Information Technology

The Secretary of Housing and Urban Development has proposed a major overhaul of the agency's programs and operations during the next several years. One proposal is to cut staff at the Federal Housing Administration (FHA) by more than 50 percent by the year 2000. Information technology figures prominently in FHA's plans to streamline its single family operations, boost efficiency, and meet mandated staff reductions. Thus far, the planned actions are consistent with, but are not as extensive as, efficiency improvements taken by leading mortgage industry organizations. FHA's streamlining efforts, however, are in the early stages and, as other efforts continue, FHA will be deciding on specific operational changes, information technology applications, and management controls that will determine the efficiency and effectiveness of its operations and the achievement of staff reductions. In doing so, it can use the recently enacted Information Technology Management Reform Act of 1996 to establish an effective framework for making these information technology decisions.

GAO found that: (1) FHA plans to use existing information technology capabilities to facilitate some streamlining and staff reduction initiatives, while other initiatives will require new information technology applications; (2) FHA plans to reduce single family housing staff from its 1994 level of about 2,700 to 1,150 in the year 2000 by: (a) expanding the use of existing electronic data transfer capabilities and using information systems to support the consolidation of loan processing operations from 81 offices to 5 offices; (b) implementing new loss mitigation processes that will be supported with a new information system; and (c) using information technology to support new processes associated with conducting real property maintenance and disposition operations or selling defaulted mortgage notes rather than foreclosing on properties; (3) FHA plans to incorporate information technology initiatives that are similar to, but not as extensive as, those used by other mortgage industry organizations to improve productivity; (4) further improvements may be achieved if FHA adopts other automated capabilities used by these organizations; (5) some of FHA's planned changes may help resolve management control weaknesses or maintain adequate controls for loan origination, loss mitigation, and property disposition; (6) however, GAO was unable to assess the impact of the planned changes because FHA has not yet made all of the decisions, developed the detailed operating procedures, or identified the information systems requirements that will be needed to implement the planned initiatives and management controls; (7) FHA officials recognize that additional information technology investments are needed to achieve the efficiency and effectiveness of other mortgage organizations; (8) however, they added that they must deal with budget and procurement limits and technical skills shortfalls to make needed improvements; (9) in this regard, FHA is considering using the expertise of other organizations; (10) in making future technology acquisitions, FHA can take advantage of the recently enacted Information Technology Management Reform Act of 1996, which establishes a framework for information technology decisionmaking and implementation based on best industry practices.