DOJ Flies The Friendly Skies

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The Department of Justice is wasting money on air travel costs through a poorly designed travel website and by failing to discourage the overuse of travel agents, according to the agency’s inspector general. Excessive fees ($626,250) for Justice Department (DOJ) employees to speak with live travel agents instead of booking online. A September 2013 inspector general report on travel spending by DOJ employees found they too often turned to live travel agents instead of using the agency’s e-travel website, GetThere. DOJ travel was administered by a contractor, CWTSatoTravel (CWT), which provided both the online website as well as live booking services over the phone. Each time an employee booked airline travel on the website, the contractor would receive a fee of $6.49, while the cost of each booking completed over the phone would cost DOJ nearly five times more, or $31.

In 2010, the agency began to reach out more aggressively to employees in the hope of ensuring flights were booked online 75 percent of the time. However, by June 2013, DOJ employees were using the online portal for only 60 percent of their flights. Since the agency purchases an average of 167,000 airline tickets annually, the cost of using live agents instead of the website amounted to $626,250. This is not the first time DOJ was called out for excessive air travel costs. A February 2013 report by the Government Accountability Office showed that a culture of excessive travel spending started at the top. The report found that from 2007 through 2011, the three individuals who served as Attorney General took 659 “nonmission flights using DOJ aircraft at a total cost of $11.4 million.

Even if employees used the website it would have resulted in any savings for the agency, and in fact may have cost more. Design flaws in how flights were displayed often failed to show employees the cheapest flights, or if they did provided confusing information to suggest they were not allowed to choose them. The problem stemmed from the execution of a government-wide program called “City Pairs,” which negotiates the price of any flight purchased by the federal government between 500 cities. While employees are encouraged to look for the City Pair flight, which does not change over the course of a year, they are required also to look for cheaper flights should they come available. DOJ’s website, GetThere, would display non-”City Pair” flights as “out of policy” even though it was, in fact, agency policy to look at all flights. As a result, employees would often choose the higher-priced flight, of course.

Information found for this “Your Tax Dollars @ Work” post was done by using a Google search. Information compiled from multiple public websites & media outlets.

Why Didn’t I Move To Hawaii

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Ever dream of escaping it all and owning a dream home on a remote island paradise? Didn’t think you could afford it? Think again. There is now a U.S. Department of Agriculture (USDA) home loan program here to help you. Created to assist those with low and moderate incomes in rural areas obtain safe and sanitary dwellings, the program has expanded to cover “mortgages for millionaires” and homes in suburban and urban areas, as well as seaside resort communities. This year more than 100 individuals or families received loan guarantees for $500,000 or more from the U.S. Department of Agriculture to purchase a residence in Hawaii. If these new homeowners later cannot afford their new homes, it’s no problem; the federal government will protect the banks from losses by repaying 90 percent of the loans.

These and thousands of other loan guarantees were issued this year by the USDA Rural Housing Service (RHS) Section 502 loan programs. The Section 502 guarantee program and Section 502 direct loan program provide loans to low and moderate income individuals for the purchase of modest housing in a rural area. The programs had authority to guarantee $24 billion in privately sourced loans and make $900 million in new direct loans for FY2013. There is no down payment requirement for the loans, no maximum purchase price, and—according to USDA—the government is required to serve all borrowers who meet eligibility requirements and seek to purchase homes in eligible areas. And despite the name of the program, it serves more than just rural areas. An independent analysis found that, today, the program covers nearly the entire U.S. land mass. That has helped turn the program into one of the sweetest deals available.

The program issued nearly 166,000 loan guarantees in FY 2013 and more than 100 of those were for amounts greater than, or equal to $500,000. Nearly all of these half-a-million dollar home loans were in Hawaii. Many of the most scenic parts of Hawaii, including Maui and Kauai, are eligible areas for USDA rural loan assistance. Maui has been selected as the top island in the world for 20 consecutive years in the annual Condé Nast Traveler Readers’ Choice Awards. Providing a combination of tropical ambience and American comforts, this island paradise offers an abundance of activities offered, from whale-watching to nature hikes to watersports with unending natural beauty. The entire island of Kauai, described as “a little slice of heaven, is considered rural by USDA.

Since property values in Hawaii exceed the national average, buying a home there may seem to be out of reach for most, but everyone from risky borrowers to the wealthy are benefitting from this USDA loan program. The USDA rural housing program’s income guidelines are generous, notes a senior loan officer in Hawaii. Likewise for those with more modest incomes, the Federal Government will reimburse up to 90 percent of the original loan amount to the lender if a borrower defaults on a loan. Thousands of borrowers do foreclose every year, costing the federal government hundreds of millions of dollars, and the number and cost have skyrocketed over the past five years. In 2008, the program had 3,369 foreclosures costing in $103 million in loss claims paid. By 2011, there were 18,808 foreclosures costing $295 million. Last year, the program paid $496 million in loss claims, according to the USDA Office of Inspector General. If trends continue, this loss will have exceeded half-billion dollars in 2013.

The department acknowledges default rates vary throughout the year and during 2012, the delinquency rate for loans 30 or more days past due ranged from 7.65 percent to 10.44 percent. By comparison, the delinquency rate in a typical housing market is around 3 percent. While designed to operate off of loan fees, the program’s delinquency rates make a taxpayer bailout more likely according to experts who predict it’s likely the program isn’t covering its costs and will probably require taxpayer funding. While USDA was putting taxpayers on the hook for generous and increasingly risky loan guarantees, housing assistance to low-income individuals across the country, including in Hawaii, was being cut. In March, USDA threatened the elimination of rental assistance for more than 10,000 very low income rural residents, generally elderly, disabled, and single female households. In July the Department notified hundreds of borrowers that their contracts would be cut off before the end of FY 2013, 90 including a housing unit for disabled elderly in Kailua-Kona, Hawaii.

And while USDA is quick to threaten assistance for the poor, elderly and disabled, the Inspector General found the Rural Development program did not identify and review loss claims from loans with questionable eligibility prior to payment, resulting in millions of dollars in improper payments. Before USDA kicks out low income elderly and disabled from rural housing, the department should first discontinue its risky loan practices that are costing nearly half-a-billion dollars a year in loss claims. This really has me wondering why I didn’t move to Hawaii.

Information found for this “Your Tax Dollars @ Work” post was done by using a Google search. Information compiled from multiple public websites & media outlets.