Pursuant to a congressional request, GAO the reviewed the reasonableness of the: (1) Department of Housing and Urban Development's (HUD) estimates of budgetary savings from the sale of its single-family loans; and (2) model HUD used to estimate savings from the sale of multifamily loans.

GAO noted that: (1) according to HUD, it achieved $830 million in budgetary savings by selling 98,640 single-family loans; (2) nearly all of these savings, $774 million, were attributable to the sale of 71,946 single-family loans that HUD acquired through its mortgage assignment program and sold through five sales held between October 1995 and September 1997; (3) on the basis of GAO's independent estimates, GAO concluded that HUD's estimates of budgetary savings from the sale of the single-family loans GAO reviewed are reasonable; (4) specifically, GAO independently estimated that HUD achieved budgetary savings of $345 million, compared with HUD's estimate of $259 million, from its sale of 38,547 loans sold in three single-family sales held between October 1995 and September 1996; (5) the $86 million difference between GAO's estimate of savings and HUD's is not large when one considers that the loans sold through these three sales represented an unpaid principal balance of $1.7 billion; (6) according to Booz-Allen and Hamilton, Incorporated, a large management and technology consulting firm, the model HUD used to estimate savings from the sale of multifamily loans produced reasonable estimates of savings; (7) however, Booz-Allen and Hamilton questioned the logic and support for several key assumptions and found that the model was not thoroughly documented; (8) in response, HUD developed a new model that addressed these weaknesses; and (9) without documentation for the original model and the historical data used to support key assumptions, GAO cannot conclude whether the original model would produce reasonable estimates of savings.