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GAO Report Suggests Need for Scrutinizing Housing Nonprofits

Nonprofits often perform necessary and worthwhile functions, and many have established productive working relationships with NAHB members. But a recent report by the U.S. General Accounting Office (GAO) analyzing HUDís Discount Sales Program demonstrates why NAHB members should not simply assume that the behavior of nonprofits is above reproach and that they do not need to be scrutinized the same way as any other link in the chain of affordable housing providers.

The Discount Sales Program gives approved nonprofit organizations a discount when they buy single-family homes from HUD, under the condition that the nonprofits rehab the properties and sell them to low- or moderate-income buyers at a restricted price.

The program has been difficult to monitor, largely because few nonprofits submit required reports to HUD on time and with complete information.

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Nonetheless, of the 44 nonprofits that did submit the latest round of reports on time, HUD was able to determine that 28 had violated program requirements by overcharging buyers.

GAO estimates that 76% of buyers under the program would have spent less had they bought the homes directly from HUD and paid for the rehab work themselves.

To read the report, click here.

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