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The Relationship Between Housing and Overall Quality of Life

person A.J. Johnson today 01/25/2016

The Relationship Between Housing & Quality of Life   When examining ways to increase affordable housing opportunities, ensuring that opportunity is not limited by where a person lives is critical. Unfortunately, today where people live depends on large part on their income, race, and ethnicity. A critical element in ensuring housing stability is the pursuit of policies that help all households find decent and affordable housing in neighborhoods that offer safety, stability, and opportunity.   There is a lot of anecdotal evidence that one of the best ways to achieve the goal of meeting the affordable housing needs of the country is a two-pronged approach. First, promote residential mobility and a deconcentration of poverty, while second, supporting reinvestment in racially segregated and economically impoverished neighborhoods. The basic building blocks of opportunity are high-quality housing, jobs, good schools, transportation, and healthcare.   In this article, I want to highlight some of the latest research that demonstrates the correlation between where a person lives and quality of life. I want to outline proposals from academia, government and interest groups relating to affordable housing and economic opportunity. Recommendations from these groups relate to the following areas:
  • Use tax policy to increase the supply of affordable rental housing;
  • Eliminate restrictive and exclusionary zoning that keeps households out of high-opportunity neighborhoods;
  • The importance of the federal housing voucher program and how to better equip the program in ways that will help households access high opportunity neighborhoods;
  • Examination of a comprehensive approach to revitalizing high-poverty communities;
  • Preservation of affordable rental housing;
  • Ensuring that the secondary market continues to support affordable rental housing; and
  • Maintenance of single-family rentals as a source of affordable housing.
  Not all Housing is Created Equal   A strong housing market helps families build wealth, attend good schools, and live in community’s that are more conducive to long-term success. However, segregation and pockets of poverty remain significant problems. This residential segregation has been exacerbated by a long history of disinvestment, discrimination, and counter-productive public policy at all levels of government. One of the best studies I have seen on this problem is "The Making of Ferguson: Public Policies at the Root of its Troubles," by Richard Rothstein. The report outlines policies in Ferguson, MO that contributed to the racial divide of that city, and many of those same public policies have been implemented in cities across the country. Such policies include urban renewal plans that show little regard for existing residents and often result in involuntary displacement and higher rates of segregation.   America is in many ways a deeply segregated society, both by race and income. In the past 30 years, residential segregation by income has actually increased. Middle-income neighborhoods are in decline and rich and poor are increasingly isolated from other families. In fact, the income, wealth, and educational attainment of the highest income neighborhoods is increasing, while low-income areas are stagnating (see "Worlds Apart: Inequality between America’s Most and Least Affluent Neighborhoods," Rolf Pendall and Carl Hedman, published by the Urban Institute in 2015).   Discrimination continues to play a major role in segregation. African Americans seeking homes are shown fewer units than white, and when they are shown homes, they are often steered away from white neighborhoods (see "Housing Discrimination Against Racial and Ethnic Minorities 2012," published by HUD in 2013). Also, wealthy communities continue to adopt exclusionary zoning regulations designed to keep the poor out. For those interested in reading more on this subject, an excellent article appeared in the Washington Post on August 13, 2014, "One of the Best Ways to Fight Inequality in Cities: Zoning," by Daniel Hertz.   Many Americans live in high poverty areas because those are the only neighborhoods with affordable rent. Government programs help create and preserve some affordable housing in higher income neighborhoods, but the numbers are too low to come close to meeting need. There is also a shortage of landlords willing to participate in the Section 8 Voucher Program, further limiting the potential for affordable housing in wealthier areas.   13.8 million Americans now live in high-poverty neighborhoods (defined as those where more than 40% of residents are poor), nearly twice as many as in 2000 (see "Architecture of Segregation: Civil Unrest, the Concentration of Poverty, and Public Policy," by Paul A. Jargowsky, published by The Century Foundation in 2015). Communities with high levels of poverty often lack amenities such as high-quality schools, day care centers, recreational facilities and access to high quality jobs. Instead, these areas are often identified by violence, stress, and environmental hazards. There is also often a lack of positive peer influences for children in these areas.   Children in poverty-stricken neighborhoods are also less successful in school, less likely to attend college, and more likely to drop out before high school graduation. Research by Harvard University economist Raj Chetty and others has shown that living in areas that are more segregated by race or income also reduces economic mobility (see "Where is the Land of Opportunity? The Geography of Intergenerational Mobility in the United States," Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez, published in The Quarterly Journal of Economics, in 2014). The same research noted above also found that people living in less segregated, low-poverty neighborhoods have a much better quality of life and more economic opportunity - even when they have lower incomes. Children in these households also perform much better academically than children in segregated, lower-income neighborhoods. Young children who move to higher income areas are much more likely to attend college and less likely to become single parents (see "The Effects of Exposure to Better Neighborhoods on Children: New Evidence from the Moving to Opportunities Project," also by Chetty, Hendren, and Lawrence F. Katz, published by Cambridge in 2015).   The Impact of Rent Burden on Household Success   About 50% of all renters spend more than 30% of their income on housing, and 26% spend 50% of their income on housing. An analysis from Enterprise Community Partners and the Harvard University Joint Center for Housing Studies projects that the number of households spending 50% or more of their income on rent will increase from 11.8 million to 13.1 million by 2025 (see "Projecting Trends in Severely Cost-Burdened Renters: 2015-2025," Allison Charette and others, Enterprise Community Partners, 2015).   I recently wrote an article for The Tax Credit Advisor on the new HUD Rule regarding the Affirmatively Furthering Fair Housing Assessment Tool. This rule requires recipients of federal housing and community development funding to foster more inclusive communities, promote equal access to community assets, and combat segregation and concentrated poverty. Under the rule, communities need to examine residential patterns and determine whether their laws, policies, and practices are barriers to affirmatively furthering fair housing. If a community determines that a law, policy, or practice is a barrier, it must then take steps to address it. While the goal of the rule is laudable (ensure that low-income renters can live in higher opportunity neighborhoods and revitalize distressed communities), it may be an overreach and could be construed as "social engineering." There is considerable opposition in Congress to the rule and its long-term implementation is by no means assured.   After paying for housing, the average severely cost-burdened low-income household has barely more than $15 per day to meet all other basic needs - including food, transportation, health care, and savings. This calculation is based on the Joint Center for Housing Studies of Harvard University, "America’s Rental Housing: Evolving Market and Needs" (2013). Based on this same study, a low-income renter living in affordable housing can spend two-thirds more on food, double the amount on health care, and nearly triple the amount on transportation, as are those who are rent-burdened.     While most low-income households have limited access to high opportunity areas, households that receive Housing Choice Vouchers tend to fare much better. However, there are still barriers to the ability of voucher holders to access better communities. High costs and a shortage of landlords willing to participate in the voucher program are primary impediments.   Industry-Wide Policy Recommendations   There are many proposals in the affordable housing industry on how to address the issues of affordability and availability. Chief among these are recommendations regarding how to use tax policy to increase the supply of affordable rental housing.   Due to funding limitations, only 25% of households that are eligible for federal rental assistance actually receive it (see "Chart Book: Federal Spending is Poorly Matched to Need," by Barbara Sand and Will Fischer, published by the Center on Budget and Policy Priorities, 2013). Waiting lists for federal assistance are incredibly long, and many localities have closed these lists because most people on the list cannot expect to receive assistance due to the wait times. Between 90,000 and 95,000 affordable units are created or preserved by the Low-Income Housing Tax Credit Program (LIHTC), but due to limitations on the amount of credit made available by Congress, the program cannot address the current shortage of 4.5 million affordable units. This information is available from HUD in "Data Sets: Low-Income Housing Tax Credits."   Following are recommendations for improving tax policy to address some of the affordable housing needs the nation is currently facing.   Expand and improve targeting of the LIHTC Program.   Any overall program for addressing the issue of affordability must focus on increasing the supply of affordable units. The most practical way to do this is to significantly expand the LIHTC program. The LIHTC program is the most successful affordable housing program in U.S. history, and one of the most supported by the nation’s lawmakers. A major reason for the strong support of the program is the fact that private owners of the properties have strong incentives to make the project’s successful, and it is the private industry that faces losses if the projects fail. The program also tends to create high-quality and well-planned developments.   The Bipartisan Policy Center’s Housing Commission has proposed a 50% increase in LIHTC allocations, which would preserve or create an additional 350,000 to 400,000 affordable units over a ten-year period (Bipartisan Housing Commission, "Housing America’s Future: New Directions for National Policy, " 2013). The President’s budget proposals have proposed allowing states to convert some of their private activity bond authority to allocable tax credits, thus increasing the amount of credit available to the states.   Current proposals relative to the LIHTC program also recognize the fact that not all states have the same needs relative to affordable housing. Tax credits are currently allocated to states based on population, but this formula does not recognize the disparity in need. For this reason, any additional tax credits as the result of a program expansion should be allocated proportionately to states based on their ability to demonstrate a shortage of affordable and available units for very low-income households. Some scholars have suggested changing the allocation to this proportional methodology for all LIHTC allocations - not just any increase in allocation. For an examples of this, see Bruce Katz and Margery Austin Turner, "Rethinking U.S. Rental Housing Policy: Build on State and Local Innovations," published by the Brookings Institution in 2007.   While almost half of all residents in LIHTC projects are very low-income, the program itself is not designed in a way to create housing that is affordable to the lowest income renters. Without additional subsidies - such as housing vouchers - tax credit affordability can be problematical. One way to improve affordability in the tax credit program is to permit "income averaging." Under this option, landlords would use income from rents that are charged to higher income tenants to offset the cost of providing rents that are affordable to lower-income residents.   Congress recently made permanent the 9% credit, improving program efficiency. Congress could also make permanent the 4% credit, furthering improving the program (currently the 4% credit changes on a monthly basis, and is never actually 4%).   LIHTC investments also can help support comprehensive revitalization of distressed neighborhoods. More than 45 states give priority to the rehabilitation and preservation of existing housing in their allocation plans. (For additional information on State allocation plans, see Tracy Kaufman, "Preservation Incentives in State Qualified Allocation Plans" [Washington: National Housing Trust, 2011]).   Renters Tax Credit   The largest federal housing program is the Mortgage Interest Deduction (MID) Program for homeowners. Currently, more than 75% of federal housing expenditures support homeownership. More than half of these expenditures benefit high-income households that earn more than $100,000 per year and have little difficulty affording housing. The MID is the nation’s largest housing subsidy, costing $70 billion annually (the LIHTC has cost $100 billion in nearly 30 years). In addition to the MID, homeownership support includes deductions for property taxes and exclusion of capital gains on sales of principal residences, which together cost another $65 billion per year. Legislation changing the tax code to better benefit renters would contribute greatly to the ability of lower-income renters to afford housing.   There have been a number of proposals for a renter’s tax credit, and some states already offer tax refunds or deductions to certain renters. The Center on Budget and Policy Priorities has developed a detailed plan for a federal credit program. The proposal is outlined in "Renters’ Tax Credit Would Promote Equity and Advanced Balanced Housing Policy," by Barbara Sard and Will Fischer in 2013. The proposal presents a plan whereby states would assist very low-and extremely low-income households pay an affordable share of their income for rent by providing tax credits to landlords who lease to low-income renters, charging the renters no more than 30% of their income for housing.   States would receive a capped amount of credits based on their share of the national population, with a minimum allocation for small states. States would then provide credits directly to tenants - who would use them to rent housing - or provide them to landlords - who would offer specific units at affordable rents. This proposal sounds similar to the LIHTC, but would not be tied to the cost of development in the way that the LIHTC is. While it would not add to the affordable housing stock, it would create the number of units that would be affordable to lower income renters. According to the Center on Budget and Policy Priorities, a credit in the amount of $5 billion annually would assist 1.2 million low-income households.   Eliminate Restrictive & Exclusionary Zoning   A large body of research indicates that restrictive zoning and land use policies drive up the cost of housing, making it very difficult for lower-income families to find affordable housing in high-opportunity areas. For those interested in delving into this issue, some excellent research has been done, including the following:  
  • Joseph Gyourko and Raven Malloy, "Regulation and Housing Supply." Working Paper 20536 (National Bureau of Economic Research Working Paper, 2014.
  • John M. Quigley and Larry A. Rosenthal, "The Effects of Land Use Regulation on the Price of Housing: What Do We Know? What Can We Learn?" Cityscape 8 (1) (2005).
  Approximately 38% of local governments in the nations 50 largest metropolitan areas have zoning codes that are low-density only, restricting density to less than 8 dwelling units per acre. Many of these areas’ zoning codes also prohibit the construction of typical apartment complexes. For more information on this data, see Rolf Pendall, Robert Puentes, and Jonathan Martin, "From Traditional to Reformed: A Review of the Land Use Regulations in the Nation’s 50 Largest Metropolitan Areas," 2005.   Another problem in many areas is "NIMBYism," - Not in My Back Yard. Local opposition to affordable developments remains a significant barrier to the construction of housing in certain areas.   Increase Funding for the Housing Choice Voucher Program   The federal Housing Choice Voucher Program plays a critical role in helping low-income families afford quality, safe housing. In 2015, only 25% of households that qualify for rental assistance actually receive it. While Congressional funding for the program has never been enough to come close to meeting the need, tight budget caps and sequestration have further depressed funding. Experts estimate that more than 100,000 vouchers were eliminated due to sequestration.   Most affordable housing experts have called for expansion of the program. The Bipartisan Policy Center’s Housing Commission has proposed providing vouchers for all currently unassisted, cost-burdened, extremely low-income renters (those with incomes below 30% of the median income for their area). Such an expansion would provide 3 million additional vouchers at a cost of $22 billion per year, less than 32% of the federal homeownership subsidies. While an expansion of this type would require considerable investment, the cost pales by comparison to the $70 billion spent annually on the MID.   HUD has taken some steps to expand the use of the voucher to higher-income areas. One action that HUD will be taking is basing the value of a voucher on the ZIP code in which a tenant rents, rather than on a uniform standard that is set across an entire metropolitan area; this variable valuation will help voucher holders afford units in more expensive neighborhoods. A demonstration of this concept in Dallas showed that this change helps voucher holders move to safer and low-poverty neighborhoods.   HUD also recently simplified the portability procedure for using a voucher outside of the original jurisdiction that issued it.   Approaches to Revitalization of High-Poverty Communities     In "An Opportunity Agenda for Renters," Center for American Progress stated, "Revitalizing distressed communities requires a comprehensive set of strategies that helps residents live in communities that enable them to access better life opportunities." What this essentially means is that as important as affordable housing is, when it stands alone without providing reasonable access to jobs, health service, etc., the efficacy of the affordability is diminished.   Affordable housing should be an integral part of a revitalization plan, and a good revitalization plan recognizes the barriers that residents of high-poverty communities experience, including limited access to quality housing and transportation, high rates of crime, barriers to securing employment, poor schools, and limited economic activity.         Preservation of Existing Housing Stock   There are a number of existing programs that are designed to preserve affordable housing; these programs need to be funded.   The nation’s unsubsidized affordable housing stock is, in many cases, in a state of disrepair, lacks access to capital, and faces rising rents and conversion to owner-occupied housing. The subsidized stock is threatened by expiring restrictions on affordability as well as disinvestment and disrepair (see "Preserving Affordable Rental Housing: A Snapshot of Growing Need, Current Threats, and Innovative Solutions," published by HUD in 2013). Between 1999 and 2008, nearly 30% of units renting for less than $400 were lost from the nation’s affordable housing stock (Harvard University Joint Center for Housing Studies, State of the Nation’s Housing 2012: Key Facts," 2012). More than 200,000 units have been lost from the nation’s stock of public housing since the mid-1990s. There are 2.1 million units of subsidized affordable housing whose restrictions expire in the next ten years; half of these units are in high-rent neighborhoods where owners earn below-market rents, meaning they are likely to be lost from the affordable stock unless there is a concerted effort to preserve them as affordable (Harvard University Joint Center for Housing Studies, "State of the Nation’s Housing, 2015").   Failure to preserve existing affordable housing is a waste of federal resources that have already been invested. It is also bad from an economic standpoint. Over the long-term, constructing a new affordable unit costs 25% to 45% more than acquiring and preserving an existing affordable unit (see "Comparing the Life-Cycle Costs of New Construction and Acquisition-Rehab of Affordable Multifamily Rental Housing," by Charles Wilkins and others).   The backlog of needed repairs for the nation’s public housing totals more than $26 billion, yet the Public Housing Capital Fund, which provides funding for upgrades and repairs, is severely underfunded. An expansion of Low-Income Housing Tax Credits would assist in meeting these preservation needs, but LIHTC projects typically require additional funds from programs like HOME to be viable for the lowest-income residents.   Summary   National policies need to be developed that will create opportunities for low-income renters to access safe and affordable housing in high quality neighborhoods. It is these neighborhoods that provide the support systems needed for lifestyle success. It is not a choice between promoting residential mobility and reinvesting in distressed neighborhoods. The most successful policies will be those that enable more households to access affordable housing in high-opportunity communities while at the same time creating more opportunities in low-income areas. This goal can be achieved by taking a multi-pronged approach to addressing the affordable housing crisis. This approach includes using the tax policy to increase the supply of affordable rental housing, eliminate restrictive and exclusionary zoning, increase funding for housing choice vouchers, take a more comprehensive approach to revitalizing high-poverty communities, and focus on the preservation of existing affordable housing.  

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RD to Implement HOTMA Income and Certification Rules on July 1, 2025

Although HUD has postponed implementation of HOTMA for its Multifamily Housing Programs until January 1, 2026, the USDA Rural Housing Service (RHS) Office of Multifamily Housing has announced that the Housing Opportunity Through Modernization Act (HOTMA) will take effect on July 1, 2025, bringing significant changes to income calculation rules for multifamily housing programs. Key Implementation Details To accommodate the federally mandated HOTMA requirements, Rural Development published comprehensive updates to Chapter 6 of Handbook 2-3560 on June 13, 2025. All multifamily housing tenant certifications effective on or after July 1, 2025, must comply with the new HOTMA requirements. Recognizing the challenges of the transition period, Rural Development has announced a six-month grace period. Between July 1, 2025, and January 1, 2026, the agency will not penalize multifamily housing owners for HOTMA-related tenant file errors discovered during supervisory reviews. Legislative Background HOTMA was signed into law on July 29, 2016, directing the Department of Housing and Urban Development (HUD) to modernize income calculation rules established initially under the Housing Act of 1937. After years of development, HUD published the Final Rule on February 14, 2023, updating critical regulations found in 24 CFR Part 5, Subpart A, Sections 5.609 and 5.611. The HOTMA changes specifically affecting the RHS Multifamily Housing portfolio are contained in 24 CFR 5.609(a) and (b) and 24 CFR 5.611, which standardize income calculation methods across federal housing programs. Notable Policy Changes Unborn Child Consideration One of the most significant changes involves how unborn children are counted for household eligibility purposes. Under the new rules, pregnant women will be considered as part of two-person households for income qualification purposes, aligning Rural Development policies with other affordable housing programs, including HUD and the Low-Income Housing Tax Credit (LIHTC) programs. However, the household will not receive the $480 dependent deduction until after the child is born, maintaining consistency in benefit distribution timing. Updated Certification Forms Rural Development has released an updated Form RD 3560-8 Tenant Certification, which was initially published on December 6, 2024, and revised on April 18, 2025. The form is available on the eForms Website for immediate use. The previous version of the form has been renumbered as RD 3560-8A and should be used for all tenant certifications effective before July 1, 2025. Implementation Timeline The HOTMA implementation has experienced some delays. Originally scheduled to take effect on January 1, 2025, the Rural Housing Service announced on October 3, 2024, that implementation would be postponed to July 1, 2025, to allow additional time for property owners and managers to prepare. Rural Development initially implemented HOTMA through an unnumbered letter dated August 19, 2024, which outlined the overview and projected timeline for implementation. Industry Impact The HOTMA changes represent the most significant update to federal housing income calculation rules in decades, affecting thousands of multifamily housing properties across rural America. Property owners and managers have been working to update their systems and train staff on the new requirements. The six-month penalty-free transition period demonstrates Rural Development s commitment to supporting property owners through this complex regulatory change while ensuring long-term compliance with federal requirements. Moving Forward Multifamily housing stakeholders are encouraged to review the updated Chapter 6 of Handbook 2-3560 and ensure their staff is adequately trained on the new HOTMA requirements. Property owners should also verify they have access to the updated Form RD 3560-8 and understand the timing requirements for its use. For ongoing updates and additional resources, stakeholders can subscribe to USDA Rural Development updates through the GovDelivery subscriber page. The implementation of HOTMA represents a significant step toward modernizing and standardizing income calculation methods across federal housing programs, ultimately improving consistency and fairness in affordable housing administration.

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HUD’s Proposed Rule to Eliminate Affirmative Fair Housing Marketing Plans: A Critical Analysis

Introduction The Department of Housing and Urban Development (HUD) has proposed eliminating the requirement for Affirmative Fair Housing Marketing Plans (AFHMPs), a cornerstone of fair housing enforcement for decades. This proposed rule, published on June 3, 2025, represents a significant departure from established fair housing practices and raises serious concerns about the federal government s commitment to ensuring equal housing opportunities for all Americans. HUD s justification for this elimination rests on six primary arguments, each of which fails to withstand careful scrutiny and analysis. Background on Affirmative Fair Housing Marketing Plans AFHMPs have long served as essential tools in combating housing discrimination by requiring property owners and managers to actively market housing opportunities to groups that are least likely to apply. These plans ensure that information about available housing reaches all segments of the community, not just those who traditionally have had better access to housing information networks. Analysis of HUD s Justifications 1. Claims of Inconsistency with Fair Housing Act Authority HUD argues that its authority under the Fair Housing Act and Executive Order 11063 is limited to the "prevention of discrimination, claiming that AFHM regulations go beyond this scope by requiring outreach to minority communities through targeted publications and outlets. The agency characterizes this as impermissible "racial sorting. This argument fundamentally misunderstands both the nature of discrimination and the historical context of fair housing enforcement. Information disparities have long been one of the most prevalent and effective forms of housing discrimination. When certain groups systematically lack access to information about housing opportunities, the discriminatory effect is equivalent to being explicitly excluded. The failure to provide equal access to housing information is, in itself, a discriminatory act, not merely a neutral information gap. AFHMPs address this reality by ensuring that housing information reaches all communities, particularly those that have been historically excluded from traditional marketing channels. 2. Constitutional Challenges Under Equal Protection HUD contends that AFHM regulations violate the Equal Protection Clause by requiring applicants to favor some racial groups over others. This characterization is both inaccurate and misleading. AFHMPs do not create preferences or favor any particular group. Instead, they ensure equitable access to information by targeting outreach to communities that are "least likely to apply for specific housing opportunities. This principle applies regardless of the racial or ethnic composition of those communities. For instance, housing developments located in predominantly minority neighborhoods are required to conduct affirmative marketing in white communities since white residents would be least likely to apply for housing in those areas. The regulation is race-neutral in its application it focuses on reaching underrepresented groups regardless of their racial identity. This approach promotes inclusion rather than exclusion and advances the constitutional principle of equal protection under the law. 3. Delegation of Legislative Power Concerns HUD s third argument that the Fair Housing Act s authorization of AFHM regulations constitutes an unconstitutional delegation of legislative power represents perhaps the weakest aspect of their legal reasoning. Congress explicitly mandated that affirmative efforts be made to eliminate housing discrimination. As the administrative agency responsible for implementing congressional intent in this area, HUD possesses both the authority and the responsibility to determine the most effective means of carrying out this mandate. The development of specific regulatory mechanisms to achieve Congress s stated goals falls squarely within HUD s legitimate administrative authority and represents appropriate implementation of legislative intent rather than overreach. 4. The "Color Blind Policy Justification HUD frames its opposition to AFHMPs as part of a "color-blind policy approach, arguing that it is "immoral to treat racial groups differently and that the agency should not engage in "racial sorting. This argument mischaracterizes the function and operation of AFHMPs. These plans do not sort individuals by race or treat different racial groups unequally. Rather, they ensure that all groups have equal access to housing information by specifically reaching out to those who are least likely to receive such information through conventional marketing channels. Critically, AFHMPs require marketing to the general community in addition to targeted outreach. This comprehensive approach ensures broad access to housing information while addressing historical information disparities that have contributed to ongoing patterns of segregation. 5. Burden Reduction for Property Owners HUD argues that "innocent private actors should not bear the economic burden of preparing marketing plans unless they have actively engaged in discrimination. This position suggests that property owners should be exempt from fair housing obligations unless they can prove intentional discriminatory conduct. This reasoning effectively provides cover for property owners who prefer that certain groups remain unaware of housing opportunities. The "burden of creating inclusive marketing strategies is minimal compared to the societal cost of perpetuating information disparities that maintain segregated housing patterns. The characterization of comprehensive marketing as an undue burden ignores the fundamental principle that equal housing opportunity requires proactive effort, not merely passive non-discrimination. This represents a retreat to a "wink and nod approach to fair housing enforcement that falls far short of the Fair Housing Act s aspirational goals. 6. Prevention vs. Equal Outcomes HUD s final argument contends that AFHM regulations improperly focus on equalizing statistical outcomes rather than preventing discrimination. This argument creates a false dichotomy between prevention and opportunity creation. AFHMPs exist not to guarantee equal outcomes but to ensure equal opportunity by providing equal access to housing information. When information about housing opportunities is not equally available to all segments of the community, the opportunity for fair housing choice is compromised from the outset. True prevention of discrimination requires addressing the structural barriers that limit housing choices, including information disparities. The Broader Implications HUD s proposed elimination of AFHMP requirements represents a concerning retreat from decades of progress in fair housing enforcement. The proposal effectively returns to an era when discrimination, while technically prohibited, was facilitated through information control and selective marketing practices. The reality of housing markets is that access to information varies significantly across communities. Property owners and managers possess considerable discretion in how they market available units. Without regulatory requirements for inclusive outreach, there are few incentives to ensure that information reaches all potential applicants. Anyone with experience in affordable housing development and management understands that information flow can be deliberately targeted and shaped. This targeting can either expand housing opportunities for underserved communities or systematically exclude them. Marketing strategies can be designed to minimize applications from certain groups while maintaining technical compliance with non-discrimination requirements. Conclusion The six justifications offered by HUD for eliminating AFHMP requirements fail to provide compelling reasons for abandoning this critical fair housing tool. The arguments reflect a fundamental misunderstanding of how housing discrimination operates in practice and ignore the crucial role that information access plays in maintaining or dismantling segregated housing patterns. Rather than advancing fair housing goals, the proposed rule exacerbates existing disparities by removing a key mechanism for ensuring that all communities have equal access to housing information. The elimination of AFHMPs would represent a significant step backward in the ongoing effort to achieve the Fair Housing Act s vision of integrated communities and equal housing opportunities for all Americans. The current proposal suggests an agency leadership more committed to reducing the regulatory burden on property owners than to expanding housing opportunities for underserved communities. This represents a troubling departure from HUD s mission and responsibilities under federal fair housing law. Moving forward, policymakers, housing advocates, and community leaders must carefully consider whether this proposed rule serves the public interest or merely provides cover for practices that perpetuate housing segregation through more subtle but equally effective means.

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HUD Inspector General Reports Major Financial Recoveries and Oversight Improvements

Federal watchdog agency identifies nearly $500 million in recoveries while addressing critical housing challenges across America. The U.S. Department of Housing and Urban Development s Office of Inspector General (HUD OIG) has published its semiannual report to Congress, highlighting significant financial recoveries and systemic improvements across federal housing programs during the six-month period that ended on March 31, 2025. Record Financial Impact and Enforcement Actions The HUD OIG s oversight activities generated significant financial returns for taxpayers, with audit and investigative efforts yielding nearly half a billion dollars in recoveries and recommendations. Audit activities alone led to collections of $387.4 million, while identifying an additional $42.3 million in funds that could be better utilized and questioning $8.1 million in costs. Investigative efforts produced equally impressive outcomes, with over $61 million in recoveries and receivables. The enforcement actions were thorough, leading to 36 arrests, 58 indictments, and 92 administrative sanctions, including 60 debarments from federal programs. Among the most notable prosecutions, a landlord received a 17-year prison sentence for fraudulently obtaining federal rental assistance while violating the Fair Housing Act. Similarly, a businessman was sentenced to 17 years for orchestrating a reverse mortgage fraud scheme that specifically targeted elderly homeowners. Addressing Systemic Housing Quality Concerns The report highlights ongoing challenges in maintaining adequate housing conditions within HUD-assisted properties. Inspections revealed that 65% of the observed housing units had deficiencies, with 63 life-threatening issues identified. These findings underscore the continued struggle to ensure that federally subsidized housing meets basic safety and health standards. Under the Rental Assistance Demonstration (RAD) program, initial inspections of converted properties experienced significant delays, with 50% lacking timely management and occupancy reviews. The OIG has recommended improvements to the timing and completion processes of inspections to address these critical gaps. One investigation led to a civil lawsuit against a management company for lead paint safety violations impacting over 2,500 apartments, highlighting the serious health risks faced by residents in certain assisted housing properties. Fraud Risk Management Needs Enhancement The report highlights fraud risk management as a vital area needing attention, especially within large public housing authorities. An audit of the New York City Housing Authority (NYCHA) showed a lack of a comprehensive fraud risk strategy, despite some existing anti-fraud measures. The authority s approach was described as mainly reactive instead of proactive. This finding has led the OIG to recommend evaluating fraud risk management practices at other large public housing authorities across the country, indicating that NYCHA s challenges may reflect broader systemic issues. Progress in Resolving Past Recommendations Collaboration between HUD and the OIG has produced positive outcomes in addressing previously identified issues. During the reporting period, HUD resolved 135 open recommendations, bringing the total number of outstanding recommendations down to 693. This trend shows a consistent decrease in unresolved audit findings. However, although not part of the report, it should be noted that the recent and planned cuts to HUD staff may slow the pace of corrective activity. Since October 2022, the OIG has identified 283 non-monetary benefits resulting from its recommendations, including 77 guidance enhancements, 64 process improvements, 112 increases in program effectiveness, and 30 enhanced accuracies. These improvements highlight the broader impact of oversight activities beyond direct financial recoveries. Challenges in FHA Program Oversight The Federal Housing Administration continues to face challenges in managing counterparty risks with mortgage lenders and servicers. The OIG found that Carrington Mortgage and MidFirst Bank misapplied FHA foreclosure requirements in over 18% and 14% of cases, respectively. Additionally, other lenders, including CMG Mortgage and loanDepot.com, demonstrated deficiencies in their quality control programs for FHA-insured loans. These findings underscore the necessity for improved oversight of the private entities on which HUD depends to effectively deliver housing assistance programs. Disaster Recovery and Grants Management HUD s administration of disaster recovery grants continues to encounter monitoring challenges. Although grantees under the National Disaster Resilience Program faced delays in completing activities, they remain on track to achieve their overall goals. The OIG has recommended enhanced action plans and improved documentation of collaboration with partners. In broader grants management, the OIG identified compliance issues with federal transparency requirements, noting that prime award recipients did not consistently report subawards as mandated by the Federal Funding Accountability and Transparency Act. Technology and Cybersecurity Improvements HUD s information security program has achieved maturity level 3, but it has not yet reached full effectiveness. Penetration testing uncovered significant weaknesses in data protection and website security, prompting recommendations for comprehensive enhancements to safeguard sensitive information and systems. Whistleblower Protections and Transparency The OIG continues to underscore the significance of whistleblower protections in ensuring program integrity. During the reporting period, 10,214 hotline intakes were processed, with 6,631 referred to HUD program offices for action. The Public and Indian Housing office received the highest number of referrals at 5,250, highlighting ongoing concerns in this program area. Notably, the report found no attempts by HUD to interfere with OIG independence, and no instances of whistleblower retaliation were reported, indicating a healthy oversight environment. Looking Forward The semiannual report illustrates both the ongoing challenges that federal housing programs face and the effectiveness of independent oversight in addressing these issues. With nearly $500 million in financial impact and numerous process improvements, the HUD OIG s work continues to yield substantial returns on taxpayer investment while ensuring that federal housing assistance reaches those who need it most safely and effectively. The findings emphasize the crucial role of strong oversight in preserving the integrity of programs that offer housing assistance to millions of Americans while pointing out areas where ongoing attention and enhancement are vital for program success.

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HOTMA Compliance Deadline Extended to January 1, 2026 for HUD Multifamily Housing Programs

On May 30, 2025, the Office of Multifamily Housing Programs issued a new Housing Notice extending the mandatory compliance date for the Housing Opportunity Through Modernization Act of 2016 (HOTMA). The previous deadline of July 1, 2025, has now been extended to January 1, 2026, for all owners participating in HUD multifamily project-based rental assistance programs. What This Means for Owners and Agents Full HOTMA compliance is required for all tenant certifications dated on or after January 1, 2026. This includes adherence to both the mandatory provisions and any discretionary policies implemented by owners. Owners and agents may voluntarily adopt HOTMA compliance earlier by utilizing the rent override function in the Tenant Rental Assistance Certification System (TRACS). Interim Compliance Guidance Until a property fully implements HOTMA, HUD advises the following: Continue to follow your current Tenant Selection Plan (TSP) as approved by HUD or your Contract Administrator. Maintain adherence to existing Enterprise Income Verification (EIV) policies and procedures. Ensure any early implementation steps are consistent with TRACS capabilities and accurately documented in tenant files. Key Takeaways New HOTMA compliance deadline: January 1, 2026 Optional early adoption is available through TRACS Existing policies remain in effect until full HOTMA compliance is achieved LIHTC Impact Owners and operators of LIHTC projects should contact the relevant Housing Finance Agency (HFA) for information on the effective date in their respective states. If you have any questions regarding the HOTMA implementation timeline, updating your policies, or the use of TRACS features, please contact our office. We are here to help ensure a smooth transition to full HOTMA compliance.

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