Bloomberg News

HUD Pledges Improved Oversight of HOME Program After Missteps

November 04, 2011

Nov. 4 (Bloomberg) -- The Department of Housing and Urban Development is proposing greater oversight of a $1.6 billion low-income housing program that has been criticized for excessive waste and fraud.

HUD Secretary Shaun Donovan said today that the proposed regulations would improve the performance and accountability of the HOME Investment Partnerships Program, which directs federal money to states and localities to use to build or buy affordable housing.

“We want to expand HOME’s impact and ensure that every dollar is used smartly to help families afford their homes,” Donovan said in a press release announcing the rule. The new rules have been in the works since 2009, according to the release.

The proposed changes would require state and local governments to improve oversight of HOME projects. Jurisdictions would have to examine the financial health and capacity of participating developers and non-profit groups. They would be required to establish procedures to protect homebuyers from predatory lending and consider local housing needs before approving a project.

Between 20,000 and 30,000 projects are currently under way in more than 640 jurisdictions. The block grant program allows jurisdictions to tailor the program to local needs.

HOME’s flaws were highlighted in a May report by the Washington Post, which found hundreds of projects stalled or idled. The program most recently was the target of a House oversight hearing.

Representative Randy Neugebauer, the Texas Republican who leads the House Financial Services Committee oversight panel, called HOME “government waste at its worst,” beset with delayed and abandoned projects, inadequate oversight and little accountability.

At the Nov. 2 hearing, two witnesses described the ease with which they were able to steal money from the HOME program. Both had been convicted of fraud.

--Editors: Lawrence Roberts, Maura Reynolds

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To contact the reporter on this story: Lorraine Woellert in Washington at lwoellert@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net.


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