The Administration supports H.R. 1776, which would promote wider
homeownership opportunities for Americans and would codify new HUD
programs and recent Administration reforms. The Administration is
pleased that H.R. 1776 would reauthorize many successful, existing HUD
programs, and establish a new framework for manufactured housing safety
standards. The Administration also supports some of the specific
provisions for USDA Rural Housing Programs, especially the removal of
the requirement that 20 percent of the multifamily housing guarantee
loans be subsidized. The Administration does, however, have concerns
with several specific provisions of the bill, which are discussed below.
The bill, as drafted, has a constitutional defect by vesting
significant federal authority in the manufactured housing consensus
committee, the members of which occupy federal offices but are not
appointed in conformity with the Appointments Clause. To remedy this
constitutional defect, H.R. 1776 should provide expressly that the
consensus committee is appointed and supervised by the Secretary and
should not limit the Secretary to appointing only individuals
recommended by the administering organization. Further, the deadline
provided for making the initial appointments raises serious
constitutional concerns, and it should either be eliminated or made
hortatory. It is the Administration's understanding that the legislation
does not intend for the consensus committee members to become Federal
employees solely by their service on the committee. The specific
inapplicability of the Ethics in Government Act and Title18, currently
laid out in Section 601(a)(3)H(ii) and (iii) is therefore unnecessary
and should be removed so as not to confuse this issue.
The Administration supports the development of national model
installation standards for manufactured housing. Nevertheless, to
adequately implement these new mandates, the legislation should be
amended to expand the Secretary's fee-collection authority and specify
the Secretary's enforcement authority for the installation and dispute
The Administration supports the type of innovative effort in this
bill to increase homeownership for teachers and public safety officers.
This complements HUD's existing efforts to promote homeownership.
However, it is important to note that this provision will permit
individuals to purchase homes with slightly less cash investment and
therefore may slightly increase the risk of default.
The Administration is pleased that the Committee has adopted
legislation included in the President's FY 2001 budget that would create
a new hybrid adjustable rate mortgage (ARM) for the Federal Housing
Administration (FHA). However, the product can only be fully successful
if FHA's ARMs cap is increased from 30 percent to 40 percent of its
annual volume, which the bill does not do.
The Administration is concerned about several other provisions that
should either be modified or deleted, including the following:
The bill weakens income targeting in the CDBG and HOME formula
grant programs by excepting an additional 10 jurisdictions from the
national median income ''cap'' and by relaxing of income targeting
requirements under CDBG and HOME for municipal employees.
The bill makes several changes to the HOME program that, while
small, set troublesome precedents. For example, the bill provides a
special rent subsidy exception for ''grandfamilies,'' i.e., elderly
heads of household with grandchildren. Once an exception is made for
one special needs population, more exceptions would follow. Further,
as drafted, this additional subsidy may not result in any additional
supportive services. The Administration is also concerned that several
provisions, such as the optional pledge of collateral other than grant
allocations and providing 100% loan guarantees, would weaken credit
standards and increase the Federal Government's costs.
The rural housing provision in Title X regarding "excess fees" to
be used for administrative expenses without further appropriation
violates Federal credit standards and could jeopardize portfolio
management if permitted.
The bill's establishment of a Land Title Report Commission, which
would analyze the Bureau of Indian Affairs' (BIA's) system of
maintaining land ownership records and determine how best to modify
the system, duplicates existing congressional and judicial
supervision, and fails to address the fractionation of land held in
trust, which is the fundamental cause of expanding workload in BIA's
While we support the goal of increasing homeownership
opportunities for persons with disabilities and others, the tenant
based pilot program for disabled homeownership, as authorized in the
bill, is unnecessary, and it inappropriately raises the program's
income limits which ensure those with the most severe housing needs
The bill requires transfer of ownership of HUD-owned housing under
certain circumstances and limits HUD's flexibility in accepting bids,
which would depress sales prices. HUD already has the authority to
achieve these transfers.
The bill allows HUD to waive environmental review compliance
requirements outlined in section 703(d). The Administration supports
alternate methods of assisting tribes to reach compliance without
compromising environmental protection laws.
The bill codifies the requirements already contained in Executive
Order 12866 on regulatory planning and review. Thorough consideration
of potential impacts of agency regulatory actions on particular
sectors of the economy, legislating such requirements can be
inflexible and burdensome and can hinder regulatory efficiency.
The Administration looks forward to working productively with the
Congress to address these and other concerns.
H.R. 1776 would affect direct spending; therefore, it is subject to
the pay-as-you-go requirement of the Omnibus Budget Reconciliation Act
of 1990. The Administration's preliminary estimate is that the bill
would produce a PAYGO cost of between $25 million and $50 million per
year. The modifications suggested above would eliminate this cost.