Issue Date
January 30, 2009
Audit Report Number
2009-PH-1004
TO: Vance T. Morris, Director, Office of Single Family Asset Management, HUF
FROM: John P. Buck, Regional Inspector General for Audit, Philadelphia Region, 3AGA
SUBJECT: The City of Camden, New Jersey, Did Not Always Administer Its Asset Control
Area Program in Compliance with HUD Requirements
HIGHLIGHTS
What We Audited and Why
We audited the City of Camden’s (City) asset control area (ACA) program
following a request from the U.S. Department of Housing and Urban
Development’s (HUD) Office of Single Family Asset Management for a review
of the City’s compliance with its ACA agreement with HUD. Our objective was
to determine whether the City complied with specific requirements in the ACA
agreement pertaining to the resale of properties it acquired from HUD.
What We Found
The City did not comply with the specific provisions in the ACA agreement
pertaining to the resale of its acquired ACA properties. It did not (1) ensure that
17 (or 25 percent) of 68 properties it acquired from HUD were rehabilitated and
sold within the required timeframe, (2) ensure that all expenses included in net
development costs for rehabilitated properties were eligible, and (3) verify
homebuyers’ eligibility and maintain the appropriate related supporting
documentation. As a result, the City was unable to support $441,500 in property
discounts from HUD for the 17 outstanding properties. It also included more than
$11,600 in ineligible expenses in the net property development costs for four
properties, which increased their sales prices and, consequently, the related
mortgages by more than $11,700.
What We Recommend
We recommend that the Director, Office of Single Family Asset Management,
direct the City to obtain and provide evidence that it has the necessary resources
to complete the rehabilitation and sale of the 17 outstanding properties. If the
City cannot provide evidence of its ability to rehabilitate the outstanding
properties, it should pay HUD $441,500. In addition, we recommend that the
City buy down the mortgages for the four properties which had more than
$11,600 in ineligible expenses included as part of their net development costs,
and that the City verify and document the eligibility of each homebuyer in the
future. We further recommend that the Director, Office of Single Family Asset
Management, not renew the ACA agreement with the City until it has
demonstrated that it is in compliance with the requirements of the agreement.
For each recommendation without a management decision, please respond and
provide status reports in accordance with HUD Handbook 2000.06, REV-3.
Please furnish us copies of any correspondence or directives issued because of the
audit.
Auditee’s Response
We discussed the audit results with the City and HUD officials throughout the
audit and at an exit conference on January 15, 2009. The City provided written
comments to our draft report on January 20, 2009. The City generally agreed
with our finding and recommendations.
The complete text of the City’s response, along with our evaluation of that
response, can be found in appendix B of this report.
2
TABLE OF CONTENTS
Background and Objective 4
Results of Audit
Finding: The City Did Not Comply with Specific ACA Agreement Provisions 5
Scope and Methodology 11
Internal Controls 13
Appendixes
A. Schedule of Questioned Costs 15
B. Auditee Comments and OIG’s Evaluation 16
C. Analysis of Sale Prices, Net Development Costs and Ineligible Costs
19
D. Calculation of Mortgage Buy-Down Amounts and Adjusted Mortgages
20
3
BACKGROUND AND OBJECTIVE
Section 204 of the National Housing Act (12 U.S.C. (United States Code) 1710) directs the U.S.
Department of Housing and Urban Development (HUD) to promote the revitalization of
neighborhoods through the creation of asset control areas (ACAs) in HUD-approved
communities. HUD sells HUD-owned properties to authorized entities located within the ACAs
at a discounted price. In turn, the authorized entities must ensure that the properties are
rehabilitated and sold to eligible homebuyers, officers, teachers, or qualified military personnel.
HUD entered into an ACA agreement with the City of Camden (City) on November 22, 2005.
Under the ACA agreement, the City acquired 68 properties from HUD at a cumulative discount
of more than $1.7 million. Discounts on the homes ranged from $25,000 to $35,500 for each
property. The City was required to manage the rehabilitation of the properties as necessary and
sell them to eligible low- and moderate-income buyers, officers, teachers, or qualified military
personnel at prices not to exceed the lesser of fair market value or 115 percent of eligible
expenses to rehabilitate the properties. About a month after the City executed its ACA
agreement with HUD, it entered into a third-party agreement with Fairview Village II, LLC
(Fairview II), dated December 27, 2005. The agreement stated that Fairview II would implement
the ACA agreement. On May 25, 2006, an amended City Council ordinance authorized the City
to convey the ACA properties to Fairview Village, LLC, or any entity owned by RPM
Development, LLC. In accordance with the agreement and the ordinance, the City transferred
ownership of 17 properties to Fairview II and 51 to Fairview III. The ACA agreement allows
for the City to enter into a contract of sale with other parties for an ACA property before
rehabilitation is complete if the contract of sale describes the specific repairs remaining to be
made for that property and the repairs are made before resale of the ACA property.
Fairview II and Fairview III share a sole owner/principal, Edward Martoglio. Mr. Martoglio is
also an owner/principal of RPM Development, LLC (the developer), and RPM Contracting, LLC
(RPM Contracting). In September 2002, the City entered into a redevelopment agreement with
the developer to implement the Fairview neighborhood development plan. The developer is
responsible for the major affordable housing production activity in the Fairview neighborhood.
The City’s ACA properties are located in the Fairview neighborhood and are being rehabilitated
and sold by the developer. RPM Contracting is the general contractor for the ACA properties.
During the ACA application process, the City disclosed to HUD its intent to transfer its acquired
ACA properties to the developer for rehabilitation and resale. Although the ACA properties
were acquired by the City, the developer provided or paid the properties’ acquisition costs of
more than $1.4 million. As of November 15, 2008, the developer had rehabilitated 51 properties
and sold 50 of them. The New Jersey Housing and Mortgage Finance Agency (Agency)
provides the developer with funding and is the developer’s primary source of funds for
rehabilitating the ACA properties.
Our objective was to determine whether the City complied with specific requirements in the
ACA agreement pertaining to the resale of properties it acquired from HUD.
4
RESULTS OF AUDIT
Finding: The City Did Not Comply with Specific ACA Agreement
Provisions
The City did not comply with specific provisions in the ACA agreement. It did not (1) ensure
that 17 properties discounted by HUD for $441,500 were rehabilitated and sold within the
required timeframe, (2) ensure that all expenses included in net development costs for
rehabilitated properties were eligible, and (3) verify homebuyers’ eligibility and maintain the
appropriate related supporting documentation. These deficiencies occurred because the City did
not explore or seek alternate sources of funding for the rehabilitation of its acquired properties
and did not effectively implement its quality control plan. As a result, it could not support
$441,500 in property discounts from HUD for the 17 outstanding properties. Furthermore these
properties were not available for low- and moderate-income homebuyers and did not contribute
to the ACA program’s intent of improving the housing stock and revitalizing the neighborhood.
The City also recorded more than $11,600 in ineligible net development costs, which increased
the sales prices and, consequently, the mortgages for four properties by more than $11,700. In
addition, since the City did not properly verify homebuyers’ eligibility, it could not ensure that
homebuyers met the requirements stipulated in the ACA agreement.
Properties Acquired Were Not
Rehabilitated within the
Required Timeframe
The City did not ensure that properties acquired under the agreement were
rehabilitated and sold to homebuyers within the required timeframe. Section 5.4
of the ACA agreement requires that the City convey by deed 100 percent of
properties acquired to eligible buyers, officers, teachers, or qualified military
personnel within 18 months after the transfer effective date. The City acquired 68
properties from HUD. It then transferred the properties to a developer to be
rehabilitated and sold to eligible homebuyers. The developer did not rehabilitate
and sell all the properties within 18 months of being transferred. Of the 68
properties, 38 (55 percent) were not conveyed by deed to homebuyers within 18
months after HUD transferred the properties to the City. As of October 20, 2008,
the developer had rehabilitated 51 properties and sold 50 of them. We inspected
two of the remaining 17 properties that had not been rehabilitated to observe the
general condition of the properties prior to renovation work. For verification
purposes, we also inspected five of the 51 rehabilitated properties and noted that
the renovation work had been completed.
5
HUD provided a total discount of $441,500 related to the 17 properties that had
not been rehabilitated and sold. The developer indicated that it would incur
holding costs of $65,018 related to insurance, taxes, utilities, maintenance,
security, and other costs for the 17 properties over a one-year period. Because
the developer did not rehabilitate the 17 properties within the required timeframe,
the properties were not available for low- and moderate-income homebuyers and
did not contribute to the ACA program’s intent of improving the housing stock
and revitalizing the neighborhood. Furthermore, because of the additional
holding costs that may be incurred, the net development costs will increase, and
may increase home sale prices and mortgages. The City should be required to
demonstrate that the developer will be able to complete rehabilitation of the
remaining properties and provide a timeline for completion of the needed repairs.
If the developer is unable to rehabilitate and sell the remaining 17 properties, the
City should pay HUD the amount of the discount for each property, a total of
$441,500.
The City Did Not Ensure That
All Net Development Costs
Were Eligible
The City did not review the developer’s net property development costs to ensure
that all costs were eligible. At the beginning of our review in April 2008, the City
was compiling appropriate documentation on net development costs for its
rehabilitated ACA properties based on feedback it had received from HUD. HUD
determined from a monitoring review in April 2007 that the City’s documentation
of net development costs did not reflect a final account of the costs including
canceled checks, paid receipts, and invoices. As of the beginning of our review,
the City had rehabilitated 37 properties. At that time, it only had complete
records of net development costs for one of its rehabilitated ACA properties. We
reviewed the available supporting documentation for that property and three
others out of five for which the City had provided support as of July 31, 2008. In
all four cases reviewed, we found ineligible costs as defined by exhibit 8 of the
ACA agreement.1 The costs should not have been included in the calculation of
net development costs. In one case with net development costs totaling $68,602,
we identified $2,522 in ineligible costs including payments for office supplies,
general overhead, and other miscellaneous items. The documentation provided
indicated that the costs were not related to the ACA property. We noted similar
ineligible costs totaling $9,125 for the other three properties reviewed, resulting in
a total of $11,647 in ineligible costs for the four properties. The breakdown for
the four properties is as follows:
1
Exhibit 8 of the ACA agreement defines the eligible expenses that can be included in calculating net development
cost. Costs not listed as eligible are ineligible. Ineligible costs include, but are not limited to, general overhead,
developer fees, sales bonuses, and maintenance and management costs related to other properties.
6
Property address Net development costs Ineligible costs
2820 N. Congress Road $68,602 $2,522
2776 N. Congress Road $82,685 $4,785
2957 Hartford Road $71,858 $1,530
3173 Tuckahoe Road $65,256 $2,810
The accuracy of the calculation of net development costs is important because the
resale price of the City’s ACA properties cannot exceed the lesser of the fair market
value or 115 percent of net development costs to rehabilitate the properties. In all
four cases reviewed, the properties’ sale prices were based on the net development
costs, which were lower than their appraised values. The sale prices and the
appraised values for the four properties were as follows:
Property address Sale price Appraised value
2820 N. Congress Road $78,000 $86,000
2776 N. Congress Road $95,000 $96,500
2957 Hartford Road $82,000 $90,000
3173 Tuckahoe Road $75,000 $76,000
Because the net development costs for these four properties included ineligible costs
of $11,647, the sale prices of the properties increased and also caused the mortgage
amounts for the homebuyers to increase. For example, net development costs for the
property at 2820 N. Congress Road totaled $68,602 and the property was sold for
$78,000. The percentage of the sale price over net development costs was 113.70
percent.2 The maximum allowed according to the ACA agreement is 115 percent of
net development costs. Based on our review, $2,522 in ineligible expenses were
included in the net development costs for this property. If the ineligible costs are
eliminated, the sale price is reduced to $75,992.3 The difference between the initial
sale price and the adjusted sale price is $2,008.4 We reviewed the settlement
statement for the homebuyer and it indicates that the homebuyer obtained a
mortgage of $77,900. The City should buy down the mortgage by $2,008.5 For the
four properties reviewed, the mortgages increased by $11,733 (see appendixes C and
D). The City should buy down the existing mortgages for those homes.
The City Did Not Verify
Homebuyers’ Eligibility
The City did not verify homebuyers’ eligibility, as determined by the developer,
and maintain the appropriate related supporting documentation. The ACA
agreement defines eligible buyers as individuals with income at or below 115
percent of local area median income adjusted by family size, as defined by HUD
2
$78,000 (sale price)/$68,602 (net development costs) =113.70 percent
3
[$68,602 (net development costs) - $2,522 (ineligible costs)] x115percent = $75,992 (adjusted sale price)
4
$78,000 (sale price) - $75,992 (adjusted sale price) = $2,008 (buy down)
5
$77,900 (mortgage) - $2,008 (buy-down) = $75,892 (adjusted mortgage amount)
7
for the fiscal year in which the acquired ACA property is sold. Section 5.2E of
the ACA agreement requires the City to maintain sufficient documentation to
support income eligibility for homebuyers. Our review of five randomly selected
homebuyers indicated that the developer’s staff documented that the homebuyers
were eligible without sufficient documentation. For example, in one case, the
developer’s staff and the homebuyer signed an income certification indicating that
the information presented on the certification was true and accurate. The
homebuyer and a household member reported income from employment and
Social Security totaling $57,518. However, there was no documentation in the
file to support the source of income related to employment or Social Security
earnings. Examples of adequate documentation would include a pay stub and/or
third-party employment verification, as well as a statement of Social Security
earnings or verification from the Social Security Administration. We found no
evidence to indicate that the City verified the eligibility of the homebuyers as
determined by the developer. As a result, we had no assurance that the
homebuyers met the eligibility requirements stipulated in the ACA agreement.
The City Did Not Explore
Alternate Funding Sources and
Did Not Effectively Implement
Its Quality Control Plan
The deficiencies identified above occurred because the City did not explore
alternate sources of funding and did not effectively implement its quality control
plan. City staff stated that the 17 outstanding ACA properties had not been
rehabilitated because the developer ran out of funds. The Agency was the major
source of the developer’s funds. According to City staff, the developer would
need to wait until 2009 to apply for more funds from the Agency. We found no
evidence to indicate that the City had explored or sought alternate sources of
funding to rehabilitate the 17 outstanding properties. Although the City
transferred its ACA properties to the developer, the City was ultimately
responsible for ensuring that the ACA properties were rehabilitated and sold
within the required timeframes in accordance with the ACA agreement. The City
needs to develop a process for exploring or seeking alternate sources of funding
when existing funds for property repairs are exhausted to help prevent or reduce
instances in which rehabilitation work cannot be performed on its ACA properties
due to funding shortages.
The City also did not effectively implement its quality control plan. The City’s
quality control plan was accepted by HUD and incorporated into the ACA
agreement under exhibit 5. The quality control plan states that one of the goals of
the City’s monitoring system (pertaining to its ACA program) includes assurance
that development costs are correctly calculated. Section 2.2 in exhibit 5 states
that the City will review documents submitted by the developer for accuracy and
completeness. City staff stated that they reviewed the documentation submitted
8
by the developer but did not document their reviews. Therefore, we found no
evidence of reviews or steps/procedures taken by the City to ensure that net
development costs or expenses submitted by the developer were eligible and
accurately calculated in accordance with the ACA agreement. Also, contrary to
its quality control plan, which states that one of the goals of the City’s monitoring
system (pertaining to its ACA program) includes verifying buyer eligibility, and
section 5.2E of the ACA agreement, which states that the City will maintain
sufficient documentation to support income eligibility for homebuyers, the City
did not verify homebuyers’ eligibility, as determined by the developer, and
maintain the appropriate related supporting documentation as discussed above.
The City needs to effectively implement its quality control plan to ensure that it
complies with the requirements of the ACA agreement.
Conclusion
The City did not comply with the specific provisions of the ACA agreement. It
did not (1) ensure that properties acquired under the agreement were sold to
eligible homebuyers within the required timeframes, (2) ensure that $11,647 in
property net development costs for the properties were eligible, and (3) verify
homebuyers’ eligibility and maintain the appropriate related supporting
documentation. The deficiencies identified occurred because the City did not
explore or seek alternate sources of funding for the rehabilitation of its ACA
properties and did not effectively implement its quality control plan. As a result,
it was unable to support $441,500 in property discounts from HUD for 17
unrepaired properties and must buy down the mortgages for four properties which
had $11,647 in ineligible expenses included as part of their net development costs.
In addition, since the City did not properly verify homebuyers’ eligibility, it could
not ensure that homebuyers met the requirements stipulated in the ACA
agreement. The City should be required to demonstrate that it has the ability to
rehabilitate and sell the 17 outstanding properties and provide a timeline for
completion of the needed repairs. It should also effectively implement its quality
control plan to ensure that it complies with the requirements of the ACA
agreement.
Recommendations
We recommend that the Director, Office of Single Family Asset Management,
direct the City to
1A. Obtain and provide evidence that the developer has the necessary funds to
complete the rehabilitation and sale of the remaining 17 properties. If the
developer cannot provide evidence of financial ability to rehabilitate the
9
outstanding properties, the City should pay HUD $441,500 for the
discount it received on the properties.
1B. Obtain and provide the developer’s timeframes for completing
rehabilitation on outstanding properties.
1C. Develop a process for exploring or seeking alternate sources of funding to
help prevent or reduce instances in which rehabilitation work cannot be
performed on its ACA properties due to fund shortages.
1D. Buy down the mortgages for the four properties for which we identified
$11,647 in ineligible costs. Based upon our recalculation, the buy-down
amount is a total of $11,733 for the four properties (see appendix D for a
list of the four properties).
1E. Obtain documentation on net development costs for all of its rehabilitated
ACA properties from the developer and review the costs for eligibility and
accuracy in accordance with the ACA agreement. The City should
document its review of each ACA property and should buy down the
mortgages if it is determined that there were ineligible costs that increased
the mortgage amounts to the homebuyers.
1F. Verify and document the eligibility of each homebuyer. If the City is
unable to provide satisfactory documentation to support the eligibility of
any homebuyers, the City should pay HUD the amount of the sales
discounts associated with the homes.
We also recommend that the Director, Office of Single Family Asset Management
1G. Not renew the ACA agreement with the City until it has demonstrated that
it is in compliance with the requirements of the agreement.
10
SCOPE AND METHODOLOGY
We performed our review in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective. We believe that the evidence obtained provides a reasonable basis for our finding and
conclusions based on our audit objective.
We performed the audit at the City from April through October 2008. The City’s office is
located at City Hall – Suite 432, Camden, New Jersey. Our audit covered the period
November 1, 2005, through March 31, 2008. However, we extended the period as necessary to
achieve our objective. During the audit, we assessed the reliability of computer-processed data
relevant to our audit by comparing the data to hard-copy information. We found the computer-
processed data sufficiently reliable to meet our audit objective.
We discussed operations with staff from the City and key officials from HUD’s Philadelphia
Real Estate Owned Division office and its headquarters Single Family Asset Management
Division.
To determine whether the City complied with the ACA agreement, we obtained and reviewed the
following:
The ACA agreement and documents related to the City’s ACA application.
Correspondence prepared by HUD, the City, the developer, and other related parties.
Information obtained from public records using data retrieval tools including LexisNexis.
HUD reviews of the City including e-mails and memorandums.
Documentation on the ACA properties acquired by the City including but not limited to
supporting documentation for net development costs, homebuyer eligibility, and property
sales.
Audited financial statements for the City for the period ending June 30, 2007.
Financial data on the ACA properties submitted to the City by the developer of its ACA
properties.
Construction loan agreements between the developer of the City’s ACA properties and
the Agency.
Organizational chart for the City’s Division of Housing Services.
Ghenene & Associates’ Agreed-Upon Review Procedures Report on the City’s ACA
program, dated June 15, 2007.
We also performed the following:
We reviewed acquisition, sale, and other relevant information pertaining to the City’s 68
acquired ACA properties to determine whether the properties were rehabilitated and sold within
the timeframe specified by the ACA agreement.
11
We reviewed files for four of the City’s 68 acquired ACA properties to determine whether the
net development costs for the properties were based on supported eligible expenses. Our review
was limited because during our audit timeframe, the City was compiling appropriate
documentation on net development costs for its rehabilitated properties. As of the beginning of
our review in April 2008, the City only had complete records of net development costs for one of
its rehabilitated ACA properties. The City later provided supporting documentation for two
additional properties. We randomly selected another two properties for review from the City’s
listing of acquired properties. As of July 31, 2008, the City had support for net development
costs available for 5 of its 68 ACA properties. We reviewed the supporting documentation for
net development costs for four of the five properties. We also reviewed the settlement
statements for the four properties to determine the mortgage amounts. The City’s developer
included $11,647 in ineligible expenses in the net development costs for the four properties. As
a result, the related sale prices and, consequently, the mortgages increased by approximately
$11,700 (see appendixes C and D).
We randomly selected and reviewed the files pertaining to five properties from the City’s listing
of acquired ACA properties to determine whether the homebuyers met the eligibility
requirements stipulated by the ACA agreement.
We inspected 2 of the City’s 17 properties that had not been rehabilitated to observe the general
condition of the properties prior to repair work. The properties were selected by staff of the
City’s developer. For verification purposes, we also randomly selected and inspected 5 of the
City’s 51 rehabilitated properties from its listing of acquired properties.
12
INTERNAL CONTROLS
Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following controls are achieved:
Program operations,
Relevance and reliability of information,
Compliance with applicable laws and regulations, and
Safeguarding of assets and resources.
Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. They include the processes and procedures for planning,
organizing, directing, and controlling program operations as well as the systems for measuring,
reporting, and monitoring program performance.
Relevant Internal Controls
We determined that the following internal controls were relevant to our audit
objective:
Program operations – Policies and procedures that management has
implemented to reasonably ensure that a program meets its objectives.
Compliance with laws and regulations – Policies and procedures that
management has implemented to reasonably ensure that resource use is
consistent with laws and regulations.
Safeguarding resources – Policies and procedures that management has
implemented to reasonably ensure that resources are safeguarded against waste,
loss, and misuse.
Validity and reliability of data – Policies and procedures that management has
implemented to reasonably ensure that valid and reliable data are obtained,
maintained, and fairly disclosed in reports.
We assessed the relevant controls identified above.
A significant weakness exists if management controls do not provide reasonable
assurance that the process for planning, organizing, directing, and controlling
program operations will meet the organization’s objectives.
13
Significant Weaknesses
Based on our review, we believe that the following item is a significant weakness:
The City did not implement controls to ensure that properties acquired under
the ACA agreement were sold to eligible homebuyers within the required
timeframes, that all net property development costs were eligible, and that all
homebuyers were eligible.
14
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
Recommendation Ineligible 1/ Unsupported 2/
number
1A $441,500
1D $11,733
1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
that the auditor believes are not allowable by law; contract; or federal, state, or local
policies or regulations.
2/ Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
or activity when we cannot determine eligibility at the time of the audit. Unsupported
costs require a decision by HUD program officials. This decision, in addition to
obtaining supporting documentation, might involve a legal interpretation or clarification
of departmental policies and procedures.
15
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
16
Comment 2
Comment 3
17
OIG Evaluation of Auditee Comments
Comment 1 We are encouraged by the City’s plans to identify and pursue a funding source for
the rehabilitation of its outstanding ACA properties. The City should provide
HUD support or evidence for the three properties that have recently been placed
under construction. If the City provides satisfactory supporting documents, the
unsupported costs reported in recommendation 1A will be reduced.
Comment 2 The City is on the right track with its plan to review and certify financial
transactions in accordance with exhibit 8 of its ACA agreement, and should seek
HUD guidance for clarification of issues or requirements when needed.
Comment 3 This is the final report on our audit. Upon receiving correspondence from HUD
pertaining to the audit and the related findings, the City should work with HUD to
resolve the audit recommendations.
18
Appendix C
ANALYSIS OF SALE PRICES, NET DEVELOPMENT COSTS
AND INELIGIBLE COSTS
Percentage
of sale price
Net over net OIG Audit
Property Appraised Sale development development Ineligible adjusted
address value price costs costs costs sale price*
2820 N.
Congress Road $86,000 $78,000 $68,602 113.70% $2,522 $75,992
2776 N.
Congress Road $96,500 $95,000 $82,685 114.89% $4,785 $89,585
2957 Hartford
Road $90,000 $82,000 $71,858 114.11% $1,530 $80,877
3173 Tuckahoe
Road $76,000 $75,000 $65,256 114.93% $2,810 $71,813
* OIG adjusted sale price = (net development costs – ineligible costs) x 115 percent
Note: According to the ACA agreement rehabilitated properties may be sold at the lesser of fair
market value (appraised value) or 115 percent of eligible rehabilitation expenses (net
development costs). The OIG Audit adjusted sale price is the maximum allowable sale price for
each respective property.
19
Appendix D
CALCULATION OF MORTGAGE BUY-DOWN AMOUNTS AND
ADJUSTED MORTGAGES
Difference Homebuyer
between sale mortgage OIG Audit
OIG Audit price and OIG amount at adjusted
Property Sale adjusted Audit adjusted property mortgage
address price sale price sale price* settlement date amount**
2820 N.
Congress Road $78,000 $75,992 $2,008 $77,900 $75,892
2776 N.
Congress Road $95,000 $89,585 $5,415 $90,250 $84,835
2957 Hartford
Road $82,000 $80,877 $1,123 $65,600 $64,477
3173 Tuckahoe
Road $75,000 $71,813 $3,187 $71,350 $68,163
* The difference between the sale price and the OIG Audit adjusted sale price (from appendix C
above) represents the mortgage buy-down amount for each respective property based on the
ineligible costs identified in appendix C above. The total amount for the four properties is
$11,733.
** The OIG Audit adjusted mortgage amount is the homebuyer mortgage amount at the property
settlement date less the difference between the sale price and the OIG Audit adjusted sale price.
20
The City of Camden, New Jersey, Did Not Always Administer Its Asset Control Area Program in Compliance with HUD Requirements
Published by the Department of Housing and Urban Development, Office of Inspector General on 2009-01-30.
Below is a raw (and likely hideous) rendition of the original report. (PDF)