Examination of the Financial Statements of FHA Insurance Operations for the 15-Month Period Ended September 30, 1976
CED-78-95: Published: Apr 28, 1978. Publicly Released: Apr 28, 1978.
- Full Report:
The Federal Housing Administration (FHA) is a noncorporate, business-type agency which was made subject to the Government Corporation Control Act by the Housing Act of 1948. From its inception to September 30, 1976, FHA has acquired about 3,800 multifamily properties and mortgage notes representing about 407,000 housing units at a cost of about $4.4 billion and about 675,000 small homes and notes at a cost of about $11 billion. The four FHA insurance funds are intended to function as revolving funds that carry out the insurance operations provided for in the National Housing Act.
The FHA reported a net loss of $1.1 billion in the operation of its mortgage insurance funds during the 15-month period ended September 30, 1976. The combined insurance reserves of these funds had a $1.3 billion deficit due to increased losses in the General Insurance and Special Risk Insurance Funds. Because of various types of procedural and other accounting problems, a determination could not be made as to whether the financial statements fairly presented the financial position of FHA at the end of the period, the results of its operations, and the changes in its financial position for the 15-month period examined.
Recommendation for Executive Action
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of the Department of Housing and Urban Development should direct the FHA to strengthen its procedures for routine reconciliation of accounting transactions and account balances to detailed supporting records. In addition, the FHA should be directed to redesign its analysis procedures for determining probable loss on sales of its property so that a better loss percentage can be determined.