Administrative Procedures and Controls Need Strengthening To Reduce Losses to HUD's Mortgage Insurance Fund
CED-81-29: Published: Dec 18, 1980. Publicly Released: Dec 18, 1980.
Additional Materials:
- Full Report:
Contact:
A review was performed of payments made by the Department of Housing and Urban Development (HUD) and the Veterans Administration (VA) to mortgage investors to determine if opportunities exist to reduce losses to Federal mortgage insurance and guarantee programs.
No problems were found in guarantee payments made by VA. HUD pays mortgagees several million dollars annually in unearned interest by paying interest on reimbursable foreclosure expenses before the expenditures are made. HUD officials have not taken corrective action, citing legal problems and increased administrative costs as the reasons. GAO found a sufficient legal basis for taking corrective action and pointed out that the administrative costs involved would be minimal compared to the millions of dollars in recurring annual savings resulting from the change. HUD also pays mortgagee insurance claims for certain reimbursable costs without adequate justification that the payments are warranted. Due to inadequate supporting documentation and a limited review of mortgage claims, HUD has: (1) paid unreasonable costs to secure HUD-insured vacant properties; (2) erroneously paid mortgagees for fees to inspect properties; and (3) made duplicative property tax payments on HUD-acquired properties.
Recommendations for Executive Action
Status:
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of HUD should reemphasize to all HUD area offices and mortgagees that HUD will not reimburse mortgagees for taxes paid after the date the mortgagee submits the notice of property transfer and application for insurance benefits. The staff responsible for reimbursing mortgagees should be instructed not to pay mortgagees' claims for taxes that do not appear on HUD Form 1025.
Agency Affected: Department of Housing and Urban Development
Status:
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of HUD should revise HUD regulations and procedures to require that interest paid on mortgagees' insurance claims be calculated from the date the expenditures are made rather than from the date of default.
Agency Affected: Department of Housing and Urban Development
Status:
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of HUD should establish a minimum dollar amount for preservation and security work that, if exceeded, would require the mortgagees to: (1) have the property inspected before and after the work is performed to ensure that the work is justified and satisfactorily completed; and (2) submit the inspection reports, along with paid invoices for the work, to the HUD area offices for review and approval before HUD reimburses the mortgagees for the work.
Agency Affected: Department of Housing and Urban Development
Status:
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of HUD should require mortgagees to submit documentation providing assurance that fees claimed are allowable expenses, and emphasize to the staff responsible for reimbursing mortgagees that claims for inspection fees on occupied properties are not allowable under HUD procedures.
Agency Affected: Department of Housing and Urban Development
Explore the full database of GAO's Open Recommendations
»
Dec 16, 2020
-
Lead Paint in Housing:
HUD Has Not Identified High-Risk Project-Based Rental Assistance PropertiesGAO-21-55: Published: Dec 16, 2020. Publicly Released: Dec 16, 2020.
Dec 15, 2020
-
Disaster Housing:
Improved Cost Data and Guidance Would Aid FEMA Activation DecisionsGAO-21-116: Published: Dec 15, 2020. Publicly Released: Dec 15, 2020.
Dec 8, 2020
-
Troubled Asset Relief Program:
Treasury Continues Winding Down Housing ProgramsGAO-21-39: Published: Dec 8, 2020. Publicly Released: Dec 8, 2020.
Aug 13, 2020
-
Homelessness:
Better HUD Oversight of Data Collection Could Improve Estimates of Homeless PopulationGAO-20-433: Published: Jul 14, 2020. Publicly Released: Aug 13, 2020.
Jul 29, 2020
-
Crumbling Foundations:
Extent of Homes with Defective Concrete Is Not Fully Known and Federal Options to Aid Homeowners Are LimitedGAO-20-649: Published: Jul 29, 2020. Publicly Released: Jul 29, 2020.
Jul 27, 2020
-
Housing:
Preliminary Analysis of Homeownership Trends for Nine CitiesGAO-20-544R: Published: Jun 25, 2020. Publicly Released: Jul 27, 2020.
Jun 26, 2020
-
Rental Housing:
As More Households Rent, the Poorest Face Affordability and Housing Quality ChallengesGAO-20-427: Published: May 27, 2020. Publicly Released: Jun 26, 2020.
Apr 30, 2020
-
Priority Open Recommendations:
Department of Housing and Urban DevelopmentGAO-20-500PR: Published: Apr 23, 2020. Publicly Released: Apr 30, 2020.
Mar 17, 2020
-
Working Capital Fund:
HUD Could Improve Management to Better Achieve Efficiencies and Help Ensure Customer SatisfactionGAO-20-263: Published: Mar 17, 2020. Publicly Released: Mar 17, 2020.
Mar 3, 2020
-
Military Housing:
Preliminary Recommendations to Strengthen DOD's Oversight and Monitoring of Privatized HousingGAO-20-471T: Published: Mar 3, 2020. Publicly Released: Mar 3, 2020.
Looking for more? Browse all our products here