Section 236 Rental Housing:

An Assessment of HUD's Comments on GAO's Evaluations

PAD-78-62: Published: Apr 20, 1978. Publicly Released: Apr 20, 1978.

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A report issued in January 1978 comprehensively evaluated the section 236 rental assistance program and made recommendations to Congress and the Department of Housing and Urban Development (HUD) which would ensure that moderate income households receive a reasonable share of future housing assistance. The report concluded that the section 236 program had been successful in producing quality housing units in record numbers and in providing this housing to a tenant group drastically different from the very low-income households aided by conventional public housing programs or by the section 8 leasing program. The report recommended that HUD take measures to see that moderate income households receive an equitable share of federal housing assistance and that section 236 be reactivated until a preferable alternative is developed.

HUD shared the view that the program was an effective means of assisting a segment of the housing poor. However, they felt that the inflexibility of the section 236 subsidy mechanism which tied payments to the mortgage debt, in combination with general multifamily insurance problems, undermined the long term economic viability of section 236. HUD noted that it was exploring other methods to aid moderate income households and agreed that HUD had a responsibility to respond to the housing needs of the entire range of the housing deprived. Current housing policy includes nothing for this income group. In the meantime, the supply of moderately priced rentals continues to shrink. The January 1978 report also noted that the long-term costs of housing programs are often inadequately analyzed, particularly the long-term subsidy costs of leasing existing units under section 8.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: The Secretary of HUD should: (1) develop criteria for judging the performance of multifamily insurance programs and procedures for screening out unacceptable risks; (2) provide Congress with an understandable analysis of past program mortgage failures; (3) evaluate new Federal Housing Administration insurance programs or program changes in terms of likely insurance losses; and (4) suspend commitments for nonprofit, cooperative, and rehabilitation projects until they have the capability to screen out unacceptable risks.


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