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B-245138 1 (1992-07-07)

handle is hein.gao/gaobadocj0001 and id is 1 raw text is: 4 ,ComptroUer General of the United States Wangton, D,0, 20848 Decision Hatter of: Calculation of Debt, and Interest on Debt, Owed to Department of Housing and Urban Development File: B-245138 Date; July 7, 1992 DIGEST 1, Secretary o Housing and Urba'n Development has authority under the National Housing Act tQautomatically reduce the amountdof, debt due ,on' Federal Wousing Administration (FHA) insured lmans for E anufactured homes by deducting the greater ot the 8ale price or the appraised value of the home from the outstanding loan balance, As a matter of proper accounting practice, FHA may Thoose to reflect the compromise of the loans by booking either (a) the loan amount and then immediately adjusting that amount t'o an amount equal to the insurance paid or (b) the amouit of the reduced loan (which equals the amount of the insurancm paid by FHA), 2. Secretery of Housing and Urban Development has authority under the National Housing Act to assess interest on manufactured housing and property improvement loans made pursuant to Titlg I of the Act at the lesser of the rate specified in thp borrower's promissory note or the Treasury rate. DECISION The General Counsel ofheDepartmentof'Housingvand Urban Development (HUb) has requested our opinion concerning the computation of debts owed HUD on defaulted manufactured home loans and the assessment of interest on those loans and property improvement loans, The request was precipitated by a difference of opinion between the Federal Housing Administration (FHA)Thnd HUD's Inspector General (IG). The IG disagrees with FhA's current practi'es of computing debts owed by those who default 'on loans guaranteed by FHA by subtracting from the outstanding loan balance the greater of the sale proceeds or the appraised value of the manufactured home, and assessing interest on the debts at the lesser of the note rate or Treasury rate. We conclude that FHA's current practices are authorized by law.

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