Home Foreclosure Sales: FHA, Rural Housing Service, and VA Could Better Align Program Metrics with Their Missions

What GAO Found

By 2019, the number of foreclosed properties—known as real estate-owned (REO) properties—that federal entities owned declined to historically low levels because of the housing market recovery and the sale of many of the properties (see figure).

Real Estate-Owned Properties of Selected Federal Entities, 2004–2019

Note: Fannie Mae and Freddie Mac are the government-sponsored enterprises shown here. Data for the enterprises and FHA are calendar year; for VA and RHS, fiscal year ending September 30.

The entities GAO reviewed each have processes to oversee their REO maintenance contractors’ activities and performance, including internal and external performance reviews and on-site inspections. Entities generally have standardized maintenance policies for REO properties across the country, such as emergency repairs for broken windows and routine maintenance requirements for the frequency of cutting grass. GAO found that the performance of contractors whose documentation GAO reviewed generally met entities’ standards and requirements. However, entities’ oversight of contractors identified instances of underperformance in maintenance. For instance, the Federal Housing Administration (FHA) recouped almost $3 million from seven property maintenance contractors for work below quality standards from 2017 to 2020.

The REO program metrics of FHA, the Department of Veterans Affairs (VA), and the Rural Housing Service (RHS) focus on required financial goals, such as minimizing losses, but do not always align fully with other program goals or agency missions. For example, FHA does not collect comprehensive information on REO property sales to public-sector homeowners or local nonprofits—missing an opportunity to measure the extent to which its REO program supports its goal to strengthen neighborhoods and communities. Similarly, VA and RHS lack metrics that would show whether their REO programs align with their broader agency missions to serve veterans and rural homebuyers, respectively. Incorporating additional metrics could help FHA, VA, and RHS ensure that their REO programs assist in meeting their agencies’ missions.

Why GAO Did This Study

Poor maintenance of foreclosed properties can negatively affect communities and threaten neighborhood stability. FHA, VA, RHS, and Freddie Mac are among the federal entities owning foreclosed properties through REO programs.

GAO was asked to review how these federal entities monitor REO property conditions. The objectives this report examines include trends in the number of REO properties; oversight of maintenance contractors; and whether metrics used to assess REO program performance align with entities’ missions.

GAO reviewed and analyzed reports and data on the number of REO properties and documentation on FHA, Freddie Mac, VA, and RHS oversight of REO property maintenance from 2017 to 2020. GAO also analyzed data on REO reimbursements to contractors for maintenance activities.

What GAO Recommends

GAO recommends that FHA, VA, and RHS consider additional REO program metrics that measure how the programs support their respective missions of strengthening communities and serving veterans and rural homeowners. The entities generally agreed with the recommendation.

For more information, contact John H. Pendleton at (202) 512-8678 or pendletonj@gao.gov.

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    What GAO Found Climate change is expected to have far-reaching effects on the electricity grid that could cost billions and could affect every aspect of the grid from generation, transmission, and distribution to demand for electricity, according to several reports GAO reviewed. The type and extent of these effects on the grid will vary by geographic location and other factors. For example, reports GAO reviewed stated that more frequent droughts and changing rainfall patterns may adversely affect hydroelectricity generation in Alaska and the Northwest and Southwest regions of the United States. Further, transmission capacity may be reduced or distribution lines damaged during increasing wildfire activity in some regions due to warmer temperatures and drier conditions. Moreover, climate change effects on the grid could cost utilities and customers billions, including the costs of power outages and infrastructure damage. Examples of Climate Change Effects on the Electricity Grid Since 2014, the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) have taken actions to enhance the resilience of the grid. For example, in 2015, DOE established a partnership with 18 utilities to plan for climate change. In 2018, FERC collected information from grid operators on grid resilience and their risks to hazards such as extreme weather. Nevertheless, opportunities exist for DOE and FERC to take additional actions to enhance grid resilience to climate change. For example, DOE identified climate change as a risk to energy infrastructure, including the grid, but it does not have an overall strategy to guide its efforts. GAO's Disaster Resilience Framework states that federal efforts can focus on risk reduction by creating resilience goals and linking those goals to an overarching strategy. Developing and implementing a department-wide strategy that defines goals and measures progress could help prioritize DOE's climate resilience efforts to ensure that resources are targeted effectively. Regarding FERC, it has not taken steps to identify or assess climate change risks to the grid and, therefore, is not well positioned to determine the actions needed to enhance resilience. Risk management involves identifying and assessing risks to understand the likelihood of impacts and their associated consequences. By doing so, FERC could then plan and implement appropriate actions to respond to the risks and achieve its objective of promoting resilience. Why GAO Did This Study According to the U.S. Global Change Research Program, changes in the earth's climate are under way and expected to increase, posing risks to the electricity grid that may affect the nation's economic and national security. Annual costs of weather-related power outages total billions of dollars and may increase with climate change, although resilience investments could help address potential effects, according to the research program. Private companies own most of the electricity grid, but the federal government plays a significant role in promoting grid resilience—the ability to adapt to changing conditions; withstand potentially disruptive events; and, if disrupted, to rapidly recover. DOE, the lead agency for grid resilience efforts, conducts research and provides information and technical assistance to industry. FERC reviews mandatory grid reliability standards. GAO was asked to examine U.S. energy infrastructure resilience. This report describes: (1) potential climate change effects on the electricity grid; and (2) actions DOE and FERC have taken since 2014 to enhance electricity grid resilience to climate change effects, and additional actions these agencies could take. GAO reviewed reports and interviewed agency officials and 55 relevant stakeholders.
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  • Second Member Of “Boogaloo Bois” Pleads Guilty to Conspiracy to Provide Material Support to Hamas
    In Crime News
    A Minnesota man pleaded guilty today to conspiracy to provide material support and resources, namely property, services and weapons, to what he believed was Hamas, a designated foreign terrorist organization, for use against Israeli and U.S. military personnel overseas.
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  • Justice Department Sues to Block Aon’s Acquisition of Willis Towers Watson
    In Crime News
    The U.S. Department of Justice filed a civil antitrust lawsuit today to block Aon’s $30 billion proposed acquisition of Willis Towers Watson, a transaction that would bring together two of the “Big Three” global insurance brokers. As alleged in the complaint filed in the U.S. District Court for the District of Columbia, the merger threatens to eliminate competition, raise prices, and reduce innovation for American businesses, employers, and unions that rely on these important services.
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  • Attorney General Merrick B. Garland’s Statement on Missing and Murdered Indigenous Persons Awareness Day
    In Crime News
    Attorney General Merrick B. Garland issued the following statement:
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  • Priority Open Recommendations: Department of Health and Human Services
    In U.S GAO News
    What GAO Found In April 2020, GAO identified 55 priority recommendations for the Department of Health and Human Services (HHS). Since then, HHS has implemented eight of those recommendations by, among other things, taking actions to improve the quality of care in the Indian Health Service's federally-operated facilities and improve the accuracy and completeness of Medicaid data to expedite their use for program oversight. In addition to the eight priority recommendations HHS implemented, four recommendations are no longer open priority recommendations, primarily because they became a lower priority as a result of recent regulatory or programmatic changes. In May 2021, GAO identified 18 additional priority recommendations for HHS—including some recommendations related to the Coronavirus Disease 2019 (COVID-19) pandemic—bringing the total number of priority recommendations to 61. These recommendations involve the following areas: COVID-19 response and other public health emergency preparedness; Public health and human services program oversight; Food and Drug Administration oversight; National efforts to prevent, respond to, and recover from drug misuse; Improper payments in Medicaid and Medicare; Medicaid program; Medicare program; Health information technology and cybersecurity; and Health insurance premium tax credit payment integrity. The ongoing COVID-19 pandemic underscores the need for sustained attention on improving HHS's operations. Implementing our priority recommendations could help improve the efficiency and effectiveness of key federal health care programs and funding, including those relevant to the nation's ongoing response to COVID-19. Why GAO Did This Study Priority open recommendations are the GAO recommendations that warrant priority attention from heads of key departments or agencies because their implementation could save large amounts of money; improve congressional and/or executive branch decision-making on major issues; eliminate mismanagement, fraud, and abuse; or ensure that programs comply with laws and funds are legally spent, among other benefits. Since 2015, GAO has sent letters to selected agencies to highlight the importance of implementing such recommendations. For more information, contact A. Nicole Clowers at (202) 512-7114 or ClowersA@gao.gov.
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  • Secretary Blinken’s Meeting with the C5+1
    In Crime Control and Security News
    Office of the [Read More…]
  • Justice Department Publishes Statement on 2016 President’s Council of Advisors on Science and Technology Report
    In Crime News
    Today, the Justice Department published a statement on the 2016 President’s Council of Advisors on Science and Technology (PCAST) Report, Forensic Science in Criminal Courts: Ensuring Scientific Validity of Feature-Comparison Methods.  The statement is a response to PCAST’s claims regarding what it described as forensic “feature comparison methods.”
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  • In Commemoration of Juneteenth
    In Crime Control and Security News
    Antony J. Blinken, [Read More…]
  • New York City Police Department Officer Charged with Acting As an Illegal Agent of the People’s Republic of China
    In Crime News
    A criminal complaint was unsealed today in federal court in the Eastern District of New York charging Baimadajie Angwang, 33, a New York City Police Department officer and United States Army reservist, with acting as an illegal agent of the People’s Republic of China (PRC) as well as committing wire fraud, making false statements and obstructing an official proceeding. Angwang was arrested earlier today in Williston Park, New York, and his initial appearance is scheduled for this afternoon before United States Magistrate Judge Peggy Kuo at the United States Courthouse in Brooklyn, New York.
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  • 3 Things We’ve Learned From NASA’s Mars InSight
    In Space
    Scientists are finding [Read More…]
  • Former Blue Bell Creameries President Charged In Connection With 2015 Ice Cream Listeria Contamination
    In Crime News
    A Texas grand jury charged the former president of ice cream manufacturer Blue Bell Creameries L.P. with wire fraud and conspiracy in connection with an alleged scheme to cover up the company’s sales of Listeria-tainted ice cream in 2015, the Justice Department announced today. 
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  • On the Passing of Former Papua New Guinean Prime Minister Morauta
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • Federal Court Bars Florida Tax Preparation Businesses and Their Tax Return Preparers From Preparing Tax Returns
    In Crime News
    The Justice Department announced today that a federal court in Orlando, Florida, permanently enjoined Advanced Tax Services Inc. and Genson Financial Group LLC from preparing federal tax returns for others and ordered the businesses to disgorge $710,191.55, jointly and severally, representing the ill-gotten gains that they received for the preparation of tax returns. The court also entered permanent injunctions and disgorgement judgments against defendants Lenorris Lamoute and Dosuld Pierre, whom the court found prepared tax returns for compensation at Advanced Tax Services. The order was entered on default because the defendants failed to defend against the government’s allegations.
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  • The United States Welcomes the Organization of American States Resolution on Nicaragua
    In Crime Control and Security News
    Antony J. Blinken, [Read More…]
  • Two Bank Executives Charged for Conspiring to Launder Hundreds of Millions of Dollars Through U.S. Financial System in Connection with Odebrecht Bribery and Fraud Scheme
    In Crime News
    An Austrian man was arrested today in the United Kingdom on criminal charges related to his alleged participation in a conspiracy to launder hundreds of millions of dollars through the U.S. financial system as part of a scheme to pay bribes around the world and defraud the Brazilian government. 
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  • Secretary Pompeo’s Call with Republic of Cyprus Foreign Minister Christodoulides
    In Crime Control and Security News
    Office of the [Read More…]
  • Justice Department Issues Proposed Rule and Model Legislation to Reduce Gun Violence
    In Crime News
    Today, the Department of Justice announced two new steps to help address the continuing epidemic of gun violence affecting communities across the country. First, the department issued a notice of proposed rulemaking that makes clear that when individuals use accessories to convert pistols into short-barreled rifles, they must comply with the heightened regulations on those dangerous and easily concealable weapons. Second, the department published model legislation to help states craft their own “extreme risk protection order” laws, sometimes called “red flag” laws. By sending the proposed rule to the Federal Register and publishing the model legislation today, the department has met the deadlines that the Attorney General announced alongside President Biden in April. 
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