What the Department of Housing and Urban Development Does

What Is the Department of Housing and Urban Development (HUD)?

The purpose of the U.S. Department of Housing and Urban Development (HUD) is to provide housing and community development assistance and to make sure everyone has access to “fair and equal” housing.

To achieve these goals, HUD runs or participates in many programs intended to support homeownership, increase safe and affordable rental housing, reduce homelessness, and fight housing discrimination.

HUD is led by the HUD secretary, a member of the president’s cabinet who is nominated by the president and confirmed by the Senate. Marcia Fudge currently holds the position, having taken office on March 10, 2021.

Understanding the Department of Housing and Urban Development (HUD)

HUD was established in 1965 under President Lyndon B. Johnson. It is a cabinet-level government agency, meaning that the agency’s head, called the secretary, is appointed by the president and approved by a simple majority vote in the Senate. The secretary then holds that position until they leave or a new president takes office. HUD’s predecessor was the Housing and Home Finance Agency, formed in 1947.

In the event of a major catastrophe, the HUD secretary is 13th in line to succeed the president, after higher-level cabinet executives such as the secretary of state and secretary of the treasury. The HUD secretary reports to the president of the United States (POTUS) . 

The federal government’s involvement in housing stretches back much further than the creation of either agency, however. In 1918, for example, the government helped finance the building of homes for workers in industries contributing to World War I efforts.

Mission

HUD’s mandate is to oversee various federal housing programs in the name of promoting fair and equal housing. Under HUD’s fiscal years 2022–2026 strategic plan, the department’s mission is “to create strong, sustainable, inclusive communities and quality affordable homes for all."

The agency further states it aims to advance housing justice and reduce homelessness.

HUD's first overarching goal is to "ensure HUD centers its focus on people, and their lived experiences, with policy and programs that are equity-focused, anti-discriminatory, and that advance housing justice, so that everyone has an affordable, healthy place to live."

HUD's Initiatives

HUD is responsible for national policy and programs that address housing needs in the U.S. Through various initiatives, HUD works to:

• Strengthen the U.S. housing market
• Ensure there is enough quality, affordable rental housing
• Improve people’s quality of life by improving their housing
• Strengthen communities
• Enforce fair housing laws

HUD and the Federal Housing Administration (FHA)

HUD also oversees the Federal Housing Administration (FHA), which Congress created in 1934. The FHA is primarily known for its mortgage insurance program, which enables homebuyers—who might not otherwise qualify for a conventional mortgage due to a low credit score, a small down payment, or a history of bankruptcy or foreclosure—to get an FHA home loan.

Fair Housing Act

HUD oversees several programs and rules that you might have heard of.

The Fair Housing Act, passed in 1968, governs most of the housing market and prohibits discrimination based on race, color, national origin, religion, sex, familial status, and handicap when housing is rented or sold or when a homebuyer applies for a mortgage.

The Community Development Block Grant (CDBG)

The Community Development Block Grant program provides grants to cities and counties to implement activities directed toward the revitalization of neighborhoods, economic development, and providing improved facilities and services.

Grantees must use the funds in ways that will:

• Primarily benefit low- and moderate-income residents
• Prevent or eliminate slums or blight
• Address urgent community problems, such as natural disaster recovery, that threaten residents’ health and welfare

Housing Choice Voucher Program

HUD also oversees the Housing Choice Voucher Program, commonly referred to as Section 8. This program helps very low-income families, older people, and people with disabilities pay for rental housing that meets or exceeds minimum health and safety standards. Rentals do not have to be located in subsidized housing projects, and local public housing agencies are responsible for distributing the vouchers.

How HUD Helps Communities

At the end of 2023, HUD announced that it had accomplished a 20-year record: 120,000 new incremental vouchers over a three-year period. In addition, the agency announced that the efforts of the FHA led to a significant number of new homebuyers and the highest first-time homebuyer rate in over two decades.

HUD also doubled its funding for the Eviction Protection Grant program in 2023—a brand-new program funded for the first time in 2022—and provided legal assistance for over 19,000 low-income tenant households at risk of, or subject to, eviction.

There were two new offices established by HUD in 2023: an Office of Disaster Management (ODM) in the Office of the Deputy Secretary and an Office of Disaster Recovery (ODR) in the Office of Community Planning and Development. In 2021 and 2022, HUD provided $6.7 billion in disaster assistance to help communities safely repair infrastructure and housing through disaster recovery grants. 

HUD has also developed several case studies to highlight programs it considers successes. Below are a few examples.

Portland, Oregon

In Portland, Oregon, HUD contributed $3.3 million toward financing Bud Clark Commons, an eight-story, LEED Platinum-certified development that provides both transitional and permanent housing to help those struggling with homelessness.

The complex also houses case-management services to help people who are homeless overcome problems such as mental illness, chemical addiction, and unemployment.

Since opening in 2011, the Commons has served more than 7,000 people, connected 3,600 with social services, and placed 350 in permanent housing. Most of the development’s funding came from tax-increment financing and low-income tax credits from the city of Portland, but HUD’s financing filled in the gaps. 

Anchorage, Alaska

HUD also helped finance an Anchorage, Alaska, revitalization program started in 2004 in an older neighborhood called Mountain View, one of the city's oldest neighborhoods. Housing investments have decreased vacancy rates and raised property values.

El Paso, Texas

A third success story comes from El Paso, Texas, where about $11 million of the $14 million used to create a 73-unit affordable housing development for very low-income older people came from HUD.

The Paisano Green Community boasts zero net energy consumption, LEED Platinum certification, and average monthly energy costs of $18.30 per apartment unit and $21.11 per townhouse unit—despite El Paso’s desert climate, where summer highs are in the mid-90s and winter lows are in the 30s.

Criticisms of HUD

The Department of Housing and Urban Development has done immeasurable good in providing safe housing to Americans and lifting people out of poverty. At the same time, the organization is often subject to criticism, which comes mainly from organizations and individuals that support limited government. They argue that government programs often don’t work as intended and that HUD’s activities are best left to local governments and the private sector.

In some locations, Section 8 vouchers are in such high demand that there are long waiting lists; waiting lists can even be closed in areas of very high demand. And while the program allows participants to rent any available housing, in practice their choices are often severely restricted and the options are undesirable.

Critics add that Section 8 vouchers tend to concentrate low-income families in impoverished neighborhoods. Also, because HUD sometimes sets the value of its vouchers too low for local housing-market conditions, few landlords are willing to accept the vouchers. Some of those who do abuse the system.

The program also imposes annual housing safety inspections on landlords who rent to Section 8 tenants and has a reputation for paying landlords several months late. 

According to the Cato Institute, HUD has provided grant funds that have been abused, given unneeded subsidies to developers at taxpayers’ expense, and experienced a number of incidents involving mismanagement, political manipulation, corruption, and fraud.

The Bottom Line

As with all government departments, HUD has supporters who think its resources are being well spent and its programs are effective—and it has detractors who think its resources are misallocated and its programs are unnecessary at best (and harmful at worst).

There are real-life examples of people who have been helped and people who have been harmed by its rules and programs. Ultimately, it is difficult to assign blame or praise to just one entity when so many factors affect housing in the U.S.