Status of GAO's Recommendations to the Department of Housing and 
Urban Development (11-MAY-01, GAO-01-741R).			 
								 
GAO's January 2001 Performance and Accountability Series provides
an overview of where the Department of Housing and Urban	 
Development (HUD) currently stands on management issues. In this 
series, GAO made several recommendations to HUD for improving	 
various aspects of HUD's programs and operations. This report	 
reviews the status of nine recommendations that GAO considers key
recommendations because of the impact they can have on managing  
HUD's programs. HUD has taken important steps toward addressing  
some of its management deficiencies; however, significant	 
weaknesses still persist in some of HUD's major program areas,	 
including single-family mortgage insurance, rental housing	 
assistance, information and financial management systems, and	 
human capital. Seven of the nine key recommendations deal with	 
two of the performance and accountability areas, single-family	 
mortgage insurance and information and financial management	 
systems.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-741R					        
    ACCNO:   A01022						        
  TITLE:     Status of GAO's Recommendations to the Department of     
             Housing and Urban Development                                    
     DATE:   05/11/2001 
  SUBJECT:   Information resources management			 
	     Federal aid for housing				 
	     Financial management systems			 
	     Housing programs					 
	     Mortgage programs					 
	     Unexpended budget balances 			 
	     Risk management					 
	     Community Development Block Grant			 
	     High Risk Series 2001				 
	     HUD Credit Watch Program				 
	     HUD Section 202 Elderly Housing Program		 
	     HUD Section 8 Housing Assistance Program		 
	     Mutual Mortgage Insurance Fund			 
	     Public Housing Capital Fund			 

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GAO-01-741R
     
GGG

GAO- 01- 741R Status of GAO?s Recommendations United States General
Accounting Office

Washington, DC 20548

May 11, 2001 The Honorable Mel Martinez The Secretary of Housing

and Urban Development Subject: Status of GAO?s Recommendations to the
Department of Housing and Urban Development

Dear Mr. Secretary: We appreciated meeting with you earlier this year to
discuss the management challenges facing the Department of Housing and Urban
Development (HUD). As I mentioned in our meeting, we have issued several
reports containing recommendations for improving various aspects of HUD's
programs and operations. During the meeting, you said that you would
appreciate receiving a summary of HUD?s progress in implementing our
recommendations. This letter summarizes our understanding of HUD's progress
implementing our key open recommendations. The enclosure contains a complete
update of the status of all open recommendations. Most of these
recommendations were made in reports issued in 1999 and 2000, although some
are based on a report issued in 1994. HUD officials have reported to us that
they are making progress in addressing many of the

open recommendations, although in some cases considerable work still must be
done before we can consider them implemented. The enclosure, which lists the
status of our open recommendations, reflects a reduction of 19
recommendations that we have closed due to HUD actions since our September
2000 update and the addition of four new recommendations from recently
issued products.

This letter focuses on the status of nine of the recommendations that we
consider to be key recommendations because of the impact they can have on
managing HUD's programs. As you know, our January 2001 Performance and
Accountability Series provides an overview of where HUD currently stands on
management issues. In that report we note that HUD has taken important steps
toward addressing some of its management deficiencies; however, significant
weaknesses still persist in some of HUD's major program areas, including
singlefamily mortgage insurance, rental housing assistance, information and
financial management systems, and human capital. 1 Seven of the nine key
recommendations deal with two of the performance and accountability areas,
single- family mortgage insurance and information and financial management
systems. We are also including two recommendations dealing with HUD's budget
process because we believe their implementation is critical to getting a
better handle on HUD's management issues. In many cases we are consulting
with your staff as HUD implements the recommendations.

1 See Major Management Challenges and Program Risk: Department of Housing
and Urban Development (GAO- 01- 248, Jan. 2001)

2 GAO- 01- 741R Status of GAO?s Recommendations Improved Single- Family
Mortgage Insurance Management Can Reduce Financial

Risks

HUD?s internal controls over its single- family mortgage insurance programs
do not adequately promote effective monitoring of contractors, lenders, and
appraisers or ensure the integrity of the loan origination process.
Recommendations in the single- family mortgage insurance area that we
believe are in need of your priority attention and their status follow:

! In May 2000, 2 we recommended that HUD develop methods to encourage
contractors to reduce the number of single- family properties that have been
in inventory longer than 6 months. HUD officials report that they have
amended management and marketing contracts to address the long- standing
problems of inadequate property maintenance. These actions, however, do not
address the need to provide tools, such as incentives and penalties, to
ensure that the contractors aggressively market the less saleable properties
and remove any impediments that cause them to stay in the inventory. We will
keep this recommendation open until HUD has developed controls that
specifically address the aged inventory problem.

! In April 2000, 3 we recommended that, once the legal basis of the Credit
Watch Program is resolved, HUD revise the Credit Watch Program?s regulations
to cover lenders that sponsor other lenders as loan correspondents and
underwrite the loans that the correspondents originate. Currently, HUD?s
Credit Watch Program is designed to identify and terminate the loan
origination authority of lenders with a high ratio of loan defaults, but is
silent with regard to lenders who underwrite the loans of their
correspondents. HUD officials told us that they believe legislative changes
to the National Housing Act are needed for the department to take action
against lenders that sponsor loan correspondents with unacceptable loan
default rates. In its 2002 budget submission, HUD included an amendment to
the National Housing Act expanding the Secretary's authority to include
originators and underwriters of loans. We will keep this recommendation open
pending the outcome of the legislative proposal.

! In April 1999, 4 we recommended that HUD determine the department's
authority to hold FHA- approved lenders accountable for poor- quality FHA
appraisals performed by the appraisers they select and issue policy guidance
that sets forth the specific circumstances under which HUD may exercise its
authority to hold lenders accountable. HUD informed us that it is working on
a letter to mortgagees that it believes will meet our recommendations. We
will keep this recommendation open pending our review of the mortgagee
letter.

! Recently, in a February 2001 report, 5 we recommended that HUD develop
criteria for measuring the actuarial soundness of the Mutual Mortgage
Insurance Fund. Under this Fund, HUD?s FHA provides insurance for private
lenders against losses on home mortgages. The criteria should specify the
economic conditions that the Fund would be expected to withstand and may
specify capital ratios currently consistent with these

2 See Single- Family Housing: Stronger Measures Needed to Encourage Better
Performance by Management and Marketing Contractors (GAO/ RCED- 00- 117, May
12, 2000). 3 See Single- Family Housing: Strong Oversight of FHA Lenders
Could Reduce HUD?s Insurance Risk (GAO/ RCED- 00- 112, Apr. 28, 2000).
Subsequent to our report, the U. S. Court of Appeals held that the

Credit Watch Program's termination regulations were valid in Capitol
Mortgage Bankers, Inc. v. Cuomo, 222 F. 3d 151 (4 th Cir. 2000). 4 See
Single- Family Housing: Weaknesses in HUD's Oversight of the FHA Appraisal
Process (GAO/ RCED- 99- 72, Apr. 16, 1999).

5 See Mortgage Financing: FHA?s Fund Has Grown, but Options for Drawing on
the Fund Have Uncertain Outcomes (GAO- 01- 460, Feb. 28, 2001).

3 GAO- 01- 741R Status of GAO?s Recommendations

criteria. In addition, HUD's annual actuarial reviews should give more
attention to tests of the Fund?s ability to withstand appropriate stresses,
including more severe scenarios that capture worse- than- expected loan
performance that may result from economic changes and other factors. HUD has
not yet responded to this recently issued report.

More Effective Information and Financial Systems Would Improve Management
Oversight

We have been working with HUD officials to resolve a range of information
technology management issues. Our open recommendations in this area date
back to our April 1994 report 6 on HUD's information resources management
program. For example:

! In April 1994, we recommended that HUD develop and test contingency plans
(business resumption plans) for the backup, recovery, and continuity of
operations of all systems and computer installations that support critical
departmental functions. Without adequate contingency plans, HUD faced
unnecessarily high risks that its missions would be seriously impaired if a
major service disruption or disaster occur. HUD has developed contingency
plans. However, in its reports on HUD's fiscal years 1999 and 2000 financial
statements, HUD?s Office of Inspector General noted testing deficiencies
that constituted serious internal control weaknesses. Because this concerns
HUD's ability to perform critical functions and support critical programs in
the aftermath of a major disruption or disaster, we will keep this
recommendation open until the plans have been tested adequately and HUD
makes provisions to ensure the plans are sufficiently being tested on an
ongoing basis.

! In April 1994, we also recommended that HUD improve its computer security
controls because the security weaknesses we observed posed risks to the
integrity of the department's computer systems and sensitive data. In
addition, our April 1999 report 7 on four HUD grant programs disclosed that
HUD still could not show that only authorized users were accessing its
computer systems. HUD has made progress in both of these areas. However,
HUD's Inspector General continues to report serious weaknesses in computer
security. The Inspector General's March 1, 2001, report on HUD's fiscal year
2000 financial statements again discusses serious computer security
deficiencies. These deficiencies include the lack of automated system
security, computer and data access controls, and background investigations
of staff with access to sensitive systems or data- the same deficiencies we
observed and reported in 1994. We will keep this recommendation open until
these deficiencies are corrected.

! Our 1994 report also recommended that HUD develop and link strategic
business and information resources management planning processes. We also
recommended that HUD develop a departmentwide enterprise architecture to
establish a standard framework for guiding the management and use of
information management resources to accomplish HUD's mission and objectives.
Without strategic business and information resource management planning, HUD
did not have a sound basis for developing a departmentwide enterprise
architecture. HUD has articulated a business vision in its 20/ 20 reform
plan and annual Government Performance and Results Act plans and has also
reported completing a baseline enterprise architecture in January 2001. The
department still needs to better align its strategic business and
information resource management plans and integrate the plans with its
capital investment management processes before we can

6 See HUD Information Resources: Strategic Focus and Improved Management
Controls Needed (GAO/ AIMD- 94- 34, Apr. 14, 1994). 7 See Community
Development: Weak Management Controls Compromise Integrity of Four HUD Grant
Programs (RCED- 99- 98, Apr. 27, 1999).

4 GAO- 01- 741R Status of GAO?s Recommendations

close the planning recommendation. We will examine HUD's recently completed
baseline enterprise architecture and its implementation to determine whether
it results in a departmentwide standard framework for guiding the management
and use of information resources.

Better Management of Unexpended Budget Balances Would Improve Program
Operations

For years, unexpended balances have clouded HUD's budget needs because HUD
has not adequately determined what portion of them is available for
recapture. While these balances have been very large, HUD has not had the
information needed to quantify the portion that could be used to offset the
need for new appropriations. We made the following recommendations to
address these issues:

! In September 1999, 8 we concluded that HUD could better manage unexpended
balances in its larger grant programs and some unobligated funding could be
used to meet other needs. We recommended that HUD's Office of Budget work
with HUD?s program offices to identify programs with a history of
unobligated balances, as well as grantees holding excessive balances, so
that action could be taken to ensure the expeditious obligation and
expenditure of these funds. In response, HUD has established a departmental
task force and contracted with three contractors to review programs carrying
large balances, including HUD's Section 202, Public Housing Capital Fund,
Community Development Block Grant, and Section 8 tenant- based programs.
However, the task force has not been institutionalized within HUD, and the
contracted studies have not been completed. We will keep this recommendation
open until we are satisfied that HUD is effectively managing its unexpended
balances.

! In April 2001 testimony, 9 we reported that without accurate and timely
information about the nature, amount, and availability of HUD's unexpended
balances, decisionmakers could not fully and fairly evaluate the
department's funding needs. In order for HUD to fully account for unexpended
balances in its funding requests, we recommended that the Secretary (1)
develop systems that routinely provide timely, reliable information on the
status of unexpended funds for the purpose of quantifying the amount
available for recapture or rescission; (2) routinely incorporate this
information into the management and operations of programs, and (3)
consistently use this information in formulating its budget request, clearly
demonstrating how it is taking these balances into account when setting
forth its budget needs. HUD has not yet responded to this recent
recommendation.

- - - We typically update the status of our open recommendations annually.
Sometimes this process is complicated by differences in our view and those
of HUD staff on whether our recommendations have been fully implemented. For
example, when a recommendation has more than one part and HUD has
implemented some but not all of the parts, HUD may believe that the
recommendation should be closed. However, we will not fully close out a
recommendation until we are satisfied that all key parts of that
recommendation are met. In addition, in some cases, HUD reports to us that
it has developed reform plans or a draft proposal to fix a problem. While
such initiatives are important, we do not believe that reform plans or draft
documents alone are sufficient for us to close out a recommendation. Rather,

8 See HUD?s Fiscal Year 2000 Budget Request: Additional Analysis and
Justification Needed for Some Programs (GAO/ RCED- 99- 251, Sept. 3, 1999).
9 See Comments on HUD's Fiscal Year 2002 Budget Request (GAO- 01- 663T, Apr.
25, 2001).

5 GAO- 01- 741R Status of GAO?s Recommendations

it is the results of such reform initiatives that demonstrate management
problems have been corrected that count.

We look forward to consulting with your staff to help them implement these
recommendations. It was a pleasure meeting with you on these important
issues. Please feel free to contact me at (202) 512- 7631 or Bob Procaccini
at (202) 512- 6776 if you have any questions concerning this letter or about
the status of our recommendations. Key contributors to this report are
Angela Davis and Andy Finkel.

Sincerely yours, Stanley Czerwinski Director, Physical Infrastructure Issues

Enclosure

Enclosure: Status of GAO's Open Recommendations to the Department of Housing
and Community Development 6

GAO- 01- 741R Status of GAO?s Recommendations GAO Report Recommendation
Status Contacts

AIMD -94- 34 HUD Information

Resources: Strategic Focus and Improved Management

Needed (04/ 14/ 94) ?. develop and test contingency plans for the

backup, recovery, and continuity of operations of all systems and computer
installations that support

critical departmental functions. Until the plans are fully developed and
tested, report the lack of

contingency plans as a material internal control weakness.

Open, pending clean Inspector General opinion on

a fully tested contingency plan

GAO - Dave Gill 512- 6250

HUD - Mike Milazzo 708- 0220 x6098

?. eliminate weaknesses in computer security controls over automated systems
and installations

that store, process, transmit, or use sensitive or privacy data. This will
require establishing effective

mechanisms to ensure that both HUD and HUD contractor (1) computer
operations conform with

federal and departmental requirements, (2) staffs receive appropriate
background investigations that

are commensurate with their access to sensitive systems, and (3) staffs
receive sufficient computer

security training so that they are aware of and can fulfill their computer
security responsibilities.

Open, pending HUD action GAO - Dave Gill 512- 6250 HUD - Holloway Coats 708-

0614 x6006 or Pam Woodside 708- 0614 x109

.? establish strategic business and IRM planning processes and develop and
maintain plans that are

clearly linked to each other. The plans should articulate senior executive's
vision of the mission,

objectives, and priorities. Open, pending our review of

recent HUD activity GAO- Dave Gill 512- 6250

HUD - Debra Stouffer 708- 2374 x108

?develop an enterprise architecture based on the strategic business and IRM
plans to govern the

development, deployment, and use of IRM resources

Open, pending our review of recent HUD activity

GAO- Dave Gill 512- 6250 HUD - Debra Stouffer

708- 2374 x108 AIMD- 99- 25

HUD Information Systems: Improved Management

Practices Needed to Control Integration Cost

and Schedule (12/ 18/ 1998) ?ensure that the department develops and uses

defined processes for estimating information technology project costs,
including Software

Engineering Institute requisites Open pending HUD

implementation of its planned fixed price,

outcome- based contract system

GAO - Dave Gill 512- 6250 HUD - Dennis Peacock 708-

0614 x6285

Enclosure: Status of GAO's Open Recommendations to the Department of Housing
and Community Development 7

GAO- 01- 741R Status of GAO?s Recommendations

?. ensure that the department fully implements and institutionalizes a
disciplined and documented

information technology investment management process consistent with
provisions of the Clinger

Cohen and Paperwork Reduction Acts and GAO and OMB's guidance for selecting,
controlling, and

evaluating information technology investments Open, pending our review

of recent HUD activity GAO - Dave Gill 512- 6250

HUD - Debra Stouffer 708- 2374 x108

RCED- 99- 251 HUD's Fiscal Year 2000

Budget Request: Additional Analysis and

Justification Needed for Some Programs (09/ 3/ 99)

?. direct the Office of Budget to work with HUD's program offices to
identify programs with a history

of unobligated and undisbursed balances, as well as grantees holding
excessive balances, so that action

can be taken to ensure the expeditious obligation and expenditure of these
funds

Open, pending HUD's completion of ongoing and

future reviews of unobligated balances

GAO - Carol Anderson- Guthrie 214 777- 5739

HUD - Ronald Spraker 708- 2865 x6851

?. establish firm monitoring procedures for overseeing multifamily housing
contract

administrators' performance and property condition, and amend its budget
request to reflect

the reduced scope from the exclusion of certain properties in the program

Open, pending final approved monitoring

procedures GAO - Carol Anderson- Guthrie

214 777- 5739 HUD - Ronald Spraker 708- 2865

x6851 RCED- 99- 98

Community Development: Weak Management

Controls Compromise Integrity of Four HUD

Grant Programs (04/ 27/ 99)

?consider whether it is more cost- effective to modify IDIS or replace it?..
ensure that a new

system corrects the problems GAO found with IDIS Open, pending

implementation of effective new grants management

system GAO- Frank Minore 512- 7639

HUD - Bill Eargle 708- 2186 x3844

Enclosure: Status of GAO's Open Recommendations to the Department of Housing
and Community Development 8

GAO- 01- 741R Status of GAO?s Recommendations

?. regardless of the decision on the future of IDIS?. ensure that access to
IDIS is limited to

authorized users and that those users have access levels appropriate to the
duties they

perform?. ensure that the security officer for IDIS is fully aware of the
responsibilities that must be

carried out and has the appropriate training and staff for those
responsibilities

Open, pending appropriate HUD action

GAO- Frank Minore 512- 7639 HUD - Bill Eargle 708- 2186

x3844 RCED 00- 31

Multifamily Housing: Impact of Loan Sales on

Tenants and Properties Varies by Property

(01/ 20/ 00)

?. determine whether four properties violated the prohibition against
discrimination; and if so, take

appropriate enforcement action Open, pending referral to

HUD's enforcement center for final resolution

GAO - Jim Vitarello 512- 5119 HUD - Jim Mitchell

708- 3703

?. notify housing authorities and assisted tenants associated with partially
assisted loan sale

properties of the tenant protections and of their rights to seek judicial
enforcement of these

protections Open, pending distribution

of HUD letter to individual public housing authorities

GAO - Jim Vitarello 512- 5119 HUD Audrey Hinton 708- 2866

x2691

?. follow up with housing authorities to determine whether they are able to
enforce the tenant

protections or whether further steps are needed to enforce the protections

Open, pending distribution of HUD letter to individual

public housing authorities GAO - Jim Vitarello 512- 5119

HUD Audrey Hinton 708- 2866 x2691

AIMD- 00- 60R Credit Reform: HUD's FY

2000 Credit Subsidy Estimates Were

Reasonable, But Could Have Been Improved

?. use the audited liability for loan guarantees model when preparing the
President's budget

submission for the MMI fund. In the interim, complete the detailed cell- by-
cell review of the

budget model to identify and correct all formula errors.

Open, pending HUD action GAO - Dan Blair 512- 9401 HUD - Judy May 401- 0450

x3239

?. establish a supervisory review process detailed enough to identify
formula errors in budget models

prior to submitting credit subsidy estimates to OMB for inclusion in the
President's budget

Open, pending HUD action GAO - Dan Blair 512- 9401 HUD - Judy May 401- 0450

x3239

Enclosure: Status of GAO's Open Recommendations to the Department of Housing
and Community Development 9

GAO- 01- 741R Status of GAO?s Recommendations

?. implement plans to adjust the timing of audit procedures related to
credit subsidies so that these

procedures are completed in time for any alternate sources of data and
errors found are factored into

the President's budget submission Open, pending HUD action GAO - Dan Blair
512- 9401

HUD - Judy May 401- 0450 x3239

?. improve HUD's credit estimation process by establishing a process to
incorporate all necessary

revisions identified during the audit in time to meet the schedule for the
President's budget

submission Open, pending HUD action GAO - Dan Blair 512- 9401

HUD - Judy May 401- 0450 x3239 GGD- 98- 48

GSE's: Federal Oversight Needed for Nonmortgage

Investments

?. develop criteria through appropriate rulemaking processes to help ensure
that the

housing enterprises' nonmortgage investments are consistent with the
purposes expressed in their

charter acts Open, pending final rule GAO- Bill Shear 512- 4325

HUD - Sandra Fostek 708- 2224 RCED- 00- 112

Single- Family Housing: Strong Oversight of FHA

Lenders Could Reduce HUD's Insurance Risk

(04/ 28/ 00)

?. revise the Credit Watch Program's regulations to cover lenders that
underwrite FHA- insured

loans with excessive default and claim rates as well as those lenders that
originate such loans

Open, pending legislation GAO - Stan Ritchick 512- 6788 HUD - Phil Murray
708- 1515

?. develop procedures and enhance FHA's management information systems to
identify and

select for technical reviews, loans and lenders within each homeownership
center's jurisdiction

that pose a high insurance risk to HUD Open, pending full

implementation expected Fall 2001

GAO - Stan Ritchick 512- 6788 HUD - Vance Morris 708- 2121

x2204

Enclosure: Status of GAO's Open Recommendations to the Department of Housing
and Community Development 10

GAO- 01- 741R Status of GAO?s Recommendations

RCED- 00- 117 Single- Family Housing:

Measures Needed to Encourage Better

Performance by Management and

Marketing Contractors (05/ 12/ 00)

?. to develop more effective methods, such as specific incentives or
penalties, to encourage

contractors to reduce the number of properties that are in the inventory
longer than 6 months

Open, pending HUD addressing the aged

inventory problem GAO - Stan Ritchick 512- 6788

HUD - Joe McCloskey 708- 1672 x2296

RCED- 98- 117 Housing Finance: FHA's

Risk Sharing Programs Offer Alternatives for

Financing Affordable Multifamily Housing

(04/ 23/ 98)

?. take steps to correct current flaws in the information systems supporting
the programs

Open, pending implementation expected

December 2001 GAO - Jim Vitarello 512- 5119

HUD - Joe Malloy 708- 3000 x2524

RCED- 99- 217 Multi- Family Housing:

HUD Missed Opportunities to Reduce Costs on Its

Uninsured Section 8 Portfolio (07/ 30/ 99)

?. require HUD to enforce its regulation prohibiting dual fees unless there
is a documented,

sound and equitable basis for waiving the regulation?. identify all Section
8 contracts for

which state agencies receive both an administrative fee under the Section 8
contract

and an override fee, including those contracts that are not subject to a
refunding agreement with

HUD Open, pending

implementation of proposed retroactive

waiver process GAO - Rose Schuville 312 220-

7718 HUD - Jim Mitchell 708- 3944

x2612 RCED- 99- 72

Single- Family Housing: Weaknesses in HUD's

Oversight of the FHA Appraisal Process

(04/ 16/ 99)

?. determine the department's authority to hold FHA- approved lenders
accountable for poor

quality FHA appraisals performed by the appraisers they select from FHA's
roster and issue

policy guidance that sets forth the specific circumstances under which and
actions by which

HUD may exercise this authority Open, pending our review

of recent HUD activity GAO - Stan Ritchick 512- 6788

HUD - Vance Morris 708- 2121 x2204

Enclosure: Status of GAO's Open Recommendations to the Department of Housing
and Community Development 11

GAO- 01- 741R Status of GAO?s Recommendations

RCED- 98- 174 Public Housing Subsidies:

Revisions to HUD's Performance Funding

System Could Improve Adequacy of Funding

(06/ 19/ 98)

?. consider establishing a process that (1) allows housing agencies to
appeal their expense levels

when they believe that significant changes have occurred over time in their
operating

circumstances that cause their subsidy to be inappropriate and (2) HUD can
use to review

housing agencies' expense levels that it believes may be excessive

Open, pending results of Harvard University study

GAO - Don Watson 214 777- 5609 HUD - Steven Sprague or Regina

Gill 708- 1872 RCED- 99- 210

Public Housing: HUD Has Several Opportunities to

Promote Private Management (07/ 26/ 99)

?.( 1) encourage housing authorities through their planning process to
consider and adopt asset

management principles, including project- based budgeting and accounting;
(2) encourage small

housing authorities to look for opportunities to achieve efficiencies by
forming consortia or joint

ventures that could include third parties; and (3) provide incentives for
housing authorities to make

more cost- effective use of their resources Open, (third part only,

pending the outcome of the Harvard University study)

GAO - Andy Finkel 512- 6765 HUD - Bill Minning 708- 0713

x4115 RCED- 00- 168

HUD Housing Portfolios: HUD has Strengthened

Physical Inspections but Needs to Resolve Concerns

About Their Reliability (07/ 25/ 00)

?. revise REAC's April 2000 quality assurance plan as necessary to ensure
the quality assurance

activities it contains will provide REAC with the information it needs to
evaluate four key

areas?. reevaluate whether the plan contains appropriate criteria for
quality assurance

personnel to use in assessing each of the activities covered by the plan

Open, pending additional action from HUD

GAO - Rick Hale 512- 3090 HUD - William Hill 708- 4932

x3279

?. periodically issue reports describing the quality assurance activities
that it has performed and the

results of these activities Open, pending additional

action from HUD GAO - Rick Hale 512- 3090

HUD - William Hill 708- 4932 x3279

Enclosure: Status of GAO's Open Recommendations to the Department of Housing
and Community Development 12

GAO- 01- 741R Status of GAO?s Recommendations

HEHS- 00- 119 Benefit and Loan

Programs: Improved Data Sharing Could Enhance

Program Integrity (09/ 13/ 00)

?. develop a strategy for obtaining access to automated data from financial
institutions,

determine the most cost- effective, efficient method for obtaining such
data, and report to the

Congress on any legislation that would be needed to implement this
strategy?. coordinate with SSA

and OCSE to determine what strategies are the most effective for obtaining
this information

Open, pending HUD action GAO - Sigurd Nilsen 512- 7003 HUD - Gloria Cousar
708- 0950

GAO- 01- 460 Mortgage Financing:

FHA's Fund Has Grown, but Options for Drawing on

the Fund Have Uncertain Outcomes (02/ 28/ 01)

?. develop criteria for measuring the actuarial soundness of the Mutual
Mortgage Insurance

Fund?. criteria should specify the economic conditions that the Fund would
be expected to

withstand and may specify capital ratios currently consistent with these
criteria

Open (new) GAO - Matt Scire 512- 6794 HUD - Judy May 401- 0450 x3239

?. give more attention to tests of the Fund's ability to withstand
appropriate stresses?. including

more severe scenarios that capture worse- than expected loan performance
that may be due to

economic conditions and other factors, such as changes in policy and the
conventional mortgage

market Open (new) GAO - Matt Scire 512- 6794

HUD - Judy May 401- 0450 x3239

?. develop better tools for assessing the impact these changes may have on
the volume and

riskiness of loans that FHA insures?. such changes should be made in small
increments so

that their impact can be monitored and adjustments can be made over time

Open (new) GAO - Matt Scire 512- 6794 HUD - Judy May 401- 0450 x3239

Enclosure: Status of GAO's Open Recommendations to the Department of Housing
and Community Development 13

GAO- 01- 741R Status of GAO?s Recommendations

GAO- 01- 663T Housing and Urban

Development: Comments of HUD's Fiscal Year 2002

Budget Request (04/ 25/ 01)

?. develop systems that routinely provide timely, reliable information on
the status of unexpended

funds for the purpose of quantifying the amount available for recapture or
rescission; routinely

incorporate this information into the management and operations of programs;
and consistently use

this information in formulating its budget request, clearly demonstrating
how it is taking these

balances into account when setting forth its budget needs

Open (new) GAO - Carol Anderson- Guthrie 214 777- 5739

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