RURAL HOUSING 

SERVICE

Better Data Controls, 

Planning, and 

Additional Options 

Could Help Preserve 

Affordable Rental 

Units

Report to the Subcommittee on 

Agriculture, Rural Development, Food 

and Drug Administration, and Related 

Agencies, Committee on Appropriations, 

U.S. Senate

May 2018

GAO-18-285

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-18-285, a report to the 

Subcommittee on Agriculture, Rural

Development, Food and Drug

Administration, and Related Agencies,

Committee on Appropriations, U.S. Senate.

May 2018

RURAL HOUSING SERVICE

Better Data Controls, Planning, and Additional 

Options Could Help Preserve Affordable Rental Units

What GAO Found

The U.S. Department of Agriculture’s Rural Housing Service (RHS) implemented 

an automated tool to estimate when properties could exit the rural rental housing 

program, but RHS lacked sufficient controls to ensure the accuracy,

completeness, and timeliness of those estimates. In 2016, RHS developed its 

Multi-Family Housing Property Preservation Tool to replace a manual process of 

estimating exit dates. RHS data suggest that a smaller number of properties 

could exit RHS’s program in the near term, but between 2028 and 2050, over 90 

percent of RHS’s properties and units could exit the program (about 13,000 

properties with 407,000 units). However, RHS lacked controls that would better 

ensure the accuracy and completeness of these estimated exit dates, such as 

the verification of key data input at mortgage origination. In addition, RHS had 

not established a regular process to update the preservation tool’s underlying 

data due to staff turnover and data system challenges. Without these controls, 

RHS may lack assurance that is has reliable data for calculating exit dates and 

initiating preservation efforts.

While RHS has taken actions to address properties with maturing mortgages, 

such as offering property owners options designed to prevent property exits, 

about 60 percent of properties with maturing mortgages exited the program 

between 2014 through 2017. The agency’s planning efforts lacked key steps 

such as (1) establishing preservation goals, (2) developing metrics for evaluating 

preservation efforts, and (3) analyzing and responding to risks facing its portfolio 

such as resource limits and growing capital rehabilitation needs. Without taking 

these actions, RHS is not well positioned to preserve affordable housing in the 

near term or when much larger numbers of properties and units could exit the 

program starting in 2028. Although taking the steps above would help RHS’s 

preservation efforts, some tenants may still be at risk of losing rental assistance 

when mortgages mature. Accordingly, allowing RHS to renew rental assistance 

after mortgage maturity could protect assisted low-income tenants from 

increased rents or displacement from their units. When the Department of 

Housing and Urban Development (HUD) faced a similar loss of affordable 

housing subsidies, Congress authorized the department in 2011 to continue 

providing rental assistance at properties after contracts expired.

Estimated Number of Rural Housing Service Properties, by State and Territory

View GAO-18-285. For more information, 

contact Daniel Garcia-Diaz at (202) 512-8678

or GarciaDiazD@gao.gov.

Why GAO Did This Study

Under its rural housing program, 

RHS provides mortgages and rental 

assistance to support affordable 

rental units for low-income tenants

(see figure). When these mortgages 

reach the end of their terms 

(mature), property owners may exit 

the program; current law does not 

allow RHS to continue providing 

rental assistance when such exiting 

occurs. As a result, tenants in 

properties with mortgages that are 

maturing may face rent increases or

lose their housing altogether.

GAO was asked to examine how 

RHS is addressing the risks posed 

by maturing mortgages. This report 

examines RHS’s efforts to (1) 

estimate rural housing property exit 

dates and (2) preserve the 

affordability of rural rental properties 

with maturing mortgages. GAO

reviewed RHS mortgage loan data 

and preservation documents, and 

interviewed RHS officials and 

industry stakeholders. 

What GAO Recommends

Congress should consider granting 

RHS authority to continue providing 

rental assistance to tenants in 

properties with maturing mortgages. 

GAO is also making five

recommendations, including that 

RHS improve data quality and take 

steps to comprehensively plan for 

preserving properties with maturing 

mortgages. We provided a draft of this 

report for review and comment to RHS

and HUD. RHS agreed with all five of 

GAO’s recommendations.
Page i GAO-18-285 Rural Housing Service 

Letter 1

Background 3

RHS Developed a Tool That Estimates That Large Numbers of 

Mortgages Will Mature Starting in 2028, and Better Controls 

Could Improve Data Accuracy 7

RHS Has Taken Steps to Address Properties with Maturing 

Mortgages, but Lacked Comprehensive Planning and Faces 

Statutory Constraints That Limit Preservation 15

Conclusions 25

Matter for Congressional Consideration 26

Recommendations for Executive Action 26

Agency Comments 27

Appendix I Objectives, Scope, and Methodology 29

Appendix II Number of Properties and Units That Could Exit the Rural Housing 

Service’s Program Between 2017 and 2050 33

Appendix III GAO Contact and Staff Acknowledgments 35

Table

Table 1: Rural Housing Service Rental Properties That Exited the 

Program between 2014 and 2017 19

Figures

Figure 1: Estimated Number of Rural Housing Service Rental 

Properties, Total Units, and Units with Rental Assistance, 

by State 6

Figure 2: Estimated Number of Rural Housing Service Rental 

Properties and Units That Could Exit RHS’s Program 

between 2017 and 2050, by Year 9

Figure 3: Estimated Number of Rural Housing Service Rental 

Properties with Mortgages Eligible for Prepayment 

between 2017 and 2050, by State 11

Contents
Page ii GAO-18-285 Rural Housing Service

Figure 4: Overview of Rural Housing Service’s Options to 

Preserve the Access to and Affordability of Properties for 

Low-Income Tenants 18

Abbreviations

AMAS Automated Multi-Family Housing Accounting

System

HUD U.S. Department of Housing and Urban

Development 

MFIS Multi-Family Information System

Preservation Tool Multi-Family Housing Property Preservation Tool

RAD Rental Assistance Demonstration 

RHS Rural Housing Service

USDA U.S. Department of Agriculture

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

copyrighted images or other material, permission from the copyright holder may be 

necessary if you wish to reproduce this material separately.
Page 1 GAO-18-285 Rural Housing Service

441 G St. N.W.

Washington, DC 20548

May 17, 2018

The Honorable John Hoeven

Chairman

The Honorable Jeff Merkley

Ranking Member

Subcommittee on Agriculture, Rural

Development, Food and Drug

 Administration, and Related Agencies

Committee on Appropriations

United States Senate

The U.S. Department of Agriculture’s (USDA) rural rental housing 

program was created in the 1960s and 1970s to help provide funding for 

the development of affordable multifamily rental properties.1 Through the 

department’s Rural Housing Service (RHS), USDA has provided 

mortgage loans (mortgages), interest subsidies, and rental assistance for 

more than 14,000 properties with 400,000 units of affordable rental 

housing for low- and very-low income rural tenants, including vulnerable 

residents such as the elderly and people with disabilities.

Some of RHS’s oldest rural rental mortgages have begun to mature—that 

is, reach the end of their repayment schedules, at which point they could 

exit the affordable housing program. Property owners whose RHS 

mortgages have matured are no longer required to provide housing to 

low-income tenants and no longer receive RHS rental assistance, which 

covers the difference between the tenant’s contribution and the unit’s 

rent. As a result, tenants in properties whose mortgages have matured 

may no longer be able to afford their rents. RHS has therefore identified 

 1

USDA’s rural rental housing program consists of its Section 514 Farm Labor Direct Loans 

program (including both off-farm and on-farm farm labor housing), Section 515 MultiFamily Housing Direct Loans program, and Section 521 Rental Assistance Program. The 

Housing Act of 1961 added Section 514 to the Housing Act of 1949 (42 U.S.C. §1484). 

For off-farm labor housing, a Section 514 loan can be combined with a grant authorized 

under Section 516 of the Housing Act of 1949 (42 U.S.C. §1486). The Senior Citizens 

Housing Act of 1962 amended the Housing Act of 1949 by adding Section 515 (42 U.S.C. 

§1485). In 1974, Section 521 of the Housing Act of 1949 was amended to authorize rental 

assistance (42 U.S.C. § 1490a). 

Letter
Page 2 GAO-18-285 Rural Housing Service

ways to preserve affordable housing for tenants in properties with 

maturing mortgages.2

You asked us to examine what information RHS has on rural rental 

housing maturing mortgages and the extent to which RHS has tools and 

strategies to preserve those properties. This report examines RHS’s 

efforts to (1) estimate the dates that properties may exit the rural rental 

housing program due to mortgage maturity and (2) preserve the 

affordability of rural rental properties with maturing mortgages.

To examine RHS’s efforts to estimate property exit dates, we analyzed 

RHS documentation and interviewed RHS officials about the data the 

agency uses to identify and preserve properties with maturing mortgages. 

To assess the accuracy and completeness of data used to determine 

property exit dates, we reviewed and analyzed two different types of data. 

First, we analyzed a stratified random sample of RHS mortgage loan 

documents in five selected states—California, Illinois, Minnesota, 

Pennsylvania, and Virginia. We selected these states based on their 

geographic diversity and number of rural rental properties, and because 

they had a high number of mortgages nearing maturity. Second, we 

reviewed and assessed the underlying data the agency uses to estimate 

property exit dates. To assess the reliability of these data, we reviewed 

RHS documentation, tested the data for missing or erroneous values, and 

interviewed RHS officials. As discussed later in this report, we identified a 

selected number of errors in the data for the sample of RHS mortgage 

documents and underlying data that we reviewed. However, we 

determined the data we used were sufficiently reliable for purposes of 

estimating the number of properties, units, and units with rental 

assistance that could exit the rural rental housing program between 2017 

and 2050, and for properties that are eligible to prepay their mortgages.

To examine steps RHS has taken to preserve properties with maturing 

mortgages, we reviewed RHS guidance and documentation on the 

agency’s options for preventing properties from exiting the program. In 

addition, we interviewed RHS national and state officials about what tools, 

resources, and plans were in place for addressing maturing mortgages 

and rehabilitating properties. We also interviewed officials from a 

judgmental sample of rural housing industry organizations that we 

 2

For the purposes of this report, preservation refers to steps RHS has taken to keep rural 

rental housing affordable for low-income tenants.
Page 3 GAO-18-285 Rural Housing Service

selected by identifying stakeholders that represented a diverse range of 

roles in the rural housing industry including: developers, borrower and 

tenant advocacy organizations, and organizations advocating for the 

retention or expansion of affordable housing. To determine how other 

agencies approached expiring rental assistance contracts and lowincome housing preservation, we reviewed past GAO reports and 

interviewed officials from the Department of Housing and Urban 

Development. Appendix I describes our objectives, scope, and 

methodology in greater detail.

We conducted this performance audit from May 2016 to May 2018 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.

Mortgages under RHS’s program can be used to build, acquire, and 

rehabilitate rental housing in rural areas and are generally 30-year loans 

with 50-year amortization periods and include subsidized interest rates as 

low as 1 percent.3 To help finance housing projects and keep rents 

affordable to low-income tenants, RHS offers rental assistance subsidies 

to some property owners, which cover the difference between the tenant’s 

contribution and a unit’s rent.4

The rental assistance program, authorized in 1974, provides the rental 

subsidies through agreements with property owners for an amount 

estimated to last for 1 year as required under the program’s 

 3

According to RHS officials, Section 515 loan terms were 40 to 50 years until 1997, at 

which time the term was changed to 30 years with loan amortization extending to 50 years 

in order to reduce the monthly loan payment for borrowers. At the end of the 30-year term, 

owners may need to pay a balloon payment to cover the remaining balance of the loan or 

reamortize the loan. Unlike Section 515 direct loans, Section 514 direct loans have 

repayment terms of 33 years.

4

The rental assistance program is authorized by Section 521 of the Housing Act of 1949, 

as amended (42 U.S.C.1490a). See GAO, Rural Housing Service: Additional Actions 

Would Help Ensure Reasonableness of Rental Assistance Estimates, GAO-17-725 

(Washington, D.C.: Sept. 13, 2017) for additional information on RHS’s rental assistance 

program.

Background
Page 4 GAO-18-285 Rural Housing Service

appropriations acts.5 Eligible tenants pay no more than 30 percent of their 

income toward the rent, and RHS pays the balance to the property owner. 

Tenants must be low-income (incomes above 50 percent of area median 

income but not more than 80 percent of area median income) or very-lowincome (with incomes not more than 50 percent of area median income) 

to be eligible for rental assistance. The agreements with the owners 

expire when the original dollar amount obligated is fully expended. 

Agreements specify that owners will receive payments on behalf of 

tenants in a designated number of units at the property. In addition, 

property owners must certify tenants’ incomes annually or when a tenant 

experiences a substantial change in income. Statutorily, rental assistance 

is tied to RHS loans for rural rental housing and is no longer provided to 

property owners once mortgages mature.

The program supports five general types of rural rental housing projects—

family; elderly (units may be occupied by an income-eligible household 

that includes a tenant or co-tenant who has a disability or is age 62 or 

older, or both); mixed (project has both family and elderly units);

congregate housing (project may be occupied by income-eligible elderly 

households that need meals or other services); and group homes (may 

be occupied by income-eligible elderly persons or individuals with 

disabilities who share living space within a rental unit).

Properties with RHS rental housing mortgages can exit the program in 

three ways—foreclosure, prepayment, and natural maturity of the 

mortgage. When an owner defaults on loan payments and the property is 

foreclosed, it may exit RHS’s program.6 Properties can also exit the 

program when loans mature naturally, meaning the loan is paid off as 

scheduled by the original loan term. Loans can also be prepaid, meaning 

payments are made ahead of schedule, which ends the loan term early. 

Only those loans made on or after December 15, 1989, are ineligible to 

prepay. As previously noted, once a property exits RHS’s program, 

owners are generally no longer required to provide housing for low-

 5

The length of agreements has changed over time. According to RHS officials, RHS 

issued 20-year agreements from the program’s inception through fiscal year 1982, 5-year 

agreements during fiscal years 1983–2003, 4-year agreements in fiscal years 2004–2006, 

and a combination of 1- and 2-year agreements in fiscal year 2007. Officials said RHS has 

issued 1-year agreements since fiscal year 2008.

6

If a project that is subject to restrictive use provisions is sold to a purchaser who will not 

operate the property as a Section 515 or Section 514 property, the agency has no means 

to continue to enforce the restrictive use provisions after the sale is finalized. 
Page 5 GAO-18-285 Rural Housing Service

income tenants and properties are no longer eligible to receive rental 

assistance that is used to keep rents affordable for tenants.

Some owners that are reaching the end of their RHS mortgage terms may 

wish to exit the program. Other owners may wish to remain in the 

program and continue renting to low-income tenants. RHS has offered 

tools and incentives to help owners stay in the program and preserve the 

affordability of rural rental housing. Some of these tools involve extending 

mortgage terms, which extends the availability of rental assistance to 

properties.

RHS’s June 2017 data showed that the program had approximately 

14,000 properties containing 427,000 rental units. Of these, 

approximately 12,000 properties (85 percent) and 282,000 units (66 

percent) received rental assistance.7 According to RHS, the agency has 

not financed any new rental housing properties since 2011. Instead, RHS 

has generally used program funding to repair and rehabilitate existing 

program properties.

RHS properties are geographically dispersed, but one-quarter of the RHS 

program, or about 3,500 properties, was concentrated in six states as of 

June 2017: Texas (670 properties); Missouri (609); North Carolina (595); 

Michigan (564); Illinois (534); and Minnesota (509) (see fig. 1). Appendix 

II provides data in table form for RHS properties, units, and units with 

rental assistance.

 7

As of April 2018, RHS’s most recent data on properties with maturing mortgages were 

data from June 2017. 
Page 6 GAO-18-285 Rural Housing Service

Figure 1: Estimated Number of Rural Housing Service Rental Properties, Total Units, and Units with Rental Assistance, by 

State

1 to 100 properties

101 to 200

201 to 300

301 to 400

401 to 500

More than 500

Sources: GAO analysis of Rural Housing Service data. | GAO-18-285

AK

HI

PR

GU

VI

35 292

185

167

64

83

115

515

670

28

98

16

1

Properties

Properties map

130

54

129

104

134

267

189 373

333

289

249

340

306

375

431

428

509

564

534 469

408

609

439

489 451 429

414

370

595

245

207

297

MA - 66

CT - 65

RI - 12

NJ - 90

DE - 51

MD - 149

VT - 120

NH - 84

Interactive Graphic

Hover over states for details. Click menu to the right for different maps. Housing units map Housing units with

rental assistance map
Page 7 GAO-18-285 Rural Housing Service

RHS’s Multi-Family Housing Portfolio Management Division and the MultiFamily Preservation-Direct Loan Division administer USDA’s rural rental 

housing loan program.8 RHS’s national office also maintains the 

Automated Multi-Family Housing Accounting System (AMAS) and MultiFamily Information System (MFIS) databases, develops program policy, 

and oversees management of the program. RHS state offices administer 

the day-to-day operations of the rural rental housing program, including 

entering key mortgage and project information contained in hard copy 

mortgage closing documents into the AMAS and MFIS databases.9

In March 2016, RHS developed the Multi-Family Housing Property 

Preservation Tool (preservation tool), an electronic system designed to 

use data from AMAS and MFIS to estimate mortgage maturity and 

property exit dates and to calculate new dates that may result from RHS’s 

preservation efforts. Before introducing the preservation tool in 2016, 

RHS officials manually calculated exit dates for rural rental properties, a 

 8

According to RHS officials, the Multi-Family Preservation-Direct Loan Division is tasked 

with providing underwriters for loans and leads the agency’s preservation efforts. The 

division also manages loan prepayment requests. 

9

AMAS, which is the system of record implemented in 1985 that is used to record loan 

level data, contains housing and financial data on RHS properties. MFIS tracks property 

and tenant information and, for the purpose of managing properties with maturing 

mortgages, includes information on property location. If RHS is able to preserve the 

affordability of rural rental housing properties through extending loan terms, for example, 

these systems would help track the extensions and RHS would calculate new mortgage 

maturity and property exit dates. 

RHS Developed a 

Tool That Estimates 

That Large Numbers 

of Mortgages Will 

Mature Starting in 

2028, and Better 

Controls Could 

Improve Data 

Accuracy

RHS Developed a Tool to 

Estimate Property Exit 

Dates
Page 8 GAO-18-285 Rural Housing Service

process that was subject to errors and inconsistencies due to properties 

with multiple mortgages and mortgages that could be prepaid. AMAS and 

MFIS track loan closing dates; loan amounts; interest rates; and property 

location, among other information, but were not designed to estimate 

property exit dates.

According to RHS officials, the preservation tool and the underlying data it 

uses are publicly accessible via the Internet and are intended to improve 

program transparency and help support the agency’s preservation 

efforts.10 Users can search for the date a property began operating; total 

number of units; units receiving RHS rental assistance; mortgage amount 

and interest rate; mortgage prepayment eligibility; and property exit date 

estimates, among other information. The preservation tool enables RHS 

to look at trends in property exits across years and help determine when 

RHS will need to take preservation actions. As of April 2018, RHS had 

estimated property exit data available from 2017 to 2050, but not 

information on properties whose mortgages may mature in 2051 or 

beyond. RHS officials said that data will be released publically on its 

website when available.

Our analysis of data used by the preservation tool showed that 

approximately 900 properties (6 percent of the program’s portfolio), 

including 20,000 units (5 percent), will have maturing mortgages and 

could exit the program between 2017 and 2027. Industry stakeholders 

said that low-income tenants living in these properties could face 

escalating rents or lose their housing altogether. In addition, over 13,000 

properties (94 percent) and about 407,000 units (95 percent) are 

estimated to have mortgages that will mature between 2028 and 2050 

(see fig. 2).11

 10See 

https://public.tableau.com/profile/greg.steck7461#!/vizhome/USDARuralDevelopmentMulti

-FamilyHousing/Overview for the preservation tool and link to the underlying data 

download. Rural Housing Service, Preservation Tool underlying data link, accessed 

February 5, 2018, https://www.rd.usda.gov/files/MFH_Property_Public_No_PII.xlsx.

11We analyzed RHS’s publicly-available website data by sorting and counting the number 

of properties estimated to exit in each year between 2017 and 2050 and where they are 

located based on the state included in each property’s address information. 

RHS Data Show a 

Significant Increase in 

Maturing Mortgages after 

2027
Page 9 GAO-18-285 Rural Housing Service

Figure 2: Estimated Number of Rural Housing Service Rental Properties and Units That Could Exit RHS’s Program between 

2017 and 2050, by Year

Our analysis of RHS’s June 2017 data, the most recent data available, 

also showed that 35 percent of RHS’s rural rental properties (4,944 out of 

14,075 properties) have mortgages that are eligible for prepayment and 

could exit the RHS program ahead of their original mortgage maturity 

date. This earlier exit could cause tenants to face rent increases or 

search for alternative affordable housing earlier than expected (see fig. 

3). According to RHS, if an owner prepays and a property exits the RHS 

program, rental assistance is no longer available to assist that property’s 
Page 10 GAO-18-285 Rural Housing Service

tenants. Concerns about the loss of affordable units led Congress to 

enact legislation that precluded prepayment for loans made on or after 

December 15, 1989.12 For those properties that are eligible for 

prepayment, RHS officials said they cannot predict which owners might 

make this choice and the agency has not been collecting data on 

borrower’s prepayment choices. As a result, outreach to these owners is 

particularly important for possible preservation of affordable housing.

 12Pub. L. No. 101-235, § 206, 103 Stat. 1987, 2041 (1989), codified, as amended, at 42 

U.S.C. § 1472(c)(1)(B).
Page 11 GAO-18-285 Rural Housing Service

Figure 3: Estimated Number of Rural Housing Service Rental Properties with 

Mortgages Eligible for Prepayment between 2017 and 2050, by State
Page 12 GAO-18-285 Rural Housing Service

Our review identified three internal control shortcomings that could impact 

the accuracy, completeness, and timeliness of RHS’s data on properties 

with maturing mortgages.

First, RHS lacks sufficient controls to help ensure the accuracy of all loan 

information for each mortgage at the time of initial data entry because it 

only retroactively reviews a sample of loan document information entered 

into AMAS and MFIS. Although RHS staff reviews some loan information 

through the agency’s State Internal Review process, officials noted that 

the review of mortgage data entered into AMAS and MFIS only occurs for 

each field office at least once every 5 years and includes a step for staff 

to review and reconcile AMAS information with loan documents to help 

ensure the accuracy of RHS debt instruments.13 RHS officials added that 

they improved the guidance in October 2017 by adding specific data 

checks intended to help ensure that loan amount, interest rate, and 

amortization period information were correct. In addition, during our 

review of RHS’s rural rental housing loan documents, we identified 

mismatches between loan document information and the data in AMAS 

and MFIS used by the preservation tool. We found errors in the data on 

mortgage amounts, closing dates, and repayment periods in an estimated 

3 percent to 5 percent of the properties in five states we examined.14

While the data we reviewed had limited errors, without appropriate 

internal controls, RHS cannot be assured that the data that is used by the 

preservation tool will be reliable in the future, and the mismatches 

suggest that RHS could improve how data are entered into AMAS and 

MFIS.

 13According to Rural Development Instruction 2000-M (05-19-04), State Internal Reviews 

are comprehensive evaluation reviews of the delivery of programs and administrative 

functions in field offices and centralized program functions within the state. According to 

RHS officials, the state director has discretion to conduct more frequent reviews if staff 

suspects data weaknesses, changes in personnel occur, or loan information discrepancies 

occur in the initial sample of loans chosen for review.

14RHS staff enters information from loan documents for RHS’s rural rental housing into 

AMAS and MFIS. The preservation tool draws information from AMAS and MFIS to 

estimate when mortgages will mature and when properties could exit the RHS program. 

Our review of loan documents included selecting a stratified random sample of 100 

properties in California; Illinois; Minnesota; Pennsylvania; and Virginia. Our results are 

limited to the states we inspected and cannot be generalized to other states, which may 

have different error rates. The estimated percentages are projections (generalizations) to 

all properties in the five states we included in our review. Estimated data entry error rates 

are based on the results of our review of loan documents from a stratified random sample 

of 100 properties selected from the 2,151 properties in the five states. The upper bounds 

of the 95 percent confidence intervals for these estimates do not exceed 12 percent.

Better Controls Could 

Improve the Accuracy and 

Utility of Maturing 

Mortgage Data
Page 13 GAO-18-285 Rural Housing Service

According to RHS officials, these systems were not designed to estimate 

the expected maturity of rural rental housing mortgages. At the time of the 

systems’ development, officials said that it was not a priority to build in 

controls to ensure the accuracy of such estimates. RHS officials said that 

rural rental housing mortgages would not mature for many years after 

they were originated. As a result, RHS did not create controls intended to 

ensure the accuracy of data related to mortgage maturity and did not 

prioritize establishing a process to check that data.

Federal internal control standards state that management is responsible 

for designing control activities for information systems and information 

processing objectives to support the completeness, accuracy, and validity 

of information processing.15 Without these controls, mortgage information 

used by the preservation tool to estimate property exit dates may be 

inaccurate and could affect the reliability of exit date estimates needed to 

identify properties for possible preservation.

Second, RHS lacked controls to check the accuracy and completeness of 

underlying data used by the preservation tool. When we examined the 

underlying data the preservation tool uses to estimate property exit dates, 

we observed missing (blank) values for some property address; property 

state; borrower address; and management company name information. 

For example, borrower address and property address were missing for 

588 and 141, respectively, of the roughly 14,000 properties. In addition, 

some properties in RHS’s data included estimated property exit dates but 

contained incomplete information (“N/A” designations) for key variables 

such as property name; property address; property state; number of units; 

and type of housing.

Although RHS has been developing and implementing the preservation

tool since 2016 and has made the preservation tool’s exit date estimates 

available on its website, the agency has not yet developed a control 

process to identify potential issues with its underlying data. As noted 

above, federal internal control standards require activities to help ensure 

the completeness, accuracy, and validity of program information. Without 

information that has been checked for accuracy, RHS might not be 

assembling the most complete and accurate information with which to 

estimate exit dates and begin possible preservation of rural rental housing 

 15GAO, Standards for Internal Control in the Federal Government, GAO-14-704G 

(Washington, D.C.: Sept. 10, 2014). 
Page 14 GAO-18-285 Rural Housing Service

for low-income tenants. In addition, RHS is missing an opportunity to 

improve data on properties with maturing mortgages and be better 

positioned to address those properties to protect low-income tenants.

Third, the agency has not developed a regular, timely process for 

updating the preservation tool’s underlying data and exit date information. 

Since RHS developed the tool in March 2016, RHS updated the 

underlying data for September and December 2016 and June 2017 but 

not for 2018. RHS staff said the data were intended to be updated 

quarterly because information that affects exit date calculations changes 

as RHS preserves rural rental housing or properties exit the RHS 

program. However, RHS officials said that they have been unable to 

update the preservation tool quarterly due to staff attrition and competing 

program demands across RHS.

Federal internal control standards require activities to help ensure the 

accuracy and validity of program information. For RHS’s information to be 

accurate and valid, it needs to be as current as possible for program 

management purposes. Since the mortgage maturity dates of properties 

are affected by RHS’s preservation options and the exit dates of 

properties can change over time as mortgages mature, it is critical for 

RHS to have accurate, complete, and timely rural rental housing 

information.

Without controls to help ensure that RHS, industry stakeholders, and the 

public have the most recent data available, they might not have the most 

current information that could be used for estimating property exit dates 

and starting preservation.
Page 15 GAO-18-285 Rural Housing Service

While RHS has taken steps to address properties with maturing 

mortgages, such as identifying various options and incentives intended to 

preserve the affordability of properties for low-income tenants, a majority 

of properties with maturing mortgages from 2014 to 2017 have exited 

RHS’s rural rental housing program. Moreover, RHS has not taken 

important steps to comprehensively plan and prepare for the much larger 

number of potential property exits in future years, such as developing 

goals and metrics to assess the effectiveness of its preservation efforts 

and analyzing risks to its ability to preserve properties. While taking these 

steps would help RHS’s preservation efforts, some tenants may still be at 

risk of losing rental assistance when mortgages mature because RHS 

cannot continue to provide rental assistance. RHS also cannot provide 

vouchers to tenants residing in properties whose mortgages have 

matured.

In addition to developing the preservation tool as a first step in preserving 

properties with maturing mortgages, RHS officials said they 

commissioned two studies on the impacts of maturing mortgages to 

advance the agency’s understanding of key issues. Officials said they 

hoped the two studies would help the agency prepare for maturing 

mortgages. In September 2016, the Housing Assistance Council 

completed its first study for RHS, which identified the characteristics of 

RHS’s rural housing program and the impact that maturing mortgages 

may have on tenants and geographic regions.16 The report noted that 

understanding these characteristics and effects is important for planning 

and implementing strategies to preserve the properties. According to 

officials, the second study, which was under review by the agency as of 

December 2017, was intended to outline issues facing RHS’s multifamily 

housing program, such as the estimated $5.6 billion needed to 

rehabilitate properties program-wide, and possible policy solutions for 

addressing potential property exits.17

 16Housing Assistance Council, USDA Rural Rental Housing Portfolio: The Early 

Implications of Maturing Mortgages (Washington, D.C.: September 2016). The Housing 

Assistance Council is a national nonprofit organization based in Washington, D.C., that 

provides technical housing services; financial products; housing program and policy 

assistance; research; and training and information services to public, nonprofit, and 

private organizations focusing on providing affordable housing to low-income rural 

families.

17CoreLogic and RSM US LLP, USDA Rural Development Multi-Family Housing 

Comprehensive Property Assessment (McLean, VA., and Irvine, Calif.: Mar. 1, 2016).

RHS Has Taken 

Steps to Address 

Properties with 

Maturing Mortgages, 

but Lacked 

Comprehensive 

Planning and Faces 

Statutory Constraints 

That Limit 

Preservation

RHS has Taken Steps to 

Preserve Properties with 

Maturing Mortgages with 

Limited Success to Date
Page 16 GAO-18-285 Rural Housing Service

RHS has offered property owners several options to prevent property 

exits and preserve the access to and affordability of housing for lowincome tenants (see fig. 4).

• Reamortization: Loan reamortization and a shortened reamortization 

process (known as “Re-Am Lite”) allow borrowers to repay 

outstanding loan balances over new, longer repayment periods. By 

extending the term of the loan, officials said that the agency can 

continue providing rental assistance to that property. Re-Am Lite does 

not require borrowers to have their properties appraised, which 

officials said can shorten the reamortization application process by 60 

to 90 days.

• Deferral: Borrowers can defer repayment of direct loans for up to 20 

years. This prevents property exits and preserves affordability for lowincome tenants by continuing the payment of rental assistance to 

property owners.18 Loan deferrals can be offered under the MultiFamily Housing Preservation and Revitalization program. This 12-

year-old demonstration program offers a combination of property 

rehabilitation funding and the opportunity for owners to reamortize or 

defer loan payments to help keep rents affordable.19 Officials said the 

program can also be used to attract new owners who wish to stay in 

the affordable housing program by offering a funding source for 

property rehabilitation.20

 18Loan payment deferral is typically allowed under the Multi-Family Housing Preservation 

and Revitalization demonstration, which is described in more detail below. The 

demonstration caps payment deferral at 20 years. 

19The Multi-Family Housing Preservation and Revitalization demonstration was initially 

authorized by the fiscal year 2006 Agriculture Appropriations Act, Pub. L. No. 109-97, 119 

Stat. 2120, 2138 (2005), and has since been reauthorized through annual appropriations 

acts. See, e.g., Pub. L. No. 115-31, 131 Stat. 135, 153 (2017). At the start of the program, 

the average age of a project with a Section 515 loan was 28 years and much of the RHS 

program needed revitalization. The purpose of the MPR demonstration is to ensure that 

existing rental projects provide decent affordable rental housing over the remaining term 

of any RHS loan or the remaining term of any existing restrictive use provisions, 

whichever ends later.

20Funding for the Multi-Family Housing Preservation and Revitalization program is 

appropriated annually, but remains “available until expended,” that is, does not need to be 

obligated by the agency during the same funding year. RHS can hold funding in reserve in 

order to fund projects larger than the agency’s annual appropriation for the program. RHS 

received the following fiscal year appropriations for its Multi-Family Housing Preservation 

and Revitalization demonstration: about $18 million in 2013; $20 million in 2014; $17 

million in 2015; $22 million in 2016; and $22 million in 2017. 
Page 17 GAO-18-285 Rural Housing Service

• Prepayment Offer: If borrowers decline RHS’s options that extend 

loan terms (reamortization, Re-Am Lite, and deferral), but wish to 

remain in the RHS portfolio, the agency encourages property owners 

to submit a request to prepay their mortgage, if eligible to do so and if 

their mortgages are 12 or more months from maturity. After an owner 

submits a prepayment request, RHS is authorized to offer owners 

incentives to avert prepayment. These incentives include increased 

returns on investment to for-profit owners, additional rental assistance 

units, and equity loans.21

• Prepayment: If borrowers decline RHS’s options, the agency 

encourages property owners to prepay their loans. While owners who 

prepay would no longer have rural rental housing loans with RHS or 

be eligible to receive rental assistance from the agency, prepayment 

of a loan allows RHS to provide vouchers to tenants affected by the 

loss of affordable housing. According to RHS data, only about 5,000 

of the 14,000 properties within RHS’s multifamily housing program are 

eligible to prepay loans.

• Transfer: RHS has taken steps to facilitate the sale (transfer) of 

properties to new owners to prevent property exits. Officials described 

this as a key preservation tool because new RHS mortgage terms 

typically accompany the sale and allow for rental assistance to 

continue at properties where applicable.22 First, the agency 

established a more centralized and standardized transfer process 

based on input from developers, owners, and other stakeholders, 

which officials say reduced the average property transfer time from 

156 to 112 days. Second, RHS maintains a spreadsheet available on 

the agency’s website, called the Preliminary Assessment Tool, which 

officials said streamlines and provides greater transparency to the 

property transfer process for potential buyers and sellers. The agency 

also hosted three conferences in 2016 designed to help find new 

buyers for RHS properties whose owners were seeking to sell their 

 21RHS can offer for-profit owners increased returns on investment in exchange for 

continuing their mortgage and remaining within RHS’s program. RHS officials described 

this as an incentive for properties to stay in the program and keep properties affordable 

instead of leaving it for potentially higher profits in the private market. Providing additional 

rental assistance for a property owner’s units is another incentive. Additional rental 

assistance can increase occupancy rates at a property by making it affordable to more 

low-income residents. RHS may also offer equity loans directly to property owners as an 

incentive to prevent property exits. These loans can be used at the discretion of the 

property owners and are therefore attractive to owners whose properties may face 

revitalization or other needs. 

22Some RHS properties do not have rental assistance contracts.
Page 18 GAO-18-285 Rural Housing Service

properties.23 Finally, in September 2016, RHS announced a 2-year 

pilot program to encourage nonprofit organizations to purchase rural 

rental properties with maturing mortgages, which could create new 

loan terms that would extend the repayment period and continue the 

properties’ affordability. Prior to the pilot, nonprofit owners were not 

required to make an initial equity contribution to projects and therefore 

could not earn any return on investment. Under the pilot, loan 

transfers to nonprofits would allow nonprofits to earn returns on their 

own resources initially invested in the property.

Figure 4: Overview of Rural Housing Service’s Options to Preserve the Access to and Affordability of Properties for LowIncome Tenants

 23The conferences were held in French Lick, Indiana; Charlotte, North Carolina; and Des 

Moines, Iowa. 
Page 19 GAO-18-285 Rural Housing Service

Despite the preservation options and incentives identified by RHS, 61 

percent (148 of 244) of the properties with mortgages that matured 

between January 2014 and December 2017 exited the agency’s rural 

rental housing program (see table 1). Some industry stakeholders said 

that options and incentives did not adequately or broadly appeal to 

property owners. They added that existing options and incentives would 

be used primarily by owners who have no other choice but to stay in the 

program. Stakeholders explained that owner choice might be limited 

because of the condition of their property or because their property is 

located in a market that would not accommodate the sale of a property or 

rent increases to market levels. Some stakeholders also said options that 

extend loan terms only offer a short-term solution to preservation 

challenges because mortgages cannot be extended indefinitely.

Table 1: Rural Housing Service Rental Properties That Exited the Program between 

2014 and 2017

Properties with 

maturing mortgages

Properties that have exited due 

to mortgage maturity

Calendar year Total Total Percent

2014 14 10 71

2015 62 39 63

2016 80 46 58

2017 88 53 60

Total 244 148 61

Source: GAO analysis of RHS data. GAO-18-285.

RHS’s efforts lacked a number of important steps that would better 

position the agency to preserve properties. First, RHS lacked 

documented goals for preserving its program and has not created 

measures for tracking progress toward those goals. In the absence of 

documented goals, RHS national officials stated that the agency’s goal is 

to preserve all properties within its program that are needed to ensure 

sufficient affordable housing, though they acknowledged that current 

resource levels would preclude that possibility and that some owners may 

leave the program regardless of the options the agency offers.

Second, RHS is not monitoring and assessing options and incentives it is 

providing in a way that would inform or improve the use of these options. 

While the agency can track preservation status—meaning whether a 

property is still within the program or not—through its preservation tool 

discussed above, it is not actively tracking preservation outcomes. RHS is 

RHS Has Not 

Comprehensively Planned 

to Preserve Properties 

with Maturing Mortgages
Page 20 GAO-18-285 Rural Housing Service

also not systematically collecting data for monitoring purposes. RHS 

officials said agency databases contain variables that would show which 

options owners choose to use, but added that this information is not 

available in a single source. RHS is also not collecting information that 

would help them assess options. For example, the agency is not 

collecting information from property owners on what options and 

incentives appeal to them. This information would help the agency assess 

preservation options on how well they are being received by borrowers. 

Similarly, RHS is not monitoring the results of efforts to preserve 

properties, including information on how many properties were transferred 

as a result of its three buyers-sellers conferences.

Finally, RHS has not fully analyzed or responded to the risks facing its 

rural rental housing program, such as the following:

• Owner behavior—RHS officials told us a key risk to preserving its 

rural rental housing program is that the agency cannot predict whether 

owners will choose to leave the program or stay. To help respond to 

this risk, the agency directed staff to notify owners 3 years in advance 

that their loan is maturing and that options are available for preserving 

the property within the program. While this window could provide RHS 

with the time to plan for property exits, RHS is not collecting 

information from owners on why they may choose to exit rather than 

stay in the affordable housing portfolio. The agency’s effort to predict 

owner behavior would be aided by collecting and analyzing data on 

how many owners choose to leave the program and why.

• Resource constraints—During a May 2017 conference, a senior RHS 

official highlighted the issue of agency resource constraints for 

addressing maturing mortgages, saying that the agency does not 

have the ability or the financial resources to preserve all of the 

properties that could leave the program once the loans mature. RHS 

has also acknowledged that, even at lower levels of about 80

maturing mortgages each year, the agency does not have the 

resources to provide all preservation options to every owner who 

wishes to use them. RHS has also not analyzed or planned for how it 

would prioritize the use of limited resources. RHS national office 

officials said there is some guidance that could be used by state 

offices to prioritize the use of resources, but this guidance was not 

specific to addressing maturing mortgages and was in the process of 

being updated to include information that could be used to help 

prioritize limited resources for preserving properties. That update is 

expected by January 2019.
Page 21 GAO-18-285 Rural Housing Service

• Management of maturing mortgages—RHS has not analyzed or 

responded to risks involving staff management of maturing 

mortgages. For example, the agency’s national office said that staff 

attrition and turnover in the national, state, and field offices that 

manage mortgages have resulted in fewer staff managing its program 

in general and that they were not sure what the effect of maturing 

mortgages would have on staff workloads. RHS staff in some of the 

states we visited expressed concern that workloads are already heavy 

and that any increase caused by maturing mortgages, including 

smaller numbers occurring now, might affect their ability to be 

responsive to program needs. Similarly, some state office staff 

expressed concerns that they were not trained for managing and 

responding to properties with maturing mortgages and needed 

additional guidance from the national office. RHS national office 

officials said that while the agency does not provide training specific to 

maturing mortgages, it does provide training on loan servicing, which 

includes the use of preservation options, and the national office 

conducts monthly conference calls that all state offices participate in, 

which have included maturing mortgages as a topic and which can be 

used to answer staff questions about maturing mortgages.

• Rehabilitation Costs—RHS has commissioned two studies on the 

risks that program-wide rehabilitation costs pose to its ability to 

preserve its program, but has not analyzed or planned for how it 

would address the estimated $5.6 billion needed to rehabilitate its 

aging portfolio of properties. Officials said that they have met with 

industry stakeholders and Congress about capital needs estimates, 

but no additional steps such as requesting additional funding were 

taken. Officials added that federal budget uncertainties caused by 

years of continuing resolutions and a sequestration have made 

planning for maturing mortgages and program-wide rehabilitation 

more difficult. However, RHS has been aware of growing rehabilitation 

needs since at least 2004, when the agency released a commissioned 

study that said capital needs program-wide would continue to 

increase and cost more if not addressed.24

Federal internal control standards call for agencies to define objectives in 

specific and measurable terms to enable management to identify, 

analyze, and respond to risks related to achieving those objectives. 

Specifically, these standards call for agencies to establish goals and 

 24The two studies commissioned by RHS are the CoreLogic and RSM US LLP report 

previously sited, and ICF Consulting, Rural Rental Housing: Comprehensive Assessment 

and Portfolio Analysis (Fairfax, VA.: November 2004). 
Page 22 GAO-18-285 Rural Housing Service

performance measures for tracking progress toward achieving goals; 

establish activities that monitor performance and assess results so that 

appropriate action is taken; and identify, analyze, and respond to risks 

related to achieving their goals.

RHS officials said that, as of December 2017, they had not taken steps to 

develop goals and measures, perform key monitoring and assessments, 

and analyze and respond to risks because the larger number of potential 

property exits is not expected to begin for another 10 years (2028). RHS 

officials said that they were using this time to see how their existing 

options and resources perform, and that the agency would make resource 

and other adjustments over time as they gained experience with 

preservation. However, as discussed above, mortgages have already 

begun to mature and the majority of properties with maturing mortgages 

between 2014 and 2017 exited the agency’s rural rental housing program. 

Some property owners may have chosen to exit the program regardless 

of additional actions or incentives. For example RHS officials noted that 

many of the property owners whose mortgages are currently maturing are 

nearing retirement or prefer market returns to RHS’s options and 

incentives. However, the percentage of exits (61 percent) suggests that 

RHS’s current planning efforts have not proven sufficient to prevent the 

majority of properties with mortgages that have matured from exiting its 

rural housing program.

By not having taken the planning steps identified above, RHS is not well 

positioned to respond to properties that currently have maturing 

mortgages and require action, nor is the agency prepared for the future 

larger number of potential property exits that starts in 2028. In particular, 

without developing goals and measures, conducting sound monitoring 

and assessments of rural rental housing program developments, and 

analyzing and responding to risks, RHS may not have the key 

information, staff, tools, and resources in place to effectively preserve 

properties and prevent the financial hardship that increasing housing 

costs could cause rural low-income tenants or the loss of their housing 

altogether.
Page 23 GAO-18-285 Rural Housing Service

RHS has options to extend loan terms in order to continue rental 

assistance at properties but cannot continue providing rental assistance 

to tenants once the loan is paid off and the property exits RHS’s 

affordable housing program.25 Some owners of properties with maturing 

mortgages may be open to continue offering rental assistance and agree 

to restrict the units to eligible low-income tenants after mortgage maturity. 

Further, some industry stakeholders cited that having the ability to extend 

existing rental assistance contracts after mortgage maturity would be 

useful in protecting tenants from rent increases or displacement.

However, in some cases, property owners may not want to extend rental 

assistance contracts after mortgage maturity. Tenants living in these 

properties could be subject to rent increases or the risk of displacement.

RHS lacks the authority to provide vouchers to tenants in these situations. 

Voucher assistance would allow RHS to provide assistance to the tenants 

to help pay for rent in their existing unit or at other rental housing in the 

private market without requiring the owner to serve low-income tenants 

exclusively.

In 2016, legislation was introduced that would have allowed RHS to 

continue providing rental assistance to properties through new contracts 

with owners after their loans matured or to provide vouchers to tenants 

under different circumstances, including mortgage maturity.26 In exchange 

for accepting rental assistance payments on behalf of eligible tenants, the 

legislation would have required the property owners to enter into an 

agreement with RHS to ensure that the property remained subject to lowincome use restrictions for an additional period of time. In cases where a 

new rental assistance contract is not possible, RHS would offer vouchers 

to tenants after mortgage maturity. The proposed legislation was 

introduced on April 12, 2016, but no further action on the bill was taken.27

In the past, Congress has taken legislative action to continue rental 

assistance to low-income tenants and protect them from the impact of 

terminated assistance. For example, beginning in fiscal year 2006, 

Congress has authorized RHS to provide vouchers to tenants affected by 

loan prepayments, which leads to the property owners’ exit of the RHS’s 

 25See 42 U.S.C. § 1490a(a)(2).

26 H.R. 4908 (114th Congress), Rural Housing Preservation Act of 2016, April 12, 2016.

27An identical bill, S. 2783 (114th Cong.), was introduced in the Senate at the same time. 

As with H. R. 4908, no action was taken on S. 2783. 

Law Limits RHS’s Ability to 

Offer Rental Assistance 

and Vouchers to Lowincome Tenants
Page 24 GAO-18-285 Rural Housing Service

housing program.28 Tenants receiving vouchers after the prepayment of a 

loan could use them to remain in the property after it exits RHS’s program 

or to find other suitable housing in the private market. Congress has 

limited the amount that RHS paid in subsidies. The amount of a voucher 

is limited to the difference between the comparable fair market rent for the 

housing unit occupied by a tenant and the rent paid by the tenant on the 

date of prepayment or foreclosure.

In addition, when the Department of Housing and Urban Development 

(HUD) faced a similar loss of affordable housing, Congress gave the 

department authority in 2011 to further protect tenants through the 

creation of the Rental Assistance Demonstration (RAD).29 Before the 

RAD program, HUD had limited authority to extend rental assistance at 

these properties when contracts expired or owners terminated 

contracts.30 However, this demonstration, among other things, allowed 

HUD to continue providing rental assistance to property owners after the 

original contracts expired.31 In 2014, we reported that the conversion of 

rental assistance should not have an effect on voucher program costs 

because HUD uses the same calculation for providing budget authority for 

 28Section 542 of the Housing Act of 1949, as amended, authorizes the U.S. Department of 

Agriculture (USDA) to make vouchers available to assist very-low income families to 

reside in rental housing in rural areas. 42 USC 1490r Appropriations legislation has limited 

the use of vouchers to low-income families living in Section 515 properties whose 

mortgages are prepaid after September 30, 2005. See, e.g., Agriculture, Rural 

Development, Food and Drug Administration, and Related Agencies Appropriations Act, 

2006, Pub. L. No. 109-97, 119 Stat. 2120, 2139 (2006); Consolidated and Further 

Appropriations Act, 2013, Pub. L. No.113-6, 127 Stat. 198, 213 (2013); Consolidated 

Appropriations Act, 2017, Pub. L. No. 115-31, 131 Stat. 135, 153 (2017). A loan can be 

prepaid through either prepayment or foreclosure action. See e.g., 82 Fed. Reg. 21972 

(May 11, 2017). 

29In GAO, HUD Rental Assistance Demonstration: Information on Initial Conversions to 

Project-Based Vouchers, GAO-14-402 (Washington, D.C.: Apr. 24, 2014), we noted that in 

2014 rental assistance contracts for about 38,000 affordable housing units currently 

subsidized by HUD were expected to expire over the next several years. 

30Rental assistance contracts under these programs were entered into the 1960s, 1970s, 

and 1980s, and typically had agreement terms of 15, 20, and 40 years. Contracts were 

either not eligible for renewal or had limited contract renewal provisions and new contracts 

were not authorized. 

31The three HUD programs are the Rent Supplement, Rental Assistance Payment, and 

Moderate Rehabilitation programs. The Rental Assistance Demonstration program was 

authorized by Congress in November 2011 under the Consolidated and Further 

Continuing Appropriations Act of 2012. Pub. L. No. 112-55 125 Stat. 553, 673-675 (2011).
Page 25 GAO-18-285 Rural Housing Service

the project-based vouchers converted under RAD as it does for 

calculating budget authority for tenant-protection vouchers.32

Without the authority to continue providing rental assistance or to provide 

vouchers to tenants at existing properties whose mortgages have 

matured, RHS is not well positioned to protect tenants from potential 

increased rents or displacement from their units. The agency could lose 

important sources of low-income housing, which for some communities 

may be the only source of affordable housing. Further, without the 

authority to offer vouchers to tenants living in units that received rental 

assistance at mortgage maturity, tenants may also face rent increases 

and not be able to afford their rents in properties where the owners 

choose not to extend their rental assistance contracts. Continued 

provision of rental assistance could be limited to units or tenants that 

were receiving rental assistance at mortgage maturity and would not 

represent an expansion of the number of units or tenants assisted.

Furthermore, Congress could structure this to have no or limited 

budgetary impact, similar to what was done under HUD’s RAD program. 

For example, subsidies could be kept at a level that is similar to what was 

provided at mortgage maturity.

RHS’s preservation tool is a positive first step to help the agency estimate 

property exit dates, alert stakeholders to properties with maturing 

mortgages, and begin to preserve their affordability. However, the lack of 

data controls for information on RHS rural rental properties raises 

concerns about data used by the preservation tool, especially as RHS 

applies preservation options that extend mortgages and result in new exit 

dates. The lack of controls for underlying data used by the preservation 

tool, and missing information on some properties, demonstrate that RHS 

has opportunities to improve rural housing program data as properties 

continue to have maturing mortgages. RHS has not been able to update 

the preservation tool’s data on a regular basis. Developing controls with 

clear guidance on the frequency and process for routinely updating data 

on RHS’s website could help ensure that preservation efforts are based 

on the most current information available. Regular updated information 

would also help ensure that industry and other stakeholders have the 

most recent information available on RHS’s rural rental housing program.

 32GAO, HUD Rental Assistance Demonstration: Information on Initial Conversions to 

Project-Based Vouchers, GAO-14-402 (Washington, D.C.: Apr. 24, 2014).

Conclusions
Page 26 GAO-18-285 Rural Housing Service

While RHS has taken steps to better understand maturing mortgage 

challenges and preserve properties, RHS’s strategy to use the next 

several years to plan for the larger number of expected future maturations 

and test available preservation options does not address the significant 

number of mortgages that will mature before then. The agency has also 

not taken important planning steps required by federal internal control 

standards to establish goals and performance measures for tracking 

progress toward achieving goals; establish activities that monitor 

performance and assess results so that appropriate action is taken; and 

identify, analyze, and respond to risks related to achieving their goals. 

Actions to enhance the agency’s data and controls, and strengthen its 

comprehensive planning and program evaluation processes, would better 

position RHS to respond to maturing mortgages, preserve its rural rental 

housing program, and maintain affordable housing for low-income 

tenants.

Further, the agency lacks the authority to continue rental assistance to 

properties with matured mortgages and is limited in its ability to issue 

vouchers to tenants affected by property exits. Even if the agency takes 

additional steps to plan for maturing mortgages or increases options and 

incentives for preserving housing, these limits to rental assistance and 

vouchers restrict RHS’s ability to protect tenants. These limits also effect 

RHS’s ability to meet the agency’s objective of providing decent, safe, 

and sanitary housing to low-income rural residents. Expanding RHS’s 

ability to protect existing tenants would give the agency tools that are 

available to other affordable rental housing programs, and could be 

implemented in a way to maintain, rather than increase, program size and 

costs.

We are making the following matter for congressional consideration:

• For RHS properties whose mortgages have matured, Congress 

should consider granting RHS the authority to renew annual rental 

assistance payments to owners who wish to continue to receive them 

and provide vouchers to tenants living in rental assistance units in 

properties whose owners choose to no longer receive rental 

assistance.

We are making the following five recommendations to RHS:

Matter for 

Congressional 

Consideration

Recommendations for 

Executive Action
Page 27 GAO-18-285 Rural Housing Service

• The RHS Administrator should establish additional controls to check 

the accuracy of all loan information entered into RHS information 

technology systems, to help ensure complete, accurate, and reliable 

data for estimating rural rental housing property exit dates. 

(Recommendation 1)

• The RHS Administrator should establish a process to help ensure 

regular and frequent updates for the preservation tool and its 

underlying data. (Recommendation 2)

• The RHS Administrator should establish performance goals and 

measures for its rural rental housing preservation and rehabilitation 

efforts and report out these outcomes. (Recommendation 3)

• The RHS Administrator should monitor the results of rural rental 

housing preservation efforts and assess the degree to which those 

efforts yielded intended outcomes. (Recommendation 4)

• The RHS Administrator should identify, analyze, and respond to risks 

to achieving its preservation goals, including resource and staffing 

limitations. (Recommendation 5)

We provided a draft of this report for review and comment to RHS and 

HUD. RHS provided technical comments, which we incorporated into the 

report, and stated that it agreed with all five of our recommendations but 

did not provide a formal agency comment letter. HUD stated that it had no 

comments on the draft.

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of Agriculture, the Secretary of Housing and 

Urban Development, and other interested parties. In addition, the report is 

available at no charge on the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-8678 or garciadiazd@gao.gov. Contact points for our 

Offices of Congressional Relations and Public Affairs may be found on 

Agency Comments
Page 28 GAO-18-285 Rural Housing Service

the last page of this report. Key contributors to this report are listed in 

appendix III.

Daniel Garcia-Diaz

Director, Financial Markets

 and Community Investment
Appendix I: Objectives, Scope, and 

Methodology

Page 29 GAO-18-285 Rural Housing Service

Our objectives were to examine the Rural Housing Service’s (RHS) 

efforts to (1) estimate the dates that properties may exit the rural rental 

housing program due to mortgage maturity, and (2) preserve the 

affordability of rural rental properties with maturing mortgages.

To examine RHS’s efforts to estimate property exit dates, we analyzed 

RHS documentation and interviewed RHS officials about the data the 

agency uses to identify and preserve properties with maturing mortgages. 

To determine what steps RHS has taken to help ensure the accuracy and 

reliability of RHS’s Multi-Family Housing Property Preservation Tool 

(preservation tool), we reviewed documentation that included the 

preservation tool’s user guide, and the capabilities it offered the agency 

and the public. We also conducted interviews with RHS national and state 

office officials about the preservation tool and about how the agency’s 

Automated Multi-Family Housing Accounting System (AMAS) and the 

Multi-Family Housing Information System (MFIS) operate. AMAS contains 

data on loans and rental assistance contracts and MFIS tracks monthly 

loan and rental assistance payments and contains data on the location of 

RHS’s rural rental properties. Both systems provide data used by the 

preservation tool to calculate mortgage maturity and exit dates for rural 

rental housing properties. To determine how the preservation tool was 

built and the main information it uses to determine mortgage maturity and 

property exit dates, and the information it calculates for users, we 

interviewed the contractor hired by the agency to create and populate the 

preservation tool.

To analyze the accuracy of AMAS and MFIS data used by the 

preservation tool to calculate mortgage maturity and property exit dates, 

we reviewed mortgage documents that RHS uses to populate those 

systems. We reviewed loan documents for a generalizable stratified 

random sample of 100 properties in five states—California; Illinois; 

Minnesota; Pennsylvania; and Virginia—to determine if loan information 

found within mortgage documents matched data contained in AMAS and 

MFIS for selected variables relevant to mortgage maturity and property 

exit date calculations. We stratified the population of 2,152 loan 

documents in the five states by state, number of loans per property, and 

age groups. We computed an initial sample size of 60 properties for a 

simple random sample to achieve an upper bound of no more than 5 

percentage points, an expected error (inaccurate data field) rate of 0 

percent, and a 95 percent confidence level. We then proportionally 

allocated the sample across the strata and increased sample sizes in 

stratum within each state so that we selected at least 10 properties with 

more than 1 loan and 10 properties older than 20 years old. States we 

Appendix I: Objectives, Scope, and

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 30 GAO-18-285 Rural Housing Service

visited were selected based on their geographic diversity, diversity (age 

and size of program) of rural rental housing properties, and their proximity 

to GAO offices.

To select properties’ loan files for this review, we created a 

nongeneralizable sample of 20 properties in each of the five states. We 

also interviewed agency officials knowledgeable about the data—

including officials from RHS, Rural Development’s Office of Operations 

and Management, and the U.S. Department of Agriculture’s (USDA) 

National Financial and Accounting Operations Center—about the 

processes used to populate these systems and any quality checks in 

place for ensuring that data were inputted completely and accurately, 

including any available documentation on these steps. We also 

interviewed RHS state office officials, who service loans, about the 

process for identifying errors in these systems and making corrections.

To determine which rural rental housing properties were estimated to exit 

the RHS program and where these properties were located, we analyzed 

RHS’s raw data from June 2017 (the latest available RHS data). We 

analyzed the data to determine the number of properties, units, and rental 

assistance units with property exit dates by state and by year from 2017 

to 2050. We also generated summary statistics on the number of 

properties that were eligible to prepay their mortgages. In assessing 

RHS’s data we also conducted checks on the data for outliers and 

missing information. Although we found a selected number of data 

anomalies that point to the need for better data controls, we determined 

the data we used were sufficiently reliable for purposes of describing the 

estimated number of properties that could exit the RHS program between 

2017 and 2050.

To better understand the calculations used by the preservation tool, we 

reviewed the logic or code it uses to calculate mortgage maturation dates. 

For this analysis, we used documentation on the program used to 

generate estimates and compared this documentation to the code to see 

if there were any operational differences. Additionally, we reviewed each 

of the functions within the logic and looked for inconsistencies in logic or 

deviations from financial convention that might cause incorrect 

predictions.

To examine steps RHS has taken to preserve properties with maturing 

mortgages, we reviewed documents that listed options available for 

retaining properties with maturing mortgages. We gathered and analyzed 

documentation on any comprehensive planning efforts by RHS to address 
Appendix I: Objectives, Scope, and 

Methodology

Page 31 GAO-18-285 Rural Housing Service

rural rental housing maturing mortgages, including documentation 

showing preservation goals and measures, and any assessments of 

RHS’s plans, efforts, or resources needed to address maturing 

mortgages. We also analyzed documentation and interviewed national 

and state RHS officials about any training and guidance that was being 

provided to staff on maturing mortgages. In addition, we interviewed RHS 

national and state officials about what tools, resources, and plans were in 

place for addressing maturing mortgages and their limits. Further, we 

asked about ongoing efforts to address maturing mortgages, including 

any plans to obtain additional resources for managing maturing 

mortgages now and in the future when a larger number of properties are 

expected to have loans mature. We reviewed and interviewed officials 

about studies commissioned by RHS on the effects of maturing 

mortgages on the rural affordable rental housing program and affected 

communities and on program-wide rehabilitation needs and cost 

estimates. We also assessed how the studies and reports were 

conducted for any flaws in their approaches and methodologies.

To determine stakeholder perspectives on how RHS was managing 

maturing mortgages, we interviewed officials from a judgmental sample of 

rural housing industry organizations. We took multiple steps to identify 

these industry organizations. First, we met with an affordable housing 

organization with a national membership that represents owners; 

developers; housing advocates; and tenants. We asked this national 

organization to identify industry organizations that work with RHS. From 

that list, we focused on organizations that also had a multi-state or 

national focus. Second, during interviews with these organizations, we 

requested additional contacts. We interviewed organizations that were 

named during multiple interviews. This selection process allowed us to 

identify stakeholders that represented a diverse range of roles in the rural 

housing industry including: developers, borrower and tenant advocacy 

organizations, and organizations advocating for the retention or 

expansion of affordable housing.

To determine how other agencies approached expiring rental assistance 

contracts and low-income housing preservation, we also interviewed 

Department of Housing and Urban Development officials. More 

specifically, we determined what key steps and best practices the 

department used to preserve its multifamily housing program properties, 

including properties with maturing mortgages, and what tools and 

resources were required for managing its housing program.
Appendix I: Objectives, Scope, and 

Methodology

Page 32 GAO-18-285 Rural Housing Service

We conducted this performance audit from May 2016 to May 2018 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: Number of Properties and Units 

That Could Exit the Rural Housing Service’s 

Program between 2017 and 2050

Page 33 GAO-18-285 Rural Housing Service

State Properties that could exit Rural 

Housing Service’s rural rental 

housing program

Units that could exit Rural 

Housing Service’s rural rental 

housing program

Units with rental assistance that could exit 

Rural Housing Service’s rural rental 

housing program

AK 35 847 796

AL 451 14,809 7,981

AR 439 9,898 6,085

AZ 115 3,946 3,423

CA 515 26,577 18,294

CO 129 3,738 2,858

CT 65 2,495 1,776

DE 51 1,681 1,307

FL 414 18,897 12,946

GA 429 15,431 8,583

HI 28 1,039 838

IA 408 8,465 7,071

ID 167 4,241 3,878

IL 534 9,970 7,237

IN 469 12,739 7,405

KS 289 5,876 3,842

KY 431 11,724 6,394

LA 375 12,290 7,934

MA 66 1,930 1,614

MD 149 5,346 3,073

ME 333 8,035 6,216

MI 564 17,168 9,480

MN 509 10,313 6,540

MO 609 14,869 8,667

MS 489 14,998 9,334

MT 130 2,287 1,915

NA 8 0 0

NC 595 21,971 16,921

ND 134 2,350 1,771

NE 189 3,052 2,334

NH 84 2,486 2,112

NJ 90 3,225 2,117

NM 104 4,106 3,255

NV 64 2,024 1,695

Appendix II: Number of Properties and Units 

That Could Exit the Rural Housing Service’s 

Program between 2017 and 2050
Appendix II: Number of Properties and Units 

That Could Exit the Rural Housing Service’s 

Program between 2017 and 2050

Page 34 GAO-18-285 Rural Housing Service

State Properties that could exit Rural 

Housing Service’s rural rental 

housing program

Units that could exit Rural 

Housing Service’s rural rental 

housing program

Units with rental assistance that could exit 

Rural Housing Service’s rural rental 

housing program

NY 428 13,003 5,755

OH 373 14,047 8,768

OK 249 7,383 5,115

OR 185 6,352 4,969

PA 297 9,971 6,934

PR 98 5,636 3,803

RI 12 421 376

SC 306 11,287 6,754

SD 267 5,159 3,846

TN 340 11,798 7,392

TX 670 23,477 14,414

UT 83 2,126 1,728

VA 245 10,016 6,832

VI 16 432 428

VT 120 1,946 1,481

WA 292 8,868 6,324

WI 370 8,584 5,811

WP 

(Guam) 

1 49 0

WV 207 6,532 4,263

WY 54 1,516 1,204

(blank) 1 0 0

Total 14,075 427,426 281,889 

Source: GAO analysis of RHS data. GAO-18-285.
Appendix III: GAO Contact and Staff 

Acknowledgments

Page 35 GAO-18-285 Rural Housing Service

Daniel Garcia-Diaz, (202) 512-8678 or garciadiazd@gao.gov

In addition to the contact named above, Harry Medina (Assistant 

Director); Steve Ruszczyk (Analyst in Charge); Holly Hobbs; Enyinnaya 

David Aja; Jim Ashley; Stephen Brown; William Chatlos; DuEwa Kamara; 

John McGrail; Marc Molino; and Tovah Rom made key contributions to 

this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(100826)
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