Multifamily Housing: HUD's Proposal to Restructure Its Portfolio

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 properties and sets lower rents than required to maintain 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, with 900,000 units, that have both Federal Housing Administration mortgage insurance and project-based section 8 assistance; (4) rents for 67 percent of older section 8-based properties are less than the market rents for comparable units, while the rents for 80 percent of 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 faces issues such as what processes should be used to restructure multifamily mortgages and how much the federal government should finance project rehabilitation.