HUD's Loan Servicing Contracts for Multifamily Mortgages Need Better Management

In response to a congressional request, GAO evaluated the Department of Housing and Urban Development's (HUD) reply to formal congressional questions concerning the HUD Region III contract and proposed nationwide contract with the private sector for loan services. HUD plans to utilize the private sector contracts to improve the servicing of HUD-held mortgages resulting in increased revenues from the collection of outstanding debt.

GAO found that, since HUD has limited data on its own past performance and costs in collecting debts, it has had difficulty in establishing a basis for comparing the Region III contractor's work against its own. To help monitor performance, HUD plans to develop an automated system for comparing its performance with the contractor's performance. Regarding the monitoring of the Region III contractor's work, HUD has not made the required quarterly visits to the contractor's site to evaluate its performance. Further, GAO stated that the initial provisions of the Region III contract governing the contractor's basic payment fee were not clearly spelled out nor fully understood by HUD officials. GAO concluded that the HUD response to the questions was incomplete, its procurement practices for the Region III contract were deficient in several respects, and some of the problems identified with the Region III contract may apply to the nationwide contract.

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.

Director: John H. Luke Team: General Accounting Office: Resources, Community, and Economic Development Division Phone: (202) 275-6111