Issues Related to Mark-to-Market Program Reauthorization
GAO-01-871T: Published: Jun 19, 2001. Publicly Released: Jun 19, 2001.
This testimony discusses the Mark-to-Market Program, which provides for low-income rental housing while reducing the federal government's costs for rental subsidies. The program, which is administered by the Department of Housing and Urban Development's (HUD) Office of Multifamily Housing Restructuring (OMHAR), provides the framework to restructure insured Section 8 properties in HUD's multifamily housing portfolio by lowering their rents to market levels when their current Section 8 contracts expire and reducing their mortgage debt if such action is necessary for the properties to continue to have a positive cash flow. Without restructuring, rents for many of the 8,500 properties in HUD's portfolio would substantially exceed market levels, resulting in higher federal subsidies under the Section 8 program. Legislative authorization for the Mark-to-Market program and OMHAR is scheduled to end on September 30, 2001. If authorization is not extended, HUD will still be required to renew Section 8 contract rents at market levels, but the tools established by the Multifamily Assisted Housing Reform and Affordability Act for restructuring mortgages will no longer be available. This testimony focuses on (1) the status of the Mark-to-Market program, (2) factors that have affected the pace of program implementation and the actions HUD has taken to address these factors, and (3) the advantages and disadvantages of extending the program past its statutory termination date and of transferring program responsibilities to HUD or keeping them with OMHAR.