We conducted an evaluation of HUD’s management of its real estate-owned (REO) properties.  The objective of our review was to determine whether HUD and its contractors had adequate controls to ensure that HUD REO properties were properly secured and maintained.

We found that the field service managers did not always correctly report vandalism in the HUD REO data system, known as P260, and did not always report each vandalism occurrence to local police departments.  As a result, it was difficult to use the P260 system to identify where vandalism of HUD-owned properties occurred, how frequently it occurred in local areas, or the cost to HUD.  In addition, the field service managers did not always inspect REO properties at least once every 14 days as required and did not completely document inspections that were performed.

OIG recommended that the Office of Single Family Housing require that field service managers complete the data screen provided in the REO data system for all instances of vandalism or theft and report all such instances to local police departments, whether or not police officers were available to inspect the vandalized properties.  We also recommended that the Office of Single Family Housing reemphasize to field service managers that they must conduct routine inspections of REO properties at least once every 14 days.