Administrative Procedures and Controls Need Strengthening To Reduce Losses to HUD's Mortgage Insurance Fund

Highlights

A review was performed of payments made by the Department of Housing and Urban Development (HUD) and the Veterans Administration (VA) to mortgage investors to determine if opportunities exist to reduce losses to Federal mortgage insurance and guarantee programs.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Housing and Urban Development	The Secretary of HUD should reemphasize to all HUD area offices and mortgagees that HUD will not reimburse mortgagees for taxes paid after the date the mortgagee submits the notice of property transfer and application for insurance benefits. The staff responsible for reimbursing mortgagees should be instructed not to pay mortgagees' claims for taxes that do not appear on HUD Form 1025.	Closed Please call 202/512-6100 for additional information.
Department of Housing and Urban Development	The Secretary of HUD should revise HUD regulations and procedures to require that interest paid on mortgagees' insurance claims be calculated from the date the expenditures are made rather than from the date of default.	Closed Please call 202/512-6100 for additional information.
Department of Housing and Urban Development	The Secretary of HUD should establish a minimum dollar amount for preservation and security work that, if exceeded, would require the mortgagees to: (1) have the property inspected before and after the work is performed to ensure that the work is justified and satisfactorily completed; and (2) submit the inspection reports, along with paid invoices for the work, to the HUD area offices for review and approval before HUD reimburses the mortgagees for the work.	Closed Please call 202/512-6100 for additional information.
Department of Housing and Urban Development	The Secretary of HUD should require mortgagees to submit documentation providing assurance that fees claimed are allowable expenses, and emphasize to the staff responsible for reimbursing mortgagees that claims for inspection fees on occupied properties are not allowable under HUD procedures.	Closed Please call 202/512-6100 for additional information.

Full Report

Full Report (28 pages)

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Topics

Housing

Claims processing costsConstitutional lawCost controlForeclosuresInsurance claimsInsurance lossesLoan defaultsMortgage programsTaxesClaims payments