Property Disposition

Although the Department of Housing and Urban Development (HUD) cannot control all the costs associated with buying and selling foreclosed single-family properties, it can avoid or minimize some of the costs of managing them. GAO reviewed HUD's Single-Family Property Disposition Program in the Illinois State Office and found that the Illinois State Office had spent thousands of dollars unnecessarily on water and sewer services, as well as for tax penalties, lost properties, and increased costs to recover properties from the new owners. Nationwide, HUD could be wasting large amounts of money. GAO supports efforts by the Illinois State Office to better track unpaid taxes, which would help avoid future tax liens and lost properties.

GAO found that: (1) there were two practices at the Illinois State Office that unnecessarily increased HUD management costs; (2) the office incurred $22,000 in unnecessary expenses when it continued to pay for water and sewer services for 60 vacant properties that were held in inventory for months before these properties were sold; (3) because the office did not pay property taxes on time, it lost three properties and incurred $62,000 in unnecessary expenses to recover the properties and pay the penalties and interest on the delinquent taxes; (4) the office's expenses to recover these properties were substantially higher than the amount it would have paid had it timely acted; and (5) the office could avoid having future tax liens and losing properties if it better tracked its unpaid taxes.

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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