An efficient collections policy is one of the cornerstones of a successful business or government operation. This idea was stressed last year when Senators Charles H. Percy, R-Ill. and James Sasser. D-Tenn. sponsored legislation aimed at helping Uncle Sam collect about $25 billion in debts that were in arrears. Now the General Accounting Office has put its finger on a situation in the Department of Housing and Urban Development in which improved practices are vital. HUD. according to Washington Report, publication of the U. S. Chamber of Commerce, is increasingly writing off defaulted but collectible home improvement loans. In a study of the problem. GAO said the department wrote off more than $18 million in defaulted loans in 1980. up from $14.6 million in 1979 and $8 million in 1978. HUD estimated that at the end of 1981 more than $106 million of the cumulative $130 million in loans now in default would be deemed uncollectible. Borrowers obtain funds from participating lenders under HUD’s home improvement loan program. HUD provides credit insurance on the loans if the lender pays an annual insurance premium. Should the borrower default. HUD pays the lender 90 percent of the loan balance. GAO made several recommendations to improve HUD’s loan – accounting and collecting procedures including; – Strengthen the effort to find the defaulting borrower before writing off a loan as uncollectable. – Increase the use of legal remedies such as obtaining liens on the improved properties. – Charge defaulting borrowers the maximum legally allowable interest rates. Currently they are charged a lower effective rate on defaulted loans (about 6 Eercent) than they were c arged at loan origination. 4 The department has agreed to implement a number of the recommendations, said Washington Report. It also plans to use a private collection firm to supplement staff efforts and shore up a foreclosure policy. The innovations are expected to result in collections of $15 million on defaulted loans in fiscal 1982 – highest recovery in the program’s 48-year history. This is good news for the taxpayers and the Justice Department shouldn’t let down in the follow-through.