Rebuilding the Research Capacity at HUD (2008) / Chapter Skim
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9 The Relationship Between Research and Policy Development
9 The Relationship Between Research and Policy Development
Pages 149-178
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From page 149... ...
This chapter describes and illustrates the relationships among the activities: in particular, how research feeds into policy development and how policy development influences research. The examples show that PD&R research (both external and in-house)
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From page 150... ...
Thus, it is necessary to take a long perspective on the contributions of PD&R to the policy development process. This is particularly true of the research program, and most particularly true in recent years as the size of the research budget has been constant or shrinking.
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From page 151... ...
That in-house study was undertaken by the first assistant secretary for policy development and research and largely staffed by individuals who became part of PD&R when it was created during the course of the study. (The study did not recommend enacting a program like Section 8 new construction, but its recommendation for income-conditioned subsidies became part of the program.)
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From page 152... ...
In 1997 Congress enacted the Mark to Market Program to preserve as much of Section 8 inventory as financially reasonable and provide housing assistance for the residents of those projects whose owners chose to convert them to market-rent housing. Rents were marked down to the fair market rents for existing housing in the local market, thus lowering the subsidy.
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From page 153... ...
government delivered rental housing subsidies to low-income households exclusively through the construction and operation of housing projects for these households. Local public housing authorities operated all of the projects built during the first 17 years.
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From page 154... ...
In 1973, the National Housing Policy Review Taskforce produced the first estimates of the cost-effectiveness of low-income housing programs. This research indicated that the total cost of the housing provided under the public housing program and Section 236, HUD's largest program that subsidized the construction of privately owned projects, significantly exceeded the market rents of these units and hence that households with tenant-based assistance could occupy equally good housing in the private market at a lower cost to taxpayers (U.S. Department of Housing and Urban Development, 1974)
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From page 155... ...
The savings to taxpayers from the shift in budget from project-based to tenant-based assistance since 1974 has enormously exceeded the combined cost of the Housing Policy Review Taskforce, the HUD-funded coste ffectiveness studies of the late 1970s and early 1980s, and indeed the entire budget of PD&R over the past three decades. The lowest estimate of the excess cost of project-based relative to tenant-based housing assistance for providing equally good housing based on detailed data on the housing provided is 35 percent.
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From page 156... ...
Housing Vouchers HUD's Section 8 Housing Choice Voucher Program is the largest lowincome housing program in the United States. It costs about $15 billion a year, accounts for almost one-half of HUD's budget, and serves about 2 million of the poorest families in the country.
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From page 157... ...
These studies have estimated the effects of housing vouchers in comparison with no housing assistance and alternative types of housing assistance, and they compared the performance of different types of housing vouchers. They have produced reliable information on a wide range of effects of housing vouchers that is of enduring value for housing policy development.
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From page 158... ...
metropolitan areas, was primarily intended to see how recipients would respond to different types of household-based housing assistance and, for a given type, to different program parameters. The most influential demand experiment research went beyond a comparison of different types of household-based assistance: it compared the effects of the minimum-standards housing allowance program with the major established housing programs in existence at the time, namely, public housing, Section 236, and Section 23 programs.
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From page 159... ...
These findings eventually led policy makers to consolidate the two programs into a single program (the Housing Choice Voucher Program, enacted in 1998) that combined features of the older certificate and voucher programs.
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From page 160... ...
In addition to informing the debate about the performance of the voucher program, the success rate studies have led to specific policy reforms. For example, the finding of the earliest study that larger families had lower success rates than smaller families that were the same with respect to other characteristics led HUD to increase fair market rents for larger units in the voucher program in 1983.
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From page 161... ...
HUD recently launched the final phase of the MTO evaluation, and its results will inform the ongoing debate about how far to go in offering housing vouchers to occupants of the worst public housing projects. The HOPE VI Program has offered housing vouchers to tens of thousands of such families over the past 15 years, and the 1998 QHWRA mandated the vouchering out of additional public housing projects under certain circumstances and allowed it under others.
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From page 162... ...
HUD subsequently conducted in-house research on the geographic distribution of vouchers across the country, as well as the geographic distribution of rental housing at below fair market rents (Devine et al., 2003)
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From page 163... ...
Specifically, in the 50 largest metropolitan areas, the voucher program applies to only about 2 percent of all occupied housing units and 6 percent of all rental units with rents below the applicable fair market rents. Virtually all census tracts contain at least some units with rental housing that is below fair market rents, and 83 percent have at least some voucher recipients living in them.
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From page 164... ...
(As noted above, the National Housing Policy Review began before PD&R was created, but the review staff included many individuals who became part of PD&R, including the first assistant secretary, Michael H Moskow, and three of the four deputy assistant secretaries.)
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From page 165... ...
Politically, the potential losers have always been able to prevent change. The CDBG formula research did affect policy, however; in 1990 Congress enacted a second block grant, the HOME Investment Partnerships Program.
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From page 166... ...
.10 This research represented the first effort to use paired testing to gain a nationally representative measure of differential treatment discrimination against blacks as they sought rental and sales housing in metropolitan areas. Paired testing was a pathbreaking approach insofar as it was the first attempt to directly measure discrimination in housing.
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From page 167... ...
, a private enforcement initiative testing program. FHIP was begun as a demonstration with the 1987 Housing and Community Development Act, with a segment of the effort devoted to funding private, nonprofit fair housing groups to conduct paired testing as part of an enhanced fair housing enforcement effort.
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From page 168... ...
. PD&R also took the lead in commissioning the Urban Institute to undertake two research projects involving new forms of paired testing in realms where this technique was in its infancy.
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From page 169... ...
The resulting papers appeared in a massive coedited volume, Mortgage Lending, Racial Discrimination, and Federal Policy (Goering and Wienk, 1996)
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From page 170... ...
Despite these endorsements, PD&R has not funded paired testing in all contexts of transactions for which they would be appropriate. The three national paired-testing housing discrimination studies funded to date by PD&R have all involved in-person encounters between housing agents and testers.
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From page 171... ...
The report concluded that Fannie Mae had a positive net worth, but that its net worth had been negative every year from 1978 to 1984, a period of large and unexpected interest rate fluctuations, and that it continued to incur substantial risk from future fluctuations. In 1989 the Financial Institutions Reform, Recovery and Enforcement Act converted Freddie Mac (FHLMC)
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From page 172... ...
Until the passage of the Housing and Economic Recovery Act of 2008, HUD has had the responsibility to analyze the mortgage and housing markets and GSE activity, and based on these analyses to set new goals by regulation every few years. More than a dozen working papers have been prepared by PD&R staff, primarily in the Office of Economic Affairs, documenting the extent to which the GSEs fund affordable loans, loans to minority home buyers, loans to first-time home buyers, and loans for multi family housing projects.
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From page 173... ...
PD&R staff also prepared a substantial analysis of the goals established in the major bill introduced into the House of Representatives in 2007; as a result, the proposed legislation was changed to incorporate single-family rental housing in the goals, and the GSEs' "ability to lead the market" was added as a factor to be considered in establishing specific single-family housing goals. The Housing and Economic Recovery Act of 2008 contains a requirement for the GSEs to report on the number of rental units affordable to low-income families contained in mortgage purchases of 2-4 unit owner-occupied properties, and permits the new regulator to establish requirements for such units.
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From page 174... ...
Subprime Mortgages PD&R's research on subprime lending started in the mid-1990s, when subprime loans were a very small share of the mortgage market and largely unknown to policy makers or the public. In 1994 PD&R developed a list of subprime lenders, based on data collected under the Home Mortgage Disclosure Act (HMDA)
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From page 175... ...
. The assistant secretary for policy development and research also convened a conference in 2006 to obtain information about recent changes in subprime mortgage instruments and a second conference in 2007.
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From page 176... ...
. The evaluation, which is being conducted by Abt Associates, will describe the current state of the counseling industry and then evaluate the effectiveness of pre-purchase counseling in forestalling mortgage default, including both an analysis of the counseling services received by currently delinquent homeowners and a controlled experiment of future home buyers as part of the evaluation.
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From page 177... ...
The task force also led to a roundtable on predatory lending in 2001, cochaired by assistant secretaries from Treasury and HUD and a member of the Board of Governors of the Federal Reserve, bringing together consumer advocates and industry representatives for vigorous discussion. Setting GSE Affordable Housing Goals The HUD list of subprime lenders has also been used for more than a decade to establish the affordable housing goals for Fannie Mae and Freddie Mac.
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From page 178... ...
For example, an administration proposal contained in each year's budget during 2003-2005, to allow FHA to compete with subprime lenders, was not approved by Congress. Conclusion The relationship between research and policy development is complex and ongoing.
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