Department of Housing and Urban Development Policies Concerning Multifamily Property Management and Disposition

GAO discussed the Department of Housing and Urban Development's (HUD) policies concerning multifamily property management and disposition. Specifically, GAO addressed: (1) the basis for the prices that HUD receives on project sales and the financing mechanisms involved; (2) the current status of delinquencies on HUD multifamily assigned mortgages; (3) HUD responsiveness to prior GAO recommendations concerning loan servicing; and (4) the results of a recent report concerning HUD contracting with the private sector for loan servicing and accounting of HUD-held multifamily mortgages. GAO has previously reported that HUD pricing policies are inadequate because they do not factor tax shelter benefits into minimum bid prices on negotiated sales. HUD is currently introducing a new degree of flexibility into property financing which should greatly facilitate its disposition. GAO found that HUD has not achieved its management goals for HUD-held mortgages and many of the mortgages evaluated by GAO were so delinquent that recovery of the loans was unlikely. Records showed that, in fiscal year 1982, HUD lost about $87 million in delinquent loans and foreclosures. However, GAO believes that HUD has attempted to address the problems and recommendations cited in prior reports and it has been cooperative with other agencies in exchanging taxpayer information. Finally, GAO reported that private sector contracting has diminished demonstration project value, due partly to HUD failure to establish an adequate basis for judging the success of private sector servicing.