The U.S. Department of Housing and Urban Development has reported that nearly $3 billion of the more than $1.6 billion in loan guarantees issued to homebuyers have been in bad shape.
The UHU report is due to be released Monday and was prepared by the department’s Office of Inspector General.
“There are many loan guarantees that are not in good shape, not in compliance with the terms of the guarantee or other applicable requirements,” said John J. Glynn, acting inspector general.
“We are aware of some cases where the loan was repaid but it was a result of fraud or misrepresentation.”
The department said in a release that some of the funds were used for payments to the homeowner but not for repairs or renovations.
Glynns report said that a total of $2.1 billion of loan guarantees have been canceled or withdrawn and $1 billion remain in bad condition.
“The $2 billion of loans that are in the process of being canceled or withdrawing have been used to repay loan principal and interest for individuals, families and small businesses who were undersubscribed in the housing market prior to the housing crash,” the report said.
A spokesperson for the department said the department is continuing to work with federal agencies and local governments to address the issues identified in the report.
The Department of Education said it is also reviewing the report to determine how best to assist students and families.
“DHS is reviewing the findings of this inspector general’s report, which includes recommendations to ensure that our programs are effective and that taxpayer dollars are appropriately spent, said Jennifer Williams, a spokeswoman for the Education Department.
The report was released the same day that the House voted to approve a $1-billion federal stimulus package to help with housing affordability.