HUD fires company managing foreclosed-home sales; 27-state pact canceled for 'failure to perform'


Besieged with complaints about a management company's ability to service and sell thousands of government-owned foreclosed homes, the Department of Housing and Urban Development severed its five-year, multimillion-dollar contract with Intown Management Group LLC yesterday.

The Atlanta-based organization, which had contracts worth hundreds of millions of dollars in 27 states including Maryland, was informed of HUD's decision yesterday. The Maryland contract was for $74 million.

"We're saying that they were terminated for failure to perform," said James S. Kelly, a spokesman for HUD in its Baltimore office. Kelly would not elaborate. He said his office had received complaints about Intown since it took over the sales of HUD homes in March. "There were a number of different types of complaints," he said.

Calls to Intown officials were not returned.

HUD told real estate brokers yesterday in a memo that it is suspending the sale of its homes until Sept. 29, after which it will resume the bidding process with new contractors. However, HUD is directly taking over the Maryland operation through its Homeownership Center in Philadelphia.

Intown replaced Golden Feather Realty Services Inc., which was selected in 1996 as a part of a HUD pilot program to assign a private broker to manage and sell its listings.

But, apparently, Intown was ill-prepared to carry out its mission.

"They were totally incompetent," said John Katsafanas of 1st Preference Mortgage Corp. of Baltimore, who specializes in financing HUD foreclosures. "They just weren't prepared to take on 27 states at one time. It was a contract that was designed to fail.

"You could never talk to them. Everything was done by computer. You couldn't talk to anybody. Call and leave messages and they wouldn't return calls," he said.

According to Katsafanas, the inventory of foreclosed homes in the state had ballooned under Intown's management to approximately 1,600 homes.

"It was astronomical. There were 500, 600, maybe 700 in Baltimore City alone," Katsafanas said, adding that when HUD was doing its own selling, it had a "couple of hundred" listings in the city.

Pub Date: 9/23/99

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