HUD's Payment of Distributive Shares From the Mutual Mortgage Insurance FundGao ID: CED-81-44 February 9, 1981
The Mutual Mortgage Insurance Fund allows single-family homes to be purchased with small downpayments and long-term mortgages and insures lenders against loss from defaulted mortgage loans. The Department of Housing and Urban Development (HUD) is required to pay dividends (distributive shares) from the Fund to eligible mortgagors when their mortgages are paid in full. A review was performed of HUD efforts to pay distributive shares to mortgagors.
The procedures used by HUD for paying distributive shares were found to be ineffective. The portion of unpaid shares has substantially increased in recent years. According to HUD, the increase in unpaid shares is due largely to an inability to locate mortgagors after their mortgages are paid off. Many of the notices of shares due sent by HUD are returned as undeliverable because mortgagors have since moved. Since HUD has no forwarding addresses for these mortgagors, it is often unable to inform them of distributive shares due. GAO found that current procedures do not instruct mortgagees to inform mortgagors about distributive shares from the Fund. Consequently, most mortgagors contacted by GAO stated that they had been unaware of any refund due them until they received the HUD notification of a distributive share due.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.Director: Steven J. Wozny Team: General Accounting Office: Community and Economic Development Division Phone: (202) 426-1780