Examination of Financial Statements Pertaining to Insurance Operations of the Federal Housing Administration, Fiscal Year 1975
CED-76-157: Published: Nov 11, 1976. Publicly Released: Nov 11, 1976.
- Full Report:
The Federal Housing Administration administers mortgage insurance programs under which lending institutions are insured against loss in financing first mortgages on various types of housing. Insurance is also provided on loans which finance property alterations, repairs and improvements, and mobile homes.
At June 30, 1975, FHA's combined insurance reserves were depleted for the first time (totaling $182.6 million). This situation resulted from increasing losses in the General Insurance and Special Risk Insurance Funds. For the first time, the Congress appropriated money to keep the insurance funds solvent. FHA's insurance operations have additional accounting deficiencies which affected the FY75 financial results. The premiums receivable accounts contain substantial numbers of delinquent premiums due that probably are not collectable because of difficulties in identifying the current, responsible mortgagee and a cumbersome manual accounting system. During a monthly updating procedure, data for numerous insured cases were inadvertently dropped from the files. FHA did not realize this because established internal control procedures were not being followed. As of March 1976, FHA was unable to reconcile a cash difference of about $26,000 with the U.S. Treasury balance.