Sales of the 

Federal Emergency Management Agency 

Travel Trailers and Mobile Homes 

 

DEPARTMENT OF HOMELAND SECURITY 

Office of Inspector General 

 OIG-07-41 May 2007 
Office of Inspector General 

U.S. Department of Homeland Security

Washington, DC 20528

 May 2, 2007 

MEMORANDUM FOR: R. David Paulison 

 Administrator 

 Federal Emergency Management Agency 

FROM: Richard L. Skinner 

 Inspector General 

SUBJECT: Sales of FEMA Travel Trailers and Mobile Homes 

 OIG-07-41 

The purpose of this memorandum is to advise you of the results of our review of FEMA travel trailer 

and mobile home sales that took place in 2005 and 2006 in Alabama, Florida, Mississippi, and 

Texas. Our objectives were to determine whether the sales were at fair and equitable prices, 

provided the best return for the government, and complied with applicable regulations. We 

interviewed responsible FEMA officials and reviewed pertinent documents, including a selected 

sample of sales at: FEMA Headquarters; the Long Term Recovery Office (LTRO) in Orlando, 

Florida; and the Transitional Recovery Offices (TRO) in Montgomery, Alabama; Biloxi, 

Mississippi; and Austin, Texas. 

Results of Review

FEMA needs a consistent and equitable sales policy for travel trailers and mobile homes. FEMA has 

sold travel trailers and mobile homes for as little as $1.00 and as much as $20,000. Pricing has not 

resulted in the best return for the government and has been inequitable to buyers. Because FEMA 

field offices were using inconsistent pricing practices, FEMA officials in October 2006, directed that 

sales be placed on hold pending development of a national sales policy. FEMA needs to expedite 

the development of that policy. This report identifies some of the issues the policy must address. 

Background

Section 408 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), 

as amended, authorizes FEMA to provide direct temporary disaster housing assistance to eligible 

applicants in a Presidentially declared disaster. These units include mobile homes, travel trailers, 

and other forms of pre-fabricated housing. The Stafford Act and 44CFR 206.118 authorizes FEMA 

to sell the units at “fair and equitable prices” to occupants, provided the occupant: 

• Lacks permanent housing; 

• Agrees to obtain and maintain hazard insurance; and 

• Agrees to obtain flood insurance if the unit will be located in a Special Flood Hazard Area. 
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In addition, FEMA Directive “Direct Housing Sales and Applicant Information Guide” requires that 

the sales price be based on the original acquisition cost of the unit less an appropriate depreciation 

for age and use. Further price reductions are authorized if an applicant is unable to pay the 

established price. 

Although FEMA headquarters directed that the sale of travel trailers and mobile homes be placed on 

hold in October 2006, an exception was made for the Orlando LTRO, which continued selling units. 

The Biloxi TRO stopped accepting new purchase applications, but continued to process the 

applications it had received, and the Montgomery TRO placed all sales on hold. At the time of our 

field visits in late 2006, the Orlando LTRO had sold 288 units, the Montgomery TRO had sold 52 

units, the Biloxi TRO had sold 6 units, and the Austin TRO had not sold any. 

Pricing the Housing Units

The three field offices used different methods to determine sales prices. The methods were not 

consistent with FEMA policy, were inequitable in some cases, and did not always result in a fair 

return in the government’s investment. 

 

Rather than using the acquisition cost of a unit as the base price, as required by the FEMA directive, 

the Orlando LTRO calculated the average cost of each type of unit for each year of purchase and 

used that as the base price. This averaging method was inequitable in some cases because the 

features of the units varied considerably. A unit with more features costs more than a unit with 

fewer features and should logically be priced higher. Basing the price on an average cost, rather 

than on the actual cost, results in some purchasers getting more for their money and some getting 

less. 

In the next step of the pricing process, Orlando LTRO officials deducted a depreciation allowance 

from the base price. They based the amount of depreciation on the amount of time that the unit had 

been in service: 

• Unused units were depreciated 10 percent. 

• Units leased up to 6 months were depreciated 20 percent. 

• Units leased from 6 to 12 months were depreciated 30 percent. 

• Units leased from 12 to 18 months were depreciated 40 percent. 

• Units leased from 18 to 24 months were depreciated 50 percent. 

The other FEMA offices used different systems for determining sales prices. The Biloxi TRO 

deducted 30 to 40 percent from the acquisition cost of each unit for depreciation if a unit was sold 

within 18 months, depending on the number of months that the unit was occupied. Once 18 months 

had passed, they deducted 50 percent for depreciation. The Montgomery TRO, which sold only 

travel trailers, priced all units at $6,000 and did not deduct for depreciation. 

Orlando LTRO Further Reduced Prices and Sold New Units at Used Unit Prices

Under FEMA policy, price reductions are permitted for applicants who are unable to pay the full 

sales price. Reductions are authorized only when an applicant applies in writing and provides 

documented proof that two loan companies have turned down their loan application for purchase of 
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the unit. The Orlando LTRO made such price reductions in a number of cases, but could not support 

these reductions as required under the criteria. Some files did contain loan denials to support the 

applicant’s inability to pay, but some of the denials were from loan institutions that do not provide 

loans for mobile homes and travel trailers. 

Orlando LTRO officials said that they also reduced prices by amounts that FEMA paid to haul, 

install, and repair the trailers and mobile homes. While reducing the sales price by expenses the 

applicants paid would have made sense, we question the logic in reducing the sales price by 

expenses that FEMA paid. 

FEMA policies require that travel trailers and mobile homes be sold to current occupants “as is, 

where is.” However, Orlando LTRO officials allowed some occupants of older units to purchase 

new units at a depreciated price based on the age and use of their old unit. In addition, FEMA either 

paid the cost of transporting and installing the new units, or reduced the price of the unit by that 

amount if the occupant paid. These practices not only reduced the sales income to the government, 

but they were inequitable to those purchasers who were not provided the same opportunity. 

Conclusions

Because FEMA has not enforced a nation-wide policy on sales of travel trailers and mobile homes, 

FEMA officials at several sites have developed their own ad hoc policies and procedures. Under 

these locally developed policies, some purchasers receive better treatment and prices than do other 

purchasers, and the government is deprived of a fair return on the sales of these units. It is possible 

that FEMA sales of travel trailers and mobile homes could dramatically increase in the coming 

months. FEMA officials need to issue and enforce appropriate policies and procedures concerning 

such sales. 

Recommendations

 

We recommend that the Administrator, Federal Emergency Management Agency, issue and enforce 

a nation–wide policy on sales of travel trailers and mobile homes that ensures fair prices and 

addresses the inequities identified in this report. 

We conducted this review under the authority of the Inspector General Act of 1978, as amended, and 

according to Quality Standards for Inspections issued by the President’s Council on Integrity and 

Efficiency. 

Please advise us within 30 days of the actions taken to implement our recommendations. Should 

you have any questions, please call me, or your staff may contact Matt Jadacki, Deputy Inspector 

General for Disaster Assistance Oversight, at (202) 254-4100. 

cc: DHS Audit Liaison 

 FEMA Audit Liaison 
Additional Information and Copies 

To obtain additional copies of this report, call the Office of Inspector General 

(OIG) at (202) 254-4100, fax your request to (202) 254-4285, or visit the OIG 

web site at www.dhs.gov/oig.

OIG Hotline 

To report alleged fraud, waste, abuse or mismanagement, or any other kind 

of criminal or noncriminal misconduct relative to department programs or 

operations, call the OIG Hotline at 1-800-323-8603; write to DHS Office of 

Inspector General/MAIL STOP 2600, Attention: Office of Investigations – 

Hotline, 245 Murray Drive, SW, Building 410, Washington, DC 20528; fax 

the complaint to (202) 254-4292; or email DHSOIGHOTLINE@dhs.gov. The 

OIG seeks to protect the identity of each writer and caller.