Review of Rehabilitation Loan Programs in Chicago and San Francisco

The Department of Housing and Urban Development's (HUD) rehabilitation loan payments in Chicago ad San Francisco were reviewed to see whether: (1) programs were reaching property owners of low and moderate and/or limited economic circumstances; and (2) HUD was making the most effective use of the limited funds available by restricting their use to repairs and improvements essential to restoring housing to a decent, safe, and sanitary condition.

The programs have considerably upgraded rundown properties and benefited their owners, tenants, and neighborhoods. However, in one Chicago project which received most of the rehabilitation funds for that city, 67 percent of the loans were made to persons with annual income of $15,000 or over. In addition, many of the loans in the Chicago project and in San Francisco were used for major reconstruction and refurbishing in excess of that required for decent, safe, and sanitary housing. Although such use of rehabilitative loans is not prohibited, the practice of making a large percentage of the loans in these projects to persons with incomes higher than $15,000 and of making loans that were used for major reconstruction and refurbishing work in excess of that necessary for decent, safe, and sanitary housing is questionable.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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