Property Disposition: Information on HUD's Acquisition and Disposition of
Single-Family Properties (Fact Sheet, 07/24/95, GAO/RCED-95-144FS).
Pursuant to a congressional request, GAO provided information on the
Department of Housing and Urban Development's (HUD) acquisition and
disposition of single-family properties.
GAO found that: (1) HUD spent nearly $14 billion to acquire, manage, and
dispose of nearly 200,000 single-family properties it sold during fiscal
years 1992 through 1994; and it only received $9.2 billion from the sale
of these properties; (2) the median loss per single-family property was
around $22,500; (3) HUD acquisition costs represented about 89 percent
of its total costs; (4) HUD acquired an average of more than 63,000
single-family properties per year and sold an average of nearly 66,000
such properties during fiscal years 1992 through 1994; and (5) these
single-family properties remained in HUD inventory about 5 months before
being sold.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-95-144FS
TITLE: Property Disposition: Information on HUD's Acquisition and
Disposition of Single-Family Properties
DATE: 07/24/95
SUBJECT: Real property acquisition
Mortgage programs
Mortgage protection insurance
Funds management
Foreclosures
Insurance claims
Homeowners loans
Property disposal
Losses
IDENTIFIER: Mutual Mortgage Insurance Fund
HUD Single Family Accounting Management System
General Insurance Fund
Special Risk Insurance Fund
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Cover
================================================================ COVER
Report to the Chairman, Subcommittee on Housing and Community
Opportunity, Committee on Banking and Financial Services, House of
Representatives
July 1995
PROPERTY DISPOSITION - INFORMATION
ON HUD'S ACQUISITION AND
DISPOSITION OF SINGLE-FAMILY
PROPERTIES
GAO/RCED-95-144FS
Property Disposition
Abbreviations
=============================================================== ABBREV
FHA - Federal Housing Administration
GAO - General Accounting Office
HUD - Department of Housing and Urban Development
MMI Fund - Mutual Mortgage Insurance Fund
SAMS - Single-Family Accounting Management System
Letter
=============================================================== LETTER
B-261237
Letter Date Goes Here
The Honorable Rick A. Lazio
Chairman, Subcommittee on
Housing and Community
Opportunity
Committee on Banking and
Financial Services
House of Representatives
Dear Mr. Chairman:
Each year, lenders foreclose on thousands of defaulted mortgages on
single-family properties insured by the Department of Housing and
Urban Development's (HUD) Federal Housing Administration (FHA).\1
With few exceptions, HUD then takes ownership of, and subsequently
sells, these properties. FHA almost always loses money on the sale
of foreclosed properties. The costs of settling the lenders'
insurance claims and maintaining and selling the properties are
typically higher than the proceeds from the sale of the properties.
However, typically, the premiums that FHA receives from borrowers
with mortgages insured by FHA more than offset these losses, and
FHA's principal insurance fund for single-family mortgages--the
Mutual Mortgage Insurance Fund (MMI Fund)--has sustained itself over
the years and has not required appropriations from the U.S.
Treasury.\2
Factors external to HUD, such as trends in housing prices, affect
both the rate of foreclosure on mortgages insured by FHA and HUD's
recovery of the costs attributable to foreclosed mortgages.\3 For
example, declining housing prices can lower the value of properties
below the amount of their mortgages. This can lead to increased
foreclosures and larger average losses per foreclosure. In addition,
HUD's policies and practices in acquiring, managing, and selling
foreclosed single-family properties influence the financial health of
the funds and the level of the mortgage insurance premiums that home
buyers may be required to pay.
Concerned about the costs that HUD incurs in acquiring, managing, and
selling foreclosed single-family properties, you asked us to provide
you with information on (1) the losses on such properties sold during
the 3 fiscal years ending September 30, 1994, and the breakdown of
the costs associated with these losses, (2) the number of properties
that HUD acquired and sold over the 3-year period, and (3) the length
of time that the properties remained in HUD's inventory before being
sold. This information should be useful to the Congress during its
debate on the future of FHA and on the possibility of developing
public-private partnerships for purposes such as disposing of
acquired single-family properties. The information could also serve
as a baseline for evaluating the effectiveness of HUD's actions to
reduce losses to the funds resulting from foreclosures.
In summary, we found the following:
Although HUD spent nearly $14 billion to acquire, manage, and
dispose of nearly 200,000 single-family properties that it sold
during fiscal years 1992 through 1994, it received about $9.2
billion from the sale of these properties.\4 The median loss per
property was about $22,500. The losses for a relatively small
percentage of the properties were substantially higher.
However, premiums for the principal fund for single-family
mortgages--the MMI Fund--have more than offset the losses
incurred for mortgages financed by loans insured by this fund.
The largest costs that HUD incurs through the property foreclosure
and disposition processes are the acquisition costs. These
costs, which, under the law, HUD is required to pay as an
insurance claim to the lender, represent about 89 percent of the
total costs. HUD officials stated that acquisition costs are
the driving factor in the losses sustained in the sale of
foreclosed properties. HUD paid more than $12.4 billion to
acquire the single-family properties sold during fiscal years
1992 through 1994. In addition, HUD paid about $691 million to
manage these properties. These management, or holding, costs
represent about 5 percent of the total costs. Finally, HUD paid
about $867 million, or about 6 percent of the total costs, to
sell the properties. Section 1 of this report discusses in more
detail the losses to the funds and the breakdown of the costs
associated with these losses.
During fiscal years 1992 through 1994, HUD acquired an average of
more than 63,000 single-family properties per year and sold an
average of nearly 66,000 such properties per year. Hence, the
number of single-family properties in HUD's inventory declined
slightly during this period. Most of the acquisitions and sales
occurred in a few states. (See sec. 2 for more information.)
On a median basis, single-family properties remained in HUD's
inventory about 5 months before being sold. However, 38 percent
of the properties remained in inventory from 5 months to 1 year,
and 8 percent remained more than 1 year before being sold. The
losses for properties that remained in inventory for longer
periods were usually much larger than the losses for properties
that were sold within 5 months. (See sec. 3.)
--------------------
\1 HUD defines a single-family property as a one- to four-unit
residential dwelling.
\2 Almost all of the single-family properties that HUD sold (88
percent) during fiscal years 1992 through 1994 were financed by
mortgages backed by the MMI Fund. The rest of the mortgages were
financed by loans insured by two other FHA funds--the General
Insurance Fund and the Special Risk Insurance Fund. For FHA's MMI
Fund mortgages originated from 1975 through 1985, claims in the
10-year period following origination averaged about 11 percent.
\3 Our report on the financial health of the MMI Fund, Mortgage
Financing: Financial Health of FHA's Home Mortgage Insurance Program
Has Improved (GAO/RCED-95-20, Oct. 18, 1994), discusses in detail
the factors influencing the probability that borrowers will default
on their mortgage loans.
\4 Except where otherwise noted, all dollar figures used in this
report have been adjusted to reflect their estimated value in 1994.
---------------------------------------------------------- Letter :0.1
We based our analysis of (1) the costs and revenues associated with
HUD's single-family property disposition program, (2) the number of
properties in inventory, and (3) the length of time that properties
remain in inventory on data from HUD's automated Single-Family
Accounting Management System (SAMS). This system, which tracks the
properties acquired and sold by HUD and contains extensive
information on HUD's property disposition activities, did not become
fully operational until fiscal year 1992. Therefore, we did not have
relevant nationwide data for prior years and had to limit our
analysis to data from fiscal year 1992 through fiscal year 1994. To
analyze acquisition costs by type and program administrative
expenses, we used data from HUD's single-family insurance claims
system. The effects of these limitations on our analysis are
discussed in appendix I.
The data in this report were current as of September 30, 1994. We
did not independently verify the accuracy of HUD's data. However, we
worked with HUD officials and the SAMS database contractor to ensure
that we understood which costs and revenues were and were not
included in SAMS. We then developed an appropriate methodology for
using the data to estimate losses, costs, and revenues to the funds
for fiscal years 1992 through 1994. To determine when and how long a
property was in HUD's inventory, we used the date that the property
was acquired and the date when HUD reconciled the settlement
statement with the funds received by the U.S. Treasury. We also
excluded from analysis certain properties, such as those that HUD
sells on behalf of the Department of Defense and those for which
HUD's acquisition date was not recorded or was obviously incorrect.
Consequently, the data on the inventory and costs reported here may
not match those published by HUD. We performed our work from June
1994 through July 1995.
We provided a draft of this report to HUD officials to obtain their
comments. In a meeting with the Director of the Single-Family
Property Disposition Division, the Director of the Single-Family
Post-Insurance Division, and the Acting Director of HUD's Office of
Evaluation, we obtained HUD's comments. HUD generally agreed with
the facts as presented. We incorporated, where appropriate,
technical and editorial changes suggested by HUD to further clarify
certain information presented.
As arranged with your office, unless you announce its contents
earlier, we plan no further distribution of this report until 10 days
after the date of this letter. At that time, we will send copies to
interested congressional committees, the Secretary of HUD, and other
interested parties. We will also make copies available to others on
request.
Please contact me at (202) 512-7631 if you or your staff have any
questions. Major contributors to this report are listed in appendix
IV.
Sincerely yours,
Judy A. England-Joseph
Director, Housing and Community
Development Issues
LOSSES AND COSTS ASSOCIATED WITH
HUD'S ACQUISITION, MANAGEMENT, AND
SALE OF SINGLE-FAMILY PROPERTIES
============================================================ Chapter 1
The Department of Housing and Urban Development's (HUD) single-family
mortgage insurance programs are intended to protect lenders from
financial losses resulting from defaults on mortgage loans to home
buyers. As part of this insurance protection, HUD acquires
foreclosed properties from lenders and manages these properties until
they can be sold from its inventory. This section describes the
costs and revenues associated with HUD's acquisition and disposition
activities as well as the losses to the Federal Housing
Administration's (FHA) insurance funds incurred through these
activities.
OVERALL COSTS AND REVENUES
---------------------------------------------------------- Chapter 1:1
During fiscal years 1992 through 1994, HUD sold about 200,000
single-family properties. It spent nearly $14 billion to acquire,
manage, and sell these properties, and it sold these properties for
about $9.2 billion.\1 Overall, FHA's insurance funds lost about $4.75
billion from the foreclosure of these loans.\2 (See fig. 1.1.)
However, premiums for the principal single-family fund--the Mutual
Mortgage Insurance (MMI) Fund--have more than offset the losses
incurred for properties financed by loans insured by this fund.
Figure 1.1: Total Costs,
Revenues, and Losses From HUD's
Single-Family Properties Sold
During Fiscal Years 1992-94
(See figure in printed
edition.)
Note: Dollar amounts are in 1994 dollars.
Source: GAO's analysis of SAMS data.
For the properties sold from HUD's inventory during fiscal years 1992
through 1994, the median loss per property for foreclosure and
disposition activities was about $22,500, or about 39 percent of the
costs paid to acquire these properties. The insurance funds incurred
losses on about 97 percent of the properties sold from HUD's
inventory during this period.
For a relatively small portion of the properties sold, the losses
were much higher than the median and substantially increased the
total loss to the funds. About 11,500 properties, or 6 percent of
the properties sold, accounted for about 16 percent of the total loss
to the funds--about $750 million. The funds lost more than $50,000
through the acquiring and selling of each of these properties.
Moreover, 482 of these properties incurred losses of more than
$100,000 each, resulting in losses to the funds of more than $57
million.
Of the properties with unusually high losses, a disproportionately
large number were multiunit dwellings. For example, although less
than 1 percent of the single-family properties that HUD sold during
this period had three or four dwelling units, one-third of the
properties with losses exceeding $100,000 had three or four dwelling
units. These multiunit properties may have had higher mortgage loans
and higher unpaid principal balances at the time of default than most
of the properties sold by HUD. In addition, the properties with very
high losses were concentrated in just a few states. Twenty percent
of all properties with losses from $50,000 to $100,000 were in
California; about half of all properties that lost this much were
located in five states--California, Connecticut, Illinois, New York,
and Texas. Forty-four percent of the properties with losses
exceeding $100,000 were located in five states--California, Colorado,
Connecticut, Massachusetts, and New York. According to HUD
officials, losses of this magnitude may be due to a number of
reasons, such as the collapse of a local real estate market due to
the closing of a locally based industry. Figure 1.2 illustrates the
range of losses per property.
Figure 1.2: Losses to FHA's
Insurance Funds From the Sale
of HUD's Single-Family
Properties, Fiscal Years
1992-94
(See figure in printed
edition.)
Note: Dollar amounts are in 1994 dollars.
Source: GAO's analysis of SAMS data.
The losses presented in this report do not include the program
administration costs--staff salaries, benefits, and the Single-Family
Accounting Management System (SAMS) contractor costs--that HUD
incurred to administer its single-family property disposition
program. HUD estimated that these administrative costs were about
$43 million annually in nominal dollars during fiscal years 1992
through 1994. These costs are paid out of the insurance funds but
are not part of the profit and loss calculations computed in the SAMS
system, from which we obtained our data. Likewise, the estimates of
costs associated with single-family property disposition in SAMS and
reported in this report do not include interest foregone on money
drawn from FHA's funds to pay the insurance claims on properties.
When HUD sells the acquired properties, the net sales proceeds are
deposited in the appropriate insurance fund; however, interest is
foregone for the length of time between property acquisition and
sale.
--------------------
\1 We adjusted all dollar figures used in this report to reflect
their estimated value in 1994 unless otherwise noted. Because our
SAMS data extract did not show the dates when some expenses were
incurred, we assumed that these expenses were incurred during the
year in which HUD sold the property, and we adjusted them to 1994
dollars using the year of sale.
\2 Mortgage insurers commonly lose money on a mortgage foreclosure in
part because typically, a delinquent borrower would rather sell a
house than suffer foreclosure unless the value of the house had
dropped below the value of the mortgage.
BREAKDOWN OF COSTS
---------------------------------------------------------- Chapter 1:2
For the single-family properties sold during fiscal years 1992
through 1994, HUD incurred by far the largest proportion of its total
costs--about 89 percent, or more than $12.4 billion--to acquire the
properties. In addition, it incurred about 5 percent of its total
costs, or about $691 million, to manage the properties and about 6
percent of its total costs, or about $867 million, to sell the
properties. (See fig. 1.3.)
Figure 1.3: Overall Costs of
HUD's Single-Family Property
Disposition Program for
Properties Sold in Fiscal Years
1992-94
(See figure in printed
edition.)
Source: GAO's analysis of SAMS data.
PROPERTY ACQUISITION COSTS
-------------------------------------------------------- Chapter 1:2.1
HUD protects lenders from loss by insuring mortgages against the risk
of default. As part of this insurance program, HUD acquires
properties that have gone through foreclosure.
The acquisition costs incurred by HUD represent all of the expenses
paid by or on behalf of the lender in connection with the
foreclosure, acquisition, operation, protection and preservation, and
conveyance of the property to HUD. In accordance with the law, HUD
reimburses the lender for the unpaid principal balance of the
loan--even if the property is worth less than the mortgage balance,
covers a portion of the costs associated with foreclosure, and makes
interest payments to compensate the lender for the interest lost when
the borrower defaults on the loan.\3
The details on the components of acquisition costs are contained in
HUD's single-family insurance claims system rather than the SAMS
system. HUD provided us with a nationwide breakdown of the
acquisition costs for acquired properties from the claims data
system. As figure 1.4 shows, the largest portion of the acquisition
costs nationwide is the unpaid principal balance, which represents
about 86 percent of the total. Other acquisition costs include the
interest paid to compensate lenders for the interest lost through
defaults on loans and the reimbursement made to lenders for various
costs, including the property taxes paid by the lender, the legal
fees associated with the foreclosure, expenses to protect and
preserve the property, and other miscellaneous costs. Appendix II
presents a more detailed breakdown of HUD's property acquisition
costs.
Figure 1.4: Acquisition Costs
for Single-Family Properties
for Which Final Claims Were
Paid During Fiscal Years
1992-94
(See figure in printed
edition.)
Note: Includes partial and final claim payments, for conveyances
only.
\a Includes costs to protect and preserve the property, legal fees,
and other miscellaneous costs and deductions associated with property
acquisition.
Source: HUD's Mortgage Insurance Accounting System.
An example of a property acquisition cost is an FHA insurance claim
for about $126,300 that HUD paid to a lender in 1994. This payment
included nearly $105,000 for the unpaid principal balance, about
$16,000 as compensation for lost interest, and about $6,700 for other
acquisition costs, including legal fees and costs to protect and
preserve the property, less about $1,400 for an escrow account held
by the lender.
--------------------
\3 Full interest is not paid if lenders fail to meet time
requirements when filing their claims on defaulted loans.
PROPERTY MANAGEMENT
(HOLDING) COSTS
-------------------------------------------------------- Chapter 1:2.2
The property management, or holding, costs--for maintenance and
operation, repairs, and property taxes--were much smaller than the
acquisition costs for the properties sold from fiscal year 1992
through fiscal year 1994. Nevertheless, these costs totaled more
than $691 million. Over the 3-year period, maintenance and operating
expenses accounted for about 58 percent of the total holding costs;
repairs, about 25 percent; and property taxes, the remaining 17
percent, as shown in figure 1.5. The median total holding cost was
just under $2,700 per property.
Figure 1.5: Holding Costs for
HUD's Single-Family Properties
Sold During Fiscal Years
1992-94
(See figure in printed
edition.)
Source: GAO's analysis of SAMS data.
The following example illustrates property holding costs: HUD
acquired a property in January 1994 and sold it about 5 months later.
During this time, the holding costs amounted to $2,279, including
$1,014 in fees to a private company for managing the property, $868
in real estate taxes, $221 in utility charges, and $176 in
miscellaneous costs.
For a small number of properties sold, the holding costs were
substantially higher than the median holding cost and accounted for a
significant percentage of the total holding costs. For example,
although the median amount spent by HUD on repairs for the 3-year
period was $290 per property sold, the amount spent on repairs for
about 6,000 properties exceeded $5,000 each, totaling more than $45
million. Thus, 3 percent of the properties sold accounted for 26
percent of the $173 million spent by HUD on repairs during this
period. Likewise, although the median amount spent on maintenance
and operations for the 3-year period was $1,542 per property sold,
the amount spent on these costs for about 12,150 properties exceeded
$5,000 per property. In this case, total maintenance and operating
expenses for 6 percent of the properties sold were more than $87
million, or about 22 percent of the approximately $400 million spent
by HUD in this expense category.
Overall, a shift occurred from fiscal year 1992 to fiscal year 1994
in the proportion of the total holding costs spent on maintenance and
operation, repairs, and property taxes for properties sold in the
3-year period. While the median amount spent per year on maintenance
and operations increased from $1,302 in fiscal year 1992 to $1,672 in
fiscal year 1994, the median amount spent per year on repairs
decreased from $431 in fiscal year 1992 to $165 in 1994. The median
amount spent per year on property taxes, the smallest of the three
expense categories, decreased slightly from $429 in fiscal year 1992
to $383 in fiscal year 1994. (See fig. 1.6.)\4
HUD officials believe that this shift occurred as a result of a
number of factors. For example, during the early 1990s, one HUD
field office with a very large inventory had a policy of sprucing up
many properties by making minor repairs designed to improve their
marketability. According to HUD, since this office's inventory has
declined, the total number of properties being repaired nationwide
has declined as well. HUD also told us that some minor items that
were classified as repairs before fiscal year 1994 have been
reclassified as part of the maintenance activities required of
contractors that manage properties for HUD. Another reason that HUD
officials indicated for the shift in the magnitude of the cost
categories has been an effort by HUD to discourage time-consuming
repairs so that properties can be marketed and sold out of inventory
quickly.
Figure 1.6: Change in
Distribution of Holding Costs
for Single-Family Properties
Sold During Fiscal Years
1992-94
(See figure in printed
edition.)
Source: GAO's analysis of SAMS data.
Other costs may have been associated with managing HUD's
single-family properties, but they are not part of the calculations
of profit and loss in SAMS. For example, the costs reported in SAMS
for property taxes do not include the payments made by HUD to local
governments for the tax penalties and interest expenses that HUD
incurred for the late payment of property taxes on property in its
inventory. Therefore, the costs reported in SAMS for property taxes
are likely to be somewhat understated. For example, the tax penalty
report produced by the SAMS system indicated that HUD had incurred
$1.01 million in tax penalties for single-family properties during
fiscal year 1994.\5 HUD does not include these tax penalties and
interest expenses in its property disposition costs because it views
them as part of the "cost of doing business," not as an addition to
the cost of property disposition for an individual property. These
expenses are, however, charged to the appropriate insurance fund.
--------------------
\4 Depending on the billing cycle of the local taxing jurisdiction,
some property tax liabilities incurred while properties were owned by
HUD may have been paid beforehand, as part of the acquisition costs.
The timing of the tax payments would not affect the total amount lost
per property.
\5 Approximately 18 percent, or about $179,000, of the total
penalties reported were attributed to mortgagees and may be collected
by HUD in the future.
PROPERTY SALES COSTS
-------------------------------------------------------- Chapter 1:2.3
For the single-family properties sold from fiscal year 1992 through
fiscal year 1994, HUD incurred about $867 million in sales costs.
These costs include commissions paid to real estate agents,
advertising expenses, and special discounts offered to encourage
potential buyers to purchase HUD's properties.
The following example illustrates property sales costs: HUD acquired
a property in May 1994 and sold it about 4-1/2 months later for
$46,000, incurring $3,327 in sales costs. Specifically, HUD paid
$2,500 to a selling broker, $240 to a closing agent, $552 for
advertising expenses, and $35 for miscellaneous expenses.
NUMBER OF SINGLE-FAMILY PROPERTIES
ACQUIRED AND SOLD
============================================================ Chapter 2
During the 3 fiscal years 1992 through 1994, HUD acquired an average
of over 63,000 properties annually. During the same period, HUD sold
an average of nearly 66,000 properties each year. Because acquiring
and selling are ongoing activities, HUD at any one time owns and
manages thousands of properties. Overall, the number of properties
held by HUD at a specific time--the end of the fiscal year--declined
during these 3 years because sales outpaced acquisitions. At the end
of fiscal year 1994, HUD had 28,587 properties in inventory. (See
fig. 2.1.)
Figure 2.1: Acquisitions,
Sales, and Ending Inventory of
Single-Family Properties,
Fiscal Years 1992-94
(See figure in printed
edition.)
Source: GAO's analysis of SAMS data.
SINGLE-FAMILY PROPERTIES
ACQUIRED BY HUD
---------------------------------------------------------- Chapter 2:1
Although HUD acquired an average of about 63,000 properties per year
in fiscal years 1992 through 1994, it acquired fewer properties in
each succeeding fiscal year. The number of properties acquired per
year declined from about 67,000 in fiscal year 1992, to about 63,000
in fiscal year 1993, to just under 60,000 in fiscal year 1994. (See
fig. 2.2.) In addition, about 42,000 borrowers who had defaulted
were able to avoid foreclosure during this period by being accepted
into HUD's mortgage assignment program.\1 HUD estimates that more
than half of these loans will eventually go into foreclosure and the
properties will be acquired by HUD.
Figure 2.2: Single-Family
Properties Acquired Annually by
HUD, Fiscal Years 1992-94
(See figure in printed
edition.)
Source: GAO's analysis of SAMS data.
The properties acquired by HUD during fiscal years 1992 through 1994
were concentrated in relatively few states. Over half were located
in seven states--Arizona, California, Florida, Georgia, Tennessee,
Texas, and Virginia. About 30,000, or more than 15 percent of all
the properties acquired by HUD during this 3-year period, were
located in Texas. (See fig. 2.3.)
Figure 2.3: Geographic
Distribution of Single-Family
Properties Acquired During
Fiscal Years 1992-94
(See figure in printed
edition.)
Source: GAO's analysis of SAMS data.
--------------------
\1 As an alternative to foreclosure, HUD operates a mortgage
assignment program. For borrowers accepted into the program, HUD
pays the insurance claim, takes assignment of the loan, and develops
a repayment plan for the borrower. Other alternatives to property
acquisition include claims without conveyance of title and
preforeclosure sales.
SINGLE-FAMILY PROPERTIES SOLD
BY HUD
---------------------------------------------------------- Chapter 2:2
From fiscal year 1992 through fiscal year 1994, HUD sold an average
of about 66,000 properties annually. The number of properties sold
per year declined steadily, from about 70,000 in fiscal year 1992, to
about 65,000 in fiscal year 1993, to about 62,500 in fiscal year
1994. (See fig. 2.4.)
Figure 2.4: Single-Family
Properties Sold by HUD, Fiscal
Years 1992-94
(See figure in printed
edition.)
Source: GAO's analysis of SAMS data.
The properties sold by HUD during fiscal years 1992 through 1994 were
concentrated in nearly the same states as the properties acquired by
HUD. Over half were located in seven states--Arizona, California,
Colorado, Florida, Georgia, Texas, and Virginia. The largest number
of sales took place in Texas. Specifically, from fiscal year 1992
through fiscal year 1994, 32,561 sales, or 16.5 percent of all the
sales during that period, occurred in Texas. (See fig. 2.5.)
Figure 2.5: Geographic
Distribution of Single-Family
Properties Sold During Fiscal
Years 1992-94
(See figure in printed
edition.)
Source: GAO's analysis of SAMS data.
HUD'S INVENTORY OF
SINGLE-FAMILY PROPERTIES TO
MANAGE AND SELL
---------------------------------------------------------- Chapter 2:3
At any particular time, HUD has title to and responsibility for
managing many thousands of single-family properties; the exact number
of properties in inventory changes as new properties are acquired and
acquired properties are sold. The number of properties held by HUD
at the end of each fiscal year declined during the period of our
review. HUD's inventory was reduced from 33,136 properties at the
end of fiscal year 1992 to 28,587 properties at the end of fiscal
year 1994. (See fig. 2.6.)
Figure 2.6: HUD's Ending
Inventory of Single-Family
Properties, Fiscal Years
1992-94
(See figure in printed
edition.)
Source: GAO's analysis of SAMS data.
LENGTH OF TIME THAT SINGLE-FAMILY
PROPERTIES REMAINED IN HUD'S
INVENTORY
============================================================ Chapter 3
The median time required for HUD to sell an acquired single-family
property was about 5 months for the properties sold during fiscal
years 1992 through 1994.\1 The properties that remained unsold as of
September 30, 1994, had been in inventory a median length of 3
months. As discussed in section 1, the costs of acquiring, managing,
and selling a single-family property typically exceed the revenues.
These costs were higher for properties that remained in inventory for
longer periods of time, while sales revenues generally were lower.
Holding costs, in particular, are likely to increase with the length
of time that a property remains in HUD's inventory. Declining sales
revenues, however, may not be caused by the length of time that a
property remains in inventory. HUD officials told us, for example,
that properties take longer to sell in regions that are experiencing
declining property values. Hence, the properties that remain in
inventory for longer periods of time usually incur higher losses
(sales revenue less costs) than the properties that remain in
inventory for shorter periods of time.
--------------------
\1 To measure time in inventory, we used the number of days between
the date that HUD acquired the property and the date that HUD
reconciled the settlement statement with funds received by the U.S.
Treasury. In contrast, according to HUD officials, industry measures
the time in inventory from the date that the property is listed for
sale to the date that a contract is accepted. HUD uses a measure
similar to ours as well as a measure that uses the sales closing
date. The reconciliation date should be within a few days of the
closing date. (For more detailed discussion of this issue, see app.
I.)
LENGTH OF TIME THAT
SINGLE-FAMILY PROPERTIES SOLD
BY HUD REMAINED IN INVENTORY
---------------------------------------------------------- Chapter 3:1
The properties sold in fiscal years 1992 through 1994 were in
inventory a median of 4.7 months. However, the time required to sell
any one property varied over a wide range, as shown in figure 3.1.
About half of the approximately 198,000 properties sold during fiscal
years 1992 through 1994 remained in inventory from 2 to 5 months.
Only 8,350, or about 4 percent, of the properties sold during these
years were sold in less than 2 months. About 75,000 properties, or
38 percent, were in inventory more than 5 months but no more than 12
months before being sold. The remaining 8 percent were in inventory
more than 1 year before being sold. Among these properties, 2,166,
or about 1 percent of all the properties sold, were in inventory more
than 3 years before being sold.\2
Figure 3.1: Time in Inventory
for Single-Family Properties
Sold During Fiscal Years
1992-94
(See figure in printed
edition.)
Note: Months 1 through 11 are set at 30 days each, and month 12
includes the remaining days in the year.
Source: GAO's analysis of SAMS data.
--------------------
\2 While SAMS does indicate whether a property is currently being
held off the market, it does not readily indicate whether a property
has been held off the market in the past. According to HUD
officials, for some properties included in our analysis, the time in
inventory includes time during which the property was held off the
market. Some of these properties may have been held off the market
as part of a program for leasing properties to nonprofit
organizations for housing homeless people or for other program
purposes.
LENGTH OF TIME THAT UNSOLD
SINGLE-FAMILY PROPERTIES HAD
BEEN IN INVENTORY
---------------------------------------------------------- Chapter 3:2
As of September 30, 1994, HUD had 28,587 properties in inventory.
Although HUD had owned these properties for a median of 3 months, the
properties--like the properties that HUD sold--had been in inventory
for widely varying periods of time, as shown in figure 3.2. Almost
60 percent of the properties that HUD held on September 30, 1994, had
been acquired no more than 4 months earlier. In addition, about 29
percent had been acquired earlier in fiscal year 1994. The remaining
12 percent had been in inventory more than 1 year. Of these, 1,231,
or 4.3 percent of all the unsold properties, had been in inventory
more than 3 years.
Figure 3.2: Time in Inventory
for Single-Family Properties
That Remained Unsold as of
September 30, 1994
(See figure in printed
edition.)
Note: Months 1 through 11 are set at 30 days each, and month 12
includes the remaining days in the year.
Of the 28,587 properties in inventory as of September 30, 1994,
3,104, or about 11 percent, were being held off the market. HUD may
hold properties off the market while carrying out certain
administrative processes and assisting programs for the homeless and
for other reasons. These properties made up an increasing portion of
the properties in inventory for longer periods of time. In fact,
over half of all the properties in inventory for longer than 18
months were being held off the market as of September 30, 1994.
Source: GAO's analysis of SAMS data.
RELATIONSHIP BETWEEN LOSSES AND
TIME IN INVENTORY
---------------------------------------------------------- Chapter 3:3
Properties that are in inventory for longer periods of time have
proportionally higher losses than properties that are in inventory
for shorter periods of time. In general, for every dollar spent to
acquire a property, HUD incurred a higher loss for a property that
was in inventory longer, as shown in figure 3.3. For example, losses
represented 32 percent of the acquisition costs for properties that
were sold within 1 month of being acquired. That is, for every
dollar spent to acquire such properties, HUD ultimately lost 32 cents
after the holding and selling expenses and the revenues received from
the sale of the properties are taken into account. For properties
that were in inventory for about 12 months, HUD lost about 52 cents
for every dollar spent to acquire the properties.
Figure 3.3: Distribution of
Median Losses as a Percentage
of Acquisition Costs, by Time
in Inventory, for Single-Family
Properties Sold During Fiscal
Years 1992-94
(See figure in printed
edition.)
Note: Months 1 through 11 are set at 30 days each, and month 12
includes the remaining days in the year.
\a Part of the higher losses for those properties that were in
inventory for longer periods of time could be due to the effects of
inflation. We could not control for this because not all costs for
individual properties were incurred in the same year, and we could
not identify the year(s) in which they were incurred.
Source: GAO's analysis of SAMS data.
As reported in section 1, the major costs that HUD incurs in
disposing of single-family properties are the costs of acquiring,
holding, and selling the properties. Of these three types of costs,
the holding costs are most likely to increase with the length of time
that a property remains in HUD's inventory. For example, the median
holding costs for properties that were sold during the 12th month
after being acquired were about twice as high (more than $4,100) as
the median holding costs for properties that were sold during the 2nd
month after being acquired (about $2,000). The median acquisition
cost for properties sold during the 12th month was also somewhat
higher (about $60,700) than the median acquisition cost for
properties sold during the 2nd month (about $57,900). Similarly, the
median selling expense was somewhat higher for properties sold during
the 12th month (about $4,100) than for properties sold during the 2nd
month (about $3,500). Conversely, the median sales revenue for
properties sold during the 12th month (about $37,900) was lower than
the median sales revenue for properties sold during the 2nd month
(about $44,100). According to HUD officials, the price at which
individual properties can be sold declines with time, while holding
costs mount, and properties may take longer to sell in regions
experiencing economic difficulty. (See fig. 3.4.)
Figure 3.4: Distribution of
Median Costs and Revenue, by
Time in Inventory, for
Single-Family Properties Sold
During Fiscal Years 1992-94
(See figure in printed
edition.)
Note: Months 1 through 11 are set at 30 days each, and month 12
includes the remaining days in the year.
\a Inflator is based on the fiscal year that the property was sold,
not the date(s) that the cost(s) was incurred.
\b Holding costs are costs associated with taxes, maintenance and
operations, and repairs.
\c Sales revenue is calculated as the sum of profit (loss),
acquisition costs, holding costs, and selling expenses.
Source: GAO's analysis of SAMS data.
OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I
Concerned about the costs that HUD incurs through its single-family
property disposition program, the Chairman, Subcommittee on Housing
and Community Opportunity, House Committee on Banking and Financial
Services, asked us to obtain information on (1) the losses to FHA's
insurance funds on single-family properties sold during the 3 fiscal
years ending September 30, 1994, and the breakdown of the costs
associated with these losses, (2) the number of properties that HUD
acquired and sold over the 3-year period, and (3) the length of time
that the properties remained in HUD's inventory before being sold.
To obtain information on the costs and revenues associated with HUD's
single-family property disposition program, the number of properties
that HUD acquired and sold, and the length of time that properties
remain in inventory, we extracted data from HUD's automated SAMS.
This system tracks the properties acquired and sold by HUD and
contains extensive information on HUD's property disposition
activities. Because SAMS did not become fully operational until
fiscal year 1992 and no other source of comparable nationwide data
was available for prior years, we limited our analysis to data from
fiscal years 1992 through 1994.
We performed our analysis on properties acquired on or before
September 30, 1994, excluding the following types:
Several categories of single-family properties were HUD's
responsibility to sell but were not a part of the FHA insurance
programs; therefore, the costs of their acquisition and sale did
not represent losses to the FHA funds. For example, HUD has
managed and sold some properties acquired by the Department of
Defense.
For some properties, HUD's acquisition date was not recorded or was
obviously incorrect (i.e., when the recorded date of acquisition
was after the recorded date of sale).
We analyzed 197,922 properties that HUD sold in fiscal years 1992
through 1994 and 28,587 properties that remained in inventory as of
September 30, 1994. We did not analyze profit and losses for 1,490
sold properties whose acquisition costs were reported as $0 as of
September 30, 1994. These properties were likely to have been ones
for which HUD had not yet paid an insurance claim. These cases would
have distorted our estimates of loss per property and would have
yielded a median loss amount that was lower than it should have been.
As a result of these exclusions, our universe consisted of 196,432
properties.
To measure time in inventory, we used the date that HUD acquired the
property and the date that HUD reconciled the sales closing
settlement statement with funds received by the U.S. Treasury.
HUD's Office of Insured Single-Family Housing believes that our
estimates of the length of time the properties remain in HUD's
inventory are slightly inflated because of the way in which we
measured inventory time. They use a property's sales closing date as
the ending date for time in inventory. We used the reconciliation
date as our endpoint for time in inventory because it is consistent
with that used by other key HUD organizational units, namely that of
the accounting staff, which does not consider a property to have left
inventory until the settlement statement has been reconciled.
Likewise, a case in SAMS is considered "active" until the
reconciliation has occurred. This definition of time in inventory
was developed to help ensure that the reconciliation occurred in a
timely manner, which had not always happened in the past. This lack
of timely reconciliation contributed to the situation that resulted
in the diversion of funds by sales closing agents in the 1989 Robin
HUD scandal. Since HUD's policy is to reconcile the closing
statement with the funds received by the U.S. Treasury within a very
short time frame after the sales closing, our estimates of time in
inventory should be at most only a few days longer than they would
have been had we used the inventory measurement recommended by the
Office of Single-Family Housing.
Also for analyses of time in inventory, we excluded four properties
whose time in inventory was recorded as zero days (these were
properties with invalid acquisition dates), in addition to the
exclusions noted above, resulting in a universe of 197,918 properties
sold during fiscal years 1992 through 1994. Thus, our inventory
numbers may not match those published by HUD.
When we analyzed profit and loss together with time in inventory for
sold properties, we excluded 1,493 properties whose acquisition costs
and/or time in inventory were recorded as zero, thereby obtaining a
universe of 196,429 sold properties.
Details on the components of acquisition costs are contained in HUD's
single-family insurance claims system rather than in the SAMS system.
We used data from the claims system to categorize the acquisition
costs for all properties acquired during fiscal years 1992 through
1994. This analysis illustrates the relative magnitude of each type
of cost associated with property acquisition. In regard to the
analysis that we performed on the SAMS cost data, because our summary
data did not show when the expenses were incurred, we adjusted the
total cost figures to 1994 dollars, using the year of sale by HUD.
SAMS also does not allocate to individual properties the
administrative expenses such as staff salaries that HUD incurs in
acquiring, managing, and selling these properties. Therefore, we did
not include HUD's administrative costs in our analysis of the
program's losses and costs.
To illustrate the types of costs associated with property acquisition
and disposition, we obtained several examples from HUD that they
believe represent typical acquisition, holding, and sales expenses.
The data in this report are current as of September 30, 1994. We did
not independently verify the accuracy of HUD's data, and we do not
attest to its reliability. We worked closely with HUD officials and
their SAMS database contractor to ensure a proper interpretation of
the data. We then developed an appropriate methodology for using the
data to estimate losses, costs, and revenues to the funds for fiscal
years 1992 through 1994. We performed our work from June 1994
through July 1995.
ACQUISITION COSTS
========================================================== Appendix II
Acquisition costs represent all of the expenses paid by or on behalf
of a lender in connection with the foreclosure, acquisition,
operation, protection and preservation, and conveyance of a property
to HUD. Acquisition costs for properties are primarily paid on the
basis of the initial insurance claims submitted by mortgagees to HUD.
However, mortgagees may submit a supplemental claim within 6 months
after the original claim is settled. According to HUD's contractor
for the SAMS system, about 11.5 percent of the claims received are
followed by a supplemental claim, and the average amount of a
supplemental claim payment is $747.
Acquisition costs are specified in HUD Handbook 4330.4, REV-1, "FHA
Single-Family Insurance Claims." The following list outlines the
major categories of acquisition costs. In addition, other
miscellaneous costs may be included in acquisition costs.
Unpaid principal balance
Disbursement for protection and preservation
Boarding Debris removal Doors Lawn cutting Locks
Photographs Property inspections Snow removal Winterization
Hazard insurance premiums
Special assessments
Taxes, ground rent, and water rates, which are liens prior to the
mortgage
Eviction
Attorney/trustee fees
Foreclosure and/or acquisition, conveyance (Note: Terminology for
these costs may vary in different jurisdictions.)
Deed recording Filing cost Final abstracting Process
serving Publication of foreclosure notice Title order and
review
Interest on net claim amount
Miscellaneous costs and deductions
DATA FOR FIGURES USED IN THIS
REPORT
========================================================= Appendix III
Table III.1
Total Costs, Revenues, and Losses From
HUD's Single-Family Properties Sold
During Fiscal Years 1992-94 (Fig. 1.1)
(Dollars in billions)
Item Total
-------------------------------------------------- --------
Cost $13.97
Revenue\a 9.21
Net loss $4.76
------------------------------------------------------------
Note: Dollar amounts are in 1994 dollars; inflator is based on the
fiscal year in which the property was sold, not the date that the
costs were incurred.
\a Revenue is calculated as the sum of profit (loss) and cost.
Source: GAO's analysis of SAMS data.
Table III.2
Losses to FHA's Insurance Funds From the
Sale of HUD's Single-Family Properties,
Fiscal Years 1992-94 (Fig. 1.2)
Number of
Profit/loss properties
---------------------------------------------- ------------
Profit or no loss 6,441
Loss less than/equal to $10,000 22,910
Loss greater than $10,000; less than/equal to 84,213
$25,000
Loss greater than $25,000; less than/equal to 71,387
$50,000
Loss greater than $50,000; less than/equal to 9,320
$75,000
Loss greater than $75,000; less than/equal to 1,679
$100,000
Loss greater than $100,000 482
Total number of properties sold 196,432
------------------------------------------------------------
Note: Dollar amounts are in 1994 dollars; inflator is based on the
fiscal year in which the property was sold, not the date that the
costs were incurred.
Source: GAO's analysis of SAMS data.
Table III.3
Overall Costs of HUD's Single-Family
Property Disposition Program for
Properties Sold in Fiscal Years 1992-94
(Fig. 1.3)
Percent of total
Type of cost cost
---------------------------------------- ------------------
Acquisition 88.8
Holding 4.9
Sales 6.2
============================================================
Total\a 99.9
------------------------------------------------------------
\a Does not equal 100 percent because of rounding.
Source: GAO's analysis of SAMS data.
Table III.4
Acquisition Costs for Single-Family
Properties for Which Final Claims Were
Paid During Fiscal Years 1992-94 (Fig.
1.4)
Percent of total acquisition
Type of acquisition cost cost
------------------------------ ----------------------------
Unpaid principal balance 86.2
Interest expense 9.2
Taxes 2.6
Other\a 2.1
============================================================
Total\b 100.1
------------------------------------------------------------
Note: Data include partial and final claim payments, for conveyances
only.
\a Includes protection and preservation of the property, legal fees,
and other miscellaneous costs and deductions associated with property
acquisition. (For more detailed descriptions of acquisition costs,
see app. II.)
\b Does not equal 100 percent because of rounding.
Source: HUD's Single-Family Insurance Claims System.
Table III.5
Holding Costs for HUD'S Single-Family
Properties Sold During Fiscal Years
1992-94 (Fig. 1.5)
Type of holding cost Percent of holding cost
------------------------------ ----------------------------
Maintenance and operations 57.8
Repairs 25.1
Property taxes 17.1
============================================================
Total 100.0
------------------------------------------------------------
Source: GAO's analysis of SAMS data.
Table III.6
Change in Distribution of Holding Costs
for Single-Family Properties Sold During
Fiscal Years 1992-94 (Fig. 1.6)
(Costs in percentages of total holding
costs)
Maintenance
Fiscal and Repa Property Tota
year operation irs taxes l
---------- ------------------------ ---- ---------- ----
1992 50.7 31.3 18.0 100.
0
1993 58.5 24.5 16.9 99.9
1994 64.9 18.9 16.2 100.
0
------------------------------------------------------------
Note: Some percentages do not add to 100 percent because of
rounding.
Source: GAO's analysis of SAMS data.
Table III.7
Acquisitions, Sales, and Ending
Inventory of Single-Family Properties,
Fiscal Years 1992-94 (Figs. 2.1, 2.2,
2.4, and 2.6)
Number of Ending
properties Number of inventor
Fiscal year acquired properties sold y
------------ ------------------ ---------------- --------
1992 67,149 70,421 33,136
1993 63,029 65,045 31,120
1994 59,923 62,456 28,587
------------------------------------------------------------
Source: GAO's analysis of SAMS data.
Table III.8
Geographic Distribution of Single-
Family Properties Acquired and Sold
During Fiscal Years 1992-94 (Figs. 2.3
and 2.5)
Properties
State acquired Properties sold
---------------------------------------- ------------------ ------------------
Alabama 2,389 2,610
Alaska 306 438
Arizona 11,881 12,965
Arkansas 2,434 2,628
California 17,652 12,732
Colorado 5,960 8,794
Connecticut 1,672 1,048
Delaware 136 122
District of Columbia 382 377
Florida 16,253 16,501
Georgia 8,076 8,547
Hawaii 30 15
Idaho 301 393
Illinois 6,210 6,600
Indiana 3,300 3,584
Iowa 682 739
Kansas 1,783 1,845
Kentucky 882 920
Louisiana 4,288 5,033
Maine 342 218
Maryland 3,308 2,999
Massachusetts 691 302
Michigan 5,969 6,095
Minnesota 6,571 6,691
Mississippi 2,378 2,685
Missouri 3,948 4,059
Montana 494 616
Nebraska 639 704
Nevada 1,582 1,485
New Hampshire 278 234
New Jersey 2,193 1,839
New Mexico 806 922
New York 4,602 4,130
North Carolina 3,582 3,696
North Dakota 665 823
Ohio 5,921 6,020
Oklahoma 5,907 6,988
Oregon 206 251
Pennsylvania 4,662 4,632
Puerto Rico 300 356
Rhode Island 240 186
South Carolina 2,496 3,493
South Dakota 205 281
Tennessee 6,759 7,355
Texas 29,521 32,561
Utah 1,559 1,935
Vermont 66 42
Virginia 7,561 7,700
Washington 598 702
West Virginia 211 231
Wisconsin 780 850
Wyoming 436 569
Missing\a 8 381
================================================================================
Total 190,101 197,922
--------------------------------------------------------------------------------
\a We could not identify the location of these properties.
Source: GAO's analysis of SAMS data.
Table III.9
Time in Inventory for Single-Family
Properties Sold During Fiscal Years
1992-94 (Fig. 3.1)
Number
of
properti
Months in inventory\a es
-------------------------------------------------- --------
Less than/equal to 1 56
Greater than 1, less than/equal to 2 8,294
Greater than 2, less than/equal to 3 30,989
Greater than 3, less than/equal to 4 39,751
Greater than 4, less than/equal to 5 28,501
Greater than 5, less than/equal to 6 20,963
Greater than 6, less than/equal to 7 16,536
Greater than 7, less than/equal to 8 12,313
Greater than 8, less than/equal to 9 9,135
Greater than 9, less than/equal to 10 6,609
Greater than 10, less than/equal to 11 5,151
Greater than 11, less than/equal to 12 4,374
Greater than 12, less than/equal to 18 8,990
Greater than 18, less than/equal to 24 2,312
Greater than 24, less than/equal to 30 1,028
Greater than 30, less than/equal to 36 750
Greater than 36 2,166
Missing\b 4
============================================================
Total 197,922
------------------------------------------------------------
\a Months 1 through 11 are set at 30 days each, and month 12 includes
the remaining days of the year. \b We could not identify the time in
inventory for these properties.
Source: GAO's analysis of SAMS data.
Table III.10
Time in Inventory for Single-Family
Properties That Remained Unsold as of
September 30, 1994 (Fig. 3.2)
Number Percent
Total of of
number properti properti
of es held es held
properti off off
Months in inventory\a es market\b market
-------------------------------------------------- -------- -------- --------
Less than/equal to 1 4,901 104 2.1
Greater than 1, less than/equal to 2 4,964 114 2.3
Greater than 2, less than/equal to 3 3,771 99 2.6
Greater than 3, less than/equal to 4 3,207 98 3.1
Greater than 4, less than/equal to 5 2,287 108 4.7
Greater than 5, less than/equal to 6 1,612 86 5.3
Greater than 6, less than/equal to 7 1,274 92 7.2
Greater than 7, less than/equal to 8 949 83 8.7
Greater than 8, less than/equal to 9 793 70 8.8
Greater than 9, less than/equal to 10 463 58 12.5
Greater than 10, less than/equal to 11 436 71 16.3
Greater than 11, less than/equal to 12 408 79 19.4
Greater than 12, less than/equal to 18 1,153 435 37.7
Greater than 18, less than/equal to 24 527 293 55.6
Greater than 24, less than/equal to 30 335 213 63.6
Greater than 30, less than/equal to 36 276 225 81.5
Greater than 36 1,231 876 71.2
================================================================================
Total 28,587 3,104 10.9
--------------------------------------------------------------------------------
\a Months 1 through 11 are set at 30 days each, and month 12 includes
the remaining days of the year.
\b HUD may hold properties off the market while carrying out certain
administrative processes and assisting programs for the homeless as
well as for other reasons.
Source: GAO's analysis of SAMS data.
Table III.11
Distribution of Median Losses as a
Percentage of Acquisition Cost, by Time
in Inventory, for Single-Family
Properties Sold During Fiscal Years
1992-94 (Fig. 3.3)
Median loss
as a percent
of
acquisition
Months in inventory\a cost\b
---------------------------------------------- ------------
Less than/equal to 1 32.0
Greater than 1, less than/equal to 2 33.8
Greater than 2, less than/equal to 3 33.4
Greater than 3, less than/equal to 4 34.2
Greater than 4, less than/equal to 5 35.9
Greater than 5, less than/equal to 6 37.7
Greater than 6, less than/equal to 7 39.9
Greater than 7, less than/equal to 8 42.4
Greater than 8, less than/equal to 9 44.6
Greater than 9, less than/equal to 10 47.1
Greater than 10, less than/equal to 11 49.4
Greater than 11, less than/equal to 12 51.9
Greater than 12, less than/equal to 18 56.8
Greater than 18, less than/equal to 24 65.2
Greater than 24, less than/equal to 30 66.0
Greater than 30, less than/equal to 36 59.6
Greater than 36 68.4
------------------------------------------------------------
\a Months 1 through 11 are set at 30 days each, and month 12 includes
the remaining days of the year.
\b Part of the higher losses for properties that were in inventory
for longer periods of time could be due to the effects of inflation.
We could not control for this because not all costs for individual
properties were incurred in the same year, and we could not identify
the year(s) in which the costs were incurred.
Source: GAO's analysis of SAMS data.
Table III.12
Distribution of Median Acquisition,
Holding, and Selling Costs and of Sales
Revenue, by Time in Inventory, for
Single-Family Properties Sold During
Fiscal Years 1992-94 (Fig. 3.4)
(Costs and revenues in 1994 dollars\a)
Median
Median sellin Median
Median holdin g sales
acquisitio g expens revenu
in inventory\b n cost cost\c e e\d
-------------------------------------------- ---------- ------ ------ ------
Less than/equal 5 to 1 51,116 1,351 1,872 29,847
Greater than 1, 5 less than/equal to 2 57,879 1,973 3,525 44,147
Greater than 2, 5 less than/equal to 3 58,747 1,932 3,875 46,097
Greater than 3, 6 less than/equal to 4 61,625 2,215 4,061 47,998
Greater than 4, 6 less than/equal to 5 62,613 2,489 4,195 47,698
Greater than 5, 6 less than/equal to 6 62,043 2,760 4,247 46,313
Greater than 6, 6 less than/equal to 7 61,974 2,986 4,219 45,172
Greater than 7, 6 less than/equal to 8 61,159 3,202 4,179 42,999
Greater than 8, 6 less than/equal to 9 60,880 3,435 4,118 41,998
Greater than 9, 6 less than/equal to 10 60,683 3,613 4,108 40,717
Greater than 6 10, less than/equal to 11 61,158 3,831 4,179 39,527
Greater than 6 11, less than/equal to 12 60,670 4,147 4,111 37,893
Greater than 6 12, less than/equal to 18 60,582 4,747 4,113 35,286
Greater than 5 18, less than/equal to 24 58,457 5,896 3,862 30,273
Greater than 6 24, less than/equal to 30 64,165 7,377 4,137 34,276
Greater than 6 30, less than/equal to 36 67,767 9,088 4,675 38,745
Greater than 6 36 63,736 11,457 3,971 33,473
--------------------------------------------------------------------------------
\a Inflator is based on the fiscal year that the property was sold,
not the date(s) the costs were incurred.
\b Months 1 through 11 are set at 30 days each, and month 12 includes
the remaining days of the year.
\c Holding costs are costs associated with taxes, maintenance and
operations, and repairs.
\d Sales revenue is calculated as the sum of profit (loss),
acquisition costs, holding costs, and selling expenses.
Source: GAO's analysis of SAMS data.
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IV
RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION, WASHINGTON,
D.C.
Robert S. Procaccini, Assistant Director
Mathew J. Scire, Senior Evaluator
Barbara A. Johnson, Senior Evaluator/Computer Specialist
Sara Ann W. Moessbauer, Senior Operations Research Analyst
Larry A. Goldsmith, Senior Evaluator
CHICAGO/DETROIT FIELD OFFICE
Susan E. Swearingen, Evaluator-in-Charge
Jimmie Gilbert, Senior Evaluator
John A. Wanska, Senior Evaluator
Frank Zbylski, Senior Operations Research Analyst