rental Assistance; Improving Performance Through a Strengthened SEMAP.
HUD recognizes that SEMAP is more process-oriented than results-oriented. To make SEMAP a more effective assessment tool, HUD is proposing to revise the management indicators used by HUD to measure the performance of PHAs. For example, the proposed rule would revise the indicator that measures Section 8 voucher use to encourage PHAs to maximize the number of Section 8 families served. Under this revised indicator, HUD will not only consider the number of vouchers available to a PHA, but also the funds available to the PHA, including budget authority and a portion of reserves. HUD also proposes to assume responsibility for conducting the inspections used to measure a PHA's compliance with housing quality standards (HQS). Currently, HUD measures HQS compliance through a reporting requirement for PHA self-conducted inspections. The proposed rule would also establish a new deconcentration indicator that will evaluate the ability of Section 8 families with children to access neighborhoods with below-average poverty rates or neighborhoods with above-average schools.
Priority: Utilize Housing as a Platform for Improving the Quality of Life.
Stable housing, made possible with HUD support, provides an ideal platform for delivering a wide variety of health and social services to improve health, education, and economic outcomes. HUD housing serves at least two broad populations: People who are in a position to markedly increase their self-sufficiency and people who will need long-term support (for example, the frail elderly and people with severe disabilities). For those individuals who are able, increasing self-sufficiency requires access to life-skills training, wealth-creation and asset-building opportunities, job training, and career services. For those who need long-term support, HUD housing will provide access to income support and other benefits that can enhance an individual's quality of life.
HUD's Supportive Housing for Persons with Disabilities Program (Section 811) is a critical HUD program that allows persons with disabilities to live as independently as possible in the community by increasing the supply of rental housing with the availability of supportive services. HUD increases the supply of rental housing for persons with disabilities by providing interest-free capital advances to nonprofit sponsors to help them finance the development of rental housing such as independent living projects, condominium units, and small group homes with the availability of supportive services for persons with disabilities. The capital advance can finance the construction, rehabilitation, or acquisition with or without rehabilitation of supportive housing. The advance does not have to be repaid as long as the housing remains available for very low-income persons with disabilities for at least 40 years. Over the last several years, the Section 811 program has not been as effective as desired because the underlying statutory foundation for the program required substantial reform and improvements to meet the challenges of current market conditions and reflect modern practices with respect to production of housing.
The Frank Melville Supportive Housing Investment Act of 2010 (Pub. L. 111-374) (Melville Act), which was enacted on January 4, 2011, amended section 811 of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 8013), which authorizes the supportive housing program for persons with disabilities (Section 811 program). The Melville Act made significant changes to the Section 811 program, with one of the most significant changes being the establishment of new project rental assistance authority. This new authority allows HUD to make Section 811 program operating assistance available to State housing agencies and similar organizations for the purposes of granting funds to the development of supportive housing for persons with disabilities, and overseeing compliance with the requirements applicable to such housing.
Regulatory Action: Supportive Housing for Persons With Disabilities: Implementing New Project Rental Assistance Authority.
While the Melville Act makes many important changes to the Section 811 program, HUD's first priority is to implement the requirements for the new project rental assistance authority. Project rental assistance has long been part of eligible assistance for the Section 811 program, and the existing Section 811 program regulations provide that project rental assistance is available for operating costs. The new project rental assistance provided by the Melville Act offers another method of financing for supportive housing for persons with disabilities for projects that do not receive capital advances. The new project rental assistance is designed to promote and facilitate the creation of integrated supportive housing units, which is achieved by making funds available to State housing agencies and other appropriate entities. As provided by the Melville Act, projects eligible for the new project rental assistance can be either new or existing multifamily housing projects.
HUD's proposed rule establishes the requirements and procedures that would govern the eligibility and use of the new project rental assistance authority in HUD's Section 811 program.
Retrospective Review of Agency Regulations
Pursuant to section 6 of Executive Order 13563 "Improving Regulation and Regulatory Review" (Jan. 18, 2011), the following Regulatory Identifier Numbers (RINs) have been identified as associated with retrospective review and analysis in the Department's final retrospective review of regulations plan. Some of these entries on this list may be completed actions, which do not appear in The Regulatory Plan. However, more information can be found about these completed rulemakings in past publications of the Unified Agenda on Reginfo.gov in the Completed Actions section for that agency. These rulemakings can also be found on Regulations.gov. HUD's retrospective review plan can be found at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/general_counsel/Review_of_Regulations
Regulation Identifier Number (RIN) |
Title |
Anticipated Reductions in Regulatory Burden |
2502-AI92 |
Federal Housing Administration (FHA): Refinancing an Existing Cooperative Under Section 207 Pursuant to Section 223(f) of the National Housing Act; Final Rule |
|
2502-AJ03 |
Streamlining Inspection and Warranty Requirements for Federal Housing Administration (FHA) Single Family Mortgage Insurance: Removal of the FHA Inspector Roster and of the 10-Year Protection Plan Requirements for High Loan-to-Value Ratio Mortgages; Proposed Rule |
|
2502-AI91 |
Approval of Farm Credit System Lending Institutions in FHA Mortgage Insurance Programs; Proposed Rule |
|
2502-AJ06 |
Expansion of Eligibility of Nonprofit Organizations To Participate in FHA Single Family Mortgage Insurance Programs; Proposed Rule |
|
2502-AJ02 |
Federal Housing Administration (FHA) Single Family Mortgage Insurance: Removal of Requests for Alternative Mortgage Amounts; Proposed Rule |
|
2502-AI99 |
Federal Housing Administration (FHA): Suspension of FHA's Regulation Placing Time Restrictions on Resale of FHA-Insured Property; Proposed Rule |
|
2502-AJ01 |
Federal Housing Administration (FHA): Suspension of Single Family Mortgage Insurance for Military Impacted Areas; Proposed Rule |
|
2502-AJ00 |
Federal Housing Administration (FHA): Approval of Lending Institutions and Mortgagees-Alternative Reporting Requirements for Small Supervised Lenders |
|
2502-AI98 |
Section 8 New Construction and Substantial Rehabilitation Programs: Changes to Limitation on Distributions of Project Funds and Adjustment of Initial Equity; Proposed Rule |
|
2502-AI67 |
Streamlining Requirements Governing the Use of Funding for Supportive Housing for the Elderly and Persons With Disabilities Programs; Proposed Rule |
|
2577-AC68 |
Public Housing Assessment System (PHAS); Final Rule |
|
2577-AC50 |
Public Housing Capital Fund Program; Final Rule |
|
2577-AC88 |
Streamlined Application Process in Public/Private Partnerships for Mixed-Finance Development of Public Housing Units; Proposed Rule |
|
2577-AC89 |
Revisions to the Consortia of Public Housing Agencies; Proposed Rule |
|
2577-AC87 |
Removal of the Indian HOME Investment Partnerships Program Regulations; Final Rule |
|
2577-AC86 |
Public Housing and Section 8 Programs: Housing Choice Voucher-Improving Portability for Voucher Families Proposed Rule |
|
2577-AC76 |
Revision to the Section 8 Management Assessment Program (SEMAP) Lease-Up Indicator; Proposed Rule |
|
2506-AC26 2506-AC29 2506-AC31 2506-AC32 2506-AC33 |
Implementation of the Homeless Emergency Assistance and Rapid Transition to Housing Act of 2009 (HEARTH Act) |
|
2501-AC94 |
HOME Investment Partnerships-Improving Performance and Accountability; Updating Property Standards and Instituting Energy Efficiency Standards |
|
Aggregate Costs and Benefits
Executive Order 12866, as amended, requires the agency to provide its best estimate of the combined aggregate costs and benefits of all regulations included in the agency's regulatory plan that will be made effective in calendar year 2011. HUD expects that neither the total economic costs nor the total efficiency gains will exceed $100 million. None of the rules on HUD's regulatory plan is anticipated to have an economically significant impact. The revisions proposed to be made to HUD's HECM program are anticipated to strengthen the program, keep seniors in their homes, and protect the FHA Insurance Fund, but the proposed changes are prospective and are not expected to result in an economic impact of $100 million or more annually. The changes proposed to be made to the SEMAP program are similarly designed to strengthen the program and are intended to have the Housing Choice Voucher program be administered more effectively and efficiently but will also not result in an economic impact of $100 million or more. Implementation of the new project rental assistance authority in the Section 811 program, as authorized by the Melville Act, will open up another source of financing for supportive housing for persons with disabilities but not at a level of $100 million or more.
The Priority Regulations That Comprise HUD's Regulatory Plan
A more detailed description of the priority regulations that comprise HUD's regulatory plan follows.
[1] This statement is based on language found on page 4, paragraph 2, of the Introduction to HUD's FY 2010 to 2015 Strategic Plan. (See http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_4436.pdf.)
[2] This statement is taken from the first column of page 19 of section 2 of HUD's FY 2010 to 2015 Strategic Plan. (See http://portal.hud.gov/hudportal/documents/huddoc?id=DOC_4436.pdf.)
[3] The information in this paragraph is taken from HUD's webpage on Housing Choice Vouchers found at http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/programs/hcv/about/fact_sheet.)