Department of Housing and Urban Development

Fact Box

United States Department of Housing and Urban Development

Formed on September 9, 1965
Preceding departments- Housing and Home Finance Agency
Headquarters- Robert C. Weaver Federal Building, Washington, D.C.
Secretary of Housing and Urban Development -- Julian Castro
Employees (2004) 10,600
Annual budget (2014) $38.5 billion

A cabinet level agency, the Department of Housing and Urban Development (HUD) oversees federal programs designed to help Americans meet their housing needs. HUD seeks to increase homeownership, support community development and increase access to affordable housing free from discrimination. The agency enforces a swath of federal housing laws, operates mortgage-supportive initiatives and distributes millions of dollars in federal grants. HUD is also one of the most scandal-plagued agencies in the federal government. Over the last three decades, one HUD secretary after another has been implicated in public controversies, with several having to resign. Scandals have often involved allegations of distributing HUD contracts to friends or associates of the department’s top official. In addition, HUD’s mortgage operations have gotten into hot water during the recent sub-prime housing crisis.


Congress created the Federal Housing Administration (FHA) in 1934 to help Americans with their housing needs during the Great Depression.

In July 1947, the Housing and Home Finance Agency was established to help people buy homes following World War II. Two years later, the Housing Act of 1949 was enacted to help eradicate slums and promote redevelopment in urban areas. 
Throughout the 1950s, FHA focused on broadening its mission. In September 1959, a new Housing Act allowed funds for elderly housing. 
FHA became a part of the new Department of Housing and Urban Development created in September 1965. In the 1960s, HUD sought to eliminate discrimination through the implementation of the Fair Housing Act of 1968. The department also enforced the provisions of the Brooke Amendment in 1969, which established that low-income families would pay no more than 25% of their incomes for rent. Robert C. Weaver, HUD’s first secretary, oversaw the department’s anti-discrimination efforts under the Fair Housing Act—efforts that became especially important when riots broke out in predominantly African-American areas after the assassination of Dr. Martin Luther King, Jr. in 1968. The decade ended with the establishment of the Government National Mortgage Association (Ginnie Mae), which expanded availability of mortgage funds for moderate-income families. The government, using mortgage-backed securities, guaranteed these funds.
In 1970, the Housing and Urban Development Act introduced the Federal Experimental Housing Allowing Program and Community Development Corporation. The Pruitt-Igoe housing buildings in St. Louis, a controversial public housing project that suffered numerous problems since opening in 1951, were demolished in 1972. The following year, President Richard Nixon declared a moratorium on housing and community development assistance. In 1974, the Housing and Community Development Act was signed. This new law provided for community development block grants and offered help for urban homesteading. Help for the elderly and handicapped continued under the Housing and Community Act of 1977, which set up Community Development Block Grants for these groups. Section 8, which gave low-income residents a wider range of housing choices, began to operate, using tenant-based certificates.
Under President Jimmy Carter, HUD, led by Patricia R. Harris, began to issue Urban Development Action Grants (UDAG), which gave distressed communities funds for residential or nonresidential use. Inflation continued to be a problem throughout the 1970s, and when it hit 19% in 1979, HUD began looking for ways to help Americans buy homes and secure home mortgage loans. 
The Depository Institutions’ Deregulation and Monetary Control Act of 1980 changed the rules governing thrift institutions. This helped to expand alternative mortgages and assisted first-time homebuyers. Mortgage rates continued to climb, however, and even those from Federal Housing Authority-insured mortgages peaked at 15.17%. This was an increase of 8.17%, up from 7 percent in 1972. The Housing and Urban-Rural Recovery Act of 1983 began new Housing Development Action Grant and Rental Rehabilitation programs.
The 1980s also saw HUD trying to assist in the problem of homelessness, first with the Stewart B. McKinney Homeless Assistance Act (AKA the McKinney-Vento Homeless Assistance Act), which gave money directly to local communities trying to assist the homeless. In February 1988, the Housing and Community Development Act provided for the sale of public housing to resident management corporations. This was done to help alleviate homelessness by increasing opportunities for low-income housing. At the close of the decade, the Indian Housing Act gave HUD new responsibilities for the housing needs of Native Americans and Alaskan Indians. And following the savings and loan crisis, the Financial Institutions’ Reform, Recovery and Enforcement Act bailed out failing thrift institutions.
In the 1990s, HUD concentrated its efforts on revitalizing public housing. The Cranston-Gonzalez National Affordable Housing Act emphasized homeownership and tenant-based assistance, and it launched the HOME housing block grant. Additionally, the Low-Income Housing Preservation and Residential Homeownership Act of 1990 strengthened the government’s commitment to the preservation of assisted, low-income multifamily housing. 
In October 1992, the HOPE IV program began its work to locate and renovate existing public housing. That same year, the Federal Housing Enterprises’ Financial Safety and Soundness Act created HUD’s Office of Federal Housing Enterprise Oversight to provide oversight for Fannie Mae and the Federal Home Loan Mortgage Corporation (Freddie Mac). In 1993, the Empowerment Zone and Enterprise Community program became law as part of the Omnibus Budget Reconciliation Act. 
In 1995, HUD became involved in housing reform with the “Blueprint for Reinvention of HUD.” Suggestions included consolidation of other programs into three block grants. The Housing Opportunity Program Extension Act, signed in March 1996, gave public housing authorities tools to screen out and evict potentially dangerous residents, due to substance abuse or criminal behavior. In October 1998, new government laws were established to allow local housing authorities to open up more public housing to the middle class. At the same time, HUD opened its first Enforcement Center, which was charged with taking action against HUD-assisted multifamily property owners and other HUD fund recipients who violated laws and regulations. Congress continued to enact public housing reforms, reducing segregation by race and income, encouraging and rewarding work, bringing more working families into public housing and increasing the availability of subsidized housing for very poor families. 
HUD has had a long history of scandal and controversy. During the 1980s, HUD became embroiled in accusations of playing favorites with developers and housing officials who had political connections with the Reagan administration. One example involved a housing project in Durham, North Carolina, that was given the go-ahead even though some HUD staffers had found hazardous waste near the site. The mayor of Durham at that time was a friend of HUD secretary, Samuel Pierce, who was called before Congress to testify in regards to the many claims of improper dealings by his department. Pierce refused to testify by citing the Fifth Amendment right to not incriminate himself.
HUD continued to be the focus of problems during the 1990s. As the department struggled to clear itself of the scandals from the previous decade, the Government Accountability Office labeled HUD a “high risk” of not properly accounting for its financial records—a label that remained for the rest of the 1990s. Scandal also enveloped HUD’s secretary under President Bill Clinton. Henry Cisneros, who was a rising star in the Democratic Party when he was appointed to lead HUD, found himself investigated by the FBI for failing to disclose payments he had made before joining the administration to keep an affair quiet. Cisneros wound up resigning from office. During the scandal, congressional Republicans tried unsuccessfully to abolish HUD. The move did succeed in forcing the Clinton administration to downsize HUD’s bureaucracy.
The years of the Bush administration have also witnessed troubles with HUD, especially involving former secretary Alphonso Jackson.

What it Does

The Department of Housing and Urban Development (HUD) is a cabinet-level agency that oversees federal programs designed to help Americans with their housing needs. HUD seeks to increase home ownership, support community development and increase access to affordable housing free from discrimination. The agency enforces a swath of federal housing laws, operates mortgage-supportive initiatives and distributes millions of dollars in federal grants.

Key HUD Offices:
Federal Housing Administration: FHA was originally the forerunner before HUD was founded. Founded in 1934 to revive a housing industry leveled by the Great Depression, FHA sought to stimulate home ownership by providing mortgage insurance and regulating interest rates. Over time, the agency has contributed to a dramatic increase in the number of homeowners across a diverse income-scale. Early programs especially increased the market for single-family homes, while special housing initiatives for veterans in the post-WWII era—and for the elderly, disabled and lower-income buyers in the subsequent decade—expanded untapped or difficult market areas. Since its inception, FHA has insured 34 million homes and manages a current insurance portfolio of $400 million. The agency was incorporated into HUD when the latter became a cabinet-level agency in 1965. As FHA experienced a significant loss of market share in the last several years, attention turned towards reform measures to “modernize” its programs, making them more flexible and accessible to a wider range of buyers—while simultaneously providing stability and a safe alternative to sub-prime lending. In 2007, FHA added the new “FHA-Secure” refinancing program to help borrowers hurt by the sub-prime crisis.
Office of Public and Indian Housing: PIH manages a large number of programs that provide funding through grants that are designed to help residents of affordable housing become more self-sufficient and economic independent. PIH also works with public housing authorities across the country to help them improve their management and service delivery efforts. The office also is in charge of programs designed to improve housing conditions for Native American families.
Office of Community Planning and Development: CPD is responsible for distributing different kinds of grants throughout the country to help low-income communities finance growth and development. CPD also supports efforts to alleviate homelessness through numerous grant programs. Like its parent, HUD, the Office of Community Planning and Development has been the subject of controversy over the misuse of federal funds involving political appointees of President George W. Bush.
Office of Healthy Homes and Lead Hazard Control: OHHLHC is responsible for helping to eliminate health problems caused by lead-based paint in privately-owned and low-income housing. Using scientific research and grants, OHHLHC helps local communities to address their own lead paint exposure. Additionally, OHHLHC enforces HUD’s lead-based paint regulations. The office has been the focus of some controversy, ranging from personnel problems inside the agency to disputes with advocacy groups regarding how OHHLHC’s grants are awarded. 
Office of Federal Housing Enterprise Oversight: OFHEO is an independent entity within the Department of Housing and Urban Development responsible for ensuring the stability, liquidity and affordability of the US mortgage market. The office does this by overseeing two housing government-sponsored enterprises (GSEs)—Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation)—which together own and/or secure more than 70% of residential mortgage loans in the United States. As the primary regulator of the two GSEs, the OFHEO is responsible for supervising their operations and ensuring their stability, capitalization, and compliance with legal requirements and standards. OFHEO is headed by a director who is appointed to a five-year term by the President, and it is funded through the GSEs it oversees.
Office of Policy Development and Research: PD&R serves as a research, survey, study and analysis support system for HUD. It assists in oversight of the United States government-sponsored Fannie Mae and Freddie Mac housing mortgage loan enterprises, and PD&R is meant to facilitate the formation of partnerships between universities and communities so they can jointly address urban problems. The office’s staff is made up of economists, engineers, planners, policy experts and social scientists who provide technical oversight to the HUD teams making policy decisions and preparing budget and legislative proposals.
Office of Fair Housing and Equal Opportunity: FHEO seeks to prevent discrimination in housing on the basis of race, sex, family status and other grounds. One of the largest federal civil rights agencies, FHEO administers federal laws and makes policy regarding equal access to housing. The office administers funding, processes discrimination complaints, and oversees enforcement and compliance with federal laws. The agency is responsible for implementing and enforcing the Fair Housing Act and other civil rights laws—including Title VI of the Civil Rights Act of 1964, the Architectural Barriers Act of 1968, Title IX of the Education Amendments Act of 1972, Section 504 of the Rehabilitation Act of 1973, Section 109 of the Housing and Community Development Act of 1974, the Age Discrimination Act of 1975 and Title II of the Americans with Disabilities Act of 1990.
Government National Mortgage Association: GNMA, or “Ginnie Mae,” is an agency within HUD that is designed to support the government’s housing programs by creating a secondary market to buy and sell residential mortgages. Ginnie Mae provides guarantees for mortgage-backed securities (MBS), most of which are federally insured loans issued by the Federal Housing Administration and other federal housing offices. In effect, the agency buys mortgages from lending institutions and pools them into government-backed securities, which it sells to investors, guaranteeing timely repayment on both the principal and the interest. Ginnie Mae operations have directly affected low- and moderate-income potential homeowners. By providing a safety net for lenders and investors, GNMA securities ensure a steady flow of capital to the (secondary) mortgage market and create accessible terms for many people who might not otherwise be serviced by traditional lenders. (This has changed somewhat in recent years, with private-sector companies taking an increasing share of the secondary mortgage market and offering competitive mortgage deals, including in the sub-prime market).
HUD Support Offices
Administration develops and implements policies and procedures associated with human capital management and the administrative management of the department. The office oversees Grants Management (Super Notice of Funding Availability-SuperNOFA), Freedom of Information (FOIA) requests, human capital management, executive scheduling services for senior executives and the central coordinating point for all secretary and deputy secretary correspondence.
Administrative Law Judge
Board of Contract Appeals provides due process through dispositions of all matters brought before the board. The board presides over on-the-record hearings, motion practice and settlement hearings.
Enforcement Center deals with troubled housing projects. When owners fail to bring properties up to standard, the center takes appropriate enforcement action. This includes administrative sanctions, such as civil money penalties, suspension and/or debarment, and possible referral to the Department of Justice for civil action. When criminal activity is suspected, the center refers cases to HUD’s Office of the Inspector General.
Faith-Based and Community Initiatives implements President George W. Bush’s faith-based programs involving housing programs.
Other HUD support offices include the Chief Financial Officer, Chief Information Officer, Chief Procurement Officer,Congressional/ Intergovernmental Relations, Equal Employment Opportunity, Field Policy/Management, General Counsel ,Labor Relations, Policy Development/Research, Real Estate Assessment Center and Small/Disadvantaged Business Utilization

Where Does the Money Go?

The Department of Housing and Urban Development spent nearly $8.1 billion on 5,988 contractors this decade. According to, HUD paid for a variety of services, from automatic data processing and telecommunications services to research and development in support of its goals.

The top 10 contractors are:
Lockheed Martin Corporation                          $791,331,987
First Preston Management, Inc.                       $497,527,786
Michaelson, Connor & Boul, Inc.                      $429,052,149
Golden Feather Realty Services, Inc.               $408,329,665
Harrington, Moran, Barksdale, Inc.                  $290,005,823
ATS Corporation                                             $277,951,955
Electronic Data Systems Corporation               $244,451,520
ARCO Management of Washington, DC, Inc.      $222,708,600
National Home Management Solutions, LLC  $169,094,810
Eaton Corporation                                           $144,152,847
Lockheed Martin, HUD’s largest contractor and long one of the nation’s top defense contractors, provides automatic data processing and telecommunications services for HUD, while First Preston Management, Inc. provides professional administrative and management support services. According to their web site, First Preston “specializes in the marketing and management of real estate portfolios owned by mortgage banking companies, government agencies and other clients.”
In addition to spending money on contractors, HUD allocates millions of dollars each year in federal grants to support a variety of housing goals. In 2005, the Office of Healthy Homes and Lead Hazard Control distributed $123 million in grants to eliminate dangerous lead paint hazards in thousands of privately owned, low-income housing units. These funds were provided through HUD’s Lead-Based Paint Hazard Control and the Lead Hazard Reduction Demonstration grant programs. In addition, HUD’s Operation LEAP (Lead Elimination Action Program) provided $4 million to encourage private sector contributions to reduce the risk of lead ingestion among children. HUD also awarded $2.3 million in Lead Outreach grants for public education campaigns on what parents, building owners and others can do to protect children. Further, nearly $1.7 million assisted research to study methods to reduce the cost and increase the effectiveness of lead hazard control strategies.
The Office of Community Planning & Development provides financial information on the distribution of its grants to states, cities and counties throughout the United States. Cumulative dollar totals are made available on five different types of grants: Community Development Block Grants (CDBG); HOME Investment Partnerships (HOME); American Dream Downpayment Initiative (ADDI); Housing Opportunities for Persons with AIDS (HOPWA); and Emergency Shelter Grants (ESG). Information can be viewed by state, which includes totals for individual cities and counties, or by all cities and counties listed together in one compilation. State breakdowns are available by year, from 2001 to 2008. Some of the largest recipients among cities of CPD grants are as follows: New York ($357 million); Los Angeles ($125 million); Chicago ($121 million); Philadelphia ($75 million); Houston ($49 million); Detroit ($48 million); Baltimore ($39 million); San Francisco ($38 million); and Cleveland ($32 million).
Examples of other HUD grants:
Resident Opportunities and Self Sufficiency (ROSS) provided $50 million to help seniors and families living in public housing be more independent and have access to education and training opportunities. In addition, $60 million was distributed to help low-income individuals find jobs and achieve economic self-sufficiency. Section 202 Demonstration and Planningprovided $18 million to help develop housing for low-income people who were also elderly. These grants went to 75 sponsors.
HOPE VI grants:
  • Washington DC was awarded a $20 million HOPE VI grant for revitalization of Sheridan Terrace Housing Development. It will be replaced with a new mixed-income neighborhood. 
  • Boston was awarded a $20 million HOPE VI grant for revitalization of Washington Beech public housing project. A new mixed-income neighborhood will replace the 57-year old complex.
  • North Carolina was awarded a $20 million HOPE VI grant to revitalize public housing developments in Fayetteville. 
  • Phoenix was awarded a $8.9 million HOPE VI grant to revitalize the A.L. Krohn Homes public housing development and replace them with a new mixed income neighborhood.
  • New Orleans was awarded a $20 million HOPE VI grant to revitalize C.J. Peete public housing development and add affordable housing units, as well as support services for relocated residents.  

Data for Department of Housing and Urban Development