HOUSING

Evaluation of Mark-to-Market Program
Department of Housing and Urban Development

The Mark-to-Market (M2M) program was designed to provide a solution to the problem of rapidly increasing costs in the FHA-insured stock that is supported by Section 8 assistance. In many cases, Section 8 contracts provide for rents that are above local market levels. In order to bring the rents down to market levels, while at the same time preserving low-income housing affordability, the M2M program allows HUD to reduce Section 8 rents to market levels and to reduce the FHA mortgage on the property, if necessary, to a level that can be supported by the lower rents. The program’s goals thus are to preserve low-income rental housing affordability while reducing the long-term costs of Federal rental assistance and minimizing the adverse effect on FHA insurance funds. The program also aims to establish a network of locally based entities to administer the program.

The objective of this study is to evaluate the implementation of the M2M program to date in terms of cost-effectiveness and participant and resident satisfaction. This includes an assessment of the costs and financial benefits of the program. Claims on the FHA fund and payments to Participating Administrative Entities (PAEs) are the main financial costs, while Section 8 reductions are the main financial benefits. Along with the easier to measure financial outcomes of the program, there are a number of less quantifiable benefits: participant satisfaction (PAEs, HUD staff, property owners, lenders, and residents) and long-term preservation of affordable rental housing.