HUD Should Make Immediate Changes in Accounting for Secretary-Held Multifamily Mortgages

The Department of Housing and Urban Development (HUD) holds over 2,000 multifamily mortgages valued at about $3.7 billion. These Secretary-held mortgages were either returned from commercial lenders after mortgagors defaulted on their insured mortgages or resulted from HUD selling property it had previously acquired. As of September 30, 1979, HUD reported that $500 million in payments on multifamily mortgages was delinquent. Numerous problems have contributed to the high amount of delinquency. These included several accounting system weaknesses that prevented adequate information from being available to properly service individual mortgages and to promptly and accurately pay property taxes. Also, incentives were lacking to encourage mortgagors to make payments under revised payment plans (workout agreements) to prevent foreclosure.

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