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HUD Archives: News Releases
HUD TERMINATES PROPERTY MANAGEMENT CONTRACT WITH INTOWN MANAGEMENT GROUP
WASHINGTON - Housing and Urban Development Secretary Andrew Cuomo today announced HUD has terminated a management contract with InTown Management Group because the company did a poor job managing and marketing about 25,000 homes that HUD acquired through foreclosure.
The terminated contracts cover properties in Alabama, Delaware, the District of Columbia, Georgia, Idaho, Illinois, Indiana, Kentucky, Maryland, Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Virginia, Washington State and West Virginia.
"HUD sets tough standards for its contractors as part of our effort to wipe out waste, fraud and abuse involving our funds," Cuomo said. "When contractors fail to meet our standards, we replace them."
InTown - based in Atlanta, GA - was one of seven contractors that received Management and Marketing (M&M) contracts from HUD in April to maintain and sell homes that the Federal Housing Administration owns as a result of foreclosures. FHA, which is part of HUD, insures home mortgages. When a homeowner defaults on an FHA-insured mortgages, FHA takes possession of the home and works to sell it to another homebuyer.
The M&M program allows FHA to manage its inventory of single-family homes in accordance with the best private sector practices, to streamline the disposition process, and to reduce the time and cost of selling properties, ultimately generating significant savings.
HUD's other M&M contractors, excluding InTown, are performing well. Cumulatively, the six other contractors, who manage about half of HUD's inventory of foreclosed homes, have sold nearly 15,000 homes and put about another 12,500 homes under sales contract since April. In the last 30 days alone, these contractors have sold over 5,000 homes - nearly the same number of sales HUD averaged per month for the entire country before the M&M program began.
InTown, which was responsible for the other half of HUD's inventory of foreclosed homes, sold only 2,261 homes since April.
HUD terminated all six of InTown's contracts because the company failed to effectively market and sell homes and failed to maintain homes in good condition. As a result, instead of enabling FHA to sell foreclosed homes more quickly, InTown slowed down the process of selling the homes and contributed to neighborhood deterioration as vacant homes went unsold.
HUD is considering the possibility of further action against InTown officials.
After a one-week transition period, new private contractors will assume all FHA Real Estate Owned (REO) management and marketing responsibilities formerly performed by InTown starting on Wednesday, September 29. During the transition period, FHA temporarily will not list properties for sale or accept bids on outstanding listings for the areas formerly covered by InTown. However, all scheduled closings will proceed to the greatest extent possible.
On September 29, FHA will resume complete REO property sales operations, including listing properties for sale and accepting bids. Furthermore, all outstanding sales contracts will be honored by FHA, and all previously submitted bids for listed properties will be reviewed, pursuant to FHA guidelines.
Content Archived: January 20, 2009
Content Archived: January 20, 2009