Later in 1965 to combat poverty rebuilding our cities and making housing more affordable by all. Yet by every official measure, poverty and its consequences is as bad as 50 years ago. Poverty rate today is essentially unchanged from when hud was founded. Millions of more americans fall below the poverty mark, including an unbelievable one out of five children. This is shameful. Hud says its mission is to build quality Affordable Homes for all and yet, according to inflation figures, the median price of new homes as doubled and median rents have gone up by more than onethird. In other words, its not just the poor who find the cost of housing beyond their means, its almost everyone. This is unacceptable. To make matters worse, to achieve this unenviable record, hud has spent 1. u dollars and is asking for a 9 budget increase. 1. 6 trillion is more than 13,000 for every household in america, equivalent to the cost of feeding a family of four for an entire year. Meanwhile, one of our greatest threats is namely the National Debt clock. Given the obama economy for the last six years, its an open tax subsidies are needed but it is an open question whether housing vouchers and huds mainstay is a longterm solution or simply creating a permanent underclass. For whatever good hud does, it clearly has not won the war on poverty. Economic growth and equal opportunity can do that. In other words, the greatest Housing Program in america remains a good career path and a growing economy. Not a hud program. If we truly care about the least of these among us, we can no longer measure success by the number of dollars appropriated to hud. That should be obvious. Instead, success must be measured in the number of our fellow citizens who rise from lives of poverty and dependency to lives of hope, selfsufficiency and pride. Thats true success. Its time to bring a new focus and new ideas on how to best help the poor in our society. On this purpose, which is a moral purpose, there should be no debate. Ive been encouraged to hear our witness, secretary castro, state that he believes in, quote, evidencebased management style. Directed to the goal of, quote, giving every person new opportunities to thrive. To give these opportunities, again, it is time to think anew, not to add 9 to programs that have failed again in the words of president johnson to quote, not only relieve these symptoms of poverty but to cure it and, above all, prevent it. I now yield three minutes to the Ranking Member for an Opening Statement. Thank you, mr. Chairman and welcome back, secretary castro. Today we gather to discuss the future of housing in america. But frankly, if left to my republican colleagues, that future looks very bleak for the very most vulnerable population. Mr. Secretary, hud remains a critical part of our nations social safety net. It is essential to ensure that families have a stable roof over their heads. But as we will see here today, my colleagues have no interest in strengthening our Nation National housing system. Their priorities, that is, on the other side of the aisle, are clearly reflected in the funding bill which drives this agency down to historic lows, undercutting programs which helped families reach housing stability. Hud provides critical rental and homeless assistance for our countrys most vulnerable populations, makes important investments in local Community Development and Affordable Housing initiatives and helps millions of families achieve the American Dream of Home Ownership. All while ensuring fairness for historically disadvantaged communities, safe, decent and Affordable Housing is critical to ensuring that our young people are helping and successful. Studies have shown that children who lack stable housing often fall behind. Today hud is more important than ever in the wake of the foreclosure crisis. Our nation is facing a significant affordable rental housing shortage, although private capital has an Important Role to play on this front. It cannot be leveraged without reliable federal funding. To truly address the acute need for affordable rental housing and the epidemic of homelessness, it is absolutely critical that we fully fund and expand the housing and homeless Assistance Programs that have been so successful at hud. This year marks the 50th anniversary of the establishment of hud. And as i think about the next 50 years of housing in america, i believe that if we are truly serious about ending poverty and uplifting all communities, we must reinvest in hud. Mr. Secretary, i believe that the same principles also underline your vision for the future of housing in america and i look forward to hearing your testimony today. Thank you and i yield back the balance of my time. The chair now recognizes the gentlemen from the housing and insurance subcommittee for two minutes. Thank you, mr. Chairman. Welcome, mr. Secretary. Good to see you again. Glad youre with us today. Mr. Secretary, i want to thank you for traveling to our city a few weeks ago to meet with myself and industry regulators. I think the longtime executive director of the Public Housing authority put it best when he described the current state of play when he said the funding situation isnt changing and that you, mr. Secretary, you take the initiative to introduce unnecessary burdens so people can do their jobs with the resources that they have been given. I visited sites run by two different Public Housing authorities. Facing greater challenges in saving for a down payment and being able to own a home this could have serious negative consequences for the Housing Market. Just this week, again, the urban institute released a major study mr. Sect you have been in the job this year and the most significant action youve taken is a cut of one quarter of the revenue for the federal housing administration. As i stressed with your staff this week when we met, i believe that continues to jeopardize homeowners and taxpayers. I have yet to see the changes necessary to build a stronger housing system for the american people. I know you and i have some discussions and ideas. Im looking forward to hearing about those as the committee continues to go on. But again, i welcome and look forward to your testimony and talking with you hear shortly here shortly. The chairman now recognizes another gentleman from missouri mr. Cleaver. The Ranking Member. Thank you, mr. Chairman. We visited the Fifth District not long ago. We visited the other side of our state, mr. Luetkemeyer and spent time in kansas city. And so were here today with the hearing entitled the future of housing in america, over site of the department of housing and urban development. I think its always important to look to the future and hopefully this hearing will deal with the future more than the past or otherwise we are like somebody trying to drive a car looking through a rearview mirror. I think weve got to go to the future, figure out the things that we can do. That would be important. But if we look at the past, i think its important for us to think about the fact that when the economy teetered on the brink of cataclysmic collapse, it was in 2008 home sales ground to a holt and prices skyrocketed. In the seven years since, the home sales has improved. The bureau of labor statics announced that the economy added 280,000 new jobs and the 63rd consecutive month of an increase in housing. The hud 2015 score card from the National Association of realtors said the sale of Single Family homes and townhomes and cond min rose 6. 1 the best since september of 2013 so i think there are things that we can do better but im very pleased, mr. Secretary, that the department of hud is in fact doing a lot of things well. I yield back, mr. Chairman. The time of the gentleman expires. At this time, it is my pleasure to welcome the honorable Julian Castro back to our committee. The secretary was sworn in as the 16th hud secretary on july 28th, 2014. Hes been introduced before. He needs no further introduction. At the secretarys request, before i recognize him, to give an oral summary of his written testimony, the secretary has asked to be yielded a minute in order to offer a statement of honor on behalf of a hud colleague who passed away this week. So for that purpose, mr. Secretary, you are recognized at this time. Thank you very much, chairman hensarling to representative waters and for members of the committee. Thank you for giving me time to talk about one of our hud family that passed away earlier this week, our chief financial officer, brad huther. Brad really set the Gold Standard during his career for public service, over a career that spanned three decades. He was a leader whose intellect allowed him to master complex subject matter, policy and whose integrity made him a champion will depend on effective government the most. After a Development Career that included time at the u. S. Department of commerce, then the World Intellectual Property Organization brad came out of retirement in 2014 to join us at hud and although he was only with us for a short period, he made large contributions to our department and to its work on behalf of the american people. He was an administrators administrator, a man of integrity, folks that all of us respected and had confidence in and his passing is an incredible loss for the field that he did so much over his career to contribute to. And chairman, i just wanted to say that our thoughts and prayers at hud are with mr. Hurthers family and wanted to acknowledge him in front of this committee because i know he had the opportunity to work with many of you as well. Mr. Secretary, on behalf of the House Financial Services family, we issue our sincere condolences to your colleague as part of the hud family. On the gentlemans passing. At this time, mr. Secretary, i will recognize you for an oral summary of your written testimony. Please know that your written statement your complete written statement will be made part of the record. Again, welcome. You are now recognized for your testimony. Thank you again. Mr. Chairman, we gather today at a very special moment for hud. This year marks our 50th anniversary. I think all of us would agree that much has changed since 1965 but one thing hasnt. The Important Role that quality housing and Strong Communities play in the lives of the american people. Where a person lives often shapes how they live, the Jobs Available to them, the education that their children receive and the overall quality of life that they enjoyed. Thats why all of us at hud come to work every day knowing that we can make a difference for others and im proud to say that were making an impact in a number of ways. For example, hud along with our federal and local partners continues to make progress towards achieving the goals of president obamas Opening Doors initiative to prevent and end homelessness. From 2010 to 2014, weve seen a 21 drop in chronic homelessness and 33 drop in veteran homelessness. Well keep working until we reach that day when everyone who Needs Housing can find it in our great nation. We continue to make important strides in helping families of all income levels, secure a decent place to call home. One example is our innovative rental assistance demonstration, which has helped communities leverage nearly 1 billion in private market constructions to reduce repairs to Public Housing and with an additional 5 billion coming down the pipeline, its clear that were going to help ensure that Public Housing is quality housing for years to come. Were also helping more responsible families achieve their dreams of Home Ownership through our federal housing administration. Fha served as a stabilizing force during the housing crisis and has provided access to credit for generations of underserved borrowers. We built on this legacy earlier this year by making responsible Home Ownership more affordable by lowering half a percentage point to encourage new borrowers to enter the market the next three years while trying to strengthen fhas financial health. Hud is making a tremendous difference across the board and we all must continue to work to do more. In fact, under huds current budget, we can only serve one out of four who are eligible for our assistance. Were examining our own system to see how we can effectively serve those that we serve. The deputy secretary has spent her top priority and hit the ground running. Her First Six Months leading an operational and management review that we call deep dives which many of these findings in hand, were now taking action to improve how we do business, to build on what is working and to adjust what needs improvement. One area of focus is our procurement process which can take over nine months to complete from beginning to end. These delays are unacceptable, which is why we have embarked on an effort to transform this process and reduce procurement days by 30 . In addition, by october 1st, we aim to resolve 10 out of the 11 material weaknesses out of the financial review. Were also using shared Service Providers to minimize our back office function so we can serve our nations families and communities. At the end of the day, we know our work isnt about program its about people. Understand no matter what side of the aisle youre on, im sure we can all agree on one thing, the work that hud does does give folks the opportunity to thrive. Working with our partners, we have given this opportunity for those experiencing homelessness who wanted a fresh start, to veterans who needed a little support after adjusting life to after service and Older Americans who deserve to live in comfort and dignity. To families looking to buy their first home, put down roots and build for themselves and their children. We continue to look for new ways to extend these opportunities to all americans. Our partnership with congress is essential to this work and we look forward to working with you to secure funding that invests in proven Housing Initiatives to build a stronger and better hud and to help more families achieve their own dreams through the strength of our partnerships, the power of our policy ideas and our hard work, im confident that we can ensure that the doors of opportunity are available to americans today, tomorrow and for the next 50 years. Thank you very much. Thank you, mr. Secretary. The chair now yields himself five minutes for questions. Mr. Secretary, im sure youre well aware this year doesnt just mark the 50th anniversary of hud, it also represents the 50th anniversary of the moynihan report, which many historians believe provided the impetus for the creation of hud in the first place. Recently, the urban Institute Published a report, the moynihan report revisited. Are you familiar with the report or have you had an opportunity to view it . I have not had an opportunity to read the entire report. I did see some press about it, yes. Mr. Secretary, in that report it states, after alluding to the alarming statistics of 50 years ago in the original report, it goes on to say about those statics, quote, they have not only grown worse, they have grown worse not only for blacks but for whites. And hispanics as well. So you werent even born when hud was first created, but after 50 years, 1. 6 trillion, you requested 9 increase, specifically what is the evidence, the statistical evidence that hud has made progress in achieving its original goal of eliminating poverty . Yeah. Thank you very much for that. Let me give you two examples, chairman hensarling. Thank you for bringing up that report. Let me begin by saying that i see it differently. I do believe that weve made tremendous differences in the lives of americans because of the investments that hud has made. In fact, if we need proof of that, we can look at some of the Committee Members who are here who grew up in Public Housing who have been very clear that the fact they grew up and had a chance to live in Public Housing is one of the reasons that they were able to achieve success. Mr. Secretary, im aware of the stories and there are inspirations to us all but the statics that i see show that poverty is essentially unchanged after 50 years. Lets start off with the statistical evidence. Do you have statistical evidence that hud has actually played a role in eliminating poverty . Yeah. Ill give you a couple of examples. One of the examples i mentioned in my Opening Statement is veteran homelessness. We have seen a 33 reduction in veteran homelessness and a large part of that is because of hud vouchers that have been funded by this congress and the president has led that effort to effectively end veteran homelessness. Another event over what time period, mr. Secretary . Weve seen a 33 reduction in veteran homelessness between 2010 and 2014. Another example is our Jobs Plus Initiative. Theres been Research Done that has shown that individuals who went through jobs plus which congress has also funded in the past and which were requesting a significant increase because of it is effectiveness, weve seen that individuals who go through jobs plus tend to earn 14 more than individuals who do not. So why is the Poverty Level essentially unchanged in 50 years . Mr. Chairman, i believe that the answer to that is much larger than hud and its programs. Let me ask you this, mr. Secretary, in the limited time that i have. You and i have had private conversations and ive been encouraged by many things that you and i have spoken about. But im still somewhat unclear, at the end of the day, as secretary, how do you measure success at hud . How success measured . How do you define it and measure it . We measure success in several ways. You and i have continued to have conversations about how not just measuring input but also measuring outcomes. One outcome is the fact that somebody has a roof over their head. That makes a tremendous difference in their lives. Weve seen that, for instance, on the policy of Housing First that tries to give veterans Housing First so that they can stabilize themselves and then address other issues to get on the right track in life. However, i believe that we need to continue to measure when we invest in things like jobs plus, family selfsufficiency, the ross program extent to which those individuals that go through those programs go on and get good job training and get a job to the extent to which they get a good education and they are able to mr. Secretary, my time is winding down. Let me ask you three specific questions. So in tracking peoples right to rise, their ability to succeed, number one, currently, does hud have any way of tracking when an individual leaves the assistance of one pha and moves to another does that have any way to track that . Hud does track who is on the rolls. How do you track one pha that leaves to another . I believe we have an ability to track that, mr. Chairman. Okay. I would like you to share that with this committee. Because i havent seen those statistics. You have tracking when one leaves pha and becomes homeless . Do we have any way of knowing when someone leaves the hud program whether they become homeless . I believe we have a way to track within a continuum of care how many individuals are homeless. uw as to whether that person if you would share that with this committee. Because i havent seen that. And then last but not least since im well over my time is there any way that hud can track when people become selfsufficient and stay that way, say, three years, five years later . I would be glad to share with you the evidence that we have on that. Sure. So you can track that . We have done some tracking of selfsufficiency, particularly on the family selfsufficiency program. I look forward to seeing that. I am way over my time. I yield to the Ranking Member for five minutes. Thank you very much, mr. Secretary. We are delighted that you are here with us this morning and we thank you for the way that you have come into your position and the leadership that you have provided thus far. And i am very pleased to hear from members on both sides of the aisle how generous you have been in visiting their communities and how you have been so very, very helpful. I think i want to ask you a little bit about the rental housing and Home Ownership crisis that we have. In the current rental housing crisis, rent has taken a larger share of income and families are facing greater challenges in saving for a down payment and being able to own a home this could have serious negative consequences for the Housing Market. Just this week, again, the urban institute released a major study that predicts that the Home Ownership rate will continue to decline through 2030 and a major rental surge is upon us, a surge that were truly not prepared to meet. The Home Ownership rate will decrease for nearly all age groups and africanamericans will fall further behind all racial groups in Home Ownership. What is your vision for how we solve this problem and how can hud, given the proper resources, enable more families in this country the opportunity to own a home or affordably rent one . Yeah. Thank you very much for the question, Ranking Member waters. Youre correct that what we see out there in the United States right now is an Affordable Housing rental crisis. A good example of this, a good demonstration of this was in the latest worstcase Housing Needs assessment. What that found was 7. 7 million lowincome households who either are paying 50 or more of their income in rent are living in substandard housing or both of those things. And those families, by the way, are families not on any government assistance right now. Another report was released last week by the lowincome Housing Coalition that was fascinating in what it found. It said that in no decent size city in the United States could you afford a twobedroom apartment, a decent twobedroom apartment working minimum wage full time. And that in the vast majority of communities, you cant even afford a onebedroom apartment. So what is hud doing about that . Thats why we have requested additional section 8 vouchers, for instance, because we lost 67,000 section 8 vouchers to a sequestration. Its why we seek to stretch our resources as far as we can through initiatives like r. A. D. Its why we believe in properly funding both capitally and funding for Public Housing and why we look to be innovative in communities with initiatives like choice, neighborhoods and promise zones. We want to take a wholistic approach to making opportunities more possible for americans and as i mentioned early on, right now were only serving one out of every four people that qualify for hud services. So we see there is a tremendous need out there and we want to do something about it. Thank you very much. National Housing Trust fund, we have a deficit of over 7 million affordable available units and we all know that barney frank worked very hard. I worked with him to get the National Housing trust fund. We dont seem to have much support from our friends on the opposite side of the aisle. We must find ways to fully capitalize the trust fund and defend against republican attacks to abolish the program, including the latest attack in that house funding bill. Can you speak to this issue quickly . Yes. I was glad to see director watt flip the switch and this is important and will be a powerful tool in creating more Affordable Housing opportunities because it focuses on extremely lowincome individuals. These are individuals who are making 30 or less than median income. Sheila crowelly recently in front of chairman luetkemeyer we see the biggest gap in terms of Affordable Housing opportunities so were disappointed in the thud recommendations that this essentially is wiped away and that those two programs have separate identities. Thank you so much, i yield back my time. We now yield back. [ technical difficulties ] thank you for stopping by our district. The jewel of the midwest. And a jewelry from the area and a comment. And we had a meeting last week, the Ranking Member and i and a meeting with the industry and housing officials and they came up with a lot of different concerns but the same message that we heard in the city that day was the same message i heard last week, regulation is strangling their ability to deliver services. And let me give you an exam bell of some of the things they were you can tag about. And i see an advocate and ill give you his idea. Number one recognize that you dont have the same amount of funds you would like to have and figure out what you have more efficiently. The moving to work program works. Expand it. Regulation is costing too much money, figure out how to minimize it. Raise the minimum rent. Another one talked about flexibility. Flexibility is very important for them to be able to utilize the assets they have and to be able to to deserve the people serve the people they are supposed to. And another comment is there is inconsistency between regions of hud offices especially with regard to transportation issues. It is hard tor one agency or one area to look at another area and see if they are going to do something you are not and that is a problem within your your agency. So i guess my kwi to you my question so you, you are looking for ways to improve services, and these are suggestions that we have. Are something you can work on with us . Absolutely. And let me say i also enjoy the opportunity to visit Jefferson City and hear from folks in the Real Estate Industry and the advocates, including the pha representatives. It was very insightful to hear particularly the concerns of smaller of a smaller pha and let me say unequivocally that as i mentioned that day to you personally, were ready to work with you and with the entire committee and congress on some of the issues. Ill give you money example an example of that. One was the issue of administration of Income Verification. Why do we requirin vom verification every year for certain residents making the same income year after year. That is a good question. Because 56 of the households that are hud assisted are elderly or disabled. So were supportive of a change to that that would only require Income Verification every three years for folks where at least 90 of thinm come is fixed income sources. And with regard to ntw and the other issues that you mentioned we are working on that and in this budget for instance weve proposed an increase of 15 ntw places that would have increased flexibility and weerking woulding on these issues as well. And you made a comment a minute ago there was 67,000 hud vouchers cut out of the budget. And in my discussions with the individuals in the industry they talked like there were 200,000 that went unused. Is that true. Im not family with that. People werent access them because they didnt have the funds or restrictions and they couldnt utilize them. That may be true sometime ago but when we went through sequestration they have to pull them back and they had to notify families you cant use those vouchers. These with people on the ground using them and they are left unused because of the problems they have to deal with and the restrictions and the lack of flex iblts or whatever it is that is causing them to not be able to do that. We have to look at that. If they are going unused throwing a figure out, that 67,000, that isnt going to fly. Next question. We have a long discussion with one of your a group of your folks with regards to the income that was cut back in january and again it really concerns me because according to your report which i have right here, you are continuing to take in or lend to a group of folks who are probably more problematic from the standpoint of you are now going to the 640 to 679 credit scores, which is type. But by doing that i suppose they skpoes you expose you to more risk and if you look at the loss. I have some problems with the loss information in the report. One place it said you lost 7. 5 billion over the first half of the year which means you will lose 15 billion this year. And in other place it says your loss ratio will probably go down, which is great. But that number doesnt jive with this other one so im concerned about that. But i think the bottom line is there seems to be a continued problem in my mind with regards to ability of income to cover the expenses and were going to watch it very carefully. I hope this all works out. Thank you, mr. Chairman. I yield back. Time of the gentleman has expired. We recognize mr. Cleaver for five minutes Ranking Member of the housing and insurance subcommittee. Thank you. Thank you. I think it is the other button to the gentlemans right. Thank you. Thank you mr. Chairman. Mr. Secretary, i dont know how we are going to be able to erase this stereo type or the misinformation that seems to be eternally out here in the world that people who live in Public Housing move in and their goal is to stay for an entire lifetime. The facts dont match the stereotypes. If you have children living in a multifamily property, the stay is about 5. 14 years about the time that my family lived in Public Housing. And that is just so dramatically different than what people seem to want to believe and it is perpetuated. Do you have any idea how we can erase that misinformation that seems to be all over the country and i think there is there is also some resentment from those of us my father worked three jobs to save enough money to buy a lot to get a house. And other families were doing the same thing. But i dont know how we get that out. So my father 92, and if this is on cspan hes probably watching so thanks for everything daddy. And but i dont know, it is an in sult to him and a lot of other people. How can we erase this . It is a great question. And let me say as well and i say i enjoyed visiting with chairman luetkemeyer and with you in your district Ranking Member cleaver you ask a great question. And what we see every day is that whether it is in Public Housing or folks receiving a section eight voucher we see folks who want to work hard and want to get on the track to a better life. And we understanding that our investment in public and hud assisted housing is a way to get them on that track. I reject the notion that somehow folks who are living in Public Housing are lazy or that it creates a culture of dependency. The fact is that 56 of the households that we serve are headed by someone who is elderly or disabled, to begin with. And of the rest, a significant number of the folks are under the age of 18. They are children. Of the folks who are working age, a decent number of those folks are working. And if they are not working then they are required to do a Community Service or be in school or go through job and so this is very much an opportunity for folks to get on to the track of a better life that they want to get on. Thank you. I agree obviously with everything youve said. It is so frustrating to hear the contrary. Lets talk about fha for just a moment because it plays a major role for firsttime home buyers and fha has helped almost a half Million People get into homes since 2014 and about one half of them are brown and black americans. Is fha do you believe fha, as we talk about the future, one of the agencies that absolutely must be preserved so that we can continue to provide this kind of assistance to firsttime home buyers as well as others . Fha plays an in valuable role in creating upward mobility in our nation for people of all income levels. It has been the primary vehicle for first time home buyers to geet into a to get into a home. As you mentioned for the frame and Latino Community about 50 hearse have an fha loan and over the last couple of years weve seen the Mortgage Insurance Fund rise in value by 21 billion and it is on the right path so yes, we feed to do everything we can to continue to strengthen fha and ensure it is there to provide that opportunity for folks to reach the American Dream. Thank you. It may be also important to realize that those individuals qualified for the loan that they were not just sure. I know there is a few seconds left. We have to distinguish between the issue of affordability and access. What we did is we lowered the mortgage Insurance Premium and made it more affordable but that does not change who qualifies for a loan and we still have a high average credit score of 677. The average credit score out there is 687 to give you a sense of the closeness of those numbers. Thank you mr. Sektd. The time has expired. We recognize the man from new jersey the chair of the market subcommittee. Thank you, mr. Secretary. The housing act makes it unlawful to refuse to sell or represent to someone because of race, religious, sex or origin and that should be the law but however the impact rule allows the government to allege discriminatory practices based not on intent but on statistic cal out comes and not on intent or disparity treatment and the results are that the cost of litigation is strangling the market, the availability of credit is thereby cut back and lending to potential homeowners the same potential homeowners that we hear you say we are trying to help, therefore it reduces the supply of new houses and builders back away from projects that are vulnerable to litigation from you and you are punishing the people we are trying to help. Lets take a look at your agency. In the 2014 fha annual report to Congress Regarding the status of mutual Mortgage Insurance Fund fha indicated the endorsements for the year was 61 to whites, 17 to hispanic and 10 for blacks. Statistically, is that not disparity impact. Statistically, is that not your agency discriminating, are you doing anything about that . First of all, is that dir parody impact . I reject that premise. Thank you for the question it is clever but i think it is misguided and i think you know what im talking about. Let me ask you, is that a dir parody impact. That is not how the impack has been analyzed or used. And believe in disparity impact and if we look for the rational and how that works out and i have confidence in the way it is used. Let me ask you, is 40 , disparity impact, the population is 13. 5 and you are lending to only 10 . This issue didnt come up in that context. You are taking it completely out of context. No. It would never come up in that context and that is not the context that it is being litigated about either. Because you are litigating against lenders and the like and the housing industry and im asking what you are doing. Is what you are doing disparity impact. Should we use it against you. And is it fair against them, is it not fair against you. What we need to do is to preserve disparity Impact Analysis because it is important to determine where there is discrimination and where other tools can be utilized to have a better impact. And what percentage off is disparity impact. I rejection that notion congressman. Well what is these are fact cases and i reject a hypothetical that would never come up in the first place to try to analyze such a serious topic. So you cannot define for us what percentages are disparity impact even though your Agency Brings those lawsuits. You know very well that the definition changes in different scenarios and Different Industries as it is applies to different cases. Exactly. And isnt that the problem. That is part of the strength of the tool. No it is not it is a not a one size fits all tool and it is in the context of individual cases. And so you are saying if im a lender or a home builder i dont know what your charge against me are going to be because as you just stated right now, it changes from circumstances to circumstances. Not at all. There is no clear definition of what clear disparity impact is. No. Burden impact shifting if it is litigated, gives the defendant an opportunity to show that there is a legitimate business reason for why the statistics are the way they are and when they demonstrate that, it forces the plaintiff to actually have to come back and show that, no, you should be doing it a different way that would be more effective and have not so much of a disparity impact. So burden shifting. By your own testimony. The burden shifting protects the defendant. Well the defendant only after he has been brought to court, hired attorneys gone through the expense of this and having to put a defense for something youve just told me and told this hearing that you do not have a definition of what it really means. That is not true. As a lawyer there are plenty of lawsuits thrown out summarily so im not sure what you are talking about. There are plenty of lawsuits thrown out summarily dismissed. Only after the defense has to defend the charge [ overlapping speakers ] just look at the track record of disparity impact and it has had a good track record. What i see is disparity by. Beg for order, mr. Chairman. The time of the gentleman has expired. The chair now recognizes gentle lady from new york, miss maloney, Ranking Member of the market summary. Thank you so much, ranging member and chairman for this important hearing and thank you and hud for all you do for Affordable Housing in america. Two programs that im constantly asked about are the section eight and the 202 program which does so much to provide housing for seniors and according to your own study, seniors with low incomes are the most likely to pay more than they can afford for their housing than any other sector in our society. And this program is very important not only to new york but i would say the whole country. And im concerned that we dont have enough funding to meet the rising demand for affordable seniors housing. The capital advance, the new construction i understand has been frozen and has very little in it and according to the oop for aarp for every section unit that becomes available there are well over ten seniors on a waiting list so can you describe what hud is doing to meet the rising demand for Affordable Housing for seniors under the section 202 program . Thank you very much representative. I do appreciate the chance to speak to this, particularly because as much fuss is made over the idea of these mils millennials and the young people we know the Fastest Growing segment of the population are the baby boomers, turning 65 and elderly and spread out in every Single Community out there and are a focus of the section 202 program. We are requesting an additional investment in section 202, particularly for a demonstration project in this budget, this demonstration project would allow us to show the linkage between our investment in housing for the elderly and a reduction in ghealth care costs. Because we believe that it is important to show that that that does exist, and that hopefully that will inform policy in the future, because by spending ale lit bit for housing and Supportive Services on one hand you can save money in the Health Care System on the other. That is the hypothesis. But more broadly, as i mentioned a few moments ago, 56 of the households that we serve are actually headed by someone who is elderly or disabled. And that goes across hud assisted housing. So our service to elderly americans is by no means limited to 202, it is also Public Housing, section eight, rental assistness and it is part of the assistance and it is part of the reason were requested greater levels of voucher and funding for our Housing Programs. Thank you. The other hud programs that im interested in supporting Additional Support for is section three, the earned income disregard and public house and the family selfsufficiently program. These are important tools for the department and local Housing Providers to help families earn more income and achieve more economic mobility. Can you talk about the importance of these programs and policies and how we can work with you and the administration to strengthen and expand them . I can. What we want is that we want the folks that we serve, whether it is section 8 vouchers or in Public Housing, we want and theyre working age, we want them to be able to have gainful employment and eventually not need our public assistance. I agree with folks on that point. And one tool that we can use is section 3. Section 3 says that when an investment is made, lets say there is construction that a pha does, that the contractors make best efforts to hire lowincome individuals in that area including Public Housing residents. So this gives folks an opportunity to get a good job, to be able to provide better for their families and hopefully to use that to move up and out eventually. Recently we promulgated a new rule on this to give communities stronger guidance on the use of section 3. This is about investing in Economic Opportunity for lowincome individuals, and we look forward to working with you, the committee and congress to ensure that we can make the most of section 3. Because the fact is, frankly, that the track record is checkered for housing authorities out there in how much they have utilized section 3, and we want there to be consistency in the utilization of section 3. My time has expired. Thank you. Gentlelady yields back. The chair recognizes the gentleman from texas, mr. Neg ga bower. 20 years ago this month president clinton announced the nation Home Ownership strategy. He said and i quote, i want to say this one more time, our Home Ownership strategy will not cost the taxpayers one extra cent. It will not require legislation and it will not add more federal programs to a growing federal bureaucracy. I think we can all agree that that vision didnt turn out that way. If you recall back in february, you and i had a conversation about the fact that you were about to lower your guarantee fee by 50 basis points and the fact that you were still not meeting the federally mandated reserve ratio for the funded fha. I guess and i think back then the number was 0. 41 . You know the mandate is 2 . I wondered if you could tell us today, mr. Secretary what is the current status . Yeah, thank you very much, representative, for the question. I cannot give you that information because that wont be available until the next annual report. As you know, thats done by an independent actuary and so we do not do that analysis. That analysis is done by a neutral third party. We expect to have that 2015 report in november of this year. Mr. Secretary i want to make sure i understand that. So you dont know until the end of the period how youre doing . I mean, mr. Secretary, you were the mayor of san antonio and i can imagine the director of finance, if you ask him, you know, how are our sales tax receipts coming in line with our projected budget, and he says i wont be able to tell you that for a year, would that be an appropriate answer . Well, what i would say is that yall can change that. Thats set by congress, not by me. But internally i mean, change it. If you want to change it go ahead and change it. Internally, i would think that you would lets be clear about that. As mr. Luetkemeyer said, we put out a Quarterly Report and mr. Luetkemeyer to his credit asked my staff to review the Quarterly Report with him. Wed be glad to that with you. However, as to your question as to whether i have an update on that capital reserve ratio the answer is no because congress has an independent actuary that does this once a year let me ask you another question. Are the premium revenues you projected to meet the standard because i believe what you told me in february by the end of 2015 you would be at 2 so you dont have any idea whether youre going to be at 2 at the end of the year . Again just to correct the record, what i said when i was here on february 151th was we expected within two years we would reach the 2 capital reserve. Thats what i said in february. Well, i mean here i think the problem a lot of us have is youre running an organization that has a 42 billion budget, has a trillion dollarplus contingent liability, and we dont have the ability to track progress other than on an annual basis. Thats not true at all. Thats not true at all. In fact, we provided to chairman luetkemeyer our annual our Quarterly Report. We do track several statistics. However, you asked specifically about that capital reserve ratio. Let me ask you about the revenues. Are the revenues on track to meet that goal . The answer to that is that they are encouraging so far. Let me giver you a precise example. I dont want to know whether theyre encouraging or not. I want to know are they on track . Are you going to meet the 2 at the end of the year . They are encouraging right now. Yeah. See, encouraging is not ill give you an example of why i say that, okay . When you look at march of 2014 versus march of 2015 for instance, there were 8,000 more borrowers to fha insured loans. Thats just a monthtomonth comparison. Weve seen as the Quarterly Report indicated, a significant uptick in refinancing, so you got to understand this thing took effect january 26th. With the limited early data that we have, we believe that we are on track. However, we will not get an official number on this the assessment, until around the thanksgiving time frame when that independent actuary gives us a report. I think the thing thats troubling and a lot of my colleagues on the other side of the aisle talk about safety net, and, you know, to me a safety net is, you know, something that provides to keep you from failing or falling or hurting yourself, and so the safety net that we have today is made out of string, and i think you would agree if i had a safety net, i would rather have one meatade out of rope. When you have 1 trillion of the taxpayers on the hook and you only have 0. 41 equity, the taxpayers are at risk. Yeah thats apples and oranges. Youre conflating two things. Thats not i dont think thats the way it works. Im sorry. Mr. Secretary, how is that apples and oranges . The capital reserve ratio is not a simple ratio of how much money we have to pay claims. We have more than enough to handle the claims, the losses, that we have in front of us. Its the economic present value of your liability. Regular order, mr. Chairman. The chairman can see the clock. Chair now recognizes the gentlelady from new york, miss val lass quez. Thank you, mr. Chairman. Mr. Secretary this hearing could not come at a better time as the house, unfortunately, just passed ffy 16 spending bill which if enacted, if enacted will severely underfund virtually every hud program and jeopardize the housing stability of vulnerable americans. The shortage of affordable rental housing is a huge problem in new york and a new analysis released this week brought the swearity ity severity of the problem home. Rents in new york city rose by 32 citywide even after the effects of inflation were removed. My question is, mr. Secretary what will happen to working families like in new york city if we do not have Public Housing . In new york city we have 615,000 people who lives in Public Housing and section 8. These are hardworking people, and if we dont provide that type of resources, where will they go . And people, you know, i dont suffer from multiple personalities. I understand that if we want to tackle the issue of poverty, it takes investment. That if we want to tackle the issue of homelessness among veterans, it takes the role of the federal government. And by the way, i am proud to report that in new york city the number of Homeless Veterans in new york dropped by 40 last year and declined 75 since 2012. Why . Because of vouchers and homeless assistance grants and because the city is putting also resources. Thats what it takes. And so we want to tackle the issue of poverty in our country . And then we ask about what is it that hud can show about to demonstrate the effectiveness of the agency . It takes investment and the understanding that for the last 20 years theres one issue that really is impacting americans. Theyre working harder, theyre working two and three jobs but theres one thing and that is wage stagnation. While the 1 is doing extremely well, the rest 99 , are working harder and getting less. So mr. Secretary if the funding bill that passed the house if enacted, how will this impact hurt huds efforts to address the Affordable Housing crisis . If the thud bill becomes law, it will seriously injure seriously damage our ability to meet the needs out there, as it is as i mentioned earlier we only serve 1 in 4 people right now who qualify for hud services. A couple weeks ago chairman luetkemeyer had at his subcommittee a group of individuals to discuss Public Private partnerships which i think is a fruitful discussion that ought to be had. It was very clear in that testimony whether it was the public, the nonprofit sector, Public Sector, or private sector that said if hud doesnt do these things, who else is going to do them . There is no private market to serve people who are extremely low income. And those are the vast majority of the people that we serve. And so whether its traditional Public Housing or section 8 vouchers or project best rental assistance, we need to make an investment. If we dont, what it means is more people out on the street, more mothers with children that are homeless or doubling up. More veterans who dont have the chance to have a place to call home. Those are the human consequences of the budgetary decisions that are on the table. So mr. Chairman, mr. Secretary, i would like to ask you about section 3. I have been working on section 3 for many, many years. When secretary donovan was there, i introduced legislation and im happy to see that some of the provisions that were contained in my legislation are being reflected in the rule that you are putting out, but my question is if there is a tool that could empower residents in Public Housing its section 3. Without the proper oversight and without the proper training and investment, its not going to work. Thank you for that. Time of the gentlelady has expired. The chair rises the gentleman from michigan, mr. Huizenga. Secretary castro, over here. Sorry, im kind of hidden behind one of my other colleagues here. So i wanted to i had a different line of questioning but something that my colleague from missouri, mr. Cleaver, had brought up about the short time versus long time for a lifetime myth that exists with people that are utilizing hud and housing through you, threw out a statistic of 5. 4 years of families with teens. I dont know if thats accurate or where he got that. Are you familiar with that statistic at all . Yeah. That sounds about right. In the fiveyear range. I think i guess Ranking Member cleaver is not here right now. However, what he was probably referring to is for working age individuals. Recall that for the majority of the folks that we serve these households that are elderly or disabled, our goal is not to just get them in and out. So they have a longer period of average stay, but that sounds correct. I think thats completely different. But earlier at the beginning the chairman was asking you specifically about and you didnt answer, whether we are tracking people from one pha as they exit that presumably within that fiveyear time frame, to what happens to them. Where do they go next . Do they go to another Public Housing authority . Do they maybe move to another state . What do they do . And you couldnt provide that hey tricks. Well i said we will get information that we have on that. Do i believe right now that were tracking that as well as we would like to . The answer to that is no. Okay. That we can make an improvement there. It seems if we can dial it down to 5. 4 years we ought to be able to figure out you ought to be able to figure out how you are going to make sure that people are utilizing that Service Really shift to what is more of my concern, which is how do we make sure that we have an opportunity economy that eliminates poverty and breaks that cycle that may exist . You know, i was a former licensed realtor. Started my career in that. Some of my proudest moments that i was involved in werent with my big sales. My first listing was a twofamily house in holland, michigan, that was very transitional. Hispanic family on top that shared a onebedroom apartment. In fact, louis and alaya are still friends today and helping them transition into buying their own place. One i talked about in this committee before is someone else who still remains a friend jill whose husband had left the family, and she moved from a trailer park into her first home, and i was able to help explain to her kids why and how important that was, and literally sitting here 20 years later, im getting emotional and choked up because that really is why you exist. You dont exist to just make sure that were taking care of people temporarily. You exist to make sure that we are taking care of people long term and i dont mean getting into your system and staying in your system. What is the opportunity, and im afraid that as im looking at this report it seems that the solution typically has been to just simple throwy throw more money at it, and its not only about subsidizing the market i would hope with section 8 or other things. Its how do we make sure that as my colleague was starting to go at, how do we make sure that the people that are providing that, that are building it, have some assurance and have some understanding of what the ground rules are, what the guideposts are . So that theyre not going to get sued and theyre not going to have these questions as they linger over there. You know that to me is i think vital. The other quickly i want to hit in this remaining minute on page 8 and page 9, i wanted to highlight a couple things. One of them, start with this the evidencebased jobs plus program. A proven model for increaseing Housing Residents earning. Are you tracking that and can you provide the matrix on that as well because im curious. Is this just web based . Is this physical presence that people are having from hud . Explain this. Because thats 100 million that youre putting into this. That can provide a whole lot of housing temporarily. Thank you very much for that question, representative. Let me say that i agree with you on the premise that for folks who are working age, and this is what the law requires that if theyre not working that they be either doing Community Service or job training or pursuing an education. So we want folks to basically be on a path to selfsufficient si. Jobs plus does track. We do have numbers and wed be glad to provide them on how were doing. However, one of the things i have said is that with this opportunity agenda that hud needs to get better at measuring the outcomes there. Amen to that. I know my time has expired, but i hope that you will get much, much better at that and provide that to the committee. Time of the gentleman has expired. Chair recognizes gentleman from texas, mr. Hinojosa. Thank you, mr. Chairman, and thank you, Ranking Member waters. I ask unanimous consent that my Opening Statement and my questions be made a part of the record. I am late for opening a meeting and i must leave. Without objection. That that case the chair recognizes the gentleman from new york, mr. Meeks, for five minutes. Thank you Ranking Member mr. Chairman. Mr. Secretary, let me ask you first let me just identify myself as a proud product of Public Housing, and my whole family, you know, all of whom are doing fairly well now. I dont know how well we would have done or how my parents would have been able to do what they did without Public Housing and then when i think about my friends, some now who are attorneys and doctors and engineers and pharmacists, all products of Public Housing but had it not been for that assistance so that they could move forward, i dont know whether any of us would be in positions that were in. So i personally know the critical need and the significant importance of Public Housing giving individuals an opportunity, giving families an opportunity to come together and to be successful in life. And i cant think of a greater investment that we as a country can make especially when were talking about and often times were campaigning, the average, everyday person and the poor person and making sure that they have a quality of life. Theres Nothing Better than making sure they have a different roof over their head so a child can get an education in a place where they can grow and become productive members of society. In new york im concerned because when i look at the budgets that and the funding packages that the Republican Party is putting forward, where i see that it fails to restore funds to loss to sequestration and revokes critically needed investments in the National Housing trust fund and it shortchanges several mental Assistance Programs with very lowincome households i get concerned about whats going on in new york a little bit because, you know, recently our mayor, de blasio, released a new ambitious plan to revamp the new york city Housing Authority and bring it back into a stable housing footing and rebuild and expand and preserve public and Affordable Housing and the plan is highly dependent to converting thousands of units to a projectbased section 8 and is highly dependent on hud subsidies to rental assistance demonstration program, r. A. D. Currently section 8 accounts for roughly twothirds of your budget, and as more Public Housing moves into section 8 through r. A. D. , im wondering how is hud coping with such increased demands from communities across the country and how can cities like my city of new york plan for the future with the uncertainty around increased federal assistance to preserve Affordable Housing stocks. Youre correct that we do need a certain level of confidence in that investment. R. A. D. Has been one way weve tried to stretch resources by doing exactly what folks have suggested, that we engage in the private sector. In this case so that they can renovate those Public Housing units because the fact is we have a 26 billion backlog in renovation needs in Public Housing, and we lose 10,000 units every year to disrepair and in new york you see that in spades. So thats why were requesting a couple things in this budget. 50 million for that r. A. D. Program. Were also requesting Additional Resources in terms of salary and expenses because the cap was lifted in fiscal year 15 to 185,000. We want to ensure we can meet that demand. By the way, we already have applications for r. A. D. That are around 180,000. So its a successful effort at getting interest, Public Private sector collaboration, and on top of that, what we see with rad is that we leverage for every 1 of public money we spend, we leverage 19 of private investment, but we need to do it right, and we need to ensure that those resources are there that undergird it which are Public Resources that we treat tenants right, and that it still is fundamentally Public Housing even though you have this Public Private partnership. And so i guess what my nervousness is because im not sure what these budgets are looking like and im not sure everybody has the same is on the same priority level, as you move forward and we look im worried about the underpinning of the Public Sector continuing what it needs to match the private sector because if we get into these scenarios and then we lose the subsidies to keep them affordable, what happens to Public Housing . So can you tell me well i agree with you, if were not careful, then the Public Sector wont even have the strength to engage the private sector so that we can fruitfully renovate or create new housing. That was a point made in the subcommittee hearing that the private sector needs the Public Sector to do Affordable Housing. Time of the gentleman is expired. The chair recognizes the gentleman from wisconsin, mr. Duffy, chairman of our oversight and investigation subcommittee. Thank you mr. Chairman. Thank you for being here, mr. Castro. Just want to make a note that homelessness doesnt just exist in urban america. It also exists in rural america. In places like my district rural wisconsin. For the last two years, we have held a homelessness and hunger summit trying to bring in the stakeholders from across our Rural Community trying to figure out how we can address this problem more effectively. Trying to figure out whether the bright spots are of what small agencies, what they do to more effectively tap into resources in the community how they can more effectively tap into Government Resources and so its a problem that we think we have to address and my comments are in no way trying to undermine the problem of homelessness across the country. I would note though that i do hear a lot about the rules and regulations, especially for small providers in our community, and listen if youre a one or twoperson organization, it becomes incredibly difficult for them to navigate the rules and regulations. But want to move beyond that. Youre asking for more money, a 9 increase, or thats in the president s budget. Why do you need more money when weve improved the homelessness in america. Why do you need more Public Housing money, more section 8 housing money when weve had improvements in the economy and in this space . Well, the fact is that, for instance lets take our vouchers. Through sequestration we lost 67,000 vouchers. What we see out there is that you had an improvement we were able to serve every 1 out of 4 people have we had an improvement we have seen an improvement and why was that . The reason for that cure asking for more money though. We dedicated more resources to it. Hud vouchers to the committees credit, Congress Credit and the president s leadership, the reason, the main reason we have seen a reduction in veteran homelessness is because we actually invested im talking about and i appreciate your comments on veterans and thats a nice number okay, then lets talk about folks who live in rural areas or tribal communities lets talk about it as a whole then. What success have you had of getting people not just into the system of Public Housing and section 8 but out of the system. It goes back to the questions the chairman asked and mr. Huizenga asked. You come and ask for more money but you cant sit there today and say this is what were doing, were bringing people in. They need help. We all want to help them thats not true. Hold on. Let me finish. Here are the facts and the numbers of how weve moved people out of the space of public assistance and into selfsufficient si. You dont know if the numbers give us are numbers people from assistance to sustainability themselves or to another Public Housing authority. You cant actually give us the right numbers and youre asking for more money. I gave an example earlier. A good im looking at numbers. Listen, what percentage a good example of what we have seen is through our Jobs Plus Initiative jobs plus. Lets talk about jobs plus. Jobs plus, is the 9 increase asked for by the president , is that going to the programs that you say work like jobs plus . What were requesting is were going its across the board. Were going from 15 million to 100 million thats not my question. Mr. Secretary hold on a second. If you have programs is the only things were requesting jobs plus . Of course not. If you have brahmsprograms that work, jobs plus, why arent you say, congress, listen, lets talk about programs that work that will take people off assistance and into sustainability that is what im talking about. No, youre not. Youre giving me a small section. The funding thats asked for is funding across the board not to be driven into jobs plus. Not to programs that actually move people to sustainability. I think you judge success by how much money we spend. Thats how you judge no i dont. Thats not true. You cant give that is not true. Tell me the number the other day hold on. Tell me there was a group regular order. Regular order. Mr. Secretary the time belongs to the gentleman from wisconsin. Please add ten seconds to the clock. If thats not how you judge your sur sec, tell me the percentage of people that going into section 8 and then move out into self sustainability. We would love to you dont have that number. What i do know is we have a waiting list of 189 my time. If you are judging success by getting people off assistance and into self sustainability you would be here today telling us those numbers. But you cant tell us because you have no this is not how you judge success in your agency. Thats part of the problem. Representative, i did just tell you some of that. You didnt give me a number because you dont even know it. I did. What was the number. The time of the gentleman has expired. The chair now recognizes the gentleman from california mr. Sherman. Mr. Secretary, i want to recognize with you that section 8 and other Housing Programs are successful in every one of our districts, that a Housing Program has to chiefly be evaluated on whether it provides housing and getting people off the street and in housing is a good thing. Whether they then get a wellpaying job is a little bit outside your department and i look forward to working last gentleman to defeat fast track so we can get the highpaying jobs that will lead not only to successful Housing Programs but successful economic futures for those you benefit, but i think its wrong for us to stay were going to cut back on section 8 until you give us perfect numbers and until you establish providing housing means somebody gets a good paying job, too. I will give you a short time to comment. One outcome an important outcome is that somebody has a roof over their head. That is what the department of housing is for. We are first and foremost about housing. However, to the second question, do i believe that we should also make investments, and we are making some investments that seek to get folks to a stronger track so that they can achieve the American Dream, of course i do, and should we look at the outcomes of that . Yes, we should and i think we can Work Together on that, but to say it doesnt count at all that somebody has a roof over their head thats just ridiculous. Well said, and i now want to move to fha and a couple technical areas where fha has a rule or a policy that clashes with another federal rule and hope that fha moves in the direction of the other federal rule. The first example of this is with property subject to transfer fees. Now, 99 of transfer fees are terrible. Thank you at fha for working to prohibit them. Fhfa, which, of course oversees fannie and freddie has done a slightly more nuanced job. Instead of prohibiting all of them, they only prohibited the 99 that are bad. The 1 that are helpful are those that benefit the property that are key to the Business Plan of homeowners associations, and fund homeowners associations by a reasonable amount when the property is transferred. So i wonder whether you would look at a technical tweak to the fha regulations and see whether the fhfas very similar regulations but a little bit more nuanced might be better for both similar federal programs. Thank you very much for that question. Let me very briefly say that at fha our primary concern is to ensure responsible bor orowers can access credit. On top of that we are interested where it makes sense in policy that encourages neighborhood stability, for instance, and we are looking at matching fhfa on this issue you brought up and so wed love to follow up with you and your staff on that and give you an update on what were up to. Its similar agencies trying to carry out the same policy and they ought to have identical or very close to identical rules and in this one case your Sister Agency has a more sophisticated rule. Federal statute generally requires that you have to stop paying mortgage insurance once you have a 78 situation. Youve got a situation where borrowers have to keep paying fha forever except they dont if they refinance. Now, if they had to pay forever, i would say, well maybe you need the money. But if youre not going to get the money, theyre just going to refinance, then i would say thats a i have been through some refinancings. Its a lot of paperwork. And then it would be easier for borrowers if theyre trying to compare fha insurance with private insurance if you were offering the same product that is to Say Something thats canceled at 78 . Will you take a look at that . We are always, of course looking at how we can be sensitive to the conditions out there. As you know this life of loan issue came to pass during the last few years where there was a need to do everything that we could to ensure that we built up our reserves and we want to do whats prudent. Always willing to look at this issue. Thank you. Time of the gentleman is expired. The chair now recognizes the jae from new york, mr. King. Thank you. Good morning, mr. Secretary. Im over here. I regret i was not here for your Opening Statement. I was across the hall a hearing being held on the reauthorization of the 9 11 Health Care Act so i was there but i want to thank you for being here today and generally when i ask you a question its not written out but this one im going to read as its written because theres a lot of specifics involved. It regards Westchester County in new york which is not in my district but its pretty adjacent to it and the implications of whats going on in westchester could impact my district. I would like to ask the question. You can answer it today, fine. To the extent you have to get back to me in writing, i would greatly appreciate that. I understand that in 2009 hud reached an out of Court Settlement with Westchester County settling a 2006 civil lawsuit alleging that the county failed to consider race as an impediment to fair and Affordable Housing and filing its analysis of impediments document which is filed with hud when seeking cbdg block grants. Its my understanding from talking to the Westchester County officials, including the county executive and i would say at this stage i dont see this as being a partisan issue because the original settlement the democratic county executive. Its now being implemented by a republican county executive. So i dont see this as being a partisan issue but from talking to the county executive, he believes that the county is ahead of schedule in implementation of the settlement terms, 469 of the 750 required Public Housing units have been financed 424 have Building Permits permits, and so far the county spent 37 million and leveraged another 112 million of other sources and at least 51. 6 million was agreed upon in the settlement terms. 37 and 112. Yet the county believes that hud is not recognizing this progress. In response to a hud request, the county included in its analysis of impediments an examination of all of its 853 local Zoning Districts for evidence of exclusionary practices based on race and ethnicity and found none. Since then its made seven more such analyses each time including consideration of more data as requested by hud. The most recent ai was more than 700 pages and each time the county has found no evidence of exclusionary practices. A conclusion that has been supported by an independent authority. Hud, however has disagreed with the county and in 2011 began cutting off housing grants which is more than 20 million to date. Can you two questions. Can you say why hud has summarily rejected each of the eight analyses of impediments submitted by Westchester County in the past six years to fulfill the settlement requirements and all entitlement grantees such as Westchester County which certify they are affirmatively forwarding fair housing and they must conduct these analyses. What is the average length of an ai document and how often are they rejected and what criteria does hud use to determine whether an ai is acceptable . As i said this case as it goes forward could have implications in my district and other districts in the region and again, any testimony you give today i appreciate very much the opportunity to just address this briefly. Would love to get back to you and your staff with the specifics on westchester. Let me begin by saying that, of course, we take the issue of fair housing very seriously under the Fair Housing Act of 1968. It requires that the secretary affirmatively further fair housing. As you know, congressman, this issue of westchester has been with us for a while and there has been a tremendous amount of work that hud staff has done in conjunction with the local community to try to resolve these issues. What i have told my staff is that, of course, theres a time when were punitive, and this is one of those cases historically that developed and went into litigation but we often seek what i call missiondriven flexibility to work with communities to meet the goals of the programs but also to ensure that they can undertake feasible actions to get into compliance. Having said that i would like to be able to get back with you on the specifics and an update on where were at with regard to westchester because i know my staff has been working hard on that. And, again, i dont reside in westchester. I know the officials up there. They believe they are attempting to comply in good faith. They dont feel hud is acknowledging that but again im not gelling in the middle of this, but i think it is important if we can set some parameters because i do know there are other pending actions in the region which could have an impact on my district and again, on all people in the region and youre right fair housing is essential. On the other hand, local governments have to try to comply and, again this is very expensive and again it can be complicated. Whatever you can get back to me on, i would truly appreciate it. Thank you for your testimony this morning. Thank you. Time of the gentleman has expired. At the request of the secretary the committee will stand in recess for five minutes. On cspans road to the white house, more president ial hopefuls announce their candidacy. Former secretary of state Hillary Clinton will kick off her campaign with a speech that will outline her agenda as a candidate live from the fdr four Freedoms Park in new york city at 11 00 a. M. Eastern. On monday afternoon at 3 00 on cspan3, were live at Miamidade College where former Florida Governor jeb bush will officially announce his candidacy. On tuesday, Businessman Donald Trump announces whether or not he will make a bid for the presidency at new yorks trump towers at 11 00 a. M. Eastern. And you can watch all of these events online anytime at cspan. Org. Cspans road to the white house 2016. Here are some of our featured programs this weekend on the cspan networks. On book tv on cspan2, saturday night at 10 00 p. M. Eastern Fox News Contributor Kirsten Powers says that although they were once its champions, liberals are now against tolerance and free speech. On sunday night at 11 00 former Deputy Director of the cia, michael morell, on the successes and failures of the agencys war on terror and its current fight against al qaeda and isis. And on American History tv on cspan3, saturday night at 9 9 1515, Kevin Mcmahon on the strategy behind president nixons Supreme Court appointments and the impact he had on the court and american politics. And sunday night at 6 00 on american artifacts we visit the National Museum of American History to view the newly restored murals from alabamas Talladega College depicting the amistad slave revolt and the aftermath and the founding of Talladega College. Get our complete schedule at cspan. Org. With live coverage of the u. S. House on cspan and the senate on cspan2, here on cspan3 we complement that coverage by showing you the most relevant congressional hearings and Public Affairs events and on weekends cspan3 is the home to American History tv with programs that tell our nations story including six unique series. The civil wars 150th anniversary visiting battlefields and key events. American artifacts touring museums and historic sites. History bookshelf with the best known American History writers. The presidency, looking at the policies and legacies of our nations commanders in chief. Lectures in history with top College Professors delving into americas past. And our new series real america featuring archival government and educational films from the 1930s through the 70s. Cspan3, created by the cable tv industry and funded by your local cable or satellite provider. Watch us inh d, like us on facebook, and follow us on twitter. And we have more now with housing and urban Development Secretary Julian Castro. This is more of his]s nj sjan before the House Financial Services committee. This portion is about an hour 20 minutes. The committee will come to order. The chair now recognizes the gentleman from massachusetts, mr. Capuano. Thank you, mr. Chairman. Welcome back, mr. Secretary. Mr. Secretary, i know weve mentioned the fha. I want to be clear, if im correct, as i understand it, not a single penny of general fund taxpayer dollars has been spent to help the fha. Is that correct . Thats right. Okay. And as i understand it, again, by the way, happy birthday, 50 years old and all that. In those 50 years as i read it, there have been five republican president s serving 28 of those 50 years. Did any of those five republican president s, mr. Nixon, mr. Ford mr. Reagan, mr. Bush, and mr. Bush, did any of them shut down hud . No of course not. Did any of them admit defeat in huds mission . No. But today were hearing that hud is a failed agency and we should probably close it down. I guess that would come as a surprise to mr. Reagan and others. Prior to hud were there any programs anywhere to help seniors find decent, Affordable Housing . No. With the advent of hud that really led to the assistance without hud there who be no not less but none, there would be no senior Housing Programs in this country whatsoever. Thats right. The answer is if not hud, then no one is there. Then no one. So i guess i have heard a lot of criticism today, and i think i heard some fair questions and fair comments but of the criticism, i believe in giving elected officials what they want whenever possible, and i have heard several elected officials today publicly state that they think that huds programs are failing, so, therefore, if they have a failing program, why would they want your money . I think youre doing a pretty good job and i would suggest you give those officials exactly what they want, which is nothing, and to send your money into my district because i think youre doing a great job. And im not saying that out of anything other than respect for the opinion of others, and i hope as a former mayor youd appreciate that approach. I guess now i want to move on to something else. And i apologize but our time is limited here as you know. I do want to pick a little scab. The dask program, my least facetoface res program hud participates in, not because i dont like the program. Because i dont like the focus. And i guess my concern is that basically weve been selling these houses in batches to the richest people in the world, and thats okay, not a problem, except for me i thought part of huds mission was to actually create strong, sustainable, Inclusive Communities and quality Affordable Homes for all. With that mission i always ask myself, who is in the best position to know what that means in a Given Community . So i looked up the last i dont know if its the last one but the november 2014 sale. And on that there was some housing, some foreclosed housing in a county i actually never heard of before but maybe youre familiar with a bexar county. Sure. This is the county with san antonio. Thats what i read. Has 42 properties in this batch averaging 106,560 on their foreclosure loans and it was sold to a Company Called am nip management, llc. I looked them up and theyre a subsidiary of American Homes that is headquartered in agoura hills, california, which is kind of wedged in between Thousand Oaks and simi valley and im wondering do you really think somebody in a nice beautiful building in agoura hills knows better what to do with 42 foreclosed properties in san antonio than say, maybe the mayor of san antonio or maybe a person named Walter Martinez who runs the san antonio cdc with headquarters on el paso ave or somebody named Oscar Ramirez who runs the guadeloupe association with headquarters on guadeloupe ave . Which do you think is in a better position to know what is probably in the best interests of the people of san antonio, those people or somebody in agoura hills california . Its a point well taken, congressman, and i want to thank you for your advocacy on this and because of your advocacy the advocacy of others and also nonprofits who have made this very point. That part of our responsibility really is to understand the effect that these policies have on neighborhoods. So we believe the dasp has been a powerful tool to help stave off foreclosure in some instances. Wed love to get back to you on the changes we made to it to improve it. Thank you. Time of the gentleman has expired. On behalf of the secretarys texas ears and my texas ears for the sake of the gentleman north of the masondixon, it is bexar county. The chair we need to have an he will location lesson. Theres an x in there somewhere. Not for a texan. The chair recognizes the gentleman from pennsylvania, mr. Fitzpatrick. Im sorry. Im sorry. The chair stands corrected. The chair recognizes the gentleman from california mr. Royce, chairman of our Foreign Affairs committee. Thank you, mr. Chairman. Mr. Secretary, good to see you again. Let me ask you about a line of questioning here where i think you and i may be in concurrence but last week we both had an opportunity to talk a little bit about a subject where i publicly endorsed moving forward with some Building Block Housing Finance reforms and these reforms would increase private sector participation in the secondary Housing Market and decrease taxpayer exposure to future losses and would over time limit the disruption in the market, and i wanted to get your take on this. The things weve discussed at that forum were an increase in private sector credit risk sharing by the gses including a time line to ramp up the offerings, the creation of a truly common securitization platform which allows for issuance of mortgagebacked securities other than the gses, and the development of a common residential mortgagebacked security by fannie mae and freddie mac and i thought i would just give you the floor right now to discuss how this might bring private sector capital back into the market and how we might Work Together to achieve these goals as kind of a Building Block. Congressman, royce, i, of course, appreciate your efforts on this issue of Housing Finance reform. Housing finance reform has been a long and winding road i think its fair to say but the administration is supportive of Housing Finance reform and, in fact, i think theres agreement on some of these issues. The president has made very clear that he does have an interest. I think like all americans do in taking taxpayers off the hook in the event, god forbid, we did experience the same kind of housing crisis we just went through. Agreed that we can find ways to introduce more private capital into the market. My hope is that in there well find a way to ensure that people of modest means who are responsible are able to get access to credit, and so with respect to proposed legislation, i think theres some common principles that are the foundation to build on, and we look forward to working with you well the question that i was going to try to drive to was the idea that gses increasing their risk sharing activities in the form of volume of offerings and percentage of risk sharing. That would be a big step to bring private capital in. Certainly the common securitization platform thats that idea youre familiar with and making that available for the private sector to come in as well i think would be helpful, and i was trying to elicit very willing to have conversationszdwn about that and build on legislation. Were hopeful that, of course, the ball is in Congress Court let me then go to another question mr. Secretary. And thats that headline i saw banks cedefha market share to thinly capitalized banks. We have a situation where the market share for large banks has been cut in half from 61 to 33 and i know that is a concern. Nonbacks nonbanks have increased. They were 24 , now a year later theyre 51 or several years later. So is this troubling, and do you think legal uncertainty maybe is part of the problem in terms of getting the traditional lenders more involved here and what about the need for a greater certainty around the rep and warranty framework here . Have you been looking at this as a way of bringing capital back in. The answer to that is yes, we are looking at that. We believe it makes sense to take reasonable steps to create more business certainty for lenders. I know this is something that director watt at fhfa has worked on, is working on now. Thats something we are working on with something we called blueprint for access to credit. We hear from lenders about the uncertainty that does exist regarding potential liability, and so were working on that and we look forward to being able to create, i hope, greater certainty that will help open up the credit box reasonably for responsible americans to get access to credit. One of the ceos that i know was interviewed on this said if you want to stick with the program of putting back any time anywhere whatever, thats fine, were just not going to make these loans and were going theres going to be a whole bunch of americans that are underserved in the Mortgage Market and thats the part of this that is concerning. There have been some ideas put forward in terms of you know, how to adjust this and handle it, but given the percentage of erosion here in market share and especially the fact that its thinly capitalized nonbanks that are coming in i think it needs to be addressed. So thank you. Thank you, mr. Chairman. Time of the gentleman has expired. The chair now recognizes the gentleman from massachusetts, mr. Lynch. Thank you mr. Chairman, and i want to thank Ranking Member waters as well. Thank you, mr. Secretary for helping the committee with its work. Good to see you again. Mr. Secretary, im one of those members of congress that you referred to that grew up in Public Housing, like mr. Meeks of new york. Grew up in the old colony Housing Project in south boston with five sisters. It has been described as one of the poorest predominantly white census tracks in the nation, and we considered ourselves very very fortunate to have a home to have that home, and listening to this debate here today about the question that was posed earlier, does huds affordable Housing Program work . I guess from listening to the debate if youre family has not struggled, no explanation is possible. But if you have actually lived in Public Housing, no explanation is necessary. You understand what that means. I do. We talked a little earlier, you know, i have had an opportunity in the last couple weeks, we cut a ribbon on one of my big veterans Housing Projects thats coming up. We just broke ground. Its the New England Center for Homeless Veterans and its going to provide 38 new permanent supportive Housing Units for veterans including a dedicated floor just for women veterans. Weve got a lot of them. Its going to renovate 59 existing supportive Housing Units for veterans and then its going to create 165 new units. So its got everything. Its got if you have got substantive use problems psychiatric problems, we have the whole city together and i want to give credit to mayor walsh, marty walsh, who is part of this and also governor baker who is a republican but we worked together on this and there is at least a dozen different agencies, city, state and federal, that have combined on that project, and i have got another one with an old another project its an old Police Station in my home neighborhood of south boston where theyre converting this old Police Station to single unit occupancy units for veterans. So like most communities, we love our veterans and we want to make sure that their service is remembered, is respected, and rewarded. But i have to say that it has really been a collaboration of a bunch of different projects in trying to figure out all the different aspects of what hud is doing on behalf of our veterans and i was wondering, you know you alluded to it a couple times in earlier questions but can you drill down and explain what the Obama Administration is doing what hud is doing on veterans housing in this country today and what your most successful models have been in creating that housing. Yeah. Im glad to do that. This is a real american Success Story because president obama in 2010 became the first president to say were not just going to reduce homelessness. Were going to end it starting with veteran homelessness, and what weve seen since this time from 2010 to 2014 is a 33 reduction in veteran homelessness through collaboration with congress that funded hud vouchers, so you asked what works. Why are we here . Strong coordination between hud the virginiaa, and providers out there on the ground to quickly get veterans into housing. The adoption of smart policies like Housing First. Housing first basically says were not going to make our veterans jump through hoops stay a certain of nights in a shelter or transitional living. Were going to get them into permanent housing right away because the research is compelling that if you get someone into permanent housing with Supportive Services, that is a real stabilizing influence on their lives so they can address then if theres some other issue in their life, perhaps if theres an addiction issue or theres a Mental Health issue or other issues. Having that housing is the key to being able to stabilize and address those issues. And what were seeing now is communities like new orleans that announced about a month and a half ago that they have effectively eliminated veteran homelessness. I joined congressman green the other day in houston. Houston has put in place the system to get to functional is a Success Story we need to support. I want to say we have it 2. 5 million sons and daughters of america have served since the first gulf war. This is something we are going to have to focus on. A lot of them have done multiple tours of duty. Obviously, they need some help. Thank you. I yield back mr. Chairman. The chair now recognizes the gentleman from pennsylvania mr. Fitspatrick, chairman of Terrorism Task force. Thank you mr. Chairman, and thank you mr. Secretary for the time spent with the committee today. I want to stay on the issue of homelessness among veterans. You said in your Opening Statement that youve reduced homelessness among veterans by 33 . That is not an insignificant number. Together we should celebrate that a little bit. Recognizing as well that there is still a lot of work to do done. If that subset population of veterans in this country, serve this country, 67 of them are still without homes. And you mentioned about president obama has made this commitment to end veterans homelessness. One veteran is homeless is one too many. I remember in november of 2009 i was a private citizen back my home in leaventon, pennsylvania watching the news. It was being reported that general shinseki who was the secretary of va had articulated this commitment. He put a time frame on it he said five years. This was november 2009. That the goal was to end veteran homelessness in the United States. My thought at that point in time thats an aggressive goal. But i had concerns about how we were going to get there as a nation. In my community, its a town that was built for veterans returning from world war ii and the korea era veterans, one of which was my father. Many who had not had an opportunity to own a home had it not been for the va and. Tucked between the city of philadelphia and new jersey. Housing prices sky rocketed. It was built in the shadow of a steel mill. They were house rich and cash poor. Housing prices have gone through the roof. Addressing this issue in my community, housing costs are very expensive. My second concern is homelessness is but a system of other problems, problems like Substance Abuse b problems like Behavioral Health issues. These veterans are coming back. There is an area next to my home ben salem. They proposed a 60 unit veteran Housing Project. The mayor is committed to deinatedenote the there is an opportunity in our community to work with hud so you could be the last dollar in the project rather than the first dollar and let the private sector lead. I would like the opportunity to work with your and your undersecretaries on that. I want to get to another bucks county issue. I think this is an issue in housing authorities that other congressional districts and members of congress are dealing with. This had to do with a recapture sweeping of accounts that occurred a couple years ago, probably before you were appointed secretary. Housing authorities across the country received a letter where washington wanted to recapture or reclaim reserves in their accounts back to washington to redistrict for other programs. The bucks county Housing Authority, which im very proud of which does a good job which manages well its housing. Which had built up significant reserves and uses those reserves to build new projects, to get individuals in the projects on the road to selfsufficiency, they received this letter and they were going to lose millions of dollars that they were prepared to reinvest in the community. The Housing Authority to the south of us, the city of philadelphia is wellknown for the problems they had. They had no reserves, they mismanaged their authority. They settled lawsuits, unrelated to housing, paid millions and mid midians in legal fees. The message sent by hud if youre a well run Housing Authority and you built up reserves you will be penalized and the mismanaged ones were not penalized because theyll get the dollars redistributed. I was wondering if you could comment on what message you think that sends in these housing authorities and our congressional authorities who is working hard and try trying to reinvest in things so we can get rid of veteran homelessness. I look forward to working youn onyou on the issue of veteran homelessness. We want our Housing Authority to succeed. We arrived this did predate me, however it was a subject of an ig audit. That money is being held by hud but will belong, doesnt belong to the phas. We want them to have the tools theyll need i appreciate it. The phes could have reinvested in the communities that were well wellrun. We recognize the gentleman from texas. Thank you, mr. Chairman. Mr. Chairman, as i have sat here this morning i have literally had tears to well in my eyes. As ive heard some of what has been said regarding people who are in need of help. And mr. Chairman i want the record to reflect that i personal pronoun will not sit silently by while the tools that are needed to fight inviddious discrimination and help those who are in desperate need of assistance are eliminated. These tools have been hard won and hard fought for. We cannot allow the evisceration of the Fair Housing Initiative program. The decimation of the Housing Trust funds. We cannot allow this to be eliminated. These tools have been recognized by courts. And they have made a difference. I applaud you for standing up and standing your ground this morning. Somebody has to take a stand. I applaud you and all of my colleagues who are doing so. Mr. Chairman mr. Secretary, more specifically, under disparate impact Statistical Analysis alone will not bring a victory to the plaintiff. The plaintiff has a further obligation to go on and show that there is a less discriminatory alternative. Absent that the plaintiff will not prevail. Disparate impact is not a theory. It is a standard that eleven circuit courts have approved. It bears a methodology by which one who is accused improperly can defend and win. The Fair Housing Initiative program. This is the most efficacious way that we know of to present empirical evidence of inviddious discrimination. It is proven to be the best way. If there is another way, i defy someone to show me other than a person confessing i am a person who discriminated which rarely happens. Which is why you have the disparate impact standard. People dont confess. They have facially neutral policies. But in application it is inviddious discrimination. We cannot allow what we have fought hard for over the decades to just simply evaporate because some people dont understand. I know what inviddious discrimination is like. Ive been to colored water fountains, ive had to sit in the back of the bus, in the balanybal balcony of the movies. I know what im talking about. I know what it smells like. Ive gone to those filthy fountains. I know what it looks like. Ive had the clan to protest. Because of my protestations. Im going to stand and i want it very well known that we cannot allow poor people to go without efficacy in the congress of the United States of america. Now, who is helped by the federal rental Assistance Program . Elderly with children the elderly themselves. The disabled with children, disabled adults. More than 50 of the people on federal assistance are disabled, elderly and children. Are we saying that america no longer wants to help the disabled, the elderly and the children . Have we gotten to a point now where weve got to cut through the bones all the way to the elderly, all the way to the disabled . Is this the america that we have fought hard to create . I stand with you and i promise you, especially
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