Summary

GAO examined the current status of actions taken by the Department of Housing and Urban Development (HUD) on recommendations GAO made to the agency in a previous report. In this report, GAO estimated that $150 million of a total $200 million in grants was directly granted to property owners to cover their rehabilitation costs in fiscal year 1980. By combining grant assistance to homeowners for housing rehabilitation with other funds, or by using loans to replace grants wherever feasible, GAO said that HUD should be able to more efficiently and effectively use millions of dollars annually in its Community Development Block Grant (CDBG) Program. HUD agreed with GAO that direct grants for housing rehabilitation were costly and sometimes inappropriate, but disagreed with the recommendation that CDBG regulations be amended to prohibit the use of grants unless grants are combined with other resources. Instead HUD believes that, through concerted technical assistance, its efforts to encourage communities to use more cost-effective financing techniques can achieve the desired results.

GAO believes that the HUD technical assistance effort should help in assisting communities to adopt more effective and efficient rehabilitation financing techniques; however, HUD lacks sufficient data to determine how successful its efforts have been and whether additional steps are needed. If HUD intends to rely on its technical assistance efforts, then it needs to develop performance standards and compare them with reliable management data to enable HUD to measure overall progress in meeting its objectives. GAO also found in its followup work that: (1) existing management data were inaccurate, thus preventing HUD from effectively monitoring recent changes to restrict the use of certain funds for refinancing home mortgages; and (2) the improved use of available data systems, and the establishment of performance standards, could improve monitoring of and technical assistance to local communities in meeting objectives of giving loan priority to certain persons.