TITLE

Credit Reform: HUD's Fiscal Year 2000 Credit Subsidy Budget Estimates Were Reasonable, But Could Have Been Improved: AIMD-00-60R

AUTHOR(S)
Calbom, Linda M.
PUB. DATE
January 2000
SOURCE
GAO Reports;1/14/2000, p1
SOURCE TYPE
Government Document
DOC. TYPE
Article
ABSTRACT
GAO provided information on the Federal Housing Administration's credit subsidy budget estimates used to formulate the President's fiscal year (FY) 2000 budget to determine whether: (1) these estimates were reasonable; and (2) any changes need to be made to the credit subsidy estimation process to ensure that future budget estimates are reasonable. GAO noted that: (1) the estimates of loan program costs included in the FY 2000 President's budget for the Section 221(d)(4) of the National Housing Act and the Mutual Mortgage Insurance (MMI) Fund loan guarantee programs were reasonable, given the nature of the estimates; (2) however, the process used to calculate these estimates could be improved, which would also have improved the quality of the estimate; (3) for example, the financial statement audit work related to the Section 221(d)(4) program, which was available after the submission of the FY 2000 budget estimate to the Office of Management and Budget, identified better sources of data that would have reduced the estimated program cost by nearly $12 million or 9 percent of the original cost over the life of the loans made during FY 2000 and estimated to be outstanding for up to 40 years; (4) further, the MMI Fund budget estimate was prepared with a cash flow model containing several formula errors; (5) although some of these errors were identified and corrected during the 1998 audit prior to the budget submission, a lack of coordination between the budget and financial statement audit processes and the lack of a detailed supervisory review allowed these errors to remain in the budget model; and (6) if all the identified errors had been corrected in the budget model, the estimated net receipts of MMI Fund would have increased by $96 million, or 4 percent of the original net receipts amount over the life of the loans made during FY 2000 and estimated to be outstanding for up to 30 years.
ACCESSION #
18207492

 

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