HUD Reform Act

In the late 1980s, management problems at the Department of Housing and Urban Development (HUD) led to the enactment of the HUD Reform Act of 1989. The act required HUD to institutionalize policies and procedures to help ensure that past abuses would not be repeated. For example, title I of the act directs HUD to be transparent in its granting of competitive funds through notices in the Federal Register. This report discusses HUD's actions in response to (1) title 1, which is principally concerned with addressing the ethics, management, and Federal Housing Administration issues raised during the late 1980s, and (2) four other titles in the act that address other changes in HUD's management of federally assisted housing.

GAO noted that: (1) HUD has developed policies and regulations to comply with the Reform Act; (2) in response to the ethics, management, FHA reforms required by title I of the Reform Act, HUD has, among other things: (a) required the publication of a notice in the Federal Register of the availability of competitive grants, including the criteria for selection, announced its award decisions in the Federal Register, and maintained documents for public scrutiny on these decisions; (b) established ongoing program monitoring and evaluation activities of certain housing programs identified in the Reform Act within its Office of Policy Development and Research; and (c) issued regulations that impose civil money penalties on parties who submitted false information in the process of originating property improvement loans; (3) for the other Reform Act titles GAO examined, HUD has complied with title II's requirements to annually assess and report to Congress on the management and preservation of multifamily projects it holds; (4) HUD has also established a policy and a regulation to comply with title III's directive to extend the time a family is eligible to receive rental subsidies; (5) HUD has complied with title VII's requirement that it take possession of a foreclosed property financed under its Rehabilitation Loan Program, regardless of a borrower's right to redeem the property under state law; and (6) to comply with title VIII's requirement that rent subsidies are based on comparable private sector rents, HUD has provided instructions to public housing agencies on how to adjust rents to keep pace with comparable rents in the area and to conduct studies to determine rents that can be reasonably charged to low-income renters.