
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, December 25, 1993                   TAG: 9312250028
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-3   EDITION: HOLIDAY 
SOURCE: The Washington Post
DATELINE: WASHINGTON                                LENGTH: Medium

REPORT: HUD LOST $200 MILLION

Real-estate speculators, mortgage-company officials, multifamily property owners and others misused or stole more than $200 million from the Housing and Urban Development Department during the year that ended Sept. 30, according to a report from HUD's inspector general.

The report said that amid the HUD staffing shortages and mismanagement that have resulted in previously reported huge losses in major programs, many smaller crimes have been committed and misapplications of funds discovered that add up to heavy losses.

The inspector general's office, which reports twice annually on the department's operations, said 375 people were convicted of fraud, theft and other crimes involving the department's mortgage insurance, rental assistance, public housing and other programs in the year that ended in September.

Government investigators recovered $88.7 million of the losses from various programs during the 1993 fiscal year and expect eventually to get back another $121 million, according to the recent report.

The inspector general's office said it did not know the overall extent of the losses, including money that cannot be recovered.

Investigators focus much of their attention on cases of individuals and companies using fraud to get government assistance, most often perpetrated by "real-estate investors, speculators and brokers" in programs that help Americans buy homes, the report said.

The Federal Housing Administration's mortgage insurance programs, which help families buy homes, continue to be favorite targets of criminals and account for the majority of HUD's problems.

Overall, the highest number of convictions were reported in the FHA's single-family loan insurance program aimed at first-time home buyers "and others who might not qualify for conventional mortgage loans," the report said.

In a long-running investigation, HUD's Long Island Mortgage Fraud Task Force has uncovered about $18 million in fraudulent mortgages since it was launched nearly three years ago, according to the inspector general.

The inspector general also reported that 10 people in Atlanta have been indicted for lying about the purchase price of homes and pocketing much of the money loaned to them from federal insurance programs.

Those indicted included a mortgage company branch manager, a real-estate speculator and an accountant. In the scheme, the individuals got $1.2 million in mortgages by lying in documents used to qualify the borrowers.

by CNB