IT Modernization: HUD Needs to Improve Its Estimation and Oversight Practices for Single-Family Housing
Fast Facts
The Department of Housing and Urban Development relies on outdated IT infrastructure and manual processes to insure a portfolio of single-family mortgages worth over $1 trillion. HUD has made several unsuccessful attempts to modernize its IT.
We reviewed HUD's modernization effort ("FHA Catalyst"), which started in 2019. HUD addressed some leading practices for acquiring new systems. For example, it tested system modules to see if they met performance requirements. However, it didn't subject results to an independent review. We also found unreliable cost and schedule estimates and other weaknesses.
Our 8 recommendations address these issues.
Highlights
What GAO Found
For the Federal Housing Administration (FHA) Catalyst program, the Department of Housing and Urban Development (HUD) substantially implemented leading practices for managing information technology (IT) requirements and risk management. The Catalyst program is intended to modernize the single-family housing loan life cycle and associated IT systems. Specifically, the department fully implemented two of four requirements management leading practices, and partially implemented the other two. For example, HUD established requirements and performed testing on all FHA Catalyst modules. However, the department did not document agreements among the project managers responsible for managing requirements or subject FHA Catalyst to an independent review to ensure modules were performing as expected. As a result, the FHA Catalyst program is at risk of not performing as intended or of not meeting requirements.
In addition, HUD established a risk management plan, and identified and analyzed risks to FHA Catalyst. However, HUD did not develop contingency plans for the identified risks. Without established contingency plans, the department could be unprepared to handle a critical risk, should one occur.
HUD developed cost and schedule estimates for the FHA Catalyst program that exhibited significant weaknesses in addressing leading practices for cost and schedule estimation and, therefore, were unreliable.
- According to GAO's Cost Estimating and Assessment Guide, the characteristics of a high-quality, reliable cost estimate are that it is comprehensive, well-documented, accurate, and credible. The FHA Catalyst cost estimate was unreliable because it partially addressed the “comprehensive” characteristic, minimally addressed the “well-documented” and “accurate” characteristics, and did not address the “credible” characteristic. For example, although the estimate included life-cycle costs, it did not include the cost of full-time government employees and infrastructure. Without a reliable cost estimate, the department faces an increased risk that the program will cost more than the planned $91.9 million.
- GAO's Schedule Assessment Guide states that a sound schedule estimate is comprehensive, well-constructed, credible, and controlled. The FHA Catalyst schedule was unreliable because it partially addressed the comprehensive, credible, and controlled characteristics, and did not address the well-constructed characteristic found in the guide. The absence of a reliable schedule estimate raises increased doubt that HUD will be able to complete the modernization by December 2023 as planned.
Although HUD took early action to establish FHA Catalyst oversight and partially implemented four related categories of leading practices, gaps exist in the established processes to oversee the program. These gaps include a lack of fully defined roles and responsibilities, and the absence of measures to assess performance. Accordingly, HUD lacks assurance that oversight will be performed and that decision makers have the information needed to monitor the program.
Why GAO Did This Study
For many years, HUD has insured a portfolio of single-family mortgages worth over $1 trillion, relying on an outdated IT infrastructure and manual processes. HUD has made several unsuccessful attempts to modernize IT in the past, leaving it dependent on legacy systems. In April 2019, FHA and HUD's Office of the Chief Information Officer (OCIO), initiated FHA Catalyst.
GAO was requested to review HUD's single-family housing modernization program. This report examines (1) the extent to which HUD has implemented leading practices for managing requirements and identifying and mitigating risks for FHA Catalyst, (2) the reliability of the program's estimated costs and schedule, and (3) the extent to which HUD has established effective oversight for the program.
GAO compared FHA Catalyst documentation on requirements, risk, cost, schedule, and oversight to leading practices identified in the Capability Maturity Model Integration, and GAO's guides on cost, schedule, and investment management. GAO also interviewed FHA and OCIO officials.
Recommendations
GAO is making eight recommendations to HUD to fully implement leading practices for managing requirements and mitigating risks, estimating cost and schedule, and conducting oversight. HUD concurred with the recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to clearly document agreements among the staff responsible for managing requirements to maintain alignment between requirements and FHA Catalyst modules. (Recommendation 1) |
HUD agreed with the recommendation and provided its August 2022 Executive Oversight Committee Charter, which includes a list of roles and responsibilities for the members of the committee. However, the charter is not specific to FHA Catalyst and does not clearly document agreements among the staff responsible for managing requirements to maintain alignment between requirements and FHA Catalyst modules. In August 2025, HUD stated that it would provide additional documentation that details its requirement management process. We will continue to monitor the implementation of this recommendation.
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| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to ensure that FHA Catalyst is subject to independent verification and validation. (Recommendation 2) |
HUD agreed with the recommendation. In August 2025, HUD stated that it had not yet completed independent verification and validation. It stated that it performs verification and validation within the department and would provide us information on this process. We will continue to monitor the implementation of this recommendation.
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| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to develop contingency plans for risks identified as critical (high probability, high impact) to FHA Catalyst. (Recommendation 3) |
HUD agreed with the recommendation. As of August 2025, HUD had provided a system contingency plan. However, the recommendation was regarding creating contingency plans for each risk identified as critical and not a system-wide contingency plan. We requested that the department provide a current risk register for the program to identify whether contingencies had been developed for the critical risks. We will continue to monitor the implementation of the recommendation.
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| Department of Housing and Urban Development | The Secretary of Housing and Urban Development should direct the Federal Housing Administration and the Office of the Chief Information Officer to ensure that cost estimation guidance that incorporates the best practices called for in the GAO Cost Estimating Guide is applied to future FHA Catalyst cost estimates. (Recommendation 4) |
HUD agreed with the recommendation. As of August 2025, the department had provided us with cost estimation best practices for the program. We requested FHA Catalyst's most recent cost estimate to determine whether these best practices have been implemented in the estimate. We will continue to monitor the implementation of this recommendation.
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| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to develop, and ensure the implementation of, schedule guidance that incorporates the best practices called for in the GAO Schedule Guide. (Recommendation 5) |
HUD agreed with the recommendation. As of August 2025, the department had provided schedule estimation best practices specifically for FHA Catalyst. We requested that HUD provide us with any department-wide schedule estimation guidance. We will continue to monitor the implementation of the recommendation.
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| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to revise the FHA Catalyst schedule estimate according to the newly developed guidance. (Recommendation 6) |
HUD agreed with the recommendation. As of August 2025, the department had provided high-level schedule milestones for FHA Catalyst. We requested that HUD provide us the integrated master schedule so that we are able to determine whether the project's schedule was revised according to the new guidance. We will continue to monitor the implementation of this recommendation.
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| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to improve oversight practices for FHA Catalyst to ensure that they fully address leading practices for planning for program oversight and assessing program performance, including, but not limited to those for establishing processes, outlining responsibilities, requiring metrics for Agile performance, and balancing periodic program-wide assessments with monitoring progress. (Recommendation 7) |
HUD agreed with the recommendation. As of August 2025, the department had provided us with a best practices document for FHA catalyst. We requested documentation of the current processes HUD uses for oversight and program performance for FHA Catalyst. We will continue to monitor the implementation of the recommendation.
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| Department of Housing and Urban Development | The Secretary of Housing and Urban Development (HUD) should direct the Federal Housing Administration and the Office of the Chief Information Officer to improve the alignment of FHA Catalyst oversight with leading practices for managing corrective actions including, but not limited to defining when a corrective action is needed and how to address that action; and evaluating oversight practices by assessing conformance with established processes. (Recommendation 8). |
HUD agreed with the recommendation. As of August 2025, the department had provided a description of the corrective action process for FHA Catalyst. We requested official documentation of the process and its current IT governance processes. We will continue to monitor the implementation of the recommendation.
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