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Single-Family Housing: Cost, Benefit, and Compliance Issues Raise Questions about HUD's Discount Sales Program

GAO-04-208 Published: Jan 30, 2004. Publicly Released: Jan 30, 2004.
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Highlights

In 2001, the Department of Housing and Urban Development's (HUD) Inspector General reported on serious problems in HUD's Discount Sales Program, under which nonprofit organizations purchase HUD-owned properties at a discount, rehabilitate them, and resell them to low- and moderate-income homebuyers. The objectives of the program are to expand affordable housing opportunities, help revitalize neighborhoods, and reduce HUD's property inventory in a timely, efficient, and cost-effective manner. Although the Inspector General recommended that the agency suspend the program and evaluate its viability, HUD did neither. GAO was asked to assess (1) the costs of the program to HUD, (2) the benefits of the program to homebuyers, and (3) HUD's efforts to monitor participating nonprofits and enforce program requirements.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Housing and Urban Development The Secretary of HUD should evaluate options to improve the Discound Housing Program's benefit to homebuyers, the agency's monitoring of nonprofits, and enforcement of excess profits requirements.
Closed – Not Implemented
The volume of properties sold under HUD's Discount Sales Program has dropped steeply in recent years, shrinking to less than 1 percent of HUD's total property sales. HUD has indicated that it would not be cost-effective to evaluate the program's costs and benefits and options for improving it given the program's small size. Accordingly, HUD does not plan to implement the recommendation.
Department of Housing and Urban Development The Secretary of HUD should assess the extent to which the Discount Housing Program is meeting its objectives.
Closed – Not Implemented
The volume of properties sold under HUD's Discount Sales Program has dropped steeply in recent years and in fiscal year 2005 accounted for less than 1 percent of HUD's total property sales. HUD has indicated that it would not be cost-effective to evaluate the program given the program's very small and shrinking size.
Department of Housing and Urban Development If the Secretary of HUD determines that the current cost of the program plus the resources needed to improve it exceed the program's benefits, the program should be terminated.
Closed – Not Implemented
The volume of properties sold under HUD's Discount Sales Program has dropped steeply in recent years, shrinking to less than 1 percent of HUD's total property sales. HUD has indicated that it would not be cost-effective to evaluate the program's costs and benefits and options for improving it given the program's small size. Accordingly, HUD does not plan to implement this recommendation.

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Topics

Administrative costsCost analysisExcess profitsHousing programsLow income housingMonitoringNonprofit organizationsProgram abusesProgram evaluationHomeownership