Resolution Trust Corporation:

More Actions Needed to Improve Single-Family Affordable Housing Program

GGD-92-136: Published: Sep 29, 1992. Publicly Released: Sep 29, 1992.

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GAO reviewed: (1) the Resolution Trust Corporation's (RTC) progress in selling single-family houses under its Affordable Housing Disposition Program; and (2) whether RTC controls are adequate to ensure that qualified purchasers buy and occupy the homes.

GAO found that: (1) RTC lacks a consistent verification program to ensure that it sells homes only to eligible buyers; (2) the lack of complete, reliable data prevents RTC, Congress, and others from evaluating the program's results and RTC efforts to reach the low-income families; (3) RTC recently issued a directive requiring buyers to prove that they are eligible to purchase the properties and implementing the requirement that a buyer own the purchased property for at least 1 year; (3) several RTC offices have begun identifying buyers who may have been ineligible to buy program houses or failed to reside in them after purchase; and (4) RTC has taken steps to improve the accuracy of data on prior sales.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: RTC has revised its program compliance review procedures as well as its SAMDA contractor oversight program to more carefully focus on areas where GAO identified non-compliance with RTC policies. Since the issuance of the report, program compliance reviews scheduled for 1992 have been completed and corrective action plans were developed. Follow-up reviews are being held to ensure that these plans are properly implemented. Internal control reviews have been held in four offices in 1993, and are scheduled for the remaining two offices during September and October, 1993. Also, RTC has conducted reviews of all four contractors that do loan underwriting and income certifications for the affordable housing program. Areas where income certifications were being done have been identified improperly, and mandatory training on the single family income certification process has been held. Through August 1993, 17 certification training courses have been held for SAMDA contractors.

    Recommendation: To further improve the effectiveness of the affordable housing program, the Chief Executive Officer, RTC, should implement corporationwide procedures and systems to monitor and oversee the implementation of the program directives and the performance of contractors providing services under the program, particularly the verification of documentary evidence submitted by buyers to support their eligibility to participate in the affordable housing program.

    Agency Affected: Resolution Trust Corporation

  2. Status: Closed - Implemented

    Comments: Directive was issued requiring a post-sale occupancy monitoring system at each field office.

    Recommendation: The Chief Executive Officer, RTC, should implement a corporationwide postpurchase monitoring of sales to verify that buyers actually reside in the properties acquired.

    Agency Affected: Resolution Trust Corporation

  3. Status: Closed - Implemented

    Comments: RTC has issued new directives defining its policies and procedures for resolving program violations. RTC headquarters is now notified of all significant Inspector General investigations. AHDP headquarters staff are involved in the decision of whether to prosecute the action or seek civil remedies. One of the new directives clarifies civil remedies in cases of fraud, such as in AHDP. Program and legal staff received training in July 1993 on the new procedures. AHDP is refining its procedures with Legal to pursue civil and administrative remedies, and will issue further policy on resolving program violations. As of July 1993, RTC had 28 program violation investigations in process.

    Recommendation: The Chief Executive Officer, RTC, should further develop policies, procedures, and remedies for resolving program violations.

    Agency Affected: Resolution Trust Corporation

  4. Status: Closed - Implemented

    Comments: RTC has implemented a data integrity program and requested changes to the REOM system. Audit controls have been incorporated into the data cleanup process to ensure accuracy of the data. These controls include error reporting programs, verification of data entry, data spot checks for sampling and verification of REOMS data field contents, and a monthly data evaluation and reporting process.

    Recommendation: The Chief Executive Officer, RTC, should implement data collection controls to ensure data consistency and accurate reporting of sales data, especially for information necessary to evaluate RTC progress in achieving the program goals.

    Agency Affected: Resolution Trust Corporation

 

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