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CED-81-44 1 (1981-02-09)

handle is hein.gao/gaobabbmp0001 and id is 1 raw text is: COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON D.C. 20548 B-201669 FEBRUARY 9, 1981 The Honorable Samuel R. Pierce, Jr. Secretary of Housing and Urban Development 114275 Dear Mr. Secretary: Subject: JHjii's Payment of Distributive Shares from the Mutual Mortgage Insurance Fund7(CED-81-44) This report reviews the manner in which the Department of Housing and Urban Development (HUD) administers certain aspects of the Mutual Mortgage Insurance (MMI) Fund. Title II of the National Housing Act of 1934 authorized a national mutual mortgage insurance program and established the Mutual Mortgage Insurance Fund. This program allows single- family homes to be purchased with small downpayments and long- term mortgages and insures lenders against loss from defaulted mortgage loans. HUD charges insured lenders annual premiums which are passed on to mortgagors as a part of their install- ment payments. The mutual aspect of the insurance program requires HUD to pay a dividend to eligible mortgagors when their mortgages are paid in full. The dividends, referred to as distributive shares, represent program income not needed to pay operating costs and insurance losses. Our review showed that HUD's efforts to pay distributive shares have not been effective and that as of March 1980, 198,000 homeowners who were due a total of $52 million in such shares had not received payment. The major problem is HUD's inability to locate mortgagors after the mortgages have been paid in full. Following our discussions of this matter with various HUD officials, some procedural changes were undertaken to inform mortgagors of potential distributive shares due them and to obtain forwarding addresses of mortgagors who move away from insured properties. We believe, however, that additional actions are needed for HUD to adequately discharge its responsibility to properly pay these distributive shares. (386670) / ~ I ~ / -I

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