Multifamily Housing: HUD's Mark-to-Market Proposal

GAO discussed the Department of Housing and Urban Development's (HUD) proposal to restructure its multifamily housing portfolio. GAO noted that: (1) HUD pays higher costs than necessary to subsidize low-income properties and sets lower rents than required to maintain the properties' physical condition; (2) HUD has proposed to replace project-based assistance with tenant-based assistance and restructure mortgages for properties, when needed; (3) HUD is targeting about 9,000 properties that receive both Federal Housing Administration mortgage insurance and project-based section 8 assistance; (4) rents for 67 percent of section 8-based properties are less than the market rents for comparable units, while the rents for 80 percent of the newer projects exceed comparable market rents; (5) the costs and savings associated with the HUD proposal are unclear; and (6) in considering the HUD proposal, Congress needs to consider what processes should be used to restructure multifamily mortgages and how much the federal government should finance project rehabilitation.