HUD No. 03-113
October 27, 2003
REVISED ASSET CONTROL AREA PROGRAM AWARDS FIRST CONTRACT
Changes Improve HUD Oversight, Improves Participant Accountability
WASHINGTON - The nation's housing commissioner said today a recently signed contract between the Federal Housing Administration and Enterprise Home Ownership Partners, Inc., a California non-profit that agreed to buy and rehab up to 600 HUD-held single family properties in Los Angeles, signals that the FHA's revamped Asset Control Area program is "back in business."
The program, administered by the Department of Housing and Urban Development, sells to local governments and non-profits deeply discounted HUD-owned properties obtained through foreclosure in designated revitalization areas. The properties are then rehabilitated and resold to low-to-moderate income families. To date, nearly 750 homes have been bought, fixed and sold by program participants.
"The restoration of this program helps us in our on-going efforts to keep opening the doors of homeownership for low-to-moderate income families," said HUD Assistant Secretary for Housing/Federal Housing Commissioner John Weicher. "The stronger management controls we have implemented will ensure accountability by program participants and will produce more homes for some of the nation's neediest communities."
In April, 2002 HUD suspended the two-year old trial program following an audit by the Department's Inspector General Office, which found poor management controls resulting in violations in several of the program's 16 participating cities. For instance, some ACA operations had been turned over to for-profit developers, some homes were sold at prices higher than permitted in the program, and other homes were sold without rehabilitation. The report recommended instituting tighter controls.
Following the audit, an internal HUD task force was convened. The task force revamped the program by:
- Expanding the qualification process by requiring participants to resell properties to income-eligible buyers within 18 months of acquisition
- Requiring participants to execute on each property a compliance note/mortgage for a property's discount amount to ensure compliance with ACA requirements
- Requiring participants to have an annual HUD compliance review/audit performed by a third party
- Requiring participants financial statements to be audited annually by a certified public accountant pursuant to the Single Audit Act.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet.