Detailed Information on the
Homeownership Voucher Assessment

Create 20,000 new homeowners in ten years.

The default rate will be at or below the national average by 2010. In addition, HUD will be creating a new baseline from improved data.

Measure: Number of homeownership closings.

Explanation:Baseline is number of homeownship closings at the end of the previous fiscal year, as identified in the PIC System. Initial baseline of 531 closings was established in 2002. At the end of fiscal year 2005, 5,121 families (cumulative) have become homeowners through the Housing Choice Voucher Program, and the Family Self Sufficiency and Moving to Work homeownership programs, for an increase of 3,069 homeownership closings.

Measure: Number of PHAs with homeownership closings.

Explanation:Baseline is number of PHA's with one or more homeownship closings at the end of the previous fiscal year, as identified in the PIC System.

Measure: The goal is to create 20,000 homeowners in ten years beginning in 2006.

Explanation:This measure will build on the success of the program in exceeding its annual performance goals.

Measure: By 2010, the default rate will remain at or below the national average.

Explanation:This will build on the programs current success in below average default rates.

Measure: The average annual total cost per voucher (+ admin fees) per PHA.

Explanation:Metric reflects average cost of homeownership assistance.

Is the program purpose clear?

Explanation: The Homeownership Voucher program expands the purpose of the Housing Choice Voucher Program to allow low-income families (that are first time homebuyers) the option of using their Voucher subsidy towards owning a home rather than renting.

Evidence: Housing Choice Voucher Program Purpose: To remedy the unsafe housing conditions and the acute shortage of decent and safe dwellings for low-income families... 42 USC Sec. 1437a Homeownership Voucher Program Purpose: A public housing agency...may provide assistance to an eligible family that purchases a dwelling unit...that will be occupied by the family... 42 USC Sec 1437f(y). Also see 65 FR 55137, Sep 12, 2000

Does the program address a specific and existing problem, interest or need?

Explanation: The program is intended to help facilitate homeownership for low-income families that currently rent. There are many socio-economic benefits that have been identified as resulting from homeownership, including safer and revitalized neighborhoods, better quality of life, accumulation of wealth on the part of the families, and better education of children in such families.

Evidence: Ohio State University reseach indicates that children of homeowners are likely to perform higher on academic achievement tests and are more likely to finish high school and goes on to cite other benefits such as increased happiness and satisfaction on the part of homeowners. Also see U.S. House of Representatives, Report 108-164, in regard to benefits of homeownership, as stated in purpose of American Dream Downpayment Act.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: This program is complementary of other federal homeownership programs rather than being redundant. There is no other program that provides a monthly subsidy to assist low-income families in meeting homeownership expenses. As the Mortgage Interest Reduction doesn't benefit low-income families, the Voucher program provides alternative assistance.

Evidence: Prior to the Section 8 homeownership option, the only way current voucher holders could become homeowners was to graduate from the program altogether since voucher subsidies could not be used for homeownership assistance. This program is specifically targeted to families that have been renters through the Housing Choice Voucher program (or Public Housing) that have achieved enough financial stability to become homeowners with federal assistance. The Homeownership Counseling program and HOME are complementary programs.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: Despite obstacles, the program is designed efficiently. The homeownership voucher statute stipulates certain minimum income, employment and other restrictions that serve to target the program to families that are able to sustain a mortgage over time. The FMR provides local market-based determination of housing assistance. There are hindrances in terms of the voluntary nature of the program to the PHA's as well as income requirements, cost of available homes, family credit problems and other factors. However, these arise based on the circumstances of the applicant families and the economic conditions they face when applied under the governing statute.

Evidence: Lack of sufficient downpayment dollars has been reported as hindrance for some families in the first two years of the program implementation. Legislation has been passed to allow one year's worth of subsidy to be used for a downpayment, but that option has not yet been implemented due to lack of resources from the Appropriators.

Is the program effectively targeted, so that resources will reach intended beneficiaries and/or otherwise address the program's purpose directly?

Explanation: Funds are targeted to households that meet the program requirements. To ensure that qualified families are prepared for homeownership, funds (administrative fees, homeownership counseling funds, and other resources) are spent on homeownership counseling. Once families have an approved mortgage, the voucher subsidy is used for mortgage payments.

Evidence: Assistance is targeted to families that meet certain criteria set by law: first-time homebuyer meeting minimum employment and income qualifications with exceptions for elderly and disabled families. All families must receive homeownerhip counseling and must find a home and qualify for a mortgage loan. Current PIC data indicates that 35% of the families assisted are extremely low income, 49% are very low income, and 15% low income, and that 32% of the families assisted are disabled. This compares with the overall housing choice voucher program where 80% of the families are extremely low income, 18% are very low income and 2% are low income.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The purpose of the program is to make homeownership a reality for low-income families that are first time homebuyers who have been renting through the Voucher or Public Housing program. The new long-term goals aim to increase the number of new homeowners through this program in the next ten years and to keep default rates low.

Evidence: Create 50,000 new homeowners in ten years (from 2006-2016). The default rate will be at or below the national average by 2010 for all homeowners. These goal will be included in the 2006 APP.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: The outcome measures are compatible for the short and long term. There is a compounding effect that tends to increase the targets each year.

Evidence: Based on a telephone survey in April and May 2003, 1,395 homeowners were asssisted with vouchers up from 531 reported in a similar survey in 2002. The long-term goal to create 50,000 new homeowners is ambitious as it will require that many new PHAs will participate in the program and that at least 5,000 new homeowners will come through the program every year for ten years beginning in 2006. The annual goal of increasing the program by 20% each year, should help attain the long-term goal.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: The program is exceeding its current annual performance goal, and it is adding a new goal to increase the number of PHAs that will have closings. These annual goals will help achieve the long-term goal of 50,000 new Voucher homeowners by 2016.

Evidence: Measures and baselines are set forth in 2.3 above and in Measures section. Measurement to date has been on the basis of surveys. Starting with 2004 the program is being rebaselined on the basis of PIH Information Center (PIC) data regarding number of homeownership closings. In addition to continuing the goal to increase the number of homeownership closings by 20% each year, a new goal has been added to increase by 10% the number of PHA's having an initial homeownership closing under the program. This is an ambitious goal given the voluntary nature of the program on the part of the PHAs.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: The Department has collected and will continue to collect data that directly measure outputs and outcomes. During FY 2004 HUD will be changing from a survey based methodology to record baselines and measures to a new methodology based on PIC data. PIC includes the means to make these measurements and efforts are being made to improve the accuracy of PIC data. See response to 3.1 below.

Evidence: 2003, 2004, and 2005 Annual Performance Plan (APP) goal was to increase the number of households that use vouchers for homeownership by 20%. Based on a telephone survey in April and May 2003, 1,395 homeowners were asssisted with vouchers up from 531 reported in a similar survey in 2002. (Rebaselining the program on the basis of PIC data)

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: Principal partners in this effort are the PHAs, Neighborhood Reinvestment Corporation, and HUD homeownership counseling agencies. Their NeighborWorks program is working specifically to implement this program in communities across the country, and increase the number of closings. There are also Homeownership counselors that are funded specifically to work with Voucher recipients. However, this program is voluntary for these agencies, and if resources are not available, or market conditions are adverse, they may be limited in its implementation. Nonetheless, most communities understand the benefits of homeownership and seek to increase it.

Evidence: The Housing Act of 1937, as amended, describes this as a voluntary program. Therefore the goals for the program are contingent upon HUD getting public housing agencies to commit to more counseling and closings. Incentives are in place in 2004 to give additional administrative fees to PHAs that have closings through the program.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: An independent study was conducted by ABT Associates under contract to HUD (PD&R) to assess the overall viability, costs and benefits of the program and published in June 2003. PD&R is initiating a new independent survey during FY2005 to assess the overall viability of the program, constraints, etc. Also HUD and Neighborhood Reinvestment Corporation (NRC) are conducting a workshop on barriers and solutions to assess what is working and how to promote future growth of the program. The program is being closely monitored by review of PIC data on a continuing basis. Recent analysis by PIH demonstrates that the number of closings are increasing each month at a rate in excess of current goals.

Evidence: The ABT Study is available for review. The study concluded that the program can work to provide low-income working families with the opportunity to afford decent, safe and sanitary housing. The study found that 78% of the purchasers in their sample are female heads of household, the median income of purchasers was $17,377.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: The budget for the Homeownership voucher program is not explicitly discussed in the Housing Choice Voucher budget and is not tied to resources required

Evidence:  

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: In October of 2002, HUD published a final rule to streamline and improve the homeownership voucher program. Major changes to the program regulations under this and other rules included the elimination of a complicated recapture provision; additional flexibility for public housing agencies to establish minimum income requirements that differ from the HUD-established standards; change in the point in time by which construction must be initiated; and clarification that manufactured homes where the family does not also own the real property on which the home is located may be eligible housing for purchase, provided that certain conditions are met.

Evidence: The regulations established have been limited to those necessary to implement the legislation. These regulations maximize discretion to the PHA's so that they are able to adapt to local needs and circumstances. See 65 FR 55133, Sep 12, 2000 and 67 FR 64483, Oct 18, 2002

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The Department's PIC System collects information regarding the number of homeownership closings as well as the number of agencies participating. However, phone surveys reveal that a significant number of homeownership voucher closings go unreported to HUD. Presently, PHAs enter approximately 60% of the voucher homeownership closings data in PIC and progress is being made to increase that percentage. HUD has contracted for assistance to collect the most up-to-date and accurate homeownership closing data available and to close the gap between the number of closings and the number reported in PIC. HUD has also introduced incentives to PHA's to promote better reporting of homeownership closings in the PIC system. (Note: If reporting problems are addressed, this question could be reassesed as a YES in a year)

Evidence: Current data is available in the Department's PIC system as well as from surveys. From the data we can do analyses of the effectiveness of the program in serving target populations. Based on these results we can recommend program, regulatory or legislative initiatives to improve service delivery. We are also conducting a homeownership voucher survey that will provide us valuable information about the needs for technical assistance and training for the PHA's. This information will be used to allocate technical assistance and training resources to improve the program.

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: Through our new output measure of number of housing authorities with an initial closing we are monitoring HUD's success in providing an environment condusive to increased homeownership. This, together with overall number of closings, will provide an indicator of the health of the service providing capacity. Also, as indicated in 3.1 above survey data will be used to allocate resources needed to improve program performance. In addition, as a part of its overall monitoring of the Housing Choice Voucher program of which homeownership is one option, HUD monitors the expenses and performance of HA's.

Evidence:  

Are funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: Funds are obligated by HUD to PHAs on a timely basis. PHA's are funded via Annual Contribution Contracts and quarterly funding actions. PHA's obligate funds via subsidies distributed. Amounts are separately tracked for homeownership and rental housing choice vouchers.

Evidence: There have been no complaints from lenders or PHAs about funds being obligated in a timely manner. The PIC System captures individual and composite family data for the homeownership option. HUDCAPS captures funding contract obligation data.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: Data regarding homeownership voucher payments is collected in the PIC System. With this data HUD can determine the amounts paid in relation to the individual homeowners or various strata of homeowners, as well as by PHA and to compare these data with other families in the housing voucher program. The FMR provides local market-based determination of housing assistance, and therefore provides efficiencies in program execution.

Evidence: See HUD Form 50058 for data elements collected by the PIC System. HUD does not have readily available data regarding the cost of administering the program by the PHA's. Incentives are being introduced in FY 2004 to reward PHA's under their Administrative Fees for their initial closing and for each subsequent closing during 2004.

Does the program collaborate and coordinate effectively with related programs?

Explanation: This program is a component of the housing choice voucher program. Many of the homeowner closings are a result of working with families through the Family Self-sufficiency (FSS) program. Federally funded Community based activities such as through CDBG, HOME and Homeownership Counseling Grants, contribute toward program effectiveness. Most of the coordination occurs at the local level.

Evidence: The evidence is obtained by reviewing the case histories of individual families receiving assistance. The ABT Study cited early targeting of the FSS program by some PHA's to identify a suitable client population and indicates that a variety of community based funding programs are utilized in conjunction with the homeownership voucher program, including "deferred or forgivable loans...including programs of the Federal Home Loan Bank, and loan products developed by city or state agencies and funded through HUD's HOME and CDBG programs."

Does the program use strong financial management practices?

Explanation: This program is a component of the housing choice voucher program and financial management is included in that program.

Evidence: See response provided under Sections 3.3 and 3.4

Has the program taken meaningful steps to address its management deficiencies?

Explanation: A key deficiency has been the lack of accurate and timely data on homeownership closings. HUD is working to imrpove this capability and reporting levels. The program also needs to gain more significant secondary and primary market involvement. The HUD program office has engaged GSEs to get more involvement in promoting the program to lenders.

Evidence: HUD has implemented an incentive system for 2004 to increase the number and reporting of homeownership closings as described in 3.4 above. This will be based on reportings through the PIC System. More timely data Is anticipated to result. Also HUD has contracted for efforts to improve the PIC data, and for an up to date survey of homeownership closings as well as the needs of PHA's for training and technical assistance. These results will be utilized to target resources where needed to improve the program.

Are grants awarded based on a clear competitive process that includes a qualified assessment of merit?

Explanation:  

Evidence:  

Does the program have oversight practices that provide sufficient knowledge of grantee activities?

Explanation: Data are collected via the PIC system and special studies. NRC collects monthly information about grantee activites on programs with which they work, and publish monthy reports. Telephone interviews have been conducted to verify data and gain input from grantees. Neighborhood Reinvestment does regular site visits and provide on-going TA to Homeownership voucher programs nationally.

Evidence: See results of PD&R study (by ABT Associates), PIC data, and Quarterly Financial Reports (52681-B). Also see the response in 3.7 above regarding a recent survey to gain timely information regarding number of closings and needs for technical assistance and training to assist new PHA's to implement the program.

Does the program collect grantee performance data on an annual basis and make it available to the public in a transparent and meaningful manner?

Explanation: The number of homeownership closings by PHA are available on the PIH Public website.

Evidence: See PIH Public Website, under Voucher Homeownership

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: This is a relatively new program, in existence since 2001. The program has exceeded its annual performance goals each year since a baseline was established in 2002. As the long-term performance goal is going to be new in 2006, the program has not yet begun to address that specific target. In addition, default rates have been low thus far, and will help work towards the other new long-term goal.

Evidence: As of September 30, 2003 there were less than 500 homeownership voucher closings in PIC. The number in PIC is now over 1400. As of September 30, 2004 the number of closings recorded in PIC was over 2000. To achieve the long-term goal of 50,000 new homeowners through the Voucher program by 2016, a higher number of annual closing will need to be achieved.

Does the program (including program partners) achieve its annual performance goals?

Explanation: The program has exceeded its annual performance goals each year since a baseline was established in 2002.

Evidence: The annual program goal to increase by 20% the number of households who have used housing choice vouchers to become homeowners was established for the first time in FY 2003 after establishing a baseline in FY 2002. The baseline in 2002 of 531 homeownership units grew to 1395 units in 2003, an increase of 163%. The program is being rebaselined starting in FY 2004 on the basis of PIC data.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: Aside from subsidies distributed, potential efficiencies are largely related to the cost of administering the program. Since the program is just being started by many PHAs, it is difficult to measure administrative efficiency. Additionally, administrative cost data are collected for the entire Housing Choice Voucher data and are not specifically for the homeownership option.

Evidence: For the first time in 2004 PHA's will be rewarded by an increase to their Administrative Fee based on their number of homeowners assisted, as reported in PIC.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: This is the only homeownership program (federal or private) that helps subsidize the cost of buying a house while working closely and effectively with other HUD programs (Homeownership counseling, HOME, etc.) to help families through the entire homebuying process.

Evidence: This is a new program, so it will require time to measure success rates (i.e. number of foreclosures in comparison to other homeownership programs).

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: Objective data collected through surveys and the PIC System indicate that the program is more than achieving its annual goal of new homeowners. A study published by ABT in June 2003 under a HUD (PD&R) contract indicated that the program was achieving its purposes.

Evidence: According to PIC date, the program has grown from 531 homeowners in 2002, to 1395 in 2003, and to over 2000 by the end of 2004. PIC data indicates that over 80% of program households are extremely low or very low income) and almost half of the purchasers were minorities (current PIC data indicates 37% are minorities). PIC data indicates that 32% of the households are disabled. The ABT study indicated that 78% of the purchasers in their sample are female heads of household, median income of purchasers was $17,377, (current According to the ABT study the majority of the homes are in neighborhoods with slightly higher incomes and greater residential stability than in neighborhoods where they were renting.