The 1930s

In the midst of widespread unemployment and financial collapse, Congress passed the Emergency Relief and Construction Act of 1932, creating the Reconstruction Finance Corporation (RFC). This was the government’s first major involvement in the housing field. The RFC was authorized to make loans to private corporations providing housing for low-income families. Also in 1932, the Federal Home Loan Bank Board was established to make advances on the security of home mortgages and establish a Home Loan Bank System.

However, these efforts did little to assist individual homebuyers. The average home loan at that time required very short-term credit, with terms generally ranging from three to five years. Large down payments, second mortgages, and high interest rates were commonplace. As the depression ended, and the prospect of improved financial status for individual families increased, the National Housing Act of 1934 was passed to relieve unemployment and stimulate the release of private credit in the hands of banks and lending institutions for home repairs and construction. To accomplish this, the Act of 1934 created the Federal Housing Administration (FHA). The FHA continues to this day, under the Assistant Secretary for Housing-Federal Housing Commissioner, as the main federal agency handling mortgage insurance. Title II of the Act of 1934 established two basic mortgage insurance programs: Section 203 mortgage insurance for one to four family homes; and Section 207 multifamily project mortgages. The FHA’s assumption of risk, through its insurance programs, made possible the amortization of mortgage loans with regular monthly payments to reduce the size of loan.

The Act of 1934 also authorized the FHA to create a national mortgage association to provide a secondary market where home mortgages could be sold. The allowed more money to be available for home loans. In 1937, the Federal National Mortgage Association, or Fannie Mae, was chartered by the FHA as a subsidiary of the RFC.

While these early measures were a major government effort to stimulate housing construction, they did not help those lower income families most in need of housing. Because of the needs of this group, the United States Housing Act of 1937 established the public housing program. The Act, administered by the United States Public Housing Authority, authorized loans to local public housing agencies for lower-rent public housing construction expenses.

The programs created by these acts guided the direction of federal housing policy for the next 10 years, leading to the creation of the urban renewal program. Over the years, all of these original programs have undergone some changes and additions. However, they continue to reflect the federal government’s aim to marshal both public and private resources to improve housing conditions for low-and moderate-income families.

The same year that the public housing program was approved by Congress, the Bankhead-Jones Farm Tenant Act was passed to allow the Secretary of Agriculture to make rural housing loans. The separate administration of rural loans continues to the present with the Farmers Home Administration’s (FmHA). FmHA direct loans for rural housing may be used in conjunction with other housing assistance such as Section 8 housing assistance.

While another major housing act would not be passed until 1949, government housing agencies underwent several reorganizations between 1937 and 1949. In 1939, the United States Public Housing Authority was transferred to the newly created Federal Works Agency; and the Federal Loan Agency was created to assume responsibility for the FHA, the RFC, Fannie Mae, the Federal Home Loan Bank Board, and the Home Owners Loan Corporation. Three years later, the National Housing Agency (NHA) was established to handle all non-farm housing programs. The Federal Home Loan Bank Administration, the FHA, and the Federal Public Housing Administration became constituent agencies of NHA. In 1943, the Housing and Home Finance Agency (HHFA), HUD’s immediate predecessor, replaced the NHA. Back to top.

The 1940s

World War II caused a temporary moratorium on domestic housing construction except for defense proposes. Legislation during this period, however, has a major impact on housing. The 1944 authorization of the Veterans Administration (VA) home loan program has guaranteed millions of single-family and mobile home loans since its inception. The market increase in housing construction following World War II, which led to the growth of suburban areas, is in part attributable to this financing program. This exodus to the suburbs in turn led to the need for new housing programs to deal with declining urban areas.

Congress responded to this urban decline with the Housing Act of 1949 (1949 Act). Title I of the 1949 Act authorized funds to localities to assist in slum clearance and urban redevelopment. This program, as earlier programs, once again emphasized new construction. In addition, it provided funding for activities not directly related to housing construction. Open space land, neighborhood facilities and basic water and sewer facilities were all made eligible for federal assistance. Back to top.

The 1950s

The Housing Act of 1954 amended the 1949 Act to provide funding, not only for new construction and demolition, but for the rehabilitation and conservation of deteriorating areas. These amendments represented a substantive change in the evaluation of housing problems. The gradually shift from new construction to conservation has had a major impact on today’s housing policies where rehabilitation rather than demolition is encouraged. Two years later the Housing Act of 1956 added special provisions under Sections 203 and 207 and the public housing programs to give preference to the elderly, and amended the 1949 Act to authorize relocation payments to persons displaced by urban renewal. Federal involvement in housing was rapidly expanding to include not only the financing of new construction but measures to preserve existing housing resources and develop better communities. This trend continued throughout the 1960s and into the 1970s. Back to top.

The 1960s

Legislation in the 1960s expressed the social concerns of providing decent and sanitary housing and ensuring that such housing is made available to all. In that sprit, Executive Order 11063, Equal Opportunity in Housing, was issued in 1962 and represented the first major effort by the federal government to combine civil rights with housing. Title VI of the Civil Rights Act of 1964 assured nondiscrimination on federally assisted programs. Equality in housing opportunity was legislated by Title VII of the Civil Rights Act of 1968, the Fair Housing Act, which prohibited discrimination in the sale, financing, or lending of housing. The full protection of the law was expanded by the Fair Housing Amendments of 1988, further prohibiting discrimination based on familial status or handicap.

In 1965, the Housing and Urban Development Act created HUD to succeed the HHFA as a cabinet-level agency.

The 1960s brought a new method of developing low-income housing. The Housing and Urban Development Act of 1965 initiated a new leased housing program to make privately owned housing available to low-income families. The Housing and Community Development Act of 1974 (1974 Act) replaced Section 23 with the Section 8 Leased Housing Assistance Payment Program (Section 8). Title I of the 1974 Act created a new community development block grant (CDBG) program. Back to top.

The 1970s

In the late 1960s to the mid-1970s, laws were enacted to define and protect the rights of consumers in the areas of interstate land sales and real estate settlement procedures (RESPA). The Home Mortgage Disclosure Act of 1976 and the Community Reinvestment Act of 1978 attempted to have lending institutions reveal where they were making their housing loans in an effort to discourage geographical discrimination in the mortgage lending industry. Back to top.

The 1980s

The 1980s represented an era of retrenchment in new housing construction programs funded by HUD. Project based Section 8 assistance, which proliferated during the 1970s, obligated the government to long-term housing assistance payments. Budgetary constraints during the 1980s led to the elimination of the Section 8 new construction program in order to limit the scope of its assistance to existing housing. Back to top.

The 1990s

The 1990s presented a different set of crises for the Department, much of which related to the cost of expiring Section 8 contracts and deteriorating properties. Several new programs were established to ensure the survival of affordable units and the viability of subsidized housing programs. The Low-Income Housing Preservation and Resident Homeownership Act of 1990 attempted to maintain the supply of affordable housing by offering project incentives not to prepay mortgages and to continue the low-income rental use of their properties.

In addition, HUD was facing the high cost of renewing expiring Section 8 contracts. At the crux of the problem, was the high cost of FHA-insured mortgages, which necessitated higher that market-rate rents, thereby making HUD Section 8 subsidies extremely expensive. The Multifamily Assisted Housing Reform and Affordability Act of 1997 created a mechanism to restructure the mortgages in order to maintain affordable Section 8 subsidies.

HUD was also beset by budgetary pressures and was forced to look to management reform and personnel cutbacks. Significant organizational reconfiguration was necessary, based on the long-range HUD 2020 Management Reform Plan (2020 Plan).

The 2020 Management Reform Plan was announced in 1997 as an attempt to streamline the Department through significant staff cuts and reorganizing operations by function. The intent of the plan was to eliminate “stovepipe” bureaucratic processes in which offices operate independently, with duplication of operations. Under the 2020 Plan, programs were consolidated and some functions were to be privatized, with the number of HUD programs to be reduced from 300 to 70. Although significant staff reductions were achieved, program consolidation had only limited success. Back to top.

The Present

The mission of HUD, to “promote adequate and affordable housing, economic opportunity, and a suitable living environment free from discrimination” continues to focus the department’s initiatives. Over the past two years, the national homeownership rate for all Americans has reached a record of 68 percent, but minority homeownership rates lag far behind. The Department is committed to President Bush’s goal of creating 5.5 million new minority homeowners by the end of the decade. Together with the housing industry, HUD programs play a key role in helping to reach this goal, including FHA mortgage insurance, an important source of financing, especially for minority and lower income homebuyers; homeownership vouchers; the HOME program; CDBG; housing counseling; and other focused efforts.

During Fiscal Year 2002, HUD launched a major consumer advocacy initiative: reforming outdated and needlessly complex regulatory requirements under the Real Estate Settlement Procedures Act (RESPA).

To assist citizens who decide against or who may not be prepared for homeownership, HUD also maintains a commitment to increasing quality affordable rental housing. Working with public agencies, nonprofit, faith-based, and community organizations as well as private partners, the department has helped expand the availability of affordable housing and improve structural and living conditions at HUD-insured and assisted rental housing projects. Moreover, a variety of HUD program offices offer specially targeted programs to provide housing and other essential support to populations with special needs, including the elderly, persons with disabilities, individuals with HIV/AIDS, and the homeless.

The Department also plays a major role in meeting President Bush’s challenge to end chronic homelessness within ten years. To help meet this goal, the Interagency Council on Homelessness has been reactivated. It consists of 18 federal agencies that assist homeless individuals and families.