USDA Rural Housing Service:

Reengineering and Reinvention of the Direct Section 502 and 504 Single Family Housing Program

OGC-97-6, Dec 5, 1996

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Pursuant to a legislative requirement, GAO reviewed the Rural Housing Service's (RHS) new rule on reengineering and reinvention of the Direct Section 502 and 504 Single Family Housing Program. GAO found that: (1) the rule would set forth revised and combined rules for carrying out the requirements of sections 502 and 504 of the Housing Act of 1949 and combines the current 18 regulations into one rule as part of the National Performance Review Program; (2) the rule, among other changes, implements a Dedicated Loan Origination System which will utilize many of the methods used by private mortgage companies to improve program performance and efficiency to the program's customers; and (3) RHS did not comply with applicable requirements in promulgating the rule, since it improperly accelerated the rule's effective date.