HUD Will Use Some FHA Receipts for Section 8 Vouchers

The Department of Housing and Urban Development is projecting that new, higher fees charged by the Federal Housing Administration along with earnings from the Government National Mortgage Association program will double the agency's mortgage-related "receipts" in the new fiscal year to $6.9 billion. HUD secretary Shaun Donovan said he plans to use some of the additional $3.4 billion in FHA/GNMA revenue to expand such social programs as Section 8 rental vouchers. During a press conference with reporters Mr. Donovan provided little detail on replenishing the depleted FHA insurance fund, but seemed confident that it would stay in the black thanks to new premium hikes charged to borrowers. HUD has set its overall FY 2011 budget at $48.5 billion, a 5% reduction from last year. The Section 8 plan and HUD budget, if approved by Congress, will create 35,000 additional renters by giving them federal housing vouchers. In terms of dollars for vouchers, the increase is 8% to $19.6 billion. Secretary Donovan, in response to a question, said government money will not be used to bail out apartment projects such as the $5.6 billion Stuyvesant Town leveraged buyout which occurred in 2006. The housing secretary noted that "private investors are rightly" suffering what he called "private losses."