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Questions and Answers about HUD

What Is the Department of Housing and Urban Development?

Created as part of President Lyndon B. Johnson's War on Poverty, the Department of Housing and Urban Development (HUD) was established as a Cabinet Department by the Department of Housing and Urban Development Act (42 U.S.C. 3532-3537), effective November 9, 1965. It consolidated a number of other older federal agencies.

What Is HUD's Mission?

The Department of Housing and Urban Development is the Federal agency responsible for national policy and programs that address America's housing needs, that improve and develop the Nation's communities, and enforce fair housing laws. HUD's business is helping create a decent home and suitable living environment for all Americans, and it has given America's communities a strong national voice at the Cabinet level. HUD plays a major role in supporting homeownership by underwriting homeownership for lower- and moderate-income families through its mortgage insurance programs.

What Are HUD's Major Programs?

The primary programs administered by HUD include:

 - Mortgage and loan insurance through the Federal Housing Administration
 - Community Development Block Grants (CDBG) to help communities with economic development, job opportunities and housing rehabilitation;
 - HOME Investment Partnership Act block grants to develop and support affordable housing for low-income residents;
 - Rental assistance in the form of Section 8 certificates or vouchers for low-income households;
 - Public or subsidized housing for low-income individuals and families;
 - Homeless assistance provided through local communities and faith-based and other nonprofit organizations;
 - Fair housing public education and enforcement.

What Does HUD Do?

HUD has a record of accomplishments that spans more than 30 years. Thousands of communities and tens of millions of Americans have benefited from HUD's housing and community development programs.

For instance:

Since 1934, the Federal Housing Administration has insured over 30 million single family home mortgages. In FY 2002, an estimated 1.1 million additional families will use FHA mortgage insurance to become new homeowners.

Ginnie Mae, a wholly-owned federal corporation within HUD, pioneered the Mortgage Backed Security. These government-backed securities lower market interest rates and create homeownership incentives, and enabled Ginnie Mae to add more than $1.5 trillion to the supply of America's affordable mortgage funds.

HUD continues to play a major role in providing shelter for America's most vulnerable populations: the working poor, minorities, Native Americans, people with disabilities, people with AIDS, the elderly, the homeless.

More than 7 million families have lived in locally-managed, HUD supported public housing. Today, HUD helps provide decent, safe and affordable housing to more than 4.3 million low-income families through its public housing, rental subsidy and voucher programs.

What Is the Community Development Block Grant Program?

HUD's Community Development Block Grant (CDBG) program was created in 1974 to assist states and communities, combining a variety of old, narrow, categorical programs; it is one of the oldest of all federal block grant programs. It is administered by the Office of Community Planning and Development (CPD).

CDBG funds are awarded on a formula basis, and may be used for a wide range of activities. Funds must be spent to meet one of three broad national goals: Aid low and moderate-income persons; prevent or eliminate slum or blight conditions, or meet an urgent need that threatens health or safety. At least 70 percent of the funds must be used for activities that benefit low- and moderate-income persons. Actual uses of the funds are determined by state and local jurisdictions through the comprehensive strategic planning process developed by CPD. Communities and states are accountable to HUD for how funds are spent.

The CDBG formula allocates 70 percent of its funds, after set-asides, to "entitlement" communities (larger cities with populations over 50,000, central cities and urban counties) and 30 percent to states which are distributed to smaller communities. CDBG funds are used to renovate housing; construct or improve public facilities, such as water, sewer, streets and neighborhood centers; purchase real property; and assist private businesses in economic development activities.

Since the program began, over $95 billion has been allocated to grantees. Currently, 838 cities and 153 counties that are eligible to receive a CDBG entitlement grant directly from HUD. In addition, 49 States and the Commonwealth of Puerto Rico award more than 3,000 CDBG grants to other small cities and counties from CDBG funds allocated to the States by HUD each year. HUD awards funds for Nonentitlement grants to Hawaii's three nonentitlement counties on a formula basis.

Under the Section 108 Loan Guarantee component of the CDBG program, communities can obtain financing for economic development, housing rehabilitation and large-scale physical development projects. A grantee must pledge their current and future CDBG funds as security for the loan guarantee, and also will be required to identify additional security, as necessary.

What Is "Assisted" Housing?

HUD "assists" low-income households with rental subsidies in the private sector, primarily through Section 8 certificates and vouchers, through the Office of Public and Indian Housing. Families seeking assistance apply thorough their local public housing agency.

Under the voucher program, tenants have greater freedom of choice to select housing where they want to live within a standard rent range.

Under the Section 8 certificate program, rent subsidies are used to pay owners the difference between what tenants can pay and contract rents.

Public and Indian Housing (PIH) also provides funds for the rental voucher, certificate and Moderate Rehabilitation programs that are managed by local public housing agencies (PHAs) created by state law and administered by local governments.

Overall, more than 3 million households will receive Section 8 rental assistance this year.

HUD also administers a Housing Counseling Program to assist tenants and homeowners in property maintenance, financial management and other matters.

How Does Public Housing Work?

Public housing programs provide direct payments to Public Housing Agencies (PHAs) and Indian Housing Authorities (IHAs) to develop and operate housing for low-income families. The Office of Public and Indian Housing (PIH) administers HUD's public housing programs.

HUD provides financial assistance to about 3,350 Public and Indian housing authorities that provide public housing and services to 1.3 million households.

HUD's HOPE Program is being used to tear down dilapidated public housing developments...how does that work?

The HOPE VI (Homeownership and Opportunity for People Everywhere) program, also administered by the Office of Public and Indian Housing, provides funds to transform the nation's most distressed public housing into communities of hope.

Since the inception of the HOPE VI program in 1993, there have been a total of 149 revitalization grants awarded, totaling $4.05 billion, to integrate public housing into surrounding communities and provide residents the skills to contribute to their communities.

HOPE VI funds are used to replace current-buildings with lower-density units. Based on the principles of architectural reconfiguration, integration of services and resident contributions, the funds go to replacing and rehabilitating neighborhood homes, providing job training and encouraging neighboring businesses to hire public housing residents. They also are used for joint ventures on private multifamily housing financing for Section 8 rentals, wiring selected units for computers and Internet communications, and developing mixed-income housing with rental and homeownership choices in public housing neighborhoods.

Through the HOPE VI Program HUD stresses involving public housing residents in the leadership and management of their developments. It also links public housing to work and stresses self-sufficiency, including graduation to conventional rental housing and homeownership.

How Do the Homeless Get Help from HUD?

HUD provides funds to state and local governments and to nonprofit organizations to assist homeless individuals and families. The funds are used to help the homeless move from the streets, to temporary shelter, to supportive housing (with services, if necessary), and ultimately back to the mainstream of American life. .

HUD's homeless efforts began on a national level with the Stewart B. McKinney Homeless Assistance Act of 1987, which provided the first direct HUD programs to help communities deal with homelessness.

The Office of Community Planning and Development (CPD) administers most of HUD's homeless assistance programs, including:

Shelter Plus Care - HUD provides grants for rental assistance to homeless persons with chronic disabilities under the Shelter Plus Care program. Eligible recipients are state and local government units, public housing agencies and Indian tribes. To receive the funds each recipient must provide supportive services at least equal in value to the rental assistance. Supportive services would address mental illness, substance abuse and acquired immunodeficiency syndrome (AIDS) and related diseases.

Supportive Housing - Supportive Housing grants go to state and local governments, Indian tribes and nonprofit organizations to provide short-term transitional housing and services to deinstitutionalized homeless individuals, families with children, individuals with mental disabilities and others, including AIDS victims. States may receive funds for long-term housing projects for homeless handicapped persons. HUD provides grants for acquisition, rehabilitation, new construction and annual payments for operating costs and supportive services. HUD also provides technical assistance. Participants must match the acquisition, rehabilitation or new construction costs and provide a percentage of the operating costs.

Section 8 Moderate Rehabilitation (SRO) - Public and Indian housing agencies and private nonprofit organizations compete for Section 8 Moderate Rehabilitation grants based on local needs and their ability to provide single-room occupancy (SRO) housing for homeless persons.

Emergency Shelter Grants - Emergency Shelter Grants are distributed to states, entitlement cities and counties and territories on a formula basis, and to Indian tribes. The funds may be used to renovate, rehabilitate or convert buildings to be used as shelters for homeless persons. The funds also may be used to operate emergency shelters, provide essential services to homeless individuals and to prevent homelessness.

Housing Opportunities for Persons with AIDS (HOPWA) - HOPWA provides housing assistance and supportive services to prevent homelessness of low-income persons with HIV/AIDS and their families, and to devise long-term comprehensive strategies for meeting the housing needs of persons with AIDS and their families. Eligible activities include construction, acquisition, renovation and operation of facilities; rental assistance and short-term housing payments; supportive services; technical assistance, and other housing-related activities. Ninety percent of HOPWA funds are allocated on a formula basis to states and metropolitan areas that have the largest number of AIDS cases. Governments and nonprofit organizations also may compete for 10 percent of the funds to develop model programs.

What Is the HOME Program? How Is It Different from Other HUD Low-income Housing Programs?

The HOME Investment Partnerships Program was created by the 1990 Cranston-Gonzalez National Affordable Housing Act. It provides funds to participating jurisdictions to increase the supply and affordability of housing and homeownership for low-income families. It is administered by HUD's Office of Community Planning and Development (CPD).

HOME funds are distributed on a formula basis, similar to the Community Development Block Grant (CDBG) program, and are administered locally through community development departments or housing finance agencies. Participating jurisdictions include states, large cities and urban counties, consortia, Indian tribes and territories.

Participating jurisdictions must provide a 25 percent match for housing activities funded by HOME. Since the program began, it has awarded more than $10.7 billion in HUD funds, including $1.5 billion in FY 2000 and assisted more than 377,000 households.

How Do HUD's Fair Housing Programs Work?

Federal Fair Housing statutes prohibit housing discrimination based on race, color, national origin, sex, religion, families with children, and disabilities.

HUD's programs to prevent housing discrimination through public education and enforcement are administered by the Assistant Secretary for Fair Housing and Equal Opportunity (FHEO).

In addition to investigating and resolving housing discrimination complaints under the Fair Housing Laws, FHEO conducts compliance reviews of HUD funds recipients, ensures equal employment opportunity and affirmative action within HUD and ensures that HUD programs provide equal opportunity.

Under its Fair Housing Assistance Program (FHAP), FHEO assists state and local governments in becoming certified -- having "substantially equivalent" fair housing laws -- and processing complaints with technical assistance and training grants.

FHEO's Fair Housing Initiatives Program (FHIP) funds public agencies that have "substantially equivalent" fair housing laws and also private nonprofit organizations. These public and private organizations assist HUD in enforcement activities including testing, investigating, and resolving complaints. FHEO refers complaints arising in certified jurisdictions to those government agencies for investigation and prosecution.

FHIP also funds public education and outreach programs conducted by the fair housing organizations to make the public aware of what constitutes discrimination and promote voluntary compliance in the housing industry.

Are Any HUD Housing Programs Available for Persons Who Are Not Very Low Income?

FHA assists first-time buyers and others who might not be able to meet down payment requirements for conventional loans by providing mortgage insurance to private lenders. It also insures loans for home improvements and buying manufactured (mobile) homes.

This is done through the Federal Housing Administration (FHA), a branch of HUD which works through local mortgage lending institutions to provide Federal mortgage and loan insurance for homeownership and the construction or improvement of affordable housing.

There are a variety of general and targeted mortgage insurance and loan programs administered by the Office of Housing/Federal Housing Commissioner.

As of October 1, 2000, FHA has insurance in force on 6.7 million single-family dwellings, totaling $480 billion.

The Mutual Mortgage Insurance Fund insures most of these loans. MMI is designed to be a self-sustaining fund requiring no annual appropriations.

Interest rates on FHA loans are generally market rates, while down payment requirements are lower than for conventional loans. FHA loans cannot exceed the statutory limit.

When buyers become seriously delinquent on their loans, their mortgage companies usually foreclose and file insurance claims with HUD for the amount still owed on the loan. HUD pays the claim and becomes the owner of the property. The HUD Property Disposition staff across the nation and its contractors maintain and market these properties.

FHA also assists in providing affordable rental housing by insuring loans to developers and builders who construct or rehabilitate apartments and other multifamily housing developments.