Pursuant to a congressional request, GAO provided information on the quality of appraisals for the Federal Housing Administration's (FHA) single-family loans, focusing on nine properties--six in New Jersey and three in Ohio--that GAO visited in November 1997 and January 1998, respectively.

GAO noted that: (1) appraisal reports for eight of the nine properties did not reflect conditions GAO observed that could adversely affect the structural soundness and continued marketability of the houses and health safety of the occupants; (2) examples of conditions GAO observed that were not reflected in the reports included termite damage, masonry and foundation damage, makeshift structural supports, rotted siding, and deteriorated roofing shingles; (3) as of February 1998, five of these eight properties had been purchased with FHA-insured mortgages; (4) the ninth property GAO visited did not have any significant visible defects, and the appraisal report accurately reflected the conditions GAO observed at the home; (5) the Department of Housing and Urban Development's (HUD) field offices in Camden, New Jersey, and Cleveland, Ohio, did not adequately monitor the performance of the appraisers for the properties GAO visited; (6) a HUD contractor who performed field reviews of the appraisals for three of the New Jersey homes concluded that the appraisers overlooked serious deficiencies and should have rejected the properties; (7) the Camden office could locate only one of the three field review reports in its files; and (8) the appraiser for two of the Ohio properties had received four unacceptable ratings in field reviews conducted in fiscal year 1997--grounds for possible removal from FHA's roster of appraisers--but the Cleveland office had not taken any disciplinary action against the appraiser.