We evaluated the efforts of HUD’s Financial Operations Center (FOC) in managing Federal Housing Administration (FHA) debts due HUD as a result of single-family indemnification agreements and civil money penalties (CMP).  We wanted to know whether FOC debt servicing and collections complied with applicable Federal laws and regulations.  We also wanted to determine the status and assess the collectability of the September 30, 2008, indemnification debt balance of more than $45.9 million.

FOC staff complied with the Federal statutory and regulatory guidelines covering the collection of indemnification and CMP debt.  The FOC serviced debt in a timely manner, and debt management decisions were reasonable and prudent.  FOC collection rates compared favorably with rates of the U.S. Department of Veterans Affairs and private collection agencies.

Regarding the indemnification debt balance of $45.9 million, much of it is seriously delinquent, old and the likelihood of collection is doubtful.  As of September 30, 2009, the debt balance stood at almost $40.9 million.