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The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited HUD’s single-family note sales program.  This is the third in a series of audits on the note sales program.  The first audit, 2017-KC-0006, reported that HUD did not conduct rulemaking or develop formal procedures for its single-family note sales program.  The second audit, 2017-KC-0010, reported that HUD generally ensured that purchasers followed the requirements outlined in the conveyance, assumption, and assignment contracts (purchase agreements), but the requirements in the purchase agreements needed improvement.  We conducted this third audit to determine the loss rates for notes sold in HUD’s Distressed Asset Sales Program (DASP) and compare them to the loss rates for notes processed through the traditional conveyance claim process. 

HUD generally had a lower loss rate than that of its comparable conveyance process.  The DASP loss rate was more than 3 percentage points lower than the loss rate of similar conveyance notes identified during our analysis.  This calculation took into account the loss rate for actual DASP sales during the same period as the similar real-estate-owned conveyance claims.  Ultimately the DASP program generally saved the insurance fund more money than its comparable conveyance process. 

The report does not contain recommendations.