Rural Housing Programs:

Opportunities Exist for Cost Savings and Management Improvement

RCED-96-11, Nov 16, 1995

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Pursuant to a congressional request, GAO provided information on the Rural Housing and Community Development Service's (RHCDS) housing loan programs, focusing on opportunities for cost savings and management improvements in the loan programs.

GAO found that: (1) RHCDS is improving its loan programs' operations, but improving program delivery could save the federal government money and benefit borrowers and tenants in the programs; (2) centralized servicing of RHCDS loans could save over $100 million per year through staff reductions and greater staff productivity; (3) the number of direct loan program borrowers graduating to private credit could be increased by allowing borrowers to refinance their loans with commercial lenders and considering all loans for graduation, but RHCDS has few mechanisms in place to force loan graduation; (4) RHCDS could reduce multifamily housing program costs by shortening the terms of loans, eliminating certain equity loans made to owners, and funding more projects not requiring rental assistance; and (5) the process used to fund individual projects does not ensure that the neediest areas receive program assistance.