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WASHINGTON (AP) - One-third of the projects in a $1.6 billion elderly housing program are in or near financial ruin, with bloated loans and lousy management to blame, according to auditors who say the government will have little choice but to foot the bill.

At least two times, prominent Republican political consultants swayed officials in the Department of Housing and Urban Development to overrule field deputies and approve loans for projects in the troubled Retirement Service Center program, the internal audit says.The study details anew favoritism and myriad management problems at HUD during the Reagan administration tenure of Secretary Samuel R. Pierce Jr.

It also suggests that the price tag for that mismanagement is rising, with no end in sight, as millions of dollars in loans insured by the government go sour.

``There is a high probability that as more recently approved (retirement centers) proceed through their processing stages, additional projects will become troubled or go into default,' the auditors concluded in the new report, obtained through the Freedom of Information Act.

The money lost and wasted in many cases went to projects that catered not to low- and moderate-income people but for developments featuring fountain-filled lobbies, plush dining rooms, pools - and rents of more than $2,000 a month.

It would take an income of at least $25,000 a year to live in many of the centers, but the median annual income for people older than 65 is about $15,000.

As in other HUD programs in which private lenders were allowed to underwrite HUD-insured mortgages, the audit found lenders were too generous in their appraisals and thus approved excessive mortgages.

Such bloated loans bring lenders higher fees. They also result in higher rents because of the cash flow needed to pay the mortgage, and the high rents in turn contribute to the unusually high vacancy rate in such projects, the auditors said, ultimately causing cash crunches that trigger defaults.

HUD Secretary Jack Kemp suspended the program in July after an audit in the Chicago area touched on its problems, finding shaky loans totaling $119 million.

Kemp has not decided whether to revive the program; auditors said it would need a total overhaul and cited ``ample justification' to kill it.

Auditors said 62 of 190 Retirement Service Centers nationwide - or nearly 33 percent - either had defaulted or were troubled. The mortgages for the 62 total $59 million - nearly 40 percent of the $1.6 billion spent on the program.

HUD is liable for at least 85 percent and in some cases 100 percent of the loans should they default.

The $599 million figure was from loan data through last October. Preliminary results of a follow-up review paint an even bleaker picture, a HUD official said Friday.


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