Inspector General: HUD Misspent $1B On Preforeclosure Program

Posted by Orb Staff on September 20, 2012 No Comments
Categories : Mortgage Servicing

12427_hud Inspector General: HUD Misspent $1B On Preforeclosure Program The federal government may have shelled out more than $1 billion in mortgage assistance to homeowners that did not require such aid.

The Washington Post reports that a study conducted by the inspector general for the U.S. Department of Housing and Urban Development (HUD) has determined that the department failed to enforce the standards of the Preforeclosure Sale Program that ran from September 2010 to August 2011. The program paid more than $1.7 billion in claims on nearly 20,000 properties where the homeowner was facing ‘unavoidable’ financial crises.

The HUD inspector general conducted a random survey of 80 cases within the program and found that all but 17 were not eligible under the program's criteria. Based on that sample, the inspector general estimated that the government might have paid more than $1 billion in claims for 11,693 sales that failed to meet the program's basic participation requirements.

‘HUD did not have adequate controls to enforce the program requirements, and the requirements were not well written,’ wrote the inspector general in the audit. ‘As a result, the FHA insurance fund may have taken unnecessary losses.’

HUD did not issue a press statement on its website to announce its inspector general's findings.

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