The recent Office of Inspector General audit of the U.S. Department of Housing and Urban Development reveals an uneven application of compensation to property preservationists.
Despite promise of the third generation of the Management & Marketing to “streamline HUD’s operations, capitalize on the expertise of its potential vendors, and provide flexibility to meet changing market conditions in the REO industry,” the program often fails to properly compensate the handlers of these properties.
However, the OIG finds several examples of field servicers being overpaid — but in more cases underpaid — in regards to bids on real estate properties.
“HUD did not always pay field service managers in accordance with their contractors, resulting in an estimated net underpayment of $553,784,” the report states, citing five inadequate procedures taking place across HUD offices.
The OIG is recommending the Deputy Assistant Secretary for Single Family Housing develops better oversight of M&M III and either reimburse, or request repayment for wrongfully compensated field servicers.
In the first two years of M&M III, HUD acquired 198,318 and sold 201,585 properties for an average of 86% of the appraised value. In that time, the OIG found in the limited contracts reviewed that HUD overpaid six field service mangers nearly half a million dollars in contract work.
However, it underpaid 15 field servicers nearly one million dollars in contract work. In one instance, a field service manger was underpaid by $60,148, according to the OIG audit.
