Federal Housing Administration:

Monitoring of Single Family Mortgages Needs Improvement

RCED-91-11: Published: Feb 7, 1991. Publicly Released: Feb 7, 1991.

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GAO reviewed the Federal Housing Administration's (FHA) Section 203(b) mortgage insurance program for single family homes, focusing on how FHA field offices monitored the processing and approval of program participant applications.

GAO found that: (1) because FHA lacked a comprehensive description of monitoring program activities, GAO identified and reviewed 25 monitoring activities which FHA used in its review of the mortgage credit, valuation, and loan management areas of the insurance program; (2) during fiscal year 1988, Tampa, Florida, and Los Angeles, California, field offices did not comply with 8 and 9, respectively, of 22 applicable monitoring procedures; (3) there was extensive noncompliance with up to 10 of the field offices' applicable corrective action requirements because of lack of awareness of the requirements, nonexistent documentation, or unclear criteria; and (4) the lack of a single source or list of monitoring activities and internal controls made it difficult to determine the adequacy of headquarters' and regional offices' monitoring of the insurance program.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: A summary of monitoring procedures was signed and distributed to HUD field offices on August 5, 1992.

    Recommendation: In order to improve implementation of the Section 203(b) monitoring system and to provide the information necessary to determine if appropriate monitoring and corrective actions have been taken, the Secretary of Housing and Urban Development (HUD) should direct the Assistant Secretary for Housing--Federal Housing Commissioner, to develop a concise, easily updated list of the procedures for the Section 203(b) program's monitoring operation, indexed to more detailed guidance documents.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed - Implemented

    Comments: The summary of monitoring procedures distributed to HUD field offices on August 5, 1992 contained documentation requirements for each procedure.

    Recommendation: In order to improve implementation of the Section 203(b) monitoring system and to provide the information necessary to determine if appropriate monitoring and corrective actions have been taken, the Secretary of Housing and Urban Development should direct the Assistant Secretary for Housing--Federal Housing Commissioner, to require documentation of the performance and results of all monitoring and corrective actions.

    Agency Affected: Department of Housing and Urban Development

 

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