Multifamily Housing

Issues Facing the Congress in Assessing HUD's Portfolio Reengineering Proposal Gao ID: T-RCED-96-231 July 26, 1996

Congress is considering proposals to reengineer about 8,600 properties from the Department of Housing and Urban Development's (HUD) multifamily rental housing portfolio. These 8,600 properties--known as the insured Section 8 portfolio--receive mortgage insurance through HUD and Section 8 rental subsidies that are tied directly to the properties. Last year, HUD proposed a process called "mark-to-market" that was aimed at addressing such problems as high Section 8 assistance costs and the poor physical condition of many properties. In early 1996, HUD modified that process in response to stakeholders' concerns and renamed it "portfolio reengineering." This testimony discusses (1) the problems afflicting the portfolio, (2) HUD's plans for overcoming these problems, (3) a HUD-contracted study by Ernst & Young LLP that estimates how the properties are likely to be affected by HUD's reengineering proposal, (4) GAO's preliminary assessment of Ernst & Young's study, and (5) issues that Congress should consider in deciding how to respond to HUD's proposal.



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