Summary: Through the Federal Housing Administration (FHA), the Department of Housing and Urban Development (HUD) insures private lenders against nearly all losses arising from foreclosures on single-family homes insured by FHA. FHA-insured single-family mortgages were valued at about $361 billion as of September 1997. This poses a risk to taxpayers because each year lenders foreclose on FHA mortgages that go into default and file insurance claims with HUD for their losses. Although FHA's single-family mortgage insurance program is self-sufficient, requiring no federal money to operate, poor program management can contribute to the losses sustained by FHA when foreclosures occur. This testimony discusses (1) FHA's role in providing mortgage credit to home buyers; (2) management problems plaguing HUD's single-family program, including HUD's oversight of the contractors responsible for safeguarding and maintaining foreclosed FHA properties, indications that weaknesses may exist in HUD's oversight of FHA appraisers, and internal control problems cited in FHA's financial statement audits; and (3) HUD's plans for addressing these and other single-family management problems as part of its agencywide HUD 2020 Management Reform Plan.
