Single-Family Housing

The Department of Housing and Urban Development (HUD) introduced its management and marketing contracts nationwide last year as a way to dispose of the inventory of single-family properties that HUD acquires through foreclosures. The contractors are responsible for all management and marketing activities, ranging from inspecting the properties to ensure that they are presentable to listing and selling the properties. HUD has experienced widespread problems with the management and marketing contracts since they started in April 1999. Property maintenance and security, which was a problem under HUD's previous property disposition approach, remains a significant problem. Also, older properties in HUD's inventory have accumulated as the contractors have focused their sales efforts on the newly acquired, more saleable properties. In addition, while HUD encourages contractors to sell properties quickly, it does not provide incentives for the contractors to focus on properties that have been in inventory for a long period of time. This testimony summarizes the May 2000 report, GAO/RCED-00-117.

GAO noted that: (1) HUD has experienced widespread problems with the management and marketing contracts since they started in April 1999; (2) property maintenance and security, which was a problem under HUD's previous property disposition approach, remains a significant problem; (3) although monitoring improvements have aided HUD's ability to detect such problems, these improvements have not had a sufficient impact in remedying them; (4) in addition, older properties have accumulated in inventory as the contractors have focused their sales efforts on the newly acquired, more saleable properties; and (5) also, while HUD encourages contractors to sell properties quickly, it does not provide incentives for the contractors to focus on properties that have been in inventory for a long period of time.