Housing and Urban Development's Efforts To Improve Its Accounting System for Mortgage Insurance Premiums

FGMSD-80-27: Published: Mar 19, 1980. Publicly Released: Mar 19, 1980.

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GAO reviewed the action taken by the Department of Housing and Urban Development (HUD) to improve its system for billing and collecting mortgage insurance premiums. The review concentrated on the effectiveness of actions taken to reduce the amount of delinquent premiums.

HUD has not been sufficiently aggressive in collecting the millions of dollars in premiums that mortgage institutions owe. Controls over the delinquent premiums were expected to be drastically improved once a new automated system was implemented in September 1979. However, design changes have caused delays and the system is not scheduled for implementation until 1982. Because of this, HUD has started making long-needed improvements to its existing accounting system. Procedures currently used are inconsistent with those followed in the private sector and could keep some mortgagees from knowing about delinquencies for years. HUD also had difficulty collecting the application fees that homeowners actually paid in advance from the mortgagees. This problem could be mitigated by requiring the mortgagee to pay the fees when the application is accepted rather than waiting until related documents are processed through the system.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: This recommendation was made when HUD billed and collected its mortgage insurance premiums annually. Subsequent to the report, Congress had passed the Housing and Community Act of 1980, requiring HUD to bill and collect premiums monthly. To do this, HUD is in the process of redesigning its billing and collection system for mortgage insurance premiums.

    Recommendation: The Secretary of HUD refrain from canceling current or delinquent premiums until receiving notification that all valid receivables that were due the Government when the insurance was canceled were in fact collected.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed - Not Implemented

    Comments: This recommendation was made when HUD billed and collected its mortgage insurance premiums annually. Subsequent to the report, Congress had passed the Housing and Community Act of 1980, requiring HUD to bill and collect premiums monthly. To do this, HUD is in the process of redesigning its billing and collection system for mortgage insurance premiums.

    Recommendation: The Secretary of HUD should send an acknowledgement to the mortgage holder stating all delinquent premiums owed on the mortgage each time a mortgage or servicing agent is changed in the master file.

    Agency Affected: Department of Housing and Urban Development

  3. Status: Closed - Not Implemented

    Comments: This recommendation was made when HUD billed and collected its mortgage insurance premiums annually. Subsequent to the report, Congress had passed the Housing and Community Act of 1980, requiring HUD to bill and collect premiums monthly. To do this, HUD is in the process of redesigning its billing and collection system for mortgage insurance premiums.

    Recommendation: The Secretary of HUD should revise the billing system to include all delinquent as well and current premiums due on the anniversary date.

    Agency Affected: Department of Housing and Urban Development

  4. Status: Closed - Not Implemented

    Comments: This recommendation was made when HUD billed and collected its mortgage insurance premiums annually. Subsequent to the report, Congress had passed the Housing and Community Act of 1980, requiring HUD to bill and collect premiums monthly. To do this, HUD is in the process of redesigning its billing and collection system for insurance premiums.

    Recommendation: The Secretary of HUD should, to correct deficiencies noted, perform a mortgage reconciliation with each mortgagee.

    Agency Affected: Department of Housing and Urban Development

  5. Status: Closed - Not Implemented

    Comments: This recommendation was made when HUD billed and collected its mortgage insurance premiums annually. Subsequent to the report, Congress had passed the Housing and Community Act of 1980, requiring HUD to bill and collect premiums monthly. To do this, HUD is in the process of redesigning its billing and collection system for mortgage insurance premiums.

    Recommendation: The Secretary of HUD should aggressively pursue the collection rather than the liquidation of valid delinquent premiums.

    Agency Affected: Department of Housing and Urban Development

 

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