In 2002, Econometrica was awarded its first-ever contract from the U.S. Department of Housing and Urban Development (HUD). The contract originated in the Office of Policy Development and Research, and the work was an evaluation of the HUD Mark-To-Market (M2M) program—a program designed to address the rapidly increasing costs in the Federal Housing Administration (FHA)-insured stock that is supported by Section 8 (also known as project-based) assistance. In many cases, these Section 8 contracts provide for rents above local market levels. The M2M program brings rents down to market levels while simultaneously preserving low-income housing affordability by allowing HUD to reduce the Section 8 rents to market levels and reduce the FHA mortgage on the property, if necessary, to a level that lower rents can support. The program’s goals are thus to preserve low-income rental housing affordability while reducing the long-term costs of federal rental assistance and minimizing the adverse effect on the FHA insurance funds. The program also aims to establish a network of locally based entities to administer the program.

The objective of Econometrica’s study was to evaluate the implementation of the M2M program to date in terms of cost effectiveness and participant and resident satisfaction.

Our study included three primary analysis activities: (1) a Process Analysis of the administrative mechanisms implementing the M2M program; (2) a Retrospective Statistical Analysis of trends in participation levels, estimates of savings to the government resulting from the program, measures of program efficiency, and preliminary indications of program outcomes; and (3) a Prospective Analysis case study to document the restructuring process for 15 properties undergoing restructuring in 2003.

Econometrica successfully met its commitments under this contract, and HUD accepted our final report for publication. This inaugural HUD contract has led to many more contracts in the ensuing years; we currently count more than 60 contracts and cooperative agreements awarded by HUD and several others related to HUD programs and regulations awarded by state and local governments. Incidentally, the HUD official who oversaw this pivotal project, Dr. Jennifer Stoloff, is also now a full-time Econometrica employee!

The evaluation report is available online at https://www.huduser.gov/portal//Publications/pdf/M2MEva.pdf. You may also learn more about the M2M program at https://www.hud.gov/program_offices/housing/mfh/presrv/presmfh/aboutm2m.