HUD sells loans online
- By Judi Hasson
- Jul 03, 2001
The Department of Housing and Urban Development has joined the ranks of e-government in a major way, selling $109 million in loans entirely on the Internet.
The $109 million auction was the largest such online transaction ever conducted by the government. The sale was handled by Hanover Capital Partners Ltd. and its affiliate, HanoverTrade.com. HUD paid a commission for the sale.
"There have been other sales online, but this was the first one that was done soup-to-nuts on the Internet," a HUD official said.
In the past, HUD conducted parts of its sales online, advertising its products or property or receiving financial statements via the Internet. But eventually, potential buyers had to complete purchases on paper.
In this sale, every part of the transaction could be handled electronically, ranging from bidders validating their financial backgrounds to HUD receiving and confirming bids.
The loans, sold last month, originated a decade ago under HUD's Section 312 loan program, which provided below-interest-rate loans to rehabilitate homes in low-income areas. More than 100,000 loans were made under the program. Congress terminated the program several years ago, but HUD still had 6,000 loans outstanding.
"This is a powerful example of how HUD is using leveraging technology to become more efficient," said HUD Secretary Mel Martinez. "By empowering bidders with an advanced loan trading system, HUD increased bidder interest, maximized the sales proceeds and increased the savings to the taxpayers."
And instead of creating its own Web site for the auction, HUD turned to a company that already had succeeded in e-commerce. Other federal agencies, including the U.S. Marshals Service, are doing the same thing—turning property over to a private e-company and paying a commission for a successful sale.
A recent study by Federal Computer Week and the Pew Internet & American Life Project found that the federal government is selling more than $3.6 billion in property and products online.