HUD Duties

U.S. Housing and Urban Authority and what it does for Americavillage homes image by John Keith from Fotolia.com

HUD, or the U.S. Department of Housing and Urban Development, was developed under President Lyndon B. Johnson's "Great Society" program in 1965 and today is still responsible for making homes affordable for low-income families. HUD has a wide range of programs, the most popular of which might be its mortgage and loan insurance program, but the agency is also active in providing grants for affordable housing, in developing communities that are in need of rehabilitation and in assisting homeowners who are facing foreclosure or homelessness.

Mortgage and Loan Insurance

HUD does not actually offer mortgages, but the agency does provide mortgage and loan insurance through the Federal Housing Administration (FHA). If a loan applicant qualifies under HUD's requirements, the lender can then create a loan package that HUD will insure. The loan insurance includes a premium that buyers must pay along with the monthly mortgage payment, but the loan usually comes with a lower rate that HUD provides to qualified applicants. If the homeowner defaults on the loan, HUD pays the residual to the lender and then takes possession of the property and sells it as a "HUD home."

HUD's HOME Investment Partnerships Program was developed as a result of the Cranston-Gonzales National Affordable Housing Act (1990) with the purpose of developing affordable housing in low-income areas where residents are unable to purchase homes. As its name suggests, the program is a partnership that HUD creates with participating communities, and these communities must match HUD's funding by at least 25 percent in order for the funding to be approved.

In 1974, HUD began offering the Community Development Block Grant program for the purpose of assisting neighborhoods and communities in need of rehabilitation. The focus of the Community Development Block Grant program is on low-income areas and particularly those suffering from "slum or blight conditions." HUD makes the funding available to the individual states, with the requirement that the money must be used toward improving communities. The money is provided through HUD with the agency's Office of Community Planning and Development responsible for administering the program.

In the event of impending foreclosure or even homelessness, HUD makes housing counselors available for those in need. The counseling is without charge, and the agency provides access to counselors in all 50 states. In some cases, HUD will work through counselors who do charge for their services, but the agency requires that counselors assist free of charge for those who are unable to pay. For those who are homeless, HUD provides information regarding nonprofit organizations that are available in each local area in order to help homeowners get back on their feet.