HUD 2020 Management Reform Plan: Business Line Part I

Information by State  Print version

"We must admit that some programs do not work. We must recognize the right roles for government and the private sector. We must crack down on waste, fraud and abuse wherever and whenever we find it. We must understand that quick-fix solutions do not work — that many of these challenges require long-term structural changes."
Secretary Andrew Cuomo

OVERVIEW

HUD's twin missions are to empower people and communities and restore the public trust. The Department relies on the services and products delivered by each of its business lines to accomplish these missions. To identify how each business line will contribute to the new HUD's success, and highlight where greater strength is needed, the Department reviewed program and management performance in detail at every level during a recent staff retreat. Over the following months, senior managers from headquarters and field offices, acting as change agents, teamed with key staff and program managers to find practical and effective answers to HUD's most pressing problems. These teams developed management reform targets consistent with the Secretary's goals. This was the foundation for HUD's reform agenda.

Each business line was asked to define its reform plans according to:

• Need for change
• Reforms (administrative, legislative, or management)
• Benefits of reform.

In addition, each area prepared a staffing plan, as well as the tools needed to implement these reforms (technology and training). These comprehensive reform plans will fundamentally change how HUD operates. When implemented, they will allow HUD to more effectively fulfill its mission. HUD will implement many reforms immediately — others require Congressional action.

This section describes specific management reform plans for each business line. Each plan includes: a summary of key issues, background on the need for change, reforms we will make, benefits gained through reform, and any legislative changes required to make progress.

PROGRAM	REFORMS
Office of Public and Indian Housing	Establish a cross-cutting Real Estate Assessment Center for reviewing physical inspections and financial statements of PIH housing authorities and multifamily projects Create a cross-cutting Section 8 Financial Processing Center for Housing and PIH Establish a Department-wide integrated financial system Create an Enforcement Authority to manage PIH and multifamily troubled portfolios Establish two Troubled Agency Recovery Centers (TARCs) Create a special (non-funded) applications center for demolition/ disposition, designated housing, and 5(h) homeownership Provide block grant funds for high performers Replace PHMAP for better assessment and propose receivers for troubled management Streamline headquarters and enhance field office responsibilities and authority Privatize functions such as physical inspections, legal and investigative services, technical assistance and HOPE VI construction management Consolidate PIH job skills and economic development programs with similar programs in CPD and Office of Housing into a new Economic Development and Empowerment Service
Office of Housing	Establish a cross-cutting Real Estate Assessment Center for reviewing physical inspections and financial statements of PIH housing authorities and multifamily projects Create a cross-cutting Section 8 Financial Processing Center for Housing and PIH, as well as other consolidated processing centers Establish a Department-wide integrated financial system Create an Enforcement Authority to manage PIH and multifamily troubled portfolios Reallocate staff in shift from retail to wholesale service delivery Retrain workforce to meet new challenges Privatize Real Estate Owned functions Develop streamlined contract and procurement process
Office of Community Planning and Development	Convert inflexible, labor-intensive competitive grant programs to performance-based grant programs Outsource technical assistance as necessary Monitor grantees failing program compliance through an Enforcement Authority Use advanced mapping software system (Communities 2020) that shows communities the impact of HUD funding and activities in their area Align resource needs and responsibilities within the newly established Economic Development and Empowerment Service
Office of Fair Housing and Equal Opportunity	Eliminate the split of enforcement and program/ compliance functions in headquarters and the field Cross-train field staff Consolidate field oversight functions Restructure leadership functions at headquarters Integrate fair housing principles throughout HUD's other program areas Make use of other program areas' software and new technology to fill gaps in information
Office of the Chief Financial Officer	Consolidate program and administrative accounting operations from ten accounting divisions into one accounting center Consolidate HUD budget functions into CFO operations Ensure implementation of Management Integrity Plan Incorporate Resource Estimation and Allocation Process (REAP) into budget process

PUBLIC and INDIAN HOUSING

"Our purpose is not to criticize government, as so many have, but to renew it. We are as bullish on the future as we are bearish on the current condition of government. We do not minimize the depth of the problem, nor the difficulty of solving it. But, because we have seen so many public institutions, we believe there are solutions."
David Osborne and Ted Gaebler,
Reinventing Government

SUMMARY The Office of Public and Indian Housing (PIH) faces many challenges as it continues to transform public housing across America. In order to successfully meet these challenges, PIH will align its staff resources to address the greatest needs. It will establish centers that house "back office" activities, freeing field staff to target their energies on monitoring and providing services to 3,400 Housing Authorities and the 1.4 million families they house. PIH will establish its own grants center; establish a Department-wide Section 8 Financial Processing Center; participate in the Department-wide Real Estate Assessment Center; establish Troubled Agency Recovery Centers to work with troubled Housing Authorities; and undertake other privatization and streamlining efforts to encourage greater productivity and accountability with local PIH partners and customers.

The Office of Public and Indian Housing has identified six areas where change is most needed. These are:

• Staffing Imbalances

  Two forces have created staffing imbalances in PIH field offices: PIH's field restructuring and the Department's ongoing effort to reduce overall staffing to 7,500 employees by fiscal year 2000. The 1994 field restructuring organized field staff into several disciplines to match the functions of property management. This specialization of duties, combined with significant reductions in the number of field staff, has led to many shortages within disciplines, particularly in smaller offices.

• Myriad Programs to Deliver and Monitor

  The proliferation of PIH programs in the last decade has created a gap between the need to monitor activities and the ability to do so. Many of the smaller PIH programs (e.g., the Tenant Opportunities Program, the Family Investment Centers, and the Urban Youth Corps Initiative) are highly specialized and require intensive staff effort, making it difficult to give them the attention they need while monitoring overall business line program operations. Also, the high number of PIH programs has greatly increased the demand for staff to oversee the grant award process in response to Notices of Funding Availability (NOFAs).

• Program Transitions

  The tremendous variety of public housing options now available requires field office staff to have new skills. They must be familiar with the unique features of gap financing, specialized grant agreements and contracting, and program monitoring — all qualitatively different from traditional public housing.
  

  Additional program changes involve the shift of the Section 8 Moderate Rehabilitation program and many Section 8 New Construction/Substantial Rehabilitation properties to the Section 8 tenant-based program(s), requiring a new consolidated system for processing all certificates.

• Coordinating Delivery of HUD Programs

  PIH, like many of the Department's business lines, has difficulty coordinating a plethora of programs, especially in developing and implementing so-called place-based strategies, those strategies that address the specific places where Americans work and live. Because each program is designed independently, it is difficult to uniformly coordinate complex, disparate requirements and procedures.

• Troubled Agencies

  Given new, more effective approaches to assessing PHAs, HUD will be in a position to move quickly to identify "troubled" PHAs. Because of the complexity and sensitivity experienced by the

  Department in past work with troubled agencies, we need to make greater efforts to turn around troubled PHAs and prevent them from reaching that stage. This will require more staff attention, which is difficult to allocate given the competing priorities for administering a multitude of programs with limited staff resources.

• Current Program Delivery Process

  The roles and responsibilities of both headquarters and field office staff are often poorly differentiated, overlapping, unclear, and fragmented, making coordinated, effective allocation of staffing and resources difficult. Red tape in navigating multiple levels of authorization and reporting is plentiful, reducing effectiveness and flexibility in the field.

  To perform its work, field office staff are now grouped into several disciplines that mimic property management functions. These existing groupings include:

  • Finance and Budget Specialists
  • Facilities Management Specialists
  • Public Housing Revitalization Specialists divided into sub-specialists:
    • Organization, Management and Personnel (OMP)
    • Marketing, Leasing and Management (MLM)
    • Community Relations and Involvement (CRI).

  While created to address existing needs, these classifications must change to better reflect HUD's reforms and PIH's efforts to streamline its service and delivery process.

REFORMS

Three main restructuring areas have been identified to address these problem areas:

• Department-wide collaboration opportunities
  • Establishing a Real Estate Assessment Center

• Collaboration with Housing
  • Development of a Section 8 Financial Processing Center

• Processing Center reforms specific to PIH
  • Troubled Agency Recovery Centers
  • Special Applications Center
  • PIH Grants Center

• Other reforms
  • Headquarters streamlining
  • Enhancing the role of field offices
  • Enhanced financial accountability

The proposed reforms and expected benefits from reengineering each of these areas are described below.

Department-wide Collaboration Opportunities:
Establish a Department-wide Real Estate Assessment Center

HUD will create a Real Estate Assessment Center to centralize and standardize the way the Department conducts annual PHA assessments. The Center's staff will supervise the assessment process and manage contractor performance, generating an overall score and incorporating performance and compliance concerns for every agent/agency receiving HUD funding. This scoring and ranking will give the Department a comprehensive oversight tool. PIH can thus spend less time with high performing agencies, instead focusing attention and assistance on troubled authorities with lower scores.

How will the Center measure program performance and compliance with federal rules? It will gather relevant data, both qualitative and quantitative, pertaining to each program recipient, including: (a) physical inspections; (b) independent audits (combining standard fiscal audit requirements with compliance factors defined by HUD); (c) management and performance assessment, as defined by the revised PHMAP; and (d) evaluations of community and residents' satisfaction.

Physical inspections and audits will be performed by contractors. An expanded, more accurate PHMAP will provide inputs for other performance measures. HUD field staff will supply qualitative management assessment (e.g., recent turnover of critical staff and/or number and complexity of programs) and assessments of grants management. We will obtain views of residents and other community clients from surveys and toll-free calls. The Center will then analyze the information and grade the agent/agency according to the following system:

1. Pass with distinction or "high performance." The highest grade will give a PHA a possible bonus award of operating funds and allow it to prepare fewer performance reports. The PHA will be highlighted as a "best practices" site as a model for other PHAs.

2. Pass. For PHAs of more than 250 units that score adequately but still have problems (higher than average vacancy rates or one to two poorly managed properties, for instance), field offices will perform targeted monitoring of PHA activities in problem areas and will help them improve annual scores. PHAs of less than 250 units that score in this range will receive the benefits of "high performance," except for the bonus award of operating funds.

3. Fail. We will assign failing PHAs to a Troubled Agency Recovery Center for targeted intervention.

For PHAs that score above the failing level but have a serious breach of contract between annual assessments, the PIH Assistant Secretary may intervene.

Benefits of Reform

The new Assessment Center provides:

• Comprehensive, annual assessments based on the key components of PHA performance — tenants' quality of life, PHA management, condition of physical stock, and compliance with federal rules.

• Stronger HUD management controls.

• A front-end risk assessment approach for public housing that ranks PHAs, helping management focus limited resources on the neediest PHAs.

• Uniform standards for early detection of fraud, waste, and abuse.

The Assessment Center also oversees the contracts for physical inspections of every agent/agency and for expanded independent audits.

Contracting out functions supplements scarce PIH field staff resources and increases the assessments' objectivity.

Proposed legislation would reward high-performing authorities with incentives through allocation of operating funds. This would encourage a "management by results" philosophy and provide an incentive for grantees to improve performance. Proposed legislation would also permit high-performing and non-troubled housing authorities to reduce the number of planning and status reports prepared.

Collaboration with Housing:
Create a Section 8 Financial Processing Center for Housing and PIH

PIH will establish a unified center for Section 8 payments processing with Housing. It will:

• Review and approve budgets
• Establish payments
• Maintain HUDCAPS
• Process year-end statements
• Calculate renewal needs
• Maintain funding control.

Currently, Housing and PIH have two very distinct methods for processing payments: Housing uses a monthly voucher system based on actual subsidy needs, while PIH uses an annual budget projection, with adjustments made upon receipt of year-end statements. Unifying these processes will benefit both business lines. This will also necessitate improvements to the HUDCAPS system to accommodate processing of all certificates.

Benefits of Reform

The combined Section 8 Financial Management Center will standardize and consolidate Section 8 processing functions — ensuring uniformity, consistency, and accountability in processing Section 8 subsidies and projecting future Section 8 subsidy needs. It will provide a single, effective financial management system, enhancing program accountability. The Center will also centralize and focus staff resources to better identify and respond to training and development needs.

PIH-Specific Reforms:
Establish Two Troubled Agency Recovery Centers

To deal with "failing" PHAs, PIH will establish two Troubled Agency Recovery Centers (TARCs). Any agent/agency receiving a failing annual assessment score will be referred to a TARC, which will develop and implement an intervention strategy to bring the agent/agency to passing scores. The TARCs will be arms of PIH's existing Office of Troubled Agency Recovery (OTAR), located in headquarters. The 192 staff proposed for this effort will be divided between the two TARCs and program hubs.

PIH will divide staff assigned to the TARCs into several teams. Each team will be assigned one large, troubled PHA. Where appropriate, staff will be temporarily relocated to work directly with residents, PHA staff, and leaders in the community. If PHA problems are not addressed within a one-year time limit, as prescribed by proposed legislation, the TARCs will recommend judicial or administrative takeovers to the Assistant Secretary.

To address small, troubled PHAs (failing score with less than 250 units), teams of three staff will be located in program hubs to correct problem areas and prevent further declines in performance. Staff will be assigned several small PHAs in their geographic area and report directly to one of the TARCs.

Individual skills on TARC teams will encompass all aspects of PHA management and operations, including the Section 8 program, financial and management systems, deterioration of physical stock, resident needs, and more. Other field staff may perform some routine functions for troubled authorities under TARC direction.

Benefits of Reform

The TARC model more clearly defines and separates the roles of intervention/recovery and program operation/management. Intervention functions will be performed by specialized personnel, all under the authority of a TARC Director. This staff will be largely assigned to the TARCs, with a contingent distributed to the program hubs. TARCs will enable field staff to focus on community priorities and enhancing performance of passing PHAs, rather than on problem PHAs. The proposal encourages effective, targeted program delivery: specialized staff for large or small PHA recovery efforts and field staff dedicated to preventing decline in good PHA performance.

Consolidating intervention activities will also generate more expertise as teams learn to swiftly identify and correct problem areas and share solutions with staff.

Finally, TARCs will remove intensive, specialized work from field offices, allowing staff to focus on monitoring and improving the bulk of agents/agencies which are neither high performing nor troubled.

PIH-Specific Reforms:
Create a Public and Indian Housing Grants Center

PIH will establish a center to perform competitive grants selection, allocation and reservation requirements, as well as Public Housing Operating Fund management, as follows:

• Competitive Grants. The Grants Center will be responsible for all aspects of competitive grants management, including preparation and publication of NOFAs, grants application and review process, and notice of grant award.

• Funds Management. The Grants Center will also be responsible for the Public Housing Operating Fund and Capital Fund. For the Public Housing Operating Fund, the Center will provide a range of services, including calculation of subsidy allocations, review and approval of PHA budgets, and processing of year-end statements. For the Capital Fund, the Center will review and approve a five-year plan, reserve funds, notify Congress and the PHA, and prepare grant agreements.

PIH-Specific Reforms:
Create a Special Applications Center

PIH will consolidate special (non-funded) applications and processes for its unique programs in a single Special Applications Center. Those applications are: demolition/disposition, designated housing, and 5(h) homeownership. PIH will assign up to 15 staff to this center.

Benefits of Reform

Consolidating these discrete functions will maximize staff effectiveness and increase program accountability. Consolidation will also eliminate current duplication of efforts in the field, for example: demolition/disposition processing, now conducted at four locations, and processing designated housing and 5(h) applications, now performed at all existing field offices. The center will standardize application processing and use staff specifically trained in evaluating and processing these applications. Centralizing these functions will relieve regular field staff of specialized processing burdens.

Other PIH-Specific Reforms:
Streamline Headquarters/Enhance Field Office
Responsibilities/Enhance Financial Accountability

PIH will consolidate the field structure to better use existing staff and to take advantage of cross-program efficiencies. The total number of PIH offices will decrease by ten, as the existing 52 offices evolve into 26 program hubs and 17 program centers. An additional 76 staff will move into the field as a result of headquarters reorganization.

Field offices are the first point of contact for PHAs that pass the annual assessment; they will work toward community goals using HUD and other federal resources. Field staff will assess risk and monitor programs for large PHAs with passing scores, all capital fund programs (except for HOPE VI, in some cases), and various competitive grants. Annual personnel assessments will be tied to the annual performance of PHAs for which they are assigned.

PIH will also abandon the functional discipline specialization resulting from earlier field restructuring. Instead, program hub and program center needs will be better met by consolidating the OMP, MLM, CRI and planning and evaluation functions into a generalist position.

PIH will also take steps to strengthen financial accountability and controls, including integrating PIH financial systems with the rest of the agency, working closely with the new Department-wide consolidated budget function within the CFO's office, and bringing on board new financial personnel such as a chief financial officer.

Benefits of Reform

By creating central processing centers and enhancing field offices - thus separating intervention/recovery functions from routine activities - PIH strengthens field office staff. Field staff can concentrate on helping and monitoring non-troubled PHAs, flagging potential or emerging problems. This structure better meets community needs by focusing staff expertise on troubled agencies (both large and small) where necessary, community service coordination, and program monitoring. This reform also links agency performance to individual personnel assessments.

PROPOSED LEGISLATION

Internal reforms are under way throughout the agency. But to effect real change within the PIH business line, Congressional action is needed to facilitate lasting reform. Proposed authorizing legislation will support the reorganization plan by:

• Replacing the PHMAP system, making it a component of the annual assessment conducted by the Assessment Center;

• Making poor physical condition of properties automatic grounds for designation of an agent/agency as "troubled," providing a framework for the Assessment Center to contract out physical inspections and giving new input into the revised assessment system;

• Creating a formula for distributing operating funds and providing incentives to housing authorities with good management, rewarding high-performing housing authorities;

• Waiving four of the nine planning requirements for non-troubled small housing authorities and high-performing large authorities, enabling these entities to submit one interim statement during the five-year comprehensive plan;

• Supporting TARCs by giving agents/agencies a one-year deadline to correct their troubled status or be placed in judicial receivership (for larger authorities) or administrative receivership (for smaller authorities); and

• Consolidating programs, such as incorporating the Public Housing Drug Elimination Program into the proposed formula award of operating subsidies.

PROPOSED LEGISLATION

PUBLIC HOUSING MANAGEMENT REFORM ACT OF 1997
1. Deregulate Small PHAs and High-Performing PHAs	Streamlining planning submissions and performance indicators for small PHAs, HUD will substantially reduce burden on field staff for compliance monitoring and oversight. High-performing PHAs will also have lighter submission requirements.
2. Merge Section 8 Certificate and Voucher Programs	Consolidation allows streamlining of HUD regulations and oversight of a single program.
3. Consolidate Tenant Opportunities Program (TOP) and Economic Development/Supportive Services Program	Combination allows HUD to conduct one competition, rather than two, under a single set of regulations.
4. Streamline PHA Submissions to HUD and Provide for Timely and Limited HUD Review Process	Submission of a single streamlined comprehensive plan with annual modifications requires substantially less HUD staff time for review and approval. Lighter submission requirements for high performers will also reduce staff workload.
5. Create New Performance Evaluation Board to Recommend System Enhancements for Public Housing Authority Oversight	Creation of board to enhance performance measurement system and develop system for site inspections; use of audit reports will create a more efficient, more effective system for oversight of public housing authorities.
6. Allocate Public Housing Drug Elimination Funds by Performance-based Formula	Conversion to formula will eliminate the need to conduct staff-intensive annual competition.
7. Allocate Capital Funds for Small PHAs by Formula Instead of Competition	Formula allocation of capital resources to small PHAs will eliminate the need to conduct annual competition.
8. Automatic Judicial Receivership for Persistently Troubled Large PHAs	Gets HUD staff out of the business of managing restructuring of large troubled PHAs.
9. Privatize Oversight of HOPE VI Construction Process	Contracting with private real estate firms will ease staffing burdens and improve oversight of HOPE VI projects.

HOUSING

"If you change your systems, organizations, and people, but leave the work processes alone, or change your systems, organizations, and processes, but not the way your people work, think, and feel, you will sentence your organization to ongoing conflict. To reach your destination, you must bring all five levels into alignment."
David Osborne and Peter Plastrik,
Banishing Bureaucracy

SUMMARY The Office of Housing faces specific problems: poor alignment of staff and resources, lack of integrated computer systems, and high risks in multifamily portfolios. Addressing these problems will involve establishing additional consolidated processing centers, such as a Section 8 Financial Processing Center; turning over troubled properties to a centralized enforcement authority; privatizing discrete functions, such as Real Estate Owned properties; creating an asset management system; and aggressively managing portfolio risk.

THE NEED FOR CHANGE

For more than 60 years, the Federal Housing Administration (FHA) has helped make capital available to support rental housing, single family homeownership, and community health care facilities. To continue this role for America's communities in the 21st Century, the Office of Housing has developed a reform plan that blends the efficiency and flexibility of the private sector with FHA's continuing commitment to serve the public.

The areas to address in order to accomplish our goals:

• Accurately assessing the financial or physical condition of multifamily properties;

• Increasing accountability of internal managers, property owners, and stakeholders;

• Relieving asset managers of non-asset manager work;

• Changing service delivery from retail to wholesale;

• Verifying income in the Section 8 program;

• Linking the reform plan to personnel performance standards;

• Making sure the right skills are available to match needs; and

• Managing staff reductions.

PROPOSED LEGISLATION

Housing 2020: Multifamily Management Reform Act of 1997
1. FHA Mark-to-Market Reforms	Repositioning/rehabilitating the 500,000 over-subsidized and insured properties will lighten FHA's exposure to default and reduce staff workload because remaining properties will be in better condition and better regulated through market discipline.
2. Strengthen FHA Multifamily Enforcement	Creation of new Department-wide Enforcement Authority. Streamlining and privatizing the process for FHA pursuit of bad owners reduces staff burden for enforcement actions, and thus reduces burden on staff for overseeing/resolving troubled properties.
3. Reform Bankruptcy Laws to prevent FHA Multifamily Property Owners from Evading Enforcement	Preventing owners from using bankruptcy laws as refuge from enforcement action makes it easier for FHA to pursue bad owners, thus reducing burden on staff and improving the caliber of the housing stock.
4. Extend Permanently FHA Note Sale Authority	Note sales reduce staff drain that results from having to service troubled properties and notes.
5. Consolidate Multiple Multifamily Insurance Authorities into a Single General Authority	Single, flexible insurance authority will replace more than 10 specialized authorities. Will enhance user access to multifamily insurance products and streamline management systems.

OVERVIEW to SUBDIVISION

Each of the Office of Housing's subdivisions contributed reorganization strategies to the HUD-wide reengineering effort. The following sections describe the individual strategies of Multifamily Housing, Single Family Housing, and the Comptroller. In addition, Housing headquarters is also being reorganized.

MULTIFAMILY HOUSING

THE NEED FOR CHANGE

During the 1980s, the Office of Housing was significantly affected by the decline in real estate markets. In the early 1990s, it owned almost 2,400 multifamily mortgages, with an outstanding balance of over $7 billion. The substantial inventory of HUD-held mortgages was costing taxpayers hundreds of millions of dollars and compromising HUD's ability to perform its other principal functions, specifically production of new, affordable housing and effective management of the insured portfolio. Strategies are needed to set the future course for multifamily housing. Necessary reforms are identified in the following areas:

Asset Development

Asset development services (intake, processing, underwriting approval, construction inspection, and final closing) are currently delivered in 51 field offices. However, this service delivery structure has several major weaknesses:

• Services are poorly integrated and delivery is fragmented;

• Processing is slow and inconsistent: the industry standard for processing is 30-45 days, far less than HUD's current average, and answers to similar client questions vary from field office to field office;

• Mortgagees are not held accountable for performing due diligence, putting HUD at greater risk;

• Quality control is weak, with 51 different underwriting authorities making decisions — leading to increased risk and inconsistencies;

• Confusion and clouded accountability result from burdensome reporting relationships; and

• Existing staff skill mix doesn't offer consistent, uniform, quality service across all offices.

Asset Management

Asset Management oversees and manages assets including 31,000 projects with approximately 5,400 "troubled" properties. It also administers nearly 30 different housing programs to ensure that low and moderate income residents have safe, affordable housing, to safeguard tax dollars, and to protect the FHA insurance fund. Asset managers monitor and service many properties, with an average workload of 55 projects per person. Typical tasks include property inspections, financial analysis, and reviewing grant and other applications.

The current delivery structure has four major weaknesses:

• Asset managers are overburdened with non-asset manager responsibilities, are poorly trained, and lack the experience to handle a broad range of troubled and non-troubled projects;

• Owners may exploit bankruptcy laws to avoid compliance;

• No efficient system exists to identify, assess, and respond to troubled properties; and

• Section 8 subsidy administration is inefficient and burdensome.

REFORMS

Asset Development

The following reforms will be made:

• Multifamily Housing will consolidate 51 field offices into 17 program centers. These hubs will be supported by staff in program centers; staff will be on detail to various locations, moving across hubs and program centers. Shifting assignments allows staff to adapt resources and focus as needed to respond to changing markets;

• Implement a fast-track development process;

• Delegate certain underwriting responsibilities to mortgagees or contractors;

• Establish a quality assurance unit.

Benefits of Reform

Multifamily Housing will see these results from reform:

• Uniform, consistent processing;

• Sharply reduced processing time;

• Less underwriting risk and inconsistency by having fewer people make underwriting decisions;

• More responsibility and accountability for mortgagees;

• Clear lines of authority and responsibility, more accountability;

• Shared use of skilled staff across hubs;

• Flexibility to meet rapid market changes; and

• Fewer material weaknesses in managing and controlling staff resources.

Asset Management

We will usher in change and correct flaws within Asset Management with the following reforms:

• Create a Department-wide Enforcement Authority to handle the troubled properties of PIH and Office of Housing.

• Create a Department-wide Real Estate Assessment Center for PIH and Office of Housing.

• Housing will consolidate key functions in processing centers. Contractors and/or skilled HUD staff will perform such core functions as property disposition, insurance conversion, and Section 8 voucher processing. To align work with available skills, anticipating further staff reductions by the year 2000, Housing hubs will be located in 17 areas to best serve customers and support the 34 program centers;

• Increase consistency and cohesiveness in processing control;

• Reduce asset managers' non-troubled property workload to appropriate levels;

• Provide direct lines for staff reporting;

• Improve service quality and balance of staff skills;

• Expand the Insurance Conversion Servicing Center to handle co-insured portfolio refinancing; and

• Coordinate autonomous field offices.

Benefits of Reform

Multifamily Housing will reap the following benefits from acting on these reforms:

• Reduce non-core functions performed by asset managers;

• Provide timely, accurate financial and physical condition status of multifamily properties through the Assessment Center; and

• Dedicate resources to deal with all troubled properties in the Recovery and Enforcement Authority.

SINGLE FAMILY HOUSING

THE NEED FOR CHANGE

Single Family Housing currently performs loan production, asset management, and property disposition with 2,080 employees in 81 locations across the country, in addition to 190 headquarters staff. One critical goal is to rid the agency of the administrative burden of a substantial inventory of HUD-held mortgages. However, this goal, among others, is more difficult to achieve with the existing service delivery structure. Among its flaws:

• Delays and problems in insurance endorsement processing;

• Information systems that do not help staff effectively monitor compliance;

• Poorly controlled and monitored property disposition; and

• Staff reductions that prevent consistent delivery of quality services.

REFORMS

Single Family Housing will consolidate all Single Family operations into three Homeownership Centers (HOCs). This reform will generate economies of scale, encourage better use of technology, and allow us to dedicate staff solely to customer assistance. To jump start the transition, we will either streamline or outsource Real Estate Owned (REO) activities and sell nearly all assigned notes.

When fully implemented, HOCs will perform functions which are now performed in individual field offices. Specifically, they will be staffed to perform the following core functions:

• Insurance endorsements
• Operational post-endorsement technical reviews
• Fee panel oversight
• Underwriting
• Servicing advice and guidance to mortgagees
• Contractor oversight/management
• Loss mitigation
• REO sales (carryover inventory)
• Marketing and outreach
• Quality control post-endorsement technical reviews
• Lender monitoring
• Sanctions
• Audits/investigations

Benefits of Reform

This consolidation and streamlining will achieve several objectives:

• HOCs will provide faster, more uniform, efficient service to clients, lenders, and borrowers;

• Risk assessment, loss mitigation, and quality assurance will all improve;

• Loan production will increase in targeted populations with better marketing and outreach;

• HOCs will cut the processing time for insurance endorsements from two weeks to one day;

• Service to lenders will improve through automated systems; and

• A state-of-the-art financial system will vastly improve HUD's underwriting and loss mitigation efforts.

HOUSING COMPTROLLER:
ASSET RECOVERY CENTERS

THE NEED FOR CHANGE

Currently, Title I asset recovery operations are performed by 108 employees in three Asset Recovery Centers. The existing delivery structure has two major weaknesses:

• Recovery processes are cumbersome and are poorly integrated with premium collection and claims examination; and

• Resource investment is not justified by the level of assets recovered.

REFORMS

HUD will work with the Department of Treasury to transfer appropriate asset recovery activities to Treasury.

Benefits of Reform

By transferring asset recovery activities to the Treasury, HUD will reduce resources committed to this non-core function and can refocus staff on higher priority tasks. Treasury can better ensure timely and accurate debt collection, significantly increasing the amount of unpaid debts collected.

HOUSING HEADQUARTERS

THE NEED FOR CHANGE

Housing headquarters develops policy and budgets, conducts Congressional and industry relations, plans and implements new products and services, and oversees lender compliance, among other tasks. It also provides field support. Three major weaknesses in headquarters' current operations have been identified:

• Field support is inadequate;

• Information systems are outdated and disparate, preventing staff from comparing data and flagging problems; and

• Procurement is cumbersome.

REFORMS

Headquarters will streamline operations to better focus on such HUD-wide responsibilities as policy and budget development, troubleshooting, industry relations, and those that support field office service delivery. Its field support will focus on personnel, procurement/contracting, information technology, training and auditing, and technical assistance. Headquarters will also:

• Limit its role in compliance and execution to providing data resources, administrative support, and auditing;

• Design a 360° review system of headquarters by field staff;

• Accelerate reconciliation of Generally Accepted Accounting Principles with Federal Credit Reform accounting systems;

• Treat field office staff as customers, allowing field staff to devote their full attention to making programs work; and

Housing will also make full use of the new financial systems being developed in the Department-wide integrated financial system.

Benefits of Reform

Headquarters will create positive change by:

• Using less staff in targeted support of core field office functions;

• Helping field staff better serve customers;

• Streamlining program development, monitoring, enforcement, risk management and budgeting, through better information systems; and

• Expediting policy and program implementation through the Department's overall reform of procurement and contracting.