House Financial Services Subcommittees Hold Second Oversight Hearing on the HOME Program

On November 2, the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity and the Subcommittee on Oversight and Investigations held a joint hearing entitled “Fraud in the HUD HOME Program.” Prior to the hearing, NCSHA sent a letter in support of the HOME program to all members on both Subcommittees, in addition to the letter led by NCSHA and signed by 32 additional national organizations, as described in NCSHA’s November 2 blog post. 

 

NCSHA’s letter highlights HOME’s flexibility, stating that it provides states with the ability to decide how best to use the scarce HOME funds to meet their most urgent affordable housing needs.  The letter asks that the Subcommittees review HOME “in the context of its undeniable record of success—the more than one million affordable homes it has produced.” NCSHA concludes the letter by urging continued, bipartisan support of the HOME program so that communities may continue to use HOME to produce the affordable, decent housing that meets their unique needs. 

 

Randy Neugebauer (R-TX), Chairman of the Oversight Subcommittee, opened the hearing by stating that many members felt they left the HOME oversight hearing held by the House Financial Services Committee in June with more questions than answers and that it still appears there is not enough oversight of the program.  He stated that the hearings are not about the worthiness of HOME, but about oversight and administration of the program.  Chairwoman of the Housing Subcommittee Judy Biggert (R-IL) said the hearing was a continuation of the Subcommittees’ oversight of HOME, stating that “HUD’s 'trust but don’t verify' approach to oversight is unacceptable.”

 

The Ranking Member of the Oversight Subcommittee, Michael Capuano (D-MA), said while he agrees oversight is important, he was not happy with the way the hearing was put together and the Housing Subcommittee Ranking Member, Luis Gutierrez (D-IL), called the hearing unusual and absurd, commenting that it was the first time he could remember having convicted felons as witnesses.

 

The first witness panel consisted of two persons convicted of criminal activity who had oversight of HOME funding before their conviction, one as a county employee and one as executive director of a nonprofit.  Both testified that more monitoring by HUD would have decreased the chances of the illegal activity occurring. 

 

The second witness panel consisted of HUD’s Acting Deputy Inspector General John McCarty, former HUD Inspector General Ken Donohue, Deputy Director for HUD’s Department Enforcement Center (DEC) James Beaudette, and Vice President for Policy and Advocacy at the National Housing Conference Ethan Handelman.  HUD’s Department of Community Planning and Development, which contains the office administering the HOME program, was not asked to testify at this hearing.

 

McCarty expressed concerns about a lack of monitoring, especially at the subrecipient level.  He suggested that HUD consider using an independent third party to help monitor HOME. He also stated that HUD would be able to better monitor HOME with a “more robust, up-to-date information system.” Donohue testified that “there is a needed balance between program efficiency and oversight to be applied collectively between the programs and the oversight agencies.”

 

Beaudette added that HUD has “undertaken efforts to improve monitoring and oversight with respect to HOME,” particularly in the last few years.  He also stated that HUD is “making key enhancements to the Integrated Disbursement and Information System (IDIS) to ensure better reporting and tracking of grantee projects.”  Beaudette concluded by testifying that, in his opinion, “it is incorrect to single out the HOME program as being particularly susceptible to fraud.”

 

Handelman testified on the importance of the HOME program and discussed its record in producing affordable homes, leveraging other resources, and creating jobs.  He also testified on the ability HOME gives states and localities to target their areas of particular need.  As an example of a successful HOME development, Handelman highlighted Silver Star Apartments in Michigan.  The Michigan State Housing Development Authority developed Silver Star Apartments in partnership with local developers, nonprofits, and the Veterans Administration to provide permanent supportive housing to veterans. The development has 74 one-bedroom units.

 

Representative Al Green (D-TX) asked the panel if any of them thought HOME should be eliminated.  None of the panelists responded that they thought the program should be eliminated and Handelman replied that HOME is one of the strongest housing programs we have.

 

Several Subcommittee members requested that the panel provide additional written information regarding HUD’s internal controls and specific suggestions for improving HUD’s oversight of HOME.