H.R. 1776 - American Homeownership and
Economic Opportunity Act of 2000
(Lazio (R) NY and 147 others)

The Administration supports H.R. 1776, which would promote wider homeownership opportunities for Americans and would codify new HUD programs and recent Administration reforms. The Administration is pleased that H.R. 1776 would reauthorize many successful, existing HUD programs, and establish a new framework for manufactured housing safety standards. The Administration also supports some of the specific provisions for USDA Rural Housing Programs, especially the removal of the requirement that 20 percent of the multifamily housing guarantee loans be subsidized. The Administration does, however, have concerns with several specific provisions of the bill, which are discussed below.

The bill, as drafted, has a constitutional defect by vesting significant federal authority in the manufactured housing consensus committee, the members of which occupy federal offices but are not appointed in conformity with the Appointments Clause. To remedy this constitutional defect, H.R. 1776 should provide expressly that the consensus committee is appointed and supervised by the Secretary and should not limit the Secretary to appointing only individuals recommended by the administering organization. Further, the deadline provided for making the initial appointments raises serious constitutional concerns, and it should either be eliminated or made hortatory. It is the Administration's understanding that the legislation does not intend for the consensus committee members to become Federal employees solely by their service on the committee. The specific inapplicability of the Ethics in Government Act and Title18, currently laid out in Section 601(a)(3)H(ii) and (iii) is therefore unnecessary and should be removed so as not to confuse this issue.

The Administration supports the development of national model installation standards for manufactured housing. Nevertheless, to adequately implement these new mandates, the legislation should be amended to expand the Secretary's fee-collection authority and specify the Secretary's enforcement authority for the installation and dispute resolution programs.

The Administration supports the type of innovative effort in this bill to increase homeownership for teachers and public safety officers. This complements HUD's existing efforts to promote homeownership. However, it is important to note that this provision will permit individuals to purchase homes with slightly less cash investment and therefore may slightly increase the risk of default.

The Administration is pleased that the Committee has adopted legislation included in the President's FY 2001 budget that would create a new hybrid adjustable rate mortgage (ARM) for the Federal Housing Administration (FHA). However, the product can only be fully successful if FHA's ARMs cap is increased from 30 percent to 40 percent of its annual volume, which the bill does not do.

The Administration is concerned about several other provisions that should either be modified or deleted, including the following:

• The bill weakens income targeting in the CDBG and HOME formula grant programs by excepting an additional 10 jurisdictions from the national median income ''cap'' and by relaxing of income targeting requirements under CDBG and HOME for municipal employees.

• The bill makes several changes to the HOME program that, while small, set troublesome precedents. For example, the bill provides a special rent subsidy exception for ''grandfamilies,'' i.e., elderly heads of household with grandchildren. Once an exception is made for one special needs population, more exceptions would follow. Further, as drafted, this additional subsidy may not result in any additional supportive services. The Administration is also concerned that several provisions, such as the optional pledge of collateral other than grant allocations and providing 100% loan guarantees, would weaken credit standards and increase the Federal Government's costs.

• The rural housing provision in Title X regarding "excess fees" to be used for administrative expenses without further appropriation violates Federal credit standards and could jeopardize portfolio management if permitted.

• The bill's establishment of a Land Title Report Commission, which would analyze the Bureau of Indian Affairs' (BIA's) system of maintaining land ownership records and determine how best to modify the system, duplicates existing congressional and judicial supervision, and fails to address the fractionation of land held in trust, which is the fundamental cause of expanding workload in BIA's system.

• While we support the goal of increasing homeownership opportunities for persons with disabilities and others, the tenant based pilot program for disabled homeownership, as authorized in the bill, is unnecessary, and it inappropriately raises the program's income limits which ensure those with the most severe housing needs are served.

• The bill requires transfer of ownership of HUD-owned housing under certain circumstances and limits HUD's flexibility in accepting bids, which would depress sales prices. HUD already has the authority to achieve these transfers.

• The bill allows HUD to waive environmental review compliance requirements outlined in section 703(d). The Administration supports alternate methods of assisting tribes to reach compliance without compromising environmental protection laws.

• The bill codifies the requirements already contained in Executive Order 12866 on regulatory planning and review. Thorough consideration of potential impacts of agency regulatory actions on particular sectors of the economy, legislating such requirements can be inflexible and burdensome and can hinder regulatory efficiency.

The Administration looks forward to working productively with the Congress to address these and other concerns.

Pay-As-You-Go Scoring

H.R. 1776 would affect direct spending; therefore, it is subject to the pay-as-you-go requirement of the Omnibus Budget Reconciliation Act of 1990. The Administration's preliminary estimate is that the bill would produce a PAYGO cost of between $25 million and $50 million per year. The modifications suggested above would eliminate this cost.