CRA Monitoring of Loans, Land Criticized : Finances: An audit of the agency finds an array of problems. But officials say most are being corrected.

The Los Angeles Community Redevelopment Agency has no reliable means of managing its land inventory or collecting on its $307-million loan portfolio, increasing the risk of loss or misuse of those assets, according to an audit report released Thursday.

The report, which reviewed the agency’s affairs between 1989 and 1991, was prepared for City Controller Rick Tuttle and lists an array of problem areas, including accountability of outstanding loans, management of loan terms, collection of loan payments and property management.

Among the most troubling findings: The CRA’s housing department was unaware that three of its loans had past-due amounts totaling $280,000, and auditors were unable to identify who is responsible for servicing 126 CRA housing and rehabilitation loans totaling $54 million.

The audit also found that the CRA hired an outside firm in 1987 to handle its escrow and loan servicing accounts rather than performing the work itself, which could have generated $2.8 million in interest revenue for the agency.

Meanwhile, the prospect of recovering $850,000 in fees owed to the CRA by the escrow company, CD Financial Corp., is uncertain because the firm filed for bankruptcy in 1991, the report says.

Although the audit did not find fraud, Tuttle said it showed that “the CRA has some serious problems in the system it uses to keep track of a very large number of loans and in the way it handles the escrow side of its business.”

CRA Administrator Edward Avila acknowledged deficiencies in the agency’s portfolio of 1,446 loans, but said the CRA has taken strong measures over the last six months to improve its record-keeping and monitoring procedures.

“We definitely have been aggressively pursuing corrective measures, which are well under way,” said Avila, who became CRA administrator in March, 1991. “We’ve essentially brought any deficiencies almost up to speed. For example, the escrow services are being handled in-house now.”

In addition, the CRA plans to hire five more accountants to improve monitoring of the loan portfolio and land inventory, review financial statements on loans owed to the agency and handle escrow functions.

The agency also plans to centralize the servicing of receivable loans and other assets under a management section to be supervised by a deputy administrator for finance and accounting.

Jim Godsey, managing partner of the auditing firm, Quezada Godsey & Co., said that “on the drawing board, the CRA’s plans look good.”

“But their plans indicate it will take until June, 1993, before the new systems are completely in place,” Godsey said. “Those systems still have to be fully developed and tested.”

In a letter sent to Avila on Thursday, Tuttle warned: “The work that remains to be done is considerable and many issues remain to be resolved.

“In particular,” Tuttle wrote, “we wish a full accounting of the 126 loans totaling $54 million that are not identified for servicing.”

Avila said all of the loans are now on a master loan list, which is being closely monitored by the CRA’s new asset management section.

“The section is reviewing the loan portfolio and ensuring that all of those loans are current and being serviced,” Avila said.

Tuttle, who in 1991 was given direct authority over CRA expenditures by the City Council, has requested a full explanation by Sept. 14 of all unresolved issues mentioned in the audit report.