Problems Continue in Accounting for and Servicing HUD-Held Multifamily Mortgages

AFMD-82-18: Published: Aug 18, 1982. Publicly Released: Oct 17, 1982.

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GAO was asked to perform a followup review to a prior report on loan servicing and accounting problems in the Department of Housing and Urban Development (HUD) multifamily mortgage programs. The earlier report concluded that the failure of HUD to produce adequate delinquency data and aggressively collect amounts owed on defaulted multifamily mortgages contributed significantly to the over $500 million owed HUD in delinquent loan payments. In that report, HUD agreed with the GAO recommendations and promised to improve its accounting system and to better manage its debt collection efforts.

GAO found that most corrective actions promised by HUD had not been completed. HUD reported that its nationwide inventory of multifamily mortgages consisted of 2,026 mortgages with an unpaid principal balance of approximately $4 billion. Over 55 percent of those mortgages were delinquent. The management of this inventory is a difficult task, since the projects securing the mortgages have a history of financial and/or management problems. HUD has taken some corrective actions, such as increasing financial training. The agency also recently made debt collection a top priority. However, GAO determined that in a 21-month period total delinquencies increased from $500 million to about $589 million.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HUD should fully implement the recommendations of the prior report by expediting testing and correction of delinquency information generated by the new management information system.

    Agency Affected: Department of Housing and Urban Development

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HUD should fully implement the recommendations of a prior report by requiring aggressive collection actions, including referrals to the Department of Justice, to obtain repayment of project funds used for unauthorized or questionable purposes.

    Agency Affected: Department of Housing and Urban Development

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HUD should fully implement the recommendations of the prior report by requiring field offices to obtain complete financial reports from borrowers.

    Agency Affected: Department of Housing and Urban Development

  4. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of HUD should fully implement the recommendations of the prior report by providing staff additional training in financial analysis.

    Agency Affected: Department of Housing and Urban Development

 

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