However, because the Director was not appointed until October 21, 1998, HUD staff began formulating organization and staffing plans for OMHAR in the Director’s absence. In effect, this authority allows the Director to compensate OMHAR employees at a higher level than other HUD employees to obtain the skills and expertise needed to accomplish the program’s purposes. Despite delays in hiring a management studies contractor and a voluminous number of tasks to complete, HUD has made considerable progress toward this end. However, in spite of HUD’s efforts, some of these tasks either have been or will be completed behind their original schedule. HUD’s Procedures to Oversee Mark-To-Market Program’s Implementation Are Under Development

Because HUD is responsible for establishing effective management controls over the program’s implementation, the HUD officials developing the mark-to-market program were establishing or planning several procedures and systems to oversee its implementation. However, as of October 14, 1998, most of these procedures and systems were not yet in place, and many of the related details remained to be developed. Within its general oversight system, HUD has either developed or is planning three key components to help ensure that field offices and PAEs carry out the program in a way that meets its objectives and is in compliance with requirements: (1) performance measures to judge the effectiveness of PAEs’ activities and a system of compensating PAEs, (2) an Internet-based tracking system to monitor and analyze actions taken by HUD field offices and PAEs in carrying out mark-to-market functions, and (3) an oversight and audit guide to test compliance with the program’s requirements and objectives. The act also requires HUD to hold at least three public forums to obtain recommendations on the implementation of certain legislative provisions. In accordance with these requirements, HUD’s program guidance includes steps for involving affected parties in the restructuring process, and, on October 1, 1998, mark-to-market staff held the three required public forums. Organizations representing owners and managers of FHA-insured assisted housing, tenant groups, nonprofit organizations, lenders, coalitions of local and state government agencies, and other advocacy groups were invited to submit ideas and comments on developing the new program. For instance, in May 1998, the mark-to-market official responsible for the HFA component of the 1997 and 1998 demonstration programs met with the Council to obtain HFAs’ views on the compensation structure for their participation in the program. Overview of the Mark-To-Market Process

As the Department of Housing and Urban Development (HUD) plans to implement it, the process to be used under the permanent mark-to-market program has nine phases: (1) screening owners and projects for eligibility, (2) assigning projects for restructuring, (3) preserving affordable housing, (4) collecting data, (5) underwriting, (6) approving the loan, (7) closing, (8) distributing postclosing documents, and (9) servicing and monitoring. 4. 5. Summary of HUD’s Reporting Requirements for the Mark-To-Market Program

The Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRAA) requires the OMHAR Director to report certain information to the Secretary of HUD and requires the Secretary of HUD to submit information on OMHAR’s operations to the Congress and the Office of Management and Budget. A recorded menu will provide information on how to obtain these lists.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the status of the Office of Multifamily Housing Assistance Restructuring's (OMHAR) development, focusing on: (1) its organization and staffing and how it relates to the Department of Housing and Urban Development's (HUD) overall structure; (2) whether it is on schedule to meet its key operational and reporting requirements; (3) the procedures and systems it will use to oversee the mark-to-market program's implementation; (4) the status of projects included in the three mark-to-market demonstration programs and how HUD is using information gathered from these programs; and (5) the actions it has taken to obtain information and feedback from parties that will be affected by the mark-to-market program.

What GAO Found

GAO noted that: (1) because a Director for OMHAR was not appointed until October 21, 1998, HUD had not made final decisions at the time of GAO's review on the Office's staffing and organization or on how the Office would relate to HUD's overall structure; (2) in addition to the 10 staff currently assigned to work on the mark-to-market program, HUD's preliminary plans call for hiring approximately 75 staff for OMHAR; (3) the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act of 1998, provides the Director special compensation authority to pay employees of OMHAR at a higher level than other employees in order to obtain the skills and expertise needed to accomplish the program's purposes; (4) HUD has made considerable progress toward meeting its key operational requirements for implementing the mark-to-market program; (5) because of delays in obtaining contract support and the sheer volume of tasks that HUD needs to complete, some of these tasks either have been or will be completed behind their original schedule; (6) the HUD officials responsible for the mark-to-market program are in the process of establishing or planning several procedures and systems designed to oversee the implementation of the program; (7) these include: (a) a system for measuring the performance of the entities responsible for carrying out restructuring transactions on HUD's behalf; (b) an Internet-based system to track the actions taken by these entities in carrying out mark-to-market functions; and (c) an audit guide to test these entities' compliance with the program's requirements and objectives; (8) as of October 14, 1998, most of these procedures and systems were still being developed; (9) in accordance with legislative requirements, HUD mark-to-market staff have taken actions to obtain information and feedback from affected parties; (10) specifically, they: (a) have developed program guidance that includes steps to involve affected parties including tenants and neighborhood associations, at various points in the restructuring process; and (b) have held three public forums to obtain recommendations from organizations representing affected parties on implementing certain legislative provisions; and (11) in addition to the legislatively required actions, HUD invited organizations representing project owners and managers, tenant groups, nonprofit organizations, lenders, coalitions of local and state government agencies, and other advocacy groups to submit ideas and comments on developing the program and to participate in meetings to discuss these issues.