Although there is no evidence the programs have met their objectives, the Department of Housing and Urban Development's Officer Next Door and Teacher Next Door property disposition initiatives are "on target" to restart with new controls in place as scheduled on Aug. 1st.

The programs were suspended for 120 days on April 1st after an audit by the agency's inspector general estimated that as many as one in four of the 3,824 participants had broken the rules.

A final report issued last week found an "abuse rate" of 21 percent based on 108 randomly selected properties sold under the programs in four cities Miami, Memphis, Springfield, Mass., and Manassas, Va.

The report also noted that HUD "has little assurance" the cops and educators who were able to buy houses at 50 percent off their list prices "are contributing to the program goals by acting as positive role models in distressed communities."

But in a letter to Acting Inspector General James Heist, Federal Housing Commissioner John Weicher has promised to "seek additional information" to better evaluate the overall program," and to analyze "how well actual outcomes meet program objectives."

Weicher also vowed to review all sales to date using new control procedures in an effort to detect additional instances of non-compliance or fraud. HUD has "no tolerance for fraud or program abuse," he said.

The Officer Next Door program was started in August 1997, and was expanded to include teachers in November 1999. The purpose is to strengthen declining neighborhoods and make them safer by offering ownership opportunities in documented revitalization areas to law enforcement offices and teachers.

In exchange for half off the market price of government-owned houses that have been taken back from previous owners who could not make their mortgage payments, the cops and educators agreed to live in the houses as their sole residence for three years from the date of closing.

Discounts for the 3,824 homes sold to date total about $158 million. But auditors estimate that the 23 buyers it found who violated the occupancy requirement or were otherwise ineligible received $734,800 in discounts they did not earn.

In some cases, the violators rented or sold the home to someone else. In other cases, they did not occupy the house as promised, or owned another residence. And sometimes, the houses were outside of revitalization areas and, therefore, improperly discounted to the tune of $1.2 million.

The rate of violations ranged from a high of 24 percent in Miami to 18 percent in Springfield.

No teachers are currently under investigation, HUD officials stressed. But investigations are either active or pending into possible violations by 47 police officers. Six policemen have already been convicted for breaking the rules and two have been indicted.

By the time the programs are re-opened, Weicher said new procedures will be place to investigate evidence of non-compliance from HUD's National Service Center in Oklahoma. The agency also plans to be sure appropriate documentation is included in loan files, and institute new mapping software to ensure sold properties are within proscribed revitalization areas.

"It is clear from (these) actions...that the Department is committed to operating programs such as the Teacher Next Door and Office Next Door under strong controls," Weicher said.

For more articles by Lew Sichelman, please press here.

Published: July 16, 2001

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