Business Notes HOUSING

The Federal Housing Administration was set up to help people buy homes. But in pursuing that popular mission, the agency seems to be rivaling the Internal Revenue Service in its ability to make enemies. The FHA's troubles stem from the depressed economic conditions in several parts of the U.S., especially in states like Texas and Colorado that have been hurt by the decline of energy prices. Last fiscal year alone, the FHA's parent agency, the Department of Housing and Urban Development, had to take possession of 64,800 homes because the owners defaulted on FHA-guaranteed mortgages. HUD has been auctioning many of the houses off, often at cut-rate prices. The sales have stirred strong protests in Denver, where the average price of a single-family home has fallen from $139,500 in the second quarter of 1987 to $117,900 in the same period this year. Denver builders complain that HUD, by selling single-family homes in Denver for as little as $5,500, has contributed to the decline of the area's housing market. The agency itself is upset that some people have been defaulting on their FHA loans, then buying bargain houses at HUD auctions.

On top of those problems, the agency faces a new lawsuit from the National Housing Law Project, a California-based public interest law firm. The group contends that under a 1987 law, HUD is required to survey its inventory to see if some of the empty houses could be used to provide shelter for the homeless.