Property Disposition

Each year, lenders foreclose on thousands of defaulted mortgages on single-family properties insured by the Department of Housing and Urban Development's (HUD) Federal Housing Administration (FHA). With few exceptions, HUD then takes ownership of, and later sells, these properties. FHA almost always loses money on the sale of foreclosed properties. In response to congressional concerns about the costs that HUD incurs in acquiring, managing, and selling these foreclosed properties, this fact sheet provides information on (1) the losses on such properties sold during the three fiscal years ending September 20, 1994, and the breakdown of the costs associated with these losses; (2) the number of properties that HUD acquired and sold during the three-year period; and (3) the length of time that the properties remained in HUD's inventory before being sold.

GAO found that: (1) HUD spent nearly $14 billion to acquire, manage, and dispose of nearly 200,000 single-family properties it sold during fiscal years 1992 through 1994, and it only received $9.2 billion from the sale of these properties; (2) the median loss per single-family property was around $22,500; (3) HUD acquisition costs represented about 89 percent of its total costs; (4) HUD acquired an average of more than 63,000 single-family properties per year and sold an average of nearly 66,000 such properties during fiscal years 1992 through 1994; and (5) these single-family properties remained in HUD inventory about 5 months before being sold.