GAO Urges Pilot Authority for FHA

The Federal Housing Administration should be able to use pilot programs to test new single-family loan products or to modify existing loan products, according to a Government Accountability Office report."We believe that HUD needs to further consider piloting or limiting volume of new or changed products because ... it is a practice followed by others in the mortgage industry and could assist HUD in mitigating the risks and costs associated with new or changed products," the GAO report says. Department of Housing and Urban Development officials contend that they don't have the authority or the resources to conduct pilot programs. However, GAO auditors maintain that the FHA would benefit from using a pilot program in developing a zero-downpayment loan program. HUD is seeking congressional authority to start a zero-down program.

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