by U. S. Government Accountability Office ( (Created by), U. S. Government Accountability Office ( (Created by)
GAO reviewed the underwriting activities used by the Veterans Administration (VA) and the Department of Housing and Urban Development (HUD) to grant and insure mortgage loans. A large portion of the processing costs incurred by VA and HUD in insuring loans involves underwriting. VA and HUD rely mostly on their own staffs for underwriting rather than on lenders. By relying more on approved lenders, when practical, to perform the required underwriting activities, VA and HUD could save several million dollars annually and improve service to their borrowers without increasing their insurance risk. Approximately 40 percent of insured loans could be processed under delegated authority procedures. GAO believes that the agencies' control systems over lender underwriting activities, if properly adhered to, are adequate to minimize the risk of relying on approved lenders to perform the entire underwriting function. By having the agencies select the appraisers and make a field review of a sample of appraisals, protection would be provided against overvaluation of property.