OFFICE OF INSPECTOR GENERAL
SEMIANNUAL REPORT TO CONGRESS
FOR THE PERIOD ENDING MARCH 31, 2017
U.S. DEPARTMENT
OF HOUSING
AND URBAN
DEVELOPMENT
SEMIANNUAL REPORT TO CONGRESS
OUR MISSION
To provide independent, objective, and
impactful oversight of the Department
to help ensure efficient and effective
programs and operations.
OUR VISION
To be the Office of Inspector General
of choice for driving accountability
and trust in Federal programs.
OUR VALUES
Accountability
Accountability is taking ownership of our
decisions and actions. We hold one another
accountable to a higher standard of conduct.
Courage
Courage is doing what is right, no
matter how difficult. We ask questions
and raise concerns when needed.
Respect
Respect is appreciating the uniqueness
of our workforce. We treat others with
dignity, civility, and mutual consideration.
Stewardship
Stewardship is accepting our responsibility
to serve the public good. We care about
leaving things better than we found them.
Trust
Trust is the result of promises kept.
We deliver on our commitments and
communicate honestly with our stakeholders.
A M E S S AG E F R O M I N S P E C T O R G E N E R A L D AV I D A . M O N T OYA
It is with great pleasure that I submit the U.S. In another significant audit, we reviewed HUD’s attempt to transition
Department of Housing and Urban Development its aging core financial systems to a Federal shared service provider
(HUD), Office of Inspector General’s (OIG) at the U.S. Department of the Treasury. During the last 14 years,
Semiannual Report to Congress for the first HUD has spent more than $131 million to modernize its legacy
half of fiscal year 2017. This report describes financial management systems. HUD’s most recent attempt, the New
the extraordinary and varied accomplishments Core Project, was designed to complete the transition of data to the
of the dedicated employees of HUD OIG. Treasury. However, this endeavor failed to significantly improve the
Among these are a continuation of OIG’s handling of HUD’s financial management transactions or produce
return on investment of 59 to 1 for every dollar spent on our work. reliable, useful, and timely financial information. As a result, the project
By promoting better stewardship and accountability, HUD OIG staff was terminated, and 97 percent of HUD programmatic transactions
ensures that we have a lasting, positive impact on the Department are still being executed using HUD’s aging legacy systems.
and our communities for the benefit of the American people. HUD OIG’s Office of Investigation continues to have significant
In the past reporting period, HUD OIG has conducted a number of impact on the Department through its investigative work. In one case,
noteworthy audits, evaluations, and investigations. Many of these have HUD OIG investigated a senior housing development located in upstate
their roots in longstanding problems that have crossed administrations New York, which was financed by a $46.5 million Federal Housing
and HUD secretaries over the years. Significant among these are a Administration (FHA)-insured loan. The investigation determined that
lack of priority in hiring skilled people to fill vitally needed positions. the developer fraudulently drew down more than $300,000 for personal
This lack of priority includes taking more than 18 months to fill HUD’s use and also inflated bids for more than $865,000 in materials through
Chief Financial Officer position. We also see the hiring of senior a kickback scheme. The developer and other conspirators were
leaders at HUD with limited accounting backgrounds, even though their found guilty of a number of crimes and sentenced to 37 to 50 months
primary responsibilities need that experience and education to execute incarceration plus other penalties and restitutions. In addition, the
the duties and oversight in preparing Federal financial statements. developer defaulted on its FHA-insured mortgage, which resulted in the
This problem was best illustrated during our financial audit, when development’s being auctioned off at a loss of more than $28 million.
we found several instances in which rounding was performed to the In another case, in Baltimore, MD, a development company used
nearest billion and hundred billion, while the Office of Management real estate agents to find straw buyers to purchase properties using
and Budget’s standard of rounding is to the nearest million. FHA-insured mortgage loans supported by fraudulent documentation.
We are also seeing serious shortcomings in information These loans swiftly fell into default and resulted in more than
technology (IT) systems, of which 87 percent are at or near the end $1.8 million in losses to FHA. The investigation resulted in five
of their life cycle. These systems include 400 IT products that no conspirators pleading guilty to violating multiple Federal criminal
longer have technical support. This vital component of HUD also statutes and being sentenced to 15 to 27 months incarceration
suffers from the same difficulty of filling critical staff positions with and paying more than $1.8 million in restitution to FHA.
individuals having the appropriate skills, background, and knowledge One area of significant development has been the maturing of
to oversee the rapidly changing world of computer systems, our Integrity and Compliance Program (ICP), which we launched in
especially in an environment of increasing cybersecurity threats. December 2015. The ICP continues to demonstrate our commitment
A direct result of these problems is seen in audits we conducted to the public to maintain a high level of integrity and dedication to
during this reporting period, which were especially concerning. In an creating a values-based ethical culture. This then becomes the
audit of HUD’s consolidated financial statements and notes for fiscal standard for every decision we make and every action we take. We
years 2016 and 2015 (restated), dated November 15, 2016, we issued are currently finishing a manager-led training program for all of
a disclaimer of opinion because of many irregularities and because our employees. This program incorporates scenarios and ethical
HUD was unable to prepare its financial statements in time for this dilemmas that are based on actual events and require staff to use
audit. However, after this audit was completed, we discovered more HUD OIG’s core values to address the issues presented. These core
than half a trillion dollars in additional errors, which caused HUD to values have also been included in our staff’s performance plans.
withdraw its financial statements included in its agency financial report. In closing, I would like to express my continued gratitude to
HUD later revised its financial statements. On March 1, Congress and the Department for their sustained commitment to
2017, we revised and reissued our report which continued our improving HUD’s programs and operations. I also want to reiterate
disclaimer opinion and showed that HUD’s financial statements my sincere appreciation of the people of HUD OIG for their dedication
still had 11 material weaknesses, 7 significant deficiencies, to the vitally important work they undertake every day. Through
and 5 instances of noncompliance with applicable laws and their collective effort, HUD OIG has surpassed its goals and
regulations. This is the third year in a row in which HUD OIG fulfilled its mission and responsibilities to our Nation’s citizenry.
could not issue a clean opinion on HUD’s financial statements.
David A. Montoya | Inspector General
PROFILE OF PERFORMANCE
For the period October 1, 2016, to March 31, 2017
AUDIT RESULTS1 THIS REPORTING PERIOD
Recommendations that funds be put to better use $3,316,329,791
Recommended questioned costs $144,534,022
Collections from audits $22,763,570
Administrative sanctions 0
Civil actions 2
Subpoenas 10
Personnel action 0
INVESTIGATION RESULTS1 THIS REPORTING PERIOD
Total restitutions and judgments $196,109,878
Total recoveries and receivables to HUD programs $10,959,917
Arrests 157
Indictments and informations 154
Convictions, pleas, and pretrial diversions 105
Civil actions 19
Total administrative sanctions 157
Suspensions 68
Debarments 52
Limited denial of participation 1
Removal from program participation 0
Evictions 13
Other2 23
Systemic implication reports 2
Search warrants 27
Subpoenas 342
JOINT CIVIL FRAUD RESULTS1 THIS REPORTING PERIOD
Recoveries and receivables to HUD programs or
$54,754,576
HUD program participants
Recoveries and receivables for other entities3 $12,869,422
Recommendations that funds be put to better use $0
Civil actions 4
Administrative sanctions 18
1T he Offices of Audit and Investigation and the Joint Civil Fraud Division periodically combine efforts and conduct joint civil fraud initiatives. Outcomes from these initiatives are shown in the Joint Civil
Fraud Results profile and are not duplicated in the Audit Results or Investigation Results.
2 Includes reprimands, suspensions, demotions, or terminations of the employees of Federal, State, or local governments or of Federal contractors and grantees, as the result of OIG activities.
3 This amount represents funds that relate to HUD programs but were paid to other entities rather than to HUD, such as funds paid to the U.S. Treasury for general government purposes.
SEMIANNUAL REPORT TO CONGRESS
TRENDING
INSPECTOR GENERAL EMPOWERMENT ACT
BACKGROUND AND SUMMARY
The Inspector General Empowerment Act (Public Law 114-317) (IGEA), enacted in December 2016, mandates
several new reporting requirements in the Offices of Inspectors General’s (OIG) Semiannual Report to Congress
(SAR). Below are the statutory requirements stipulated in the IGEA with the internal document hyperlinks to the
detailed information as addressed throughout the SAR, as appropriate:
• Summary of all reports with no establishment comment
o Trending Section (below)
• Summary of all reports with outstanding unimplemented recommendations, including potential cost
savings
o Appendix 5 - Open Recommendations
• Statistical table showing investigative report metrics
o Trending Section
• Whistleblower retaliation instances
o Chapter 11 - Whistleblower Ombudsman
• Instances of HUD interference through budget constraints, resistance, or objections
o Trending Section
• Undisclosed reports
o Appendix 4 - Undisclosed Reports
INVESTIGATIVE STATISTICS AND METRICS
The IGEA requires the SAR to include statistical tables and metrics for investigative cases. For the statistical
table below, the data used were extracted from the U.S. Department of Housing and Urban Development, Office
of Inspector General’s (HUD OIG) Case Management System. The Case Management System and its
underlying infrastructure allow for data input and maintain data integrity during the complete investigative case
cycle, while ensuring data privacy and confidentiality. The system was developed in .Net 4.5.1, and the
database is SQL 2012. HUD OIG develops queries to extract data from the Case Management System to meet
business requirements, such as the information used to create this statistical table. The footnotes to the table
provide additional guidance pertaining to each requested category of information. HUD OIG’s Case
Management System is not currently configured to quantify persons referred for prosecution or differentiate
whether a case or person was referred for Federal prosecution or State or local prosecution.
SEMIANNUAL REPORT TO CONGRESS
Investigative statistical table:
Requirement Total
A. Total number of investigative reports issued during the reporting period 4 220
B. Total number of persons referred to the U.S. Department of Justice for criminal
148
prosecution during the reporting period 5
C. Total number of persons referred to State and local prosecuting authorities for criminal
148
prosecution during the reporting period 6
D. Total number of indictments and criminal informations during the reporting period that
154
resulted from any prior referral to prosecuting authorities 7
INVESTIGATIONS OF SENIOR GOVERNMENT EMPLOYEES
The IGEA requires the SAR to summarize each investigation involving a senior Government employee when
allegations of misconduct were substantiated. Listed below are the cases for this reporting period:
FALSIFICATION OF GOVERNMENT HIRING DOCUMENTS AND FAILURE TO TAKE
APPROPRIATE ACTION
During the selection process for a noncompetitive position, a HUD OIG director became aware of the fact that the
resume of a potential applicant contained false information. Despite knowing this information, the director selected
the candidate for the position. Furthermore, it was determined, that a senior HUD OIG executive was advised of the
fraudulent resume and failed to take appropriate action against the director and applicant upon receipt of this
information. The director was demoted to a GS-14 and received a 14-day suspension. The senior executive
received a 15-day suspension. HUD OIG referred the case to the United States Attorney’s Office (USAO) on
January 20, 2016, for false statements. On January 20, 2016, the USAO declined criminal prosecution due to
available administrative remedies.
PROHIBITED PERSONNEL PRACTICES AND OBSTRUCTION OF JUSTICE
A HUD administrative officer-director admitted that she made an independent decision to hire a new Intern based
on his gender, a violation of Title 5 United States Code (U.S.C.) 2302 - Prohibited personnel
practices. Additionally, the director attempted to influence the statement of events that was being provided to
investigators by witnesses in violation of Title 18 U.S.C. 73 - Obstruction of justice. HUD OIG referred the case to
the USAO on August 31, 2016. On August 31, 2016, the USAO declined criminal prosecution due to available
administrative remedies. The director received a verbal reprimand for her actions and retired from Federal service.
CONFLICT OF INTEREST AND FAILURE TO TAKE APPROPRIATE ACTION
4
Includes approved reports of investigation.
5
Includes total cases presented for prosecution. HUD OIG’s Case Management System is not currently configured to quantify persons referred.
6
Includes total cases presented for prosecution. HUD OIG’s Case Management System is not currently configured to quantify persons referred.
7
Includes all charging documents reported: criminal complaints, indictments, informations, and superseding indictments.
SEMIANNUAL REPORT TO CONGRESS
A HUD attorney admitted she approved reimbursement for an ineligible legal services invoice. She admitted to this
approval despite her direct knowledge of a subordinate employee’s existing conflict of interest in working on
matters related to a particular housing authority at the time, a violation of 5 CFR (Code of Federal Regulations) Part
2635 - Standards of Ethical Conduct for Employees of the Executive Branch. HUD OIG referred the case to the
USAO on May 8, 2014, for conflict of interest violations. On May 8, 2014, the USAO declined criminal
prosecution. The case was declined based on the facts gathered and the USAO’s lack of interest in pursuing charges
in this matter. OIG later referred this matter to HUD. HUD advised that additional corrective action was
unnecessary as the Department had already taken corrective action before receiving OIG’s final report of
investigation by conducting remedial training for the manager and employee.
SUMMARY OF REPORTS WITH NO ESTABLISHMENT COMMENT
The Empowerment Act requires OIGs to report on each audit and evaluation report for which the Department did
not return comments within 60 days of HUD OIG providing the report to the Department. There are no instances to
report this period.
OIG INDEPENDENCE
The IGEA requires the SAR to include a detailed description of any attempt by the establishment to interfere with
the independence of OIG, including incidents in which the establishment has resisted or objected to oversight
activities or restricted or significantly delayed access to information. There are no instances to report this period.
SUMMARY OF REPORTS WITH OPEN RECOMMENDATIONS
The Empowerment Act requires OIGs to report on each audit and evaluation report for which there are any
outstanding unimplemented recommendations, including the aggregate potential cost saving of these
recommendations. A summary of these recommendations for the Office of Audit and Office of Evaluation are
presented below. The complete details of each open recommendation can be found in Appendix 5
Audit
The following table summarizes the Office of Audit’s reports with open recommendations. The recommendations
remain open because the agency management has not yet come to a decision about the recommendation; because
the agency management has not yet finished implementing the recommendation; or because the agency management
and the Inspector General disagree about the recommendations.
SEMIANNUAL REPORT TO CONGRESS
Number of open Cumulative estimated cost savings from
Year
recommendations open recommendations
Pre-2001 6 $3,992,169
2001 1 $320,000
2002 7 $1,382,626
2003 15 $1,920,011
2004 9 $9,071,874
2005 5 $3,148,423
2006 37 $18,334,821
2007 27 $6,593,635
2008 51 $72,957,525
2009 33 $80,231,180
2010 46 $64,222,765
2011 74 $107,063,059
2012 56 $23,086,047
2013 173 $518,341,775
2014 265 $2,080,155,207
2015 369 $1,675,453,066
2016 743 $9,294,027,584
2017 166 $101,828,877
Total 2083 $14,062,130,644
Evaluation
The Office of Evaluation conducts evaluations focused on improving departmental process and programs. As of the
writing of this SAR, our recommendations have not focused on producing direct cost savings, but rather improve
program effectiveness and reduce the likelihood of negative outcomes. For example, during this reporting period,
some of our recommendations addressed how HUD should enhance the risk assessment process to provide grantee
technical assistance.
The following table summarizes the Office of Evaluation’s reports with open recommendations
Number of Open
Year
Recommendations
Pre -2013 0
2013 18
2014 27
2015 25
2016 24
2017 0
Total 94
TABLE OF CONTENTS
Chapter 1 – Integrity and Compliance Program..............................................................................................1
Chapter 2 – Single-Family Programs................................................................................................................ 6
Audit.............................................................................................................................................................................................6
Investigation...............................................................................................................................................................................8
Chapter 3 – Public and Indian Housing Programs........................................................................................ 10
Audit...........................................................................................................................................................................................10
Investigation............................................................................................................................................................................. 12
Chapter 4 – Multifamily Housing and Office of Healthcare Programs....................................................... 14
Audit...........................................................................................................................................................................................14
Investigation.............................................................................................................................................................................16
Chapter 5 – Community Planning and Development Programs..................................................................17
Audit........................................................................................................................................................................................... 17
Investigation.............................................................................................................................................................................18
Chapter 6 – Disaster Recovery Programs...................................................................................................... 20
Audit........................................................................................................................................................................................... 21
Investigation.............................................................................................................................................................................23
Evaluation.................................................................................................................................................................................23
Chapter 7 – Other Significant Audits and Investigations............................................................................ 24
Audit...........................................................................................................................................................................................24
Evaluation................................................................................................................................................................................ 28
Chapter 8 – Joint Civil Fraud Initiatives........................................................................................................ 30
Chapter 9 – Legislation, Regulations, and Other Directives....................................................................... 33
Chapter 10 – Audit Resolution........................................................................................................................ 37
Chapter 11 – Whistleblower Ombudsman Program..................................................................................... 56
Appendix 1 – Peer Review Reporting............................................................................................................. 58
Appendix 2 – Audit Reports Issued................................................................................................................. 60
Appendix 3 – Tables.......................................................................................................................................... 66
Appendix 4– Undisclosed Reports.................................................................................................................. 90
Appendix 5 – Open Recommendations.......................................................................................................... 94
OIG Telephone Directory ..............................................................................................................................289
Acronyms and Abbreviations List.................................................................................................................293
Reporting Requirements ............................................................................................................................... 296
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 1 – INTEGRITY AND COMPLIANCE PROGRAM
THE INTEGRITY & COMPLIANCE PROGRAM: ASSESSMENT AND NEXT STEPS
In October 2015, the U.S. Department of Housing and Urban Development, Office of Inspector General (HUD
OIG), set out to establish its Integrity and Compliance Program (ICP). This program, modeled after private sector
corporate ethics and compliance programs, was developed to provide a framework and foundation for ethical
decision making and behavior. With the creation of the ICP, we have taken proactive steps to examine how we can
build and sustain our values-based culture, which is reflected by our Core Values.
It is the mission of every Office of Inspector General to conduct independent and objective oversight of the program
and operations of its department or agency. Helping to ensure effective and efficient operations of its Departments
and ferreting out fraud, waste, abuse, and mismanagement is at the heart of OIG’s mission. There is a high standard
for those who work within the Inspector General community. Employees must comport themselves in a manner
that cultivates trust, confidence, and respect in the performance of their duties as well as their interactions with their
coworkers.
KEY OBJECTIVES
As we developed the ICP, we had several key objectives:
assess our employees’ perceptions of OIG’s ethical culture,
compare our results vis-à-vis the National Business Ethics Survey benchmarks 8, and
help identify key strengths and areas of improvement regarding ethics and compliance within OIG.
Since the creation of the program, the Chief Integrity and Compliance Officer has led the effort to educate staff on
ICP advances and share the results of our cultural assessment survey.
8
The National Business Ethics Survey generates the U.S. benchmark on ethical behavior in corporations.
1
SEMIANNUAL REPORT TO CONGRESS
CULTURAL ASSESSMENT SURVEY
The assessment focused strongly on the leadership climate and ethical culture. This assessment was completed in
December 2015 through an online survey conducted by an independent and objective third party. 9 In addition to
identifying priorities for HUD OIG, the questions in the survey were designed to provide an assessment of the key
objectives referenced above. HUD OIG is the first in the Executive Branch to undertake an agency wide employee
survey focused exclusively on integrity and values. Of our 620 employees, 457 responded to the survey. Not only
was the 74 percent response rate remarkable, it was among the highest of any organization, private and public,
surveyed by the Ethics and Research Center.
Overall 457 HUD OIG employees participated in the
survey, a 74 % response rate.
What the data clearly demonstrated was that employees
agreed that HUD OIG has a strong ethical culture,
were committed to the effort, and
shared a common set of core values.
But the result also showed that we had areas in need of improvement, such as
a gap exists between top management’s commitment to integrity and employees’ perception of its
commitment, and
we need to do more to reward individuals who excel in upholding our core values.
9
The Ethics and Compliance Initiative conducted the survey for HUD OIG.
2
SEMIANNUAL REPORT TO CONGRESS
CORE VALUES
At the heart of the ICP is the establishment of the agency’s Core Values. As a result of employee feedback from the
assessment, five Core Values were identified. They are:
Accountability
Courage
Respect
Stewardship
Trust
CORE VALUES: DEVELOPING OUR “SPEAK UP – LISTEN UP” CULTURE
The Core Values identified in the survey serve as the foundation for our professional conduct and serve as the
essential elements toward building a better workplace. A key step in the formulation of our program was to
communicate these values to our staff. Communicating our values was accomplished through an internal interactive
campaign focused across the workforce.
From his first day on the job, Inspector General Montoya has communicated and advanced his belief that an Office
of Inspector General has to model a “Speak Up – Listen Up” culture if it expects its parent organization to do the
same. The communication initiative provided staff with the self-empowerment tools essential to raising concerns
and institutionalizing a “Speak Up – Listen Up” culture. Our tools included written communications, brochures,
and videos conveying to staff where they could go to raise questions or report concerns or suspected misconduct.
Also, a guide was published clarifying the roles of each office and program that receives these reports.
In December 2016, we took the unprecedented step of developing and disseminating a new Accountability Report to
all staff. This report listed charges and actions taken regarding misconduct and ethical lapses of OIG employees.
The introduction to the report noted that
Accountability involves a process of seeing it, owning it, solving it, and doing it. Key to learning is
accepting responsibility and being accountable for our decisions and actions. Accountability needs to
have consequences, which are both positive and negative, and those consequences need to be consistently
applied. It is important to not only practice accountability, but as much as possible, communicate that
commitment to accountability.
3
SEMIANNUAL REPORT TO CONGRESS
The release of the report demonstrates the importance of transparency and illustrates how HUD OIG holds its staff
accountable.
CORE VALUES TRAINING: BRICKS & MORTAR: BUILDING A BETTER WORKPLACE
In March 2017, HUD OIG initiated a 2-hour, manager-led training program entitled “Bricks & Mortar: Building a
Better Workplace.” The training, geared for all employees, included scenarios based on actual events that have
occurred within OIG. Staff was encouraged to openly discuss ethical dilemmas and determine possible resolutions
relative to HUD OIG core values. The training sessions were an opportunity to talk openly about our challenges,
our work environment, and how our Core Values help us build a better workplace. The training also provided staff
with the options available to raise questions or report concerns or suspected misconduct. All training sessions will
be concluded in May 2017.
4
SEMIANNUAL REPORT TO CONGRESS
NEXT STEPS
The ICP is designed to strengthen and sustain our culture of compliance and integrity. In doing so, it supports a
professional environment in which every individual is empowered to speak up and use our Core Values as a guide
to make smart decisions and do the right thing.
We hope our success will encourage the Department and other Federal agencies to follow our example, but more
importantly, we hope to become a model for HUD to replicate, since such programs are relatively uncommon within
the Executive Branch.
“I am proud that we are the first OIG to create this type of program. It is
my hope that through our ICP, we will demonstrate our commitment to
the highest standard of integrity and that our efforts become a model for
the rest of the Inspector General community and our Department.”
-The Honorable David A. Montoya, Inspector General
5
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 2 – SINGLE-FAMILY PROGRAMS
The Federal Housing Administration (FHA) single-family programs provide mortgage insurance to mortgage
lenders that, in turn, provide financing to enable individuals and families to purchase, rehabilitate, or construct
homes. Some of the highlights from this semiannual period are noted below.
AUDIT
Strategic Initiative 1: Contribute to the reduction of fraud in single-family insurance
programs
Key program results Questioned costs Funds put to better use
Audit 5 audits $20,636 $2,238,721,464
REVIEW OF FHA PAYMENT OF DELAYED CLAIMS
The U.S. Department of Housing and Urban Development, Office of Inspector General (HUD OIG), audited HUD
to determine whether it paid servicers’ claims for properties that did not foreclose or convey to HUD on time.
HUD paid claims for an estimated 239,000 properties that servicers did not foreclose upon or convey on time. OIG
estimated that HUD paid nearly $142 million for servicers’ claims for unreasonable and unnecessary debenture
interest that was incurred after the missed foreclosure or conveyance deadline and nearly $2.1 billion for servicers’
claims for unreasonable and unnecessary holding costs that were incurred after the deadline to convey.
OIG recommended that HUD issue a change to 24 CFR (Code of Federal Regulations) Part 203 to correct
deficiencies that allowed more than $2.2 billion in unreasonable and unnecessary costs to the FHA insurance fund.
These changes include a maximum period for filing insurance claims and disallowance of expenses incurred beyond
established timeframes. OIG also recommended that HUD develop a strategic information technology plan to make
significant operational changes to its monitoring of single-family conveyance claims to ensure that servicers comply
with foreclosure and conveyance timeframes. OIG further recommended that HUD develop and implement controls
to identify noncompliance with current regulations at 24 CFR 203.402. (Audit Report: 2017-KC-0001)
REVIEW OF DEPARTMENTAL CLEARANCE PROTOCOLS FOR FHA PROGRAMS
HUD OIG audited FHA’s process for making changes to its programs, policies, and operations to determine
whether HUD followed the proper requirements and procedures when implementing changes to FHA single-family
programs, policies, and operations.
HUD failed to follow required departmental clearance procedures when implementing changes to FHA programs.
Specifically, HUD did not always pursue required departmental clearance and posted draft documents or directives
in final form before conducting departmental clearance. When departmental clearance was pursued, HUD did not
always ensure that key officials reviewed the documents before issuance. As a result, significant policy information
6
SEMIANNUAL REPORT TO CONGRESS
was distributed without proper review and clearance, which undermined the intent and integrity of the process. This
action effectively bypassed the required review by other HUD offices, including OIG, which had questioned or
opposed document policies in some cases. Additionally, the risk of issuing incorrect or inconsistent information
was increased, potentially resulting in significant financial losses or other unintended consequences.
OIG recommended that HUD (1) pursue departmental clearance for the 13 documents and policies identified that
did not go through required departmental clearance and recall any documents that cannot be appropriately cleared;
(2) update its clearance tracking system to include missing concurrence forms; (3) ensure that appropriate
concurrence forms were obtained and documented for directives issued by other HUD program offices; and (4)
implement controls, update policies, and provide training to ensure that directives are reviewed and documented as
required. (Audit Report: 2017-LA-0002)
REVIEW OF HUD’S OVERSIGHT OF FHA-INSURED LOANS WITH BORROWER-FINANCED
DOWNPAYMENT ASSISTANCE
HUD OIG audited HUD’s oversight of FHA-insured loans originated with borrower-financed downpayment
assistance to determine whether HUD had adequate controls to ensure that FHA-insured loans with downpayment
assistance complied with HUD requirements.
HUD failed to adequately oversee more than $16.1 billion in FHA loans that may have been originated with
borrower-financed downpayment assistance to ensure compliance with HUD requirements, putting the FHA Mutual
Mortgage Insurance Fund at unnecessary risk. Between October 1, 2015, and September 30, 2016, HUD
guaranteed nearly $12.9 billion in FHA loans that may have contained questionable downpayment assistance.
While government entities are not prohibited sources of downpayment assistance, the assistance provided through
these programs did not comply with HUD requirements. FHA borrowers were required to obtain a premium
interest rate and, therefore, repaid the assistance through higher mortgage payments and fees. Despite the
prohibition against similar seller-funded programs, HUD’s requirements appeared to have enabled the growth of
these questionable programs. In addition, HUD did not adequately track these types of loans and review the
funding structure of these programs. Despite concerns raised by OIG, HUD failed to protect FHA borrowers
against the higher monthly mortgage payments and higher fees imposed on them, which increased the risks to the
Insurance Fund in the event of default.
OIG recommended that HUD (1) reconsider its position on questioned borrower-financed downpayment assistance
programs, (2) develop and implement policies and procedures for reviewing loans with downpayment assistance,
(3) develop requirements for lenders to review downpayment assistance programs, (4) require lenders to obtain a
borrower certification that details borrower participation, (5) ensure that lenders enter all downpayment assistance
data into FHA Connection, and (6) implement data fields where lenders would be required to enter specific
downpayment assistance information. (Audit Report: 2017-LA-0003)
7
SEMIANNUAL REPORT TO CONGRESS
INVESTIGATION
Program results
Administrative - civil actions 54
Convictions - pleas - pretrial diversions 34
Financial recoveries $163,892,032
SEVEN IMPRISONED FOR LOAN MODIFICATION SCAM
Seven employees of a mortgage modification company were sentenced in U.S. District Court in connection with
earlier guilty pleas to conspiracy to commit mail fraud, wire fraud, and misprision of a felony. Collectively, the
defendants were sentenced to more than 26 years imprisonment and ordered to pay more than $2.4 million in
restitution to the victims. The defendants jointly operated a series of California-based companies that falsely
purported to provide home loan modification services to many homeowners in exchange for upfront fees. To
induce homeowners to pay these fees, the defendants told the homeowners they had been approved for
modifications on extremely favorable terms, the modification already had been negotiated with the homeowner’s
lenders, and they would receive financial assistance under various government relief programs. None of those
promises were true, and few homeowners received any type of mortgage loan modification through the defendants’
companies. HUD OIG, the United States Postal Inspection Service, the Federal Bureau of Investigation (FBI), the
Special Inspector General for the Troubled Asset Relief Program, the Federal Housing Finance Agency OIG, and
Homeland Security Investigations conducted this investigation. (Bridgeport, CT)
SEVEN MORTGAGE COMPANY EMPLOYEES ORDERED TO PAY ALMOST $57 MILLION
FOR CONSPIRACY AND WIRE FRAUD
Seven employees of an FHA-insured lender were sentenced in U.S. District Court for their earlier guilty pleas to
conspiracy and wire fraud for their roles in a mortgage fraud conspiracy. Collectively, the defendants were
sentenced to a total of 17 years of probation and ordered to pay almost $57 million in restitution to FHA. The
employees participated in a mortgage fraud scheme by accepting, processing, and submitting fraudulent loan
applications for as many as 189 FHA-insured mortgages that contained false information pertaining to borrower
income, assets, employment, rental payments, and other credit worthiness documentation. HUD OIG and the FBI
conducted this investigation. (Newark, NJ)
FIVE SENTENCED TO PRISON FOR ROLE IN MORTGAGE FRAUD SCHEME
Five codefendants were sentenced in U.S. District Court following their convictions of mail fraud, wire fraud, and
conspiracy. Collectively, the defendants were sentenced to 10 years in jail and ordered to pay more than $1.8
million in restitution to FHA and $3.1 million to various victims. The codefendants recruited individuals to
purchase renovated houses owned by development companies and falsified income and asset information in order
8
SEMIANNUAL REPORT TO CONGRESS
for borrowers to qualify for the home loans. The defendants then received substantial payments from the proceeds
of the sales. HUD OIG and the FBI conducted this investigation. (Baltimore, MD)
MORTGAGE COMPANY FOUNDER ORDERED TO PAY MORE THAN $10 MILLION TO
GOVERNMENT
In a civil judgement filed in U.S. District Court, the founder of a mortgage company was ordered to pay the
government $10.3 million for violations of the False Claims Act. The owner submitted false verification forms
showing that the HUD-approved loan correspondent was not involved in any proceeding “that could result in or has
resulted in a criminal conviction, debarment, limited denial of participation, suspension or civil monetary penalty,”
when he was under indictment. FHA realized losses of more than $3.4 million when 237 FHA-insured loans
defaulted. HUD OIG conducted this investigation. (Chicago, IL)
9
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 3 – PUBLIC AND INDIAN HOUSING PROGRAMS
The U.S. Department of Housing and Urban Development (HUD) provides grants and subsidies to more than 3,300
public housing agencies (PHA) nationwide. Many PHAs administer both public housing and Section 8 programs.
HUD also provides assistance directly to PHAs’ resident organizations to encourage increased resident
management entities and resident skills programs. Programs administered by PHAs are designed to enable low-
income families, the elderly, and persons with disabilities to obtain and reside in housing that is safe, decent,
sanitary, and in good repair. Some of the highlights from this semiannual period are noted below.
AUDIT
STRATEGIC INITIATIVE 2: CONTRIBUTE TO THE REDUCTION OF ERRONEOUS
PAYMENTS IN RENTAL ASSISTANCE
Key program results Questioned costs Funds put to better use
Audit 9 audits $6,508,918 $12,531,138
SECTION 8 HOUSING CHOICE VOUCHER PROGRAM
HUD OIG audited the Town of Amherst, NY’s Housing Choice Voucher program administered through a
contractor, Belmont Housing Resources for Western New York, to determine whether officials established and
implemented adequate controls over the Town’s Housing Choice Voucher program to ensure compliance with HUD
regulations.
The Town and its contractor generally established and implemented adequate controls over the Town’s Housing
Choice Voucher program for admission, initial application, recertification, and rental assistance payment and unit
size determinations; however, they did not ensure that units met housing quality standards. Specifically, of 70 units
inspected, 63 failed to meet housing quality standards, and 41 were materially noncompliant. Additionally, the
Town and its contractor did not conduct adequate housing quality standards quality control inspections and did not
address tenant complaints related to the condition of program units adequately and in a timely manner. If the Town
and its contractor do not improve the housing quality standards inspection process for the Town’s Housing Choice
Voucher program, the Town could spend more than $9.3 million on units that fail to meet HUD’s minimum housing
quality standards in the next year.
OIG recommended that HUD instruct Town officials to (1) reimburse the program from non-Federal funds more
than $118,000 spent on ineligible costs related to housing assistance payments disbursed and administrative fees
received for units that materially failed to meet HUD’s housing quality standards and overpayments of housing
assistance due to recertification errors; (2) certify that the identified deficiencies have been corrected for the units
cited; and (3) implement procedures to ensure that the Town’s Housing Choice Voucher program units meet
housing quality standards, housing quality standards quality control inspections are adequately conducted, and
tenant complaints related to the condition of program units are resolved adequately and in a timely manner. (Audit
Report: 2017-NY-1003)
10
SEMIANNUAL REPORT TO CONGRESS
HUD OIG audited the public housing and Housing Choice Voucher programs of the Houston Housing Authority in
Houston, TX, to determine whether the Authority (1) followed HUD requirements when it procured goods and
services and incurred miscellaneous expenses, (2) calculated tenant housing assistance payments in accordance with
HUD payment standards, and (3) conducted tenant certifications in a timely manner.
The Authority did not follow HUD’s regulations or its own policies when contracting for goods and services and
paying for miscellaneous expenses. It also did not always use correct payment standards or perform annual tenant
recertifications for its program tenants in a timely manner and in accordance with HUD regulations and its
administrative plan. As a result, the Authority paid more than $3.2 million in Federal funds for ineligible and
unsupported costs.
OIG recommended that HUD require the Authority to (1) repay more than $183,000 in ineligible expenditures; (2)
support or repay more than $3 million in questionable costs; and (3) implement adequate internal controls, including
written procedures, to ensure that its procurement and expense payments comply with HUD’s regulations and its
own policies. (Audit Report: 2017-FW-1003)
REVIEW OF PROGRAM PARTICIPANTS RECEIVING MULTIPLE SUBSIDIES
HUD OIG audited HUD’s Office of Public and Indian Housing to determine whether HUD prevented program
participants from concurrently receiving subsidies from both public housing and multifamily subsidy programs.
HUD did not prevent program participants from receiving multiple subsidies in 38 of the 80 files reviewed. As a
result, OIG estimated that HUD did not have more than $2.24 million available to assist other eligible participants.
OIG recommended that HUD (1) require PHAs to run the Enterprise Income Verification existing tenant search
during the admission process and retain the results in the tenant file, which would avoid unnecessary costs to
HUD’s subsidy programs, allowing more than $935,000 to be put to better use; (2) require PHAs to report the
program admission date to any multifamily property listed on the Enterprise Income Verification existing tenant
search during the admission process; (3) require PHAs to maintain support for any communication with a
multifamily property listed on the Enterprise Income Verification existing tenant search; (4) require HUD staff to
review Enterprise Income Verification reports from the last 12-month period during onsite housing agency reviews
to ensure that any multiple subsidies have been resolved; and (5) implement recommendations 1 through 4 to ensure
that more than $2.24 million in housing assistance funds will be put to better use. (Audit Report: 2017-KC-0002)
PUBLIC HOUSING PROGRAM
HUD OIG audited the public housing program of the Port Huron Housing Commission in Port Huron, MI, to
determine whether the Commission administered its program in accordance with HUD’s and its own program
requirements.
The Commission did not properly implement asset management. Specifically, it inappropriately allocated more
than $1.4 million in expenses incurred by its central office cost center to its asset management projects. As a result,
HUD and the Commission lacked assurance that the costs allocated to the Commission’s projects were (1)
necessary and reasonable and (2) for eligible program-related activities or services received by the projects.
11
SEMIANNUAL REPORT TO CONGRESS
OIG recommended that HUD require the Commission to (1) support that more than $1.4 million in central office
cost center expenses allocated to the public housing program were eligible, necessary, and reasonable program costs
and (2) implement adequate procedures and controls to address the issue cited. (Audit Report: 2017-CH-1001)
HUD OIG audited the Housing Authority of the Township of Irvington, NJ, regarding the administration of its
public housing program to determine whether the issues identified in a complaint could be substantiated and
whether the Authority administered its public housing program in accordance with HUD regulations and had
sufficient financial controls.
The complaint allegations regarding serious financial and operational mismanagement were valid. Authority
officials did not always administer the Authority’s public housing program in accordance with program
requirements. Specifically, officials spent program funds for unsupported and ineligible costs, excessive
compensation was provided to the former executive director, HUD was not notified about litigation, deficiencies
were noted in rent collection, program income was spent for ineligible and unsupported costs, and controls over
procurement were inadequate. As a result, HUD had no assurance that more than $1.2 million in expenditures
charged by the Authority was eligible and adequately supported.
OIG recommended that HUD require Authority officials to (1) reimburse the public housing program from non-
Federal funds for more than $95,000 in ineligible expenditures, (2) provide supporting documentation to justify
more than $1.1 million in unsupported expenditures charged to the public housing program or repay the program
from non-Federal funds, and (3) establish adequate controls to ensure compliance with program requirements. OIG
also recommended that HUD pursue administrative sanctions against any current or former Authority officials
found to have spent public housing program funds for personal or unallowable use. (Audit Report: 2017-NY-1008)
INVESTIGATION
Program results
Administrative - civil actions 83
Convictions - pleas - pretrial diversions 49
Financial recoveries $9,630,973
HOUSING AUTHORITY OFFICIALS SENTENCED FOR BRIBES
Five former housing authority officials and contractors were sentenced in U.S. District Court for conspiracy,
bribery, and tax evasion, among other charges, for their role in exchanging housing authority business and contracts
for bribes. The former executive director was sentenced to 48 months imprisonment and ordered to pay more than
$1.5 million in restitution to the housing authority and $363,781 in back taxes, penalties, and interest to the Internal
Revenue Service. Other defendants were collectively sentenced to 18 months imprisonment and 5 years probation
and ordered to pay more than $1.8 million in restitution and $100,000 in fines. The housing authority officials used
their positions to direct contracts to known associates in exchange for payments. The executive director alone
12
SEMIANNUAL REPORT TO CONGRESS
received approximately $1.5 million in payments from individuals related to the awarding of housing authority
business. HUD OIG and the Federal Bureau of Investigation conducted this investigation. (Hartford, CT)
GUILTY PLEA BY FORMER HOUSING OFFICIAL FOR THEFT OF FUNDS
A former housing authority resident services coordinator pled guilty in U.S. District Court to one count of theft of
funds from a program receiving Federal funds. The official embezzled $91,576 in funds from the HUD-funded
Family Self-Sufficiency program, which is administered by the housing authority. The official embezzled an
additional $1,300 from a housing authority resident tenant association. HUD OIG and the South Portland Police
Department conducted this investigation. (Portland, ME)
13
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 4 – MULTIFAMILY HOUSING AND OFFICE OF
HEALTHCARE PROGRAMS
In addition to multifamily housing developments and Office of Healthcare Programs properties with U.S.
Department of Housing and Urban Development (HUD)-held or HUD-insured mortgages, HUD subsidizes rents
for low-income households, finances the construction or rehabilitation of rental housing, and provides support
services for the elderly and disabled. Some of the highlights from this semiannual period are shown below.
AUDIT
STRATEGIC INITIATIVE 2: CONTRIBUTE TO THE REDUCTION OF ERRONEOUS
PAYMENTS IN RENTAL ASSISTANCE
Key program results Questioned costs Funds put to better use
Audit 9 audits $7,812,102 $8,701,004
REVIEW OF MULTIFAMILY SPECIAL ESCROW FUNDS
HUD’s Office of Inspector General (OIG) audited the multifamily special escrow funds of the Puerto Rico
Department of Housing in San Juan, PR, to determine whether the Department administered and disbursed its
escrow funds in accordance with its memorandum of understanding with HUD and whether funded activities fully
provided the intended benefits.
Since September 2012, the Department had maintained a high balance in its escrow accounts without awarding
funds for new projects. In addition, it did not ensure the completion of three escrow-funded activities that showed
signs of slow progress and did not support the eligibility and propriety of five disbursements. As a result, HUD had
no assurance that more than $12 million in escrow funds was effectively used to meet program objectives and
provide the intended benefits.
The Department did not ensure that escrow deposits were fully secured by the Federal Government and that
program beneficiaries met income limit requirements. In addition, it failed to certify to HUD that funded activities
met program requirements. As a result, HUD lacked assurance that funds were properly safeguarded and used for
authorized purposes.
OIG recommended that HUD (1) determine the eligibility of more than $4 million in unsupported escrow fund
disbursements and activities that showed signs of slow progress, (2) use more than $7 million in unspent escrow
funds to meet program objectives and increase the supply of low- and moderate-income housing, and (3) require the
transfer of unspent funds to a more sound financial institution to ensure that escrow account deposits are fully
secured by the Federal Government. (Audit Report: 2017-AT-1003)
14
SEMIANNUAL REPORT TO CONGRESS
REVIEW OF MULTIFAMILY MANAGEMENT AGENT
HUD OIG audited Majestic Management, LLC, located in St. Louis, MO, to determine whether it charged only the
appropriate fees in managing its projects, properly procured goods and services, and disbursed project funds only
for eligible and supported expenses.
Majestic Management improperly charged fees to its projects, did not properly procure goods and services, and
spent project funds for ineligible and unsupported costs. As a result, it deprived its projects of more than $242,000
in funds needed to pay for essential items, and HUD and property owners had no assurance that the projects
benefited from nearly $976,000 paid without adequate support.
OIG recommended that HUD require Majestic Management to (1) support or reimburse the appropriate projects for
the unsupported disbursements and improper procurements; (2) reimburse the appropriate projects their portion of
the funds spent for work not completed, overbilled, or ineligible; (3) be monitored by HUD to ensure that
employees understand and correctly apply procurement requirements; (4) update its management agreements to
properly disclose its identity-of-interest companies to HUD and property owners; and (5) implement adequate
controls to ensure that payments are adequately supported, goods and services are properly procured, and only
authorized fees are collected. (Audit Report: 2017-KC-1001)
REVIEW OF HUD’S OVERSIGHT OF THE FUNDS COVERED UNDER THE LOW-INCOME
HOUSING PRESERVATION AND RESIDENT HOMEOWNERSHIP ACT OF 1990
HUD OIG audited HUD’s oversight of funds covered under the Low-Income Housing Preservation and Resident
Homeownership Act of 1990 in HUD’s Line of Credit Control System to determine whether HUD had adequate
oversight of funds covered under the Act to ensure that the balances in its projects’ grant accounts in HUD’s System
were appropriate.
HUD did not ensure that (1) it remitted its share of the proceeds from initial sales associated with resident home-
ownership program grants to the U.S. Treasury, (2) excess capital funds were deposited into the reserve for
replacements accounts for the projects, and (3) authorized capital funds in the projects’ grant accounts did not
exceed the capital grant agreement amounts. As a result, (1) the U.S. Treasury did not have more than $1.2 million
available for other appropriations, (2) HUD could not sufficiently support the use of more than $341,000 in
proceeds from initial sales, and (3) six grantees did not have nearly $368,000 in capital funds in their projects’
reserve for replacements accounts.
OIG recommended that HUD (1) ensure that the proceeds are remitted to the U.S. Treasury, (2) provide sufficient
documentation to support what it did with proceeds from initial sales, (3) deposit capital funds into the reserve for
replacements accounts for six projects, and (4) implement adequate procedures and controls to ensure that future
proceeds from initial sales paid to HUD are remitted to the U.S. Treasury. (Audit Report: 2017-CH-0001)
15
SEMIANNUAL REPORT TO CONGRESS
REVIEW OF HUD’S OVERSIGHT OF COMPLIANCE WITH PARTIAL PAYMENT OF CLAIM
USE AGREEMENT RESTRICTIONS
HUD OIG audited HUD’s implementation of use agreement restrictions for affordable set-aside units to determine
whether HUD ensured compliance with use agreement restrictions for affordable set-aside units as a condition of
partial payment of claims.
HUD did not ensure compliance with use agreement restrictions for affordable set-aside units as a condition of
partial payment of claims. As a result, HUD had no assurance that owners made available the affordable set-aside
units required by the partial payment of claims use agreements.
OIG recommended that HUD (1) develop and implement written procedures to track the required annual
certifications using the Integrated Real Estate Management System (iREMS), (2) develop and implement written
procedures to verify that properties comply with their partial payment of claims use agreement restrictions, and (3)
obtain the missing annual certifications for two properties and record them in iREMS. (Audit Report: 2017-LA-
0001)
INVESTIGATION
Program results
Administrative - civil actions 8
Convictions - pleas - pretrial diversions 9
Financial recoveries $21,907,216
THREE SENTENCED TO PRISON FOR KICKBACK SCHEME
A developer and two contractors were sentenced in U.S. District Court in connection with their guilty pleas and jury
convictions of conspiracy, mail fraud, money laundering, and making false statements. The developer was
sentenced to 37 months imprisonment and ordered to pay $1.3 million in restitution to HUD. One contractor was
sentenced to 50 months imprisonment, and both defendants were collectively ordered to pay $865,000 in restitution
to HUD. The defendants participated in a kickback scheme to falsely inflate a framing contract by $865,000 for a
HUD-insured multifamily development. The developer was unable to make mortgage payments on the fraudulently
inflated loan, and the development went into default, leading to HUD’s realizing losses of $28 million. HUD OIG
conducted this investigation. (White Plains, NY)
16
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 5 – COMMUNITY PLANNING AND
DEVELOPMENT PROGRAMS
The Office of Community Planning and Development (CPD) seeks to develop viable communities by promoting
integrated approaches that provide decent housing, suitable living environments, and expanded economic
opportunities for low- and moderate-income persons. The primary means toward this end is the development of
partnerships among all levels of government and the private sector. Some of the highlights from this semiannual
period are shown below.
AUDIT
STRATEGIC INITIATIVE 3: CONTRIBUTE TO THE STRENGTHENING OF COMMUNITIES
Key program results Questioned costs Funds put to better use
Audit 8 audits 10 $51,110,230 $3,687,984
The U.S. Department of Housing and Urban Development, Office of Inspector General (HUD OIG), audited the
Community Development Block Grant (CDBG) and HOME Investment Partnerships Program.
COMMUNITY DEVELOPMENT BLOCK GRANT
HUD OIG audited the City of Pittsburgh, PA’s administration of its CDBG program to determine whether the City
administered its program in accordance with applicable HUD and Federal requirements.
The City did not always administer its CDBG program in accordance with HUD and Federal requirements.
Specifically, of seven activities reviewed, the City did not (1) prepare independent cost estimates before awarding
contracts for three activities with costs of more than $1.4 million, (2) ensure that more than $1 million disbursed to
subrecipients for two activities was for costs that benefited the activity, and (3) document its determination that
seven activities with costs totaling more than $4.7 million were exempt or categorically excluded from
environmental review requirements. Additionally, the City did not always properly report program
accomplishments to HUD. As a result, it could not show that costs totaling more than $4.7 million complied with
applicable requirements and accomplishments were accurately reported.
OIG recommended that HUD require the City to provide documentation to show that (1) prices paid for products
and services of more than $1.4 million were fair and reasonable, (2) disbursements to subrecipients totaling more
than $1 million were for costs that benefited the activity, and (3) seven activities with costs of nearly $2.3 million
were exempt or categorically excluded from environmental reviews or repay its program from non-Federal funds for
any amount that it cannot support. OIG also recommended that HUD require the City to review its accomplishment
data to ensure accurate reporting. (Audit Report: 2017-PH-1001)
10
The total CPD audits, questioned costs, and funds put to better use amounts include any disaster recovery type audits conducted in the CPD area (6
audits). The write-ups for thee audits may be shown separately in chapter 6 of this semiannual report.
17
SEMIANNUAL REPORT TO CONGRESS
HOME INVESTMENT PARTNERSHIPS PROGRAM
HUD OIG audited Union County, NJ’s HOME Investment Partnerships Program to determine whether County
officials had established and implemented adequate controls to ensure that the County’s program was administered
in compliance with HOME program requirements.
The County’s HOME program was not always administered in compliance with program requirements.
Specifically, the County’s HOME fund was not reimbursed for assistance spent on partially canceled and
noncompliant activities, was used for ineligible and unsupported community housing development organizations
(CHDO), and was maintained in a bank account while drawdowns were made from the line of credit. In addition,
activities were not administered in compliance with program requirements, income was not always collected and
reported in the Integrated Disbursement and Information System, HOME match was not accurately calculated, and
units were either leased to tenants or sold to home buyers without documentation to support eligibility. As a result,
more than $242,000 was spent on ineligible CHDOs; more than $4.7 million was unavailable for eligible activities
and CHDOs; nearly $924,000 was spent on unsupported costs, a CHDO, and two home buyers; and HUD’s and the
County’s interest of nearly $598,000 in assisted properties was not protected.
OIG recommended that HUD instruct County officials to (1) reimburse more than $3.7 million for disbursements
made for terminated and noncompliant activities and an ineligible CHDO; (2) impose deed restrictions on two
properties assisted with nearly $598,000; (3) reallocate nearly $574,000 to an eligible CHDO; (4) provide
documents to support the eligibility of a CHDO that received nearly $228,000 in CHDO reserve funds, two home
buyers who received nearly $261,000 in HOME assistance, and unsupported costs of more than $435,000; (5)
reimburse nearly $537,000 to the local bank account for the uncollected and unreported program income; and (6)
disburse nearly $93,000 to pay eligible HOME costs before making additional drawdowns from the Line of Credit
Control System. (Audit Report: 2017-NY-1005)
INVESTIGATION
Program results
Administrative - civil actions 17
Convictions - pleas - pretrial
4
diversions
Financial recoveries $274,306
THREE SENTENCED TO PRISON FOR BID-RIGGING SCHEME
A nonprofit employee, two contractors, and a construction company were sentenced in U.S. District Court for theft
of Federal funds and violations of State lead-based paint program requirements for their role in a bid-rigging
scheme. Collectively, the defendants were sentenced to 5 years imprisonment and ordered to pay $32,280 in
restitution to the nonprofit and $9,000 in fines. The corporation was sentenced to 5 years probation and ordered to
pay a special cost to a training-licensing institution for lead abatement worker training and licensing for its eight
employees. The individuals and the corporation conspired to commit bribery concerning programs receiving
18
SEMIANNUAL REPORT TO CONGRESS
Federal funds. The nonprofit employee provided the contractors confidential bid sheets and the information
contained on the bid sheets for various HUD community planning and development rehabilitation projects before
bids were submitted to the nonprofit. Combined, the two contractors were falsely awarded approximately $610,000
in contracts, which reached nearly $1 million after change orders were paid. In addition, the contractor and
corporation accepted responsibility for violating lead-based paint program requirements, and the nonprofit
employee was found to have embezzled money from the nonprofit. HUD OIG, the Federal Bureau of Investigation,
and the Environmental Protection Agency, Criminal Investigation Division, conducted this investigation.
(Cleveland, OH)
19
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 6 – DISASTER RECOVERY PROGRAMS
In response to disasters, Congress may appropriate additional funding as Disaster Recovery grants to rebuild the
affected areas and provide crucial seed money to start the recovery process. Since fiscal year 1993, Congress has
appropriated $49.2 billion to the U.S. Department of Housing and Urban Development (HUD), from which HUD
provides flexible grants to help cities, counties, and States recover from presidentially declared disasters. Of the
$47.1 billion in active disaster grants, the funds have been allocated nationwide, with nearly $38.1 billion obligated
and $34.9 billion disbursed as of March 31, 2017.
Funds Percentage of funds Fiscal year
Disaster Funds disbursed
allocated disbursed funds allocated
Louisiana, Texas
$1.8 billion $0 0 2016
& West Virginia
Hurricane Sandy $15.2 billion $7.1 billion 47 2013
Hurricanes Ike,
$6.1 billion $5.1 billion 84 2008
Gustav & Dolly
Hurricanes
Katrina, Rita & $19.5 billion $19 billion 97 2006 & 2008
Wilma
9-11 $3.5 billion $3.1 billion 89 2001-2002
Other $1.0 billion $0.57 billion 53 Various
Keeping up with communities in the recovery process can be a challenging position for HUD. HUD OIG continues
to take steps to ensure that the Department remains diligent in assisting communities with their recovery efforts.
20
SEMIANNUAL REPORT TO CONGRESS
AUDIT
Strategic Initiative 3: Contribute to the strengthening of communities
Key program results Questioned costs Funds put to better use
Audit 6 audits 11 $41,320,063 $1,887,712
HUD OIG audited the City of New York, Office of Management and Budget’s administration of the Interim
Assistance Rapid Repairs Program, funded with Community Development Block Grant Disaster Recovery (CDBG-
DR) funds provided by HUD to assist in the disaster recovery and rebuilding efforts resulting from Hurricane
Sandy. The objective of the audit was to determine whether City officials had adequate controls to ensure that the
use of CDBG-DR funds was consistent with the Program guidelines established under the HUD-approved action
plan, applicable Federal requirements, and City policy.
City officials lacked adequate controls to ensure that the use of CDBG-DR funds was always consistent with the
action plan and applicable Federal and State regulations. Specifically, they disbursed more than $18.2 million in
CDBG-DR funds for State sales tax on repairs and maintenance services that the City was exempt from paying
under New York State tax law, section 1116(a)(1). As a result, they could not assure HUD that the funds were
disbursed for allowable, reasonable, and necessary expenses in compliance with the action plan and Federal and
State requirements.
OIG recommended that HUD instruct City officials to (1) reimburse the Program from non-Federal funds for the
exempt State sales tax on repairs and maintenance services and (2) strengthen controls over disbursements to ensure
that all costs charged to the Program are allowable, reasonable, and necessary in compliance with the HUD-
approved action plan and Federal and State requirements. (Audit Report: 2017-NY-1004)
HUD OIG audited the CDBG-DR assistance grant provided to the State of Connecticut to determine whether the
State complied with CDBG-DR requirements for its Owner Occupied Rehabilitation and Rebuilding and Owner
Occupied Reimbursement programs.
The State did not always comply with CDBG-DR requirements. Specifically, procurements were not always
executed in accordance with HUD requirements. The State also did not always support the low- and moderate-
income national objective. Further, not all costs were eligible because the State did not always complete
environmental reviews in accordance with requirements. In addition, the State did not always properly support and
calculate the unmet need of homeowners. As a result, more than $2.4 million in CDBG-DR funds was ineligible,
and more than $13.5 million was unsupported. Further, HUD did not have assurance that all environmental hazards
were appropriately identified and addressed or that low- and moderate-income information reported by the State in
HUD’s Disaster Recovery Grant Reporting system was accurate.
11
Disaster-related audits consist of community planning and development audits. The questioned costs and funds put to better use amounts relate only to
disaster-related costs.
21
SEMIANNUAL REPORT TO CONGRESS
OIG recommended that HUD instruct State officials to (1) repay from non-Federal funds or support that the
more than $13.3 million awarded for architect, engineer, and construction management services contracts was
fair and reasonable; (2) repay from non-Federal funds nearly $317,000 in payments made for services outside
the scope of work for seven contracts; (3) repay from non-Federal funds or support that more than $227,000 in
funds awarded met the low- and moderate-income national objective; (4) repay from non-Federal funds more
than $2.1 million in ineligible CDBG-DR funds spent without the notice of intent and request for release of
funds being published; and (5) strengthen program controls over procurement, contract scope of work, national
objective documentation, environmental review determinations, and unmet need determinations. (Audit Report:
2017-BO-1001)
HUD OIG audited the City of New York, Mayor’s Office of Housing Recovery Operations’ administration of the
Build it Back Single Family Program, funded with HUD CDBG-DR funds to assist in the disaster recovery and
rebuilding efforts resulting from Hurricane Sandy. The objective of the audit was to determine whether City
officials had adequate controls to ensure that the use of CDBG-DR funds was consistent with the Build it Back
Single Family Program guidelines established under the HUD-approved action plan.
City officials implemented policies that did not always ensure that CDBG-DR funds were disbursed in accordance
with the action plan and Federal requirements. Specifically, the policies did not ensure that all eligible homeowners
were reimbursed in accordance with the action plan and the Program and CDBG-DR-assisted homes complied with
HUD’s Lead Safe Housing Rule requirements. In addition, City officials did not maintain complete and accurate
Program files and records. As a result, they could not assure HUD that the use of CDBG-DR funds benefited
eligible homeowners in a fair and equitable manner, assisted homes were lead safe, and Program records were
properly maintained.
OIG recommended that HUD instruct City officials to (1) submit an amended action plan for approval to ensure that
it agrees with the City’s policies regarding the use of nearly $4.5 million and planned use of more than $1.3 million
in additional CDBG-DR assistance to homeowners with Small Business Administration loans and more than
$32,000 in assistance above the Program’s 60 percent reimbursement rate, (2) reimburse more than $101,000 in
additional grants owed to 11 homeowners, and (3) provide documentation to support that more than $1 million in
CDBG-DR funds was disbursed for lead-safe homes. (Audit Report: 2017-NY-1001)
HUD OIG audited the CDBG-DR assistance grant provided to the City of Springfield, MA, to determine whether
the City properly followed Federal procurement requirements and whether payments to vendors were adequately
supported.
A review of more than $8.3 million, representing 60 percent of more than $13.9 million in CDBG-DR funds
obligated, found that the funds were budgeted for eligible and HUD-approved activities. However, City officials
did not ensure that more than $1.9 million met Federal procurement requirements or payments to vendors were
adequately supported. Further, the City did not always document the duplication of benefits in accordance with
requirements.
OIG recommended that HUD instruct City officials to (1) provide evidence showing that more than $1.4 million
was spent for supported, necessary, and reasonable costs or repay HUD from non-Federal funds; (2) obtain support
for more than $472,000 or reprogram the funds to other allowable activities; and (3) strengthen and follow
22
SEMIANNUAL REPORT TO CONGRESS
procurement policies and financial and administrative controls to ensure compliance with Federal requirements.
(Audit Report: 2017-BO-1002)
INVESTIGATION
Program results
Administrative - civil actions 8
Convictions - pleas - pretrial diversions 7
Financial recoveries $301,813
FRAUDSTER ORDERED TO REPAY ALMOST $100,000 IN HURRICANE SANDY FUNDS
A recipient of Hurricane Sandy disaster relief funds was sentenced in State Superior Court to 24 months probation
and ordered to pay restitution of $96,710 to the New Jersey Department of Community Affairs in connection with
her guilty plea to theft by deception. In June 2013, the recipient filed an application for damage assistance with the
State of New Jersey Department of Community Affairs, the Federal Emergency Management Agency, and the
Small Business Administration, claiming that her house in Amboy, NJ, was her primary residence at the time of
Hurricane Sandy, when she resided in Keyport, NJ, during and after the storm. Only primary residence properties
were entitled to Federal disaster assistance. The recipient received HUD CDBG-DR funds in the New Jersey State-
run Rehabilitation, Reconstruction, Elevation, and Mitigation Grant program. HUD OIG and the Middlesex County
Prosecutor’s Office conducted this investigation. (Middlesex, NJ)
EVALUATION
OPPORTUNITIES FOR IMPROVEMENT WITHIN CPD’S RISK MANAGEMENT PROCESS
FOR HURRICANE SANDY GRANTS
The Office of Community Planning and Development (CPD) manages $15.2 billion in disaster recovery funding
that Congress appropriated as part of the Disaster Relief Appropriations Act of 2013. To date, the OIG Office of
Audit has identified nearly $450 million, or nearly 3 percent of the appropriated funds, in questioned costs. HUD
OIG evaluated the risk analysis process for Hurricane Sandy grants performed by CPD. The objective was to assess
CPD’s risk management process to identify opportunities for improvement. OIG observed five areas in which CPD
could improve the risk analysis process. OIG observed that (1) the risk analysis worksheet did not consider risk
related to performance outputs, (2) the risk analysis did not consider the likelihood of risk events occurring, (3)
there was no clear correlation between the risk analysis and monitoring, (4) CPD made limited use of data analytics
in its risk management process, and (5) CPD staff was not trained to conduct a risk analysis.
OIG recommended that (1) CPD revise the risk assessment worksheet to include measurement of performance
outputs; (2) update risk analysis guidance to include the assessment of the likelihood of risk occurrence; (3) ensure
that monitoring strategies correlate to the high-risk areas identified during risk analysis; and (4) ensure that CPD
staff that plans for, awards, and manages grants and other forms of financial assistance receives formal risk analysis
training. In its written response to OIG’s report, HUD agreed with the last two recommendations but disagreed with
the first two findings and recommendations. (Evaluation Report: 2016-OE-0004S)
23
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 7 – OTHER SIGNIFICANT AUDITS AND
EVALUATIONS
AUDIT
Strategic Initiative 4: Contribute to improving HUD’s execution of and accountability for
fiscal responsibilities as a relevant and problem-solving advisor to the Department
Key program results Questioned costs Funds put to better use
Audit 10 Audits $76,891,010 $1,034,919,570
The U.S. Department of Housing and Urban Development, Office of Inspector General’s (HUD OIG) more
significant audits are discussed below.
AUDIT OF HUD’S FISCAL YEARS 2016 AND 2015 FINANCIAL STATEMENTS
In accordance with the Chief Financial Officers Act of 1990, as amended, HUD OIG is required to annually audit
HUD’s consolidated financial statements and the stand-alone financial statements of the Federal Housing
Administration (FHA) and Government National Mortgage Association (Ginnie Mae). The objective was to
express an opinion on the fairness of the financial statements in accordance with generally accepted accounting
principles (GAAP). This report presents the results of OIG’s audit of fiscal years 2016 and 2015 (restated) HUD
consolidated financial statements, including its report on HUD’s internal controls and a test of compliance with
applicable laws and regulations.
On November 15, 2016, HUD OIG issued a disclaimer of opinion on HUD’s consolidated financial statements for
fiscal years 2016 and 2015 (restated) due to HUD’s inability to deliver principal financial statements for the fiscal
years ending September 30, 2016 and 2015 (restated), and accompanying notes in a timely manner. OIG then
discovered that the consolidated financial statements that were published in HUD’s agency financial report (AFR)
contained material errors, and the Office of the Chief Financial Officer withdrew the AFR to revise and reissue it.
The total amounts of errors corrected in HUD’s notes and consolidated financial statements were more than $516.4
billion and nearly $3.4 billion, respectively.
On March 1, 2016, OIG completed its review of the revised financial statements, withdrew its previous independent
auditor’s report issued on November 15, 2016, and replaced it with a report that removed one basis for disclaimer
due to HUD’s inability to deliver principal financial statements and accompanying notes in a timely manner.
However, OIG’s previous audit opinion of a disclaimer of opinion remains unchanged due to other unresolved
material matters identified in its audit, which restricted its ability to obtain sufficient, appropriate evidence to
express an opinion. Those matters related to (1) the Office of General Counsel’s refusal to sign the management
representation letter, (2) HUD’s improper use of cumulative and first-in, first-out budgetary accounting methods of
disbursing community planning and development program funds, (3) the more than $4.2 billion in nonpooled loan
assets from Ginnie Mae’s stand-alone financial statements that OIG could not audit because Ginnie Mae could not
provide adequate support to enable the testing of these asset balances, (4) the improper accounting for HUD’s assets
and liabilities, and (5) material differences between HUD’s subledger and general ledger accounts.
24
SEMIANNUAL REPORT TO CONGRESS
Primarily, HUD (1) lacked adequate controls over its financial reporting preparation process, (2) inadequately
accounted for assets and liabilities in accordance with GAAP, (3) delayed completion of significant reconciliations,
(4) did not account for the Office of Community Planning and Development’s formula grant programs’
commitments and disbursements in accordance with GAAP, and (5) lacked adequate financial management systems
to ensure accurate and reliable financial reporting. OIG provided additional details on 11 material weaknesses, 7
significant deficiencies, and 5 instances of noncompliance with applicable financial management laws and
regulations. Details of the results of the audit of HUD’s component entities, FHA and Ginnie Mae, can be found in
separate audit reports.
OIG recommended that HUD (1) properly account for all financial transactions in accordance with GAAP, (2)
improve internal controls over the financial reporting process, (3) transition nearly $168.3 million in excess funding
from public housing agencies to HUD-held reserves, and (4) deobligate nearly $332.4 million in invalid or inactive
obligations. Additionally, OIG made recommendations to FHA and Ginnie Mae to improve and strengthen internal
controls over financial reporting and governance of financial operations. (Audit Reports: 2017-FO-0003 and 2017-
FO-0005)
AUDIT OF THE FEDERAL HOUSING ADMINISTRATION’S FINANCIAL STATEMENTS FOR
FISCAL YEARS 2016 AND 2015
In accordance with the Chief Financial Officers Act of 1990 (Public Law 101-576), as amended, HUD OIG is
required to audit the financial statements of FHA annually. The scope of the audit included FHA’s fiscal years
2016 and 2015 financial statements, which are composed of the balance sheets and the related statements of net cost
and changes in net position and the combined statements of budgetary resources for the years then ended, and the
related notes to the financial statements. This report presented the results of OIG’s audit of FHA’s fiscal years 2016
and 2015 financial statements, including its report on FHA’s internal controls and a test of compliance with selected
provisions of laws and regulations that apply to FHA.
In OIG’s opinion, except for the effects of FHA’s general counsel’s refusal to sign off on certain matters included in
the management representation letter concerning all known actual or possible FHA litigations, claims, and
assessments, FHA’s fiscal years 2016 and 2015 financial statements were presented fairly, in all material respects,
in accordance with GAAP.
The audit disclosed two material weaknesses, three significant deficiencies in internal controls, and one instance of
noncompliance with applicable laws and regulations. OIG’s audit recommendations were directed toward
improving and strengthening FHA’s internal controls over financial reporting. (Audit Report: 2017-FO-0002)
AUDIT OF THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION’S FISCAL YEARS
2016 AND 2015 FINANCIAL STATEMENTS
HUD OIG audited Ginnie Mae’s fiscal years 2016 and 2015 (restated) financial statements, including reporting on
Ginnie Mae’s internal control and test of compliance with selected provisions of laws and regulations applicable to
Ginnie Mae.
25
SEMIANNUAL REPORT TO CONGRESS
For the third consecutive year, in fiscal year 2016, OIG was unable to obtain sufficient, appropriate evidence to
express an opinion on the fairness of more than $4.2 billion (net of allowance) in nonpooled loan assets from Ginnie
Mae’s defaulted issuers’ portfolio as of September 30, 2016. Ginnie Mae also continued to improperly account for
FHA reimbursable costs as an expense instead of capitalizing them. The combination of these unresolved issues for
a number of years was both material and pervasive because it impacted multiple financial statement line items
across all of Ginnie Mae’s basic financial statements. As a result of the scope limitation in OIG’s audit work and
the effects of material weaknesses in internal controls, OIG was not able to obtain sufficient and appropriate
evidence to provide a basis for an audit opinion on Ginnie Mae’s fiscal years 2016 and 2015 (restated) statements.
OIG identified four material weaknesses, one significant deficiency, and one reportable noncompliance with
selected provisions of laws and regulations. OIG’s audit recommendations were directed toward improving and
strengthening Ginnie Mae’s governance of its financial operations. (Audit Report: 2017-FO-0001)
REVIEW OF CHIEF PROCUREMENT OFFICER’S PROCUREMENT OF MAJOR SERVICE
CONTRACTS
HUD OIG audited HUD’s procurement of major service contracts to determine whether HUD had adequate
procedures in place to plan and monitor major service contracts to prevent waste and abuse.
HUD did not always support that Federal acquisition requirements were met when planning and monitoring major
service contracts. A review of 10 contracts found violations of HUD procurement policies for specific contracts or
agreements, resulting in unreasonable and unnecessary costs of more than $21.3 million, more than $9.6 million in
funds to be put to better use, and ineligible costs of nearly $162,000.
OIG recommended that HUD (1) provide adequate documentation to support that more than $21.3 million in
obligated funds was spent for reasonable and necessary costs; (2) strengthen and implement acquisition controls to
ensure that proper cost and price documentation is obtained, adequate monitoring is conducted, adequate market
research is conducted, contractors are evaluated to assess their capability to perform the work, and required contract
documentation is maintained in the file to ensure that more than $9.6 million will not be spent for unreasonable and
unnecessary costs; and (3) seek reimbursement of nearly $162,000 in ineligible funds disbursed for equipment and
support services not specified in a scanning services contract. (Audit Report: 2017-BO-0001)
ATTESTATION REVIEW OF HUD’S DATA ACT IMPLEMENTATION EFFORTS
The Digital Accountability and Transparency Act of 2014 (DATA Act) and implementation guidance provided in
Office of Management and Budget Memorandum M-15-12 mandate that Federal agencies report their financial,
budgetary, and programmatic information to the USASpending.gov website by the statutory May 2017 deadline.
HUD OIG reviewed HUD’s compliance with implementation efforts as of December 16, 2016. It assessed whether
HUD completed steps 5-8 and reassessed outstanding issues related to steps 3 and 4 of the U.S. Department of the
Treasury’s DATA Act Playbook, which provides guidance for reporting agencies. OIG concluded that HUD had
begun steps to implement the DATA Act. However, it remained not on track to provide complete departmentwide,
comprehensive reporting by the statutory May 2017 deadline. HUD continued to be unable to show that it had
26
SEMIANNUAL REPORT TO CONGRESS
completed most required Playbook steps for its contract, grant, and subsidy programs. Additionally, HUD would
not be able to report most of its required data files for its FHA and Ginnie Mae components before the reporting
deadline.
OIG’s recommendations were intended to ensure that HUD becomes compliant with the DATA Act by (1)
allocating resources for system updates, (2) resolving errors and data quality issues that the agency identified during
implementation, (3) designating official points of contact for FHA and Ginnie Mae and completing implementation
plans, and (4) completing data mapping. (Audit Memorandum: 2017-FO-0801)
AUDIT OF HUD’S TRANSITION TO FEDERAL SHARED SERVICES
HUD OIG audited HUD’s computing environment as part of the internal control assessments required for the fiscal
year 2016 financial statement audit under the Chief Financial Officer’s Act of 1990. The audit objective was to
assess the effectiveness of the controls over the New Core Interface Solution (NCIS) and PRISM™ and the impact
of the implementation of release 3 of phase 1 of the New Core Project on the preparation of HUD’s financial
statements.
Since 2003, HUD had spent more than $131 million on two projects to replace its core financial system. The latest
project, the New Core Project, provided for a transition to a Federal shared service provider. HUD ended the
project and its transition to the Federal shared service provider before completion in April 2016 after spending more
than $96.3 million. Although the service provider maintained the system of record for HUD fiscal year 2016 funds,
the transition did not significantly improve the handling of HUD’s financial management transactions. A year after
the transition, HUD had inaccurate data resulting from the conversions and continued to execute 97 percent of its
programmatic transactions in its legacy applications. In addition, HUD did not decommission all of the applications
it wanted to, including its core financial system, nor did it achieve the planned cost savings.
OIG recommended that HUD complete the actions necessary to address the procurement data conversion errors,
classify NCIS as mission critical, and include it in HUD’s disaster recovery exercises. OIG also recommended that
the New Core staff from the Office of the Chief Financial Officer work with the Office of the Chief Information
Officer on the projects HUD created to address functionality that was not completed in the New Core
implementation. (Audit Report: 2017-DP-0001)
AUDIT OF HUD’S FHA SINGLE FAMILY PREMIUMS COLLECTION SUBSYSTEM
HUD OIG audited the general and application controls over FHA’s Single Family Premiums Collection Subsystem
– Periodic (SFPCS-P) and Single Family Acquired Asset Management System (SAMS) as part of the internal
control assessments required for the fiscal year 2016 financial statement audit under the Chief Financial Officer’s
Act of 1990. The audit objective was to review the general and application controls over SFPCS-P and SAMS for
compliance with HUD information technology (IT) policies and Federal information system security and financial
management requirements.
27
SEMIANNUAL REPORT TO CONGRESS
OIG has determined that the contents of this audit report would not be appropriate for public disclosure and has,
therefore, limited its distribution to those officials listed on the report distribution list. (Audit Report: 2017-DP-
0002)
EVALUATION
TOPIC BRIEF: EVALUATION MONITORING OF NONBANK ISSUERS PRESENTING
CHALLENGES FOR GINNIE MAE
Upon his recent departure from Ginnie Mae, its president expressed concerns with regard to the size and complexity
of the Ginnie Mae portfolio. He was specifically concerned with the role nonbanks are playing in the mortgage
industry. Separately, Ginnie Mae contracted with a private firm to assess its staffing relative to changes in the
mortgage industry. The private firm concluded that Ginnie Mae staffing had not kept pace with the changes.
HUD OIG developed a topic brief to highlight issues with Ginnie Mae, its staffing, and the role of nonbanks in the
mortgage industry. The topic brief highlights OIG’s past, present, and future efforts related to the monitoring of
nonbanks. Ginnie Mae had made guarantees on loans with remaining principal balances of $1.7 trillion as of early
calendar year 2017. This total is expected to exceed $2 trillion shortly.
In fiscal year 2016, nonbank issuers accounted for 73 percent of Ginnie Mae’s single-family mortgage-backed
securities issuance volume for the year, up from 18 percent in fiscal year 2010. Although the growth of nonbanks
has diversified the pool of issuers, Ginnie Mae must now oversee significantly more issues than in the past. In
addition, Ginnie Mae may not rely on bank regulators to ensure that a majority of its servicers can meet their
financial obligations.
FEDERAL AUDIT EXECUTIVE COUNCIL IT SUBCOMMITTEE FISMA MATURITY MODEL
DEVELOPMENT
HUD OIG continued its collaboration with the Federal Audit Executive Council (FAEC) IT Subcommittee by
participating in a project that developed maturity models for the remaining Federal Information Security
Modernization Act (FISMA) Inspector General (IG) metrics. The maturity models allow the Office of Management
and Budget to measure and report Federal agency cybersecurity more consistently. The maturity models will
replace the IG FISMA metrics during the fiscal year 2017 FISMA assessments of Federal agencies. HUD OIG was
one of only a handful of IG offices to volunteer to help develop these models.
MANAGEMENT ASSISTANCE REVIEW
OIG management assistance reviews provide the quality assurance mechanism, which ensures that OIG’s audit,
investigative, and administrative operations follow established standards, policies, and procedures. Management
assistance review reports are issued to OIG management to recommend improvements in management and
operations.
28
SEMIANNUAL REPORT TO CONGRESS
During this 6-month period, OIG reported on the following:
• the Information Systems Audit Division, Washington, DC, audit activities (Evaluation Report: 2016-
OE-MAR6);
• the Region 9, Los Angeles, CA, audit and investigation activities (Evaluation Report: 2016-OE-
MAR7);
• the fiscal year 2016 summary of reported results (Evaluation Report: 2017-OE-MAR1);
• the 3-year recurring issues for the Office of Audit, ending fiscal year 2016 (Evaluation Report: 2017-
OE-MAR2); and
• the 3-year recurring issues for the Office of Investigation, ending fiscal year 2016 (Evaluation Report:
2017-OE-MAR3).
29
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 8 – JOINT CIVIL FRAUD INITIATIVES
In recent years, the U.S. Department of Housing and Urban Development, Office of Inspector General (HUD OIG),
has enhanced its efforts to identify and investigate civil fraud and pursue civil actions and administrative sanctions,
frequently combining efforts from its multiple disciplines to create teams of auditors, special agents, attorneys, and
data analysts to conduct civil investigations. The central hub to these efforts is HUD OIG’s Joint Civil Fraud
Division, a distinct team of forensic auditors and special agents dedicated to investigating fraud and pursuing civil
and administrative remedies.
HUD OIG’s joint civil fraud teams work closely with the U.S. Department of Justice, U.S. Attorney’s Offices,
HUD’s Office of General Counsel, and local prosecutors to pursue civil remedies under a variety of statutes and
regulations, including the False Claims Act; Program Fraud Civil Remedies Act; and Financial Institutions
Reform, Recovery, and Enforcement Act. HUD OIG also works with HUD’s Departmental Enforcement Center to
pursue debarments, suspensions, and limited denials of participation when appropriate.
HUD OIG’s internal joint efforts, in conjunction with partnerships with other enforcement groups, result in civil
outcomes that are meant to help HUD recover from unwarranted damages sustained due to fraud. Some of the
highlights from this semiannual period, resulting from these joint civil fraud efforts, are noted below.
Strategic Initiative 1: Contribute to the reduction of fraud in single-family insurance
programs
Program results
Recoveries and receivables to HUD
$54,754,576
programs or HUD program participants
Recoveries and receivables for other entities $12,869,422
Recommendations that funds be put to
$0
better use
Civil actions 4
SINGLE FAMILY
HUD OIG assisted the U.S. Department of Justice, Washington, DC, and the U.S. Attorney’s Office, Eastern
District of Michigan, in the civil investigation of United Shore Financial Services, LLC. United Shore is a Federal
Housing Administration (FHA)-approved mortgage lender with its principal place of business located in Troy, MI.
United Shore became an FHA-approved direct endorsement lender in March 1988. As a direct endorsement lender,
United Shore was authorized by HUD to originate and underwrite mortgage loans on HUD’s behalf, including
determining a borrower’s creditworthiness and whether the proposed loan met all applicable requirements. When a
borrower defaults on an FHA-insured loan underwritten and endorsed by a direct endorsement lender, such as
United Shore, the lender (or its representative) has the option of submitting a claim to HUD to compensate the
lender for any loss sustained as a result of default. Therefore, once a mortgage loan is endorsed for FHA insurance,
HUD insures the risk of the borrower’s defaulting on that mortgage, which is realized if an insurance claim is
submitted.
30
SEMIANNUAL REPORT TO CONGRESS
On December 28, 2016, United Shore entered into a settlement agreement with the Federal Government to pay $48
million to avoid lengthy litigation of certain civil claims the Government stated that it had against United Shore. As
part of the settlement, United Shore agreed that it engaged in certain conduct in connection with its origination,
underwriting, quality control, and endorsement of single-family residential mortgage loans insured by FHA. As a
result of United Shore’s conduct, HUD insured loans approved by United Shore that were not eligible for FHA
mortgage insurance under the direct endorsement program and that HUD would not otherwise have insured. (Audit
Memorandum: 2017-CF-1803; Joint Civil Fraud Division)
HUD OIG, in coordination with the U.S. Department of Justice’s Civil Division and the U.S. Attorney’s Office for
the Northern District of Illinois’ Eastern Division, conducted a joint review of the former president and founder of
MDR Mortgage Corporation in Palatine, IL.
MDR Mortgage provided annual verifications to HUD in 2006, 2007, and 2008, certifying that none of its
principals, owners, officers, directors, or employees were involved in proceedings that could result or had resulted
in criminal conviction, debarment, suspension, or civil monetary penalty by a Federal, State, or local government.
However, on April 7, 2005, the former president and founder of MDR Mortgage was indicted in the U.S. District
Court for the Northern District of Illinois, Eastern Division. This indictment was not disclosed in the annual
verifications. The U.S. Government later identified 237 loans that MDR Mortgage processed between January 2006
and August 2008 that had defaulted and resulted in claims paid by FHA. The U.S. District Court for the Northern
District of Illinois found the former president and founder liable under the False Claims Act and Financial
Institutions Reform, Recovery, and Enforcement Act for loans insured from 2006 through August 7, 2008, the
period in which MDR Mortgage operated using the false verifications.
On November 23, 2016, a judgment of more than $10 million was entered against the former president and founder
of MDR Mortgage in favor of the U.S. Government. Of the more than $10 million judgment, HUD’s loss totaled
more than $3.4 million. (Audit Memorandum: 2017-CH-1801; Office of Audit Region 5 and Office of
Investigation Region 5)
HUD OIG assisted the U.S. Department of Justice, Washington, DC, and the U.S. Attorney’s Office for the District
of New Jersey in a civil investigation of Security National Mortgage Company. Security National is an FHA-
approved mortgage lender with its principal place of business located in Salt Lake City, UT.
On September 22, 2016, Security National entered into a settlement agreement with the Federal Government to pay
$4.25 million to avoid lengthy litigation. As part of the settlement, Security National agreed that for 100 FHA-
insured loans, it engaged in certain conduct in connection with its origination and underwriting of the loans. The
settlement was neither an admission of liability by Security National nor a concession by the United States that its
claims were not well founded.
As a result of Security National’s conduct, HUD insured loans approved by Security National that were not eligible
for FHA mortgage insurance and that HUD would not otherwise have insured. HUD incurred substantial losses
when it paid insurance claims on the loans covered by the settlement agreement. (Audit Memorandum: 2017-CF-
1802; Joint Civil Fraud Division and Office of Investigation Regions 4, 5, and 7/8/10)
31
SEMIANNUAL REPORT TO CONGRESS
HUD OIG assisted the U.S. Department of Justice, Washington, DC, and the U.S. Attorney’s Office, District of
Colorado, in the civil investigation of Primary Residential Mortgage, Inc. Primary has its principal place of
business in Salt Lake City, UT. Primary became an FHA-approved direct endorsement lender on October 15,
1998. The direct endorsement lender program authorizes private-sector mortgage lenders to approve mortgage
loans for FHA insurance. As a result of Primary’s conduct, HUD insured loans approved by Primary that were not
eligible for FHA mortgage insurance under the direct endorsement program and that HUD would not otherwise
have insured.
On September 30, 2016, Primary entered into a settlement agreement with the Federal Government to pay $5
million to avoid the delay, uncertainty, inconvenience, and expense of lengthy litigation. Primary agreed that for
100 FHA-insured loans, it failed to follow all HUD requirements in connection with its origination, underwriting,
and endorsement of the loans. The settlement was neither an admission of liability by Primary nor a concession by
the United States that its claims were not well founded. (Audit Memorandum: 2017-CF-1801; Joint Civil Fraud
Division and Office of Investigation Regions 4 and 7/8/10)
32
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 9 – LEGISLATION, REGULATIONS, AND OTHER
DIRECTIVES
Reviewing and making recommendations on legislation, regulations, and policy issues is a critical part of the Office
of Inspector General’s (OIG) responsibilities under the Inspector General Act. During this 6-month reporting
period, OIG has committed more than 588 hours to reviewing 151 issuances. The draft directives consisted of 93
notices, 18 mortgagee letters, and 40 other directives. OIG provided comments on 34 (or 23 percent) of the
issuances, and nonconcurred on 7 but lifted 2. Of the 40 other directives, OIG reviewed 9 final rules. OIG had no
position on the 9 rules. A summary of selected reviews for this 6-month period follows.
Notices, Policy Issuances, and Final Rules
SINGLE-FAMILY HOUSING
Loan review system – OIG reviewed a mortgagee letter and associated Handbook 4000.1 update announcing the
implementation of a new loan review system. This review system will be used to manage Title II single-family loan
reviews; monitoring reviews; and mortgagee self-reporting of fraud, misrepresentation, and other material findings.
The review system will incorporate the Single Family Housing Loan Quality Assessment Methodology (defect
taxonomy). OIG’s audit of HUD’s oversight of the directives process identified the defect taxonomy as an item for
which HUD did not complete a full clearance review. Specifically, two of the six required reviewing offices did not
provide comments, and the item was put into the clearance process after it was posted for public view. Although
OIG did not have issues with the specific mortgagee letter and corresponding handbook update announcing the new
loan review system, it commented that its position did not supersede or impact open OIG recommendations
pertaining to the defect taxonomy. Mortgagee letter 2017-08 was issued March 23, 2017. The new loan review
system will be implemented May 15, 2017.
PUBLIC AND INDIAN HOUSING
Operations notice for the expansion of the Moving to Work demonstration program solicitation of comment – On
January 23, 2017, HUD published a notice soliciting comments. The operations notice establishes requirements for
the implementation and continued operations of the Moving to Work (MTW) demonstration program under the
2016 MTW Expansion Statute. HUD seeks public comment on all aspects of the operations notice as well as on the
topic of regionalization in the MTW demonstration. The 2016 MTW Expansion Statute authorizes HUD to expand
the MTW demonstration program from 39 public housing agencies (PHA) to an additional 100 PHAs over 7 years.
The PHAs will be added in groups (cohorts) that will be tasked to implement one specific policy change. The
operations notice describes a new framework for the MTW demonstration that streamlines and simplifies HUD’s
oversight of participating PHAs while providing for rigorous evaluation of each specific policy change by cohort.
A key feature of the new framework is that HUD will grant a set of general waivers to all MTW agencies when they
are designated. In addition, HUD seeks to reduce the data collection and reporting requirements for PHAs under the
new framework, focusing on financial data, basic program monitoring and performance assessment, and evaluation
of the specific policy changes to be tested through each cohort.
Rental Assistance Demonstration: revised program notice – On January 19, 2017, HUD published a notice
announcing further revisions to the Rental Assistance Demonstration program (RAD) and soliciting public comment
on changes to some of the selection and eligibility criteria for conversions of public housing under the first
component. The changes subject to notice and comment are (1) consolidating the selection priority categories for
33
SEMIANNUAL REPORT TO CONGRESS
new applications into two buckets – high investment applications and all other applications; (2) allowing PHAs to
submit a simple letter of interest, rather than an application, when a waiting list has formed – a letter of interest
would serve to reserve a project or portfolio’s position on the waiting list subject to future submission of a RAD
application; and (3) making eligible an entire contiguous HOPE VI project that was developed in phases as long as
the earliest phase is more than 10 years old.
MULTIFAMILY HOUSING
Improving previous participation reviews - On October 14, 2016, HUD published a final rule, FR-5850-F-04, which
revises its regulations for reviewing the previous participation in Federal programs of certain participants seeking to
take part in multifamily housing and healthcare programs. The rule clarifies and simplifies HUD’s process for
reviewing the previous participation of participants that have decision-making authority over their projects as one
component of HUD’s responsibility to assess financial and operational risk to the projects in these programs. The
approach is not only to bring greater certainty and clarity to the process, but also greater flexibility, avoiding a one-
size-fits-all approach.
Policy for amended and restated use agreement – On October 28, 2016, HUD published a housing notice, H 2016-
16, which clarifies the circumstances under which a Low-Income Housing Preservation and Resident
Homeownership Act of 1990 (LIHPRHA) use agreement may be amended and restated, the amendments that may
be allowed, and the conditions that must be met in the proposed preservation transaction to be considered for
approval. The notice also provides implementation guidance for the recent changes to LIHPRHA that were made
when the Fixing America’s Surface Transportation Act, Public Law 114-94, was enacted in December of 2015.
These changes will allow unlimited distributions of surplus cash and the release of all accumulated residual receipts
to an owner upon request after HUD has determined that the statutory criteria have been met.
Establishing a more effective fair market rent system – On November 16, 2016, HUD published a final rule, FR-
5855-F-03, which applies the use of small area fair market rents (FMR) in the administration of the Housing Choice
Voucher program for certain metropolitan areas. This final rule provides for the use of small area FMRs, in place of
the 50th percentile rent (the currently codified regulations), to address high levels of voucher concentration in
certain communities. The use of small area FMRs is expected to give Housing Choice Voucher program tenants
access to areas of high opportunity and lower poverty areas by providing a subsidy that is adequate to cover rents in
those areas, thereby reducing the number of program families that reside in areas of high poverty concentration.
Narrowing the digital divide through installation of broadband infrastructure – On December 20, 2016, HUD
published a final rule, FR-5890-F-02, which requires installation of broadband infrastructure at the time of new
construction or substantial rehabilitation of multifamily rental housing that is funded or supported by HUD, the
point at which such installation is generally easier and less costly than when undertaken as a stand-alone effort with
exceptions. Installing a unit-based broadband infrastructure in multifamily rental housing will provide a platform
for individuals and families residing in such housing to participate in the digital economy and increase their access
to economic opportunities.
HUD approval of requests for transfers of multifamily housing project-based rental assistance, HUD-held or insured
debt, and income-based use restrictions – On January 19, 2017, HUD published a notice, FR-5967-N-01, which
establishes the terms and conditions by which HUD will approve a request for the transfer of project-based rental
assistance, debt held or insured by the HUD Secretary, and statutorily required income-based use restrictions from
one multifamily housing project to another (or among several such projects). The 2016 appropriations act gives the
Secretary the authority to approve transfer requests through 2017.
34
SEMIANNUAL REPORT TO CONGRESS
COMMUNITY PLANNING AND DEVELOPMENT
Effective November 3, 2016, HUD will begin collecting a fee from borrowers of loans guaranteed under HUD’s
Section 108 Loan Guarantee Program to offset the credit subsidy costs. The fee was necessitated by The
Consolidated and Further Continuing Appropriations Act, 2015, and The Continuing Appropriations Act, 2016.
On November 21, 2016, HUD published a notice allocating $500 million in Community Development Block Grant
Disaster Recovery (CDBG-DR) funds appropriated by the Continuing Appropriations Act, 2017. The funding was
to assist long-term recovery in Louisiana, Texas, and West Virginia. The notice also described applicable waivers
and alternative requirements, relevant statutory provisions for grants provided under the notice, the grant award
process, criteria for plan approval, and eligible disaster recovery activities.
On December 2, 2016, HUD published an interim final rule, which changed the method by which HUD complied
with the statutory 24-month commitment requirement from a cumulative method to a grant-specific method. The
rule also established a method of administering program income that prevents participating jurisdictions from losing
appropriated funds when they spend program income.
On January 17, 2017, HUD granted a waiver to allow the Lower Manhattan Development Corporation (LMDC) to
transfer property acquired and cleared with CDBG-DR funds in exchange for other property interests. HUD will
allow LMDC to compensate its CDBG-DR for funds spent on acquisition and clearance of the properties through
the long-term lease and purchase of other properties.
On January 18, 2017, HUD allocated more than $1.8 billion in CDBG-DR funds appropriated by the Further
Continuing and Security Assistance Appropriations Act, 2017, for assisting long-term recovery in Florida,
Louisiana, North Carolina, South Carolina, Texas, and West Virginia. The funds are to be spent for disaster relief,
long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and
distressed areas resulting from a major disaster declared in 2016 and occurring before December 10, 2016.
CONSUMER ADVISORIES AND ALERTS
As a way to assist in fraud prevention, OIG issues consumer advisories and alerts, as well as industry advisories and
bulletins, on its website, www.hudoig.gov. The intent of these publications is to provide information about the risks
and illegal activities associated with certain products and services. These advisories are intended to ensure that
industry professionals as well as consumers are well informed of the perils associated with emergent frauds and
other illegal activities that jeopardize the integrity of otherwise legitimate programs. During this semiannual period,
OIG issued one single-family fraud alert and three Office of Community Planning and Development (CPD) industry
advisories, which are summarized below.
Appraiser Identity Theft – OIG uncovered a series of cases of appraiser identity theft. The schemes varied but
resulted from someone using the State certification number of a Federal Housing Administration (FHA) roster
appraiser. The FHA roster appraisers were unaware of the misuse until it came to light, usually by accident.
Implementing the Five Key Internal Controls – Internal controls are processes put into place by management to help
an organization operate efficiently and effectively to achieve its objectives. Managers often think of internal
35
SEMIANNUAL REPORT TO CONGRESS
controls as the purview and responsibility of accountants and auditors. The fact is that management at all levels of
an organization is responsible for ensuring that internal controls are set up, followed, and reviewed regularly.
Documenting the Life Cycle of a CPD Grant – The purpose of this bulletin is to make grantees and subrecipients
aware of the impact that insufficient documentation can have on their grant programs and offer guidance on how to
avoid these findings through the life cycle of a CPD grant.
Key Components of Financial Management for CPD Grants – Financial management is the systematic application
of procedures, forms, rules of conduct, and standards. For a grantee or subrecipient in receipt of Federal funds, its
financial management practices must comply with the cost principles established by the Office of Management and
Budget. This bulletin is intended to identify components of a sound financial management system and offer
guidance on avoiding some of the common challenges grantees face when managing Federal funds.
36
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 10 – AUDIT RESOLUTION
In the audit resolution process, Office of Inspector General (OIG) and U.S. Department of Housing and Urban
Development (HUD) management agree upon needed actions and timeframes for resolving audit recommendations.
Through this process, OIG strives to achieve measurable improvements in HUD programs and operations. The
overall responsibility for ensuring that the agreed-upon changes are implemented rests with HUD managers. This
chapter describes audit reports issued before the start of the period that do not have a management decision, have
significantly revised management decisions, or have significant management decisions with which OIG disagrees.
It also provides a status report on HUD’s implementation of the Federal Financial Management Improvement Act
of 1996 (FFMIA). In addition to this chapter on audit resolution, see appendix 3, table B, “Significant Audit
Reports for Which Final Action Had Not Been Completed Within 12 Months After the Date of the Inspector
General’s Report.”
AUDIT REPORTS ISSUED BEFORE START OF PERIOD WITH NO MANAGEMENT
DECISION AS OF MARCH 31, 2017
ADDITIONAL DETAILS TO SUPPLEMENT OUR REPORT ON HUD’S FISCAL YEARS 2013
AND 2012 (RESTATED) FINANCIAL STATEMENTS, ISSUE DATE: DECEMBER 16, 2013
HUD OIG audited the Office of Public and Indian Housing’s (PIH) implementation of U.S. Treasury cash
management regulations as part of the annual audit of HUD’s consolidated financial statements for fiscal years 2013
and 2012. The OIG report found that HUD’s implementation of the new cash management process for the Housing
Choice Voucher program departed from Treasury cash management requirements and Federal generally accepted
accounting principles (GAAP). HUD OIG also reported that there were not sufficient internal controls over the
process to ensure accurate and reliable financial reporting. The weaknesses in the process failed to ensure that
material financial transactions were included in HUD’s consolidated financial statements and allowed public
housing agencies (PHA) to continue to hold funds in excess of their immediate disbursing needs, which is in
violation of Treasury cash management regulations.
The OIG report included a recommendation (2C) that HUD PIH implement a cost-effective method for automating
the cash management process to include an electronic interface of transactions to the United States Standard
General Ledger (USSGL).
HUD issued three proposals to address recommendation 2C. However, OIG rejected all three proposals because
they were too vague and did not include a high-level plan showing the actions PIH will take until the final action
date to implement corrective action. Further, the proposals included several contingencies for which OIG cannot
determine whether PIH is making progress in addressing the recommendation.
This issue was referred to the Assistant Secretary on June 19, 2014, and September 30, 2014, but, as of March 31,
2015, a new proposal had not been made. Therefore, this issue was referred to the Deputy Secretary on March 31,
2015. OIG met to brief the Deputy Secretary’s staff on the subject on April 20, 2015. On August 24, 2016, PIH
stated that in coordination with the Office of the Chief Information Officer, plans were being developed to address
the recommendation. However, OIG had not been able to confirm HUD’s plans, and a new proposal had not been
made as of March 31, 2017. (Audit Report: 2014-FO-0003)
37
SEMIANNUAL REPORT TO CONGRESS
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, WASHINGTON, DC,
IMPROPER PAYMENTS ELIMINATION AND RECOVERY ACT OF 2010, ISSUE DATE: APRIL
15, 2014
HUD OIG audited HUD’s fiscal year 2013 compliance with the Improper Payments Information Act of 2002 as
amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA). OIG found that HUD did not
comply with IPERA reporting requirements because it did not sufficiently and accurately report its (1) billing and
program component improper payment rates; (2) actions to recover improper payments; (3) accountability; or (4)
corrective actions, internal controls, human capital, and information systems as required by IPERA. In addition,
HUD’s supplemental measures and associated corrective actions did not sufficiently target the root causes of its
improper payments because they did not track and monitor processing entities to ensure prevention, detection, and
recovery of improper payments caused by rent component and billing errors, which are root causes identified by
HUD’s contractor studies.
The OIG report included several recommendations that required the Office of the Chief Financial Officer (OCFO)
to work with PIH and the Office of Multifamily Housing Programs to ensure sufficient and accurate IPERA
reporting in its agency financial report (AFR). The report also recommended that OCFO conduct a current billing
study and, if not performed annually in future years, report the reason for this in the AFR and update the previous
study to reflect program and inflationary changes. Similarly, the report recommended a study to assess improper
payments arising from the Housing Choice Voucher program. Finally, the report recommended that OCFO report
on multifamily, public housing, and Section 8 program improper payment rates separately in the AFRs.
Initially, OCFO disagreed with several of OIG’s recommendations, citing (1) funding issues in conducting current
billing studies, which it believes do not produce tangible results; (2) disagreement on the need to determine whether
improper payments exist as the result of changes in the funding of the Housing Choice Voucher program; and (3)
management’s position that formal policies and procedures for the IPERA reporting process are not necessary. OIG
generally disagreed with OCFO’s management decisions because they disregarded IPERA reporting requirements
and Office of Management and Budget (OMB) guidance and the management decisions did not reflect OCFO’s
responsibility as the lead official for directing and overseeing HUD’s actions to address improper payments.
OIG sent a referral memorandum to the Acting Chief Financial Officer on September 23, 2014, regarding its
disagreement, along with an untimely referral memorandum for two recommendations that had not had management
decisions entered. Following OIG’s memorandum, OCFO entered management decisions for seven of nine
recommendations, of which OIG agreed with only one. The remaining six recommendations, along with two
recommendations for which management had not yet entered a management decision, were referred to the Deputy
Secretary on March 31, 2015. OIG briefed the Deputy Secretary’s staff on the subject report on April 20, 2015, and
in August 2015, meetings were held with OCFO to discuss what was needed to come to agreement. As of March
31, 2016, management decisions had been agreed upon for all recommendations except two.
OCFO submitted a new management decision for one of these recommendations on March 23, 2016. OIG
disagreed with the management decision because OCFO believes its contractor is measuring improper payments
made to deceased tenants, when OIG’s audit work shows that the contractor is not. OIG met with OCFO on March
29, 2016, to discuss this matter, and OCFO agreed to contact the contractor for clarification. OIG had not heard
back from OCFO on this matter until a revised management decision was submitted to OIG on March 30, 2017.
OIG is reviewing it at the time of this report.
OCFO submitted a management decision for the other recommendation on March 31, 2016. However, OIG
disagrees with this management decision because OIG believes that HUD’s decision gives HUD the option to
38
SEMIANNUAL REPORT TO CONGRESS
continue reporting its improper payments in a way that masks the true error rate in certain programs, which is not in
compliance with OMB’s guidance. OIG had not heard back from OCFO on this matter until a revised management
decision was submitted to OIG on March 30, 2017. OIG is reviewing it at the time of this report. (Audit Report:
2014-FO-0004)
HUD DID NOT ALWAYS RECOVER FHA SINGLE-FAMILY INDEMNIFICATION LOSSES AND
ENSURE THAT INDEMNIFICATION AGREEMENTS WERE EXTENDED, ISSUE DATE:
AUGUST 8, 2014
HUD OIG audited HUD’s controls over its Federal Housing Administration (FHA) loan indemnification recovery
process to determine whether HUD had adequate controls in place to monitor indemnification agreements and
recover losses on FHA single-family loans.
HUD did not always bill lenders for FHA single-family loans that had an indemnification agreement and a loss to
HUD. Specifically, it did not bill lenders for any loans that were part of the Accelerated Claims Disposition (ACD)
program or the Claims Without Conveyance of Title (CWCOT) program or loans that went into default before the
indemnification agreement expired but were not in default on the expiration date. There were a total of 486 loans
from January 2004 to February 2014 that had enforceable indemnification agreements and losses to HUD but were
not billed. This condition occurred because HUD’s Financial Operations Center was not able to determine loss
amounts for loans that were part of the ACD program, was not aware of the CWCOT program, and considered the
final default date for billing only. As a result, HUD did not attempt to recover a loss of $37.1 million for 486 loans
that had enforceable indemnification agreements.
In addition, HUD did not ensure that indemnification agreements were extended to 64 of 2,078 loans that were
streamline refinanced. As a result, HUD incurred losses of more than $373,000 for 5 loans, and 16 loans had a
potential loss to HUD of approximately $1 million. The remaining 43 loans were either terminated or did not go
into delinquency before the indemnification agreement expired, or the agreement did not state that it would extend
to loans that were streamline refinanced.
OIG rejected three management decisions proposed by the Offices of Single Family Housing and Finance and
Budget because they did not follow the plain language explicitly stated in signed indemnification agreements. The
Offices of Single Family Housing and Finance and Budget disagree with OIG’s determination that HUD should
have billed lenders for FHA loans that either were in default or went into default during the indemnification
agreement period.
OIG referred the matter to the Assistant Secretary for Housing – Federal Housing Commissioner on January 8,
2015. OIG met with the HUD Office of General Counsel (OGC) and the Offices of Housing, Single Family
Housing, and Finance and Budget on January 30, 2015. The meeting ended in disagreement; however, HUD OGC
and the OIG Office of Legal Counsel continued discussions.
Single Family Housing received two legal opinions from HUD OGC, dated January 26, 2015, and February 24,
2015. Combined, the legal opinions support Single Family Housing’s and Finance and Budget’s position that they
have collected in a manner consistent with longstanding policy that emphasized the definition of the “date of
default.” Single Family Housing maintains that its collection practice is consistent with FHA’s regulatory definition
of “date of default” found in 24 CFR (Code of Federal Regulations) 203.331, which refers to the first “uncorrected”
failure and the first failure to pay that is not satisfied by later payments.
39
SEMIANNUAL REPORT TO CONGRESS
OIG disagrees and believes that Single Family Housing and Finance and Budget have adopted a collection practice
not supported by the plain language of the indemnification agreements or required by HUD regulations. Based on
the plain language explicitly stated in signed indemnification agreements, OIG believes that the indemnification
agreement should be enforced for any loan that “goes into default” during the indemnification agreement term,
regardless of whether the loan emerged from a default status after the agreement expired. In response to HUD’s
legal opinions, OIG received its own legal opinion from the OIG Office of Legal Counsel, which supports OIG’s
position.
OIG has had discussions with HUD OGC, Single Family Housing, and Finance and Budget regarding the
recommendations in question but has not reached agreeable management decisions. On March 31, 2015, OIG
referred the recommendations to the Deputy Secretary for a decision and is awaiting that decision. (Audit Report:
2014-LA-0005)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION FISCAL YEARS 2014 AND 2013
FINANCIAL STATEMENTS AUDIT, ISSUE DATE: FEBRUARY 27, 2015
HUD OIG audited the Government National Mortgage Association’s (Ginnie Mae) fiscal year 2014 stand-alone
financial statements. OIG conducted this audit in accordance with the Chief Financial Officers Act of 1990 as
amended. OIG found a number of material weaknesses in Ginnie Mae’s financial reporting specifically related to
the auditability of several material assets and reserve for loss liability account balances. The audit report had 20
audit recommendations to (1) correct the financial statement misstatements identified during the audit and (2) take
steps to strengthen Ginnie Mae’s financial management operations. Initially, OIG did not reach consensus with
Ginnie Mae on the necessary corrective actions for 9 of the 20 audit recommendations and referred the matter to the
Deputy Secretary for a decision on September 21, 2015. In August 2016, OIG reached an agreement for
management decision on three of nine management decisions that OIG previously rejected. As a result, there are
now six audit recommendations without a management decision. OIG’s audit recommendations request that HUD’s
Chief Financial Officer provide oversight of Ginnie Mae’s financial management operations, but HUD’s corrective
action plan to provide the oversight of Ginnie Mae lacked specificity. As of March 31, 2017, the Deputy Secretary
had not provided a decision. (Audit Report: 2015-FO-0003)
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION FISCAL YEARS 2015 AND 2014
(RESTATED) FINANCIAL STATEMENTS AUDIT, ISSUE DATE: NOVEMBER 13, 2015
HUD OIG audited Ginnie Mae’s fiscal year 2015 stand-alone financial statements. OIG conducted this audit in
accordance with the Chief Financial Officers Act of 1990 as amended. This report had new and repeat audit
findings. Of the 14 audit recommendations, OIG did not reach consensus on the necessary corrective actions for 3.
Ginnie Mae did not provide a response to OIG to explain Ginnie Mae’s refusal to implement one audit
recommendation related to compliance with the Debt Collection Improvement Act.
For the remaining two information technology (IT)-related audit recommendations, Ginnie Mae’s master
subservicer (MSS) disagreed with one audit recommendation. The MSS believes that it has the proper segregation
of duties for cash processes, payment processing, and reconciliation of all financial activities. However, OIG
40
SEMIANNUAL REPORT TO CONGRESS
disagrees and maintains its original position that segregation of duties means that no single person should have
control of two or more conflicting functions within a transaction or operation. Further, while a security camera
system, criminal background checks, etc., are helpful, they do not take the place of good internal controls, which
include the segregation of duties.
Regarding the second IT audit recommendation, Ginnie Mae’s MSS agreed to regularly review the market discount
fraction change report and confirm this review in its monthly self-evaluation. However, this response and
management’s plan of action did not fully address OIG’s recommendation. The methods identified were neither
sufficient nor adequate to address (1) OIG’s finding “that management had an ineffective monitoring tool in place”
and (2) OIG’s recommendation that management automate the approval process to include restricting the capability
to make unauthorized changes unless evidence of approval is present or increase the scope of the “Admin
Adjustment Report” to include all exceptions and adjustments. The issue was not that a review process was not in
place but that the review was not meaningful or effective because the tool or report used to review financial
adjustment changes was limited. The manual approval process also enabled staff to avoid obtaining approval before
making adjustments because there were (1) no checks and balances and (2) no restrictions in the financial system to
prevent unauthorized adjustments. Management’s plan of action did not address OIG’s concern.
OIG referred this matter to the President of Ginnie Mae for a decision on April 21, 2016, and to the Acting Deputy
Secretary on March 6, 2017. As of March 31, 2017, OIG was awaiting a decision. (Audit Report: 2016-FO-0001)
ADDITIONAL DETAILS TO SUPPLEMENT OUR FISCAL YEARS 2015 AND 2014
(RESTATED) U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FINANCIAL
STATEMENT AUDIT, ISSUE DATE: NOVEMBER 18, 2015
OIG audited HUD’s consolidated financial statements and reported on deficiencies in the areas of (1) accounting for
assets and liabilities for PIH programs in accordance with GAAP and FFMIA, (2) HUD’s financial management
governance structure and internal controls over financial reporting, (3) HUD’s administrative control of funds
system, and (4) compliance with the HOME Investment Partnership Act. HUD disagreed with several
recommendations made in each of these areas, and OIG referred them to the Principal Deputy Assistant Secretary
for Community Planning and Development, the Principal Deputy Assistant Secretary for Public and Indian
Housing, and the Deputy Chief Financial Officer on April 21, 2016. However, OIG received a response on only
one recommendation, and disagreement remained on the actions necessary to correct the deficiencies identified in
the report. OIG referred the remaining recommendations to the Deputy Secretary on September 20, 2016.
Accounting for assets and liabilities for PIH programs in accordance with GAAP and FFMIA: OIG reported that
HUD had not reported on its financial statements cash advances made to Indian Housing Block Grant (IHBG)
grantees who are authorized to invest funds drawn from their line of credit. This requirement is in accordance with
GAAP. HUD disagrees because it believes that the use of funds for investment purposes is considered an
immediate use for an authorized program purpose. In addition, most of HUD’s argument is based on conclusions
from the Tenth Circuit Court of Appeals and the U.S. Government Accountability Office (GAO) Redbook and does
not consider GAAP at all. None of the references cited by HUD fall into the GAAP hierarchy outlined in OMB
Circular A-136, Financial Reporting Requirements. In addition, IHBG grantees report their investments as “cash on
hand” on OMB SF-425, in which the instructions state for cash on hand, “a recipient must compute the amount of
Federal Cash on Hand due to undisbursed advance payments using the same basis that it uses in requesting the
advances.” OIG has repeatedly requested that OCFO provide its justification for not classifying these payments as
41
SEMIANNUAL REPORT TO CONGRESS
advances on its financial statements based on accounting principles. On March 29, 2017, OCFO submitted a
revised position; however, OCFO still does not agree. OIG is reviewing OCFO’s position.
OIG also reported that HUD is not recognizing the accounts payable arising from shortages identified in PIH’s cash
management reconciliations. PIH’s position is that it does not record the payables because the cash management
reconciliations are completed 45-60 days after each quarter. By the time they are conducted, the PHA could have
used either restricted or unrestricted net position balances or requested frontload funding to cover the shortages.
OIG does not agree that this practice complies with GAAP because adjusting the prepaid expense after payables
have been paid is not accrual accounting. PIH has not submitted a revised position on this matter.
HUD’s financial management governance structure and internal controls over financial reporting: OIG reported
on deficiencies found in the financial governance and financial reporting areas. It could not accept the proposed
management decisions because (1) OCFO requested final action target dates that were too far out in the future, (2)
claimed the deficiencies had been addressed by the new processes implemented by New Core when they had not, or
(3) did not provide sufficient detail to support that the recommendations would be fully addressed. OIG
communicated these issues to HUD on March 7, 2016. A new proposal was submitted for one recommendation but
was rejected because management did not understand the intention of the recommendation and did not include an
action plan to document its processes as indicated in the recommendation. OIG has not received any new proposals
for the remaining outstanding recommendations.
HUD’s administrative control of funds system: OIG reported that data changes were being made in HUD’s Central
Accounting and Program System (HUDCAPS) by OCFO systems without adequate documentation to support the
justification, authorization, and approval of the change. HUD stated that the transition to the Oracle financial
management service has resulted in Oracle Federal Financials now being the system of record instead of
HUDCAPS and, therefore, this finding should be closed. While the transition occurred, changes to data in
HUDCAPS can still be made, which has an impact on the data in Oracle Federal Financials. OIG has not received
any new proposals on this matter.
Compliance with the HOME Investment Partnership Act: In prior-year audit reports, OIG reported that HUD was
not in compliance with section 218(g) of the HOME statute because of the use of a cumulative method for
determining compliance with commitment deadlines. OIG continued work in this area and recommended that HUD
implement a payment recapture audit for the HOME Investment Partnerships Program to identify and recapture
payments made as a result of the continued use of the cumulative method and to ensure that the impact of the
cumulative method is included in the risk assessment process to evaluate the susceptibility to significant improper
payments. HUD’s management decision indicated that it would determine compliance with section 218(g) of the
HOME statute even though GAO has already made a formal decision that HUD is not in compliance. In addition,
HUD stated that it would implement a recapture plan after the results of the Antideficiency Act investigation even
though the criteria for an Antideficiency Act violation and an improper payment differ. OIG does not agree that one
is contingent upon the outcome of the other. In regard to inclusion in the risk assessment, HUD stated that the
HOME program would be included and the risk assessment process would be reevaluated as part of a prior-year
audit recommendation. However HUD did not specify whether the impact of the cumulative method to meet
commitment deadlines in the HOME program would be included. As of March 31, 2017, no new proposals were
submitted. (Audit Report: 2016-FO-0003)
42
SEMIANNUAL REPORT TO CONGRESS
HUD DID NOT EFFECTIVELY NEGOTIATE, EXECUTE, OR MANAGE ITS AGREEMENTS
UNDER THE INTERGOVERNMENTAL PERSONNEL ACT, ISSUE DATE: MARCH 30, 2016
HUD OIG audited HUD’s implementation and oversight of the Intergovernmental Personnel Act (IPA or Act)
mobility program because of deficiencies found in prior reviews of two IPA assignments. 12 The audit objectives
were to determine whether (1) HUD’s use of IPA agreements met the purpose and intent of the IPA mobility
program, (2) HUD’s policies and procedures related to IPA agreements were adequate to ensure that its agreements
met requirements and established proper oversight and monitoring of the personnel and activities involved, and (3)
HUD used IPA agreements to circumvent other requirements.
HUD failed to ensure that its IPA agreements met the purpose of the Act because (1) it did not have sufficient
policies and procedures for negotiating, reviewing, and executing agreements; (2) its staff ignored requirements and
altered standard documents; and (3) it did not disclose information to decision makers. OIG found that HUD
abused the IPA mobility program by circumventing other hiring authorities and had no assurance that the
agreements were in HUD’s best interest, negotiated at a reasonable cost, or free from conflicts of interest. In
addition, HUD did not properly manage the assignees. This condition occurred because HUD did not have a central
means of tracking assignees or promptly outprocessing them when they left the program. These shortcomings made
HUD vulnerable to security threats.
OIG addressed the report to the Deputy Secretary and recommended that HUD establish an independent, central
point of review for IPA agreements to ensure that they are reasonable, meet requirements, and avoid potential
conflicts of interest. Further, OIG recommended that the HUD OGC review all IPA agreements before their
effective dates. In addition, HUD should ensure that all IPA assignees receive required training and that it promptly
outprocesses them when they leave. HUD should also follow procedures to address the payment of nearly $225,000
in ineligible costs for two invalid IPA agreements and require outside organizations to support or repay nearly
$50,000 in unsupported payments.
On July 29, 2016, HUD proposed management decisions for the recommendations. While HUD addressed many of
the deficiencies in the report, OIG could not agree with a number of HUD’s management decisions because the
evidence for closure was insufficient or there were mistakes in the final action target dates. In addition, OIG
substantively disagreed with management decisions for five recommendations:
1) Recommendation 1A - Establish a central point of review and authority for IPA agreements.
2) Recommendation 1F - Resubmit its revised IPA policy for departmental clearance.
3) Recommendation 2A - Establish points of responsibility for oversight and monitoring of
personnel assigned to HUD under the IPA.
4) Recommendation 2C - Provide formal performance appraisals for IPA assignees.
5) Recommendation 2E - Establish controls to ensure IPA assignees receive required information
technology security awareness training.
12
Audit Memorandum 2014-FW-0801, Potential Antideficiency Act Violations Intergovernmental Personnel Act Agreements, dated May 30, 2014,
and Audit Memorandum 2015-FW-0801, Intergovernmental Personnel Act Appointment Created an Inherent Conflict of Interest in the Office of
Public and Indian Housing, dated January 20, 2015
43
SEMIANNUAL REPORT TO CONGRESS
For each of the five recommendations, OIG disagreed with HUD’s proposed actions because they (1) were
insufficient to prevent further abuse and mismanagement of IPA assignments, (2) failed to provide transparency to
its procedures, and (3) did not ensure the security of its information systems. After discussion with HUD, OIG
rejected all of the management decisions on August 18, 2016, and asked HUD to make revisions and provide
additional information. On September 30, 2016, OIG referred the recommendations to the Deputy Secretary.
Although OIG continued to work with HUD to revise these management decisions, as of March 31, 2017, HUD had
not submitted management decisions. (Audit Report: 2016-FW-0001)
HUD DID NOT ALWAYS PROVIDE ADEQUATE OVERSIGHT OF PROPERTY ACQUISITION
AND DISPOSITION ACTIVITIES, ISSUE DATE: JUNE 30, 2016
HUD OIG audited HUD’s Community Development Block Grant (CDBG) program’s property acquisition and
disposition activities. OIG’s audit objective was to determine whether HUD had adequate oversight of property
acquisition and disposition activities under its CDBG program.
OIG found that HUD did not always provide adequate oversight of property acquisition and disposition activities.
Specifically, of 14 activities reviewed, 7 field offices did not provide adequate oversight of 8 property acquisition
and disposition activities totaling more than $26.2 million. For the eight activities for which adequate oversight was
not provided, two activities with draws totaling $6.1 million had outstanding program-related findings that HUD
had not enforced, and six totaling $20.1 million had not been monitored. Additionally, four of the eight activities
totaling nearly $11.9 million had not met a national objective.
These conditions occurred because HUD did not have adequate controls to ensure that it enforced its monitoring
findings and its grantee risk assessment procedures did not specifically address oversight of property acquisition and
disposition activities.
The OIG report included a recommendation (1C) that the Deputy Assistant Secretary for Grant Programs develop
and implement controls to ensure that HUD expeditiously takes action to enforce grantee compliance with
monitoring findings or pursue one of the established remedies for noncompliance. It also included a
recommendation (1G) that the Deputy Assistant Secretary for Grant Programs direct field offices to include
property acquisition and disposition activities as an area of special emphasis when assessing grantee risk and
establishing their monitoring plans and grantee monitoring strategies.
The Acting Deputy Assistant Secretary for Grant Programs proposed management decisions for both
recommendations on December 22, 2016. However, after discussions with HUD, OIG rejected the proposed
management decision for recommendation 1C because it did not directly address the development and
implementation of controls as recommended. OIG also rejected the proposed management decision for
recommendation 1G because it did not directly address directing field offices to include property acquisition and
disposition activities as an area of special emphasis when assessing grantee risk and establishing their monitoring
plans and grantee monitoring strategies as recommended. For OIG to consider the proposed management decisions
as acceptable alternative actions, OIG requested clarification and documentation from HUD. However, HUD had
not provided the requested information and documentation by the end of the reporting period.
OIG referred these recommendations to the Acting Assistant Secretary for Community Planning and Development
on March 30, 2017. (Audit Report: 2016-PH-0001)
44
SEMIANNUAL REPORT TO CONGRESS
INDEPENDENT ATTESTATION REVIEW: U.S. DEPARTMENT OF HOUSING AND URBAN
DEVELOPMENT, DATA ACT IMPLEMENTATION EFFORTS, ISSUE DATE: AUGUST 26,
2016
HUD OIG reviewed HUD’s efforts as of July 15, 2016, to comply with steps 1-4 of the U.S. Department of the
Treasury’s DATA Act Playbook to determine whether HUD is positioned to meet the statutory May 2017 deadline.
OIG concluded that HUD was not on track to provide complete, departmentwide reporting by the statutory deadline.
OIG noted that the implementation issues were a result of HUD’s having three different senior accountable officials
in a 6-month span and the conclusion that the DATA Act applied to FHA and Ginnie Mae was not made until
approximately May 2016. These conditions delayed implementation efforts and precluded the reasonable
expectation that the deadline would be met. In addition to the FHA and Ginnie Mae delays, as of July 15, 2016,
HUD had not completed its inventory of data elements or the mapping of agency data to the DATA Act schema.
HUD had also been unable to resolve data quality issues that have impeded the complete and accurate reporting of
departmental contract, grant, loan, and other financial assistance awards in USAspending.gov. Among other issues,
OIG recommended that HUD (1) identify the universe of all program obligations and disbursements, including the
appropriations account level of obligations and outlays by program activity and by object class for compliant
USASpending.gov reporting, and (2) execute a plan to resolve errors already identified in programmatic
expenditure information transferred to USASpending.gov before full implementation and ensure that similar types
of errors are identified in a timely manner and promptly resolved before implementation.
In response to these recommendations, OCFO disagreed, stating that the challenges encountered by HUD were not
unique to HUD and affected all agencies. Additionally, OCFO stated that it was implementing corrective actions
related to current USASpending data and legacy system data quality issues, which included developing a
comprehensive plan to lay the groundwork for assessing the completeness and accuracy of financial DATA Act
submissions.
OIG did not agree with OCFO’s proposed corrective actions because OIG believed it was necessary for HUD to
develop procedures to reconcile the complete list of its currently funded appropriations and programs and identify
the portfolio of funding identified that supports each program. Additionally, to fully address the recommendation,
OCFO’s corrective action plan should include a reconciliation of (1) the activity of obligations and outlays with
budget execution reports, (2) the fund balance with Treasury, and (3) its status of funds reports on the performance
of such reconciliations or similar reconciliations, which are generated from the Oracle® U.S. Federal Financials.
Further, although OCFO stated that HUD had a team working on corrective actions for data quality issues, OIG was
not provided sufficient evidence and assurance on how the corrective actions would resolve data relatability issues
identified during its review.
OIG referred its disagreement to the Deputy Chief Financial Officer on February 3, 2017. As of March 31, 2017,
OIG’s disagreement with OCFO had been referred to the Acting Deputy Secretary for decision. (Audit
Memorandum: 2016-FO-0802)
45
SEMIANNUAL REPORT TO CONGRESS
HUD DID NOT ALWAYS PROVIDE ACCURATE AND SUPPORTED CERTIFICATIONS OF
STATE DISASTER GRANTEE PROCUREMENT PROCESSES, ISSUE DATE: SEPTEMBER
29, 2016
HUD OIG audited HUD’s controls over its certifications of State disaster recovery grantee procurement processes
to determine whether HUD certifications of State disaster grantee procurement processes were accurate and
supported. The OIG report found that HUD did not always provide accurate and supported certifications of State
disaster grantee procurement processes. Specifically, it (1) allowed conflicting information on its certification
checklists, (2) did not ensure that required supporting documentation was included with the certification checklists,
and (3) did not adequately evaluate the supporting documentation submitted by the grantees. These conditions
occurred because HUD did not have adequate controls over the certification process. Due to the weaknesses
identified, HUD did not have assurance that State grantees had proficient procurement processes in place, and the
Secretary’s certifications did not meet the intent of the Disaster Relief Appropriations Act of 2013. 13
The report included five recommendations for the Deputy Assistant Secretary for Grant Programs. The Acting
Deputy Assistant Secretary for Grant Programs proposed corrective actions on January 11, 2017, and OIG rejected
the proposed actions on January 27, 2017. OIG referred the recommendations to the General Deputy Assistant
Secretary for Community Planning and Development on February 6, 2017. The General Deputy Assistant Secretary
responded to the referral on February 21, 2017. For all of the recommendations, the General Deputy Assistant
Secretary stated that OIG’s disagreement regarding the definition of a proficient procurement process as it relates to
State disaster grantees and the meaning of “equivalent” as it relates to a State’s procurement policies and procedures
being “equivalent to” or “aligned with” the Federal procurement standards was closed by the former Deputy
Secretary in her decision regarding resolution of recommendations from OIG’s audit of New Jersey’s Sandy
Integrated Recovery Operations and Management System. 14 In the January 10, 2017, decision, the Deputy
Secretary wrote that the State certified that its procurement standards were equivalent to the standards at 24 CFR
85.36 and HUD had also certified to the proficiency of the State’s policies and procedures. The Deputy Secretary
noted that two legal opinions from the Office of General Counsel concluded that the standards at 24 CFR 85.36 did
not apply and, therefore, there was no legal basis for the finding and associated recommendations. The General
Deputy Assistant Secretary asserted that the legal opinion for the New Jersey audit applied to this audit. Based on
this information, the General Deputy Assistant Secretary believed it was appropriate to close all of the
recommendations.
OIG disagrees with the General Deputy Assistant Secretary’s request to close the recommendations in this audit
based on the Deputy Secretary’s decision to resolve recommendations from OIG’s audit of New Jersey’s Sandy
Integrated Recovery Operations and Management System. OIG has two main areas of disagreement with the
decision: (1) OIG continues to assert that 24 CFR 85.36 was applicable to the State because its procedures needed
to be equivalent to these Federal standards, and (2) OIG asserts that the applicability of 24 CFR 85.36 was not the
only basis for the recommendations in the New Jersey audit report and believes that the decision failed to consider
the other bases of the recommendations. Further, the Deputy Secretary’s decision did not address all of the issues
with HUD’s process for certifying State disaster grantee procurement processes that were identified in the subject
audit report. OIG referred these recommendations to the Acting Deputy Secretary on March 31, 2017. (Audit
Report: 2016-PH-0005)
13
Public Law 113-2, dated January 29, 2013
14
2015-PH-1003, dated June 4, 2015
46
SEMIANNUAL REPORT TO CONGRESS
THE STATE OF NEW JERSEY DID NOT DISBURSE DISASTER FUNDS TO ITS
CONTRACTOR IN ACCORDANCE WITH HUD, FEDERAL, AND OTHER APPLICABLE
REQUIREMENTS, ISSUE DATE: SEPTEMBER 30, 2016
HUD OIG audited the State of New Jersey’s CDBG-DR-funded Superstorm Sandy Housing Incentive Program
contract. OIG conducted the audit because the contract involved more than $67.7 million in grant funds, was
critical to the implementation of three of the State’s disaster programs, and was terminated less than 1 year into the
3-year contract term. OIG’s objective was to determine whether the State disbursed disaster funds to its contractor
in accordance with HUD, Federal, and other applicable requirements for costs that were eligible, supported,
reasonable, and necessary.
OIG found that the State did not ensure that (1) disbursements met a national objective, (2) expenses were incurred
after the contract was executed, (3) other direct costs were fully supported and the prices paid were fair and
reasonable, (4) labor costs were fully supported, (5) travel costs were fully supported, and (6) disbursements were
for costs that were reasonable and necessary. Further, the State did not show that it properly managed equipment
purchased with disaster funds. These conditions occurred because the State did not have adequate controls in place
to administer its contract and monitor contract performance and was not fully aware of Federal procurement and
cost principle requirements. As a result, HUD did not have assurance that the nearly $43.1 million disbursed under
the contract was for costs that were eligible, supported, reasonable, and necessary.
The report included five recommendations for the Deputy Assistant Secretary for Grant Programs to direct the State
to provide documentation to show that disbursements complied with applicable requirements or repay any amounts
that it could not support and one recommendation for the State to repay HUD for ineligible disbursements. The
Acting Deputy Assistant Secretary for Grant Programs provided proposed management decisions for all of the
recommendations on February 14, 2017. HUD agreed to take corrective action on the recommendations. However,
HUD noted that the audit did not reflect applicable Federal procurement and cost principle requirements because
States were not required to follow 24 CFR 85.36. HUD stated that if the State cannot show that the amounts
associated with the recommendations complied with requirements, it will take one or more actions to prevent a
continuation of the deficiencies, as outlined in 24 CFR 570.495. Further, if HUD takes one or more of the remedies
in 24 CFR 570.495 and finds that the State does not make an appropriate or timely response, it will pursue one or
more of the remedies found in 24 CFR 570.496.
Although OIG agrees with HUD’s plan to review the documentation provided by the State, it does not agree with
HUD’s planned remedies. The remedies in 24 CFR 570.495 and 24 CFR 570.496 include several options that do
not require repayment from non-Federal funds. OIG rejected the proposed management decisions on March 27,
2017. To satisfy the recommendations, HUD needs to agree that if the State is unable to show that amounts
associated with the recommendations complied with requirements, it must repay HUD from non-Federal funds any
amount that it cannot support.
OIG continues to assert that requirements at 24 CFR 85.36 were applicable to the State because its procurement
procedures needed to be equivalent to these Federal standards. The State’s process was not equivalent to the
requirements for a cost estimate and cost analysis in 24 CFR 85.36 because the State did not develop a measure for
evaluating the reasonableness of contractors’ proposed costs or prices and for evaluating the separate elements that
made up the contractors’ total costs.
OIG referred these recommendations to the Acting Assistant Secretary for Community Planning and Development
on March 31, 2017. (Audit Report: 2016-PH-1009)
47
SEMIANNUAL REPORT TO CONGRESS
SIGNIFICANTLY REVISED MANAGEMENT DECISIONS
Section 5(a)(11) of the Inspector General Act, as amended, requires that OIG report information concerning the
reasons for any significantly revised management decisions made during the reporting period. During the current
reporting period, OIG has one report in which there were significantly revised management decisions.
U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, WASHINGTON, DC,
IMPROPER PAYMENTS ELIMINATION AND RECOVERY ACT OF 2010, ISSUE DATE: APRIL
15, 2014
HUD OIG audited HUD’s fiscal year 2013 compliance with the Improper Payments Information Act of 2002 as
amended by IPERA. OIG found that HUD did not comply with IPERA reporting requirements. In addition, PIH’s
and Multifamily Housing’s supplemental measures and associated corrective actions did not sufficiently target the
root causes of its improper payments because they did not track and monitor processing entities to ensure
prevention, detection, and recovery of improper payments caused by rent component and billing errors, which are
root causes identified by HUD’s contractor studies. Therefore, OIG recommended that these program offices
reassess their corrective actions and develop management-level reports in the Enterprise Income Verification system
to allow management to efficiently and effectively identify processing entities that are responsible for improper
payments.
In 2014, PIH agreed with OIG’s recommendations, and OIG accepted its management decisions. However, as PIH
tried to implement its action plans, it realized that to fully address these recommendations, it needed to make several
business process improvements, completely redesign its income verification tool, and train PHAs and staff on its
new processes. PIH submitted two new management decisions with milestones for completing these items, and
OIG accepted these management decisions on March 14, 2017. While this has extended the date for completion,
OIG believes that this approach is more holistic and will put PIH in a better place to efficiently and effectively
reduce improper payments. (Audit Report: 2014-FO-0004)
SIGNIFICANT MANAGEMENT DECISIONS WITH WHICH OIG DISAGREES
During the reporting period, OIG had four reports in which it disagreed with the significant management decision.
THE NIAGARA FALLS HOUSING AUTHORITY DID NOT ALWAYS ADMINISTER ITS HOPE VI
GRANT PROGRAM AND ACTIVITIES IN ACCORDANCE WITH HUD REQUIREMENTS,
ISSUE DATE: JULY 10, 2014
HUD OIG audited the Niagara Falls Housing Authority’s HOPE VI grant program based on an OIG risk analysis
and the amount of funding the Authority received. The objectives of the audit were to determine whether the
Authority administered its HOPE VI grant program and activities in accordance with HUD and HOPE VI grant
program requirements.
The Authority did not always administer its HOPE VI grant program and activities in accordance with requirements.
Specifically, contrary to Federal regulations and the HOPE VI grant agreement, Authority officials drew more
HOPE VI funds from HUD’s Line of Credit Control System than were needed to cover project expenditures. OIG
recommended that HUD instruct Authority officials to (1) reimburse the U.S. Treasury for approximately $1.5
48
SEMIANNUAL REPORT TO CONGRESS
million in HOPE VI funds drawn in excess of need to cover project expenditures and (2) establish procedures to
ensure that program funds are drawn in accordance with the grant agreement and regulations.
The Office of Public Housing Investments (OPHI) disagreed with recommendations 1A, 1B, and 1C and believed
the funds questioned by OIG were non-Federal cost savings, which could be better used for HOPE VI-eligible
activities in the Center Court neighborhood. OPHI believed there was no authority to require non-Federal cost
savings to be returned to the U.S. Treasury. OIG disagrees with the proposed management decisions for
recommendations 1A, 1B, and 1C and believes that all of the questioned funds should be returned to the U.S.
Treasury absent a suitable legal opinion. As a result of November 25, 2014, discussions with OIG, OPHI agreed to
obtain a legal determination from HUD OGC regarding the proposed management decisions. On March 26, 2015,
OIG referred the disagreement to the Acting Assistant Secretary for Public and Indian Housing as a legal
determination had not been provided.
On April 28, 2015, the Associate General Counsel, Office of Assisted Housing and Community Development,
provided an opinion on the proposed management decisions and the related OIG concerns. This opinion concluded
that approximately $1.5 million in questioned costs was program income under the definition of excess income and
did not have to be repaid to the U.S. Treasury.
The Counsel to the Inspector General reviewed the OGC opinion and agreed that the OIG recommendations should
be retained, the questioned costs were not program income, and the interest earned on these funds was also not
program income. Also, exhibit H of the annual contributions contract amendment would have required program
income to have been spent before the HOPE VI funds were drawn down. Because unspent HOPE VI grant funds
are no longer available for expenditure, funds returned to HUD must be returned to the U.S. Treasury.
On August 13, 2015, OIG referred the disagreement on the management decisions to the Deputy Secretary for a
decision as the departmental audit resolution official.
On January 19, 2017, the Deputy Secretary provided a final decision on the management decisions and concluded
that the Authority is not required to return the funds to the U.S. Treasury. The decision noted that the remaining
funds are excess income (program income) and that the Authority could have amended its budget and revitalization
plan to use these funds for additional betterments to the previous phases or for other purposes that benefit the
project residents or the development.
OIG closed the recommendations with disagreement. In its various responses to resolve the audit, HUD’s Office of
Public Housing, OGC, and the Deputy Secretary redefined the funds as program income and ignored expenditure
deadline requirements that would have required that the funds be repaid and remitted to the Treasury. OIG
maintains that HUD’s characterization of the funds as program income is unsupported and that its actions have
violated the intent of the HOPE VI grant agreement and 31 U.S.C. (United States Code) 1552. (Audit Report:
2014-NY-1007)
THE STATE OF NEW JERSEY DID NOT COMPLY WITH FEDERAL PROCUREMENT AND
COST PRINCIPLE REQUIREMENTS IN IMPLEMENTING ITS DISASTER MANAGEMENT
SYSTEM, ISSUE DATE: JUNE 4, 2015
HUD OIG audited the State of New Jersey’s CDBG-DR-funded Sandy Integrated Recovery Operations and
Management System. OIG determined that the State did not procure services and products for its system in
49
SEMIANNUAL REPORT TO CONGRESS
accordance with Federal procurement and cost principle requirements. It did not do so because its procurement
process was not equivalent to Federal procurement standards. Specifically, it did not prepare an independent cost
estimate and analysis before awarding the system contract to the only responsive bidder. Further, it did not ensure
that option years were awarded competitively and included provisions in its request for quotation that restricted
competition. Also, the State did not ensure that software was purchased competitively and that the winning
contractor had adequate documentation to support labor costs charged by its employees. As a result, the State did
not show that the more than $38.5 million contract price and options years totaling nearly $21.7 million were fair
and reasonable and that the more than $1.5 million it disbursed was adequately supported. The State began taking
corrective actions during the audit and began providing documentation to resolve these deficiencies. HUD needed
to assess the documentation to determine the appropriateness of all contract costs.
The OIG report included five recommendations (1A, 1B, 1C, 1D, and 1E) for HUD’s Deputy Assistant Secretary
for Grant Programs. The Deputy Assistant Secretary for Grant Programs provided proposed management decisions
for all of the recommendations. OIG concurred with the proposed management decision for recommendation 1D.
However, for recommendations 1A, 1B, 1C, and 1E, HUD maintained that it had an ongoing disagreement with
OIG regarding the applicability of the procurement regulations at 24 CFR 85.36 to State CDBG-DR grantees. HUD
also disagreed with OIG concerning the interpretation of the March 5, 2013, Federal Register notice for CDBG-DR
grants under Public Law 113-2, which provided that States must have fiscal and administrative requirements for
spending and accounting for all funds. HUD contended that the requirements at 24 CFR 85.36, including the cost
estimate requirements, do not apply to States unless a State elects to adopt the provisions at 24 CFR 85.36 as its
procurement standards. Otherwise, the State must comply with regulations at 24 CFR 570.489 and follow its
procurement policies and procedures.
OIG rejected the proposed management decisions for recommendations 1A, 1B, 1C, and 1E because they did not
meet the intent of the recommendations. On March 29, 2016, OIG referred the recommendations to the Deputy
Secretary for a decision. On January 10, 2017, the Deputy Secretary provided a final decision. The Deputy
Secretary stated that since the State did not adopt the procurement standards in 24 CFR 85.36 and instead followed
its own procurement standards, the standards at 24 CFR 85.36 did not apply to the State and could not be used as a
basis for OIG findings and recommendations. Because all of the recommendations cited 24 CFR 85.36 as their
basis and these regulations were inapplicable to the State, the Deputy Secretary found that there was no basis for the
OIG finding and recommendations 1A, 1B, 1C, and 1E. Therefore, these recommendations warranted no further
action other than closing them out.
OIG disagrees with the Deputy Secretary’s decision. OIG has two main areas of disagreement with the decision:
(1) OIG continues to assert that 24 CFR 85.36 was applicable to the State because its procedures needed to be
equivalent to these Federal standards based on its certification to HUD, and (2) OIG asserts that the applicability of
24 CFR 85.36 was not the only basis for the recommendations in the audit report and believes that the Deputy
Secretary’s decision did not consider the other bases of the recommendations, such as regulations at 2 CFR Part 225
that address factors affecting the allowability of costs, including the need for costs to be reasonable and necessary,
and the contract that required the contractor to include copies of at least three quotes when submitting invoices for
payment of direct costs. To satisfy recommendations 1A, 1B, and 1C, HUD needed to assess whether the
documentation the State provided and any additional documentation it provided after the audit were adequate to
show that prices were fair and reasonable..
OIG closed the recommendations with disagreement but maintains that the standards at 24 CFR 85.36 applied to the
State because its procedures needed to be equivalent to these Federal standards and the Deputy Secretary’s decision
did not consider the other bases for the recommendations. (Audit Report: 2015-PH-1003)
50
SEMIANNUAL REPORT TO CONGRESS
LOANDEPOT’S FHA-INSURED LOANS WITH DOWNPAYMENT ASSISTANCE FUNDS DID
NOT ALWAYS MEET HUD REQUIREMENTS, ISSUE DATE: SEPTEMBER 30, 2015
LOANDEPOT’S FHA-INSURED LOANS WITH GOLDEN STATE FINANCE AUTHORITY
DOWNPAYMENT ASSISTANCE GIFTS DID NOT ALWAYS MEET HUD REQUIREMENTS,
ISSUE DATE: SEPTEMBER 30, 2015
In fiscal year 2015, HUD OIG completed three audits of two lenders, NOVA Financial and Investment Corporation
and loanDepot LLC, which disclosed that FHA-insured loans with downpayment assistance funds did not always
meet HUD requirements. While the Deputy Secretary rendered a decision on the NOVA audit in May 2016, that
decision did not include loanDepot. OIG strongly disagreed with the Deputy Secretary’s decision on NOVA and
noted its disagreement at that time and in the last Semiannual Report to Congress. However, the Deputy Secretary
essentially reaffirmed HUD’s position when it rendered similar decisions on the loanDepot audits on January 19,
2017. The overarching issue of borrower-financed downpayment assistance is still in disagreement between HUD
and OIG.
HUD OIG audited loanDepot based on the results of a previous audit of NOVA and a referral from HUD’s Quality
Assurance Division detailing a separate lender that originated FHA-insured loans that had ineligible downpayment
assistance gifts. The HUD OIG analysis identified loanDepot as a lender with high FHA origination volume in the
geographic region that participated in similar downpayment assistance gift and secondary financing programs.
OIG found that loanDepot’s FHA-insured loans with downpayment assistance gift funds and secondary financing
did not always comply with HUD requirements, putting the FHA insurance fund at unnecessary risk, including
potential losses of nearly $5 million for 53 loans with ineligible assistance and $29.9 million for a projected 339
loans that likely had ineligible assistance. Projecting forward 1 year, at the time of the audit, this was equivalent to
more than $25 million in potential losses for loans that could have ineligible assistance and have a higher risk of
loss in the first year. Also, loanDepot inappropriately charged borrowers nearly $26,000 in fees that were not
customary or reasonable and nearly $47,000 in discount fees that did not represent the purpose of the fee. The
ineligible loans put borrowers at a disadvantage because of higher monthly mortgage payments imposed on them by
a premium interest rate.
OIG did a second audit of loanDepot’s FHA-insured loans with Golden State Finance Authority downpayment
assistance gifts, which again disclosed that loanDepot did not always comply with HUD requirements. This action
put the FHA insurance fund at unnecessary risk, including potential losses of nearly $6 million for 62 loans with
ineligible gifts and more than $16 million for 178 loans that likely contained ineligible gifts. Projecting forward 1
year, this is equivalent to nearly $16 million in potential losses for loans that would have ineligible gifts and a
higher risk of loss in the first year. Also, loanDepot inappropriately charged borrowers nearly $14,000 in fees that
were not customary or reasonable. As OIG determined in the first audit, the ineligible loans put borrowers at a
disadvantage because of higher monthly mortgage payments, including the burden of funding the downpayment
assistance program through premium interest rates.
The audits reviewed downpayment assistance gifts in which (1) downpayment assistance gift funds were indirectly
derived from a premium-priced mortgage and (2) the gifts were not true gifts but were repaid by the borrower
through higher interest rates and fees. Because downpayment assistance programs are intended to help creditworthy
families obtain housing they might not otherwise obtain, OIG found downpayment assistance programs structured
to repay the downpayment assistance at the expense of the borrowers to be objectionable.
51
SEMIANNUAL REPORT TO CONGRESS
Among other things, OIG recommended that HUD require loanDepot to (1) stop originating FHA loans with
ineligible downpayment assistance, (2) indemnify HUD for the FHA loans that were originated with ineligible
downpayment assistance, (3) reimburse borrowers for misrepresented discount fees and fees that were not
customary or reasonable, (4) reduce the interest rate for borrowers who received ineligible downpayment assistance,
and (5) reimburse borrowers for overpaid interest as a result of the premium interest rate.
The Office of Single Family Housing disagrees with OIG’s conclusions that the downpayment assistance provided
by housing finance agencies through premium pricing is not consistent with established law, guidance, and practice.
Single Family Housing believes that the downpayment assistance funding mechanisms used are not premium
pricing, nor do they violate FHA guidance regarding downpayment assistance by government entities. Single
Family Housing stated that premium pricing is defined only as a higher interest rate in exchange for a credit to be
applied toward a borrower’s closing costs or other prepaid items. Single Family Housing repeated that there are no
restrictions on how a government entity may fund its downpayment assistance programs. It considers the
downpayment assistance funding mechanisms to be permissible. These mechanisms include generating funds
through capital market vehicles, which may result in a negotiated interest rate that is higher than a negotiated
interest rate for mortgage loans without downpayment assistance.
In response to OIG’s audit report on NOVA, Single Family Housing publicly issued a letter to the lending industry,
dated July 20, 2015. The letter reaffirmed FHA’s support for certain downpayment assistance programs, like those
run by State housing finance agencies. It further stated that the intent of HUD rules regarding downpayment
assistance is clear and allows housing finance agencies the discretion necessary to fund these programs
appropriately. On August 11, 2015, before an audit resolution or substantive discussions between Single Family
Housing and OIG, HUD publicly issued a HUD OGC legal opinion. OGC determined that neither HUD’s
Interpretative Rule Docket No. FR-5679-N-01 nor Mortgagee Letter 2013-14 placed restrictions on how a
government entity may fund its downpayment assistance programs. According to this opinion, FHA’s rules and
guidance do not place restrictions or prohibitions on how a government entity raises funds to support its
downpayment assistance programs. Further, the use of funds derived from the sale of a mortgage with a higher than
market interest rate does not constitute premium pricing. In addition, HUD OGC cited that there is no violation of
FHA restrictions on premium pricing when the rates agreed upon by the borrower and lender are generally the rates
available to borrowers participating in downpayment assistance programs. HUD OGC concluded that it found no
basis to challenge the legality of the downpayment assistance programs.
OIG recognizes that housing finance agencies provide home-ownership opportunities to low- and moderate-income
families and does not disagree with Interpretative Rule Docket No. FR-5679-N-01 and Mortgagee Letter 2013-14
that housing finance agencies, as instrumentalities of State or local governments, may provide downpayment
assistance. The audit reports did not dispute that housing finance agencies are an acceptable source of funds.
However, FHA loans that contain downpayment assistance from a housing finance agency must meet all HUD
requirements, including those on premium pricing and the definition of gift funds.
The lenders were obligated to conduct due diligence to ensure that planned downpayment assistance gifts met the
requirements described in HUD Handbook 4155.1. OIG determined that the FHA loans with downpayment
assistance did not meet all HUD requirements, specifically those governing premium pricing and gift funds.
Neither HUD’s Interpretative Rule Docket No. FR-5679-N-01 nor its related Mortgagee Letter 2013-14
contemplate the use of premium pricing by a lender to reimburse the housing finance agency. The Housing and
Economic Recovery Act of 2008 amended section 203(b)(9)(C) of the National Housing Act to preclude the abuse
of the program when a seller (or other interested or related party) funded the home buyer’s cash investment after the
closing by reimbursing third-party entities; specifically, private nonprofit charities. Similarly, it would be contrary
to the intended purpose of the Housing and Economic Recovery Act to allow a local government entity to do the
same thing.
52
SEMIANNUAL REPORT TO CONGRESS
On December 1, 2015, the Office of Housing issued a response to OIG’s NOVA referral to the Principal Deputy
Assistant Secretary for Housing. In its response, Housing upheld the decision of Single Family Housing in
disagreeing with OIG’s determinations. The decision points to the HUD OGC legal opinion. Housing also stated
that downpayment assistance programs, such as the ones administered by NOVA, are key instruments in FHA’s
efforts to make affordable home ownership available to households that otherwise would be shut out of the housing
market. OIG continued to disagree with HUD’s stance on the issue and referred the NOVA audit recommendations
to the Deputy Secretary on December 15, 2015. After many discussions and meetings with HUD and OIG officials,
the Deputy Secretary rendered a decision on the NOVA audit on May 25, 2016, which generally stated that the
downpayment assistance program as described in the audit is permissible under law and that OIG has not
established a violation of any FHA rules and regulations. Further, the Deputy Secretary concluded that the
“prohibited sources” provisions of section 203(b)(9)C) of the National Housing Act do not mandate the conclusion
that government entities are prohibited sources of downpayment assistance in connection with FHA-insured
mortgages, regardless of how such entities generate their funds. Consequently, the Deputy Secretary directed the
recommendations to be closed with no further action except for one recommendation, which directed FHA to
review and, as appropriate, update its guidance, including any internal control checklists, to include FHA rules and
regulations governing downpayment assistance, premium interest rates, and allowable fees.
OIG, however, noted its strong disagreement with the Deputy Secretary’s decision and contended that it has a
number of inaccuracies and relies heavily on HUD OGC’s legal opinion, which OIG believes is flawed. Despite
OIG’s clear disagreement, the Deputy Secretary failed to reconsider HUD’s position and rendered a similar decision
on the two loanDepot audits on January 19, 2017. Both the decision and legal opinion considered only the primary
FHA mortgage transaction and failed to consider the significant role played by the secondary market transaction
after loan closing. It is the secondary market transaction that allows housing finance agency reimbursement and
predetermines the nonnegotiable premium interest rate that is unfairly imposed on FHA borrowers. While OIG
does not take issue with the legality of downpayment assistance programs in general, it is OIG’s position that the
downpayment assistance program structure in which the funding is provided or reimbursed by a party that benefits
financially from the transaction is not legal under the National Housing Act. (Audit Reports: 2015-LA-1009 and
2015-LA-1010)
FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT OF 1996
In fiscal year 2016, OIG noted that HUD’s financial management system continued its noncompliance with the
three FFMIA, section 803(a), elements. HUD’s continued noncompliance was largely due to New Core
implementation challenges, improper accounting practices, and a reliance on different legacy financial systems and
their requisite limitations.
FFMIA requires OIG to report in its Semiannual Reports to Congress instances and reasons when an agency has not
met the intermediate target dates established in its remediation plan required by FFMIA. Section 803(a) of FFMIA
requires that each agency establish and maintain financial management systems that comply with (1) Federal
financial management system requirements, (2) Federal accounting standards, and (3) the USSGL at the transaction
level.
Like many other agencies, HUD has struggled to modernize its legacy financial systems. HUD’s financial systems,
many of which were developed and implemented before the issuance of current standards, were not designed to
provide the range of financial and performance data currently required. In fiscal year 2016, HUD continued the
phased transition of key financial management functions to a Federal shared service provider (FSSP), the U.S.
Department of the Treasury, Bureau of Fiscal Service’s Administrative Resource Center (ARC).
53
SEMIANNUAL REPORT TO CONGRESS
HUD experienced significant information processing and data quality challenges following the transition of key
financial management functions to ARC with release 3 of the New Core Project on October 1, 2015. Specifically,
OIG noted unresolved data conversion errors totaling more than $9 billion. Inaccurate reports and ineffective
controls between HUD and FSSP systems through the New Core Interface System (NCIS) contributed to HUD’s
2016 FFMIA noncompliance. Following the implementation of release 3, HUD relied and will continue to rely on
legacy applications (such as HUDCAPS) as the authoritative data source for program-related financial data. HUD
delayed implementation of the NCIS automated reconciliation tool for the first 9 months of fiscal year 2016 and
failed to conduct manual reconciliations, adding to the data quality issues. Initial reports from the reconciliation
tool, when it was implemented in June 2016, identified $4.5 billion in differences between HUD’s legacy
applications and the general ledger maintained by ARC. While HUD has been working to address the many
postdeployment issues, additional work is required. In April of 2016, HUD ended the New Core Project with the
closeout of the release 3 implementation. HUD decided that it would continue to use ARC’s systems and services
for the capabilities that had already been delivered but would not transition to shared services as a means for
achieving the remaining New Core capabilities. HUD will need to address weaknesses related to its IT governance
and project management practices as it continues to modernize its IT systems.
HUD’s noncompliance with the three section 803(a) elements of FFMIA also relates to issues not associated with
the recent FSSP transition. HUD’s Integrated Disbursement and Information System (IDIS) does not comply with
applicable Federal accounting standards or the USSGL at the transaction level. The Office of Community Planning
and Development (CPD) is the system owner of IDIS, and the system is FFMIA noncompliant largely due to the use
of the first-in, first-out (FIFO) method to account for disbursements from fiscal year 2014 and prior-year grants.
While CPD has made progress in addressing this issue for fiscal year 2015 grants and forward, funding constraints
and complexities in removing the cumulative method of accounting to meet HOME program commitment rules
have delayed completion of the IDIS remediation plan. The plan also includes additional adjustments to the system
that are needed to ensure accurate accounting at the USSGL transaction level. To fully remediate this weakness,
FIFO will need to be removed retroactively, and the system needs to be completely configured to support USSGL
transaction-level accounting. OIG plans to assess the status of HUD’s IDIS remediation efforts during the course of
the fiscal year 2017 audit.
As of September 30, 2016, HUD reported that the Ginnie Mae Financial and Accounting System (GFAS) was not
compliant with FFMIA. OIG noted continuing noncompliance with the three elements of FFMIA within HUD’s
Ginnie Mae component. GFAS is not compliant with FFMIA primarily due to four material weaknesses related to
Ginnie Mae’s internal controls over financial reporting and its inability to properly account for its loan portfolio.
Ginnie Mae remains unable to support key financial statement line items related to its nonpooled loans portfolio
acquired from defaulted issuers. Ginnie Mae’s challenges stem from its lack of a financial system (or systems)
capable of recording loan-level transaction details in compliance with GAAP accounting requirements. OIG issued
a disclaimer of opinion on Ginnie Mae’s 2016 financial statements due to its continued inability to support
nonpooled loan portfolio balances totaling $4.2 billion and $5.2 billion, net, as of September 30, 2016 and 2015,
respectively. 15
OIG also noted that, despite progress, Ginnie Mae had not completely resolved deficiencies related to its recording
of contract obligations. To remediate its FFMIA noncompliance, Ginnie Mae will need to address its loan and
budgetary accounting weaknesses.
15
Audit of the Government National Mortgage Association’s Financial Statements for Fiscal Years 2016 and 2015 (Restated), Audit Report 2017-FO-
0001, November 14, 2016; https://www.hudoig.gov
54
SEMIANNUAL REPORT TO CONGRESS
As of September 30, 2016, HUD reported that three Office of the Chief Procurement Officer (OCPO) procurement
systems, the HUD Procurement System (HPS), Small Purchase System (SPS), and HUD Integrated Acquisition
Management System (HIAMS), were not substantially compliant with FFMIA. These systems have been replaced,
and OCPO needs to perform procurement closeout actions in HPS and HIAMS and validate SPS data before
decommissioning. HUD hopes to complete decommissioning for these three systems during fiscal year 2017.
In addition to the specific financial system weaknesses identified above, there are material weaknesses stemming
from a lack of systems and deficiencies related to manual accounting processes. For example, current material
weaknesses include cash management processes implemented by PIH that do not comply with FFMIA
requirements.
55
SEMIANNUAL REPORT TO CONGRESS
CHAPTER 11 – WHISTLEBLOWER OMBUDSMAN
PROGRAM
Whistleblowers play a critical role in keeping our Government honest, efficient, and accountable. The U.S.
Department of Housing and Urban Development, Office of Inspector General (HUD OIG), continues to ensure that
HUD and HUD OIG employees are aware of their rights to disclose misconduct, waste, or abuse in HUD programs
without reprisal and to assist HUD and HUD OIG employees in seeking redress when employees believe that they
have been subject to retaliation for whistleblowing.
HUD OIG’s Whistleblower Ombudsman Program works with HUD and HUD OIG employees to provide
information on
• employee options for disclosing misconduct, waste, or abuse in HUD programs;
• statutory protections for Federal employees who make such disclosures; and
• how to file a complaint under the Whistleblower Protection Act when an employee believes he or she
has been retaliated against for making protected disclosures.
The HUD OIG Whistleblower Ombudsman Program continued its focus on staff training and individual assistance.
All HUD employees attended mandatory whistleblower training in October 2016, in conjunction with the agency’s
annual ethics training. The training was presented live and then posted on HUD’s whistleblower web page.
Secretary Castro, consistent with his emphasis on this program, introduced the training and stressed its importance.
Training sessions were also held for all HUD OIG staff, managers, and senior executives in June and July 2016,
with Inspector General Montoya providing introductory remarks stressing his view of the importance of the
program. Training videos were also retained on HUD OIG whistleblower and ethics websites. This training
normally occurs during this semiannual reporting period but is provided with annual ethics training, which was
conducted earlier in 2016 to offer guidance on the Hatch Act in an election year. In addition, whistleblower training
is incorporated into HUD’s new employee training. HUD OIG’s Whistleblower Ombudsman also provided
information on an individual basis to HUD and HUD OIG employees seeking to understand their rights and options
as whistleblowers. HUD OIG is in the process of obtaining 2302(c) certification from the Office of Special Counsel
for its whistleblower training program. This certification is voluntary and held by approximately 20 percent of
Federal OIGs.
Although not statutorily mandated, HUD OIG’s Whistleblower Ombudsman also provided information to potential
whistleblowers under the National Defense Authorization Act (41 U.S.C. (United States Code) 4712) Pilot Program
(NDAA Program), which extended whistleblower protections to employees of Federal contractors, subcontractors,
and grantees. In addition, if a grantee’s or contractor’s employee believes he or she has been retaliated against for
whistleblowing, the employee may submit a complaint to OIG, and OIG will review and investigate those
complaints.
It is HUD OIG’s practice generally to refer HUD employees with whistleblower retaliation complaints to the Office
of Special Counsel (OSC). HUD OIG does not track these matters unless OSC requests HUD OIG assistance in
investigating a complaint. During this semiannual reporting period, HUD OIG did not investigate any
whistleblower retaliation complaints by HUD employees. HUD OIG did receive a number of complaints under the
NDAA Program.
56
SEMIANNUAL REPORT TO CONGRESS
The table below provides further information on those complaints.
Number of complaints received 50
Number of complainants asserting whistleblower
50
status 16
Complaints referred for investigation to the HUD
21
OIG Office of Investigation (OI)
Complaint investigations opened by OI 21
Complaints declined by OI 0
Complaints currently under review by OI 15
Employee complaint investigations closed by OI 6
16
29 cases were referred to the hotline and determined to not have whistleblower status. Many complainants raise questions regarding
treatment by housing authorities following alleging wrongdoing by the same housing authority. They define themselves as
whistleblowers but are not employees of the housing authority. These complaints are referred to our hotline for appropriate referral
and disposition.
57
SEMIANNUAL REPORT TO CONGRESS
APPENDIX 1 – PEER REVIEW REPORTING
OFFICE OF AUDIT
BACKGROUND
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203), section 989C, requires
inspectors general to report the latest peer review results in their semiannual reports to Congress. The purpose in
doing so is to enhance transparency within the government. Both the Office of Audit and Office of Investigation
are required to undergo a peer review of their individual organizations every 3 years. The purpose of the review is
to ensure that the work completed by the respective organizations meets the applicable requirements and standards.
The following is a summary of the status of the latest round of peer reviews for the organization.
PEER REVIEW CONDUCTED ON HUD OIG
The U.S. Department of Housing and Urban Development, Office of Inspector General (HUD OIG), received a
grade of pass (the highest rating) on the peer review report issued by the Treasury Inspector General for Tax
Administration on September 30, 2015. There were no recommendations included in the System Review Report.
The report stated:
In our opinion, the system of quality control for the audit organization of the HUD OIG in effect for the year ended
March 31, 2015, has been suitably designed and complied with to provide the HUD OIG with reasonable assurance
of performing and reporting in conformity with applicable professional standards in all material respects. Audit
organizations can receive a rating of pass, pass with deficiencies, or fail. The HUD OIG has received a peer
review rating of pass.
PEER REVIEW CONDUCTED BY HUD OIG ON USPS OIG
HUD OIG conducted an external peer review of the United States Postal Service (USPS) OIG, Office of Audit, and
issued a final report September 22, 2015. USPS OIG received a peer review rating of pass. A copy of the external
quality control review report can be viewed at https://www.uspsoig.gov.
OFFICE OF INVESTIGATION
PEER REVIEW CONDUCTED BY HUD OIG ON SSA OIG
HUD OIG conducted an external peer review of the U.S. Social Security Administration (SSA) OIG, Office of
Investigation, and issued a final report on August 12, 2013. HUD OIG determined that SSA OIG complied with
applicable quality standards established by the Council of the Inspectors General on Integrity and Efficiency and the
Attorney General’s guidelines.
58
SEMIANNUAL REPORT TO CONGRESS
PEER REVIEW CONDUCTED ON HUD OIG BY DOJ OIG
The U.S. Department of Justice (DOJ) OIG conducted a peer review of the HUD OIG, Office of Investigation, and
issued a final report on April 28, 2014. DOJ OIG determined that HUD OIG was in compliance with the quality
standards established by the Council of the Inspectors General on Integrity and Efficiency and the Attorney
General’s guidelines.
59
SEMIANNUAL REPORT TO CONGRESS
APPENDIX 2 – AUDIT REPORTS ISSUED
Internal Reports
AUDIT REPORTS
Chief Financial Officer
Additional Details To Supplement Our Fiscal Years 2016 and 2015 (Restated) U.S. Department
2017-FO-0003 of Housing and Urban Development Financial Statement Audit, 11/15/2016. Better use:
$500,689,142.
2017-FO-0004 Fiscal Years 2016 and 2015 (Restated) Consolidated Financial Statements Audit, 11/18/2016.
HUD’s Fiscal Years 2016 and 2015 (Restated) Consolidated Financial Statements Audit
2017-FO-0005
(Reissued), 03/01/2017.
Chief Procurement Officer
HUD’s OCPO Did Not Always Comply With Acquisition Requirements When Planning and
2017-BO-0001 Monitoring Major Service Contracts, 03/22/2017. Questioned: $21,535,180. Better use:
$9,645,864.
Deputy Secretary
HUD’s Transition to a Federal Shared Service Provider Failed To Meet Expectations,
2017-DP-0001
02/01/2017.
Government National Mortgage Association
Audit of Fiscal Years 2016 and 2015 (Restated) Financial Statements, 11/14/2016. Better use:
2017-FO-0001
$248,016,624.
Housing
HUD Needs To Improve Its Oversight of Funds Covered Under the Low-Income Housing
2017-CH-0001 Preservation and Resident Homeownership Act of 1990, 10/25/2016. Questioned: $341,230.
Unsupported: $341,230. Better use: $219,372.
60
SEMIANNUAL REPORT TO CONGRESS
Review of Information Systems Controls Over FHA’s Single Family Premiums Collection
2017-DP-0002
Subsystem – Periodic and the Single Family Acquired Asset Management System, 02/09/2017.
Audit of the Federal Housing Administration’s Financial Statements for Fiscal Years 2016 and
2017-FO-0002 2015 (Restated), 11/14/2016. Questioned: $55,350,830. Unsupported: $55,350,830. Better
use: $276,567,940.
FHA Paid Claims for an Estimated 239,000 Properties That Servicers Did Not Foreclose Upon
2017-KC-0001
or Convey on Time, 10/14/2016. Better use: $2,238,721,464.
HUD Did Not Ensure Compliance With Partial Payment of Claim Use Agreement Restrictions,
2017-LA-0001
10/27/2016.
HUD Failed To Follow Departmental Clearance Protocols for FHA Programs, Policies, and
2017-LA-0002
Operations, 01/25/2017.
HUD Failed To Adequately Oversee FHA-Insured Loans With Borrower-Financed
2017-LA-0003
Downpayment Assistance, 03/03/2017.
Public and Indian Housing
The U.S. Department of Housing and Urban Development Did Not Always Prevent Program
2017-KC-0002
Participants From Receiving Multiple Subsidies, 01/20/2017. Better use: $3,179,963.
AUDIT-RELATED MEMORANDUMS 17
CHIEF FINANCIAL OFFICER
Independent Attestation Review: U.S. Department of Housing and Urban Development,
2017-FO-0801
DATA Act Implementation Efforts, 03/02/2017.
17
The memorandum format is used to communicate the results of review not performed in accordance with generally accepted government audit
standards, to close out assignments with no findings and recommendations; to respond to requests for information; or to report on the results of a
survey, attestation engagement, or civil actions or settlements.
61
SEMIANNUAL REPORT TO CONGRESS
EXTERNAL REPORTS
AUDIT REPORTS
COMMUNITY PLANNING AND DEVELOPMENT
The City of Tuscaloosa, AL, Administered Its CDBG Disaster Recovery Funds in Accordance
2017-AT-1001
With HUD Requirements, 01/18/2017.
Shelby County, TN, Administered Its CDBG Disaster Recovery Program Funds for
2017-AT-1002
Infrastructure in Accordance With HUD Requirements, 01/18/2017.
The State of Connecticut Did Not Always Comply With CDBG Disaster Recovery Assistance
2017-BO-1001
Requirements, 10/12/2016. Questioned: $16,053,062. Unsupported: $13,592,687.
The City of Springfield, MA, Needs To Improve Its Compliance With Federal Regulations for
2017-BO-1002 Its CDBG Disaster Recovery Assistance Grant, 10/17/2016. Questioned: $1,448,663.
Unsupported: $1,448,663. Better use: $472,246.
The City of New York, NY, Implemented Policies That Did Not Always Ensure That CDBG
Disaster Recovery Funds Were Disbursed in Accordance With Its Action Plan and Federal
2017-NY-1001
Requirements, 11/02/2016. Questioned: $5,544,284. Unsupported: $1,044,878. Better use:
$1,415,466.
The City of New York, NY, Lacked Adequate Controls To Ensure That the Use of CDBG-DR
2017-NY-1004 Funds Was Always Consistent With the Action Plan and Applicable Federal and State
Requirements, 12/21/2016. Questioned: $18,274,054.
Union County, NJ’S HOME Investment Partnerships Program Was Not Always Administered
2017-NY-1005 in Compliance With Program Requirements, 01/13/2017. Questioned: $5,057,726.
Unsupported: $1,278,483. Better Use: $1,800,272.
The City of Pittsburgh, PA, Did Not Always Administer Its CDBG Program in Accordance
2017-PH-1001 With HUD and Federal Requirements, 03/22/2017. Questioned: $4,732,441. Unsupported:
$4,732,441.
62
SEMIANNUAL REPORT TO CONGRESS
HOUSING
The Puerto Rico Department of Housing, San Juan, PR, Did Not Properly Administer Its
2017-AT-1003 Multifamily Special Escrow Funds, 03/02/2017. Questioned: $4,609,004. Unsupported:
$4,609,004. Better use: $7,984,429.
Staffing Costs and Charges at Pine Grove Health Center, Pascoag, RI, Did Not Always Comply
2017-BO-1003 With Regulatory Requirements and Management Agreements, 01/24/2017. Questioned:
$675,734. Unsupported: $353,420. Better use: $139,027.
Village North Generally Verified Each Tenant’s Income, Social Security Number, and
2017-DE-1001
Citizenship Status in Accordance with HUD’s Rules and Regulations, 02/28/2017.
Majestic Management, LLC, a Multifamily Housing Management Agent in St. Louis, MO, Did
2017-KC-1001 Not Always Comply With HUD’s Requirements When Disbursing Project Funds, 12/16/2016.
Questioned: $1,218,206. Unsupported: $975,931.
New Horizons, Kansas City, MO, Received Improper Section 8 Housing Assistance Payments,
2017-KC-1002
03/03/2017. Questioned: $887,642. Unsupported: $743,086.
Seneca Mortgage Servicing LLC, Elma, NY, Generally Complied With HUD’s Loss Mitigation
2017-NY-1007 Program Requirements for Servicing Its Portfolio of FHA-Insured Mortgages, 02/17/2017.
Questioned: $19,136.
The Owner of Laurentian Hall Apartments, Pittsburgh, PA, Did Not Always Manage Its HUD-
2017-PH-1002 Mortgaged Project in Accordance With HUD Requirements, 03/24/2017. Questioned:
$80,286. Unsupported: $71,689. Better use: $358,176.
PUBLIC AND INDIAN HOUSING
The Port Huron Housing Commission, Port Huron, MI, Did Not Properly Implement Asset
2017-CH-1001
Management, 01/24/2017. Questioned: $1,432,222. Unsupported: $1,432,222.
The Lubbock Housing Authority, Lubbock, TX, Had Weaknesses in Managing Its Capital Fund
2017-FW-1001
Program Operations, 12/12/2016. Questioned: $38,232. Unsupported: $29,115.
63
SEMIANNUAL REPORT TO CONGRESS
Fort Worth Housing Solutions, Fort Worth, TX, Generally Complied With HUD Regulations In
2017-FW-1002
Its Transactions With Its Related Entity, QuadCo Management Solutions, LLC, 12/21/2016.
The Houston Housing Authority, Houston, TX, Needs To Improve Its Procurement and
2017-FW-1003 Financial Operations and Its Housing Choice Voucher Program Subsidy Determinations,
12/27/2016. Questioned: $3,212,757. Unsupported: $3,015,824.
The Tarrytown Municipal Housing Authority, Tarrytown, NY, Did Not Always Comply With
2017-NY-1002 HUD’s Procurement, Administrative, and Program Requirements, 11/22/2016. Questioned:
$474,571. Unsupported: $474,571.
The Town of Amherst, NY, Did Not Ensure That Its Housing Choice Voucher Program Units
2017-NY-1003
Met Housing Quality Standards, 12/14/2016. Questioned: $118,060. Better use: $9,351,175.
The New Rochelle Municipal Housing Authority, New Rochelle, NY, Did Not Always
2017-NY-1006 Administer Its Public Housing in Accordance With HUD’s Rules and Regulations, 01/31/2017.
Questioned: $28,349. Unsupported: $13,329.
The Irvington, NJ, Housing Authority Did Not Always Administer Its Public Housing Program
2017-NY-1008 in Accordance With Program Requirements, 3/10/2017. Questioned: $1,204,727.
Unsupported: $1,109,487.
AUDIT-RELATED MEMORANDUMS 18
GENERAL COUNSEL
Final Civil Action: Primary Residential Mortgage, Inc., Settled Allegations of Failing To Comply
2017-CF-1801 With HUD’s Federal Housing Administration Loan Requirements, 01/19/2017. Questioned:
$3,129,000.
Security National Mortgage Company Settled Allegations of Failing To Comply With HUD’s
2017-CF-1802
Federal Housing Administration Loan Requirements, 03/02/2017. Questioned: $3,173,077.
18
The memorandum format is used to communicate the results of reviews not performed in accordance with generally accepted government audit standards;
to close out assignments with no findings and recommendations; to respond to requests for information; or to report on the results of a survey, an
attestation engagement, or civil actions or settlements.
64
SEMIANNUAL REPORT TO CONGRESS
United Shore Financial Services, LLC, Settled Allegations of Failing To Comply With HUD’s
2017-CF-1803
Federal Housing Administration Loan Requirements, 03/29/2017. Questioned: $45,000,000.
Final Civil Action: Judgment Imposed on the Former President and Founder of MDR Mortgage
2017-CH-1801 Corporation Regarding Allegations of Failing To Comply With HUD’s Federal Housing
Administration Requirements, 03/31/2017. Questioned: $3,452,499.
Final Action Memorandum: Purchaser of HUD-Insured Single-Family Property Settled
2017-KC-1801
Allegations of Causing the Submission of a False Claim, 02/23/2017. Questioned: $5,000.
Final Civil Action Borrower Settled Alleged Violations of Home Equity Conversion Mortgage
2017-PH-1801
Program, 01/06/2017. Questioned: $1,500.
HOUSING
Sons of Divine Providence Did Not Ensure That the Don Orione Home, East Boston, MA,
2017-BO-1801
Operated in Accordance With Its Regulatory Agreement, 10/13/2016.
65
SEMIANNUAL REPORT TO CONGRESS
APPENDIX 3 – TABLES
TABLE A
AUDIT REPORTS ISSUED BEFORE START OF PERIOD WITH NO MANAGEMENT
DECISION AT (03/31/2017)
*Significant audit reports described in previous Semiannual Reports
REASON FOR LACK OF MANAGEMENT
REPORT NUMBER AND TITLE ISSUE DATE
DECISION
* 2014-FO-0003 Additional Details To Supplement
Our Report On HUD’s Fiscal Years 2013 and 2012 See chapter 10, page 37 12/16/2013
(Restated) Financial Statements
* 2014-FO-0004 HUD’s Fiscal Year 2013
Compliance With the Improper Payments See chapter 10, page 38 04/15/2014
Elimination and Recovery Act of 2010
* 2014-LA-0005 HUD Did Not Always Recover
FHA Single-Family Indemnification Losses and
See chapter 10, page 39 08/08/2014
Ensure That Indemnification Agreements Were
Extended
* 2015-FO-0003 Audit of the Government National
Mortgage Association’s Financial Statements for See chapter 10, page 40 02/27/2015
Fiscal Years 2014 and 2013
* 2016-FO-0001 Audit of Fiscal Years 2015 and
See chapter 10, page 40 11/13/2015
2014 (Restated) Financial Statements
* 2016-FO-0003 Additional Details To Supplement
Our Fiscal Years 2015 and 2014 (Restated) U.S.
See chapter 10, page 41 11/18/2015
Department of Housing and Urban Development
Financial Statement Audit
* 2016-FW-0001 HUD Did Not Effectively
Negotiate, Execute, or Manage Its Agreements See chapter 10, page 43 03/30/2016
Under the Intergovernmental Personnel Act
* 2016-PH-0001 HUD Did Not Always Provide
Adequate Oversight of Property Acquisition and See chapter 10, page 44 06/30/2016
Disposition Activities
* 2016-FO-0802 Independent Attestation Review:
U.S. Department of Housing & Urban Development, See chapter 10, page 45 08/26/2016
DATA Act Implementation Efforts
66
SEMIANNUAL REPORT TO CONGRESS
* 2016-PH-0005 HUD Did Not Always Provide
Accurate and Supported Certifications of State See chapter 10, page 46 09/29/2016
Disaster Grantee Procurement Processes
* 2016-PH-1009 The State of New Jersey Did Not
Disburse Disaster Funds to Its Contractor in
See chapter 10, page 47 09/30/2016
Accordance With HUD, Federal, and Other
Applicable Requirements
67
SEMIANNUAL REPORT TO CONGRESS
TABLE B
SIGNIFICANT AUDIT REPORTS FOR WHICH FINAL ACTION HAD NOT BEEN COMPLETED
WITHIN 12 MONTHS AFTER THE DATE OF THE INSPECTOR GENERAL’S REPORT
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
Corporacion para el Fomento Economico
de la Ciudad Capital, San Juan, Puerto
2005-AT-1013 Rico, Did Not Administer Its Independent 09/15/2005 01/11/2006 Note 1
Capital Fund in Accordance with HUD
Requirements.
The Cathedral Foundation of Jacksonville,
2007-AT-1010 FL, Used More Than $2.65 Million in 08/14/2007 12/03/2007 04/10/2017
Project Funds for Questioned Costs
The City of Rome Did Not Administer Its
Economic Development Activity in
2009-NY-1012 05/20/2009 09/23/2009 01/30/2032
Accordance With HUD Requirements,
Rome, NY
The Housing Authority of the City of
Terre Haute Failed To Follow Federal
2009-CH-1011 Requirements and Its Employment 07/31/2009 11/24/2009 Note 2
Contract Regarding Nonprofit
Development Activities, Terre Haute, IN
HUD Lacked Adequate Controls to Ensure
2009-AT-0001 the Timely Commitment and Expenditure 09/28/2009 03/18/2011 Note 1
of HOME funds
The Housing Authority of Whitesburg
2010-AT-1003 Mismanaged Its Operations, Whitesburg, 04/28/2010 08/26/2010 11/29/2035
KY
Sasha Bruce Youthwork, Incorporated,
2010-PH-1008 Did Not Support More Than $1.9 Million 05/11/2010 11/03/2010 09/30/2017
in Expenditures, Washington, DC
The DuPage Housing Authority
Inappropriately Administered Its Section 8
2010-CH-1008 06/15/2010 10/08/2010 10/31/2017
Project-Based Voucher Program,
Wheaton, IL
Additional Details to Supplement Our
2011-FO-0003 Report on HUD’s Fiscal Years 2010 and 11/15/2010 08/08/2011 Note 1
2009 Financial Statements
68
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
The District of Columbia Did Not
Administer Its HOME Program in
2011-PH-1005 12/23/2010 04/22/2011 Note 1
Accordance With Federal Requirements,
Washington, DC
The City of Cleveland Lacked Adequate
Controls Over Its HOME Investment
2011-CH-1003 Partnerships Program and American 12/27/2010 04/26/2011 Note 1
Dream Downpayment Initiative-Funded
Afford-A-Home Program, Cleveland, OH
The DuPage Housing Authority
Inappropriately Administered Its Section 8
2011-CH-1006 03/23/2011 07/28/2011 10/31/2017
Housing Choice Voucher Program,
Wheaton, IL
The Municipality of Mayaguez Did Not
2011-AT-1006 Ensure Compliance With HOME Program 04/08/2011 08/05/2011 Note 1
Objectives, Mayaguez, PR
The City of Buffalo Did Not Always
Administer Its CDBG Program in
2011-NY-1010 04/15/2011 01/25/2012 06/30/2017
Accordance With HUD Requirements,
Buffalo, NY
The City of Compton Did Not Administer
2011-LA-1016 Its HOME Program in Compliance With 08/18/2011 12/15/2011 08/31/2017
HOME Requirements, Compton, CA
The Municipality of San Juan Did Not
2011-AT-1018 Properly Manage Its HOME Investment 09/28/2011 01/12/2012 Note 1
Partnerships Program, San Juan, PR
The City of Cleveland Lacked Adequate
Controls Over Its HOME Investment
2011-CH-1014 Partnerships Program-Funded Housing 09/29/2011 01/26/2012 Note 2
Trust Fund Program Home-Buyer
Activities, Cleveland, OH
The City of New York Charged
2012-NY-1002 Questionable Expenditures to Its HPRP, 10/18/2011 02/16/2012 Note 1
New York, NY
HUD Needed to Improve Its Use of Its
2012-PH-0001 Integrated Disbursement and Information 10/31/2011 02/28/2012 Note 1
System To Oversee Its CDBG Program
69
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
HUD Did Not Adequately Support the
Reasonableness of the Fee-for-Service
2012-LA-0001 11/16/2011 03/27/2012 12/31/2017
Amounts or Monitor the Amounts
Charged
The Municipality of Bayamón Did Not
Always Ensure Compliance With HOME
2012-AT-1009 05/23/2012 09/18/2012 Note 1
Investment Partnerships Program
Requirements, Bayamon, PR
Prince George’s County Generally Did
Not Administer Its HOME Program in
2012-PH-1011 08/03/2012 11/30/2012 Note 1
Accordance With Federal Requirements,
Largo, MD
The Stark Metropolitan Housing Authority
Did Not Always Administer Its Grant in
2012-CH-1011 09/27/2012 01/15/2013 12/31/2018
Accordance With Recovery Act, HUD’s,
and Its Own Requirements, Canton, OH
The Saginaw Housing Commission Did
Not Always Administer Its Section 8
2012-CH-1012 Housing Choice Voucher Program in 09/27/2012 01/07/2013 01/01/2023
Accordance With HUD’s and Its Own
Requirements, Saginaw, MI
The Flint Housing Commission Did Not
Always Administer Its Grants in
2012-CH-1013 09/27/2012 01/24/2013 01/31/2018
Accordance With Recovery Act, HUD’s,
and Its Own Requirements, Flint, MI
Luzerne County Did Not Properly
2013-PH-1001 Evaluate, Underwrite, and Monitor a 10/31/2012 01/31/2013 Note 1
High-Risk Loan, Wilkes-Barre, PA
Additional Details To Supplement Our
2013-FO-0003 Report on HUD’s Fiscal Years 2012 and 11/15/2012 05/15/2013 Note 2
2011 Financial Statements
The City of Albany CDBG Recovery Act
2013-NY-1001 12/06/2012 04/03/2013 Note 1
Program, Albany, NY
Bay Vista Methodist Heights Violated Its
Agreement With HUD When
2013-LA-1003 03/14/2013 05/15/2013 Note 1
Administering Its Trust Funds, San Diego,
CA
70
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
The Municipality of Arecibo Did Not
2013-AT-1003 Always Ensure Compliance With CDBG 03/22/2013 06/14/2013 10/31/2018
Program Requirements, Arecibo, PR
The Housing Authority of the City of El
Paso Did Not Follow Recovery Act
2013-FW-1004 04/12/2013 08/27/2013 Note 1
Obligation Requirements or Procurement
Policies, El Paso, TX
The City of San Bernardino Did Not
Administer Its CDBG and CDBG-
2013-LA-1004 Recovery Act Programs in Accordance 04/23/2013 09/06/2013 09/30/2017
With HUD Rules and Regulations, San
Bernardino, CA
Nassau County Did Not Administer It’s
HOME Investment Partnerships Program
2013-NY-1006 05/13/2013 09/06/2013 Note 1
in Accordance With HUD Requirements,
Nassau County, NY
HUD Did Not Enforce the Reporting
Requirements of Section 3 of the Housing
2013-KC-0002 06/26/2013 10/24/2013 Note 1
and Urban Development Act of 1968 for
Public Housing Authorities
The Stark Metropolitan Housing Authority
Did Not Follow HUD’s Requirements and
2013-CH-1003 Its Own Policies Regarding the 07/15/2013 11/12/2013 04/30/2017
Administration of Its Program, Canton,
OH
HUD Officials Did Not Always Monitor
2013-NY-0003 Grantee Compliance With the CDBG 07/19/2013 11/26/2013 Note 1
Timeliness Spending Requirement
The Puerto Rico Housing Finance
2013-AT-1006 Authority Did Not Always Comply With 07/23/2013 11/20/2013 Note 1
HOME Requirements, San Juan, PR
The City of Hawthorne Inappropriately
2013-LA-1009 Used Nearly $1.6 Million in HOME Funds 09/13/2013 01/06/2014 Note 1
for Section 8 Tenants, Hawthorne, CA
The City of Hawthorne Did Not
Administer Its CDBG Program Cost
2013-LA-1010 09/20/2013 01/06/2014 Note 1
Allocations in Accordance With HUD
Rules and Requirements, Hawthorne, CA
71
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
The Malakoff Housing Authority Did Not
Have Sufficient Controls Over Its Public
2013-FW-1805 09/26/2013 12/19/2013 04/30/2036
Housing Programs, Including Its Recovery
Act Funds, Malakoff, TX
The City of Auburn Did Not Always
Administer Its CDBG Program in
2013-NY-1010 09/26/2013 01/24/2014 Note 1
Accordance With HUD Requirements,
Auburn, NY
The Flint Housing Commission Did Not
Always Administer Its Grant in
2013-CH-1009 09/27/2013 01/14/2014 06/17/2017
Accordance With Recovery Act, HUD’s,
and Its Own Requirements, Flint, MI
The City of West Palm Beach Did Not
2013-AT-1008 Always Properly Administer Its HOME 09/30/2013 01/17/2014 Note 1
Program, West Palm Beach, FL
The City of Toledo Did Not Always
Administer Its CDBG-R Program in
2013-CH-1010 09/30/2013 01/15/2014 Note 1
Accordance With HUD’s and Its Own
Requirements, Toledo, OH
The Michigan State Housing Development
Authority Did Not Follow HUD’s
2013-CH-1011 Requirements Regarding the 09/30/2013 01/15/2014 07/31/2029
Administration of Its Program, Lansing,
MI
The Hamtramck Housing Commission Did
Not Administer Its Grant in Accordance
2013-CH-1012 09/30/2013 01/21/2014 06/17/2017
With Recovery Act, HUD’s, and Its Own
Requirements, Hamtramck, MI
The Jefferson County Housing Authority
2013-DE-1005 Did Not Properly Use Its Disposition Sales 09/30/2013 01/24/2014 02/28/2020
Proceeds, Wheat Ridge, CO
The City of Flint Lacked Adequate
2014-CH-1001 Controls Over Its HOME Investment 11/15/2013 03/13/2014 10/16/2017
Partnerships Program, Flint, MI
The Municipality of Arecibo Did Not
2014-AT-1001 Properly Administer Its HOME Program, 12/03/2013 01/24/2014 Note 1
Arecibo, PR
72
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
Government National Mortgage
2014-FO-0001 Association Fiscal Years 2013 and 2012 12/06/2013 05/02/2014 Note 1
Financial Statements Audit
Federal Housing Administration Fiscal
2014-FO-0002 Years 2013 and 2012 Financial Statements 12/13/2013 04/14/2014 Note 1
Audit
Additional Details To Supplement Our
2014-FO-0003 Report On HUD’s Fiscal Years 2013 and 12/16/2013 07/09/2014 Note 3
2012 (Restated) Financial Statements
The City of Norfolk Generally Failed To
2014-PH-1001 12/17/2013 04/16/2014 Note 1
Justify Its CDBG Activities, Norfolk, VA
The State of Mississippi Did Not Ensure
That Its Subrecipient and Appraisers
Complied With Requirements, and It Did
2014-AT-1004 12/30/2013 04/15/2014 Note 1
Not Fully Implement Adequate Procedures
For Its Disaster Infrastructure Program,
Jackson, MS
The City of Detroit Lacked Adequate
Controls Over Its Neighborhood
Stabilization Program-Funded Demolition
2014-CH-1002 01/06/2014 05/05/2014 Note 1
Activities Under the Housing and
Economic Recovery Act of 2008, Detroit,
MI
The Paterson Housing Authority Had
Weaknesses in Administration of its
2014-NY-1001 01/15/2014 06/12/2014 07/01/2025
Housing Choice Voucher Program,
Paterson, NJ
The Boston Office of Public Housing Did
Not Provide Adequate Oversight of
2014-FW-0001 Environmental Reviews of Three Housing 02/07/2014 03/17/2015 12/31/2018
Agencies, Including Reviews Involving
Recovery Act Funds
HUD Did Not Provide Effective Oversight
2014-NY-0001 of Section 202 Multifamily Project 02/19/2014 06/10/2014 Note 1
Refinances
Violations Increased the Cost of Housing’s
2014-AT-0001 Administration of Its Bond Refund 03/14/2014 07/11/2014 Note 1
Program
73
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
Vieques Sports City Complex, Office of
the Commissioner for Municipal Affairs,
2014-AT-1801 03/20/2014 07/11/2014 Note 1
Section 108 Loan Guarantee Program, San
Juan, PR
HUD’s Fiscal Year 2013 Compliance
2014-FO-0004 With the Improper Payments Elimination 04/15/2014 01/07/2015 Note 3
and Recovery Act of 2010
The Hamtramck Housing Commission Did
Not Always Administer Its Grant in
2014-CH-1003 04/30/2014 08/08/2014 06/17/2017
Accordance With Recovery Act, HUD’s,
or Its Own Requirements, Hamtramck, MI
Improvements Are Needed Over
Environmental Reviews of Public Housing
2014-FW-0002 05/12/2014 03/17/2015 12/31/2018
and Recovery Act Funds in the Kansas
City Office
The City of Huntsville, Community
Development Department, Did Not
2014-AT-1005 Adequately Account for and Administer 05/29/2014 09/23/2014 Note 1
the Mirabeau Apartments Project,
Huntsville, AL
Financial and Administrative Control
Weaknesses Existed in Middlesex County,
2014-NY-1005 06/10/2014 07/17/2014 Note 1
NJ’s HOME Investment Partnerships
Program, Middlesex County, NJ
HUD Could Not Support the
Reasonableness of the Operating and
2014-LA-0004 Capital Fund Programs’ Fees and Did Not 06/30/2014 10/20/2014 12/31/2017
Adequately Monitor Central Office Cost
Centers
The Data in CAIVRS [Credit Alert
Verification Reporting System] Did Not
2014-KC-0002 07/02/2014 10/27/2014 Note 1
Agree With the Data in FHA’s Default and
Claims Systems
The White Mountain Apache Housing
Authority Did Not Always Comply With
2014-LA-1004 07/08/2014 10/24/2014 Note 1
Its Indian Housing Block Grant
Requirements, White River, AZ
74
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
Palladia, Inc., Did Not Administer Its
Supportive Housing Program in
2014-NY-1008 07/25/2014 11/21/2014 Note 1
Accordance With HUD Requirements,
New York, NY
The Municipality of Carolina Did Not
2014-AT-1007 Properly Administer Its HOME Program, 08/08/2014 12/05/2014 Note 1
Carolina, PR
HUD Did Not Always Recover FHA
Single-Family Indemnification Losses and
2014-LA-0005 08/08/2014 12/03/2014 Note 3
Ensure That Indemnification Agreements
Were Extended
The Goshen Housing Authority Failed To
Follow HUD’s and Its Own Requirements
2014-CH-1006 08/14/2014 01/21/2015 01/31/2018
Regarding the Administration of Its
Program, Goshen, IN
The City of Richmond Did Not
Administer Its NSP [Neighborhood
2014-LA-1005 08/22/2014 12/19/2014 11/30/2017
Stabilization Program] in Accordance
With Requirements, Richmond, CA
The State of New Jersey Did Not Fully
Comply With Federal Procurement and
2014-PH-1008 Cost Principle Requirements in 08/29/2014 09/02/2015 Note 2
Implementing Its Tourism Marketing
Program
Asset Repositioning Fees for Public
Housing Authorities With Units Approved
2014-NY-0003 09/04/2014 12/29/2014 12/31/2020
for Demolition or Disposition Were Not
Always Accurately Calculated
Miami-Dade County Did Not Always
2014-AT-1010 Properly Administer Its HOME Program, 09/11/2014 12/11/2014 Note 1
Miami, FL
The City of Jersey City’s HOME
Investment Partnerships Program
2014-NY-1009 Administration Had Financial and 09/18/2014 01/13/2015 Note 1
Administrative Controls Weaknesses, City
of Jersey City, NJ
75
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
Improvements Are Needed Over
Environmental Reviews of Public Housing
2014-FW-0005 09/24/2014 03/17/2015 12/31/2018
and Recovery Act Funds in the Detroit
Office
The City of Los Angeles Did Not Always
Ensure That CDBG-Funded Projects Met
2014-LA-1007 09/29/2014 01/27/2015 Note 2
National Program Objectives, Los
Angeles, CA
HUD Did Not Always Provide Adequate
2014-CH-0001 Oversight of Its Property-Flipping Waiver 09/30/2014 03/24/2015 Note 1
Requirements
The City of Chicago Lacked Adequate
Controls Over Its HOME Investment
2014-CH-1011 Partnerships Program-Funded Rental New 09/30/2014 01/28/2015 Note 1
Construction Projects and Program
Income, Chicago, IL
The HUD Office of the Chief Financial
2014-KC-0006 Officer Had Not Always Implemented Its 09/30/2014 01/22/2015 Note 2
User Fee Policy
HUD Policies Did Not Always Ensure
That HECM [home equity conversion
2014-PH-0001 09/30/2014 01/28/2015 Note 1
mortgage] Borrowers Complied With
Residency Requirements
Information System Control Weaknesses
2015-DP-0001 Identified in the Single Family Housing 10/21/2014 12/12/2014 Note 1
Enterprise Data Warehouse
Audit of the Federal Housing
2015-FO-0001 Administration’s Financial Statements for 11/14/2014 04/14/2015 Note 1
Fiscal Years 2014 and 2013
The City of New York Did Not Always
Disburse CDBG Disaster Recovery
2015-NY-1001 Assistance Funds to Its Subrecipient in 11/24/2014 03/23/2015 Note 1
Accordance With Federal Regulations,
New York, NY
76
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
The Office of the Commissioner for
Municipal Affairs Needs To Make
2015-AT-1001 Improvements in Administering Its 12/05/2014 04/03/2015 Note 2
Section 108 Loan Guarantee Program, San
Juan, PR
Interim Report on HUD’s Internal
2015-FO-0002 12/08/2014 09/28/2015 09/30/2017
Controls Over Financial Reporting
Office of the Chief Financial Officer Loan
2015-DP-0004 12/09/2014 04/17/2015 Note 2
Accounting System
Final Civil Action Court Ordered a Former
Executive Director of the Philadelphia
2015-PH-1804 Housing Authority To Pay Civil Penalties 02/19/2015 09/13/2016 Note 2
for Violating Federal Lobbying Disclosure
Requirements and Restrictions
The Chicago Housing Authority Moving
2015-CH-1001 to Work Housing Choice Voucher 02/24/2015 06/10/2015 04/01/2018
Program, Chicago, IL
Fiscal Year 2014 Review of Information
2015-DP-0005 Systems Controls in Support of the 02/24/2015 07/02/2015 04/30/2017
Financial Statements Audit
Audit of the Government National
2015-FO-0003 Mortgage Association’s Financial 02/27/2015 06/25/2015 Note 3
Statements for Fiscal Years 2014 and 2013
The State of Rhode Island Did Not Always
2015-BO-1003 Operate Its NSP in Compliance With 03/04/2015 07/01/2015 Note 2
HUD Regulations, Providence, RI
HUD’s Office of Community Planning
and Development Did Not Always Pursue
Remedial Actions but Generally
2015-AT-0001 03/31/2015 08/28/2015 Note 2
Implemented Sufficient Controls for
Administering Its Neighborhood
Stabilization Program
The City of Paterson, NJ’s HOME
Investment Partnerships Program Controls
2015-NY-1005 04/30/2015 06/03/2015 Note 2
Did Not Ensure Compliance With
Regulations
Compliance With the Improper Payments
2015-FO-0005 05/15/2015 10/02/2015 08/31/2018
Elimination and Recovery Act
77
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
First Niagara Bank, Lockport, NY, Did
Not Always Properly Implement HUD’s
2015-NY-1006 05/22/2015 11/19/2015 Note 2
Loss Mitigation Requirements in
Servicing FHA-Approved Mortgages
The Housing Authority of the County of
San Bernardino, San Bernardino, CA,
2015-LA-1004 05/29/2015 09/16/2015 Note 2
Used Shelter Plus Care Program Funds for
Ineligible and Unsupported Participants
The State of New Jersey Did Not Comply
With Federal Procurement and Cost
2015-PH-1003 06/04/2015 10/02/2015 Note 2
Principle Requirements in Implementing
Its Disaster Management System
HUD Did Not Adequately Implement or
Provide Adequate Oversight To Ensure
2015-FW-0001 06/16/2015 10/07/2015 Note 2
Compliance With Environmental
Requirements
The City of New Orleans, LA, Did Not
Always Comply With Requirements When
2015-FW-1002 06/26/2015 09/29/2015 Note 2
Administering Its 2013 Disaster Relief
Grant
HUD Did Not Provide Adequate
2015-LA-0002 Oversight of the Section 184 Indian Home 07/06/2015 10/28/2015 Note 2
Loan Guarantee Program
The City of High Point Did Not Properly
Administer Its Lead-Based Paint Hazard
2015-AT-1005 07/09/2015 11/06/2015 09/13/2017
Control Grants in Compliance With
Federal Requirements
NOVA Financial & Investment
Corporation’s FHA-Insured Loans With
2015-LA-1005 07/09/2015 09/11/2015 05/31/2017
Downpayment Assistance Gifts Did Not
Always Meet HUD Requirements
The State of Florida, Tallahassee, FL, Did
Not Properly Support the Eligibility of
2015-AT-1006 07/27/2015 11/24/2015 Note 2
Some Funds Used for the CDBG Disaster
Recovery Program
HUD Did Not Adequately Oversee
2015-PH-0003 Enhanced Vouchers Administered by New 07/29/2015 10/29/2015 06/30/2017
York Agencies
78
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
HUD Did Not Always Provide Adequate
Oversight of Its Section 203(k)
2015-CH-0001 07/31/2015 11/27/2015 11/17/2017
Rehabilitation Loan Mortgage Insurance
Program
The Office of Community Planning and
Development’s Reviews of Matching
2015-KC-0002 Contributions Were Ineffective and Its 08/11/2015 12/09/2015 Note 2
Application of Match Reductions Was Not
Always Correct
HUD’s Office of Multifamily Asset
Management and Portfolio Oversight Did
2015-AT-0002 08/21/2015 12/16/2015 Note 2
Not Comply With Its Requirements For
Monitoring Management Agents’ Costs
Broward County, Fort Lauderdale, FL,
Did Not Properly Administer One of Its
2015-AT-1008 08/23/2015 10/30/2015 Note 2
Projects and Did Not Comply With Some
Match Requirements
The Duson Housing Authority, Duson,
LA, Failed To Administer Its Public
2015-FW-1808 09/10/2015 11/05/2015 05/03/2017
Housing Program in Accordance With
HUD Requirements
New York State Did Not Always
Administer Its Rising Home Enhanced
2015-NY-1010 09/17/2015 03/01/2016 Note 2
Buyout Program in Accordance With
Federal and State Regulations
Program Control Weaknesses Lessened
Assurance That New York Rising Housing
2015-NY-1011 09/17/2015 03/18/2016 Note 2
Recovery Program Funds Were Always
Disbursed for Eligible Costs
HUD Did Not Have Effective Controls or
Clear Guidance in Place for the FHA-
2015-LA-0003 HAMP [Home Affordable Modification 09/18/2015 03/23/2016 Note 2
Program] Partial Claim Loss Mitigation
Option
The Housing Authority of the City of
South Bend, IN, Did Not Always Comply
with HUD Requirements and Its Own
2015-CH-1008 09/25/2015 01/22/2016 08/31/2018
Policies Regarding the Administration of
Its Section 8 Housing Choice Voucher
Program
79
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
The State of Maryland Could Not Show
2015-PH-1005 That Replacement Homes Complied With 09/25/2015 01/19/2016 Note 2
the Green Building Standard
The State of Illinois’ Administrator
Lacked Adequate Controls Over the
2015-CH-1009 State’s Community Development Block 09/30/2015 01/28/2016 01/30/2018
Grant Disaster Recovery Program-Funded
Projects
The Cooperative and Management Agent
Lacked Adequate Controls Over the
2015-CH-1010 09/30/2015 01/28/2016 04/28/2017
Operation of Carmen-Marine Apartments,
Chicago, IL
LoanCare Did Not Always File Claims for
Foreclosed-Upon Properties Held on
2015-KC-1012 09/30/2015 01/04/2016 Note 2
Behalf of Ginnie Mae and Convey Them
to FHA in a Timely Manner
loanDepot’s FHA-Insured Loans With
2015-LA-1009 Downpayment Assistance Funds Did Not 09/30/2015 01/12/2016 05/31/2017
Always Meet HUD Requirements
loanDepot’s FHA-Insured Loans With
Golden State Finance Authority
2015-LA-1010 09/30/2015 01/12/2016 05/31/2017
Downpayment Assistance Gifts Did Not
Always Meet HUD Requirements
The City of Richmond, CA, Did Not
Adequately Support Its Use of HUD-
2015-LA-1803 09/30/2015 01/08/2016 12/31/2018
Funded Expenses for Its Filbert Phase 1
and Filbert Phase 2 Activities
Audit of Fiscal Years 2015 and 2014
2016-FO-0001 11/13/2015 03/24/2016 Note 3
(Restated) Financial Statements
Fiscal Years 2015 and 2014 Financial
2016-FO-0002 11/16/2015 03/16/2016 Note 2
Statements Audit
Additional Details To Supplement Our
Fiscal Years 2015 and 2014 (Restated)
2016-FO-0003 11/18/2015 03/22/2016 Note 3
U.S. Department of Housing and Urban
Development Financial Statement Audit
Review of Information System Controls
2016-DP-0801 Over the Government National Mortgage 11/30/2015 03/30/2016 Note 2
Association
80
SEMIANNUAL REPORT TO CONGRESS
REPORT NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION
The Municipality of Toa Alta, PR, Did
2016-AT-1002 Not Properly Administer Its Section 108 12/17/2015 04/12/2016 04/11/2017
Loan Guarantee Program
Single Family Insurance System and
2016-DP-0002 Single Family Insurance Claims 12/21/2015 03/31/2016 08/21/2017
Subsystem
The City of Rochester, NY Did Not
Always Administer Its Community
2016-NY-1003 02/05/2016 06/17/2016 06/16/2017
Development Block Grant Program in
Accordance With HUD Requirements
The State of Missouri Did Not Correctly
2016-KC-1001 Allocate Salaries to Its Disaster Recovery 02/22/2016 06/20/2016 05/30/2017
Grants
HUD Lacked Adequate Oversight of
Public Housing Agencies’ Compliance
2016-CH-0001 02/26/2016 06/20/2016 10/01/2019
With Its Declaration of Trust
Requirements
Homewood Terrace, Auburn, WA, Did
Not Always Conduct Timely
2016-SE-1001 Reexaminations, Properly Request 03/09/2016 07/06/2016 07/06/2017
Assistance Payments, or Verify Income
Information
The City of Baton Rouge and Parish of
East Baton Rouge, LA, Office of
Community Development, Did Not
2016-FW-1001 03/21/2016 05/03/2016 06/01/2017
Always Properly Administer Its
Community Development Block Grant
Program Activities
New York State Did Not Always Disburse
Community Development Block Grant
2016-NY-1006 03/29/2016 07/27/2016 07/25/2017
Disaster Recovery Funds in Accordance
With Federal and State Regulations
The City of Jersey City, NJ’s Community
Development Block Grant Program Had
2016-NY-1007 03/30/2016 06/08/2016 05/16/2017
Administrative and Financial Control
Weaknesses
81
SEMIANNUAL REPORT TO CONGRESS
SIGNIFICANT AUDIT REPORTS ISSUED WITHIN THE PAST 12 MONTHS THAT WERE
DESCRIBED IN PREVIOUS SEMIANNUAL REPORTS FOR WHICH FINAL ACTION HAD NOT
BEEN COMPLETED AS OF (03/31/2017)
Decision
Report Number Report Title Issue Date Final Action
Date
The District of Columbia Housing Authority,
Washington, DC, Did Not Always Make
2016-PH-1801 04/04/2016 07/13/2016 07/13/2017
Payments for Outside Legal Services in
Compliance With Applicable Requirements
The Westmoreland County Housing
Authority, Greensburg, PA, Did Not Always
Ensure That Its Program Units Met Housing
2016-PH-1002 04/27/2016 07/13/2016 07/13/2017
Quality Standards and That It Accurately
Calculated Housing Assistance Payment
Abatements
The Housing Authority of the City of
Durham, NC, Did Not Adequately Enforce
2016-AT-1005 05/10/2016 08/15/2016 05/09/2017
HUD’s and Its Own Housing Quality Control
Standards
Compliance With the Improper Payments
2016-FO-0005 05/13/2016 10/04/2016 09/30/2018
Elimination and Recovery Act
HUD Did Not Enforce and Sufficiently
2016-AT-0001 Revise Its Underwriting Requirements for 05/20/2016 09/16/2016 09/15/2017
Multifamily Accelerated Processing Loans
The City of Camden, NJ, Did Not Ensure
That Activities Always Complied With
2016-PH-1003 05/24/2016 09/12/2016 07/25/2017
National Objective, Procurement, and
Environmental Review Requirements
The Richmond Housing Authority,
2016-LA-1006 Richmond, CA, Mismanaged Its Financial 06/03/2016 09/21/2016 05/01/2018
Operations
The City of Miami Beach Did Not Always
2016-AT-1006 06/17/2016 10/05/2016 09/29/2017
Properly Administer Its HOME Program
The Administration of Accounting,
Inventory, and Procurement of the Bridgeport
2016-BO-1002 06/27/2016 10/13/2016 08/30/2017
Housing Authority in Bridgeport, CT, Did
Not Always Comply With HUD Regulations
82
SEMIANNUAL REPORT TO CONGRESS
Decision
Report Number Report Title Issue Date Final Action
Date
The State of Connecticut Did Not Always
Administer Its Neighborhood Stabilization
2016-BO-1003 06/28/2016 10/25/2016 06/27/2017
Program in Compliance With HUD
Regulations
HUD Did Not Always Provide Adequate
2016-PH-0001 Oversight of Property Acquisition and 06/30/2016 02/16/2017 Note 3
Disposition Activities
HUD Did Not Ensure That All Costs for
Ginnie Mae’s Contract With Burson-
2016-PH-0002 07/23/2016 11/19/2016 11/30/2018
Marsteller Were Supported, Reasonable, and
Necessary
HUD Did Not Ensure That Lenders Verified
2016-PH-0003 That FHA-Insured Properties in Flint, MI, 07/29/2016 12/22/2016 12/20/2017
Had Safe Water
The Members and Operator Did Not Comply
With the Executed Regulatory Agreement
2016-AT-1009 08/02/2016 11/30/2016 11/28/2017
and HUD’s Requirements for Saltillo
Assisted Living, Saltillo, MS
The Jefferson Metropolitan Housing
Authority, Steubenville, OH, Failed To
2016-CH-1005 Manage Its Procurements and Contracts in 08/03/2016 11/17/2016 09/30/2017
Accordance With HUD’s and Its Own
Requirements
The Mobile Housing Board, Mobile, AL, Did
Not Disclose an Apparent Conflict of Interest
2016-AT-1010 08/04/2016 11/18/2016 11/17/2017
and Occupy One-Third of Its Public Housing
Units
The Georgia Housing and Finance Authority,
Atlanta, GA, Did Not Adequately Implement
2016-AT-1011 the Federal Housing Administration’s Home 08/05/2016 01/25/2017 08/05/2017
Affordable Modification Program in
Accordance With HUD’s Requirements
The State of New York Had Weaknesses in
2016-NY-1009 Its Administration of the Tourism and 08/12/2016 12/09/2016 12/08/2017
Marketing Program
HUD Did Not Collect an Estimated 1,361
2016-KC-0001 Partial Claims Upon Termination of Their 08/17/2016 12/09/2016 07/31/2017
Related FHA-Insured Mortgages
83
SEMIANNUAL REPORT TO CONGRESS
Decision
Report Number Report Title Issue Date Final Action
Date
The Richmond Redevelopment and Housing
Authority, Richmond, VA, Did Not Always
2016-PH-1005 08/17/2016 12/13/2016 09/30/2017
Charge Eligible and Reasonable Central
Office Cost Center Fees
The Housing Authority of the City of
Muncie, Muncie, IN, Did Not Always
2016-CH-1006 Comply With HUD’s Requirements and Its 08/23/2016 12/21/2016 12/31/2017
Own Policies Regarding the Administration
of Its Housing Choice Voucher Program
The Dolores Frances Affordable Housing
Project, Los Angeles, CA, Was Not
2016-LA-1008 Administered in Accordance With Its 08/26/2016 12/12/2016 12/08/2017
Regulatory Agreement and HUD
Requirements
The City and County of Honolulu, HI, Did
Not Administer Its Community Development
2016-LA-1009 08/26/2016 12/12/2016 03/30/2018
Block Grant in Accordance With
Requirements
The Municipality of Bayamon, PR, Did Not
2016-AT-1012 Always Ensure Compliance With HUD 08/29/2016 12/15/2016 12/09/2017
Program Requirements
Additional Review of Information System
2016-DP-0003 08/31/2016 12/22/2016 10/31/2017
Controls Over FHA Information Systems
The State of Louisiana’s Subrecipient Did
Not Always Comply With Its Agreement and
2016-FW-1006 08/31/2016 12/16/2016 12/16/2017
HUD Requirements When Administering Its
Disaster Assistance Programs
Evergreen Home Loans, Las Vegas, NV,
2016-LA-1011 Branch Did Not Always Comply With HUD 09/12/2016 01/04/2017 01/03/2018
FHA Origination Regulations
Operating Fund Calculations Were Not
2016-NY-0001 09/12/2016 12/22/2016 01/01/2018
Always Adequately Verified
The Sanford Housing Authority, Sanford,
NC, Did Not Comply With HUD’s and Its
2016-AT-1013 09/13/2016 12/16/2016 12/12/2017
Own Section 8 Housing Choice Voucher
Program Requirements
84
SEMIANNUAL REPORT TO CONGRESS
Decision
Report Number Report Title Issue Date Final Action
Date
HUD Rushed the Implementation of Phase 1
2016-DP-0004 09/20/2016 01/10/2017 09/20/2017
Release 3 of the New Core Project
Ginnie Mae Improperly Allowed Uninsured
2016-KC-0002 Loans To Remain in Mortgage-Backed 09/21/2016 01/04/2017 12/16/2017
Securities Pools
The Housing Authority of the City of
2016-PH-1007 Annapolis, MD, Did Not Always Follow 09/27/2016 01/25/2017 01/31/2018
Applicable Procurement Requirements
The Wyoming Community Development
Authority of Casper, WY, Did Not Always
2016-DE-1005 09/28/2016 01/24/2017 08/12/2017
Spend Its HOME and NSP Funds in
Accordance With Program Requirements
The City of Joplin, MO, Did Not Always
Comply With the Requirements of Section 3
2016-KC-1006 09/28/2016 01/12/2017 01/20/2018
of the Housing and Urban Development Act
of 1968 for Its Disaster Recovery Program
P.K. Management Group, Inc., Doral, FL,
Did Not Always Provide Property
2016-CH-1008 Preservation and Protection Services in 09/29/2016 01/20/2017 08/31/2017
Accordance With Its Contract With HUD and
Its Own Requirements
HUD Needs To Improve Its Monitoring of
2016-FO-0006 09/29/2016 03/29/2017 12/31/2017
the Travel and Purchase Card Programs
Folts, Inc., Herkimer, NY Did Not
Administer the Folts Adult Home and Folts
2016-NY-1010 09/29/2016 03/28/2017 12/31/2018
Home Projects In Accordance With Their
Regulatory Agreements
The Housing Opportunities Commission of
Montgomery County, Kensington, MD, Did
2016-PH-1008 09/29/2016 01/12/2017 11/23/2017
Not Always Ensure That Its Program Units
Met Housing Quality Standards
The Condominium Association and
Management Agent Lacked Adequate
2016-CH-1009 09/30/2016 01/25/2017 09/30/2017
Controls Over the Operation of West Park
Place Condominium, Chicago, IL
85
SEMIANNUAL REPORT TO CONGRESS
Decision
Report Number Report Title Issue Date Final Action
Date
The State of Oklahoma Did Not Obligate and
Spend Its Community Development Block
2016-FW-1010 09/30/2016 01/17/2017 11/29/2017
Grant Disaster Recovery Funds in
Accordance With Requirements
The State of New Jersey Did Not Disburse
Disaster Funds to Its Contractor in
2016-PH-1009 09/30/2016 01/27/2017 Note 3
Accordance With HUD, Federal, and Other
Applicable Requirements
Audits excluded:
89 audits under repayment plans
33 audits under debt claims collection processing, formal judicial review, investigation, or legislative solution
Notes:
1 Management did not meet the target date. Target date is more than 1 year old.
2 Management did not meet the target date. Target date is less than 1 year old.
3 No management decision
86
SEMIANNUAL REPORT TO CONGRESS
TABLE C
INSPECTOR GENERAL-ISSUED REPORTS WITH QUESTIONED AND UNSUPPORTED
COSTS AT 03/31/2017 (THOUSANDS)
NUMBER OF
QUESTIONED UNSUPPORTED
AUDIT REPORTS AUDIT
COSTS COSTS
REPORTS
For which no management decision had been made by
A1 60 266,140 191,987
the beginning of the reporting period
For which litigation, legislation, or investigation was
A2 5 27,333 5,170
pending at the beginning of the reporting period
For which additional costs were added to reports in
A3 - 2,191 560
beginning inventory
A4 For which costs were added to noncost reports 0 0 0
B1 Which were issued during the reporting period 28 197,098 90,616
B2 Which were reopened during the reporting period 0 0 0
Subtotals (A+B) 93 492,762 288,333
For which a management decision was made during the
C 68 19 249,620 157,728
reporting period
(1) Dollar value of disallowed costs:
25 20 83,581 2,716
Due HUD
48 122,818 112,145
Due program participants
(2) Dollar value of costs not disallowed 11 21 43,221 42,867
For which a management decision had been made not to
D determine costs until completion of litigation, 4 25,542 3,378
legislation, or investigation
For which no management decision had made by the end 21 217,600 127,227
E
of the reporting period <64> 22
<182,879> <115,039>
19
Twenty-nine audit reports also contain recommendations with funds to be put to better use.
20
Seven audit reports also contain recommendations with funds due program participants.
21
Nine audit reports also contain recommendations with funds agreed to by management.
22
The figures in brackets represent data at the recommendation level as compared to the report level. See Explanations of Tables C and D. below table D.
87
SEMIANNUAL REPORT TO CONGRESS
TABLE D
INSPECTOR GENERAL-ISSUED REPORTS WITH RECOMMENDATIONS THAT FUNDS BE
PUT TO BETTER USE AT 03/31/2017(THOUSANDS)
NUMBER OF AUDIT
AUDIT REPORTS DOLLAR VALUE
REPORTS
For which no management decision had been made by the 36 7,179,659
A1
beginning of the reporting period
For which litigation, legislation, or investigation was pending at the 1 1,694
A2
beginning of the reporting period
For which additional costs were added to reports in beginning - 17,769
A3
inventory
A4 For which costs were added to noncost reports 0 0
B1 Which were issued during the reporting period 14 3,298,561
B2 Which were reopened during the reporting period 0 0
Subtotals (A+B) 51 10,497,683
For which a management decision was made during the reporting 36 23 2,575,278
C
period
(1) Dollar value of recommendations that were agreed to by
management:
Due HUD 13 2,340,121
Due program participants 19 127,513
(2) Dollar value of recommendations that were not agreed to by 5 24 107,644
management
For which a management decision had been made not to determine 1 1,694
D
costs until completion of litigation, legislation, or investigation
For which no management decision had made by the end of the 15 7,920,711
E reporting period 25
<20> <5,325,451>
23
Twenty-nine audit reports also contain recommendations with questioned costs.
24
One audit report also contains recommendations with funds agreed to by management.
25
The figures in brackets represent data at the recommendation level as compared to the report level. See the Explanations of Tables C. and D
88
SEMIANNUAL REPORT TO CONGRESS
EXPLANATIONS OF TABLES C AND D
The Inspector General Act Amendments of 1988 require inspectors general and agency heads to report cost data on
management decisions and final actions on audit reports. The current method of reporting at the “report” level
rather than at the individual audit “recommendation” level results in misleading reporting of cost data. Under the
Act, an audit “report” does not have a management decision or final action until all questioned cost items or other
recommendations have a management decision or final action. Under these circumstances, the use of the “report”
based rather than the “recommendation” based method of reporting distorts the actual agency efforts to resolve and
complete action on audit recommendations. For example, certain cost items or recommendations could have a
management decision and repayment (final action) in a short period of time. Other cost items or nonmonetary
recommendation issues in the same audit report may be more complex, requiring a longer period of time for
management’s decision or final action. Although management may have taken timely action on all but one of many
recommendations in an audit report, the current “all or nothing” reporting format does not recognize their efforts.
The closing inventory for items with no management decision in tables C and D (line E) reflects figures at the report
level as well as the recommendation level.
89
SEMIANNUAL REPORT TO CONGRESS
APPENDIX 4 – UNDISCLOSED REPORTS
The Inspector General Empowerment Act (IGEA) Section 5(a)(22)(A) and (B), requires reporting within the
Semiannual Report to Congress a detailed description of particular circumstances of each (A) inspection,
evaluation, and audit conducted by the office that is closed and was not disclosed to the public and (B) investigation
conducted by the office involving a senior Government employee that is closed and was not disclosed to the public.
The following provides a summary of these items:
AUDIT
During the current reporting period OIG has three audit reports that were closed but not disclosed to the public.
AUDIT REPORTS THAT WERE CLOSED DURING THE PERIOD THAT WERE NOT
DISCLOSED TO THE PUBLIC
REVIEW OF IMPLEMENTATION OF SECURITY CONTROLS OVER HUD'S BUSINESS
PARTNERS, ISSUED JUNE 11, 2009, AND CLOSED MARCH 17, 2017
This was a LIMITED DISTRIBUTION audit report. The U.S. Department of Housing and Urban Development,
Office of Inspector General (HUD OIG), conducted an audit to determine whether technical, management, and
operational controls were in place to ensure adequate protection of HUD’s data and resources at its third-party
business partners’ sites that remotely access or physically process and maintain HUD data outside the agency’s
secured physical perimeter. Also, OIG wanted to determine whether HUD complied with applicable Federal
requirements that apply to planning, establishing, and maintaining interconnections and data sharing among
information technology (IT) systems that are owned and operated by the third-party business partners. The audit
was conducted as a component of the general and technical controls for information systems in connection with the
annual audit of HUD’s consolidated financial statements audit and evaluation of HUD’s information systems
security program and practices required by the Federal Information Security Management Act of 2002.
OIG found that technical, management, and operational controls were not in place to ensure adequate protection of
HUD data and resources at its third-party business partners’ sites. Also, HUD did not comply with applicable
Federal laws and guidelines that apply to planning, establishing, and maintaining interconnections and data sharing
among IT systems that are owned and operated by the third-party business partners. Specifically, data and
personally identifiable information may have been at risk because of (1) a lack of information security guidance at
third-party business partners’ sites, (2) security weaknesses at third-party business partners’ sites, (3) HUD’s lack of
assurance that adequate security controls had been implemented, and (4) HUD’s failure to monitor its third-party
business partners’ sites and lack of knowledge of the risks that existed at those sites. OIG recommended that the
Chief Information Officer request that the Deputy Secretary direct system owners to (1) ensure that contracts with
third-party business partners include written agreements to implement security controls, (2) direct the system
owners to conduct risk assessments that apply to their third-party business partners and systems remotely accessed
outside HUD’s physical infrastructure, and (3) update their system security plans to include controls that apply to
their third-party business partners.
OIG recommended that the Assistant Secretary of Housing - Federal Housing Commissioner and General Deputy
Assistant Secretary for Public and Indian Housing require HUD’s system owners to provide periodic specialized
security awareness training for its third-party business partners’ system administrators and users and develop and
implement a continuous management review process regarding third-party business partners’ internal controls that
includes information security controls. (Audit Report: 2009-DP-0005)
90
SEMIANNUAL REPORT TO CONGRESS
APPLICATION CONTROL WEAKNESSES IDENTIFIED IN THE ASSET DISPOSITION AND
MANAGEMENT SYSTEM, ISSUED JANUARY 14, 2014, AND CLOSED MARCH 15, 2017
This was a LIMITED DISTRIBUTION audit report. HUD OIG audited selected application controls over HUD’s
Asset Disposition and Management System (ADAMS) to test for compliance with HUD policies and procedures,
Federal requirements, and best practices as applicable.
OIG found that financial management system interface reconciliations were not sufficient. Without sufficient
monitoring and reconciliation, there is no reasonable assurance that transactions are accurately processed through
the interface and that no transactions are added, lost, or altered in processing. Also, passwords for some ADAMS
user accounts were not changed every 90 days. If an attacker has compromised a password through guessing,
cracking, or capture, the attacker can use that password until it is changed by the user. The web server software in
use was outdated. Software that is not promptly updated may leave the system exposed to known vulnerabilities.
Security vulnerabilities could result in unauthorized disclosure of information, unauthorized modification, or a
disruption of service. Some user accounts were not disabled after 90 days of inactivity. Former system users could
potentially access user accounts after the business need for access had expired. They could use the inactive
accounts for unauthorized and malicious purposes. External attackers could also discover and exploit legitimate but
inactive user accounts. Lastly, the authorization to operate had been expired for nearly a year and was not
reauthorized until August 2013 during OIG’s audit. Although the system security documents had been updated to
correct inaccurate content during the audit, some discrepancies remained. Without periodically assessing the risk,
the organization cannot ensure that all threats and vulnerabilities are identified and considered.
OIG recommended that the Office of Single Family Housing (1) improve the monitoring and reconciliation of the
financial management system interface, (2) ensure that system user account passwords are changed every 90 days to
comply with HUD policy, (3) update the web server software to the current release, (4) take appropriate actions in
response to new information system security alerts, (5) ensure that inactive user accounts are disabled in a timely
manner that meets HUD requirements, and (6) conduct a risk assessment every 3 years to comply with HUD policy
and ensure that the system security documentation is kept current and accurate. (Audit Report: 2014-DP-0002)
FISCAL YEAR 2013 REVIEW OF INFORMATION SYSTEMS CONTROLS IN SUPPORT OF
THE FINANCIAL STATEMENTS AUDIT, ISSUED APRIL 3, 2014, AND CLOSED JANUARY 18,
2017
This was a LIMITED DISTRIBUTION audit report. HUD OIG reviewed information system controls over
HUD’s computing environment as part of OIG’s audit of HUD’s financial statements for fiscal year 2013 under the
Chief Financial Officer’s Act of 1990.
OIG found that HUD did not ensure that general and application controls over its financial systems and its
computing environment fully complied with Federal requirements. The Office of the Chief Information Officer
(OCIO) did not perform web application vulnerability scans on the Office of the Chief Financial Officer (OCFO)
systems between March 2011 and March 2013 and did not monitor OCFO web applications for vulnerabilities on a
recurring schedule. OIG previously reported this weakness in 2009. OCIO addressed the weakness in 2010 but
later discontinued monitoring OCFO web applications for vulnerabilities on a recurring schedule. OCIO’s
continuous monitoring program needed improvements in its design to strengthen the collecting and reporting of
information security data. For instance, information reported on HUD’s security posture may not have been
accurate, processes used to quarantine unauthorized software did not address certain unauthorized software, and
HUD’s IT security policy did not address key issues. Additionally, OCIO did not include telecommunication links
to the U.S. Department of the Treasury in its disaster recovery plans, and there were no contingency plans in place
91
SEMIANNUAL REPORT TO CONGRESS
for resuming operation of the telecommunication links to Treasury during a disaster recovery event. Lastly, HUD’s
use of the HUD Integrated Acquisition Management System (HIAMS) as part of its integrated financial
management system did not provide the agency with the data necessary to automate the performance of the payment
management core financial functions.
OIG recommended that the OCIO update its policies and procedures to define minimum frequencies and
requirements for scanning applications for vulnerabilities, reporting on the security state of HUD’s information
systems, and coordinating with Treasury to ensure that telecommunication links are restored during a disaster
recovery event. OIG recommended that the Office of the Chief Procurement Officer ensure that all core financial
requirements are fully assessed and included in the definition stage and all stages moving forward in the project to
replace HIAMS and the HUD Central Accounting and Program System. (Audit Report: 2014-DP-0005)
INVESTIGATION
During the current reporting period, OIG has four investigation reports that were closed but not disclosed to
the public.
• It was alleged that a HUD supervisory contract oversight specialist improperly accessed
HIAMS and manipulated contract parameters without informing the assigned contract
specialists. Additionally, it was alleged that a HUD supervisory IT specialist was responsible
for the oversight of a $3.9 million contract awarded to a company, which the complainant
alleged was the supervisory contract oversight specialist's former employer. The allegation
was not substantiated.
• During the selection process for a noncompetitive position, a HUD OIG director became
aware that the resume of a potential applicant contained false information. Despite knowing
this information, the director selected the candidate for the position. Further, it was
determined that a senior HUD OIG executive was advised of the fraudulent resume and
failed to take appropriate action against the director and applicant upon receipt of this
information. The director was demoted to a GS-14 and received a 14-day suspension. The
senior executive received a 15-day suspension. HUD OIG referred the case to the United
States Attorney’s Office (USAO) on January 20, 2016. On January 20, 2016, the USAO
declined criminal prosecution due to available administrative remedies.
• A HUD administrative officer-director admitted that she made an independent decision to
hire a new intern based on his gender, a violation of Title 5 U.S.C. (United States Code) 2302
- Prohibited personnel practices. Additionally, the director attempted to influence the
statement of events being provided to investigators by witnesses in violation of Title 18
U.S.C. 73 - Obstruction of justice. HUD OIG referred the case to the USAO on August 31,
2016. On August 31, 2016, the USAO declined criminal prosecution due to available
92
SEMIANNUAL REPORT TO CONGRESS
administrative remedies. The director received a verbal reprimand for her actions and retired
from Federal service.
• A HUD attorney admitted that she approved reimbursement for an ineligible legal services
invoice. She admitted to this approval despite her direct knowledge of a subordinate
employee’s existing conflict of interest in working matters related to a particular housing
authority at the time, a violation of 5 CFR (Code of Federal Regulations) Part 2635 -
Standards of Ethical Conduct for Employees of the Executive Branch. HUD OIG referred
the case to the USAO on May 8, 2014. On May 8, 2014, the USAO declined criminal
prosecution. The case was declined based on the facts gathered and the USAO's lack of
interest in pursuing charges in this matter. OIG later referred this matter to HUD. HUD
advised that additional corrective action was unnecessary as HUD had taken corrective action
before receiving OIG’s final report of investigation.
EVALUATION
During the current reporting period, OIG has one evaluation report that was closed but not disclosed to the
public.
FEDERAL INFORMATION SECURITY MODERNIZATION ACT REPORT FOR FISCAL YEAR
2016
HUD OIG completed its annual evaluation of HUD’s cybersecurity program, making 14 recommendations for
improvement to the Department. HUD had taken actions to strengthen its cybersecurity program by developing
more robust and enterprisewide policies and procedures, establishing information security roadmaps, and initiating
procurement and implementation of additional tools and processing capabilities. Due to these actions, HUD has
satisfied and closed more than 60 OIG IT recommendations from fiscal years 2013 to 2015 Federal Information
Security Modernization Act (FISMA) evaluations, enhancing its IT security posture. However, an additional 55
OIG recommendations remain open, to include the 14 fiscal year 2016 recommendations, leaving multiple
fundamental components of an effective cybersecurity program deficient. As reported in prior-year FISMA
evaluations, HUD has failed to establish adequate governance, risk management, and contractor oversight programs
or gain appropriate technical expertise. Significant risk will continue to exist until these key deficiencies are
addressed at the executive leadership level and plans, processes, and capabilities are fully funded and implemented.
(Evaluation Report: 2016-OE-0006)
93
SEMIANNUAL REPORT TO CONGRESS
APPENDIX 5 – OPEN RECOMMENDATIONS
OFFICE OF AUDIT
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that you make a determination on collectability of
1995-NY-1001 1/24/1995 001-B past due excess income liability and require the mortgagor to start $2,200,290
correctly completing monthly excess income report.
Require that the PHA reimburse $2,568,000, less any restitution,
2000-AT-1003 3/6/2000 003-C $1,114,897
for the fictitious training invoices.
Obtain additional supporting documentation or recover from city
2001-AT-1001 10/20/2000 001-A $795,178 paid for police protection, recreation and code $573,658
enforcement activities.
Require the authority to repay the Low Rent Program $58,799 from
2001-FW-1003 12/18/2000 001-C nonfederal funds for the ineligible transfers that have not been $58,799
reimbursed by Section 8 Program.
We recommend you instruct the Public Housing Authority to
2000-NY-1003 12/30/1999 004-C reimburse from nonfederal funds, the amount of unsupported costs $31,443
determined to be ineligible.
Require the Authority to provide support for $13,082 in
2001-FW-1003 12/18/2000 001-D unsupported costs charged to Low Rent Program for audit period $13,082
and any subsequent unsupported costs, etc.
Take action to refinance mixed financing developments, recover
2001-PH-1803 8/31/2001 001-A inappropriately expended Annual Contributions Contract funds, $320,000
sanctions for Annual Contributions Contract violations.
Require the Authority to seek repayment of the $728,159 owed
2002-AT-1002 7/3/2002 001-A $658,159
from the Tupelo Apartment Homes, L.P.
Provide proper support for the $331,665 of expenditures for the
2002-AT-1002 7/3/2002 003-B $331,665
fiscal year 2000 Annual Statement, or reimburse the CGP funds.
Provide proper supporting documentation or reimburse the CGP
2002-AT-1002 7/3/2002 003-A $293,544
$293,544 of unsupported expenditures.
Support unsupported expenditures of $60,750 that were drawn
2002-PH-1005 9/30/2002 001-C down for the grant. For any unsupported expenditures require $60,750
grantee reimburse HUD.
Reimburse HUD for the $23,422 ineligible expenditures charged to
2002-PH-1005 9/30/2002 001-D $23,422
the grant.
Remove the refrigerators and ranges from the Ida Street
2002-AT-1002 7/3/2002 005-C $15,086
development or require reimbursement from the partnership.
If implementation continues we recommend that HUD complete
2002-NY-0001 2/25/2002 001-B $0
and implement the regulations.
94
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Establishes a formal repayment agreement with the Housing
Authority that will allow the current debt owed to HUD of
$533,432 to be repaid without disrupting the Section 8 Program.
The following should be included in the agreement: prior HUD
2003-CH-1019 7/25/2003 001-B $507,290
approval of the Housing Authority's proposed budgets; and a
requirement that the Housing Authority revise its funding
requisitions when leasing levels materially change so that future
overpayments will be avoided.
Recover from owner $2,687,822, the difference between
2004-BO-1002 11/4/2003 001-A $3,662,822 owed to HUD by owner and $975,000 proceeds of $333,581
foreclosure sale.
Provides documentation to support that it appropriately made
$324,364 in Housing Assistance Payments. If adequate
2004-CH-1001 11/26/2003 003-B documentation cannot be provided, then the Authority should $300,327
reimburse its Section 8 Housing Program from non-Federal funds
for the appropriate amount.
Ensures that the $287,224 of housing work cited in this finding is
completed correctly using non-federal funds. If the Authority is
unable to ensure the work is completed correctly, then the
2003-CH-1011 3/24/2003 001-A Authority should reimburse its Comprehensive Assistance $287,224
Improvement Program (now the Capital Fund Program) from non-
Federal funds the applicable amount of work not completed
correctly or not provided.
Reimburses its Section 8 Housing Program $150,851 from non-
Federal funds for the Section 8 administrative fees collected by the
2004-CH-1001 11/26/2003 002-B Authority ($14,942) and the Housing Assistance Payments $170,051
($135,909) improperly made for the Section 8 housing units that
did not meet HUD's Housing Quality Standards.
Provides documentation to support the $72,329 of unsupported
salaries and wages cited in this finding. If documentation cannot
2003-CH-1014 3/28/2003 002-A $72,329
be provided, the Authority should reimburse its Public Housing
Program the appropriate amount from non-Federal funds.
Provides documentation to support the $43,132 of unsupported
payments cited in the Indiana State Board of Accounts audit report.
2003-CH-1019 7/25/2003 002-D If documentation cannot be provided, then the Authority should $43,132
reimburse its Section 8 Voucher Program for the amount that
cannot be supported from non-Federal funds.
Reimburses its Section 8 Voucher Program $42,206 from non-
2003-CH-1019 7/25/2003 002-A $41,146
Federal funds for the ineligible costs cited in this finding.
Reimburses its Section 8 Voucher Program $40,708 from non-
2003-CH-1019 7/25/2003 002-C Federal funds for ineligible costs cited in the Indiana State Board of $40,708
Accounts audit report.
Reimburses its Comprehensive Assistance Improvement Program
2003-CH-1011 3/24/2003 001-B (now the Capital Fund Program) $36,408 from non-federal funds $36,408
for the inappropriate use.
Reimburses its Voucher Program from non-Federal funds $60,399
2003-CH-1019 7/25/2003 003-A for Section 8 subsidy at units it incorrectly certified met Housing $28,248
Quality Standards.
95
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Provides documentation to support the $33,284 of unsupported
payments cited in this finding. If documentation cannot be
2003-CH-1014 3/28/2003 005-A provided, then the Authority should reimburse its Public Housing $27,097
Program the amount that cannot be supported from non-Federal
funds.
Repay its program $32,652 that it paid CDG for hiring it
2003-FW-1001 2/21/2003 002-A $18,939
coordinator.
Provides documentation to support the annual income used in 26
reexaminations for $112,753 in Housing Assistance Payments. If
2004-CH-1001 11/26/2003 003-D adequate documentation cannot be provided, then the Authority $11,859
should reimburse its Section 8 Housing Program from non-Federal
funds for the appropriate amount.
Provides documentation to support the $1,672 of unsupported
payments cited in this finding. If documentation cannot be
2003-CH-1019 7/25/2003 002-B provided, then the Authority should reimburse its Section 8 $1,672
Voucher Program from non-Federal funds for the amount that
cannot be supported.
Require the PRPHA to submit all supporting documentation and
determine the accuracy of the $4,230,646 owed by PBA and its
2004-AT-1006 4/22/2004 001-B public housing management agents. Any amounts determined $4,230,256
ineligible must be reimbursed to the ACC projects, from non-
Federal funds.
Require the Authority to repay its programs $6,855,271 spent for
ineligible procurements. Repayment should be from non-Federal
funds and paid in the following amounts and to the following
2005-AT-1004 11/19/2004 002-E programs: Conventional Public Housing General Fund $2,818,331, $3,516,017
Capital Fund $3,630,215, HOPE VI $259,289, Section 8 $115,128,
Drug Elimination $12,048, Economic Development Support
Services $13,831, and Turnkey III Program $6,429.
Provides documentation to support that $768,517 of Housing
Assistance Payment Savings funds benefited very low-income
2004-CH-1006 6/23/2004 001-B persons and families. If the Authority cannot provide the necessary $768,517
documentation, then the Authority should reimburse a control
account from non-Federal funds for the applicable amount.
Require the Authority to collect the $327,326 due from SCHDC
2004-AT-1001 1/15/2004 001-A $199,851
and discontinue advancing funds.
Direct the Authority to provide adequate documentation to support
2004-PH-1011 9/8/2004 002-B $187,743
$1,943,993 or reimburse HUD from nonfederal sources.
We recommend that HUD’s Director of Public Housing Hub,
Detroit Field Office, assure the Royal Oak Township Housing
2005-CH-1003 11/29/2004 001-A Commission: Reimburse its Public Housing Program $367,516 $91,879
from non-Federal funds for the improper use of HUD operating
subsidy funds cited in this finding.
We recommend that HUD’s Director of Public Housing Hub,
Detroit Field Office, assure the Royal Oak Township Housing
2005-CH-1003 11/29/2004 002-A Commission: Reimburse its Public Housing Program $45,220 from $45,220
non-Federal funds for the operating subsidy that was not used in
accordance with HUD's One Strike Policy.
96
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Require the Authority to reimburse HUD $882,916 from nonfederal
2004-PH-1011 9/8/2004 001-B $29,051
sources.
We recommend that HUD’s Director of Public Housing Hub,
Detroit Field Office, assure the Royal Oak Township Housing
2005-CH-1003 11/29/2004 002-C $3,340
Commission: Reimburse its Public Housing Program $3,340 from
non-Federal funds for thee ineligible travel costs.
Require the Municipality to obtain and submit all supporting
documentation and HUD determine the eligibility and propriety of
$1,011,801 in administrative costs the Corporation charged to the
2005-AT-1013 9/15/2005 002-A $1,011,801
Block Grant revolving fund. Any amounts determined ineligible
must be reimbursed to the Block Grant program from nonfederal
funds.
We recommend that the director of HUD’s Public Housing Hub,
Cleveland Field Office, require the Authority to provide support or
reimburse its Section 8 program $812,967 ($738,708 in housing
2005-CH-1020 9/29/2005 004-A assistance payments plus $74,259 in related administrative fees) $807,977
from nonfederal funds for unsupported housing assistance
payments and unearned administrative fees related to the 65 tenants
cited in this finding.
We recommend that the director of HUD's Public Housing Hub,
Cleveland Field Office, require the Authority to reimburse its
2005-CH-1020 9/29/2005 003-A $751,881
Section 8 administrative fees $805,585 from nonfederal funds for
inappropriately funding HOPE VI expenses.
Require the Municipality to obtain and submit all supporting
documentation and HUD determine the eligibility and compliance
2005-AT-1013 9/15/2005 003-A with national objectives of the $631,195 the Corporation disbursed $471,578
for the four loans. Any amounts determined ineligible must be
reimbursed to the Block Grant program from nonfederal funds.
We recommend that HUD’s Director of Public Housing Hub,
Chicago Regional Office, assure that the Authority reduces its
2005-CH-1010 4/8/2005 001-A $105,186
Low-Rent Performance Funding Operating Subsidy by $119,376
for the excessive operating subsidy cited in this finding.
For the overpayments of phase-down funding identified in
appendix C, recover $20.6 million in ineligible phase-down
2006-BO-0001 7/11/2006 001-C $8,281,766
funding requests from the public housing agencies for fiscal years
2004 and 2005.
We recommend that the Director of the HUD Office of Public
Housing review the documentation provided by the Authority,
determine if the evidence supports that services were provided that
2006-NY-1003 2/14/2006 002-A $3,758,034
exceeded the services that were to be provided in accordance with
the cooperation agreements and seek reimbursement of any
amounts that are not supported.
We recommend that the director of HUD’s Boston Multifamily
Housing Hub, in conjunction with the HUD Office of Inspector
2006-BO-1006 3/28/2006 001-C General (OIG), pursue double damages remedies if the owner does $1,421,859
not reimburse HUD for the inappropriate disposition of project
assets.
97
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the director of HUD’s Boston Multifamily
Housing Hub assure the owner provides documentation to support
2006-BO-1006 3/28/2006 001-B the $992,979 in unsupported payments cited in this audit report. If $992,979
adequate documentation cannot be provided, the owner should
reimburse HUD for the appropriate amount.
We recommend that the director of HUD’s Boston Multifamily
2006-BO-1006 3/28/2006 001-A Housing Hub assure the owner reimburses HUD $865,121 for the $865,121
inappropriate disposition of project assets.
We recommend that the director of HUD’s Detroit Office of Public
Housing require the Commission to Reimburse its program
2006-CH-1018 9/28/2006 001-A $535,903 from nonfederal funds ($507,860 for the property $535,903
purchase plus $28,043 for legal costs) for the improper use of
program funds to pay for the property’s acquisition costs.
We recommend that the director, New Jersey Office of Public
Housing, instruct the Authority to recapture or reduce the Section 8
2006-NY-1012 9/22/2006 001-B $452,366
administrative fee reserve account by $590,042 to comply with the
requirements of PIH [Public and Indian Housing] Notice 2005-30.
We recommend that the director, New Jersey Office of Public
Housing, instruct the Authority to reimburse the capital fund from
2006-NY-1012 9/22/2006 001-D $334,205
the Section 8 program the $401,046 in excess/ineligible capital
fund transfers.
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to provide supporting
documentation or reimburse its program $582,926 ($547,238 in
2006-CH-1020 9/29/2006 001-A housing assistance and utility allowance payments and $35,688 in $293,425
associated administrative fees) from nonfederal funds for the
unsupported payments and associated administrative fees related to
the 73 household files cited in this finding.
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to review the remaining 717
(779 minus 62) zero-income households as of September 23, 2005,
2006-CH-1021 9/30/2006 002-C to determine whether they had unreported income. For households $254,879
that received excessive housing assistance and utility allowance
payments, the Authority should pursue collection and/or reimburse
its program the applicable amount from nonfederal funds.
Obtain and review support (as identified in recommendation 1D)
for $15.1 million in unsupported phase-down funding in fiscal
2006-BO-0001 7/11/2006 001-B years 2004 and 2005, determine the correct amount of phase-down $250,282
funding, and require the public housing agencies to reimburse HUD
for any ineligible funding received.
We recommend that the director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse its public
2007-CH-1001 12/13/2006 001-A $181,513
housing operating fund $181,513 from nonfederal funds for the
inappropriate disbursements cited in this finding.
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to terminate the program
2006-CH-1021 9/30/2006 002-D housing assistance to the applicable households that certified they $162,854
had no income when in fact they had income according to HUD’s
system.
98
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Require the Commonwealth to provide documentation to
2006-PH-1013 9/18/2006 001-B substantiate the eligibility of $150,000 provided to Southampton or $125,000
repay the HOME program from nonfederal funds.
We recommend that the director of HUD’s Detroit Office of Public
Housing require the Commission to provide documentation to
2006-CH-1010 5/18/2006 001-A support the $206,224 in unsupported program disbursements cited $115,149
in this finding or reimburse its program from nonfederal funds for
the applicable amount.
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
$80,776 ($49,034 for the overpayment of housing assistance and
2006-CH-1020 9/29/2006 001-B utility allowance payments for 34 households and $31,742 in $75,817
administrative fees associated with the overpayment and
underpayment of housing assistance and utility allowance payments
for 48 households) from nonfederal funds.
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to pursue collection from the
applicable households or reimburse its program $62,365 ($51,244
2006-CH-1021 9/30/2006 002-A $62,365
in housing assistance and $11,121 in utility allowances) from
nonfederal funds for the overpayment of housing assistance and
utility allowance payments cited in this finding.
We recommend that the director, Office of Public Housing, New
2006-NY-1008 6/30/2006 001-C York Hub seek repayment of the $49,483 in ineligible and $48,584
erroneous housing assistance payments.,
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to provide supporting
documentation or reimburse its program $47,463 ($43,435 in
2006-CH-1021 9/30/2006 003-A housing assistance payments plus $4,028 in related administrative $47,463
fees) from nonfederal funds for the unsupported housing assistance
payments and related administrative fees for the five households
cited in this finding.
We recommend that the director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse its program
$236,157 ($31,802 in imputed interest, $28,802 in forgiven interest,
2006-CH-1016 9/26/2006 001-A $27,726
$111,073 for the land purchase, $42,322 in cash, and $22,158 in
improper expenses) from nonfederal funds for the inappropriate use
of its sales proceeds for the Corporation.
We recommend that the director, New Jersey Office of Public
Housing, require the Authority to provide additional documentation
for the $23,592 in unsupported costs related to managerial services
2006-NY-1010 9/20/2006 002-B $23,592
and legal and auditing costs so that HUD can determine the
eligibility of these items. Any amounts determined to be ineligible
should be repaid.
We recommend that the director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse its Coordinators
2007-CH-1001 12/13/2006 002-A $18,757
funds $18,757 from nonfederal funds for the inappropriate payment
of salary and benefits cited in this finding.
99
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the director of HUD’s Cleveland Office of
Public Housing require the Authority to provide documentation to
2007-CH-1001 12/13/2006 002-B support the use of $25,033 in salary and benefits expenses for its $4,963
former counselor was eligible or reimburse its Coordinators funds
from nonfederal funds as appropriate.
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
2006-CH-1021 9/30/2006 001-A $27,729 ($27,201 in housing assistance and $528 in utility $219
allowances) from nonfederal funds for the overpayment of housing
assistance and utility allowance payments cited in this finding.
We recommend that the director, Rhode Island Multifamily
Program Center pursue the recovery of double the amount of
2006-BO-1004 3/3/2006 001-A $533,954 in ineligible costs to identities-of-interest from the $0
owner/management agent, as stipulated in 12 U.S.C. [United States
Code] Sec. 1715z-4a.
We recommend that the director, Rhode Island Multifamily
Program Center obtain adequate documentation from the
owner/management agent for the cash disbursements for
2006-BO-1004 3/3/2006 001-B $0
unsupported costs of $21,871 costs to identities-of-interest or
pursue the recovery of double this amount as stipulated in 12
U.S.C. [United States Code] Sec. 1715z-4a.
We recommend that the director, Rhode Island Multifamily
Program Center pursue the recovery of double the amount of
2006-BO-1004 3/3/2006 001-C $426,375 in unnecessary costs to identities-of-interest and non- $0
identities-of-interest from the owner/management agent, as
stipulated in 12 U.S.C. [United States Code] Sec. 1715z-4a.
We recommend that the director, Rhode Island Multifamily
2006-BO-1004 3/3/2006 001-D Program Center pursue the recovery of $397,895 in ineligible costs $0
to non-identities-of-interest.
We recommend that the director, Rhode Island Multifamily
Program Center obtain justification from the owner/management
2006-BO-1004 3/3/2006 001-E agent supporting the cash disbursements for unsupported costs of $0
$266,574 to non-identities-of-interest or pursue recovery of this
amount.
We recommend that the director, Rhode Island Multifamily
Program Center take appropriate action to prevent payments of
ineligible and unnecessary cash disbursements after our audit
2006-BO-1004 3/3/2006 001-F period, including the payment of questionable accrued payables to $0
identities-of-interest of $95,800. If they have been paid, pursue the
recovery of double this amount as stipulated in 12 U.S.C. [United
States Code] Sec. 1715z-4a.
We recommend that the director, Rhode Island Multifamily
Program Center take appropriate action to prevent payments of
2006-BO-1004 3/3/2006 001-G $0
ineligible accrued payables to non-identities-of-interest of $92,299.
If they have been paid, pursue the recovery of this amount.
We recommend that the director, Rhode Island Multifamily
Program Center obtain adequate documentation from the
2006-BO-1004 3/3/2006 001-H $0
owner/management agent for the $4,388 in unsupported accrued
payables or pursue recovery of this amount.
100
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the director, Rhode Island Multifamily
Program Center obtain adequate documentation from the
owner/management agent for cash disbursements of $1,053,550 in
2006-BO-1004 3/3/2006 002-A $0
unsupported partnership management fees paid to the owner or
pursue the recovery of double this amount as stipulated in 12
U.S.C. [United States Code] Sec. 1715z-4a.
We recommend that the director, Rhode Island Multifamily
Program Center obtain adequate documentation from the
owner/management agent for unsupported accrued payables of
2006-BO-1004 3/3/2006 002-B $0
$108,600 payable to the owner or pursue the recovery of double
this amount as stipulated in 12 U.S.C. [United States Code] Sec.
1715z-4a.
We recommend that the director, Rhode Island Multifamily
Program Center obtain justification from the owner/management
agent supporting the cash disbursements for unsupported costs paid
2006-BO-1004 3/3/2006 002-C $0
to the owner/management agent of $1,248,668 or pursue the
recovery of double this amount as stipulated in 12 U.S.C. [United
States Code] Sec. 1715z-4a.
We recommend that the director, Rhode Island Multifamily
Program Center take appropriate action to prevent unnecessary
cash disbursements after our audit period, including the payment of
2006-BO-1004 3/3/2006 002-D questionable accrued payables to the management agent of $0
$40,077. If they have been paid, pursue the recovery of double this
amount as stipulated in 12 U.S.C. [United States Code] Sec. 1715z-
4a.
We recommend that the director, Rhode Island Multifamily
Program Center pursue recovery of double the amount of $112,254
2006-BO-1004 3/3/2006 002-E $0
in questionable salary payments paid to the assistant administrator
as stipulated in 12 U.S.C. [United States Code] Sec. 1715z-4a.
We recommend that the director of HUD’s Cleveland Office of
Public Housing require the Agency to reimburse its program
2007-CH-1011 7/23/2007 001-A $1,636,075
administrative fee reserve $1,636,075 from the appropriate funds
for the excessive administrative expenses cited in this finding.
We recommend that the director of HUD’s Cleveland Office of
Public Housing require the Authority to provide documentation to
support that the $913,365 in refunding savings cited in this finding
2007-CH-1005 3/23/2007 001-A was used to provide affordable, decent, safe, and sanitary housing $913,365
to very low-income households or reimburse from nonfederal funds
its refunding savings account(s), as appropriate, to be able to trace
its use of the savings.
We recommend that the director of HUD’s Office of Public
Housing instruct the Authority to reimburse the capital fund
2007-NY-1011 8/17/2007 001-A $818,536
program $818,536 related to the administrative and management
improvement costs that exceeded HUD limitations.
We recommend that the director of HUD’s Office of Public
Housing instruct the Authority to reimburse HUD for the excessive
2007-NY-1006 5/24/2007 001-A $574,416
administrative fee charge of $692,990 in capital funds in
accordance with the procedures described in 24 CFR 905.120.
101
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the director of HUD’s Office of Public
Housing instruct the Authority to reduce the Authority’s future
2007-NY-1011 8/17/2007 001-C $505,631
capital funds by $632,039 related to the fiscal years 2003 and 2004
capital funds transferred to the low-rent public housing program.
Reimburse from nonproject sources $656,536 for salary and
benefits that represented Foundation costs. The repayments should
2007-AT-1010 8/14/2007 001-B $462,199
be deposited to the residual receipt account for each affected
project.
Repay its low-rent public housing program $834,969 from
2007-PH-1013 9/27/2007 001-B nonfederal funds for the ineligible disbursements related to the $384,969
credit union.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse its Public
2008-CH-1001 11/19/2007 001-D $292,820
Housing program $337,870 from nonfederal funds for the rental
income received by its nonprofit from the Turnkey III properties.
Reimburse from nonproject sources $458,101 that the Foundation
2007-AT-1010 8/14/2007 001-C paid itself for excessive janitorial costs. The repayments should be $238,685
deposited to the residual receipt account for each affected project.
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to provide supporting
documentation or reimburse its program $140,521 ($126,224 in
2007-CH-1010 7/20/2007 002-C housing assistance and utility allowance payments plus $14,297 in $140,521
related administrative fees) from nonfederal funds for the
unsupported payments and associated administrative fees related to
the 20 households cited in this finding.
Repay from nonfederal sources, the $147,934 improperly spent for
2007-KC-1004 1/12/2007 002-A $124,339
employee leave.
Reimburse current tenants for any portion of the $93,677 they paid
for prohibited parking fees. Parking fees collected from tenants
2007-AT-1010 8/14/2007 002-A who have moved and for whom it is not feasible to locate them to $93,677
make the payments should be deposited to the projects’ residual
receipt accounts.
We also recommend that the director, Buffalo Office of
Multifamily Housing, determine the disposition of the escrowed
funds and bonds (consisting of $50,000 in cash, a $25,000 bond
and $10,062 in accrued bond interest) set aside for the developer-
2007-NY-1003 3/12/2007 001-F $85,062
related lawsuit. After determining the proper disposition of these
funds HUD should determine whether to remove the funds from the
project’s books and records. This would allow $85,062 in
encumbered funds to be available for paying operating expenses.
We recommend that the director of HUD’s Detroit Office of Public
Housing require the Commission to provide supporting
2007-CH-1002 1/25/2007 002-A documentation or reimburse its program $166,782 from nonfederal $80,637
funds for the unsupported operating subsidies related to the 51
household files cited in this finding.
102
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
$54,024 from nonfederal funds ($47,295 for housing assistance
2007-CH-1014 9/24/2007 001-B $50,874
payments and $6,729 in associated administrative fees) for the 28
units that materially failed to meet HUD’s housing quality
standards.
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
2007-CH-1010 7/20/2007 002-A $39,428 in housing assistance from nonfederal funds for the $39,428
overpayment of housing assistance and utility allowance payments
cited in this finding.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
2007-CH-1014 9/24/2007 001-F $52,421 from nonfederal funds in associated administrative fees for $37,831
the 402 units that were more than 30 days late in receiving their
annual inspections.
Reimburse from nonproject sources any portion of $31,905 in
parking fees that it cannot support as representing necessary and
2007-AT-1010 8/14/2007 001-F $31,905
reasonable project costs. The repayments should be deposited to
the residual receipt account for each affected project.
Reimburse from nonproject sources $26,306 that the Foundation
paid itself for excessive retirement plan costs. The repayments
2007-AT-1010 8/14/2007 001-E $26,306
should be deposited to the residual receipt account for each affected
project.
We recommend that the director of the Buffalo Office of
Multifamily Housing instruct the owner and agent to negotiate a
management fee that is reasonable and commensurate with the
2007-NY-1003 3/12/2007 002-A $25,974
services that are provided. The management fee should not exceed
an amount ordinarily paid for such services, resulting in $25,974 in
cost savings.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its program $38,537
2007-CH-1016 9/28/2007 001-B from nonfederal funds ($35,918 for housing assistance payments $7,068
and $2,619 in associated administrative fees) for the 38 units that
materially failed to meet HUD’s housing quality standards.
Reimburse from nonproject sources $6,352 representing
2007-AT-1010 8/14/2007 001-G Foundation expenses. The repayments should be deposited to the $6,352
residual receipt account for each affected project.
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
$30,360 from nonfederal funds ($27,944 for housing assistance
2007-CH-1010 7/20/2007 001-A $6,304
payments and $2,416 in associated administrative fees) for the 35
units that materially failed to meet HUD’s housing quality
standards.
2007-KC-1004 1/12/2007 003-C Repay $29,095 in unauthorized vehicle allowances. $5,501
103
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse the applicable
program $27,578 ($9,644 for the overpayment of housing
2007-CH-1012 8/3/2007 001-B assistance and utility allowances and $17,934 in administrative fees $5,160
associated with the overpayment and underpayment of housing
assistance and utility allowances for the 48 households) from
nonfederal funds.
We also recommend that HUD review and approve the negotiated
2007-NY-1003 3/12/2007 002-B management fee to ensure that it is reasonable in relation to the $0
services provided to the project.
We recommend that the director of HUD’s Chicago Office of
Public Housing require the Authority to review the remaining 36
(70 minus 34) zero-income households as of September 11, 2006,
2007-CH-1010 7/20/2007 003-C to determine whether they had unreported income. For households $0
that received excessive housing assistance and utility allowance
payments, the Authority should pursue collection and/or reimburse
its program the applicable amount from nonfederal funds.
Execute loan agreements between the City and its Agency
indicating specific loan terms for repayment of the loans totaling
2009-LA-1005 12/30/2008 002-A $139,201,997 ($63,072,960 principal and $76,129,037 interest), $64,039,600
which would result in an estimated additional recovery of
$7,269,854 in CDBG program income over the first year.
Review all of the remaining 392 grants coded ineligible or lacking
2008-AO-1002 1/30/2008 001-C an eligibility determination and either support or repay $14,697,812 $4,615,112
disbursed for them.
We recommend that the Director of HUD's Detroit Office of Public
Housing require the Commission to reimburse its Public Housing
2008-CH-1008 4/30/2008 001-D $700,454
program $745,436 from nonfederal funds for the improper use of
funds cited in this finding.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Agency to provide supporting
2008-CH-1006 4/15/2008 002-D documentation or reimburse its program $587,022 from nonfederal $587,022
funds for the unsupported payments related to the 59 households
cited in this finding.
Repay $743,344 disbursed for the 17 ineligible grants to its Road
2008-AO-1002 1/30/2008 001-A $403,904
Home program.
Require the Authority to collect $274,914 from the Development
2008-AT-0803 9/30/2008 001-A $274,914
Corporation and reimburse its operating fund.
Request from responsible management agents supporting
documentation for the $265,412 in unsupported costs charged to
the project so that the eligibility of these costs can be determined.
2009-BO-1002 11/6/2008 001-E For any amounts determined to be ineligible, the project owner $265,412
should repay or seek reimbursement from responsible management
agent to pay the project from non-project funds or remove payables
from the project’s accounting.
104
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Provide support for $523,335 in payments made for various
purchases or repay any unsupported costs to its public housing
2009-AT-1001 10/20/2008 001-C $210,174
operating and capital improvement programs from nonfederal
funds.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Agency to reimburse its program
$192,854 ($113,973 for overpaid housing assistance, $17,257 for
2008-CH-1006 4/15/2008 002-A $192,854
overpaid utility allowances, and $61,624 in associated
administrative fees) for the 63 households cited in this finding from
nonfederal funds.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to provide supporting
documentation or reimburse its program $214,157 ($194,694 in
2008-CH-1007 4/18/2008 001-D housing assistance and utility allowances plus $19,463 in related $190,363
administrative fees) from nonfederal funds for the unsupported
payments and associated administrative fees related to the 30
households cited in this finding.
Repay $185,764 to it public housing operating and capital
2009-AT-1001 10/20/2008 001-A improvement programs for ineligible payments made to or on $185,764
behalf of the former board chairman from nonfederal funds.
Provide support for $182,369 in payments made to or on behalf of
the former executive director and former lease enforcement officer
2009-AT-1001 10/20/2008 001-B $177,369
or repay any unsupported costs to its public housing operating and
capital improvement programs from nonfederal funds.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide supporting
documentation or reimburse its Public Housing program $153,223
2008-CH-1003 2/15/2008 001-A $153,223
($22,092 for household eligibility and $131,131 for continued
occupancy) from nonfederal funds for the unsupported operating
subsidies related to the 36 household files cited in this finding.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to provide documentation to
support its allocation of time spent correctly administering its
Family Self-Sufficiency Program or reimburse its program’s
2008-CH-1007 4/18/2008 003-G $151,661
undesignated fund balance for administration account from
nonfederal funds the appropriate portion of the $151,661 in
Coordinator funds received for fiscal years 2004 and 2005 that
were incorrectly administered.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide support that the use of
$82,774 ($27,286 to three family members, $23,418 to two
independent contractors, $22,150 to CLM Architects, and $9,920 to
2008-CH-1003 2/15/2008 002-B $82,774
Harold Dunne, Attorney at Law) in Public Housing program funds
for housing maintenance, cleaning, and professional services were
reasonable or reimburse its program from nonfederal funds for the
applicable amount.
Reimburse or require the responsible management agent(s) to
reimburse $64,601 to the project for ineligible project costs of
2009-BO-1002 11/6/2008 001-B $64,601
$15,331 and for ineligible administrative, site supervisor, HUD 202
and site management fees of $49,270.
105
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide supporting
2008-CH-1003 2/15/2008 002-A documentation for the use of $61,202 for work performed under its $61,202
Public Housing Capital Fund program or reimburse its program
from nonfederal funds for the applicable amount.
Reimburse its program $55,047 from nonfederal funds ($50,356 for
housing assistance payments and $4,691 in associated
2008-CH-1016 9/29/2008 001-B $51,815
administrative fees) for the 28 units that materially failed to meet
HUD’s housing quality standards.
Require the Authority to obtain repayment from Whispering Pines
for the expenses paid on Whispering Pines’ behalf, including the
$35,521 for direct costs of the assisted living program and
2008-KC-1002 2/20/2008 001-B $51,282
approximately $18,711 for its share of utility expenses that had not
been repaid to the Authority as of July 2007. Repayments should
be deposited into the Authority’s public housing program account.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
2008-CH-1005 4/10/2008 001-A $49,471
$52,737 from nonfederal funds for the overpayment of housing
assistance and utility allowances cited in this finding.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Agency to reimburse its program
$47,543 ($36,748 for housing assistance payments and $10,795 for
2008-CH-1006 4/15/2008 003-A $47,543
utility allowance payments) from nonfederal funds for the
inappropriate housing assistance payments related to the 17
households cited in this finding.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to pursue collection from the
2008-CH-1005 4/10/2008 003-A applicable households or reimburse its program $46,619 from $46,619
nonfederal funds for the overpayment of housing assistance and
utility allowances cited in this finding.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its program $46,478
2008-CH-1013 9/24/2008 001-A $46,478
from nonfederal funds for the 34 units cited in this finding that
were in material noncompliance.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Agency to reimburse its program
$41,094 from nonfederal funds ($37,280 for program housing
2008-CH-1006 4/15/2008 001-A assistance payments and utility allowances plus $3,814 in $41,094
associated administrative fees) for the 38 units that materially failed
to meet HUD’s housing quality standards and/or the Corporation’s
housing standards.
Ensure that $23,499 for unreasonable late charges on fuel bills and
sewer lien penalties and $6,779 for unreasonable payments to a
2009-BO-1002 11/6/2008 001-D $30,278
lawn care company be reimbursed to the project from non-project
funds.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its Public Housing
2008-CH-1003 2/15/2008 001-B program $28,663 ($16,262 plus $12,401) from nonfederal funds for $28,663
the lost total household payments for 23 households cited in this
finding.
106
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to pursue collection from the
2008-CH-1007 4/18/2008 002-A applicable households or reimburse its program $28,267 from $28,267
nonfederal funds for the overpayment of housing assistance and
utility allowances cited in this finding.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its program $29,148
2008-CH-1013 9/24/2008 002-A from nonfederal funds for the seven long-term vacant units it $26,538
inappropriately included in its program operating subsidy
calculations.
Require the Authority to collect the correct amount of public
housing rents owed by Whispering Pines (including approximately
2008-KC-1002 2/20/2008 002-C $22,050
$25,000 owed as of October 2007). Repayments should be
deposited into the Authority’s public housing program account.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to provide documentation to
support its allocation of time spent correctly administering the
2008-CH-1005 4/10/2008 002-E Family Self-Sufficiency Program or reimburse its Coordinator $21,965
funds from nonfederal funds the appropriate portion of the $72,235
used when the Authority’s Family Self-Sufficiency Program was
incorrectly administered.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse its program
2008-CH-1007 4/18/2008 002-C $21,411 from nonfederal funds for the overpayment of housing $21,411
assistance and utility allowances due to not including household
reported income.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to provide documentation to
support its use of funds for the six Family Self-Sufficiency
2008-CH-1007 4/18/2008 003-C $14,928
Program participants whose contracts were extended contrary to
HUD’s requirements or reimburse its program $14,928 from
nonfederal funds.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
2008-CH-1005 4/10/2008 001-C $14,603
$14,603 from nonfederal funds for the inappropriate administrative
fees related to the 32 households in this finding.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
2008-CH-1005 4/10/2008 002-A $14,576
$14,576 from nonfederal funds for the escrow funds overpaid to the
seven participants cited in this finding.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse the appropriate
2008-CH-1003 2/15/2008 001-C $13,070
households $13,070 for the underpayment of housing assistance
and utility allowance payments cited in this finding.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to pursue collection from the
applicable households or reimburse its program $12,505 from
2008-CH-1007 4/18/2008 002-B $12,505
nonfederal funds for the overpayment of housing assistance and
utility allowances cited in this finding related to the underreporting
of income.
107
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Agency to reimburse its program
2008-CH-1006 4/15/2008 002-C $9,815
$9,815 from nonfederal funds for the program administrative fees
related to the underpaid housing assistance payments.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its Public Housing
2008-CH-1003 2/15/2008 001-F $4,532
program $7,932 in operating subsidies from nonfederal funds for
the two properties sold by the City.
Require the Authority to obtain repayment from Whispering Pines
or other nonfederal sources for penalties and finance charges,
2008-KC-1002 2/20/2008 001-C $1,951
including $4,901 identified as of July 2007. Repayments should be
deposited into the Authority’s public housing program account.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
2008-CH-1005 4/10/2008 003-B $1,668
$11,225 from nonfederal funds for the inappropriate administrative
fees related to the 47 households cited in this finding.
Ensure that the Authority collects rent retroactively from
Whispering Pines for the period from November 2005 to the
2008-KC-1002 2/20/2008 001-E $0
present and in doing so, consider the amount collected for utilities
during this same period as recommended in recommendation 1B.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Agency to determine the appropriate
administrative fees for the applicable households for which it is
2008-CH-1006 4/15/2008 002-E $0
unable to provide supporting documentation cited in
recommendation 2D and reimburse its program the applicable
amount from nonfederal funds.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to review the files for the 20
participants whose contracts of participation expired between July
2008-CH-1007 4/18/2008 003-D $0
1, 2005, and June 30, 2007, to support its use of program funds for
the escrow accounts, or reimburse its program the applicable
amount from nonfederal funds.
Take appropriate sanctions against Heartland Funding for violating
2008-KC-1006 9/8/2008 001-A $0
RESPA.
Refer Heartland Funding to HUD’s Mortgagee Review Board for
2008-KC-1006 9/8/2008 001-B $0
review and appropriate actions.
$0
Require Heartland Funding to adequately train its managers and
2008-KC-1006 9/8/2008 001-D
staff on RESPA requirements.
108
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Seek appropriate administrative action for 202 active loans with
original mortgage amounts of $27,773,733 if the lenders cannot
provide documentation, such as a letter of map
amendment/revision, to show that the properties are not located in
FEMA’s designated special flood hazard areas or the required
elevation certification showing that the properties meet FEMA’s
2008-CH-0002 9/29/2008 001-A elevation requirements and are covered by flood insurance. The $0
unpaid principal balances for the 202 loans as of July 2, 2008,
totaled $26,954,812. The estimated risk to HUD is $315,371 based
on FHA’s average loss rate of 39 percent based on the 2007
actuarial review of the FHA insurance fund for fiscal year 2007 and
the average percentage of loans that resulted in HUD-paid claims
for calendar years 2000 through 2007 of 3 percent.
Seek reimbursement from the applicable lenders for any future
losses from a $109,482 claim paid on loan 292-4652151 as of
August 31, 2008, if the lenders fail to provide the elevation
2008-CH-0002 9/29/2008 001-B certifications or letters of map revision/amendment. The projected $0
loss to HUD is $42,698 based on the claims paid and FHA’s
average loss rate of 39 percent based on the 2007 actuarial review
of the FHA insurance fund for fiscal year 2007.
Seek reimbursement of $73,989 ($47,751 plus $26,238) from the
lender for the actual loss incurred on one loan 495-7332855 and the
2008-CH-0002 9/29/2008 001-C claim paid due to a preforeclosure sale for loan 221-3794753, $0
respectively, if the lender fails to provide the elevation certification
or letter of map revision/amendment.
Require the applicable lenders for the 317 loans lacking evidence
of flood insurance to provide documentation showing that the
2008-CH-0002 9/29/2008 001-D properties have flood insurance or are no longer located in FEMA’s $0
designated special flood hazard areas or seek appropriate
administrative action.
Apply appropriate sanctions if the Authority does not comply with
2008-AT-0803 9/30/2008 001-B $0
its payback agreement.
Ensure that field offices require participating jurisdictions to close
out in a timely manner $62,201,487 in activities reflected in its
2009-AT-0001 9/28/2009 001-A $62,201,487
open activities report that are more than five years old and cancel
the fund balances.
Require participating jurisdictions to reimburse HUD from
nonfederal sources any portion of the $11,634,558 for activities
listed in appendix C that HUD determines had been terminated,
2009-AT-0001 9/28/2009 001-B voluntarily or involuntarily. When making this determination, $11,634,558
HUD should consider the participating jurisdictions’ lack of timely
physical completion and/or production of affordable housing
occupied by HOME income-eligible individuals.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Agency to provide supporting
2009-CH-1002 1/23/2009 003-B documentation or reimburse its program $2,081,512 from $2,081,512
nonfederal funds for the 11 Section 8 project-based projects cited in
this finding.
109
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director, Buffalo Office of Community
Planning and Development, require the City of Rome to establish a
schedule for documenting completion of the General Cable activity
2009-NY-1012 5/20/2009 001-B and the jobs retained and/or created at the site and reimburse HUD $1,100,000
any portion of the $2,953,754 in CDBG funds expended on the
activity for costs that do not qualify as meeting the job creation
requirement.
Provide documentation to support the source and use of $801,000
transferred into and withdrawn from its nonfederal account or
2010-PH-1801 12/17/2009 002-B $458,224
reimburse HUD or the appropriate programs from nonfederal
sources for any amounts that it cannot support.
Either support or repay $441,027 disbursed for five unsupported
2009-AO-1002 5/5/2009 001-B $441,027
grants.
Repay $294,060 disbursed for three ineligible grants to its Road
2009-AO-1002 5/5/2009 001-A $294,060
Home program.
Require the Authority to propose a legal solution regarding the
ownership structure of the nonprofit organization. If a legal
solution is not possible, the Director should require the Authority to
2009-AT-1009 7/20/2009 002-A $256,950
repay its public housing program $221,531 in nonfederal funds or
the current amount owed that the Authority advanced to its
nonprofit organization.
Deposit $254,470 for the ineligible disbursements $236,439 +
$12,559 + $5,472. Cited in this report into the project’s reserve for
2009-BO-1009 8/4/2009 001-A $254,470
replacement or a restricted capital account that requires HUD
approval for the release of the funds.
Provide documentation to support the $282,000 expended to
acquire and dispose of the vacant commercial building or reimburse
2010-PH-1801 12/17/2009 001-B $248,160
the applicable program from nonfederal sources for any amounts
that it cannot support.
Repay $228,930 disbursed for five ineligible grants to its Road
2009-AO-1001 5/5/2009 001-A $228,930
Home program.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Agency to reimburse its program
2009-CH-1002 1/23/2009 003-A $211,680 from nonfederal funds for the Section 8 administrative $211,680
fees received related to its inappropriate program administration
cited in this finding.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to review the remaining 284
(333 minus 49) households claiming zero income as of October 2,
2008, to determine whether the households had unreported income.
2009-CH-1007 4/28/2009 002-D $183,889
For households that received excessive housing assistance and
utility allowance payments, the Authority should pursue collection
and/or reimburse its program the applicable amount from
nonfederal funds.
Provide documentation to support payments totaling $180,000 for
2010-PH-1801 12/17/2009 001-D insurance or reimburse HUD or the applicable program from $180,000
nonfederal sources for any amounts that it cannot support.
110
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse its low-rent
2009-CH-1011 7/31/2009 003-A housing program $136,500 from nonfederal funds for the former $136,500
executive director’s payments as the resident agent of the
nonprofits in addition to his salary.
Repays the voucher program fund from nonfederal sources $64,528
2009-KC-1005 3/2/2009 001-B $58,059
in improper housing assistance.
Reimburse HUD’s Federal Housing Administration insurance fund
2009-LA-1008 3/18/2009 001-A $73,750 less amounts repaid after the completion of the audit $52,875
($15,000) for the ineligible disbursements cited in this report.
We recommend that the Director, Office of Public Housing, New
2009-NY-1011 5/15/2009 002-G York, instruct Authority officials to seek repayment of $50,237 in $50,237
ineligible housing assistance payments
Provide documentation to support payments totaling $132,000 for
2010-PH-1801 12/17/2009 001-C vehicle services or reimburse HUD or the applicable program from $29,440
nonfederal sources for any amounts that it cannot support.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to pursue collection from the
2009-CH-1007 4/28/2009 001-C applicable households or reimburse its program $31,668 from $26,044
nonfederal funds for the overpayment of housing assistance due to
unreported income.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
2009-CH-1007 4/28/2009 001-A $25,074
$25,074 from nonfederal funds for the overpayment of housing
assistance cited in this finding.
Reimburse HUD’s program $66,934 from nonfederal funds
($60,637 for housing assistance payments and $6,297 in associated
2009-PH-1011 7/30/2009 001-B $25,014
administrative fees) for the 37 units that materially failed to meet
HUD’s housing quality standards.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to pursue collection from the
2009-CH-1007 4/28/2009 002-A applicable households or reimburse its program $41,044 ($41,569 $19,583
minus $525) from nonfederal funds for the overpayment of housing
assistance cited in this finding.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
2009-CH-1007 4/28/2009 001-H $19,071
$19,071 from nonfederal funds for the improper administrative fees
related to the households cited in this finding.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to provide support or
2009-CH-1007 4/28/2009 001-D reimburse its program $16,487 from nonfederal funds for the $14,336
unsupported overpayment of housing assistance and utility
allowances for the nine households cited in this finding.
Pursue double damages remedies against the responsible parties for
the ineligible/inappropriate and applicable portion of the
2009-BO-1009 8/4/2009 001-H $0
unsupported disbursements that were used in violation of the
project’s regulatory agreement.
111
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Pursue civil money penalties and administrative sanctions, as
appropriate, against the owner, operator, and/or their
2009-BO-1009 8/4/2009 001-I $0
principals/owners for their part in the regulatory violations cited in
this report.
We recommend that the Deputy Assistant Secretary for Single
Family Housing instruct the Office of Single Family Asset
2009-NY-0002 9/1/2009 001-A $0
Management to develop and implement controls to ensure that the
final Asset Control Area regulations are issued in a timely manner.
Revise the PBCA initiative guides (e.g., the monitoring and
evaluation guide and the Section 8 guidebook) to clarify
2009-SE-0003 9/1/2009 001-A inconsistencies or unclear guidance for monitoring the PBCAs $0
including clarification of PBCA performance that requires issuing
incentive fees or assessment of disincentives.
Ensure that HUD staff follow the revised guidance when
conducting the annual compliance reviews and monthly remote
2009-SE-0003 9/1/2009 001-B $0
reviews to ensure that it receives quality work and the best value
for funds spent on contract administration activities.
Reassess the resources allocated to overseeing the PBCAs to ensure
2009-SE-0003 9/1/2009 001-C $0
that the resources are sufficient to monitor their performance.
Recapture any shortfalls generated by the closure and deobligation
2009-AT-0001 9/28/2009 001-C $0
of fund balances associated with the open activities.
Establish and implement procedures to monitor the accuracy of
commitments that participating jurisdictions enter into the
information system. These procedures should include expanding
2009-AT-0001 9/28/2009 002-A $0
HUD’s risk rating system to include risk factors for this review area
and development of an appropriate monitoring checklist to ensure
consistency and thoroughness of coverage among field offices.
Review the 510 obligations which were not distributed to the
program offices during the open obligations review and deobligate
2011-FO-0003 11/15/2010 002-C $27,500,000
amounts tied to closed or inactive projects, including the $27.5
million we identified during our review as expired or inactive.
Determine the eligibility of the $9,027,082 disbursed for projects
with signs of slow progress and reevaluate the feasibility of these
activities. The Government of Puerto Rico must reimburse HUD
2010-AT-1011 8/25/2010 001-B $9,027,082
from non-Federal funds for activities that HUD determines to have
been terminated and reprogram and put to better use any
unexpended funds associated with the terminated activities.
Require the authority to provide support showing the eligibility and
reasonableness of $9,784,157 (Footnote 2: Total disbursements of
$13,371,572 were adjusted to consider $3,576,521 questioned in
2010-AT-1009 8/13/2010 001-A recommendation 1B and $10,894 questioned in recommendation $4,892,078
1C.) disbursed for the surveillance system and multifunction
printers or reimburse this amount to its operational fund account or
HUD, as appropriate, from non-Federal funds.
Require the Government of Puerto Rico or its designee to
reimburse the HOME program from non-Federal funds $4,428,179
2010-AT-1011 8/25/2010 001-A $4,428,179
for ineligible expenses and activities that defaulted or were
terminated without generating the intended benefits.
112
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to provide supporting
documentation or reimburse its program $3,861,652 ($3,483,294 in
2010-CH-1008 6/15/2010 001-A housing assistance payments plus $378,358 in associated program $3,861,652
administrative fees) from non-Federal funds for the housing
assistance payments and associated administrative fees for the
unsupported program projects cited in this finding.
Require the Department to reimburse its HOME treasury account
2010-AT-1006 6/11/2010 001-A from non-Federal funds $2,003,356 for disbursements associated $2,003,356
with terminated activities that did not meet HOME objectives.
Require the Authority to reimburse the net restricted assets fund
2010-AT-1010 8/23/2010 001-B account from non-Federal funds the $2,583,244 or the current $1,969,809
amount owed.
Require the authority to reimburse its operational fund account or
HUD, as appropriate, from non-Federal funds $3,576,521 paid for
2010-AT-1009 8/13/2010 001-B $1,788,260
equipment that did not provide the intended benefits and/or was
unaccounted for.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to review
the remaining 131 (202 minus 71) activities to determine whether
the households were income eligible and/or homes met HUD’s
2011-CH-1003 12/27/2010 001-D $1,580,000
property standards requirements at the time of occupancy. For the
activities that received improper assistance, the City should
reimburse its Program the applicable amount from non-Federal
funds.
Repay $1,300,000 in HOME project funds, plus any interest due, to
2010-LA-1013 7/8/2010 001-A $1,300,000
the HOME U.S. Treasury account.
Require the Department to collect $1,269,032 associated with the
2010-AT-1006 6/11/2010 003-A 17 overdue loans and put the program income generated to better $1,269,032
use in accordance with HUD requirements.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to provide
supporting documentation or reimburse its Program from non-
Federal funds, as appropriate, for the $760,000 in Program and/or
2011-CH-1003 12/27/2010 001-B Initiative funds used for the 60 households and/or activities for $720,000
which the City did not have sufficient income documentation to
demonstrate that households were income eligible and/or final
inspection reports or certifications supporting that activities met
HUD’s property standards requirements at the time of occupancy.
113
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that HUD’s Associate General Counsel for
Program Enforcement determine legal sufficiency and if legally
sufficient, pursue remedies under the Program Fraud Civil
Remedies Act (31 U.S.C 3801-3812) and/or civil money penalties
(24 CFR 30.35) against Security Atlantic and/or its principals for
incorrectly certifying to the integrity of the data or that due
diligence was exercised during the underwriting of six loans that
2010-NY-1806 9/22/2010 001-A $553,730
resulted in actual losses of $452,217 on five loans and the potential
loss of $101,513 on one loan, which could result in affirmative civil
enforcement action of approximately $1,152,460. Double damages
for actual loss amounts related to five loans ($452,217) and the
potential loss ($101,513) related to one loan ($553,730 x 2 =
$1,107,460) plus $45,000, which is a $7,500 fine for each of the six
loans with material underwriting deficiencies.
Require the Authority to provide support that $446,918 in contracts
2010-AT-1003 4/28/2010 001-I were fairly and openly competed or reimburse its public housing $446,918
and capital improvement program from nonfederal funds.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
$360,864 ($268,795 in housing assistance payments plus $92,069
2010-CH-1008 6/15/2010 002-A $360,864
in program-associated administrative fees) from non-Federal funds
for the overpaid housing assistance and associated administrative
fees cited in this finding.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
implement adequate procedures and controls to ensure that if the
ownership of additional homes acquired under its Afford-A-Home
program is transferred through foreclosures, the City recaptures the
entire amount of the Program and/or Initiative funds through the
2011-CH-1003 12/27/2010 002-B $300,000
receipt of net proceeds from the sales of the homes and/or
reimburses its Program from non-Federal funds for the Program
and/or Initiative funds provided to the home buyers, as appropriate.
This will ensure that over the next 12 months the City appropriately
recaptures Program and/or Initiative funds and/or reimburses its
Program from non-Federal funds totaling at least $90,000.
Deobligate $279,245 in available funds associated with the
2011-PH-1005 12/23/2010 003-B ineligible CHDO and reprogram the funds for other eligible HOME $279,245
activities, thereby putting the funds to better use.
Require the Authority to provide support for the $275,282 in capital
2010-AT-1003 4/28/2010 001-J fund drawdowns or reimburse its capital improvement program $275,282
from nonfederal funds.
Require the Authority to provide support for $264,229 in
2010-AT-1003 4/28/2010 001-F disbursements or repay any unsupported costs to its public housing $264,229
operating and capital improvement program from nonfederal funds.
114
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that HUD’s Associate General Counsel for
Program Enforcement determine legal sufficiency and if legally
sufficient, pursue remedies under the Program Fraud Civil
Remedies Act against Mac-Clair and/or its principals for
2010-CH-1808 7/22/2010 001-A $243,000
incorrectly certifying to the integrity of the data or that due
diligence was exercised during the underwriting of seven loans that
resulted in losses to HUD totaling $562,551 which could result in
affirmative civil enforcement action of approximately $1,177,602.
Provide documentation to demonstrate that $1,945,050 was used
2010-PH-1008 5/11/2010 001-B for eligible activities that met the criteria of its HUD-approved $227,772
budget line items or repay HUD from non-Federal funds.
We recommend that the Director, Office of Public Housing, New
York, instruct the Authority to reimburse from non-Federal funds
2010-NY-1011 4/7/2010 001-A $219,715
the $219,715 expended for ineligible costs as follows; $215,402 to
HUD, and $4,313 to the 2007 ROSS Family grant.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
$211,573 ($188,722 in housing assistance payments plus $22,851
2010-CH-1008 6/15/2010 003-A $211,573
in associated program administrative fees) from non-Federal funds
for the housing assistance and associated administrative fees for the
14 households cited in this finding.
Require the Authority to account for $134,889 in tenant rent
2010-AT-1003 4/28/2010 001-D receipts or repay any unsupported amounts to its public housing $134,889
operating program from nonfederal funds.
We recommend that the Director, Office of Public Housing, New
York, instruct the Authority to provide documentation for the
unsupported Family Self-Sufficiency and ROSS grant program
2010-NY-1011 4/7/2010 001-B $100,637
costs of $100,637 so that HUD can make an eligibility
determination. If adequate documentation cannot be provided,
these costs should be repaid from non-Federal funds.
Provide documentation to support that payments for goods and
services totaling $1,736,962 were fair and reasonable or reimburse
2010-PH-1012 7/27/2010 001-A $82,064
the applicable programs from non-Federal funds for any amounts
that it cannot support.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
2011-CH-1003 12/27/2010 001-A reimburse its Program from non-Federal funds for the $20,000 in $40,000
Program funds inappropriately used to assist activity numbers
10372 and 10793.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
$34,650 ($33,632 in housing assistance payments plus $1,018 in
2010-CH-1008 6/15/2010 001-B $34,650
associated program administrative fees) from non-Federal funds for
the inappropriate retroactive payments and associated
administrative fees for the two projects cited in this finding.
115
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Acting Director of HUD’s Detroit Office
of Public Housing require the Authority to take appropriate action
to determine whether the income discrepancies are valid and if so,
2010-CH-1007 5/14/2010 003-A pursue collection from the applicable households or reimburse its $32,649
program $43,599 ($32,047 in housing assistance payments plus
$11,552 in administrative fees) from non-Federal funds for the
overpayment of housing assistance cited in this finding.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
2011-CH-1003 12/27/2010 002-A reimburse its Program $30,000 from non-Federal funds for the $30,000
three homes that had been sold through a sheriff’s sale and
ownership of the homes had been transferred.
Require the Authority to support the $27,097 in unreasonable costs
2010-AT-1003 4/28/2010 001-H or reimburse its public housing and capital improvement program $27,097
from nonfederal funds.
We recommend that the Director, Office of Public Housing, New
York, instruct the Authority to reimburse from non-Federal sources
2010-NY-1010 4/7/2010 002-C $13,355
the low-rent program operating account for the ineligible
expenditure of $38,355.
We recommend that the Director, Office of Public Housing, New
York, instruct the Authority to strengthen controls over payroll
processing to ensure that employees properly account for time
2010-NY-1010 4/7/2010 002-B $3,398
worked, employee time records are signed, and adequate
segregation of duties is established in compliance with OMB
Circular 87.
Require the Authority to reimburse its public housing program
2010-AT-1003 4/28/2010 001-G $2,250
$2,250 for ineligible costs using non-federal funds.
Pursue all administrative and/or civil monetary penalties for the
2010-BO-0001 2/18/2010 001-O $0
regulatory and contract violations disclosed in this finding.
Require the Department to review all grant agreements for each
activity entered into HUD’s information system and correct any
2010-AT-1006 6/11/2010 004-B $0
inaccurate information, including funding amount, activity status,
and fund type classification.
Require the Department to develop and implement a financial
management system that permits the tracing of HOME funds to a
level which ensures that such funds have not been used in violation
2010-AT-1006 6/11/2010 005-F $0
of the restrictions and prohibitions of applicable statutes and funds
in the local account have been used before requesting additional
grant funds.
Recapture any shortfalls generated by the closure and deobligation
of funds associated with recommendations 1C and 1D that do not
meet statutory requirements for the timely commitment and
2010-AT-1011 8/25/2010 001-E $0
expenditure of funds pursuant to the National Defense
Authorization Act of 1991 and/or Title II of the Cranston-Gonzalez
National Affordable Housing Act, as amended.
Cease the changes being made to IDIS for the HOME program
2011-FO-0003 11/15/2010 001-A related to the FIFO rules until the cumulative effect of using FIFO $0
can be quantified on the financial statements.
116
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Change IDIS so that the budget fiscal year source is identified and
2011-FO-0003 11/15/2010 001-B attached to each activity from the point of obligation to $0
disbursement.
Cease the use of FIFO to allocate funds (fund activities) within
IDIS and disburse grant payments. Match outlays for activity
disbursements to the obligation and budget fiscal source year in
2011-FO-0003 11/15/2010 001-C $0
which the obligation was incurred, and in addition, match the
allocation of funds (activity funding) to the budget fiscal year
source of the obligation.
Include as part of the annual CAPER, a reconciliation of HUD's
grant management system, IDIS, to grantee financial accounting
2011-FO-0003 11/15/2010 001-D $0
records on an individual annual grant basis, not cumulatively, for
each annual grant awarded to the grantee.
Require its subrecipient, Greater Washington Urban League, to
implement a system for maintaining time records that track
2011-PH-1005 12/23/2010 004-D $0
employee time charges to the HOME program as required by
OMB.
Implement an effective communication process with the
2011-PH-1005 12/23/2010 004-E appropriate OCFO staff to ensure compliance with record-keeping $0
requirements for the HOME program.
Identify at least annually its universe of HOME program recipients
2011-PH-1005 12/23/2010 004-F and applicable projects to be reviewed and monitor this universe $0
including required onsite visits.
Establish a procedure, on an annual basis, on which to base future
funds obligated for administrative costs on actual administrative
2011-PH-1005 12/23/2010 004-G expenses. This procedure will ensure that any amount in excess of $0
actual expenditures is recommitted for use on eligible HOME
projects.
Direct responsible grantees to justify the use of $66,849,658 that it
2012-PH-0001 10/31/2011 001-B disbursed for cancelled Block Grant program activities or repay $66,849,658
HUD from non-Federal funds.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development We further recommend
that the Director of HUD’s Buffalo Office of Community Planning
and Development instruct the City to provide documentation to
2011-NY-1010 4/15/2011 002-B justify the $20,143,219 ($4,902,754 + $15,240,465) in unsupported $5,290,982
transactions recorded in the CDBG program income account. Any
receipts determined to be unrecorded program income should be
returned to the CDBG program, and any expenditures determined
to be ineligible should be reimbursed from non-Federal funds.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development require the City to suspend
incurring costs and/or reimbursing itself for costs paid from the
City’s municipal general expense account for economic
development activities until HUD determines whether the City has
2011-NY-1010 4/15/2011 002-A the capacity to carry out its CDBG economic development $4,739,829
activities in compliance with HUD regulations. If it is determined
that the City lacks the capacity, the $4,739,829 in economic
development projects funds remaining for fiscal years 2008, 2009,
and 2010 should be reprogrammed so the City can assure HUD that
these funds will be put to better use.
117
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Require the Municipality to put to better use $2,854,395 associated
2011-AT-1018 9/28/2011 002-D $2,854,395
with unexpended funds maintained in its local bank account.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
$2,828,244 ($2,609,362 in housing assistance payments and
2011-CH-1006 3/23/2011 003-A $2,828,244
$218,882 in associated administrative fees) from non-Federal funds
for the housing assistance payments and associated administrative
fees for the 146 households cited in this finding.
We recommend that HUD’s Acting Deputy Assistant Secretary for
Single Family Housing require Ameritrust officials to indemnify
HUD against any future losses on the 10 loans with material
2011-NY-1012 8/16/2011 001-A $2,742,810
underwriting deficiencies. The projected loss is $2,742,810 based
on HUD’s loss rate of 59 percent of the unpaid principal balance of
$4,648,830
Support or repay from non-Federal funds any amounts that it
cannot support, including $1,568,245 to its operating fund and
2011-AO-0001 6/22/2011 001-A $973,126 to its capital fund paid for (1) contracts that were $2,541,371
improperly procured, (2) contract overpayments, or (3) contract
payments made outside of the contract effective dates.
Require the Municipality to reimburse the HOME program from
2011-AT-1018 9/28/2011 002-C $2,449,751
non-Federal funds $2,263,799 paid for ineligible costs.
Determine the eligibility of the $2,399,428 disbursed for four
projects with signs of slow progress and reevaluate the feasibility
of the activities. Total disbursements of $3,483,086 were adjusted
2011-AT-1018 9/28/2011 001-A to consider $713,008 questioned in recommendation 2C and $2,399,428
$370,650 in recommendation 2A. The Municipality must
reimburse its HOME program from non-Federal funds for activities
that HUD determines to have been terminated.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to reimburse its program
2011-CH-1006 3/23/2011 002-A $2,303,853
$2,303,853 from non-Federal funds for the unallowable
transactions cited in this finding.
We further recommend that the Director of HUD’s Buffalo Office
of Community Planning and Development instruct the City to
provide documentation to justify the $1,982,988 in unsupported
2011-NY-1010 4/15/2011 001-C costs associated with street improvement expenditures incurred $1,982,988
between June 2007 and October 2009. Any unsupported costs
determined to be ineligible should be reimbursed from non-Federal
funds.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its Capital Fund
2011-CH-1012 8/9/2011 002-A $1,539,629
$1,539,629 from non-Federal funds for the ineligible payments
cited in this finding.
Require the Municipality to submit all supporting documentation
showing the eligibility and propriety of $1.5 million charged to the
2011-AT-1006 4/8/2011 002-A $798,000
HOME program for the development of the Villas de Felisa
housing project or reimburse the program from non-Federal funds.
Require the Municipality to reimburse its HOME program from
2011-AT-1018 9/28/2011 001-C non-Federal funds $766,480 for disbursements associated with $766,480
terminated activities that did not meet HOME objectives.
118
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development require the City to suspend
incurring costs and/or reimbursing itself for costs paid from the
City’s municipal general expense account for clean and seal
activities until HUD determines whether the City has the capacity
2011-NY-1010 4/15/2011 003-A $744,479
to carry out its CDBG clean and seal activities in compliance with
HUD regulations. If it is determined that the City lacks the
capacity, $744,479 in fiscal year 2010 clean and seal program
funds should be reprogrammed so the City can assure HUD that
these funds will be put to better use.
We further recommend that the Director of HUD’s Buffalo Office
of Community Planning and Development instruct the City to
provide documentation to justify the $716,622 ($545,607 + $24,069
2011-NY-1010 4/15/2011 003-C $716,622
+ $146,946) in unsupported clean and seal costs incurred so that
HUD can make an eligibility determination. Any costs determined
to be ineligible should be reimbursed from non-Federal funds.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to provide
supporting documentation or reimburse its Program from non-
Federal funds, as appropriate, for the $775,000 in Program funds
used for the 41 households and homes for which the City did not
have (1) sufficient income documentation to demonstrate that
2011-CH-1014 9/29/2011 001-B households were income eligible and or (2) final inspection reports $655,000
or certifications supporting that homes met HUD’s property
standards requirements at the time of occupancy. We did not
include $20,000 in Program funds used for activity number 9706
(02) for which the City did not have sufficient income
documentation to demonstrate that the household was income
eligible since we included it in recommendation 2A of this report.
Require the Municipality to submit all supporting documentation
showing the allowability and allocability of $1,062,991 disbursed
for participant families at the Villas de Felisa housing project or
reimburse this amount to its HOME treasury account or HUD, as
2011-AT-1006 4/8/2011 001-C $574,566
appropriate, from non-Federal funds. Footnote 6: Total
disbursements of $2,836,000 were adjusted to consider $1,500,000
questioned in recommendation 2A and $273,009ineligible in
recommendation 1D.
As related to DHAP, support or repay from non-Federal funds any
amounts that it cannot support for a total of $435,442 to its
operating fund, which includes (1) $140,966 and $96,525 disbursed
2011-AO-0001 6/22/2011 001-J to two DHAP case managers who were paid without an executed $435,442
contract and for unsubstantiated, excessive salary increases; and (2)
$197,951 disbursed to the three DHAP case managers for
unsubstantiated, excessive salary increases.
We recommend that the Director of HUD’s Detroit Office of Public
2011-CH-1012 8/9/2011 002-B Housing require the Commission to return the $411,228 in excess $411,228
capital fund draws cited in this finding.
119
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide supporting
2011-CH-1012 8/9/2011 002-D $394,683
documentation or reimburse its Capital Fund $394,683 from non-
Federal funds for the unsupported costs cited in this finding.
Review the $756,833 in unsupported costs at the two properties
2011-FW-0002 4/26/2011 001-E identified in this report, determine their validity, and take $386,562
appropriate action.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to provide supporting
2011-CH-1006 3/23/2011 002-B $330,457
documentation or reimburse its program $330,457 from non-
Federal funds for the unsupported transactions cited in this finding.
We recommend that the Director of HUD’s New York City Office
of Community Planning and Development instruct City officials to
provide documentation to justify the $329,937 in unsupported
2012-NY-1002 10/18/2011 001-B $329,937
salary costs incurred between June and September 2010. Any
unsupported costs determined to be ineligible should be reimbursed
from non-Federal funds
We further recommend that the Director of HUD’s Buffalo Office
of Community Planning and Development instruct the City to
2011-NY-1010 4/15/2011 003-B $304,506
reimburse from non-Federal funds the $304,506 related to
ineligible clean and seal code enforcement costs.
Require the Municipality to reimburse its HOME treasury account
or HUD, as appropriate, from non-Federal funds $273,009 paid for
2011-AT-1006 4/8/2011 001-D $255,989
land acquired for the Villas de Felisa housing project that did not
provide the intended benefits.
1A. Require the Municipality to reimburse its HOME treasury
account or HUD, as appropriate, from non-Federal funds
$4,433,035 for disbursements associated with two activities that did
2011-AT-1006 4/8/2011 001-A $199,037
not meet HOME program objectives. Footnote 5: Total
disbursements of $4,444,697 were adjusted to consider $11,662
questioned in recommendation 2B.
We recommend that HUD’s Acting Deputy Assistant Secretary for
Single Family Housing require Ameritrust officials to reimburse
2011-NY-1012 8/16/2011 001-B HUD for the loss of $183,327 that resulted from the amount of the $183,327
claim and associated fees paid on one loan with material
underwriting deficiencies.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its appropriate
2011-CH-1012 8/9/2011 003-A $180,649
programs $180,649 from non-Federal funds for the ineligible
payments cited in this finding.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its Capital Fund
2011-CH-1012 8/9/2011 004-A $127,050
$127,050 from non-Federal funds for the ineligible payments cited
in this finding.
We recommend that the Acting Director of the HUD New Jersey
Office of Public Housing instruct Authority officials to repay the
2011-NY-1013 9/1/2011 001-A $122,785
$1,052,935 add-on subsidy incentive the Authority received, to
which it was not entitled, from 2006 through 2010.
120
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development reimburse from non-
2011-NY-1010 4/15/2011 001-B Federal funds $162,923 ($134,711+$28,212) expended on $120,199
ineligible costs pertaining to street improvement projects not done
and a duplicate reimbursement.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its operating fund
2011-CH-1012 8/9/2011 004-B $107,692
$107,692 from non-Federal funds for ineligible payments cited in
this finding.
We recommend that the Director of HUD’s Chicago Office of
Public Housing require the Authority to provide supporting
2011-CH-1006 3/23/2011 003-B documentation or reimburse its program $69,793 from non-Federal $69,793
funds for the O’Hare Modernization Program funds received for the
seven households cited in this finding.
We recommend that the Director of Public Housing, Detroit Office,
require the Commission to reimburse wage restitution of $66,210 to
2011-CH-1018 9/30/2011 003-A $66,210
its force account staff and provide proof that the payments were
made to HUD’s Office of Labor Relations.
We also recommend that the Director of Public Housing, Detroit
Office, to recapture all funds that the Commission obligated for
unit turnovers by its force account for transmission to the U.S.
Treasury. This amount includes the work item for cycle painting
2011-CH-1018 9/30/2011 003-F $36,231
and carpet removal work by its force account for $24,149 and
$12,082 that was inappropriately obligated due to the
Commission’s conflict-of-interest relationship that has not been
spent.
We recommend that the Director of HUD’s New York City Office
of Community Planning and Development instruct City officials to
reimburse from non-Federal funds $93,436 for ineligible costs
2012-NY-1002 10/18/2011 001-A $34,006
charged to HPRP; specifically, $59,430 related to payments for
rental arrears over the 6-month eligibility requirement and $34,006
for payments issued directly to participants.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide supporting
2011-CH-1012 8/9/2011 003-B $29,112
documentation or reimburse its appropriate programs $30,236 from
non-Federal funds for the unsupported costs cited in this finding.
Return the $81,153 in ineligible draws to HUD subject to the 90
2011-KC-1002 3/1/2011 001-B percent limitation on the obligation period and repay the remaining $26,411
amount to the project from non-Federal funds.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
2011-CH-1014 9/29/2011 001-A reimburse its Program from non-Federal funds for the $20,000 in $20,000
Program funds inappropriately used to assist activity number
(including the OIG-designated household number) 8917 (11).
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
2011-CH-1014 9/29/2011 002-A reimburse its Program $20,000 from non-Federal funds for the $20,000
home that had been sold through a sheriff’s sale and ownership of
the home had been transferred.
121
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse HUD $17,500 from
non-Federal funds for contract work involving repairs to the
2011-CH-1018 9/30/2011 002-E $17,500
Commission’s sidewalks and driveways and brickwork that were
not completed for HUD to recapture and transmit to the U.S.
Treasury.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its Capital Fund
2011-CH-1012 8/9/2011 002-F $13,085
$13,085 from non-Federal funds for the inappropriately earned
interest cited in this finding.
Require the Municipality to submit all supporting documentation
2011-AT-1006 4/8/2011 002-B showing the eligibility and propriety of $23,862 drawn from HUD $12,130
or reimburse the HOME program from non-Federal funds.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse HUD $11,205 for
2011-CH-1018 9/30/2011 002-F the physical needs assessment paid with its Recovery Act funds for $11,205
HUD to recapture and transmit to the U.S. Treasury. However, the
Commission could pay for the activity with its 2010 capital funds.
Require the subrecipient to support the $2,269,867 drawn from the
2011-LA-1016 8/18/2011 001-C U.S. Treasury or reimburse its HOME program from non-Federal $10,778
funds.
We recommend that the Director of Public Housing, Detroit Office,
require the Commission to reimburse HUD $9,322 from non-
2011-CH-1018 9/30/2011 003-C Federal funds, due to the conflict-of-interest relationship, for $9,322
transmission to the U.S. Treasury for the inappropriate use of grant
funds.
Require the Municipality to submit supporting documentation
showing the allocability of $39,338 and any additional payroll costs
charged to the HOME program between July 1, 2009, and June 30,
2011-AT-1018 9/28/2011 002-B $6,875
2011, associated with the three employees performing other
functions not related to the program, or reimburse the program
from non-Federal funds.
Provide support for the $90,534 drawn for unsupported costs or
return the funds to HUD subject to the 90 percent limitation on the
obligation period and repay the remaining amount to the project
2011-KC-1002 3/1/2011 001-A $5,079
from non-Federal funds. This support includes verifying that the
Authority appropriately reimbursed the $80,716 via voucher 092-
519938.
We also recommend that the Director of Public Housing, Detroit
Office to recapture the remaining $3,851 that the Commission
2011-CH-1018 9/30/2011 002-G $3,851
obligated but had not expended for repairs to its sidewalk,
driveway, and brickwork for transmission to the U.S Treasury.
We recommend that HUD’s Acting Deputy Assistant Secretary for
Single Family Housing require Ameritrust officials to ensure that
2011-NY-1012 8/16/2011 001-C $3,843
borrowers have been reimbursed $3,843 for unallowable excessive
loan discount and second appraisal fees.
Require Prospect to reimburse HUD $344,326 for the actual loss
2011-AT-1011 7/8/2011 001-A $0
sustained on five claim-terminated loans that HUD sold.
122
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Require Prospect to reimburse HUD for potential losses on three
claim-terminated loans that HUD has not resold. We estimate the
losses to be $202,655 (Footnote 6): We calculated the potential loss
2011-AT-1011 7/8/2011 001-B for recommendations 1B and 1C using the 59 percent average loss $0
rate determined by HUD for the 2010 fiscal year for real estate
owned properties that it sold. We applied the loss rate to the
unpaid principal balances for loans listed in appendices C and D.
Require Prospect to indemnify HUD against $1,694,217 in
2011-AT-1011 7/8/2011 001-C $0
potential losses on 17 defaulted loans.
Require Prospect to pay down the principal balance by $3,276 for 4
2011-AT-1011 7/8/2011 001-D over-insured loans. If HUD has paid a claim on any of these loans $0
then it should remit the payment to HUD.
Determine legal sufficiency, and if legally sufficient, pursue civil
action against Prospect and its underwriters for incorrectly
certifying to the integrity of the data or that due diligence was
2011-AT-1011 7/8/2011 001-H exercised during the underwriting of 25 loans that placed the FHA $0
insurance fund at risk for $550,257 in questioned costs and
potential losses of $1,694,217. The penalty amount will be
determined through a separate civil process.
Take appropriate administrative action against Prospect and
underwriters A, B, C, F, G, and H for not complying with HUD
2011-AT-1011 7/8/2011 001-I $0
requirements. The underwriters were responsible for the violations
identified in appendices C and D.
Require the Municipality to update its accounting records and
ensure that receipts and expenditures are properly accounted for,
2011-AT-1018 9/28/2011 002-F $0
are reconciled with HUD’s information system, and comply with
HUD requirements.
Require the Municipality to develop and implement a financial
management system in accordance with HUD requirements,
including that HOME funds can be traced to a level which ensures
2011-AT-1018 9/28/2011 002-G $0
that such funds have not been used in violation of the restrictions
and prohibitions of applicable statutes and that funds are disbursed
in a timely manner.
We recommend that the Director of HUD’s Chicago Office of
Public Housing, in conjunction with the Director of HUD’s
Departmental Enforcement Center take administrative action
2011-CH-1006 3/23/2011 001-A $0
against the executive director and board of commissioners for
failing to administer the Authority according to HUD’s and its own
requirements.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
implement adequate procedures and controls to ensure that if the
ownership of additional homes acquired under its Housing Trust
2011-CH-1014 9/29/2011 002-B Fund program is transferred through foreclosures, the City $0
recaptures the entire amount of the Program funds through the
receipt of net proceeds from the sales of the homes or reimburses
its Program from non-Federal funds for the Program funds
provided to the home buyers as appropriate.
123
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of Public Housing, Detroit Office,
require the Commission to identify the specific units assigned to
each maintenance staff member for phase II unit turnover work and
to the contractor for phase III unit turnover work and provide
support to show when each unit was assigned, what work was to be
2011-CH-1018 9/30/2011 003-B done, who worked in the units, and when the work was performed, $0
showing the days and hours spent in each unit until it was approved
as completed. If the Commission cannot provide satisfactory
records to support unit turnover costs and that duplicate unit
turnover work was not performed, HUD should require that these
costs be returned to HUD.
Refer the lender to the Mortgagee Review Board to take
appropriate administrative action, such as imposing civil money
2011-LA-1017 9/21/2011 001-A penalties for the 15 loans due to the lender’s failure to underwrite $0
loans in compliance with HUD regulations and the unallowable
restrictive covenants.
We further recommend that the Director of HUD’s Buffalo Office
of Community Planning and Development instruct the City to
2011-NY-1010 4/15/2011 002-C certify and provide support that the proper amount of CDBG assets $0
was returned to the City from the subrecipient by performing an
audit of the accounts that the Corporation maintained.
We further recommend that the Director of HUD’s Buffalo Office
of Community Planning and Development instruct the City to
establish and implement controls that will ensure adequate
2011-NY-1010 4/15/2011 002-D monitoring of subrecipient-administered activities, that CDBG $0
funds are properly safeguarded, the achievement of performance
goals in subrecipient supported activities, and that corrective
actions are taken for nonperforming subrecipients.
We further recommend that the Director of HUD’s Buffalo Office
of Community Planning and Development instruct the City to
develop administrative control procedures that will ensure
2011-NY-1010 4/15/2011 003-D $0
compliance with CDBG program requirements, including ensuring
that costs are eligible and necessary before being charged to the
program.
We recommend that HUD’s Acting Deputy Assistant Secretary for
Single Family Housing require Ameritrust officials to establish
procedures to ensure that their quality control plan is implemented
in accordance with HUD requirements, including but not limited to
2011-NY-1012 8/16/2011 002-A $0
revising the plan to ensure that it includes all basic and specific
requirements and ensuring that all required documentation
supporting the performance of quality control reviews is retained in
the quality control files.
We also recommend that HUD’s Associate Deputy Assistant
Secretary for Single Family Housing verify the lender’s
2011-NY-1012 8/16/2011 002-B $0
implementation of corrective actions taken with regard to its quality
control plan.
We also recommend that HUD’s Associate Deputy Assistant
Secretary for Single Family Housing due to the materiality of the
quality control violations, several of which were previously cited
2011-NY-1012 8/16/2011 002-C $0
during a HUD review, consider referring the lender to the
Mortgagee Review Board for an assessment of civil money
penalties.
124
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Establish and implement procedures to reassess the safe harbor
percentage and rates periodically to ensure that they are reasonable.
HUD should retain the documentation justifying the calculation of
2012-LA-0001 11/16/2011 001-A those percentages and rates. In addition, HUD should assess the $0
feasibility of requiring the agencies to periodically justify and
retain documentation showing the reasonableness of using the
maximum rates, or lower them as appropriate.
Implement policies and procedures requiring HUD to periodically
2012-PH-0001 10/31/2011 001-A use the data contained in its System to provide improved oversight $0
of cancelled Block Grant program activities.
Implement policies and procedures requiring HUD to periodically
2012-PH-0001 10/31/2011 001-C use the data contained in its System to provide improved oversight $0
of long-standing open Block Grant program activities.
Implement policies and procedures requiring HUD to periodically
2012-PH-0001 10/31/2011 001-D use the data contained in its System to provide improved oversight $0
of revised Block Grant program activities.
Periodically evaluate the adequacy of actions grantees take
2012-PH-0001 10/31/2011 001-E regarding cancelled and long-standing open or revised activities $0
shown in its System.
Reimburse its business development loan program $5,999,894 from
2013-PH-1001 10/31/2012 001-A non-Federal funds for the ineligible expenditures related to the $5,999,894
Hotel Sterling project.
Require the Municipality to develop and implement a financial
management system in accordance with HUD requirements and
ensure that $3,213,572 in HOME funds drawn from HUD between
July 1, 2009, and December 31, 2011, can be traced to a level
which ensures that such funds have not been used in violation of
2012-AT-1009 5/23/2012 001-A the restrictions and prohibitions of applicable statutes or reimburse $3,213,572
the HOME program from non-Federal funds.(Footnote 2) Total
disbursements of $3,523,723 were adjusted to consider $173,978
questioned in recommendation 1B, $86,567 questioned in
recommendation 1D, and $49,606 questioned in recommendation
2B.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse HUD $3,120,000
from non-Federal funds for transmission to the U.S. Treasury for its
2012-CH-1013 9/27/2012 001-A $3,120,000
four Recovery Act grant funds for category 4, option 2 of HUD’s
Notice of Funding Availability, dated June 3, 2009, whose
activities were not contracted using full and open competition.
Support or repay $2,048,750 for the CDBG-purchased land sold or
2012-FW-1803 4/10/2012 001-E $2,048,750
donated for the minor league baseball park.
Provide adequate documentation to show that affordability
2012-PH-1011 8/3/2012 001-F requirements were met for three rental projects or repay the $1,272,325
Program $1,272,325 from non-Federal funds.
Repay the Program $1,235,940 from non-Federal funds for funds
2012-PH-1011 8/3/2012 001-C $1,235,940
disbursed for a project that was acquired but not completed.
Repay the Program the $1,025,654 it was previously asked to repay
2012-PH-1011 8/3/2012 001-B $1,025,654
for funds disbursed to an ineligible development organization.
125
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Use its resources available of approximately $615,703 in
2012-PH-1011 8/3/2012 001-L administrative funds to strengthen its administration of the $615,703
Program.
Determine the eligibility of the $537,773 disbursed for the Ciudad
de Ensueño project and reevaluate the feasibility of the activity.
(Footnote 9) Total disbursements of $538,973 were adjusted to
2012-AT-1009 5/23/2012 002-B $537,773
consider $1,200 questioned in recommendation 1F. The
Municipality must reimburse its HOME program from non-Federal
funds if HUD determines the activity to have been terminated.
Reprogram $464,060 in committed set-aside funds for other
2012-PH-1011 8/3/2012 001-D $464,060
eligible activities, thereby putting the funds to better use.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City Officials to
reimburse the City’s CDBG line of credit $ $475,339 from non-
2012-NY-1011 8/15/2012 002-A Federal funds for the unreported ($267,141) and unremitted $456,869
($208,198) in program income from the sale of the theater and four
properties; and record these reimbursements in HUD’s Integrated
Disbursement and Information System as CDBG program income.
Require the Authority to reimburse its public housing operating
2012-AT-1012 6/1/2012 001-A $443,807
fund $522,125 using non-Federal funds.
We recommend that the Director of HUD’s Detroit Office of Public
Housing determine the amount of the $573,170 of coordinator grant
2012-CH-1012 9/27/2012 001-K funds that were actually earned by the Commission for meeting the $299,750
program’s requirements. The funds that are determined to be
unearned should be reimbursed to HUD from non-Federal funds.
We recommend that the Program Center Coordinator of the
Hartford Office of Public Housing support that $2,506,434 in
2012-BO-1002 3/14/2012 001-J contract costs charged to Federal programs was reasonable and $269,023
supportable, and repay any amounts it cannot support with non-
Federal funds.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City Officials to
2012-NY-1011 8/15/2012 002-B provide documentation to enable HUD to determine whether the $263,938
City is entitled to additional program income of $263,938 from the
disposition of the Church property.
Reimburse $897,821 from non-Federal funds for using Brownfields
2012-LA-1005 3/13/2012 001-E grant funds after the grant agreement expenditure deadline, plus $249,058
any interest due, to HUD’s Brownfields account.
Support that $304,780 in Recovery Act change orders was provided
2012-KC-1002 3/2/2012 002-B at a reasonable cost and repay any amount determined to be $216,529
unreasonable from non-Federal funds to the U.S. Treasury.
Require the Municipality to submit supporting documentation
evidencing the income eligibility of the participants assisted with
2012-AT-1009 5/23/2012 001-B $173,978
$173,978 in HOME funds or reimburse the program from non-
Federal funds.
Repay the Program $150,000 from non-Federal funds for operating
2012-PH-1011 8/3/2012 001-A $150,000
funds it disbursed to two ineligible development organizations.
Require the project’s cooperative ownership to support $133,904 in
2012-LA-1006 5/21/2012 002-B $133,904
unsupported costs or repay the project from non-Federal funds.
126
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Establish and implement sufficient written procedures and controls
for documenting shareholder interest and the funding and
2012-LA-1006 5/21/2012 003-A $127,303
maintenance of the general operating reserve account, which would
ensure that $127,303 in funds can be put to better use.
Require the Municipality to submit supporting documentation
showing the allocability and eligibility of $114,139 charged to the
2012-AT-1009 5/23/2012 001-C $114,139
HOME program for project delivery costs or reimburse the
program from non-Federal funds.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City Officials to
2012-NY-1011 8/15/2012 001-B $93,500
reimburse the City’s CDBG line of credit from non-Federal funds
for the $150,000 ineligible loan.
Provide adequate documentation for $86,575 in salaries and office
2012-PH-1011 8/3/2012 001-G expenses related to down payment assistance activities or repay the $86,575
Program from non-Federal funds.
Require Amar Plaza to seek indemnification of $75,038 in paid
legal costs, $72,246 in outstanding costs, and future legal costs
from the two shareholders who improperly executed the deed and
2012-LA-1006 5/21/2012 001-C $73,964
note and named Rampart as the beneficiary and retain the two
shareholders’ subscription price for liquidated damages incurred for
the unauthorized encumbrance on the project.
Review the 270 obligations with remaining balances totaling
2013-FO-0003 11/15/2012 006-B $432,147 and close out and deobligate amounts tied to obligations $64,088
that are no longer valid or needed.
Reimburse $625,000 from non-Federal funds for using Brownfields
2012-LA-1005 3/13/2012 001-C grant funds for an ineligible project after the grant agreement $58,922
deadline, plus any interest due, to HUD’s Brownfields account.
We recommend that the program center coordinator of HUD’s
Office of Public and Indian Housing require the Authority to
provide documentation to support HUD’s approval of its waiver
2012-CH-1009 8/3/2012 003-A $46,782
requests or reimburse HUD $46,828 from non-Federal funds for
transmission to the U.S. Treasury for the Recovery Act grant funds
used to purchase materials manufactured outside the United States.
Repay from non-Federal funds the $91,218 paid to Diversified
2012-AO-1002 7/30/2012 004-A $46,417
Ventures, which created a conflict of interest.
Repay $3,817,000 from non-Federal funds for the use of Section
2012-LA-1005 3/13/2012 001-A 108 loan funds for an ineligible project, plus any interest due, to $29,650
HUD’s Section 108 loan account.
We recommend that the program center coordinator of HUD’s
Office of Public and Indian Housing require the Authority to
2012-CH-1009 8/3/2012 001-B provide documentation to show that the contract costs for the $26,875
testing of asbestos were reasonable or reimburse HUD $26,875
from non-Federal funds for transmission to the U.S. Treasury.
Provide supporting documentation showing that income eligibility
requirements were met for the rehabilitation assistance case, and to
2012-PH-1011 8/3/2012 001-H support the excess rehabilitation funds spent or reimburse the $26,645
Program $26,645 in assistance funds provided from non-Federal
funds.
127
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its program $21,650
2012-CH-1012 9/27/2012 001-A $19,719
from non-Federal funds for the overpayment of escrow funds to the
participants cited in this finding.
Support that $1,570,038 in Recovery Act contracts awarded was
2012-KC-1002 3/2/2012 001-A granted at a reasonable cost and repay the U.S. Treasury from non- $19,575
Federal funds any amount determined to be unreasonable.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse $22,430 ($16,335 +
2012-CH-1002 1/26/2012 003-B $6,095) from non-Federal funds to HUD for transmission to the $17,946
U.S. Treasury for the projects that had Section 3 funds included but
not remitted to the Commission’s Section 3 training fund.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide supporting
2012-CH-1012 9/27/2012 001-H $16,335
documentation or reimburse its program $17,008 from non-Federal
funds for the unsupported payments cited in this finding.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse $11,289 (the
difference between the contract paid price of $33,638 and the lesser
2012-CH-1002 1/26/2012 006-A $10,573
calculated cost of $ 22,349) from non-Federal funds to HUD for
transmission to the U.S. Treasury for the cost savings cited in this
finding.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to obtain documentation to
2012-CH-1011 9/27/2012 001-A support that employees were paid in accordance with the Davis- $6,820
Bacon Act, or reimburse the employees $6,820 from non-Federal
funds for the unsupported wages cited in this report.
Require the project’s cooperative ownership to repay the operating
2012-LA-1006 5/21/2012 002-A account the $4,921 in ineligible or unreasonable expenses from $4,921
non-Federal funds.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
repay from non-Federal funds the ineligible costs of $5,291. The
ineligible costs include a double payment of $3,554 for electrical
work related to the 34 Morton Avenue rehabilitation activity, a
2013-NY-1001 12/6/2012 001-A $3,554
payment of $1,033 for a former City employee’s unused vacation
time that was accrued before the award of the CDBG-R grant and
charged to the Albany Community Development Agency’s
rehabilitation administration activity, and $704 charged to the
Agency’s rehabilitation administration activity.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse $680 to HUD
2012-CH-1011 9/27/2012 002-A $680
from non-Federal funds for transmission to the U.S. Treasury for
the one range and one refrigerator that were improperly replaced.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to pursue collections from the
2012-CH-1011 9/27/2012 001-B subcontractor and provide support for corrective payments made to $537
its employee or reimburse the contractor’s employee $537 from
non-Federal funds.
128
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Take appropriate administrative sanctions against the executive
director, including but not limited to debarment from HUD
2012-AO-1002 7/30/2012 002-I $0
programs, for the disbursement of Federal funds prohibited by
HUD requirements.
Take appropriate administrative sanctions against the executive
2012-AO-1002 7/30/2012 003-D director and board members, up to and including debarment, for the $0
disbursement of Federal funds prohibited by HUD requirements.
Take appropriate administrative sanctions against the executive
2012-AO-1002 7/30/2012 004-D director, up to and including debarment, for the disbursement of $0
Federal funds prohibited by HUD requirements.
Require the Municipality to review all grant agreements for each
activity entered into HUD’s information system and correct any
2012-AT-1009 5/23/2012 003-C inaccurate information, including the address of HOME-funded $0
activities, project completion date, fund type classification, activity
type and description, funding amount, and activity status.
Take appropriate administrative action, including possible
2012-FW-1008 6/1/2012 001-H $0
debarment, against the executive director and commissioners
Repay HUD the higher of the cost or market value of the properties
2012-FW-1803 4/10/2012 001-B purchased with CDBG funds that the Authority still owns (book $0
value is $3,122,900).
Support or repay the higher of the cost or market value of the
2012-FW-1803 4/10/2012 001-F property identified as Block 78 (property north of Hartford $0
building).
Ensure that HUD receives repayment for routine inspections that
were not conducted by field service managers between June 2011
2012-LA-0003 9/18/2012 001-G and February 2012 and ensure that repayment is received for $0
inspections that were not provided by asset managers between June
2011 and March 2012.
Identify at least annually its universe of program subrecipients,
2012-PH-1011 8/3/2012 001-J development organizations, and applicable projects to be reviewed $0
and perform monitoring according to Program requirements.
Develop and implement a financial management system in
2013-AT-1001 11/30/2012 001-A $0
accordance with HUD requirements.
Develop and implement formal financial management policies and
procedures to require an annual evaluation by OCFO and
2013-FO-0003 11/15/2012 003-C $0
applicable program offices of all allowance for loss rates and other
significant estimates currently in use to ensure appropriateness.
Develop internal controls to review field office compliance more
frequent than every 4 years, especially when findings have been
identified in the past, and to ensure that action plans operate
2013-FO-0003 11/15/2012 004-B $0
effectively and have addressed the deficiencies noted so that
noncompliance is not repeated during the next quality management
review.
129
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
establish and implement controls to ensure that CDBG-R activities
2013-NY-1001 12/6/2012 001-C are administered efficiently and effectively, funds have been used $0
only for eligible activities, costs incurred are necessary and
reasonable, national objectives have been attained, and
performance goals are being achieved.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
2013-NY-1001 12/6/2012 001-D establish and implement controls to ensure that grant- and subgrant- $0
supported activities are adequately monitored and administered to
ensure compliance with program regulations.
Transition the PHA NRA excess funds, which are as much as
2014-FO-0003 12/16/2013 002-A $643.6 million as of June 30, 2013, to HUD’s control as soon as $248,239,577
possible to safeguard the program resources.
Indemnify HUD against losses for the 725 FHA-insured loans with
an unallowable gift in the amount of $97.3 million, thereby putting
2013-LA-1008 8/20/2013 001-B $55,439,896
an estimated loss to HUD of $55.4 million to better use. See
appendixes D and E.
Review and de-obligate, as appropriate, the $43 million in expired
2014-FO-0002 12/13/2013 001-C property-related contracts once they have been closed out by the $43,000,000
contracts office.
We recommend that the Director of HUD’s Detroit Office of
Multifamily Housing Programs require the Authority to ensure that
2013-CH-1011 9/30/2013 001-A $31,148,477 in residual receipts for the 15 projects as of May 31, $31,148,477
2013, is used to reduce or offset housing assistance payments in
accordance with HUD’s requirements.
Review and deobligate at least $26 million tied to 215 inactive
2014-FO-0003 12/16/2013 008-F $26,000,000
and/or expired Section 8 obligations.
Deobligate $12,755,325 tied to 165 administrative obligations and
$2,734,967 tied to 25 program obligations marked for deobligation
during the department-wide unliquidated obligations review.
Additionally, the Office of Housing should review the 429
2014-FO-0003 12/16/2013 008-D obligations with remaining balances totaling $5,764,905 and close $21,255,197
out and deobligate amounts tied to obligations that are no longer
valid, either based on the criteria defining the availability of
appropriations at 31 U.S.C. 1301 or the criteria for recording
obligations at 31 U.S.C. 1501.
Research and deobligate at least $9.3 million tied to the 115
2014-FO-0003 12/16/2013 008-E $9,300,000
inactive and/or expired Section 202/811 funding lines.
Deobligate $7,263,662 tied to 178 administrative obligations
2014-FO-0003 12/16/2013 008-O marked for deobligation during the department-wide unliquidated $7,263,662
obligations review.
130
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Ensure that the Authority recovers from non-Federal sources
$5,496,367 in disposition sales proceeds that was not received from
2013-DE-1005 9/30/2013 001-A the sale of its 65 low-income public housing units and use the $5,496,367
recovered funds for their intended purposes or return those funds to
HUD within a reasonable period.
Repay the $5,178,293, transferred without proper HUD approval
2013-LA-1003 3/14/2013 001-A and used for ineligible expenses, to the trust fund from non-Federal $5,178,293
funds.
Provide for HUD review documentation to support $5,014,403
2014-PH-1001 12/17/2013 001-C $5,014,403
drawn for the additional 15 activities.
Provide to HUD a remediation plan for the 10 delayed activities
2014-PH-1001 12/17/2013 001-B and demonstrate that national objectives have been met as required $4,078,941
to support $4,078,941 in program funds drawn for the activities.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to provide supporting
documentation or reimburse its operating reserve fund $4,003,683
($3,610,666 + $227,500 + $111,856 + $39,189 + $14,472) from
2013-CH-1003 7/15/2013 001-D $4,003,683
non-Federal funds for the unsupported salary and benefit payments;
operating contribution payments; and lawn maintenance, snow
removal, utility, and training costs for the developments and
program cited in this finding.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse its capital fund
2013-CH-1003 7/15/2013 001-A $3,569,942
$3,569,942 ($3,319,942 + $250,000) from non-Federal funds for
the ineligible drawdowns and disbursements cited in this finding.
Deobligate the $1,419 tied to three administrative obligations
marked for deobligation during the department-wide unliquidated
obligations review. Additionally, OCFO should review the 42
obligations with remaining balances totaling $3,115,954 and close
2014-FO-0003 12/16/2013 008-K $3,117,373
out and deobligate amounts tied to obligations that are no longer
valid, either based on the criteria defining the availability of
appropriations at 31 U.S.C. 1301 or the criteria for recording
obligations at 31 U.S.C. 1501
Determine how much of the $7,010,079 in unreimbursed
expenditures for damage assessment was paid with Federal funds
and repay that amount to the appropriate program. If the Authority
2013-FW-1006 6/19/2013 002-E $2,971,168
is unable to accurately determine the amount due to-due from each
program and support that funds charged to Federal programs were
appropriate, the full $7,010,079 should be repaid to HUD.
Repay from non-Federal funds the $3,811,279 it owes HUD for
2013-FW-1006 6/19/2013 002-C $2,888,889
ineligible expenditures from DHAP-Ike funds.
Determine how much of the $2,827,829 in unreimbursed
expenditures for Cypresswood Estates was made with Federal
funds and repay that amount to the appropriate program. If the
2013-FW-1006 6/19/2013 002-D Authority is unable to accurately determine the amount due to-due $2,827,829
from each program and support that funds charged to Federal
programs were appropriate, the full $2,827,829 should be repaid to
HUD.
131
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse its operating
2013-CH-1003 7/15/2013 001-B reserve fund $2,773,976 ($2,583,429 + $190,547) from non- $2,773,976
Federal funds for the inappropriate transfers to its cost center and
salary and benefit payments cited in this finding.
Provide documentation to support the $2,455,162 in unsupported
2014-PH-1001 12/17/2013 001-A funds drawn for 12 activities or repay the amount to its program $2,455,162
from non-Federal funds.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
expend or reprogram to other eligible program activities the
2013-NY-1010 9/26/2013 001-A $2,451,645
$2,451,645 in CDBG program income maintained in the City’s
community development bank accounts as of June 30, 2013, so the
City can assure HUD that these funds have been put to better use.
Repay $2,678,698 in 2009 Recovery Act funds to HUD, which will
return the funds to the U. S. Treasury, or provide eligible costs that
it obligated and expensed before the deadlines. HUD should take
care to ensure that other expended funds are not improperly shifted
2013-FW-1004 4/12/2013 001-A $2,282,508
to Recovery Act funds, as HUD’s policy stated that public housing
agencies must use the funds provided in this grant to supplement
expenditures, not to supplant expenditures from other Federal, State
or local sources or funds independently generated.
Submit supporting documentation showing the eligibility,
reasonableness, and allocability of $1,829,165 charged to the Block
Grant program for payroll expenses that were not properly
accounted for in the Municipality’s accounting records and for
$422,393-Footnote 2: Amount includes $385,164 of rent charges
2013-AT-1003 3/22/2013 001-B between July 2009 and June 2012, and $37,228 charged to the $2,251,558
Block Grant program, associated with administrative and other
activity related expenses paid between July 2009 and August 2011.
in administrative expenses and other activity-related costs that were
not properly supported or reimburse the program from non-federal
funds.
Require the State to provide supporting documentation for the
2014-AT-1004 12/30/2013 001-B $2,158,715 acquisition of property for projects W19, S21, and S20 $2,158,715
or reimburse the program from non-Federal funds.
Provide support for $6,637,341 in unsupported costs or repay the
2013-LA-1004 4/23/2013 001-B $1,895,482
CDBG program from non-Federal funds.
Provide adequate supporting documentation for the $1,628,130 in
2013-LA-1010 9/20/2013 001-A unsupported salary and benefit costs or repay the CDBG program $1,628,130
from non-Federal funds.
Reimburse its HOME program $1,595,113 from non-Federal funds
2013-LA-1009 9/13/2013 001-A for HOME funds that were inappropriately used on Section 8 $1,595,113
housing assistance payments.
Provide supporting documentation or reimburse its program
2013-AT-1008 9/30/2013 002-A $1,081,092 in unsupported expenditures related to activities 429, $1,081,092
526, 637, and 672 from non-Federal funds.
132
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Require the Municipality to provide support showing the
allocability and eligibility of $1,077,577 spent on salaries and
fringe benefits for employees who performed local government
2013-AT-1003 3/22/2013 002-B duties and multiple federally funded activities without properly $1,077,577
allocating the costs directly related to carrying out each activity.
Any amounts determined ineligible must be reimbursed to the
Block Grant program from non-federal funds.
Provide support showing the eligibility and reasonableness of the
2013-LA-1003 3/14/2013 001-B $1,056,252 in trust funds disbursed or repay the trust fund from $1,056,252
non-Federal funds.
Reprogram $988,272 committed for canceled activities and make
2013-AT-1008 9/30/2013 001-C $988,272
funds available for other eligible HOME activities.
Require the Authority to repay from non-Federal sources $975,146
in disposition sales proceeds used in violation of its disposition
2013-DE-1005 9/30/2013 001-B $975,146
agreement and use the recovered funds for their intended purposes
or return those funds to HUD within a reasonable period.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide sufficient
2013-CH-1009 9/27/2013 001-A $935,412
documentation to support the reasonableness of $960,904 in
expenses or reimburse HUD $935,412.
Require the owner to provide documentation to support the
$709,753 in unsupported disbursements identified by the audit or
2013-PH-1804 7/22/2013 001-B $709,753
reimburse the project’s reserve for replacement account from non-
Federal funds for any disbursements that it cannot support.
Provide support showing that the $2,466,779 in unsupported
expenses were paid from non-Federal funds or provide support
showing the expenses were an eligible use of Federal funds. Any
2013-FW-1006 6/19/2013 001-A unsupported expenditures from Federal funds should be repaid to $679,174
the Authority’s Housing Choice Voucher program or to HUD if the
Authority is unable to determine the source of funds used to pay the
expenses. Any repayments must be from non-Federal funds.
We recommend that the Director of HUD’s Detroit Office of
Multifamily Housing Programs require the Authority to reimburse
2013-CH-1011 9/30/2013 002-A $608,337
the U.S. Treasury $608,337 ($77,856+ 436,759 + $93,722) for the
three projects with terminated program contracts.
We recommend that the Director of HUD’s Detroit Office of
Multifamily Housing Programs require the Authority to obtain
2013-CH-1011 9/30/2013 002-B approval from HUD to apply the project’s replacement reserves to $604,949
the defaulted mortgage for contract number MI28H150191 or
reimburse the U.S. Treasury $604,949.
Support or repay the $1,270,423 in questionable contract and
2013-FW-1006 6/19/2013 003-C $604,193
procurement payments to its appropriate program or HUD.
133
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Determine whether it received the services for which it paid
$582,595 under two contracts that violated conflict-of-interest
prohibitions and that those services cost the same or less than
comparable services from a source without a conflict-of-interest
2013-FW-1006 6/19/2013 003-B relationship with the Authority. If it used Federal funds to pay for $574,143
the services and it either did not receive the services or paid more
for them than it would have paid from a source without a conflict-
of-interest relationship, it should repay the funds to its appropriate
program or HUD.
Require the Municipality to reimburse from non-federal funds
$552,658 in unallowable and unallocated costs associated with the
2013-AT-1003 3/22/2013 002-A disbursement of salaries and fringe benefits of employees who did $552,658
not perform duties directly related to carrying out activities charged
with the program delivery costs.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to support or reimburse its
program $425,193 ($19,924 + $384,755 in housing assistance
payments + $46 in utility allowances + $20,468 in associated
2013-CH-1004 8/1/2013 001-C $425,193
administrative fees) from non-Federal funds for the unsupported
overpayment of housing assistance and utility allowances due to
unsupported calculations, missing eligibility documentations, and
discrepancies in the housing assistance payments register.
Reimburse the FHA insurance fund for the $421,630 in actual
2013-LA-1008 8/20/2013 002-B losses resulting from the amount of claims and associated expenses $421,630
paid on five loans with material underwriting deficiencies.
Require the Municipality to submit supporting documentation
evidencing how Block Grant funds in the amount of $410,221
2013-AT-1003 3/22/2013 003-B disbursed for street improvements benefited low- and moderate- $410,221
income persons in accordance with HUD requirements or
reimburse the Block Grant program from non-Federal funds.
Return the $401,705 in ineligible disbursements to the project
2013-KC-1003 8/8/2013 001-A $401,705
operating account.
Correct all deficiencies identified from non-Federal funds or
reimburse $160,051 in CDBG funds and $221,804 in HOME funds,
2014-AT-1003 12/30/2013 001-B $381,855
totaling $381,855, to program line of credit accounts from non-
Federal funds.
Support the $316,883 disbursed for unsupported costs or return the
2013-KC-1003 8/8/2013 001-B $316,883
funds to the project operating account.
Require the Municipality to submit all supporting documentation
showing that 21 home-buyer activities met the principal residency
2014-AT-1001 12/3/2013 001-B requirement for the duration of the period of affordability or $307,537
reimburse the HOME program from non-Federal funds the
$307,537 disbursed.
We recommend that the Director of HUD’s Detroit Office of
Multifamily Housing Programs require the Authority to reimburse
2013-CH-1011 9/30/2013 003-A $290,437
$290,437 to the appropriate project escrows from non-Federal
funds for the inappropriate disbursement of replacement reserves.
134
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Repay $287,655 paid to the executive director’s and another
Authority employee’s family members to its public housing
program. However, if the Authority made any of the expenditures
2013-FW-1805 9/26/2013 001-A from its 2008 capital fund grant, or if the Authority is unable to $287,655
determine the source of funds used to pay expenditures, the
Authority should repay HUD. Any repayments must be from non-
Federal funds.
Reimburse the FHA insurance fund for the $284,412 in actual
2013-LA-1008 8/20/2013 001-C losses resulting from the amount of claims and associated expenses $284,412
paid on seven loans that contained an unallowable gift.
Require the Municipality to submit all supporting documentation
showing the current status of the repair work and the eligibility and
propriety of $817,310. (Questioned amount consists of $882,909 in
housing rehabilitation awards made by the Municipality minus
2013-AT-1003 3/22/2013 003-A $240,046
$65,599 in disbursements associated with 28 housing units that
were found to have been completed during field inspections for
housing rehabilitation activities or reimburse the Block Grant
program from non-federal funds).
Reimburse $225,235 in ineligible costs related to activities 476,
2013-AT-1008 9/30/2013 002-B $225,235
524, 526, 546, 637, and 699 from non-Federal funds.
Require the owner of Lighthouse Inn to provide documentation to
support the $208,154 in unsupported disbursements cited in this
2013-AT-1007 9/13/2013 001-B $208,154
report or reimburse HUD’s Federal Housing Administration
insurance fund for the applicable portion.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct County officials to
provide documentation to justify the $189,322 in unsupported
2013-NY-1006 5/13/2013 001-A $189,322
administrative and planning costs that was disbursed for employee
salaries and fringe benefits. Any unsupported costs determined to
be ineligible should be reimbursed from non-Federal funds.
Support or repay its public housing programs $180,379 for HUD
2013-FW-1802 6/21/2013 001-D funds inappropriately used for Sunnybrook. Repayment should be $180,379
from non-Federal funds.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
Provide documentation to justify the $177,923 unsupported
2013-NY-1010 9/26/2013 001-D difference between the City’s CDBG program income balance in $177,923
IDIS and its bank account balances as of June 30, 2013. Any
portion of the unsupported difference determined to be ineligible
should be reimbursed from non-Federal funds.
We recommend that the Director of HUD’s Detroit Office of
Multifamily Housing Programs require the Authority to reimburse
2013-CH-1011 9/30/2013 003-B $175,434
appropriate escrow accounts $175,434 from non-Federal funds for
the lost interest cited in this finding.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to provide supporting
2013-CH-1003 7/15/2013 001-E documentation or reimburse its capital fund $162,156 from non- $162,156
Federal funds for the Centre’s operating expenses cited in this
finding.
135
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to provide
sufficient supporting documentation or reimburse its Program from
2013-CH-1001 2/12/2013 002-A non-Federal funds, as appropriate, for the $193,000 in Program $155,668
funds used for the four projects for which the City did not have
sufficient documentation to demonstrate that households were
income eligible.
Provide supporting documentation for activities 675, 697, 701, and
2013-AT-1008 9/30/2013 002-I 702 to show whether they were eligible HOME activities or $153,950
reimburse its program $153,950 from non-Federal funds.
Require the owner of Lighthouse Inn to reimburse HUD’s Federal
2013-AT-1007 9/13/2013 001-A Housing Administration insurance fund $146,983 for the ineligible $146,983
disbursements cited in this report.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
reimburse its Program $140,000 from non-Federal funds for the
2013-CH-1001 2/12/2013 003-A $140,000
homes that were sold through a sheriff’s sale and ownership of the
homes had been transferred within 5 years of the execution of the
mortgages and promissory notes
Require the owner to deposit $138,862 from non-Federal funds into
2013-PH-1804 7/22/2013 001-A the project’s reserve for replacement account for the ineligible costs $138,862
identified by the audit.
Support or repay $135,995 for unsupported procurement
expenditures. The funds should be repaid to the Authority’s public
housing program. However, if the Authority made any of the
2013-FW-1805 9/26/2013 001-G expenditures from its 2008 capital fund grant, or if the Authority is $135,995
unable to determine the source of funds used to pay expenditures,
the Authority should repay HUD. Any repayments must be from
non-Federal funds.
Support $131,787 in unsupported contracts and procurement
2014-AT-1002 12/5/2013 002-A payments or repay the appropriate program from non-Federal $131,787
funds.
Remit to its treasury account and put to better use repayment funds
2013-AT-1006 7/23/2013 001-C $130,915
totaling $130,915 in accordance with HUD requirements.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse from non-Federal
funds, for repayment to the U.S. Treasury, $121,830 for ineligible
2013-CH-1012 9/30/2013 001-A $121,830
expenses, including duplicate profit and overhead paid on labor and
trucking rates and duplicate payments made for kitchen cabinet
installations and canopy and lobby renovations.
Determine whether any portion of the $119,218 of improperly
disbursed management agent fees are ineligible. For any portion
2013-DE-1003 9/10/2013 001-B $119,218
determined to be ineligible, require the owner to repay the fees
from non-project funds.
136
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide documentation for the
three contracts to support that the costs paid for the contract
2013-CH-1012 9/30/2013 001-B modifications totaling $108,766 ($230,596 less the ineligible use of $108,766
funds from recommendation 1A) were reasonable. Any amounts
that cannot be shown to be reasonable should be repaid to the U.S.
Treasury from non-Federal funds.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its program
$136,012 ($78,727 in housing assistance payments + $57,285 in
2013-CH-1004 8/1/2013 001-A $95,017
associated administrative fees) from non-Federal funds for the
overpayment of housing assistance due to inappropriate
calculations of housing assistance payments.
Submit all supporting documentation showing the eligibility and
propriety of $89,331 in unaccounted for program income and
2013-AT-1006 7/23/2013 001-D $89,331
recaptured funds or reimburse the HOME program from non-
Federal funds.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct County officials to
2013-NY-1006 5/13/2013 001-B reimburse from non-Federal funds $78,530 for ineligible home- $78,530
buyer rehabilitation and demolition costs charged to the HOME
program.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
reimburse its Program $78,528 from non-Federal funds for the (1)
2013-CH-1001 2/12/2013 001-A more than $21,000 in Program funds used for 4 projects not $78,528
covered by written agreements and (2) more than $57,000 in
Program funds for housing rehabilitation services for 13 projects
that was not reasonable.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to provide
sufficient supporting documentation or reimburse its Program from
2013-CH-1001 2/12/2013 001-B non-Federal funds, as appropriate, for the $86,797 in Program $70,364
funds used for 15 projects for which the City did not have sufficient
documentation to demonstrate that the cost of additional housing
rehabilitation services was reasonable.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse the appropriate
2013-CH-1004 8/1/2013 001-H households $65,874 from non-Federal funds for the rent amounts $65,874
paid in excess of 40 percent of their adjusted monthly income for
units that were not affordable.
Repay $65,360 paid from Recovery Act funds to the executive
director’s and another Authority employee’s family members to
2013-FW-1805 9/26/2013 001-B $65,360
HUD for its transmission to the U.S. Treasury. Repayment must be
from non-Federal funds.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to deobligate the $57,410 in
2013-CH-1003 7/15/2013 001-F $57,410
capital funds cited in this finding and ensure that the Authority uses
the funds for eligible purposes.
137
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to support
or reimburse HUD $46,504 from non-Federal funds for
transmission to the U.S. Treasury for the Recovery Act Block
2013-CH-1010 9/30/2013 001-B Grant funds used for project numbers 3439 ($6,963), 3449 $46,504
($7,500), 3502 ($7,300), 3819 ($4,995), 3873 ($7,500), 3884
($7,300), and 3922 ($4,946) for which the City did not maintain
sufficient documentation to determine whether the assisted
households were income eligible.
Support or repay $42,150 in unsupported additional compensation
paid to Authority staff. The funds should be repaid to the
Authority’s public housing program. However, if the Authority
2013-FW-1805 9/26/2013 001-D made any of the expenditures from its 2008 capital fund grant, or if $42,150
the Authority is unable to determine the source of funds used to pay
expenditures, the Authority should repay HUD. Any repayments
must be from non-Federal funds.
Support or repay $31,513 in unsupported equipment and supplies
costs. The funds should be repaid to the Authority’s public housing
program. However, if the Authority made any of the expenditures
2013-FW-1805 9/26/2013 001-C from its 2008 capital fund grant, or if the Authority is unable to $31,513
determine the source of funds used to pay expenditures, the
Authority should repay HUD. Any repayments must be from non-
Federal funds.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct County officials to
terminate the contract between the County and the Village of
2013-NY-1006 5/13/2013 001-C Freeport to rehabilitate and construct single-family public housing $31,470
units to be sold to low-income residents. The remaining contract
balance of $31,470 should be put to better use by reprogramming it
for other eligible purposes.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse its program
$30,524 from non-Federal funds ($26,299 for program housing
2013-CH-1005 8/30/2013 001-B $30,524
assistance plus $4,225 in associated administrative fees) for the 25
units that materially failed to meet HUD’s housing quality
standards.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to pursue collection from the
2013-CH-1004 8/1/2013 001-E applicable households or reimburse its program $27,987 from non- $26,760
Federal funds for the overpayment of housing assistance due to
unreported income.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to provide
documentation supporting that the use of the $22,730 in Urban
Development Action Grant miscellaneous revenues for activity
2013-CH-1001 2/12/2013 003-B $22,730
numbers 11379 and 12177 was an eligible initial use of
miscellaneous revenues or a reuse of the revenues or reimburse its
miscellaneous revenues from non-Federal funds for the $22,730 in
miscellaneous revenues used.
138
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Support or repay to HUD $437,710 in capital funds spent for any
amounts that it cannot support for contracts that did not have
procurement records, contracts, cost or price analyses, or
independent cost estimates. Should the Authority provide sufficient
procurement documentation, require the Authority to provide
2014-FW-1801 11/8/2013 001-F $21,400
invoice documentation to support $21,686 paid to James Decker
Builders, $1,049 paid to Pan American Engineers, and $49,695
paid to KDC Construction Company, or repay HUD any amounts
that it cannot support. Any repayments must be from non-Federal
funds.
We recommend that the Director of HUD’s Detroit Office of
Community Planning and Development require the City to support
2014-CH-1001 11/15/2013 001-B or reimburse its Program from non-Federal funds $90,205, as $17,770
appropriate, for the City’s use of Program funds, which it lacked
sufficient documentation to support.
We recommend that the Director of HUD’s Cleveland Office of
Public Housing require the Authority to reimburse its operating
2013-CH-1003 7/15/2013 001-C $15,754
reserve fund $15,754 from non-Federal funds for the ineligible
deposit of funds in a non-interest-bearing account.
Repay $14,250 in ineligible expenses to the trust fund from non-
2013-LA-1003 3/14/2013 001-C $14,250
Federal funds.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
2013-CH-1010 9/30/2013 001-A reimburse HUD $14,145 from non-Federal funds for transmission $14,145
to the U.S. Treasury for the Recovery Act Block Grant funds
inappropriately used to assist project numbers 3427 and 3624.
Support or repay $124,009 to its operating funds any amounts that
it cannot support for contracts that did not have procurement
records, contracts, cost or price analyses, or independent cost
estimates. Should the Authority provide sufficient procurement
documentation, require the Authority to provide invoice
2014-FW-1801 11/8/2013 001-G $13,452
documentation to support $225 paid to Van’s Plumbing Repairs &
Construction and $30 paid to Mike Estes, PC, or repay to its
operating fund any amount it cannot support, as questioned under
recommendation 1A. Any repayments must be from non-Federal
funds.
We recommend that the Director of HUD’s Detroit Office of
Multifamily Housing Programs require the Authority to reimburse
2013-CH-1011 9/30/2013 002-C $12,830
the U.S. Treasury $12,830 from non-Federal funds for the lost
interest.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide documentation or
reimburse HUD $12,165 for transmission to the U.S. Treasury for
2013-CH-1009 9/27/2013 002-A $12,165
the materials and supplies for its force account labor unit
renovations due to missing or inadequate purchase orders, invoices,
receipts, or inventory records cited in this finding.
Require the owner of Lighthouse Inn to reimburse the 22 tenants
2013-AT-1007 9/13/2013 001-C for ineligible fees collected totaling $10,950, from non-project $10,950
funds.
139
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to support
or reimburse HUD from non-Federal funds $8,635 for transmission
to the U.S. Treasury for the Recovery Act Block Grant funds used
for the 24 projects for which the City could not provide adequate
support to show whether the services were provided at a reasonable
cost. We did not include $1,602 in Recovery Act Block Grant funds
2013-CH-1010 9/30/2013 002-A used for four projects for which the City could not provide $8,635
adequate support to show whether the services were provided at a
reasonable cost since we included it in recommendation 1B ($625
for project 3884 and $326 for project 3922) and recommendation
2D ($572 for project 3478 and $79 for project 3647) of this report.
However, the number of projects included in this recommendation
was reduced from 26 to 24 since a portion of the costs for projects
3478 and 3647 is included in the recommendation.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide documentation or
reimburse HUD $8,554 from the appropriate fund for transmission
2013-CH-1009 9/27/2013 002-B $8,554
to the U.S. Treasury for its force account labor employees due to
missing labor logs or labor logs that indicated work on projects
other than the Recovery Act formula grant work.
Support that it properly used $7,796 in cash from salvaged
2014-FW-1801 11/8/2013 001-E appliances and equipment or repay the money from non-Federal $7,796
sources to its low-rent program.
Require the State to provide supporting documentation for the
2014-AT-1004 12/30/2013 001-A $7,200 in appraisal fees or reimburse the Program from non- $7,200
Federal funds.
We also recommend that HUD’s Associate General Counsel for
Program Enforcement pursue the appropriate administrative actions
2014-CH-1001 11/15/2013 001-E against the contractor’s vice president and architectural firm’s $7,000
architect for inappropriately certifying that the contractor had
completed its housing rehabilitation work on the project.
Determine whether $11,728 drawn down for canceled activities
2013-AT-1008 9/30/2013 001-D $6,688
was for supported and eligible expenditures.
Support or repay the FHA insurance fund $5,450 for the loss
2013-LA-1008 8/20/2013 001-D mitigation claims paid as of April 30, 2013, on seven loans that $5,450
contained an unallowable gift.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
reimburse HUD, for transmission to the U.S. Treasury, $4,166 from
2013-CH-1001 2/12/2013 004-A $4,166
non-Federal funds for the unnecessary interest the U.S. Department
of the Treasury paid on the Program funds that the City drew down
from its treasury account when Program income was available.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to support, pursue collection from
2013-CH-1004 8/1/2013 001-G the applicable landlords, or reimburse its program $10,243 from $3,156
non-Federal funds for the overpayment of housing assistance due to
discrepancies in the housing assistance payments register.
140
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Support or repay $129,840, which includes $15,156 to its operating
fund, $2,237 to HUD for its transmission to the U.S. Treasury, and
2014-FW-1801 11/8/2013 001-A $2,818
$112,447 to its Capital Fund program, in unsupported
disbursements. Repayment must be from non-Federal funds.
Repay its operating fund $2,733 for funds paid to the previous
2014-FW-1801 11/8/2013 001-C executive director’s wife when she was not an employee. $2,733
Repayment must be from non-Federal funds.
Support or repay to its operating fund $33,081 in disbursements to
employees for bonuses that were improperly awarded, duplicated
2014-FW-1801 11/8/2013 001-B $2,175
pay periods, and unidentified purposes under the applicable years.
Repayment must be from non-Federal funds.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to support
or reimburse HUD $2,060 from non-Federal funds for transmission
2013-CH-1010 9/30/2013 002-C to the U.S. Treasury for the Recovery Act Block Grant funds used $2,060
for project numbers 3503 ($490), 3515 ($320), 3687 ($900), and
3792 ($350) that lacked support that an independent cost estimate
was performed for change order items.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to support
or reimburse HUD $1,759 from non-Federal funds for transmission
2013-CH-1010 9/30/2013 002-B to the U.S. Treasury for the Recovery Act Block Grant funds used $1,759
for project number 3477 for which the City lacked documentation
to support that it performed an independent estimate for the costs of
the services.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct County officials to
2013-NY-1006 5/13/2013 001-D provide documentation to justify the $1,264 in unsupported project $1,264
delivery costs. Any unsupported costs determined to be ineligible
should be reimbursed from non-Federal funds.
Pay down the principal balance by $1,101 for the one over-insured
2013-LA-1008 8/20/2013 002-C $1,101
loan as a result of an excessive seller contribution.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
reimburse HUD $915 from non-Federal funds for transmission to
2013-CH-1010 9/30/2013 002-D the U.S. Treasury for the Recovery Act Block Grant funds used for $915
project numbers 3478 ($572) and 3647 ($79) that exceeded the
City’s estimate by more than 15 percent and project number 3876
($264) that were excessive.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to provide sufficient
2013-CH-1009 9/27/2013 002-E documentation to support that the appliance was installed in a unit $429
renovated under the Recovery Act formula grant or reimburse HUD
$429 from its capital funds for transmission to the U.S. Treasury.
Require the Municipality to determine the amount expended for the
2013-AT-1003 3/22/2013 003-C resurfacing of all private properties and reimburse the Block Grant $0
program from non-federal funds.
141
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Develop and implement comprehensive procedures to assess the
2013-BO-0001 2/12/2013 001-A effectiveness and completeness of monitoring efforts using metric $0
or query data in the GMP database as detailed in this finding.
Develop and implement procedures to evaluate the field office
testing of non-high-risk grantees to ensure the soundness of risk
2013-BO-0001 2/12/2013 001-B $0
assessments and obtain early warning of potential deficiencies as
provided for in HUD CPD Notice 12-02
Develop and implement a quality control system to validate HOME
program data recorded in the Integrated Disbursement and
2013-BO-0001 2/12/2013 002-A Information System by using field office monitoring data in the $0
GMP database or some other auditable method, such as statistical
sampling and testing of key program data.
Develop and implement formal procedures to continually assess the
effectiveness and completeness of field office data monitoring
efforts using GMP monitoring data to include (1) verifying that
HOME data are tested, (2) analyzing results to determine whether
2013-BO-0001 2/12/2013 002-B $0
program data as a whole are reliable and to identify systemic data
issues or issues that should be addressed, and (3) verifying that
findings are corrected in a timely manner and monitoring is
complete.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to
implement adequate procedures and controls to ensure that if the
ownership of additional homes acquired through its Housing Trust
2013-CH-1001 2/12/2013 003-C Fund and Afford-A-Home programs is transferred through $0
foreclosures, the City recaptures the entire amount of the Program
funds through the receipt of net proceeds from the sales of the
homes or reimburses its Program from non-Federal funds for the
Program funds provided to the home buyers as appropriate.
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to review
and provide the results to HUD for the remaining 98 Recovery Act
Block Grant-funded roof and other exterior repair project files that
were not part of our sample to ensure that the households were
2013-CH-1010 9/30/2013 001-C $0
income eligible and that it maintained adequate and sufficient
documentation to support that households were income eligible.
For any household determined to be ineligible or if the City’s files
lack documentation to support a household’s eligibility, the related
amount will be added to 1A or 1B as appropriate.
142
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Columbus Office of
Community Planning and Development require the City to review
and provide the results to HUD for the remaining 98 Recovery Act
Block Grant-funded roof and other exterior repair project files that
were not part of our sample to ensure that the City maintained
2013-CH-1010 9/30/2013 002-E $0
adequate support to show whether the services were provided at a
reasonable cost. For any project for which a price quote was not
obtained from at least three contractors and the contract cost
exceeded the City’s independent estimate, the project and the
overage amount will be added to recommendation 2A.
Require the owner to complete and submit a current version of the
required certification to HUD for approval. If the owner does not
2013-DE-1003 9/10/2013 001-A $0
submit the required certification for HUD approval, consider
seeking administrative sanctions.
Require the owner to establish and implement comprehensive
2013-DE-1003 9/10/2013 002-A financial policies and procedures including the proper maintenance $0
of the books of account.
Provide the necessary technical assistance and confirm that the
2013-DE-1003 9/10/2013 002-B $0
procedures have been implemented.
Require the Authority to submit financial statements that show how
2013-DE-1005 9/30/2013 001-E $0
its disposition funds were expended by item and dollar amount.
Work with the Office of the Chief Information Officer to improve
the deposit module’s reporting capabilities so that Labor Relations
2013-HA-0001 4/16/2013 002-C $0
staff is able to report and analyze the deposit account transactions
and taxes or replace the system.
Resolve issues with the Office of Community Planning and
2013-KC-0002 6/26/2013 001-D Development and complete the process to publish final regulations $0
for 24 CFR Part 135.
Develop and implement additional system error checks to identify
2013-KC-0003 9/10/2013 001-C $0
potential reporting issues.
Enhance data collection to begin collecting information on whether
2013-KC-0004 9/18/2013 001-B each co-borrower will occupy the subject property as well as the $0
addresses and phone numbers of each co-borrower.
Replace GMP Development Group as Bay Vista’s management
2013-LA-1003 3/14/2013 001-D $0
agent with a non-identity-of-interest agent.
Implement proper policies, procedures, and controls to restrict the
use of trust funds to only allowable non-operating-type expenses
2013-LA-1003 3/14/2013 001-E $0
and ensure that the trust funds are not commingled with Bay
Vista’s and its properties’ operating funds.
143
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Determine legal sufficiency and if legally sufficient, pursue civil
and administrative remedies (31 U.S.C. 3801-3812, 3729, or both),
civil money penalties (24 CFR (Code of Federal Regulations)
30.35), or both against The Lending Company, its principals, or
both for incorrectly certifying to the integrity of the data, the
2013-LA-1008 8/20/2013 001-A mortgage eligibility for FHA mortgage insurance, or that due $0
diligence was exercised during the origination of 732 loans that
resulted in actual losses of $284,412 on 7 loans and potential losses
of $55.4 million on 725 loans for a total loss of $55.7 million,
which could result in affirmative civil enforcement action of
approximately $116.9 million.
Determine legal sufficiency and if legally sufficient, pursue civil
and administrative remedies (31 U.S.C. 3801-3812, 3729, or both),
civil money penalties (24 CFR 30.35), or both against The Lending
Company, its principals, or both for incorrectly certifying to the
2013-LA-1008 8/20/2013 002-A $0
integrity of the data or that due diligence was exercised during the
origination of five loans that resulted in actual losses of $421,630,
which could result in affirmative civil enforcement action of
approximately $880,760.
Fully implement its quality control plan and provide HUD with
periodic reports for 12 months to ensure that its quality control
2013-LA-1008 8/20/2013 003-A $0
reviews, to include early payment defaults, are conducted in
accordance with HUD requirements.
Provide training to ensure that its quality control staff is aware of
2013-LA-1008 8/20/2013 003-B $0
HUD’s quality control program requirements.
Develop and implement written policies and procedures for its
2013-LA-1009 9/13/2013 001-B $0
HOME program.
Implement adequate written policies and procedures for its salary
2013-LA-1010 9/20/2013 001-D and administrative allocations to meet applicable HUD rules and $0
requirements.
Provide adequate training to CDBG employees so that the
employees have a better understanding and knowledge of
2013-LA-1010 9/20/2013 001-E $0
administering the CDBG program in accordance with HUD rules
and requirements.
We recommend that the Deputy Assistant Secretary for Grant
Programs strengthen controls over the existing procedures relating
to the HUD Entitlement Communities Division monthly timeliness
report. Procedures should require the timeliness report to be sent to
the local HUD field offices by a specific date each month. If our
2013-NY-0003 7/19/2013 001-A $0
recommendations to improve procedures are implemented and
grantees’ subsequent years’ funding is reduced, following a
decision made by HUD officials after an informal consultation with
the grantees, $5,658,648 in questioned CDBG entitlement funds
from the four untimely grantees can be put to better use.
We recommend that the Deputy Assistant Secretary for Grant
Programs strengthen the existing CDBG timeliness spending
grantee notification procedures to ensure that the notification of
2013-NY-0003 7/19/2013 001-B $0
new untimely grantees becomes a higher priority and explain to
staff the importance of the notification process in the sanctioning
policy.
144
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Deputy Assistant Secretary for Grant
Programs document its rationale for not subjecting the six untimely
grantees to its sanctioning policy, which could have required that
2013-NY-0003 7/19/2013 001-C $2,720,364 in CDBG entitlement funds from these six untimely $0
grantees subsequent years grant funding be reduced. If OIG
recommendations to improve procedures are implemented, these
funds can be put to better use.
We recommend that the Deputy Assistant Secretary for Grant
Programs establish procedures requiring documentation of its
2013-NY-0003 7/19/2013 001-D $0
rationale for not sanctioning grantees not complying with the
CDBG timeliness spending requirement.
We recommend that the Deputy Assistant Secretary for Grant
2013-NY-0003 7/19/2013 001-E Programs establish procedures on how to handle grantees that are $0
minimally noncompliant with the timeliness spending requirement.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct County officials to
document their application review committee membership and
2013-NY-1006 5/13/2013 002-A $0
provide evidence of the committee meetings and their evaluation
and rating of subrecipients to fully support their funding
recommendations.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct County officials to
2013-NY-1006 5/13/2013 002-D develop controls to ensure that the County’s recently established $0
debarment verification procedures are implemented for all future
procurement activity.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct County officials to
2013-NY-1006 5/13/2013 003-C develop controls that will ensure that the County’s decentralized $0
record-keeping system is centralized for ready access to HOME
documents.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
develop a comprehensive overall CDBG policies and procedures
2013-NY-1010 9/26/2013 001-E manual to ensure that City officials adequately administer the $0
City’s CDBG program in accordance with HUD regulations.
Specifically, the City should ensure that program income is
accurately accounted for and reported to HUD in a timely manner.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
2013-NY-1010 9/26/2013 002-B develop procedures to ensure that funded activities comply with $0
program objectives and that the activities are sufficiently
monitored.
Require the owner to calculate and support the amount of funds
required to be on deposit in the tenant security deposit account and
2013-PH-1804 7/22/2013 001-C deposit funds into the account, if needed, so that the balance in the $0
account is equal to or exceeds the amount of funds required to be in
the account.
Declare the project in default of its regulatory agreement and apply
2013-PH-1804 7/22/2013 001-D remedies available under the regulatory agreement up to and $0
including foreclosure.
145
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Adjust program participants’ lien amounts for items not completed
2014-AT-1003 12/30/2013 001-C $0
or corrected in recommendations 001-A and 001-B.
Review the remaining 88 HARP contracts that were not part of our
sample to ensure that the City paid contractors for contracted
repairs according to HUD and City regulations. For any contract
2014-AT-1003 12/30/2013 001-D $0
with ineligible or unsupported costs, the City should include the
contract amounts in recommendation 001-A or 001-B for
reimbursement.
Refrain from awarding any future HARP contracts until it has
2014-AT-1003 12/30/2013 001-F adequate personnel to monitor rehabilitation work and ensure that $0
federal funds are properly expended.
Re-inspect the homes to ensure that identified deficiencies have
2014-AT-1003 12/30/2013 001-G $0
been properly corrected.
Obtain a corrective action plan from BAC with critical milestones
2014-FO-0001 12/6/2013 001-A to document how all information is to be provided, supported, and $0
reconciled to the appropriate underlying information system.
Review the projected workload requirements with BAC, evaluate
the remaining impact of ongoing delays in recording servicing
2014-FO-0001 12/6/2013 001-B $0
activity, and document the anticipated effort on future financial
reporting.
Continue efforts to confirm the insured status of loans not yet
2014-FO-0001 12/6/2013 001-C $0
matched with data from the insuring agencies.
Develop and implement a detailed remediation action plan to
ensure that grant management systems eliminate the FIFO
methodology in its entirety. The plan should (1) explain how the
budget fiscal year-TAFS for each accounting transaction (project
2014-FO-0003 12/16/2013 001-A and activity setup, commitment, disbursement, etc.) will be $0
recorded, remain constant, and be maintained, (2) reference Federal
system requirements and criteria, and (3) include resources,
specific remedies, and intermediate target dates necessary to bring
the financial management system into substantial compliance.
Establish controls within the system, which provide an audit trail of
2014-FO-0003 12/16/2013 001-B $0
the use of the funds by the budget fiscal year-TAFS.
Provide oversight of CPD’s system implementation or modification
to ensure that Federal financial management accounting standards
are embedded into the system so that the information transferred
from grant management systems to HUD’s core financial systems
2014-FO-0003 12/16/2013 001-C $0
comply with these standards, are recorded in HUD’s consolidated
financial statements in accordance with Federal GAAP, and ensure
that compliant administrative control of funds for its formula grant
programs is established.
Implement a cost-effective method for automating the cash
2014-FO-0003 12/16/2013 002-C management process to include an electronic interface of $0
transactions to the standard general ledger.
Review the cash management process to identify all financial
events to be recognized in accordance with GAAP. Establish
2014-FO-0003 12/16/2013 002-E $0
procedures to account for the cash management activity in a timely
manner in compliance with GAAP.
146
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Ensure that PIH’s automation of its cash management process
2014-FO-0003 12/16/2013 002-G $0
complies with Federal financial management requirements.
Design and Implement a loan guarantee system that complies with
the Guaranteed Loan System Requirements. Ensure that the
2014-FO-0003 12/16/2013 003-A implemented loan guarantee system should be integrated with $0
HUD’s financial management systems and be included in its
financial management system plans.
Establish an appropriate accounting and financial reporting
governance structure within OCFO with the appropriate level of
2014-FO-0003 12/16/2013 004-G accounting, experience, and training to support the size and $0
complexity of HUD’s and its component entities’ financial
reporting requirements.
Enforce already existing internal control procedures to ensure
2014-FO-0003 12/16/2013 006-C $0
proper supervision over accounting for Section 8 FAF receivables.
Perform a thorough analysis of outstanding FAF receivables and
fiscal year 2013 collections to ensure that the receivables accurately
2014-FO-0003 12/16/2013 006-D represent the amounts owed to HUD, including but not limited to $0
positive confirmations of outstanding receivable balances with the
trustees.
Complete the closeout of any remaining CDBG-R and HPRP grants
2014-FO-0003 12/16/2013 008-B and forward all grant closeout agreement certifications to OCFO $0
for recapture.
Deobligate $14,425,629 tied to 238 program obligations marked for
deobligation during the department-wide unliquidated obligations
review. Additionally, OCFO should review the 93 obligations with
2014-FO-0003 12/16/2013 008-C remaining balances totaling $316,935 and close out and deobligate $0
amounts tied to obligations that are no longer valid, either based on
the criteria defining the availability of appropriations at 31 U.S.C.
1301 or the criteria for recording obligations at 31 U.S.C. 1501.
Design and implement a policy to ensure that reconciliations
between the subsidiary ledgers (supporting records) and the
obligation balances in the general ledger (controlling accounts) are
2014-FO-0003 12/16/2013 008-M $0
periodically performed for all HUD appropriations. The policy
should also address the follow-up and clearance of identified
differences and the responsibilities for the preparers and reviewers.
Develop and implement procedures to routinely evaluate the
assistance and administrative obligation balances for the HUD-
2014-FO-0003 12/16/2013 011-E $0
administered and SSS subcategories of EHLP to determine whether
a valid need still exists and if not, deobligate those balances.
Make changes to IDIS Online, which will require grantees to
specifically identify the grant allocation year to which the
commitment should be assigned and include the commitment dates.
2014-FO-0003 12/16/2013 015-A $0
The system should also allow HUD to ensure that commitments
made during overlapping allocations and periods are counted
toward only 1 year’s compliance requirements.
147
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Stop using the cumulative method and the deadline compliance
report for determining compliance with the 24-month commitment
2014-FO-0003 12/16/2013 015-B requirement in the HOME Investment Partnership Act and use only $0
the commitments made within the 24-month period to determine
compliance.
In accordance, with the GAO legal decision and opinion, take steps
to identify and recapture funds that remain uncommitted after the
2014-FO-0003 12/16/2013 015-C $0
statutory commitment deadline and reallocate such funds in
accordance with the Act.
Recapture funds from allocations during the 24-month overlapping
2014-FO-0003 12/16/2013 015-D period only for grantees that do not comply with the 24-month $0
commitment requirement.
Initiate the billing process for the claims paid, plus incentive, where
2015-FO-0001 11/14/2014 001-F the lender has not provided the original of the note and security $1,486,544,478
instrument within the prescribed deadlines for the $1.5 billion.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct City officials to provide documentation to justify
the $183 million in unsupported salary and fringe benefits and
2015-NY-1001 11/24/2014 001-A $183,000,000
associated expenses charged to the CDBG-DR program. If
documentation provided does not support the costs, this amount
should be repaid from non-Federal funds.
HUD should remove the provision that allows public housing
authorities to charge asset management fees, which would ensure
2014-LA-0004 6/30/2014 001-B $81,613,671
that at least $81.6 million in operating funds could be put to better
use in meeting HUD program objectives.
The Boston Housing Authority and the City of Boston to provide
support that they complied with 24 CFR Part 58 requirements for
2014-FW-0001 2/7/2014 001-A the Authority’s Recovery Act grant or require the housing agency $33,329,733
to repay $33,329,733 to HUD for its transmission to the U.S.
Treasury. Repayment must be from non-Federal funds.
Deobligate all obligations marked for deobligation during the
departmentwide open obligations review, including as much as
$4,988,326 in 613 administrative obligations and $6,395,922 in 79
2015-FO-0002 12/8/2014 006-E program obligations marked for deobligation as of September 29, $31,008,694
2014. Additionally, review the 269 obligations with remaining
balances totaling $19,624,446 and close out and deobligate
amounts tied to obligations that are no longer valid or needed.
Initiate the billing process, including determining lender status, for
the 237 loans that were part of the ACD program for which the
2014-LA-0005 8/8/2014 001-A $21,698,472
lenders were not billed. HUD incurred losses of nearly $22.4
million for these loans.
The Boston Housing Authority and the City of Boston to provide
support that they complied with 24 CFR Part 58 requirements for
2014-FW-0001 2/7/2014 001-B the Authority’s 2011 Capital Fund grant or require the housing $21,478,604
agency to repay $21,478,604 to HUD. Repayment must be from
non-Federal funds.
148
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
The Detroit Housing Commission and the City of Detroit to
provide support that they complied with 24 CFR Part 58
2014-FW-0005 9/24/2014 001-E requirements for the Commission’s Recovery Act grant or require $17,275,908
the Commission to repay $17,275,908 to HUD for its transmission
to the U.S. Treasury. Repayment must be from non-Federal funds.
The Boston Housing Authority and the City of Boston to provide
support that they complied with 24 CFR Part 58 requirements for
2014-FW-0001 2/7/2014 001-C the Authority’s 2012 Capital Fund grant or require the housing $17,058,105
agency to reimburse $17,058,105 to the Authority’s 2012 Capital
Fund grant from non-Federal funds.
Deobligate all obligations marked for deobligation during the
departmentwide open obligations review, including as much as
$3,561,042 in 64 administrative obligations marked for
2015-FO-0002 12/8/2014 006-J deobligation as of September 29, 2014. Additionally, review the $13,188,250
171 obligations with remaining balances totaling $19,730,791 and
close out and deobligate amounts tied to obligations that are no
longer valid or needed.
Initiate the billing process, including determining lender status, for
the 217 loans that went into default before the indemnification
2014-LA-0005 8/8/2014 001-C $12,490,032
agreement expired for which the lenders were not billed. HUD
incurred losses of nearly $12.5 million for these loans.
Provide all supporting documentation associated with the
$10,838,880 (Total disbursements of $10,876,095 were adjusted to
consider $37,215 questioned in State CDBG, Section 108, and
program income proceeds disbursed for the development of the
2014-AT-1801 3/20/2014 001-B $10,838,880
sports complex, if HUD determines the plan to be feasible ). HUD
must determine the eligibility, reasonableness, and allocability of
the funds disbursed. OCMA must reimburse its State CDBG
program from non-Federal funds any amount determined ineligible.
Update selection rules for CAIVRS to provide for complete
2014-KC-0002 7/2/2014 001-B reporting of all ineligible borrowers to put $9.5 million to better $9,501,619
use.
The Detroit Housing Commission and the City of Detroit to
provide support that they complied with 24 CFR Part 58
2014-FW-0005 9/24/2014 001-F requirements for the Commission’s 2011 Capital Fund grant or $7,756,710
require the Commission to repay $7,756,710 to HUD from non-
Federal funds.
Submit a plan for how it will proceed with respect to the
Municipality of Dorado hotel project, including a schedule that
HUD can track to ensure its completion. HUD must reevaluate the
feasibility of the activity and determine the eligibility of the
2015-AT-1001 12/5/2014 001-B $7,369,000
$7,369,000 already invested. If HUD determines that the activity
has been canceled or is not feasible, Municipal Affairs must
mitigate activity losses by committing any unused loan proceeds
for future loan repayments.
The Detroit Housing Commission and the City of Detroit to
provide support that they complied with 24 CFR Part 58
2014-FW-0005 9/24/2014 001-G requirements for the Commission’s 2012 Capital Fund grant or $7,275,028
require the Commission to reimburse $7,275,028 to its 2012
Capital Fund grant from non-Federal funds.
149
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Reevaluate the feasibility of the activities and determine the
eligibility of the $7,136,298 disbursed for the three projects with
signs of slow progress. The Municipality must reimburse its
2014-AT-1007 8/8/2014 001-A $7,136,298
HOME program from non-Federal funds if HUD determines the
activities to have been terminated and reprogram and put to better
use any unexpended funds associated with the terminated activities.
Submit a plan for how it will proceed with respect to the
Municipality of San Lorenzo activity center project, including a
schedule that HUD can track to ensure its completion. HUD must
reevaluate the feasibility of the activity and determine the eligibility
2015-AT-1001 12/5/2014 001-A $7,010,276
of the $7,010,276 already invested. If HUD determines that the
activity has been canceled or is not feasible, Municipal Affairs
must mitigate activity losses by committing any unused loan
proceeds for future loan repayments.
We recommend that the Director of the Public Housing Financial
2014-NY-0003 9/4/2014 001-A Management Division recapture the $6,206,924 in operating $6,206,924
subsidies that was erroneously awarded to seven PHAs.
Submit a plan for how it will proceed with respect to the
Municipality of Camuy hotel project, including a schedule that
HUD can track to ensure its completion. HUD must reevaluate the
feasibility of the activity and determine the eligibility of the
2015-AT-1001 12/5/2014 001-C $5,474,376
$5,474,376 already invested. If HUD determines that the activity
has been canceled or is not feasible, Municipal Affairs must
mitigate activity losses by committing any unused loan proceeds
for future loan repayments.
The New Bedford Housing Authority to repay $4,860,197 in
2014-FW-0001 2/7/2014 001-G Recovery Act grant funds to HUD for its transmission to the U.S. $4,860,197
Treasury. Repayment must be from non-Federal funds.
The Kansas City, MO, Housing Authority and the City of Kansas
City, MO, to provide support that they complied with 24 CFR Part
58 requirements for the Authority’s Recovery Act grant or require
2014-FW-0002 5/12/2014 001-E $4,517,915
the housing agency to repay $4,517,915 to HUD for its
transmission to the U.S. Treasury. Repayment must be from non-
Federal funds.
Deobligate $89,237 in 46 administrative obligations marked for
deobligation during the departmentwide open obligations review.
2015-FO-0002 12/8/2014 006-O Additionally, review the 199 obligations with remaining balances $4,235,471
totaling $4,146,234 and close out and deobligate amounts tied to
obligations that are no longer valid or needed.
Determine whether the documentation the State provided is
adequate to support $3,487,461 disbursed for wages and salaries
2014-PH-1008 8/29/2014 001-C charged to the program by the contractors’ employees and if not, $3,487,461
direct the State to repay HUD from non-Federal funds for any
amount that it cannot support.
Deobligate the 76 expired or inactive Sections 202 and 811 and
2015-FO-0002 12/8/2014 006-F $3,458,166
project-based Section 8 projects totaling $3,458,166.
150
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
The Kansas City, KS, Housing Authority and the Unified
Government of Wyandotte County-Kansas City, KS, to provide
support that they complied with 24 CFR Part 58 requirements for
2014-FW-0002 5/12/2014 001-B $3,438,953
the Authority’s Recovery Act grant or require the housing agency
to repay $3,438,953 to HUD for its transmission to the U.S.
Treasury. Repayment must be from non-Federal funds.
Direct the applicable servicing lenders to verify and provide
documentation of the borrowers’ compliance with the residency
2014-PH-0001 9/30/2014 001-A requirement for each of the 121 cases or for each noncompliant $3,362,055
borrower, declare the loan in default and due and payable, thereby
putting approximately $3,362,055 to better use.
The New Bedford Housing Authority and the City of New Bedford
to provide support that they complied with 24 CFR Part 58
2014-FW-0001 2/7/2014 001-H requirements for the Authority’s 2011 Capital Fund grant or require $3,154,021
the housing agency to repay $3,154,021 to HUD. Repayment must
be from non-Federal funds.
The New Bedford Housing Authority and the City of New Bedford
to provide support that they complied with 24 CFR Part 58
2014-FW-0001 2/7/2014 001-J requirements for the Authority’s 2012 Capital Fund grant or require $2,966,280
the housing agency to reimburse $2,966,280 to the Authority’s
2012 Capital Fund grant from non-Federal funds.
The Kansas City, MO, Housing Authority and the City of Kansas
City, MO, to provide support that they complied with 24 CFR Part
2014-FW-0002 5/12/2014 001-F 58 requirements for the Authority’s 2011 Capital Fund grant or $2,920,093
require the housing agency to repay $2,920,093 to HUD from non-
Federal funds.
The Kansas City, KS, Housing Authority and the Unified
Government of Wyandotte County-Kansas City, KS, to provide
2014-FW-0002 5/12/2014 001-C support that they complied with 24 CFR Part 58 requirements for $2,827,316
the Authority’s 2011 Capital Fund grant or require the housing
agency to repay $2,827,316 to HUD from non-Federal funds.
The Kansas City, MO, Housing Authority and the City of Kansas
City, MO, to provide support that they complied with 24 CFR Part
2014-FW-0002 5/12/2014 001-G 58 requirements for the Authority’s 2012 Capital Fund grant or $2,710,079
require the housing agency to reimburse $2,710,079 to the
Authority’s 2012 Capital Fund grant from non-Federal funds.
Reassess the $2,621,624 unjustified write off for FAF 210 and
2014-AT-0001 3/14/2014 001-E reinstate and pursue collection of all or any portion of the amount $2,621,624
determined to have been written off without proper justification.
The Kansas City, KS, Housing Authority and the Unified
Government of Wyandotte County-Kansas City, KS, to provide
support that they complied with 24 CFR Part 58 requirements for
2014-FW-0002 5/12/2014 001-D $2,555,880
the Authority’s 2012 Capital Fund grant or require the housing
agency to reimburse $2,555,880 to the Authority’s 2012 Capital
Fund grant from non-Federal funds.
Initiate the billing process, including determining lender status, for
the 32 loans that were part of the CWCOT program for which the
2014-LA-0005 8/8/2014 001-B $2,234,925
lenders were not billed. HUD incurred losses of approximately $2.2
million for these loans.
151
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Require the Authority to take action to reclaim its properties valued
2015-FW-1801 10/2/2014 001-C at $2,032,266 to improve its financial position, decrease its reliance $2,032,266
on HUD program funding, and address its comingling issues.
Deobligate $174,168 in 5 administrative obligations and
$9,920,926 in 308 program obligations marked for deobligation
during the department-wide open obligations review. Additionally,
2015-FO-0002 12/8/2014 006-B $1,956,447
review the 72 obligations with remaining balances totaling
$313,419 and close out and deobligate amounts tied to obligations
that are no longer valid or needed.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct Palladia officials to
provide documentation to justify that the $1,615,057 in
2014-NY-1008 7/25/2014 001-A $1,615,057
unsupported costs is associated with eligible program activities.
Any unsupported costs determined to be ineligible should be
reimbursed from non-Federal funds.
We recommend that the Director of the Public Housing Financial
2014-NY-0003 9/4/2014 001-B Management Division reimburse the 5 PHAs that were $1,516,882
underfunded $1,516,882 in ARF funding.
We recommend that HUD’s Deputy Assistant Secretary for Single
Family Housing to require the lenders to indemnify HUD for any
2014-CH-0001 9/30/2014 001-B future losses on the 16 loans24 with an estimated loss of $1,487,921
$1,487,921,25 based on the loss severity rate of 54 percent of the
total unpaid principal balance of $2,755,409 as of June 1, 2014.
Recalculate the commitment requirement as a result of the
County’s improperly committing $1,478,250 The County
improperly committed $1,478, 250, composed of activity 5109 and
2014-AT-1010 9/11/2014 001-G project 61 with commitments of $500,000 and $978,250, $1,478,250
respectively. in HOME funds for project 61 and activity 5109 and
determine the cumulative effect on the County’s commitment
requirement.
Reimburse its IHBG from non-Federal funds or reduce undisbursed
2014-LA-1004 7/8/2014 001-A $1,385,687
grant funds by $1,508,602 for ineligible duplicate charges.
We recommend that the Director of HUD’s New York Office of
Public and Indian Housing require Authority officials to provide
supporting documents for the proper use of $1,250,417 in sale
2015-NY-1002 12/1/2014 002-C $1,250,417
proceeds from the scattered-site properties. Any amounts not
supported or found to be improperly used should be repaid to the
homeownership program from non-Federal funds.
Reimburse $1,183,642 in HOME and CHDO funds to the HOME
2014-AT-1005 5/29/2014 001-A $1,183,642
Investment Trust Fund treasury account from non-Federal funds.
The Nashua Housing Authority and the City of Nashua to provide
support that they complied with 24 CFR Part 58 requirements for
2014-FW-0001 2/7/2014 001-D the Authority’s Recovery Act grant or require the housing agency $1,169,494
to repay $1,169,494 to HUD for its transmission to the U.S.
Treasury. Repayment must be from non-Federal funds.
152
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of the HUD Newark Office of
Public and Indian Housing instruct Authority officials to provide
documentation to support that the 252 units for which the
Authority’s records did not document that an annual inspection was
performed during program year 2012 comply with housing quality
2014-NY-1001 1/15/2014 001-A $1,139,664
standards. If such documentation cannot be provided, the $3.89
million (consisting of $3,768,868 in housing assistance payments
and $122,977 of the Authority’s administrative fee paid related to
those units) should be reimbursed to the program from non-federal
funds.
Recover from the borrowers and reimburse $1,080,242 to the
applicable loan guarantee account from non-Federal funds for
2015-AT-1001 12/5/2014 002-A $1,080,242
ineligible disbursements that were not related to the approved
projects and used to finance local government operations.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
2014-NY-1009 9/18/2014 001-B repay the $1,060,529 not expended within the required timeframe $1,060,529
so that these funds can be recaptured in accordance with Federal
regulations.
Extend the indemnification agreement for the 15 active loans and 1
claim loan that were streamline refinanced. The 15 active loans
2014-LA-0005 8/8/2014 002-B had an unpaid balance of nearly $1.9 million with a potential loss to $1,040,145
HUD of $965,306 if the loans go into claim status. The one claim
loan had an estimated loss of $74,839.
The Kansas City, KS, Housing Authority to repay $1,039,797 in
Recovery Act grant funds to HUD for its transmission to the U.S.
2014-FW-0002 5/12/2014 001-A Treasury for contract obligations that occurred before the $1,039,797
environmental review was completed by the responsible entity.
Repayment must be from non-Federal funds.
Provide documentation to support the $1,031,000 in CDBG loans
2014-AT-1005 5/29/2014 001-B $1,031,000
or reimburse the CDBG program from non-Federal funds.
The Nashua Housing Authority and the City of Nashua to provide
support that they complied with 24 CFR Part 58 requirements for
2014-FW-0001 2/7/2014 001-E the Authority’s 2011 Capital Fund grant or require the housing $874,261
agency to repay $874,261 to HUD. Repayment must be from non-
Federal funds.
We recommend that the Acting Director of HUD’s Detroit Office
of Public Housing require the Commission to support the use of the
2014-CH-1003 4/30/2014 001-D sole-sourcing procurement method for its Recovery Act-funded $785,159
competitive grant or reimburse HUD $785,159 from non-Federal
funds for transmission to the U.S. Treasury.
Reimburse $772,000 in HOME funds used to pay ineligible
2014-AT-1005 5/29/2014 002-A expenses to the HOME Investment Trust Fund treasury account $772,000
from non-Federal funds.
153
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that HUD’s Deputy Assistant Secretary for Single
Family Housing to require the lenders to support that the loans
cited for post-endorsement technical reviews by HUD were eligible
2014-CH-0001 9/30/2014 001-A for FHA insurance or require the lenders to indemnify HUD for any $759,042
future losses on the 12 loans22 with an estimated loss of $1, 047,
314.23 based on the loss severity rate of 54 percent of the total
unpaid principal balance of $1,939,471 as of June 1, 2014.
We recommend that the Director of the Newark, NJ, Office of
Community Planning and Development instruct County officials to
provide documentation supporting that $745,606, drawn down for
2014-NY-1005 6/10/2014 001-B activities without evidence of executed agreements, was committed $745,606
in a timely manner as required. If supporting documentation
cannot be provided, the amount should be recaptured in accordance
with regulations at 24 CFR 92.500(d)(1)(B).
The Nashua Housing Authority and the City of Nashua to provide
support that they complied with 24 CFR Part 58 requirements for
2014-FW-0001 2/7/2014 001-F the Authority’s 2012 Capital Fund grant or require the housing $728,596
agency to reimburse $728,596 to the Authority’s 2012 Capital Fund
grant from non-Federal funds.
Submit all supporting documentation showing the eligibility and
propriety of $726,738 in unaccounted for drawdowns from its
2014-AT-1007 8/8/2014 002-A $726,738
treasury account or reimburse the HOME program from non-
Federal funds.
Require the Municipality to submit all supporting documentation
showing that the 35 home buyers met the principal residency
2014-AT-1007 8/8/2014 001-B requirement for the duration of the period of affordability or $675,194
reimburse the HOME program from non-Federal funds the
$675,194 in HOME assistance provided.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
Authority to establish and maintain a separate net restricted assets
2014-CH-1006 8/14/2014 001-A $640,283
account and reimburse the net restricted assets fund from non-
Federal funds $640,283 or the current amount owed and provide
the results to HUD for verification.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
provide documentation to support the reasonableness and eligibility
of the administrative program delivery costs charged to the CDBG
2014-NY-1004 5/20/2014 001-G $597,048
program, including $597,048 in program delivery costs that could
have been allocated to the State program, and repay the CDBG
program from non-Federal funds any amounts determined to be
unreasonable or ineligible.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct Palladia officials to
2014-NY-1008 7/25/2014 001-E provide source documentation to substantiate that the $584,579 in $584,579
required non-Federal cash matching funds for five of the six
program projects reviewed were met.
Support or reimburse its program $570,834 from non-Federal funds
2014-FW-1003 7/2/2014 001-C $570,834
for payments that lacked supporting documentation.
Reimburse the Authority’s programs from non-Federal funds for
2014-BO-1002 4/30/2014 002-A $512,516
more than $697,471 in unreasonable salary expenditures.
154
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
The Dearborn Housing Commission and the City of Dearborn to
provide support that they complied with 24 CFR Part 58
2014-FW-0005 9/24/2014 001-B requirements for the Commission’s Recovery Act grant or require $501,015
the Commission to repay $501,015 to HUD for its transmission to
the U.S. Treasury. Repayment must be from non-Federal funds.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
2014-NY-1009 9/18/2014 001-A repay the $464,663 not committed within the required timeframe so $464,663
that these funds can be recaptured in accordance with Federal
regulations.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
provide documentation to support compliance with the maximum
2014-NY-1009 9/18/2014 002-C HOME subsidy limits, the environmental review process, and the $459,991
use and application of program income for the unsupported housing
activity or repay $459,991 from non-Federal funds to the City’s
HOME program line of credit.
The Pontiac Housing Commission to repay $457,861 in 2011
capital funds to HUD for its statutory violation of the requirement
2014-FW-0005 9/24/2014 001-J that the responsible entity, not the Commission, sign as certifying $457,861
officer on the request for release of funds and certification.
Repayment must be from non-Federal funds.
Require the City to repay HUD, using non-Federal funds, $449,598
2014-LA-1005 8/22/2014 001-B paid to secondary lien holders, developers, and contractors for $449,598
rehabilitation work not performed.
Repay the Authority’s asset management projects from non-Federal
funds $582,562 related to the ineligible cost deficiencies identified
in this finding; specifically, charges of $240,321 for central
2014-BO-1001 1/23/2014 001-A maintenance employees; $281,611 for asset management, property $413,493
management, and bookkeeping fees; $26,434 for insurance;
$10,000 for auditing; $20,000 for consulting; and $4,196 for legal
expenses.
Deobligate, reprogram, and put to better use $387,449 in overstated
2014-AT-1007 8/8/2014 003-A $387,449
commitments.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
Authority to implement adequate procedures and controls to ensure
that all units meet HUD’s housing quality standards and its own
requirements to prevent $373,661 in program funds from being
2014-CH-1006 8/14/2014 002-C spent on units that do not comply with HUD’s requirements over $373,661
the next year. The procedures and controls should include but not
be limited to providing feedback to the inspectors to correct
recurring inspection deficiencies, inspectors are properly trained
and familiar with HUD’s and its own requirements, and inspectors
consistently conduct accurate and complete inspections.
Initiate the billing process for the five loans with losses to HUD
2014-LA-0005 8/8/2014 002-D that were streamline refinanced. HUD incurred losses of $373,228 $373,228
for these loans.
155
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Obtain and submit supporting documentation showing the
2015-AT-1001 12/5/2014 002-C eligibility and propriety of $367,840 in disbursements or reimburse $367,840
the loan guarantee account from non-Federal funds.
The Dearborn Housing Commission and the City of Dearborn to
provide support that they complied with 24 CFR Part 58
2014-FW-0005 9/24/2014 001-C requirements for the Commission’s 2011 Capital Fund grant or $366,971
require the Commission to repay $366,971 to HUD from non-
Federal funds.
The Dearborn Housing Commission and the City of Dearborn to
provide support that they complied with 24 CFR Part 58
2014-FW-0005 9/24/2014 001-D requirements for the Commission’s 2012 Capital Fund grant or $337,776
require the housing commission to reimburse $337,776 to its 2012
Capital Fund grant from non-Federal funds.
Deobligate $785 in one administrative obligation marked for
deobligation during the department-wide open obligations review.
2015-FO-0002 12/8/2014 006-S Additionally, review the six obligations with remaining balances $333,673
totaling $332,888 and close out and deobligate amounts tied to
obligations that are no longer valid or needed.
Seek recovery of the $323,720 in CDBG funds from the bank with
interest from March 14, 2002, to the present. Reimburse $323,720
2014-AT-1005 5/29/2014 002-B $323,720
in CDBG funds to the CDBG program from non-federal funds and
reimburse the interest to the U.S. Treasury.
The Pontiac Housing Commission and the City of Pontiac to
provide support that they complied with 24 CFR Part 58
2014-FW-0005 9/24/2014 001-I requirements for the Commission’s Recovery Act grant or require $315,831
the Commission to repay $315,831 to HUD for its transmission to
the U.S. Treasury. Repayment must be from non-Federal funds.
Reimburse the grantee’s program $312,077 from non-Federal funds
2014-PH-1007 7/15/2014 001-A $312,077
for the ineligible disbursements.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City Officials to
2014-NY-1009 9/18/2014 004-D record the receipt and use of $289,858 in program income in IDIS, $289,858
thus ensuring that $289,858 in program income is properly
accounted for and put to better use.
Require contract administrators that did not apply the back-out
requirements to recalculate all FAF projects with Section 8 rent
increases that occurred from January 2004 to the present and adjust
2014-AT-0001 3/14/2014 001-B $279,639
current and future rents to the amounts supported by the
calculations. We estimate annual savings of $279,639 through the
implementation of this recommendation for the projects reviewed.
The Pontiac Housing Commission to repay $273,774 in Recovery
Act grant funds to HUD for its transmission to the U.S. Treasury
2014-FW-0005 9/24/2014 001-H for contract obligations that occurred before the environmental $273,774
review was completed by the responsible entity. Repayment must
be from non-Federal funds.
156
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
2014-NY-1009 9/18/2014 002-A reimburse the City’s HOME program line of credit $250,410 from $250,410
non-Federal funds for HOME assistance expended on housing units
acquired by two ineligible home buyers.
Provide supporting documentation for activity 5134 or reimburse
2014-AT-1010 9/11/2014 001-B its program $45,600 from non-Federal funds and put to better use $250,000
$204,400 in HOME funds.
Allow HUD OIG to record the $250,000 judgement in HUD's
2014-CF-1809 9/25/2014 001-A Audit Resolution and Corrective Actions Tracking System as an $250,000
ineligible cost.
We recommend that the Director of HUD’s Chicago Office of
Community Planning and Development require the City to ensure
that for the two Program-assisted units in project number 8806 in
which the owner is involved in ongoing eviction proceedings with
the households, (1) the leases between the owner and the
2014-CH-1011 9/30/2014 001-B households are amended to remove the prohibited language if the $245,698
households are not evicted, (2) the owner executes leases that do
not include prohibited language with new households if the
households are evicted, or (3) reimburse its Program from non-
Federal funds for the $245,698 ($4,913,961 / 40 units * two units)
in Program funds drawn down for the two units as appropriate.
Require the Authority to determine how much of the $243,442 in
salaries for individuals assigned to work at multiple properties was
improperly paid with Federal funds and repay the amounts to the
appropriate programs from non-Federal funds. If the Authority is
2015-FW-1801 10/2/2014 001-D $243,442
unable to accurately determine the amount due to and due from
each program or support that the funds charged to the Federal
programs were appropriate, the full $243,422 should be repaid to
HUD.
We recommend that the Acting Director of HUD’s Detroit Office
of Public Housing require the Commission to support the
reasonableness or reimburse HUD $239,033 from non-Federal
2014-CH-1003 4/30/2014 001-C $239,033
funds, for transmission to the U.S. Treasury, for the amount of the
Commission’s Recovery Act-funded contract that exceeded the
independent estimate.
Provide documentation to support its use of $308,797 in program
2014-PH-1007 7/15/2014 001-B funds or reimburse the grantee’s program from non-Federal funds $226,664
for any amount that it cannot support.
Require the City to return to HUD, using non-Federal funds, the
actual amount of administrative costs charged to the grant related to
2014-LA-1005 8/22/2014 001-A $223,085
the three developers or $223,085 because the City mismanaged its
NSP1.
We recommend that the Director of HUD’s Detroit Office of
Community Planning and Development require the City to use for
eligible Program costs, before drawing down additional Program
2014-CH-1002 1/6/2014 001-C funds, $203,802 in (1) the remaining fire insurance funds for which $203,802
it inappropriately drew down Program funds when it had fire
insurance funds available (nearly $132,000) and (2) Program funds
drawn down for duplicate demolition costs (nearly $72,000).
157
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
submit documentation to justify the unsupported costs of $200,000
2014-NY-1004 5/20/2014 001-A incurred for an economic development loan so that HUD can make $200,000
an eligibility determination. For any costs determined to be
ineligible, HUD should require the City to reimburse the CDBG
program from non-Federal funds.
Provide documentation to support that the $200,000 transferred to
the agent’s revolving fund account was expended for eligible
2015-BO-1001 12/16/2014 001-B $200,000
project costs and if such support cannot be provided, repay the
project this amount from non-Federal funds.
Discontinue using its low-rent public housing fund as a general
2014-FW-1002 5/27/2014 001-B fund to pay costs associated with its business activities until it has $178,893
established appropriate controls.
Develop and implement procedures and controls to ensure
compliance with requirements, to include but not be limited to
procedures and controls to ensure that (1) housing assistance
payments are eligible and supported, (2) appropriate documentation
2014-AT-1011 9/22/2014 001-C $174,995
is obtained and maintained, and (3) property managers are
adequately trained on the program requirements. By doing so, we
estimate an annual savings of $174,995 in housing assistance
payments.
Determine the loss amounts for the three loans (412-4767940, 442-
2014-LA-0005 8/8/2014 001-D 2462614, and 561-8450712) that were part of the ACD program, $147,467
which OIG was unable to determine the loss. above.
Support or repay from non-Federal funds $144,263 to its Operating
2014-FW-1806 8/19/2014 001-E Fund program for credit card purchases that did not have receipts or $144,263
other support.
Deobligate $5,210 in two administrative obligations and $109,500
in one program obligation marked for deobligation during the
department-wide open obligations review. Additionally, review the
2015-FO-0002 12/8/2014 006-U $141,421
17 obligations with remaining balances totaling $26,711 and close
out and deobligate amounts tied to obligations that are no longer
valid or needed.
Require the City to repay HUD, using non-Federal funds, $137,601
2014-LA-1005 8/22/2014 001-D $137,601
for the unreasonable costs identified in the report.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to support the time spent correctly
administering its Family Self-Sufficiency program or reimburse
2014-CH-1009 9/12/2014 001-F $137,347
HUD from non-Federal funds the appropriate portion of the
$137,347 in coordinator grant funds received for fiscal years 2012
and 2013 that was incorrectly paid.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
Authority to support that program funds were not used for the
2014-CH-1006 8/14/2014 001-C $132,974 ($68,369 in personal and inappropriate expenditures + $132,974
$64,605 in unsupported expenditures) or reimburse its program
from non-Federal funds for the unsupported credit card
expenditures cited in this finding.
158
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
2014-NY-1009 9/18/2014 001-L reconcile the $118,561 ($16,192 + 102,369) discrepancy between $118,561
the City’s accounting records and financial information reported in
IDIS to ensure that these funds have been put to their intended use.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
Authority to support or reimburse its program $118,079 ($112,571
2014-CH-1006 8/14/2014 003-F $118,079
in housing assistance payments + $5,508 in associated
administrative fees) from non-Federal funds for the unsupported
overpayment of housing assistance cited in this finding.
Require the Authority to support or repay its various program
accounts $109,861 from nonfederal funds for unsupported payroll,
2014-FW-1802 3/31/2014 001-B $109,861
other compensation, bonuses, travel, supplies, contractor payments
and petty cash disbursements.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its Housing Choice
2014-CH-1009 9/12/2014 001-A Voucher program $106,924 from non-Federal funds for the $106,924
overpayment of its Family Self-Sufficiency program graduates’
escrow disbursements cited in this finding.
Require the City to repay HUD, using non-Federal funds, $103,806
2014-LA-1005 8/22/2014 001-C $103,806
for all other ineligible costs identified in the report.
Reimburse $100,000 in HOME funds to the HOME Investment
2014-AT-1005 5/29/2014 002-C $100,000
Trust Fund Treasury account from non-Federal funds.
We recommend that the Acting Director of HUD’s Chicago Office
of Public Housing require the Authority to support or reimburse its
program $220,704 ($70 + $197,906 in housing assistance payments
+ $26 in utility allowances + $22,702 in associated administrative
2014-CH-1004 7/14/2014 001-F $91,226
fees) from non-Federal funds for the unsupported overpayment of
housing assistance due to unsupported calculations, missing
eligibility documentation, and discrepancies in the housing
assistance payments register.
The Pontiac Housing Commission to reimburse $82,470 to the
Commissions’ 2012 Capital Fund grant for operation expenditures
2014-FW-0005 9/24/2014 001-K $82,470
that occurred before the environmental review was completed by
the responsible entity. Repayment must be from non-Federal funds.
We recommend that the Acting Director of HUD’s Detroit Office
of Public Housing require the Commission to
2014-CH-1003 4/30/2014 001-A reimburse HUD $79,975 from non-Federal funds, for transmission $79,975
to the U.S. Treasury, for the work items that were not allocable to
the Recovery Act competitive grant-funded contract.
Reassess the $72,969 unsupported write-off for FAF 393 and
2014-AT-0001 3/14/2014 001-F reinstate and pursue collection of all or any portion of the amount $72,969
determined to have been written off without proper justification.
159
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of the HUD Newark Office of
Public and Indian Housing instruct Authority officials to provide
adequate documentation of a valid Social Security number for the
three tenants without valid Social Security numbers on whose
2014-NY-1001 1/15/2014 002-C $70,111
behalf $116,761 in housing assistance payments was disbursed.
Any amount not supported should be repaid from non-Federal
funds, and the status of any tenant deemed ineligible should be
determined in accordance with the Authority’s administrative plan.
Submit all supporting documentation showing the eligibility and
propriety of $68,322 charged to the HOME program for project and
2014-AT-1007 8/8/2014 002-B $68,322
administrative costs or reimburse the program from non-Federal
funds.
Reassess the $67,000 unsupported write-off for FAF 184 and
2014-AT-0001 3/14/2014 001-G reinstate and pursue collection of all or any portion of the amount $67,000
determined to have been written off without proper justification.
The Dearborn Housing Commission to repay $63,255 in Recovery
Act grant funds to HUD for its transmission to the U.S. Treasury
2014-FW-0005 9/24/2014 001-A for architect and engineering fees and contract obligations that $63,255
occurred before the environmental review was completed by the
responsible entity. Repayment must be from non-Federal funds.
Reimburse from non-Federal funds $62,204 in ineligible project
2014-AT-1007 8/8/2014 002-C $62,204
costs.
Provide documentation to support that the expenditure of $57,110
in 2011 was for eligible project salaries and if such support cannot
2015-BO-1001 12/16/2014 001-D $57,110
be provided, repay the amount to the project from non-Federal
funds.
Remit to its treasury account and put to better use the reimbursed
2014-AT-1007 8/8/2014 002-D $56,102
HOME funds totaling $56,102.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to reimburse its Housing Choice
2014-CH-1009 9/12/2014 001-B $53,559
Voucher program $53,559 for the overfunding of its Family Self-
Sufficiency program participants’ escrow accounts.
Agree to allow HUD OIG to record the $57,500 settlement in
2014-CF-1805 8/11/2014 001-A HUD’s Audit Resolution and Corrective Actions Tracking System $52,500
as an ineligible cost.
Require the Authority to determine whether the Authority
improperly used Federal funds totaling $50,000 which were used to
pay unnecessary severance contract costs. If Federal funds were
improperly used, the Authority should repay $50,000 to its Federal
2015-FW-1801 10/2/2014 001-J program accounts from non-Federal funds. If the Authority is $50,000
unable to accurately determine the amount due to and due from
each program or support that the funds charged to the Federal
program were appropriate, the full $50,000 should be repaid to
HUD.
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to support its waiver request and
2014-CH-1009 9/12/2014 002-A the applicable approval from HUD to waive its conflict of interest $47,353
requirements or reimburse HUD $47,353 for the housing assistance
payments disbursed while the conflicts of interest existed.
160
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director, Office of Public Housing, Fort
Worth, TX, require the Authority to either support or repay to HUD
2015-FW-1802 10/31/2014 001-D for its transmission to the U.S. Treasury $43,300 in unsupported $43,300
asbestos abatement expenses. Repayment must be from non-
Federal funds.
Require the Authority to determine whether the Authority
improperly used Federal funds totaling $40,600 to make lease
payments on the parking lot it already owned. If Federal funds
were improperly used, the Authority should repay $40,600 from
2015-FW-1801 10/2/2014 001-F non-Federal funds to its Federal program accounts. If the Authority $40,600
is unable to accurately determine the amount due to and due from
each program or support that the funds charged to the Federal
program were appropriate, the full $40,600 should be repaid to
HUD.
We recommend that the Acting Director of HUD’s Chicago Office
of Public Housing require the Authority to reimburse its program
$39,605 ($21,546 in housing assistance payments + $18,059 in
2014-CH-1004 7/14/2014 001-A $39,605
associated administrative fees) from non-Federal funds for the
overpayment of housing assistance due to inappropriate
calculations of housing assistance payments.
Submit supporting documentation showing the eligibility and
2014-AT-1801 3/20/2014 001-D propriety of $37,215 drawn from HUD or reimburse the State $37,215
CDBG program from non-Federal funds.
We recommend that the Director, Office of Public Housing, Fort
Worth, TX, require the Authority to resolve its unpaid payroll taxes
2015-FW-1802 10/31/2014 001-B and retirement liabilities and ensure that the Authority only uses $36,882
non-federal or non-HUD funds to pay the unpaid interest or
penalties.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
Authority to reimburse its program $35,545 from non-Federal
2014-CH-1006 8/14/2014 002-B $35,545
funds ($32,769 for program housing assistance + $2,776 in
associated administrative fees) for the 19 units that materially failed
to meet HUD’s housing quality standards and its own requirements.
We recommend that the Acting Director of HUD’s Chicago Office
of Public Housing require the Authority to reimburse its program
2014-CH-1004 7/14/2014 002-A $31,204
$31,204 from non-Federal funds for the ineligible expenditures
cited in this finding.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
Authority to implement procedures and controls to ensure that
housing assistance is correctly calculated and repayment
2014-CH-1006 8/14/2014 003-K agreements are created to recover overpaid housing assistance $30,764
when unreported income is discovered during the examination
process to ensure that $30,764 ($27,211 in overpayments + $3,553
in underpayments) in program funds is appropriately used for
future payments.
161
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Acting Director of HUD’s Chicago Office
of Public Housing require the Authority to reimburse the
2014-CH-1004 7/14/2014 001-G appropriate households $25,767 from non-Federal funds for the $25,767
rent amounts paid in excess of 40 percent of their adjusted monthly
income for units that were not affordable.
Require the Authority to repay $23,546 to its Section 8
Homeownership Voucher program from non-Federal funds for the
2015-FW-1801 10/2/2014 001-M $17,124 in ineligible owner housing assistance payments to the $23,546
former Section 8 program manager and the $6,422 in ineligible
owner housing assistance payments to the son of director 1.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
Authority to support that program funds used were not used to pay
2014-CH-1006 8/14/2014 001-E $23,353
the $23,353 in employee loans or reimburse its program from non-
Federal funds for the unsupported employee loans cited in this
finding.
The New Bedford Housing Authority to repay $22,786 from non-
Federal funds to its 2012 Capital Fund grant for salaries and
2014-FW-0001 2/7/2014 001-I $22,786
benefits that were released before the responsible entity
documented that activities met exemption requirements.
We recommend that the Director, Office of Public Housing, Fort
Worth, TX, Require the Authority to support or repay $46,097 in
unsupported expenditures. The funds should be repaid to the
Authority’s public housing program. However, if the Authority
2015-FW-1802 10/31/2014 001-C $21,767
made any of the expenditures from its 2010 or earlier capital fund
grants, or if the Authority is unable to determine the source of
funds used to pay expenditures, the Authority should repay HUD.
Any repayments must be from non-Federal funds.
We recommend that the Acting Director of HUD’s Detroit Office
of Public Housing require the Commission to reimburse HUD
2014-CH-1003 4/30/2014 001-B $20,833 from non-Federal funds, for transmission to the U.S. $20,833
Treasury, for the Recovery Act-funded work items that were not
included in the Commission’s annual or 5-year plan.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
Authority to reimburse its program $20,001 ($12,221 in housing
2014-CH-1006 8/14/2014 003-A $20,001
assistance payments + $7,780 in associated administrative fees)
from non-Federal funds for the overpayment of housing assistance
due to inappropriate calculations of housing assistance payments.
We recommend that the Director of the HUD Newark Office of
Public and Indian Housing instruct Authority officials to reimburse
2014-NY-1001 1/15/2014 001-C from non-federal funds the $62,789 in housing assistance disbursed $19,407
for the nine units that materially failed housing quality standards
inspection.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
2014-NY-1004 5/20/2014 001-C repay from non-Federal funds the ineligible costs of $18,027 that $18,027
were paid to a subrecipeint, which did not benefit the CDBG
program.
162
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Reimburse its program $18,391 from non-Federal funds for the 12
2014-FW-1003 7/2/2014 002-B units that materially failed to meet HUD’s housing quality $16,391
standards.
Reimburse its program $16,350 from non-Federal funds for the
2014-FW-1003 7/2/2014 001-A overpayment of housing assistance and utility reimbursement $16,350
payments.
We recommend that the Director of HUD’s Detroit Office of
Community Planning and Development support that the more than
$14,000 in refunded gas cut and cap fees that was inappropriately
transferred into its Program account and used for Program costs
2014-CH-1002 1/6/2014 001-H $14,250
was an eligible Program use under the Recovery Act or reimburse
its Program under the Recovery Act $14,250 from non-Federal
funds and use the funds for eligible Program costs under the
Recovery Act.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
2014-CH-1006 8/14/2014 001-F Authority to reimburse its program $12,654 from non-Federal $12,654
funds for the ineligible overdraft, nonsufficient fund checks, and
service charges.
Require the Authority to determine whether the Authority
improperly used Federal funds totaling $11,833 which were used to
cancel an existing phone system and purchase a new one. If
Federal funds were improperly used, the Authority should repay
2015-FW-1801 10/2/2014 001-H $11,833 to its Federal program accounts from non-Federal funds. $11,833
If the Authority is unable to accurately determine the amount due to
and due from each program or support that the funds charged to the
Federal program were appropriate, the full $11,833 should be
repaid to HUD.
Support the income eligibility for the two families identified in the
report in accordance with program and HUD regulations or
reimburse its IHBG $11,578 from non-Federal funds for the
2014-LA-1004 7/8/2014 002-B $11,578
subsidies used to house the tenants. HUD should determine the
actual IHBG subsidy received for the affected properties and adjust
the unsupported or ineligible amount accordingly.
Support or reimburse its project $218,676 from non-project funds
2014-AT-1011 9/22/2014 001-B for housing assistance payments that lacked supporting $11,175
documentation.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
2014-CH-1006 8/14/2014 003-C Authority to pursue collection from the applicable households or $10,369
reimburse its program $10,369 from non-Federal funds for the
overpayment of housing assistance due to unreported income.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
Authority to reimburse its program $9,420 from non-Federal funds
2014-CH-1006 8/14/2014 003-E $9,420
for the overpayment of housing assistance due to allowing
households a one-bedroom payment standard each for a shared-
housing unit.
163
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Detroit Office of Public
Housing require the Commission to support the escrow account
balances for its current program participants totaling $9,040 or
reimburse its Housing Choice Voucher program for the
2014-CH-1009 9/12/2014 001-E $9,040
unsupported escrow credits cited in this finding. The actual
unsupported escrow balance was $39,178. However, $30,138 of
that amount was included in recommendation 1B as an ineligible
cost, thus reducing the amount in recommendation 1E to $9,040.
Support or repay from non-Federal funds $8,721 in unsupported
2014-FW-1804 8/1/2014 001-J $8,721
vacation payments.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
provide documentation regarding the repayment of the $7,035 that
2014-NY-1004 5/20/2014 001-D $7,035
was paid an architecture firm related to a State grant to ensure that
it was properly repaid to the CDBG program from non-Federal
funds.
We recommend that the Acting Director of HUD’s Chicago Office
of Public Housing require the Authority to pursue collection from
2014-CH-1004 7/14/2014 001-C the applicable households or reimburse its program $5,599 from $5,599
non-Federal funds for the overpayment of housing assistance due to
unreported income.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
2014-CH-1006 8/14/2014 003-B Authority to reimburse the appropriate households $3,973 from $3,973
program funds for the underpayment of housing assistance due to
inappropriate calculations of housing assistance payments.
Repay $3,840 from non-Federal funds to its Operating Fund
2014-FW-1806 8/19/2014 001-D program for amounts paid for ineligible credit card purchases and $3,840
transactions.
We recommend that the Director of HUD’s Detroit Office of
Community Planning and Development require the City to support
that the more than $7,000 in fire insurance funds transferred into its
2014-CH-1002 1/6/2014 001-F Block Grant program account in May 2012 for an address was $3,833
appropriate or reimburse its Program $3,833 from non-Federal
funds, as appropriate, for the nearly $4,000 in Program funds that it
drew down for the address.
Provide documentation to support the $3,242 in total development
2014-LA-1006 9/25/2014 001-E $3,242
costs identified in this report or reimburse the homeowner.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
2014-CH-1006 8/14/2014 001-D $3,036
Authority to reimburse its program $3,036 from non-Federal funds
for the ineligible credit card late fees and finance charges.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
2014-CH-1006 8/14/2014 003-G Authority to reimburse the appropriate household $3,006 from non- $3,006
Federal funds for the rent amount paid in excess of 40 percent of its
adjusted monthly income for the unit that was not affordable.
164
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
2014-CH-1006 8/14/2014 003-D Authority to reimburse its program $2,558 from non-Federal funds $2,558
for the overpayment of housing assistance due to not capturing
income increases reported by the households.
We recommend that the Acting Director of HUD’s Chicago Office
of Public Housing require the Authority to pursue collection from
the applicable landlords or reimburse its program $2,095 in housing
2014-CH-1004 7/14/2014 001-D $2,095
assistance from non-Federal funds for the overpayment of housing
assistance due to discrepancies in the housing assistance payments
register.
Support or repay from non-Federal funds $2,070 to its Capital or
2014-FW-1806 8/19/2014 001-F $2,070
Operating Fund program as appropriate for the missing appliances.
Repay from non-Federal funds $1,724 paid for unnecessary costs
2014-FW-1804 8/1/2014 001-M $1,724
paid for mileage.
Support or repay from non-Federal funds $1,682 paid to its
2014-FW-1804 8/1/2014 001-N $1,682
executive director for unsupported costs.
We recommend that the Acting Director of HUD’s Chicago Office
of Public Housing require the Authority to reimburse the
2014-CH-1004 7/14/2014 001-B appropriate households $5,308 from program funds for the $1,394
underpayment of housing assistance due to inappropriate
calculations.
We recommend that the Acting Director of HUD’s Chicago Office
of Public Housing require the Authority to reimburse the
2014-CH-1004 7/14/2014 001-E appropriate landlords $1,143 in housing assistance from program $1,070
funds for the underpayment of housing assistance due to
discrepancies in the housing assistance payments register.
Require the Authority to determine whether the Authority
improperly used Federal funds totaling $657 which were used to
purchase ineligible meals and other personal items. If Federal
funds were improperly used, the Authority should repay $657 to its
2015-FW-1801 10/2/2014 001-I $657
Federal program accounts from non-Federal funds. If the Authority
is unable to accurately determine the amount due to and due from
each program or support that the funds charged to the Federal
program were appropriate, the full $657 should be repaid to HUD.
Repay from non-Federal funds $620 paid to the executive director
2014-FW-1804 8/1/2014 001-O $620
for ineligible costs.
Develop and implement controls and procedures to monitor the
application of required rent adjustments to Section 8 FAF projects
2014-AT-0001 3/14/2014 001-A which should include adding a section to Housing’s monitoring $0
review checklist to address the backing out of trustee sweep
payments.
Renew Housing Notices 97-49 and 3-28 and include appropriate
example calculations to guide contract administrators and HUD
2014-AT-0001 3/14/2014 001-C $0
staff on how to calculate annual adjustment factor rents for bond-
refunded projects and for use in enforcing the requirements.
165
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Develop and implement controls to ensure requests made by
Housing for adjustments to bond receivables are properly assessed
2014-AT-0001 3/14/2014 001-D $0
and supported in accordance with provisions in Housing Notice 3-
28.
Develop and implement controls and procedures to monitor the
remitting of trust fund balances to ensure that funds due to HUD
2014-AT-0001 3/14/2014 001-H upon prepayments or normal payoff of bonds are not released to $0
other parties unless conditions established by headquarters are met
and documented.
Establish and implement procedures to review and oversee the
2014-AT-1005 5/29/2014 002-E agreements of its Community Development Department and $0
recover CDBG and HOME funds when required.
Ensure that its annual inspections are properly performed and
thoroughly documented so the inspection reports provide a clear
2014-AT-1005 5/29/2014 003-A trail of necessary repairs to ensure that the deficiencies are $0
corrected and those corrections can be verified against the
identified deficiencies.
Inspect the project, identify the deficiencies, and require the owner
2014-AT-1005 5/29/2014 003-B $0
to correct all deficiencies identified.
Review all of the Department’s participation agreements to ensure
2014-AT-1005 5/29/2014 004-A $0
compliance with HUD and HOME requirements.
Ensure that the Department obtains all of the project costs from the
2014-AT-1005 5/29/2014 005-A developer to determine the applicable costs and properly prepare a $0
cost allocation plan.
2014-AT-1005 5/29/2014 005-B Provide the cost allocation plan for review. $0
Recapture any shortfalls generated by the closure and deobligation
of funds associated with recommendations 1A to 1B that do not
meet statutory requirements for the timely commitment and
2014-AT-1007 8/8/2014 001-C $0
expenditure of funds pursuant to the National Defense
Authorization Act of 1991 and/or Title II of the Cranston-Gonzalez
National Affordable Housing Act, as amended.
Correct any inaccurate information in HUD’s information system,
including but not limited to the receipt of $233,137 associated with
2014-AT-1007 8/8/2014 003-B $0
program income and recaptured funds not reported and inaccurate
commitment amounts and dates.
Establish and implement policies and procedures to ensure that
2014-AT-1010 9/11/2014 001-A commitments are entered into IDIS after the County has a valid $0
written agreement that has been signed and dated by all parties.
Provide the revised HOME agreement templates for the various
types of awardees, which must include the HOME provisions and
2014-AT-1010 9/11/2014 001-D date line for signatures. The home buyer assistance agreements $0
template should also include a signature and date line for the
County.
Establish and implement policies and procedures to ensure that
2014-AT-1010 9/11/2014 001-E $0
amendments are executed on a timely basis.
Reimburse its project $216,749 from non-project funds for the
2014-AT-1011 9/22/2014 001-A $0
ineligible housing assistance payments.
166
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Develop and implement policies to monitor its property managers
2014-AT-1011 9/22/2014 001-D $0
to ensure adequate administration of the program.
Refer Prudential Huntoon Paige Associates, LTD to the Mortgagee
2014-AT-1015 9/30/2014 001-A Review Board for appropriate action for violations that caused a $0
more than $20 million loss to HUD’s FHA insurance fund.
Take appropriate enforcement actions against the responsible
parties and pursue civil remedies under the False Claims Act, if
legally sufficient, against responsible parties for incorrectly
2014-AT-1015 9/30/2014 001-B $0
certifying to the integrity of the data or that due diligence was
exercised by the underwriting of the loan that resulted in a loss to
HUD totaling $20,157,329.
Pursue administrative actions, as appropriate, against the
2014-AT-1015 9/30/2014 001-C responsible party for the material underwriting deficiencies cited in $0
this report.
Ensure that the Municipality maintains adequate documentation
related to the Vieques sports complex project in accordance with
2014-AT-1801 3/20/2014 001-C $0
HUD requirements and that these demonstrate the allowability,
necessity, and reasonableness of the costs incurred.
Correct any inaccurate information in HUD’s information system
2014-AT-1801 3/20/2014 001-E related to the sports complex, including but not limited to the $0
drawdowns of $216,630 associated with the loan repayment.
We recommend that the Director of HUD’s Detroit Office of
Community Planning and Development determine whether the U.S.
Treasury paid unnecessary interest on the Program funds associated
with the more than $604,000 in fire insurance funds the City
transferred into its Program account in July 2013. If the U.S.
2014-CH-1002 1/6/2014 001-B Treasury paid unnecessary interest, the City should reimburse $0
HUD, for transmission to the U.S. Treasury, from non-Federal
funds for the unnecessary interest the U.S. Treasury paid on the
Program funds that the City inappropriately drew down for
activities when it had fire insurance funds for the properties
associated with the activities.
We recommend that the Director of HUD’s Detroit Office of
Community Planning and Development require the City to
determine whether the $872,140 in fire insurance funds that it
inappropriately transferred into its Program account are associated
with demolition costs paid with other Federal program funds. If the
2014-CH-1002 1/6/2014 001-E $0
fire insurance funds are associated with demolition costs paid with
other program funds, the City should transfer the fire insurance
funds into the applicable program account and use the funds for
eligible program costs before drawing down additional program
funds.
167
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Detroit Office of
Community Planning and Development require the City to
determine for the remaining 177 addresses in its report whether fire
insurance funds were available when it drew down Program funds
for the demolition costs. If fire insurance funds were available, the
2014-CH-1002 1/6/2014 001-G City should (1) use the fire insurance funds for eligible Program $0
costs before drawing down additional Program funds and (2)
reimburse HUD, for transmission to the U.S. Treasury, from non-
Federal funds any unnecessary interest the U.S. Treasury paid on
the Program funds that it drew down for activities when it had fire
insurance funds for the properties associated with the activities.
We recommend that the Acting Director of HUD’s Chicago Office
of Public Housing require the Authority to for households currently
2014-CH-1004 7/14/2014 001-I residing in units that are not affordable, renegotiate the rents to $0
owner or require the households to move to units that are
affordable.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
2014-CH-1006 8/14/2014 001-B $0
Authority to reconcile its books and accounting records to
determine the sources and use of funds in its operating account.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
2014-CH-1006 8/14/2014 003-H Authority to review the remaining household files to ensure that $0
additional households are not residing in units that are not
affordable.
We recommend that the program center coordinator of HUD’s
Indianapolis Office of Public and Indian Housing require the
Authority to implement procedures and controls to ensure that
2014-CH-1006 8/14/2014 003-L $0
required eligibility documentation is obtained and maintained to
support households’ admission to and continued assistance on the
program.
Report on Multifamily, Public Housing, and Section 8 program
2014-FO-0004 4/15/2014 001-G $0
improper payment rates separately in the agency financial reports.
Coordinate with all appropriate program officials when responding
to OCFO’s information requests to ensure that all statements are
2014-FO-0004 4/15/2014 001-L accurate for the current fiscal year, to include but not be limited to $0
updates to corrective action plans, internal controls in place, and
information on any barriers the agency is experiencing.
Develop and execute formal plans to hold accountable program
2014-FO-0004 4/15/2014 001-M officials and processing entities (owners or administrators) $0
responsible for improper payments.
Reassess existing supplemental measures and corrective actions,
and enhance or develop new supplemental measures and corrective
2014-FO-0004 4/15/2014 002-A $0
actions to ensure that they target the root causes of error identified
in the improper payment studies.
Reassess existing supplemental measures and corrective actions,
and enhance or develop new supplemental measures and corrective
2014-FO-0004 4/15/2014 002-D $0
actions to ensure that they target the root causes of error identified
in the improper payment studies.
168
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Periodically reevaluate the supplemental measures and corrective
2014-FO-0004 4/15/2014 002-E actions so that new and innovative ways to reduce improper $0
payments are identified and implemented.
Work with REAC to develop management-level reports in EIV that
will allow Multifamily Housing management to efficiently and
2014-FO-0004 4/15/2014 002-F effectively identify processing entities that are responsible for $0
improper payments and develop policies and procedures to hold
owners/administrators identified accountable.
Work with PIH and Multifamily Housing management to develop
management-level reports in EIV that will allow PIH and
2014-FO-0004 4/15/2014 002-G Multifamily Housing management to efficiently and effectively $0
identify processing entities that are responsible for improper
payments.
Work with PIH and Multifamily Housing to determine annual
2014-FO-0004 4/15/2014 002-H improper payments HUD made to deceased tenants, and report this $0
amount as an additional source of improper payments in its AFR.
The housing agencies to work with their respective responsible
entities and local HUD environmental officer to show that no harm
2014-FW-0001 2/7/2014 001-K $0
occurred from completion of all of the projects or mitigate any
harm that occurred.
The housing agencies to work with their respective responsible
entities and local HUD environmental officer to show that no harm
2014-FW-0002 5/12/2014 001-H $0
occurred from completion of all the projects or mitigate any harm
that did occur.
The housing commissions to work with their respective responsible
entities and local HUD environmental officer to show that no harm
2014-FW-0005 9/24/2014 001-L $0
occurred from completion of all of the projects or mitigate any
harm that occurred.
Require the Authority to repay its various program accounts $6,480
2014-FW-1802 3/31/2014 001-A from nonfederal funds for ineligible vacation payments made to its $0
executive director.
Support or repay from non-Federal funds $6,895 in unsupported
2014-FW-1804 8/1/2014 001-K $0
pay increases.
Document the selection rules used for feeding data to CAIVRS to
2014-KC-0002 7/2/2014 001-A $0
explain in detail the flow of information from HUD’s systems.
Develop and implement system error checks to identify potential
2014-KC-0002 7/2/2014 001-C $0
reporting issues.
Update CAIVRS’ selection rules to report delinquent Federal debt
2014-KC-0002 7/2/2014 002-A beyond the 3-year claim period or obtain an exemption from the $0
Secretary of the Treasury to exempt FHA loans after 3 years.
Implement HUD CFO Handbook 1830.6, REV-1, in HUD’s next
2014-KC-0006 9/30/2014 001-A $0
budget process.
Identify all user fees and publish a user fee schedule for use by
2014-KC-0006 9/30/2014 001-B $0
OCFO, other Government users, customers, and the public.
2014-KC-0006 9/30/2014 001-C Address HUD’s user fees in HUD’s Agency Financial Report. $0
169
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Revise HUD’s asset management fee policy to re-federalize the
2014-LA-0004 6/30/2014 001-A Operating Fund program’s management and bookkeeping fees and $0
the Capital Fund program’s management fees.
Establish and implement procedures to reassess the management
and bookkeeping fees periodically to ensure that they are
2014-LA-0004 6/30/2014 001-C $0
reasonable. HUD should retain the documentation justifying the
calculation of the rates.
Develop, document, and implement written procedures to ensure
that fees charged to the asset management projects and Capital
2014-LA-0004 6/30/2014 001-H $0
Fund program and expenses from the central office cost center are
used to support HUD’s mission.
Develop and implement post indemnification and billing policies
2014-LA-0005 8/8/2014 001-E and procedures to ensure that lenders are billed for loans that are $0
part of the ACD and CWCOT programs.
Develop and implement post indemnification and billing policies
2014-LA-0005 8/8/2014 001-F and procedures to ensure that lenders are billed for loans that went $0
into default during indemnification agreement period.
Develop and implement policies and procedures to ensure that it
notifies the Financial Operations Center of any program changes
2014-LA-0005 8/8/2014 001-G $0
that could impact the billing of FHA single-family lenders for
losses related to enforceable indemnification agreements.
Extend the indemnification agreement for the five loans (see
2014-LA-0005 8/8/2014 002-A $0
appendix G) with a loss to HUD that were streamline refinanced.
Develop and maintain a process for grant reimbursement that
2014-LA-1004 7/8/2014 001-B readily identifies the specific charges represented by the total $0
requested and ensures that charges are reimbursed only once.
Implement policies and procedures that would allow the grantee to
2014-LA-1004 7/8/2014 001-L $0
identify IHBG subsidies for each of its projects by unit at any time.
Continue submitting the LOCCS Payment Voucher, form HUD-
50080-IHBG, with supporting documentation, and obtain the
Southwest Office of Native American Programs’ approval before
2014-LA-1004 7/8/2014 001-R requesting funds from LOCCS until the Authority implements the $0
recommendations in this audit report and the Authority has
demonstrated that it has sufficient capacity and financial controls in
place.
Review the rest of its active CDBG-funded projects in its portfolio
managed by its former redevelopment agency to ensure that all
required executed agreements are in place with the relevant parties,
2014-LA-1007 9/29/2014 001-B $0
guaranteeing the City’s vested interest within one year of this
report or take appropriate action against the City for those that did
not have the applicable required agreements.
Review the rest of its active CDBG-funded projects in its portfolio
that were managed by its former redevelopment agency to ensure
that all projects meet a national objective. For those that did not
2014-LA-1007 9/29/2014 001-C $0
meet program national objectives, provide and implement a plan of
action to meet the specific national objective within one year of this
report or reimburse HUD from non-Federal funds.
170
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director, Office of Multifamily Asset
Management, require that each Hub or field office review its
refinanced Section 202/223(f) projects for debt service savings
amounts, utilizing data provided from this audit for possible
2014-NY-0001 2/19/2014 001-B $0
additional debt service savings. Where legally possible each Hub
or field office should identify, account for by project, and use these
amounts for current and future opportunities benefiting tenants or
to fund reductions in housing assistance payments.
We recommend that the Director, Office of Multifamily Asset
Management, implement procedures to ensure that all future
2014-NY-0001 2/19/2014 001-C Section 202 refinancings comply with the requirement to generate $0
positive debt service savings or the limited exception to this
requirement related to 6 percent or lower interest rates.
We recommend that the Director of the Public Housing Financial
Management Division ensure that the 2014 ARF funding
2014-NY-0003 9/4/2014 001-C calculation for the 10 PHAs includes the corrections needed as a $0
result of this finding, thus ensuring that the ARF funding provided
will represent funds to be put to better use.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
require the subrecipient to request a waiver related to the apparent
2014-NY-1004 5/20/2014 001-B conflict of interest and implement standards of conduct procedures $0
that prohibit participation in the selection, award, or administration
of a contract involving Federal funds if there is a real or apparent
conflict of interest.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
establish controls to ensure that grant- and subgrant-supported
2014-NY-1004 5/20/2014 001-E activities are adequately monitored and administered to provide $0
assurance that funds have been used only for eligible activities,
costs incurred are necessary and reasonable, and national objectives
have been attained.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
2014-NY-1004 5/20/2014 001-F $0
establish controls to ensure that CDBG funds are not used to pay
for costs related to other funding sources or programs.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
2014-NY-1004 5/20/2014 001-H establish procedures to ensure that the costs of administering the $0
State-funded rehabilitation program are no longer charged to the
CDBG program.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
2014-NY-1004 5/20/2014 001-I $0
Establish controls to ensure that assets are adequately safeguarded
and duties are adequately segregated.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct Palladia officials to
2014-NY-1008 7/25/2014 001-B strengthen oversight controls over disbursements to ensure that $0
adequate supporting documentation is maintained and complies
with applicable regulations.
171
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct Palladia officials to
2014-NY-1008 7/25/2014 001-C follow its policies and procedures for record-keeping to maintain $0
records that adequately identify the source and application of funds
provided for financially assisted activities.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct Palladia officials to
2014-NY-1008 7/25/2014 001-D $0
provide records detailing the funding sources of the non-Federal
cash match for the six grant activities reviewed.
We recommend that the Director of HUD’s New York Office of
Community Planning and Development instruct Palladia officials to
reconcile its accounting records to ensure that total revenues and
2014-NY-1008 7/25/2014 001-F $0
expenditures in its general ledgers reconcile to the revenues and
expenditures reported in its annual performance reports and
LOCCS.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
2014-NY-1009 9/18/2014 002-N provide documentation to support compliance with HOME $0
program rent limit and income eligibility requirements for the three
tenants who occupy HOME-assisted units.
Based on the outcome of the State’s investigation and criminal trial,
make a referral to HUD recommending administrative sanctions, as
2014-PH-1007 7/15/2014 001-D appropriate, up to and including debarment of the Authority’s $0
former rehabilitation specialist, the Planning District Commission’s
former deputy director, and the involved contractors.
Conduct monitoring of the Section 108 activities with signs of slow
2015-AT-1001 12/5/2014 001-D progress to ensure that program objectives are met and provide the $0
intended benefits.
Ensure that borrowers did not use Section 108 funds to finance
2015-AT-1001 12/5/2014 002-B local government operations and verify the return of any ineligible $0
disbursement.
Ensure that the borrowers either transfer the unexpended Section
2015-AT-1001 12/5/2014 002-D 108 loan proceeds to the repayment account or submit a request for $0
extension to HUD.
Ensure that the borrowers provide HUD the additional security
2015-AT-1001 12/5/2014 002-E $0
requirements according to the loan agreement.
Ensure that borrowers develop and implement a financial
management system in accordance with HUD requirements to
2015-AT-1001 12/5/2014 002-F ensure that program funds can be traced to a level that ensures that $0
such funds have not been used in violation of the restrictions and
prohibitions of applicable statutes.
Ensure that all Section 108 loan proceeds deposited at commercial
2015-AT-1001 12/5/2014 002-G $0
banks are properly collateralized with Government obligations.
Conduct monitoring reviews of all Section 108 projects and ensure
2015-AT-1001 12/5/2014 002-H that borrowers comply with all loan agreement provisions and $0
HUD regulations.
172
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Increase monitoring of Municipal Affairs’ performance in the
administration of its Section 108 loan program. Consider imposing
2015-AT-1001 12/5/2014 002-I $0
sanctions if Municipal Affairs does not demonstrate program
progress.
2015-DP-0001 10/21/2014 002-A Not released to public. $0
2015-DP-0001 10/21/2014 002-B Not released to public. $0
2015-DP-0004 12/9/2014 001-B Not released to public. $0
2015-DP-0004 12/9/2014 001-C Not released to public. $0
2015-DP-0004 12/9/2014 001-D Not released to public. $0
2015-DP-0004 12/9/2014 001-E Not released to public. $0
Continue to work with CPD’s information technology services
contractor and OCFO to ensure that all three phases of the plan to
2015-FO-0002 12/8/2014 001-A $0
bring IDIS into compliance with GAAP and applicable Federal
system requirements are completed as scheduled
Validate grants payable estimates and any assumptions used to
2015-FO-0002 12/8/2014 003-F $0
produce the estimates against subsequent grantee reporting.
Incorporate into their grants payable accrual estimation
methodologies steps to appropriately validate grant accrual
2015-FO-0002 12/8/2014 003-G $0
estimates and assumptions used to produce the estimates against
subsequent grantee reporting.
Work with the Office of Multifamily Housing Programs to evaluate
its obligation process for the Section 8 project-based program to
2015-FO-0002 12/8/2014 005-C $0
ensure that it complies with HUD, OMB, and GAO legal
requirements to have a legal point of obligation.
Work with OCFO to revise the funds control plans for the Section 8
project-based programs to ensure that the obligation process in
2015-FO-0002 12/8/2014 005-E $0
place is sufficient to support a legally binding point of obligation
and is reviewed and authorized by designated officials.
Periodically reconcile balances with OCIO subsidiary records and
2015-FO-0002 12/8/2014 007-D $0
research and resolve any identified differences.
Increase efforts to quickly complete outstanding front-end risk
assessments and coordinate with OCFO to finalize the review and
2015-FO-0002 12/8/2014 007-F $0
approval process even in the absence of policies and procedures
with specific deadlines in this area.
Develop a subsidiary system to accumulate the capitalized cost and
2015-FO-0002 12/8/2014 007-I related depreciation expense for each software project under $0
development or placed into production.
Complete any outstanding validation reviews and transition back as
2016-FO-0003 11/18/2015 013-A much as $466.5 million in Housing Choice Voucher program $507,500,000
funding from MTW PHAs and $41 million from non-MTW PHAs.
Start the billing process for the claims paid, plus incentive, in
2016-FO-0002 11/16/2015 001-C which the lender has not provided the original note and security $291,489,605
instrument within the prescribed deadlines for the $291 million.
173
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct the State to require recipients to provide receipts
that support completed reconstruction and repair work to provide
2015-NY-1011 9/17/2015 002-F $241,292,921
greater assurance that assistance is for eligible, reasonable, and
necessary costs, thus ensuring that $241,292,921, which has not
been disbursed, will be put to its intended use.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to provide documentation showing
that the $127.2 million budgeted for inspection-related construction
2015-NY-1011 9/17/2015 003-A $127,200,000
management and environmental review services is fair and
reasonable in accordance with a cost or price analysis as required
by regulations at 24 CFR 85.36.
Close out and deobligate the remaining balances on 2,308 expired
homeless assistance contracts of $104,347,996. HUD should also
deobligate $3,602,342 in 102 program obligations marked for
2016-FO-0003 11/18/2015 008-A deobligation during the departmentwide open obligations review. $108,138,514
Lastly, HUD should review the 57 obligations with remaining
balances of $188,176 and close out and deobligate amounts tied to
obligations that are no longer valid or needed.
Review and if necessary deobligate the 228, 477, and 29 expired or
inactive project-based Section 8, Section 235-236, and Section 202-
2016-FO-0003 11/18/2015 008-F $90,000,000
811 projects totaling $52.5 million, $36.2 million, and $1.3 million,
respectively.
Develop and implement written policies and procedures with an
emphasis on increased controls toward the monitoring, tracking,
underwriting, and evaluating of the Section 184 program.
2015-LA-0002 7/6/2015 001-A $76,967,618
Implementing these controls would reduce the current high level of
risk in the program and result in potentially $76,967,618 in funds to
be put to better use (see appendix A).
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to provide adequate documentation
2015-NY-1011 9/17/2015 001-F for the reasonableness of the cost figure used to disburse $55,672,982
$55,672,982 for reconstruction costs. Any amount not adequately
supported should be repaid to the State’s line of credit.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to provide adequate documentation
2015-NY-1011 9/17/2015 001-G for the reasonableness of the cost figure used for reconstruction $31,831,316
costs, thus ensuring that the undisbursed award balance of
$31,831,316 is put to its intended use.
Implement adequate procedures and controls to address the
weaknesses cited in this audit report to prevent the Cooperative
from the possible repayment of the remaining $22,666,717 in
2015-CH-1010 9/30/2015 001-H $22,666,717
Program funds, which HUD disbursed for the project ($23,104,550
in Program funds disbursed for the project – $437,833 in proceeds
from initial membership sales the Cooperative returned to HUD).
174
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Deobligate all obligations marked for deobligation during the
department-wide open obligations review, including as much as
$19,634,263 in 209 administrative obligations and $2,224,807 in 24
2016-FO-0003 11/18/2015 008-E program obligations marked for deobligation as of September 30, $22,144,094
2015. Additionally, HUD should review the 225 obligations with
remaining balances of $285,024 and close out and deobligate
amounts tied to obligations that are no longer valid or needed.
Refer Berkadia to the Mortgagee Review Board for appropriate
2015-KC-1005 8/4/2015 001-A action for violations that caused a more than $11 million loss to $11,312,956
HUD’s FHA insurance fund.
Refer Prudential to the Mortgagee Review Board to take
appropriate action for violations that caused $10,159,961 in
2015-AT-1003 6/30/2015 001-A $10,159,961
unnecessary or unreasonable cost to HUD’s FHA insurance fund or
other administrative action as appropriate.
Submit a plan for how it will proceed with respect to the
multipurpose facility project, including a schedule that HUD can
track to ensure its completion. HUD must reevaluate the feasibility
of the activity and determine the eligibility of the $8,111,304
already invested. (Footnote 4: Total investments of $8,232,388
2016-AT-1002 12/17/2015 001-A $8,111,304
were adjusted to account for $109,084 questioned in
recommendation 2A and $12,000 in recommendation 2B.) If HUD
determines that the activity has been canceled or is not feasible, the
Municipality must commit any unused loan proceeds for future
loan repayments.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to provide documentation to
support that the $5,926,104 paid for management and consulting
services was similar in scope to the services procured by the other
2015-NY-1010 9/17/2015 003-A state agency, thus ensuring that the amount paid was procured in a $5,926,104
manner consistent with regulations at 24 CFR 85.36 and used for
its intended purpose. If the amount is deemed unsupported after
allowing maximum feasible deference to State contracting
procedures, it should be repaid from non-Federal funds.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to provide support that the
procurement for management and consultant services, for which
$2,736,658 was disbursed, is equivalent to contract methods
allowable under regulations at 24 CFR 85.36 and was executed in
accordance with State procedures, thus ensuring that the
2015-NY-1010 9/17/2015 003-D $5,000,000
$2,263,342 to be disbursed will be put to better use. If the
procurement is deemed not equivalent after allowing maximum
feasible deference to State contracting procedures or not compliant
with State procedures, the $2,736,658 should be repaid from non-
Federal funds, and the remaining $2,263,342 should be
deobligated, thus putting the funds to better use.
175
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Provide documentation to support that $4,235,773 in NSP funds
was spent for eligible costs by obtaining documentation showing
that the projects met a national objective, purchase price discounts
were met, rehabilitation costs were reasonable and necessary, resale
2015-BO-1003 3/4/2015 001-B $4,235,773
prices were in accordance with NSP requirements, rental amounts
were affordable, and developers assumed risk by investing some of
their own money in the project as applicable and if such support
cannot be provided, repay the amount.
Provide support showing that it took proper remedial action
2015-AT-0001 3/31/2015 001-B regarding five NSP3 grantees that missed the expenditure deadline, $3,345,967
thereby putting $3,379,269 to better use.
Repay HUD $3,119,448 from non-Federal funds for program funds
2015-LA-1004 5/29/2015 001-A $3,119,448
spent on ineligible participants.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to submit to HUD for its review
for compliance with Federal regulations the subrecipient
2015-NY-1010 9/17/2015 003-B $2,422,835
agreement, executed at our request, that obligates $2,422,835 for
appraisal services provided in Long Island, NY, thus ensuring that
these funds will be put to better use.
We recommend that the HUD Director of Community Planning and
Development instruct City officials to reduce the City’s CHDO
2015-NY-1005 4/30/2015 002-A $2,229,445
reserve balance reported in IDIS as of June 30, 2014, for the
ineligible CHDO reserve of $2,229,445.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to reimburse the line of credit for
2015-NY-1011 9/17/2015 001-A $2,229,234
$2,229,234, which was disbursed to program recipients for
ineligible costs
Deobligate all obligations marked for deobligation during the
department-wide open obligations review, including as much as
$430,942 in 44 administrative obligations and $135,957 in 2
2016-FO-0003 11/18/2015 008-H program obligations marked for deobligation as of September 30, $2,053,090
2015. Additionally, HUD should review the 17 obligations with
remaining balances of $1,486,191 and close out and deobligate
amounts tied to obligations that are no longer valid or needed.
Provide documentation to show that the 13 homes, with related
program costs totaling $1,928,646, meet the Green Building
2015-PH-1005 9/25/2015 001-A $1,928,646
Standard or repay HUD from non-Federal funds for any amount
that it cannot support.
Repay from non-Federal funds $1,290,264 for funds spent on
Filbert Phase 1 due to the modification of the resale restrictions for
2015-LA-1803 9/30/2015 001-A $1,807,490
HOME assisted units, which resulted in a failure to comply with
HUD’s minimum required period of affordability.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to review the five properties with
2015-NY-1010 9/17/2015 002-C indications that they may be second homes and if they are, $1,664,658
reimburse the State’s line of credit from non-Federal funds for the
$1,664,658 disbursed for these purchases.
176
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s New Orleans Office of
Community Planning and Development require the City to support
the cost reasonableness of the drainage cleaning contract and
2015-FW-1002 6/26/2015 001-A $1,611,143
provide adequate support for payment of the contractor’s invoices
or repay its grant any of the $1,611,143 that it cannot support.
Repayment should be from non-Federal funds.
Review the 216 obligations with remaining balances totaling
2016-FO-0003 11/18/2015 008-J $1,506,233 and close out and deobligate amounts tied to $1,506,233
obligations that are no longer valid or needed.
Submit a plan for how it will proceed with respect to the municipal
cemetery project, including a schedule that HUD can track to
ensure its completion. HUD must reevaluate the feasibility of the
2016-AT-1002 12/17/2015 001-B activity and determine the eligibility of the $1,454,801 already $1,454,801
invested. If HUD determines that the activity has been canceled or
is not feasible, the Municipality must commit any unused loan
proceeds for future loan repayments.
Repay $1,306,205 in NSP funds spent for ineligible activity costs
2015-BO-1003 3/4/2015 001-A $1,306,205
from non-Federal funds.
We recommend that the HUD Director of Community Planning and
Development instruct City officials to provide documentation to
2015-NY-1005 4/30/2015 002-B $1,163,598
support the additional CHDO reserve of $1,163,598 or reimburse
the City’s HOME program line of credit from non-Federal funds.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to provide documentation that the
selection of the appraiser in Staten Island was consistent with the
2015-NY-1010 9/17/2015 003-E $1,093,290
other State agency’s contract provisions. If such documentation
cannot be provided, the $1,093,290 budgeted should be
deobligated, thus ensuring that the funds will be put to better use.
Provide documents supporting that the 93 units assisted under
activities Escambia Co 14B and St. Lucie Co 14A/ARH were
2015-AT-1006 7/27/2015 001-A $1,075,000
impacted by the declared storm or reimburse HUD $2,026,266
from non-Federal funds.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to deobligate the undisbursed
2015-NY-1011 9/17/2015 001-B $911,662
amount of $911,662 to ensure that the funds will be put to their
intended use.
Develop and implement written policies and procedures to ensure
that participants are eligible for the program and comply with HUD
rules and requirements. Also, the Authority should ensure that these
2015-LA-1004 5/29/2015 001-C $873,428
policies and procedures include the monitoring of third-party
organizations involved with the program so that $873,428 in
program funds can be put to better use.
We recommend that the HUD Director of Community Planning and
Development instruct City officials to revise deed restrictions to
2015-NY-1005 4/30/2015 002-K correct effective affordability periods for the four properties that $850,008
had not been completed or repay more than $850,008 from non-
Federal funds to the City’s HOME program line of credit.
177
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the HUD Director of Community Planning and
Development instruct City officials to repay the $844,640 in
2015-NY-1005 4/30/2015 001-A HOME funds committed contrary to program regulations so that $844,640
these funds can be recaptured in accordance with Federal
regulations.
We recommend that the Deputy Assistant Secretary for Single
Family Housing instruct First Niagara Bank to provide HUD
evidence that the lender's servicing practices for loans identified in
Appendix D were acceptable for mortgages insured by HUD. In
2015-NY-1006 5/22/2015 001-A the event that HUD determines servicing practices were inadequate, $825,133
First Niagara Bank should indemnify HUD for $825,133 in
estimated losses for 10 loans. The estimated loss is based on the
loss severity rate of 50 percent of the total unpaid principal balance
of $1,650,266 as of December 31, 2014.
Implement procedures and controls to ensure that (1) housing
assistance payments are correctly calculated and paid and (2)
required eligibility documentation is obtained and maintained to
2015-CH-1008 9/25/2015 001-C $820,881
ensure that $820,881 ($753,728 in overpayments + $67,153 in
underpayments) in program funds is appropriately used for future
payments.
Require the three agencies to justify $814,382 in unnecessary
assistance payments made for the overhoused cases or either reduce
2015-PH-0003 7/29/2015 001-A future HUD funding or reduce the contract or budget authority for $814,382
any funding increment by the applicable amounts that the agencies
could not justify.
We recommend that HUD’s Deputy Assistant Secretary for Single
Family Housing require the lenders to support that the repairs to the
2015-CH-0001 7/31/2015 001-A properties associated with the 32 loans without evidence of permits $792,837
complied with local code or reimburse HUD $792,837 for the
escrow repair funds.
Support or reimburse its program from non-Federal funds for the
$686,701 in program funds drawn down for which it did not
2016-CH-1001 11/24/2015 001-A $686,701
provide sufficient documentation to support that the funds were
used for eligible project expenses.
Repay $1,089,613 in ineligible costs for funds that were
misrepresented in IDIS, funds that were drawn before a legally
2015-LA-1803 9/30/2015 001-B $632,063
binding agreement was in place between the City and the
developer, and did not produce a project (Filbert Phase 2).
We recommend that the Director of HUD’s New Orleans Office of
Community Planning and Development require the City to support
2015-FW-1002 6/26/2015 001-B $616,529
the reasonableness of the cost increases for the demolition contract
or repay $616,529 to its grant from non-Federal funds.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to repay to the State’s line of credit
2015-NY-1010 9/17/2015 002-B $598,300
from non-Federal funds the $598,300 paid in excess of the FHA
loan limits approved by the board resolution.
Deobligate the $587,198 in eight administrative obligations marked
2016-FO-0003 11/18/2015 008-O for deobligation during the departmentwide open obligations $587,198
review.
178
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Submit all supporting documentation showing the eligibility and
2015-AT-1004 7/2/2015 001-A propriety of $538,485 drawn from its treasury account or reimburse $538,485
the HOPWA program line of credit from non-Federal funds.
We recommend that the HUD Director of Community Planning and
Development instruct City officials to impose deed restrictions or
other mechanisms approved by HUD on the four properties assisted
2015-NY-1005 4/30/2015 002-J $527,116
with HOME funds to enforce affordability requirements or repay
$527,116 from non-Federal funds to the City’s HOME program
line of credit.
Provide documentation to support its use of $519,284 in program
2015-PH-1001 1/30/2015 001-C funds for activities 1760 and 1816 or reimburse its program from $519,284
non-Federal funds for any amount that it cannot support.
Provide documentation to support the $503,744 in unsupported
payments identified by the review or reimburse the applicable
2015-PH-1805 4/20/2015 001-A $503,744
programs from non-Federal funds for any costs that it cannot
support.
Support or reimburse its program from non-Federal funds
$1,211,842 (more than $652,000 disbursed to Chicago
Neighborhood Initiatives, Inc. + $1 million disbursed to the City of
2015-CH-1009 9/30/2015 001-A Belleville + nearly $60,000 for the Association’s two contracts - $500,000
$500,000) for the program funds used for the three projects without
sufficient documentation to support that the use of the funds met
Federal requirements.
Provide support for the $500,000 spent on this project,
demonstrating that the homes in the subdivision were marketed to
2015-DE-1001 5/26/2015 004-A $500,000
low- and moderate-income households, or reimburse any amount
that is not eligible from non-Federal funds.
Provide support for the necessity and reasonableness of $489,518
2015-BO-1003 3/4/2015 001-C in unexpended NSP funds or reallocate the funds for other eligible $489,518
NSP activities.
Ensure that HUD records the $500,000 settlement due in its
2015-DE-1802 9/30/2015 001-A accounting records, including the $11,000 paid at the time of $479,000
settlement, to recognize funds due as a return of an ineligible cost.
Determine whether the documentation the State provided is
adequate to support the $467,659 disbursed for wages and salaries
2015-PH-1003 6/4/2015 001-D charged to the program by contractors’ employees and if not, direct $467,659
the State to repay HUD from non-Federal funds any amount that it
cannot support.
Support or repay the payroll allocation, estimated at $457,357, to
2015-LA-1002 4/16/2015 001-B $457,357
its SHP grants for 2013.
Provide adequate support or reimburse the U.S. Treasury from non-
Federal funds for procurement activities from the 2008 grant
2015-AT-1005 7/9/2015 001-C totaling $457,327. (Footnote 4)The actual amount unsupported was $457,327
$460,397. To avoid double counting, the amount was reduced by
$3,070, which is accounted for in the eligibility section.
Provide adequate support or repay the program from non-Federal
2015-AT-1005 7/9/2015 001-D funds for procurement activities from the 2011 grant totaling $416,914
$416,914.
179
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Ensure that HUD records the $465,981 settlement due and the
2015-CF-1807 9/28/2015 001-A $50,000 payment received at settlement to recognize funds due as $415,981
return of an ineligible cost.
We recommend that the Director of HUD’s Cleveland Office of
Public and Indian Housing require the Authority to support or
reimburse its program $414,781 ($375,336 + $7,273 in housing
2015-CH-1004 9/9/2015 001-C $414,781
assistance payments + $32,172 in associated administrative fees)
from non-Federal funds for the unsupported payments of housing
assistance cited in this finding.
1Support or reimburse its program $411,382 from non-Federal
funds ($395,299 + $2,418 in housing assistance payments +
2015-CH-1008 9/25/2015 001-I $13,665 in associated administrative fees for the missing eligibility $411,382
documentation) for the missing eligibility documentation and
unsupported housing assistance payments.
Reimburse FHA borrowers $376,102 for the unallowable,
2015-LA-1005 7/9/2015 001-E misrepresented discount fees and $7,110 for fees that were not $383,212
customary or reasonable.
We recommend that the HUD Director of Community Planning and
Development instruct City officials to provide documentation to
support the income eligibility of the five home buyers assisted with
2015-NY-1005 4/30/2015 002-E $379,494
HOME funds and if documentation cannot be provided, reimburse
the City’s HOME program line of credit $379,494 from non-
Federal funds.
We recommend that the HUD Director of Community Planning and
Development instruct City officials to reimburse the City’s HOME
2015-NY-1005 4/30/2015 002-C program line of credit $344,776 from non-Federal funds for HOME $344,776
assistance spent on housing units acquired by five ineligible home
buyers.
We recommend that the HUD Director of Community Planning and
Development instruct City officials to reimburse the City’s HOME
2015-NY-1005 4/30/2015 001-C $344,341
program line of credit $344,341 from non-Federal funds for
assistance provided in excess of HOME subsidy limits.
Support or repay the program for grant funds of $340,581 that were
2015-LA-1802 9/24/2015 001-C $340,581
drawn without being reviewed by HUD.
We recommend that the Director of HUD’s New Orleans Office of
Community Planning and Development require the City to support
2015-FW-1002 6/26/2015 001-C $328,737
the reasonableness of the cost increases for the grant management
contract or repay $328,737 to its grant from non-Federal funds.
We recommend that HUD’s Deputy Assistant Secretary for Single
Family Housing require the lenders to support that the repairs to the
properties associated with the six loans were not structural repairs
2015-CH-0001 7/31/2015 001-B or indemnify HUD for the four active loans with a total estimated $305,395
loss of $222,073 and reimburse HUD for the actual loss of $83,322
incurred on the sale of two properties associated with FHA case
numbers 052-4308836 and 034-8239100.
Continue to develop and implement procedures to ensure that
future replacement homes are constructed in compliance with the
2015-PH-1005 9/25/2015 001-B Green Building Standard, thereby ensuring that program funds not $292,910
yet paid to the subgrantee for the 13 homes, with related program
costs totaling $292,910, are put to better use.
180
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Provide support for the $266,072 spent on projects for which the
State did not maintain sufficient documentation to determine
2015-DE-1001 5/26/2015 001-B $266,072
whether the costs were eligible and reimburse any amount that is
not eligible from non-Federal funds.
Provide documentation to support $265,572 in unsupported
administrative expenses. Any expenses determined not to be
2015-BO-1003 3/4/2015 001-E $265,572
properly supported should be considered ineligible and reimbursed.
.
Deobligate $140,165 in 41 administrative and $125,166 in 3
2016-FO-0003 11/18/2015 008-K program obligations marked for deobligation during the $265,331
department-wide open obligations review.
We recommend that the Director of the San Antonio Office of
Public Housing require the Authority to support payroll costs
2015-FW-1806 6/11/2015 001-B totaling $372,832 or repay its Housing Choice Voucher program $256,204
fund $321,684 and public housing program fund $51,148 from non-
Federal funds.
Reimburse its program from non-Federal funds $250,000 for the
2015-CH-1009 9/30/2015 001-C program funds that the City of Belleville inappropriately forgave $250,000
the Wagner Motor Car Company from repaying.
Indemnify HUD $191,074 for two loans that were still active and
did not receive proper loss mitigation (FHA case numbers 151-
6263199 and 151-9226347) and one loan (FHA case number 156-
2015-CH-1006 9/11/2015 001-C $191,074
0374114) in which the borrower’s revised payment was incorrect
(50 percent loss severity rate applied to the unpaid balance of
$382,147)
Provide adequate supporting documentation for the $183,642 in
2015-LA-1001 1/30/2015 001-B unsupported operating expenses and lease costs or repay the $183,642
HOPWA program from non-Federal funds.
We recommend that the HUD Director of Community Planning and
Development instruct City officials to reimburse City’s HOME
2015-NY-1005 4/30/2015 002-D $163,516
program line of credit $163,516 from non-Federal funds for the two
ineligible homeowners who owned other real properties.
Reimburse the U.S. Treasury from non-Federal funds $151,699
2015-AT-1005 7/9/2015 001-A from the 2008 grant for ineligible procurement activities using the $151,699
expired environmental contract.
Submit all supporting documentation showing the eligibility and
2015-AT-1004 7/2/2015 001-B propriety of $143,320 in HOPWA expenditures or reimburse the $143,320
HOPWA program line of credit from non-Federal funds.
Reimburse $139,767 to its loan guarantee account from non-
2016-AT-1002 12/17/2015 002-A Federal funds for ineligible disbursements that were not related to $139,767
the approved projects.
Provide supporting documentation for $136,346 in program funds
2015-LA-1004 5/29/2015 001-B used for participants for whom eligibility could not be determined $136,346
or repay HUD from non-Federal funds (see appendix D).
We recommend that the Director of the San Antonio Office of
Public Housing require the Authority to support purchases totaling
2015-FW-1806 6/11/2015 001-C $195,080 or repay its Housing Choice Voucher program fund $135,839
$123,791 and public housing program fund $71,289 from non-
Federal funds.
181
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Require servicers to repay HUD $414,673 for the 30 identified
partial claims with excessive amounts (This includes $21,685 from
2015-LA-0003 9/18/2015 001-B $131,256
our review of the contractor and $392,988 from our statistical
sample summarized in appendix D).
We recommend that the HUD Director of Community Planning and
Development instruct City officials to provide documentation to
support that $125,810 in costs charged to the three unsupported
2015-NY-1005 4/30/2015 001-G $125,810
HOME activities was for eligible costs, and if such documentation
cannot be provided, reimburse the City’s HOME program line of
credit from non-Federal funds.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to provide adequate documentation
2015-NY-1011 9/17/2015 001-D to support $119,124 in CDBG-DR funds that was disbursed to three $119,124
recipients. If any amount cannot be adequately supported, it should
be repaid to the State’s line of credit.
We recommend that the Director, Office of Public Housing, San
Antonio, TX, require the Authority to repay from non-Federal
2016-FW-1801 10/2/2015 001-C $119,000
funds unreasonable contractor costs of $119,000 to its HUD low-
rent program account.
Provide supporting documentation to show that nine tenants were
2015-AT-1006 7/27/2015 002-A income eligible for assistance under activity Leon Co 14A or $116,148
reimburse its program $220,589 from non-Federal funds.
We recommend that the HUD Director of Community Planning and
Development instruct City officials to reimburse the City’s HOME
2015-NY-1005 4/30/2015 001-E $113,849
line of credit for $113,849 that was drawn down in excess of need
so that these funds can be put to better use.
We also recommend that the Director of HUD’s Detroit Office of
Public and Indian Housing require the Commission to Reimburse
2015-CH-1002 8/26/2015 001-C HUD $111,761 from non-Federal funds ($100,507 for housing $111,761
assistance payments + $11,254 in associated administrative fees)
for the overpayment of housing assistance cited in the finding.
Reimburse from non-Federal funds the $105,514 spent on ineligible
2015-DE-1001 5/26/2015 001-A $105,514
costs.
Require the agencies to review the cases identified as potentially
overhoused and justify at least $103,732 in related unnecessary
2015-PH-0003 7/29/2015 001-B housing assistance payments made or correct vouchers as $103,732
appropriate. Any overpayments of assistance should be repaid to
HUD from non-Federal funds.
Repay $100,250 in NSP funds that were spent for ineligible
2015-BO-1003 3/4/2015 001-D $100,250
administrative expenses.
Support that the required repairs to the property associated with
FHA case numbers 241-9513470 and 277-1438986 were
sufficiently addressed and complied with local codes or indemnify
2015-CH-0001 7/31/2015 001-E $97,355
HUD for the estimated loss of $97,355, based on the loss severity
rate of 50 percent of the unpaid balance of $194,709 as of January
29, 2015.
182
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the HUD Director of Community Planning and
Development instruct City officials to reimburse the City’s HOME
2015-NY-1005 4/30/2015 002-H program line of credit $95,781 from non-Federal funds for funds $95,781
spent on the development of two housing properties that were later
terminated from the program.
Support or reimburse $92,166 from non-Federal funds ($77,133 +
$9,462 + $1,728 in housing assistance payments + $3,843 in
associated administrative fees) for the missing eligibility
2016-CH-1002 12/16/2015 001-D $92,166
documentation, unsupported housing assistance payment
calculations, payments to an incorrect landlord, and discrepancies
in the housing assistance payments register.
Reimburse HUD from non-Federal funds for the $87,651 in
2016-CH-1001 11/24/2015 001-B $87,651
program funds used for improper operating expenses.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to provide documentation to
support that the $85,309 disbursed for four applicants was
2015-NY-1010 9/17/2015 002-E $85,309
calculated correctly. If adequate support cannot be provided, the
amount should be repaid to the State’s line of credit from non-
Federal funds.
We recommend that HUD’s Deputy Assistant Secretary for Single
Family Housing require the lenders to support that the borrower for
FHA case number 451-1165810 was not reimbursed for the cost of
2015-CH-0001 7/31/2015 001-C $83,715
labor or indemnify the loan with an estimated loss amount of
$83,715, based on the loss severity rate of 50 percent of the unpaid
principal balance of $167,429 as of January 29, 2015.
Provide adequate supporting documentation for the $82,563 in
2015-LA-1001 1/30/2015 001-A unsupported salary costs or repay the HOPWA program from non- $82,563
Federal funds.
Reimburse its program $79,884 from non-Federal funds ($45,093
in housing assistance overpayments + $15,816 due to inappropriate
2015-CH-1008 9/25/2015 001-A voucher size + $605 in overpaid utility allowances + $18,370 in $79,884
associated administrative fees) for the inappropriate payments cited
in this finding.
We recommend that the Director, Office of Public Housing, Little
Rock, require the Authority to support or repay its public housing
program $611,338 from non-Federal funds for improperly procured
2015-FW-1807 8/14/2015 001-B contracts. However, if the Authority made any of the expenditures $78,293
from its capital fund grants that have not been validated within 2
years, or if the Authority is unable to determine the source of funds
used to pay expenditures, the Authority should repay HUD.
Review the 20 obligations with remaining balances of $77,807 and
2016-FO-0003 11/18/2015 008-L close out and deobligate amounts tied to obligations that are no $77,807
longer valid or needed.
Provide supporting documentation for the $77,200 in unsupported
2015-LA-1003 4/24/2015 001-C administrative and management costs or repay its project from non- $77,200
project funds for any costs that remain unsupported.
Allow the HUD Office of Inspector General to post the civil
2015-PH-1804 2/19/2015 001-A penalty of $75,000 in HUD’s Audit Resolution and Corrective $75,000
Action Tracking System as funds put to better use.
183
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Support or repay $73,451 in unsupported costs to the program from
2015-LA-1002 4/16/2015 001-A $73,451
non-Federal funds.
Reimburse FHA borrowers $25,700 for fees that were not
2015-LA-1009 9/30/2015 001-E customary or reasonable and $46,510 in discount fees that did not $72,210
represent their intended purpose.
Support or reimburse HUD $71,827 for the loss incurred or
incentive claim paid on two loans (FHA case numbers 151-
2015-CH-1006 9/11/2015 001-B $71,827
8081634 and 151-9161593) that lacked support of appropriate loss
mitigation decisions.
Require Breakthrough Living to repay the $69,577 that it collected
from its Section 8 tenants. For any tenant who left the Section 8
2015-KC-1001 3/5/2015 002-A program and cannot be located, HUD should require Breakthrough $69,577
Living to send his or her refund to the Kansas State treasurer so the
treasurer can get the refund to the tenant or a family member.
Support or indemnify HUD $67,660 for the two active loans (FHA
case numbers151-9161593 and 263-4317828) that lacked evidence
2015-CH-1006 9/11/2015 001-D $67,660
that loss mitigation was properly implemented (50 percent loss
severity rate applied to the unpaid principal balance of $135,318).
We recommend that the HUD Director of Community Planning and
Development instruct City officials to provide documentation to
support the income eligibility of the two homeowners who received
2015-NY-1005 4/30/2015 002-F $55,941
home-ownership assistance and if documentation cannot be
provided, reimburse the City’s HOME program line of credit
$55,941 from non-Federal funds.
Support or repay $49,307 in unsupported costs to the program from
2015-LA-1802 9/24/2015 001-A $49,307
non-Federal funds.
Require Breakthrough Living to repay from non-Federal sources
the unpaid balance of $47,690 that it transferred from its reserve for
2015-KC-1001 3/5/2015 001-A $47,690
replacement account to its operating account and management
agent.
Repay the program $45,740 from non-Federal funds from the 2011
2015-AT-1005 7/9/2015 001-B grant for ineligible procurement activities using the expired $45,740
environmental contract.
Support that the repair conditions and comments indicated in the
direct endorsement underwriter form, form HUD-54114, were
satisfied for FHA case number 501-8198149. If the repair
2015-CH-0001 7/31/2015 001-D conditions and comments were not properly addressed, the lenders $39,367
should indemnify the loan with an estimated loss amount of
$39,367, based on the loss severity rate of 50 percent of the unpaid
principal balance of $78,733 as of January 29, 2015.
Provide supporting documentation showing the payment of the
2015-LA-1003 4/24/2015 001-H unremitted rents from its sponsor for deposit into the project’s bank $37,138
account totaling $37,138 or repay its project from nonproject funds.
Provide supporting documentation for the $36,000 in unsupported
2015-LA-1008 9/22/2015 001-A accounting journal entries and correct inaccurate information $36,000
related to these entries in its general ledger.
184
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Support or reimburse its program $34,414 from non-Federal funds
for the unsupported payment of housing assistance due to missing
2015-AT-1011 9/30/2015 001-A eligibility documentation. (Footnote: $25,590 + $6,223 in housing $34,414
assistance payments + $2,275 + $326 in associated administrative
fees.)
Reprocure its executive director services using the appropriate
policies and procedures to ensure properly procured services going
forward and use the quotes from that procurement to justify the
2015-KC-1007 8/20/2015 001-A $34,226
$34,226 spent for executive director services from August 2011
through December 2014. For any amount the Authority cannot
support, HUD should reduce future annual operating funds.
Provide support that $33,473 paid for procurements was reasonable
2015-AT-1012 9/30/2015 001-B or reimburse the appropriate projects for the balance from non- $33,473
project funds.
Reimburse its program $33,291 from non-Federal funds ($19,629
for housing assistance payments + $307 in overpaid utility
2016-CH-1002 12/16/2015 001-A allowances and $12,826 + $529 in associated administrative fees) $33,291
for the overpayment of housing assistance and utility allowances
cited in the finding.
Support or reimburse its Public Housing Operating Fund and
2015-AT-1002 4/24/2015 001-B Capital Fund programs $33,144 from non-Federal funds for $33,144
disbursements that lacked supporting documentation.
Reimburse HUD $32,885 for loss incurred on one loan that did not
2015-CH-1006 9/11/2015 001-A receive active and proper loss mitigation or were improperly denied $32,885
loss mitigation.
Provide supporting documentation for the $31,637 in unsupported
2015-LA-1003 4/24/2015 001-D income deposit entries and correct any inaccurate information $31,637
related to the income deposits in its general ledger.
Provide documentation to support $27,646 was spent on eligible
2015-AT-1012 9/30/2015 001-A purposes or reimburse the appropriate projects for the balance from $27,646
non-project funds.
Require its sponsor to immediately repay the ineligible loans
2015-LA-1003 4/24/2015 001-F $25,300
totaling $25,300 from nonproject funds.
Reprocure its executive director services using the appropriate
policies and procedures to ensure properly procured services going
forward and use the quotes from that procurement to justify the
2015-KC-1008 9/1/2015 001-A $24,600
$24,600 spent for executive director services from August 2011
through December 2014. For any amount the Authority cannot
support, HUD should reduce future annual operating funds.
Reimburse HUD $24,088 from non-Federal funds for the Family
2015-CH-1008 9/25/2015 002-A $24,088
Self-Sufficiency grant funds inappropriately received.
We recommend that the Director, Office of Public Housing, Little
Rock, require the Authority to support or repay its programs, as
appropriate, $23,621 from non-Federal funds for unsupported leave
balance payments to the former executive director. However, if the
2015-FW-1807 8/14/2015 001-F $23,621
Authority made any of the expenditures from its capital fund grants
that have not been validated within 2 years, or if the Authority is
unable to determine the source of funds used to pay expenditures,
the Authority should repay HUD.
185
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Reimburse its Public Housing Operating Fund and Capital Fund
2015-AT-1002 4/24/2015 001-A programs $22,178 from non-Federal funds for disbursements that $22,178
violated conflict-of-interest regulations.
We recommend that HUD require the Authority to provide support
2015-FW-1004 8/17/2015 001-C for or reimburse the $21,426 in unsupported payments to its $21,426
program. Payment must be from non-Federal funds.
Reprocure its fee accounting services using the appropriate policies
and procedures to ensure properly procured services going forward
and to use the quotes from that procurement to justify the $12,873
spent from the Public Housing Operating Fund program and the
2015-KC-1006 8/20/2015 001-C $21,248
$8,375 spent from the Housing Choice Voucher program funds for
fee accounting services from October 2011 through December
2014. The Authority should repay any unsupported portion to the
appropriate program fund from non-Federal funds.
We recommend that the Director, Office of Public Housing, San
Antonio, TX, require the Authority to repay from non-Federal
2016-FW-1801 10/2/2015 001-B $19,880
funds ineligible contractor costs of $19,880 to its HUD low-rent
($18,900) and Housing Choice Voucher ($980) program accounts.
Obtain written approval from HUD for the $17,674 in unsupported
2015-LA-1008 9/22/2015 001-D rental credits or repay its project from nonproject funds for rental $17,674
credits that remain unsupported.
Justify the three awards given to contractors when only one bid was
2015-KC-1008 9/1/2015 001-D received totaling $17,626. For any amount the Authority cannot $17,626
support, HUD should reduce future annual capital funds.
Pursue collection from the applicable households or reimburse its
2015-CH-1008 9/25/2015 001-E program $16,648 from non-Federal funds for the overpayment of $16,648
housing assistance due to unreported income.
Repay the applicable clients the overcharged program fees, which
2015-LA-1002 4/16/2015 003-A $15,435
combined totaled $15,435 (see appendix E).
Reimburse its program $15,151 from non-Federal funds for the
deficiencies cited in the finding. (Footnote: $672 + $10,228 + $537
2015-AT-1011 9/30/2015 001-B $15,151
+ $2,152 in housing assistance payments + $574 + $503 + $140 +
$345 in associated administrative fees.)
Reimburse $13,726 to FHA borrowers for the fees that were not
2015-LA-1010 9/30/2015 001-E $13,726
customary or reasonable.
Provide supporting documentation for the $13,418 in unsupported
2015-LA-1003 4/24/2015 001-E general costs or repay its project from nonproject funds for any $13,418
costs that remain unsupported.
Agree to allow HUD OIG to record the $15,000 settlement in
2015-CF-1804 3/27/2015 001-A HUD’s Audit Resolution and Corrective Actions Tracking System $13,000
as an ineligible cost.
Reimburse or apply $10,552 in credit to borrowers’ future
2015-CH-0001 7/31/2015 002-A premiums for the 54 active loans with overpaid premiums and $12,576
refund $2,024 to the borrowers of the 7 terminated loans.
Reimburse $12,447 to the HOPWA program line of credit from
2015-AT-1004 7/2/2015 001-C non-Federal funds for ineligible disbursements that were not related $12,447
to the program.
186
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Submit supporting documentation showing the eligibility and
2016-AT-1002 12/17/2015 002-B propriety of $12,000 disbursed for construction permit fees or $12,000
reimburse its loan guarantee account from non-Federal funds.
We recommend that the Director, Office of Public Housing, Fort
2015-FW-1805 4/10/2015 001-C Worth, TX, require the Authority to support or repay $11,875 in $11,875
unsupported salary costs.
We recommend that the Director, Office of Public Housing, Fort
Worth, TX, require the Authority to repay its low-rent public
2015-FW-1805 4/10/2015 001-D $11,256
housing program $11,256 from non-Federal funds for ineligible
contract labor payments.
Support or repay the June 2015 drawdown of $11,198, which
2015-LA-1802 9/24/2015 001-D $11,198
Veterans First was advised to use for its Susan Street past-due rent.
Provide adequate support for the $9,632 not reviewed to show that
2015-KC-1006 8/20/2015 002-C funds were spent for eligible items or repay the affected program $9,632
from non-Federal funds.
Repay the Housing Choice Voucher program for the $9,214 spent
2015-KC-1006 8/20/2015 002-D for Housing Quality Standards voucher inspections from non- $9,214
Federal funds.
We recommend that the Director, Office of Public Housing, Fort
Worth, TX, require the Authority to repay its low-rent public
2015-FW-1805 4/10/2015 001-E $9,072
housing program $9,072 for ineligible USDA program
administrative expenses.
We recommend that the Director, Office of Public Housing, Little
Rock, require the Authority to repay its public housing program
$11,651 from non-Federal funds for ineligible expenditures.
2015-FW-1807 8/14/2015 001-E However, if the Authority made any of the expenditures from its $8,803
capital fund grants that have not been validated within 2 years, or if
the Authority is unable to determine the source of funds used to pay
expenditures, the Authority should repay HUD.
Repay $8,083 in ineligible costs to the program from non-Federal
2015-LA-1802 9/24/2015 001-B $8,083
funds
Reimburse the appropriate households $6,330 ($4,292 in housing
assistance underpayments + $1,488 due to inappropriate voucher
2015-CH-1008 9/25/2015 001-B $6,330
size + $550 in utility allowance underpayments) from program
funds for the inappropriate underpayments cited in this finding.
Require Breakthrough Living to repay from non-Federal sources
2015-KC-1001 3/5/2015 001-B the $5,642 that it used to pay for its management agent’s overhead $5,642
expenses.
We recommend that the Director, Office of Public Housing, Fort
Worth, TX, require the Authority to support or repay its low-rent
2015-FW-1805 4/10/2015 001-F $5,303
public housing program $5,303 for unsupported credit card
charges.
Reprocure its fee accounting services using the appropriate policies
and procedures to ensure properly procured services going forward
and use the quotes from that procurement to justify the $4,507
2015-KC-1007 8/20/2015 001-B $4,507
spent for fee accounting services from August 2011 through
December 2014. For any amount the Authority cannot support,
HUD should reduce future annual operating funds.
187
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Provide supporting documentation for the $4,000 unsupported loan
2015-LA-1008 9/22/2015 001-C deposit entry and correct inaccurate information related to the $4,000
deposit in its general ledger.
Reprocure its fee accounting services using the appropriate policies
and procedures to ensure properly procured services going forward
and use the quotes from that procurement to justify the $3,991
2015-KC-1008 9/1/2015 001-B $3,991
spent for fee accounting services from August 2011 through
December 2014. For any amount the Authority cannot support,
HUD should reduce future annual operating funds.
Reimburse the appropriate households $2,476 ($2,183 in housing
assistance underpayments + $293 in utility allowance
2016-CH-1002 12/16/2015 001-B underpayments) from program funds for the underpayment of $3,773
housing assistance due to calculation errors and discrepancies in the
housing assistance payments register.
Repay $3,245 in ineligible costs to the program from non-Federal
2015-LA-1002 4/16/2015 001-C $3,245
funds.
Require the Authority to repay $3,178 for ineligible expenses from
2015-KC-1010 9/30/2015 002-A non-Federal funds to its program or to HUD as the field office $3,178
deems appropriate based on the funding source.
Collect from its executive director services provider and repay its
2015-KC-1007 8/20/2015 002-A Capital Fund program the $3,000 that it improperly paid the $3,000
provider from its capital funds.
Pursue collection from the applicable landlords or reimburse its
program $2,900 from non-Federal funds for the overpayment of
2015-CH-1008 9/25/2015 001-H $2,900
housing assistance due to discrepancies in the housing assistance
payment register.
Justify the $2,400 spent for the 2012 annual agency plan and 2014
2015-KC-1007 8/20/2015 001-C 5-year and annual agency plan. For any amount the Authority $2,400
cannot support, HUD should reduce future annual operating funds.
Reimburse the appropriate household $2,286 from non-Federal
2015-CH-1008 9/25/2015 001-D funds for the rent amounts paid in excess of 40 percent of its $2,286
adjusted monthly income for the unit that was not affordable.
We recommend that the Director of the San Antonio Office of
Public Housing require the Authority to support or repay its
2015-FW-1806 6/11/2015 001-L Housing Choice Voucher program fund $2,197 from non-Federal $2,197
funds for other unsupported amounts charged to the Authority’s
credit card.
Repay the affected programs the $2,148 spent for meals, social
2015-KC-1006 8/20/2015 002-A activities, donations, gifts, and floral arrangements from non- $2,148
Federal funds.
We recommend that HUD require the Authority to repay its
2015-FW-1004 8/17/2015 001-A Housing Choice Voucher program $2,139 in incorrect housing $2,139
assistance. Payment must be from non-Federal funds.
Provide supporting documentation for the $14,873 in unsupported
2015-LA-1008 9/22/2015 001-B disbursements that included a $200 loan to an employee, or repay $1,985
its project from nonproject funds for costs that remain unsupported.
188
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Justify the $1,200 spent for the 2014 5-year and annual agency
2015-KC-1008 9/1/2015 001-C plan. For any amount the Authority cannot support, HUD should $1,200
reduce future annual operating funds.
Collect from the contractor that replaced the Authority’s air
2015-KC-1007 8/20/2015 002-B conditioning units and repay its Capital Fund program the $1,171 $1,171
that it improperly paid the contractor from its capital funds.
Repay to its project $889 from nonproject funds for incurred
2015-LA-1003 4/24/2015 001-G $889
ineligible expenses.
Require the Authority to provide adequate support that it spent
$47,057 on allowable expense. Any amount determined to be
2015-KC-1010 9/30/2015 002-B ineligible should be repaid from non-Federal funds to its program $736
or to HUD as the field office deems appropriate based on the
funding source.
Require the Authority to provide adequate support that it spent
$31,147 on allowable expenses. Any amount determined to be
2015-KC-1009 9/30/2015 002-B ineligible should be repaid from non-Federal funds to its program $519
or to HUD as the field office deems appropriate based on the
funding source.
Pursue collection from the applicable households or reimburse its
2016-CH-1002 12/16/2015 001-E program $2,293 from non-Federal funds for the overpayment of $461
housing assistance due to unreported income.
Provide supporting documentation for the $450 balance in its
general ledger account related to security deposits, ensure that the
required security deposit bank account is established and funded to
2015-LA-1003 4/24/2015 001-I $450
the required amount in accordance with HUD rules and
requirements, and correct any inaccurate information related to
security deposits in its general ledger.
Require the Authority to provide adequate support that it spent
$27,600 on allowable expense. Any amount determined to be
2015-KC-1011 9/30/2015 002-B ineligible should be repaid from non-Federal funds to its program $435
or to HUD as the field office deems appropriate based on the
funding source.
We recommend that HUD require the Authority to provide support
2015-FW-1004 8/17/2015 001-D or repay its program $53 for the unexplained payments. Payment $53
must be from non-Federal funds.
Provide adequate support for the $53 spent at the grocery store or
2015-KC-1006 8/20/2015 002-B $53
repay the affected program from non-Federal funds.
We recommend that HUD require the Authority to
2015-FW-1004 8/17/2015 001-B Reimburse $22 to the family that was overcharged. $22
Reimbursement should be from the Authority’s reserves.
Work with 134 grantees (29 NSP1 and 105 NSP3) that reported
2015-AT-0001 3/31/2015 001-C missing expenditure deadlines in DRGR to ensure that expenditure $0
information submitted is accurate and up to date.
Develop, implement, and enforce procedures to comply with rent
2015-AT-1008 8/23/2015 001-B reasonableness requirements to prevent an estimated $195,975 in $0
excess rents from being charged to the program.
Ensure that all of the NSP activities have the proper deed
restrictions in place to ensure that the NSP properties remain
2015-BO-1003 3/4/2015 001-F $0
affordable for the required affordability period and the NSP funds
are protected.
189
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Establish an agreement between the State and Rhode Island
2015-BO-1003 3/4/2015 001-G Housing to define responsibilities for the Federal programs they $0
administer.
Establish an agreement between the Providence Redevelopment
2015-BO-1003 3/4/2015 001-H Agency and the City of Providence, Office of Community $0
Development, to define responsibilities for the NSP activities.
We recommend that the Director of HUD's Office of Affordable
Housing Programs implement adequate procedures and controls to
2015-CH-0801 6/25/2015 001-A ensure that leases between rental housing projects' owners and $0
households for Program-funded units do not include language
prohibited by HUD's regulations.
We recommend that the Deputy Assistant Secretary for Public
Housing Investments require the Authority to conduct special
2015-CH-1001 2/24/2015 001-B recertifications for the households with payment standards above $0
the percentage determined to be reasonable and cost effective so
that their payment standards can be reduced within 1 year.
We recommend that the Deputy Assistant Secretary for Public
Housing Investments require the Authority to reimburse its
2015-CH-1001 2/24/2015 001-C $0
program from non-Federal funds for the excess housing assistance
paid for the households based on the results of the analysis.
Ensure that future grant agreements meet all requirements of 24
2015-DE-1001 5/26/2015 002-A $0
CFR 570.503.
2015-DE-1001 5/26/2015 002-D Obtain training for its staff on the program income requirements. $0
Implement a procedure for conducting onsite monitoring over the
2015-DE-1001 5/26/2015 003-A course of each project, such as using regional directors to conduct $0
monitoring.
Ensure that each subrecipient understands procurement
2015-DE-1001 5/26/2015 003-B requirements by continuing to require training for all new $0
subrecipients and for those that do not understand the requirements.
Implement a procedure for checking all contractors in the System
for Award Management before awarding any contract and all
subcontractors before distributing Federal funds, such as requiring
2015-DE-1001 5/26/2015 003-C subrecipients to submit a copy of the System for Award $0
Management results for each contractor and subcontractor seeking
payment with each draw request to ensure that they are verified
before receiving Federal funds.
Implement adequate policies and procedures to ensure that future
2015-DE-1001 5/26/2015 004-B projects will meet all CDBG requirements before approval and $0
maintain supporting documentation showing this compliance.
2015-DP-0005 2/24/2015 002-A Not released to public. $0
Establish and implement policies and procedures to demonstrate
how Ginnie Mae provides appropriate accounting and financial
2015-FO-0003 2/27/2015 001-A reporting oversight of the master-subservicers to ensure that the $0
master-subservicers are capable of producing accurate and reliable
accounting records and reports.
190
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Establish and implement policies and procedures to properly
account for and track at a loan level all of the accounting
2015-FO-0003 2/27/2015 001-B transactions and events in the life cycle of the loans. This measure $0
is intended to compensate for the servicing system’s inability to
perform loan level transaction accounting.
Establish and implement policies and procedures to ensure that
2015-FO-0003 2/27/2015 002-A $0
reimbursable costs are tracked and accounted for at the loan level.
Determine the amount of reimbursable costs incurred by Ginnie
Mae per loan, report the reimbursable costs incurred as receivables
2015-FO-0003 2/27/2015 002-B $0
rather than expensing them, and adjust them out of the mortgage-
backed securities loss liability account as appropriate.
Restate fiscal year 2013 financial statements to correct the impact
2015-FO-0003 2/27/2015 002-C $0
of the accounting errors determined in recommendation 2B.
Review and recalculate the appropriate amount of interest accrued
2015-FO-0003 2/27/2015 002-D on the loans and adjust the accrued interest receivable balances $0
reported as appropriate.
Report the escrow fund balances on the face of the financial
2015-FO-0003 2/27/2015 002-E statements, including additional disclosure information in the notes, $0
in accordance with generally accepted accounting principles.
Restate fiscal year 2013 financial statements to show escrow fund
2015-FO-0003 2/27/2015 002-F $0
balances omitted on the face of the financial statements.
Establish and implement policies and procedures for the
documentation and validation of Ginnie Mae management
2015-FO-0003 2/27/2015 003-A $0
assumptions, including foreclosure costs and redefault rates, used
in the loss reserve model going forward.
Reevaluate the reasonableness of foreclosure cost and redefault rate
management assumptions used in fiscal year 2014, considering the
audit points cited in this report; document the results of the
2015-FO-0003 2/27/2015 003-B reevaluation for OIG’s review; and determine the accounting $0
adjustments needed, if any, to the fiscal year 2014 mortgage-
backed securities loss liability account as a result of the changes in
the management assumptions.
Determine Ginnie Mae’s foreclosure cost reimbursement rate and
2015-FO-0003 2/27/2015 003-C take this information into account when developing its foreclosure $0
cost management assumption.
Perform a validation of the FHA foreclosure cost assumption
amount used in fiscal year 2014, document the results of the
2015-FO-0003 2/27/2015 003-D validation, and determine whether an adjustment to the fiscal year $0
2014 financial statements is warranted based on the updated
foreclosure cost management assumption.
Perform a separate reserve for loss estimate analysis on
reperforming non-pooled loans and, based on the results of this
2015-FO-0003 2/27/2015 003-E $0
analysis, establish separate loss reserve estimates on reperforming
non-pooled loans.
Work with HUD’s Chief Financial Officer to design and implement
2015-FO-0003 2/27/2015 004-B $0
a compliant financial management governance structure.
191
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Overseeing a comprehensive risk assessment of Ginnie Mae’s
2015-FO-0003 2/27/2015 004-D $0
financial management governance.
Preparing and implementing a plan, based on the results of the risk
assessment in recommendation 4D, that:
i) Demonstrates HUD OCFO oversight of Ginnie Mae’s, as a HUD
component, financial management activities;
ii) Ensures that Ginnie Mae updates its financial management
policies to reflect conclusions reached in the financial management
risk assessment;
2015-FO-0003 2/27/2015 004-E iii) Provides complete, reliable, consistent and timely information $0
for defaulted issuers’ pooled and non-pooled loans, prepared on a
uniform basis for preparation of Ginnie Mae financial statements,
management reporting, and cost reporting; and
iv) Ensures all of Ginnie Mae’s financial management systems,
both owned and outsourced, provide the financial information
necessary to prepare and support financial statements that comply
with generally accepted accounting principles.
Reassess the susceptibility of significant improper payments for the
CPD entitlement, non-entitlement, HOME Investment Partnerships
Program, and other formula grant programs based on the results of
2015-FO-0005 5/15/2015 003-C $0
audit report 2014-FO-0003 as well as the community service and
self-sufficiency requirement in public housing subsidiaries
identified in OIG audit report 2015-KC-0001.
We recommend that the Deputy Secretary of the U.S. Department
of Housing and Urban Development ensure that HUD follows and
complies with 24 CFR Part 50, Protection and Enhancement of
2015-FW-0001 6/16/2015 001-A Environmental Quality, and provides adequate oversight to ensure $0
compliance with 24 CFR Part 58, Environmental Review
Procedures for Entities Assuming HUD Environmental
Responsibilities.
We recommend that the Deputy Secretary of the U.S. Department
of Housing and Urban Development clarify the delegation of
2015-FW-0001 6/16/2015 001-C $0
authority issued in the Federal Register related to environmental
responsibility and the implementation of requirements.
If an independent program office is not established, the Deputy
Secretary should ensure that the Assistant Secretaries for Housing,
Public and Indian Housing, and Community Planning and
2015-FW-0001 6/16/2015 001-D $0
Development establish an agreement that clearly outlines each
program office’s responsibilities for oversight of environmental
requirements and resource supplements.
If an independent program office is not established, the Deputy
Secretary should ensure that the Assistant Secretaries for Housing,
Public and Indian Housing, and Community Planning and
2015-FW-0001 6/16/2015 001-E $0
Development adopt a quality control monitoring program that
includes a review of all program area field offices as required by
Executive Order 11514.
If an independent program office is not established, the Deputy
Secretary should ensure that the Assistant Secretaries for Housing,
Public and Indian Housing, and Community Planning and
2015-FW-0001 6/16/2015 001-F $0
Development develop and implement a monitoring program that all
program area field offices can use to monitor grantees and
responsible entities under 24 CFR Part 58.
192
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
If an independent program office is not established, the Deputy
Secretary should ensure that the Assistant Secretaries for Housing,
2015-FW-0001 6/16/2015 001-G Public and Indian Housing, and Community Planning and $0
Development develop training programs that meet the needs of all
program areas, including 24 CFR Parts 50 and 58.
If an independent program office is not established, the Deputy
Secretary should ensure that the Assistant Secretaries for Housing,
Public and Indian Housing, and Community Planning and
2015-FW-0001 6/16/2015 001-H Development develop and implement reporting requirements, $0
which ensure that written records are maintained and the
appropriate headquarters personnel are notified of environmental
concerns.
If an independent program office is not established, the Deputy
Secretary should ensure that the Assistant Secretaries for Housing,
Public and Indian Housing, and Community Planning and
2015-FW-0001 6/16/2015 001-I Development ensure that each program area has a dedicated $0
program environmental clearance officer with an official job
description that outlines his or her roles and responsibilities as
required by 24 CFR Part 50.
We recommend that the Director of the San Antonio Office of
Public Housing require the Authority to determine the amount of
2015-FW-1806 6/11/2015 001-F $0
Federal and State taxes it owes for payments made to its contractors
and pay those tax liabilities.
We recommend that the Director of the San Antonio Office of
Public Housing require the Authority to review its contracts with
2015-FW-1806 6/11/2015 001-G the contractors and their outside employment and take necessary $0
action to either properly treat them as contractors or reclassify them
as employees.
Develop and implement policies and procedures to ensure that
OLG uses enforcement actions available under 12 U.S.C. 1715z-
2015-LA-0002 7/6/2015 001-D $0
3a(g) for lenders that do not underwrite loans according to the
Section 184 processing guidelines.
Ensure that only underwriters that are approved by OLG are
2015-LA-0002 7/6/2015 001-H $0
underwriting Section 184 loans.
Develop and implement written policies and procedures for
situations in which the borrower for a Section 184 loan is an Indian
2015-LA-0002 7/6/2015 001-I $0
housing authority, a tribally designated housing entity, or an Indian
tribe.
Ensure that the membership of its board of directors complies with
2015-LA-1003 4/24/2015 001-L $0
its by-laws by consisting of seven members.
Obtain HUD training and technical assistance for its project
administrator, management company, and board of directors to
2015-LA-1003 4/24/2015 001-M $0
ensure compliance with HUD rules and requirements that pertain to
the management and operation of its project.
193
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Determine legal sufficiency and if legally sufficient, pursue civil
and administrative remedies (31 U.S.C. (United States Code) 3801-
3812, 3729, or both), civil money penalties (24 CFR (Code of
Federal Regulations) 30.35), or both against NOVA, its principals,
2015-LA-1005 7/9/2015 001-A $0
or both for incorrectly certifying to the integrity of the data, the
eligibility for FHA mortgage insurance, or that due diligence was
exercised during the origination of 709 loans with potential losses
of $48.5 million.
Update all internal control checklists to include specific HUD FHA
2015-LA-1005 7/9/2015 001-H rules and regulations governing down payment assistance, premium $0
interest rates, and allowable fees.
We recommend that the HUD Director of Community Planning and
Development instruct City officials to correct the reported
2015-NY-1005 4/30/2015 002-M completion status and home-buyer information recorded in IDIS for $0
the three HOME activities for which incorrect information was
recorded.
2015-PH-1001 1/30/2015 001-B Impose and record deed restrictions for activities 1760 and 1816. $0
Evaluate the apparent conflict-of-interest situation identified in this
2015-PH-1001 1/30/2015 001-F report, determine whether a conflict of interest existed, and pursue $0
administrative sanctions if warranted.
Comply with its Management Agent Handbook requirements that
stipulate HUD must perform management reviews of the
management agent’s central office activities as well as regular
2015-AT-0002 8/21/2015 001-A $0
onsite reviews of functions carried out at the projects. These
central office reviews should be performed at least once every 18
months.
Issue a notice to inform all North Carolina grantees that they must
use the lowest bidder in a sealed bid process unless they are able to
2015-AT-0801 8/25/2015 001-A $0
provide sufficient support in compliance with 24 CFR 85.36 to
remove the bidder from the procurement process.
Determine legal sufficiency and if legally sufficient, pursue
remedies under the Program Fraud Civil Remedies Act against the
2015-AT-1007 8/14/2015 001-B $0
borrower, its principals, or both for incorrectly certifying that the
property’s critical repairs were completed before loan closing.
Develop, implement, and enforce detailed procedures for County
2015-AT-1008 8/23/2015 001-D staff to detect double billing and prevent duplicate payments of $0
grant funds.
Develop, implement, and enforce detailed procedures for staff and
project sponsors to ensure that they comply with HUD’s match
requirements. Procedures and accompanying guidance should
include (1) tracking the cash or in-kind match amounts monthly or
consistently to ensure that the match amount reported in its APR to
HUD is accurate and supported by the documentation provided by
2015-AT-1008 8/23/2015 002-B $0
the project sponsors, (2) providing to project sponsors a list of the
types of documentation that may be sufficient to ensure the
eligibility of the use and source of the match funds, and (3)
reviewing the documentation from project sponsors to ensure that
the sources of the funds used to match the grant funds are eligible
and sufficiently supported to comply with 24 CFR 578.73.
194
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Pursue administrative actions, as appropriate, against the
2015-AT-1009 9/3/2015 001-F responsible parties for the regulatory agreement violations cited in $0
this report.
Determine legal sufficiency and if legally sufficient, pursue
remedies under the Program Fraud Civil Remedies Act against the
2015-AT-1009 9/3/2015 001-G hospital’s former chief financial officer for incorrectly certifying to $0
the accuracy of the financial information submitted to obtain the
Section 242 program mortgage increase.
Reimburse its program from non-Federal funds for the
2015-AT-1011 9/30/2015 001-C overpayment of any housing assistance for approval of rent $0
increases on program units contrary to its requirements.
Revise HUD’s policies and procedures, including the supplemental
203(k) review checklist and review rating guidelines, to ensure that
2015-CH-0001 7/31/2015 001-F $0
HUD reviewers properly and consistently identify and resolve
deficiencies.
Ensure that post endorsement technical reviewers receive sufficient
2015-CH-0001 7/31/2015 001-G training to understand the scope of the repairs and improvements $0
by contractors.
Determine the overpaid mortgage insurance premium for the 69
active loans after September 2014 for the life of the loans, and
2015-CH-0001 7/31/2015 002-B $0
reimburse or apply the overpayments as credits to borrowers’ future
premium payments.
Determine the number of 203(k) loans impacted by the incorrect
loan-to-value ratio for mortgage insurance premium calculations
2015-CH-0001 7/31/2015 002-C $0
and when applicable, reimburse borrowers or apply the overpaid
premiums as credits toward borrowers’ future premium payments.
Implement adequate policies and procedures to ensure that the
activities included in Authority’s plans are (1) allowable under the
Moving to Work statutory purposes, (2) described in sufficient
2015-CH-0802 8/26/2015 001-A $0
detail to convey anticipated impacts (including financial impact),
and (3) in accordance with the terms and authorizations set forth in
the Moving to Work agreements.
Renegotiate the rents to the owners or require the households to
2015-CH-1008 9/25/2015 001-G move to units that are affordable, for the households residing in $0
units that are not affordable.
Develop and implement adequate quality control procedures to
ensure that it (1) correctly calculates and pays housing assistance
2015-CH-1008 9/25/2015 001-J $0
and (2) obtains and maintains the required eligibility
documentation.
Review the remaining program household files, determine whether
the appropriate voucher sizes were provided, conduct special
2015-CH-1008 9/25/2015 001-L recertifications for the households with vouchers that do not $0
comply with the Authority’s administrative plan, and issue the
appropriate voucher sizes.
Implement adequate procedures and controls to ensure that (1)
program participants are connected to needed supportive services,
2015-CH-1008 9/25/2015 002-B (2) services included in the participants’ contracts of participation $0
are provided, (3) and participants’ escrow accounts are properly
maintained.
195
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Implement adequate controls to ensure that the Department
2015-CH-1009 9/30/2015 001-D $0
administers the program in accordance with Federal requirements.
Develop and maintain a waiting list for rental units that meets the
2015-CH-1010 9/30/2015 001-A $0
requirements of the resident home-ownership plan.
Provide sufficient documentation to support that HUD had received
50 percent of the proceeds from initial membership sales as of June
2015-CH-1010 9/30/2015 001-B 2015. If the Cooperative cannot do this, it should pay HUD half of $0
the principal on the Cooperative notes for all memberships less the
amount the Cooperative paid HUD for initial membership sales.
Verify the current household income for all members to determine
whether the members are paying more than 35 percent of their
households’ adjusted gross monthly income for membership fees.
2015-CH-1010 9/30/2015 001-D For any members that are paying more than 35 percent of their $0
households’ adjusted gross monthly income for membership fees, it
should determine the amount the household overpaid and reimburse
the household that amount.
Make a preliminary determination as to whether the Cooperative is
in default of the grant agreement. If it is preliminarily determined
2015-CH-1010 9/30/2015 001-I that the Cooperative is in default, provide the Cooperative notice of $0
the determination and propose corrective or remedial actions to
address the default.
We recommend that the Deputy Assistant Secretary, Office of
Public Housing and Voucher Programs, Require that housing
agencies provide HUD with a signed acknowledgement by
executive directors and board chairpersons when they are hired or
2015-FW-0802 9/16/2015 001-C $0
appointed. The acknowledgement should detail their awareness
and understanding of their responsibilities, and their acceptance
that failure to comply with requirements could result in
administrative or other actions.
We recommend that the Director of the Departmental Enforcement
Center Consider administrative sanctions against the former
2015-FW-1808 9/10/2015 001-L $0
executive director and board for the gross mismanagement and
poor physical condition of the Authority’s property.
Issue guidance to help participating jurisdictions accurately report
2015-KC-0002 8/11/2015 001-A $0
the amount of match contributed and consumed.
Include monitoring of HOME match during its performance
2015-KC-0002 8/11/2015 001-B reviews to ensure that match contributions exist, are eligible, and $0
are supported.
Require the 10 jurisdictions that overstated their excess match
2015-KC-0002 8/11/2015 001-C balances to remove the overstated amounts from their reported $0
HOME match carry-forward balances.
Create and implement policies and procedures specifying the
2015-KC-0002 8/11/2015 002-A $0
process for assigning match reductions.
Begin using the poverty rate instead of the family poverty rate for
2015-KC-0002 8/11/2015 002-B $0
determining eligible fiscal match reductions.
Use the national average for per capita income reported by the U.S.
2015-KC-0002 8/11/2015 002-C $0
Census Bureau for determining eligible fiscal match reductions.
196
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Review the reductions assigned in IDIS by pulling a report of all
2015-KC-0002 8/11/2015 002-D match liabilities from IDIS and comparing that report to the $0
calculated reductions.
Request a conflict of interest waiver for its fee accounting services
2015-KC-1006 8/20/2015 001-D contract for its Housing Choice Voucher program if a conflict $0
exists following the reprocurement.
Monitor the Authority’s expenditures after training to ensure that
2015-KC-1009 9/30/2015 001-C the executive director understands and correctly applies $0
procurement requirements.
Require the Authority to obtain appropriate training on eligible uses
2015-KC-1009 9/30/2015 002-C of program funds, including items that can be charged to tenant $0
services, travel expenses, and hiring practices.
Monitor the Authority after the recommended training and tenant
file reviews are complete to ensure the executive director
2015-KC-1009 9/30/2015 003-J $0
understands and properly implements public housing occupancy
requirements.
Require the Authority’s executive director to obtain appropriate
2015-KC-1009 9/30/2015 005-B training regarding inventory and record keeping requirements to $0
supplement the training recommended in the other findings.
Monitor the Authority to ensure that it implements appropriate
2015-KC-1009 9/30/2015 005-C $0
records management systems.
Determine whether Authority management is able to properly
implement HUD requirements and consider remedies that may be
2015-KC-1009 9/30/2015 005-D $0
required to address any noncompliance with the annual
contributions contract.
Monitor the Authority’s expenditures after training to ensure that
2015-KC-1010 9/30/2015 001-C the executive director understands and correctly applies $0
procurement requirements.
Require the Authority to obtain appropriate training on eligible uses
2015-KC-1010 9/30/2015 002-C of program funds, including items that can be charged to tenant $0
services, travel expenses, and hiring practices.
Monitor the Authority after the recommended training and tenant
file reviews are complete to ensure the executive director
2015-KC-1010 9/30/2015 003-J $0
understands and properly implements public housing occupancy
requirements.
Require the Authority’s executive director to obtain appropriate
2015-KC-1010 9/30/2015 005-B training regarding inventory and record-keeping requirements to $0
supplement the training recommended in the other findings.
Monitor the Authority to ensure that it implements appropriate
2015-KC-1010 9/30/2015 005-C $0
records management systems.
Determine whether Authority management is able to properly
implement HUD requirements and consider remedies that may be
2015-KC-1010 9/30/2015 005-D $0
required to address any noncompliance with the annual
contributions contract.
Monitor the Authority’s expenditures after training to ensure that
2015-KC-1011 9/30/2015 001-C the executive director understands and correctly applies $0
procurement requirements.
197
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Require the Authority to obtain appropriate training on eligible uses
2015-KC-1011 9/30/2015 002-C of program funds, including items that can be charged to tenant $0
services, travel expenses, and hiring practices.
Monitor the Authority after the recommended training and tenant
file reviews are complete to ensure the executive director
2015-KC-1011 9/30/2015 003-I $0
understands and properly implements public housing occupancy
requirements.
Require the Authority’s executive director to obtain appropriate
2015-KC-1011 9/30/2015 005-B training regarding inventory and record-keeping requirements to $0
supplement the training recommended in the other findings.
Monitor the Authority to ensure that it implements appropriate
2015-KC-1011 9/30/2015 005-C $0
records management systems.
Determine whether Authority management is able to properly
implement HUD requirements and consider remedies that may be
2015-KC-1011 9/30/2015 005-D $0
required to address any noncompliance with the annual
contributions contract.
Require LoanCare to repay any additional costs associated with the
2015-KC-1012 9/30/2015 001-A $0
violations noted.
Update Mortgagee Letter 2013-32 to require that borrowers have
2015-LA-0003 9/18/2015 002-H $0
surplus income after the FHA-HAMP modification.
Develop and implement written policies and procedures to ensure
that project funds are used solely for reasonable operating expenses
2015-LA-1008 9/22/2015 001-E $0
or necessary repairs unless it receives prior written approval from
HUD and uses surplus cash.
Obtain written approval from HUD for its management agent and
execute a management agreement that defines the management
2015-LA-1008 9/22/2015 001-F $0
agent’s roles and responsibilities as required by HUD rules and
requirements.
Develop and implement written policies and procedures to address
2015-LA-1008 9/22/2015 001-G $0
the financial operations of the project.
2015-LA-1008 9/22/2015 001-H Submit to HUD all outstanding financial statements. $0
Obtain HUD training and technical assistance for itself and its
identity-of-interest management agent to ensure compliance with
2015-LA-1008 9/22/2015 001-I $0
HUD rules and requirements that pertain to the management and
operation of its project.
Determine legal sufficiency and if legally sufficient, pursue civil
and administrative remedies (31 U.S.C. (United States Code) 3801-
3812, 3729, or both), civil money penalties (24 CFR (Code of
Federal Regulations) 30.35), or both against loanDepot, its
2015-LA-1009 9/30/2015 001-A $0
principals, or both for incorrectly certifying to the integrity of the
data, the eligibility for FHA mortgage insurance, or that due
diligence was exercised during the origination of 384 loans with
potential losses of $33 million.
Update all internal control (e.g. policies and procedures, checklists,
etc.) to include specific guidance on HUD FHA rules and
2015-LA-1009 9/30/2015 001-H $0
regulations governing downpayment assistance, premium interest
rates, and allowable fees.
198
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Determine legal sufficiency and if legally sufficient, pursue civil
and administrative remedies (31 U.S.C. (United States Code) 3801-
3812, 3729, or both), civil money penalties (24 CFR (Code of
Federal Regulations) 30.35), or both against loanDepot, its
2015-LA-1010 9/30/2015 001-A $0
principals, or both for incorrectly certifying to the integrity of the
data, to the eligibility for FHA mortgage insurance, or that due
diligence was exercised during the origination of 234 loans with
potential losses of $21.3 million.
Update all internal controls (e.g. policies and procedures,
checklists, etc.) to include specific guidance on HUD FHA rules
2015-LA-1010 9/30/2015 001-H $0
and regulations governing downpayment assistance, premium
interest rates, and allowable fees.
Pursue civil remedies or administrative sanctions against Veterans
2015-LA-1802 9/24/2015 001-F $0
First and responsible parties for the misuse of HUD funds.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to Strengthen controls to ensure
that the enhanced buyout program partial action plan description,
2015-NY-1010 9/17/2015 001-C Program Policy Manual and publicly disseminated program $0
information align with resolutions affecting the program and how
the program is implemented, and that the public is adequately
informed of how the program is implemented.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to establish controls to provide
2015-NY-1010 9/17/2015 002-D greater assurance that funds are not disbursed for the purchase of $0
second homes, including obtaining leases to document the rental
status of properties.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to strengthen controls to ensure
2015-NY-1010 9/17/2015 002-F $0
that buyout awards are calculated in accordance with Federal
regulations.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to strengthen controls to ensure
2015-NY-1010 9/17/2015 002-G $0
that enhanced buyout incentives are paid in accordance with the
State’s partial action plan and Federal regulations.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to strengthen controls over
procurement actions to ensure that services funded with CDBG-DR
funds are procured via a direct contract, a subrecipient agreement, a
2015-NY-1010 9/17/2015 003-C $0
memorandum of understanding, or some similar document to
provide greater assurance that State officials receive the services
intended and have the ability to establish and monitor performance
goals.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to strengthen controls over
maintenance of procurement files to provide greater assurance that
2015-NY-1010 9/17/2015 003-F $0
the files contain all information required by regulations at 24 CFR
85.36b(9) and that a cost analysis and independent cost estimate are
completed in accordance with regulations at 24 CFR 85.36.
199
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to strengthen controls over
2015-NY-1010 9/17/2015 003-G procurement actions to ensure that contracts paid with CDBG-DR $0
funds contain provisions required by regulations at 24 CFR
85.36(i).
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to request a HUD review of the
2015-NY-1010 9/17/2015 003-H $0
State’s procurement regulations to ensure that they are equivalent
to regulations at 24 CFR 85.36(b).
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs instruct State officials to seek additional guidance from
HUD as to what contractor-related information should be reported
on its Web site to comply with the requirement of Public law 113-2
2015-NY-1010 9/17/2015 003-I $0
that grantees maintain on a public Web site information accounting
for how all grant funds are used if contractor expenditure data is
not reported on usaspending.gov as understood by HUD when it
issued a reporting waiver.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to strengthen controls over
2015-NY-1011 9/17/2015 001-C determining the eligibility of award recipients and substantiate $0
award calculations to ensure that costs charged to the CDBG-DR
program are eligible.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to strengthen controls over the
2015-NY-1011 9/17/2015 001-E $0
maintenance of documentation to provide greater assurance that
disbursed funds are adequately supported.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to document the amount paid for the
2015-NY-1011 9/17/2015 001-H flawed studies used to support the $160-per-square-foot cost figure $0
and take action to recoup the amount paid, thus ensuring that this
amount will be available for other eligible costs.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct the State to strengthen controls to ensure that grant
2015-NY-1011 9/17/2015 002-A agreements are signed before checks are disbursed to homeowner $0
recipients, thus providing greater assurance that State officials can
enforce grant provisions.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct the State to establish and implement procedures to
2015-NY-1011 9/17/2015 002-B recapture ineligible disbursements to provide greater assurance that $0
funds disbursed for ineligible activities and costs are promptly
recovered.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct the State to properly document the low- and
2015-NY-1011 9/17/2015 002-C $0
moderate-income status of the two homeowners whose status was
improperly reported.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct the State to strengthen controls over classifying
2015-NY-1011 9/17/2015 002-D $0
assisted homeowners as low and moderate income to ensure that
CDBG-DR national objectives are accurately reported.
200
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct the State to strengthen controls over the
2015-NY-1011 9/17/2015 002-E $0
verification of recipient eligibility to ensure that CDBG-DR funds
are not used to assist second homes.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct the State to strengthen controls to ensure that all
2015-NY-1011 9/17/2015 002-G $0
required contracts and amounts are accurately reported on its Web
site.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to strengthen controls over work
2015-NY-1011 9/17/2015 003-B $0
authorization documentation to ensure that information on
deliverables and unit cost is provided.
We recommend that the Director of HUD’s Office of Residential
Care Facilities instruct Morris Park officials to establish and
implement procedures to ensure that distributions are made to the
2015-NY-1012 9/30/2015 001-A $0
owner only if the project complies with all requirements in the
regulatory agreement, to include compliance with notices of
physical inspection deficiencies.
We recommend that the Director of HUD’s Office of Residential
Care Facilities instruct Morris Park officials to establish and
2015-NY-1012 9/30/2015 001-B $0
implement written accounting procedures to ensure that books and
records are maintained in accordance with HUD requirements.
We recommend that the Director of HUD’s Office of Residential
2015-NY-1012 9/30/2015 001-C Care Facilities instruct Morris Park officials to ensure that $0
accounting records are reconciled monthly.
We recommend that the Director of HUD’s Office of Residential
Care Facilities instruct Morris Park officials to implement
2015-NY-1012 9/30/2015 001-D procedures to ensure that audited financial statements are prepared $0
and submitted to HUD in a timely manner in accordance with the
regulatory agreement.
Provide supporting documentation showing that it complied with
all environmental requirements. If the Municipality does not
2016-AT-1002 12/17/2015 002-C provide evidence that it complied with all environmental $0
requirements, HUD must initiate appropriate sanctions under 24
CFR 58.77(d)(1)(v) for noncompliance.
Either transfer the unexpended Section 108 loan proceeds to the
2016-AT-1002 12/17/2015 002-D $0
repayment account or submit a request for extension to HUD.
Provide HUD the additional security requirements according to the
2016-AT-1002 12/17/2015 002-E $0
loan agreement.
Develop and implement a financial management system in
accordance with HUD requirements to ensure that program funds
2016-AT-1002 12/17/2015 002-F can be traced to a level, which ensures that such funds have not $0
been used in violation of the restrictions and prohibitions of
applicable statutes.
Ensure that all Section 108 loan proceeds deposited at commercial
2016-AT-1002 12/17/2015 002-G $0
banks are properly collateralized with Government obligations.
Provide training, technical assistance, and increase monitoring of
2016-AT-1002 12/17/2015 002-H the Municipality’s performance in the administration of its Section $0
108 loan program.
201
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Enforce HUD’s requirements for the owners and operator to
2016-AT-1801 12/16/2015 001-A immediately obtain and maintain liability and property insurance $0
on the project.
2016-DP-0002 12/21/2015 001-A Not released to public. $0
2016-DP-0002 12/21/2015 001-B Not released to public. $0
2016-DP-0002 12/21/2015 001-C Not released to public. $0
2016-DP-0002 12/21/2015 002-B Not released to public. $0
2016-DP-0002 12/21/2015 004-A Not released to public. $0
2016-DP-0801 11/30/2015 001-A Not released to public. $0
2016-DP-0801 11/30/2015 001-B Not released to public. $0
2016-DP-0801 11/30/2015 001-C Not released to public. $0
2016-DP-0801 11/30/2015 001-D Not released to public. $0
2016-DP-0801 11/30/2015 001-E Not released to public. $0
2016-DP-0801 11/30/2015 001-F Not released to public. $0
2016-DP-0801 11/30/2015 001-G Not released to public. $0
Prepare an analysis of all outstanding REMIC deals to determine
2016-FO-0001 11/13/2015 002-A the cumulative effect of misstatements and make the appropriate $0
adjustments to the financial statements.
Update the accounting policies and procedures related to revenue
2016-FO-0001 11/13/2015 002-B $0
recognition to reasonably ensure compliance with GAAP.
Establish and implement policies and procedures to ensure that
asset balances in Ginnie Mae’s books are appropriately adjusted to
2016-FO-0001 11/13/2015 002-C $0
account for the timing differences in the collection and remittance
of cash from its master sub-servicers
Provide additional justification to support the reasonableness of the
2016-FO-0001 11/13/2015 002-E delinquency and foreclosure rates assumptions or create projections $0
for this assumption that are better supported by best practices.
Ensure that the systems and processes for servicing and financial
2016-FO-0001 11/13/2015 004-A reporting on Ginnie Mae’s defaulted issuers’ portfolio are ready $0
and capable of handling loan level accounting.
202
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Establish and implement entity wide policies and procedures for an
effective model risk management. At a minimum, it should include
the following elements:
• Controls over model development, implementation and use;
• Controls over model validation;
2016-FO-0001 11/13/2015 004-B • Controls over model documentation; $0
• Controls over evaluation for fitness, selection and validation of
third-party models; and
• Establish adequate structure of responsibilities for model
oversight, including evaluation of model data inputs, assumptions
and methodology
Segregate duties between individuals collecting, recording,
depositing, and reconciling cash, and periodically review the
2016-FO-0001 11/13/2015 005-A $0
controls over the cash process to ensure proper implementation of
compatible functions in its cash operations department.
Conduct ongoing monitoring of change reports to ensure that
unauthorized changes are not made to Ginnie Mae's data, and
2016-FO-0001 11/13/2015 005-B $0
establish a policy regarding ongoing monitoring of change activity
that requires performing periodic reviews of change reports.
Automate the approval process to include restricting the ability to
make unauthorized changes unless evidence of approval is present
or increase the scope of the “Admin Adjustments Report” to
include all exceptions and adjustments. Additionally, the
2016-FO-0001 11/13/2015 005-C $0
contractor should review the report for changes, verify that the
changes identified in the report coincide with evidence of proper
authorization, and ensure changes that are not properly supported
are investigated and resolved accordingly.
Request a legal opinion from the implementing agency, the U.S.
2016-FO-0001 11/13/2015 006-A Treasury, for a determination of whether Ginnie Mae is required to $0
comply with DCIA.
Evaluate the IHBG investment process and implement a proper
2016-FO-0003 11/18/2015 002-A $0
accounting treatment in accordance with Federal GAAP.
Work with the Office of Native American Programs to calculate the
amounts advanced to grantees and restate HUD’s financial
2016-FO-0003 11/18/2015 002-B $0
statements to recognize the prepayments on the financial
statements.
Develop standard operating procedures for routinely obtaining
2016-FO-0003 11/18/2015 002-C information on grantee investment activity and accurately reporting $0
amounts in HUD’s general ledger and financial statements.
Establish a process to track the amount HUD owes to PHAs to
2016-FO-0003 11/18/2015 002-D cover prepayment shortages and provide the information to OCFO $0
so that it can be properly recognized as accounts payable.
Develop a tracking function for the payments advanced to IHBG
2016-FO-0003 11/18/2015 002-E recipients to facilitate financial reporting and monitoring $0
compliance with grant time restrictions.
Assign adequate resources to identify and resolve incorrect
2016-FO-0003 11/18/2015 004-A transactions in GFAS so that the system can be used for reliable $0
financial reporting of Ginnie Mae’s budgetary resources.
203
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Promptly complete all reconciliation processes to determine the
2016-FO-0003 11/18/2015 004-B $0
root causes of incorrect balances.
Based on root causes identified, make necessary adjustments to the
system configurations in GFAS to ensure proper and accurate
2016-FO-0003 11/18/2015 004-C $0
budgetary resource reporting that complies with FFMIA and OMB
A-11.
Review user roles in GFAS and assign additional staff to ensure
2016-FO-0003 11/18/2015 004-D $0
that proper segregation of duties is maintained.
Evaluate the weaknesses identified by NAPA, as well as OCFO’s
disagreement with those weaknesses and recommendations, and
2016-FO-0003 11/18/2015 006-A $0
identify what corrective actions will be taken and when those
actions will be taken.
Develop a process to ensure that issues and recommendations from
all evaluations and audits, including those performed by third
parties like NAPA, are adequately documented and tracked and
2016-FO-0003 11/18/2015 006-B properly evaluated by senior management to ensure that HUD’s $0
FMFIA structure remains compliant. HUD should also ensure that
corrective actions are agreed upon and responsibility for
implementing corrective actions is appropriately delegated.
Develop procedures to provide oversight of OCPO procurement
activities to ensure that those with financial accounting and
2016-FO-0003 11/18/2015 006-C $0
reporting impact are properly captured and reflected in HUD’s
financial statements.
Review projects and acquisitions to determine whether the proper
2016-FO-0003 11/18/2015 006-D accounting treatment was applied and determine whether $0
corrections to HUD’s financial statements are needed.
Contact all other HUD program offices to determine whether any
other programs authorize or are aware of grantees holding funds in
2016-FO-0003 11/18/2015 006-E advance of their immediate disbursement needs and determine $0
financial statement impact on and compliance with Treasury cash
management requirements of any found.
Distribute the workload among available accountants when staff is
2016-FO-0003 11/18/2015 006-F unavailable to ensure that all cash reconciliations are performed in $0
a timely manner.
Ensure that standard operating procedures for IGT activity are
updated, to include reconciling IGT balances for all transactions
required by the Federal Intragovernmental Transactions
2016-FO-0003 11/18/2015 006-G Accounting Policies Guide included in the Treasury Financial $0
Manual 2-4700. HUD should also include procedures to promptly
reconcile, research, and resolve differences identified in the
Treasury quarterly scorecard.
Provide training on IGT reporting to ensure that responsible staff is
sufficiently trained to allow reconciliations to be promptly
2016-FO-0003 11/18/2015 006-H $0
performed and differences identified to be identified, researched,
and resolved in a timely manner.
204
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Ensure that the agency’s key IGT point of contact is responsible for
overseeing and coordinating efforts with component entities to
2016-FO-0003 11/18/2015 006-I $0
ensure that Treasury quarterly scorecard differences are promptly
researched and resolved.
Revise policies and procedures to ensure that MCRs are routinely
monitored and completed for all program areas and establish a
2016-FO-0003 11/18/2015 006-J timeframe for completion of the MCR reports. Further, HUD $0
should ensure that an escalation process is included to address
untimely completion of the MCR process.
Develop policies and procedures to ensure that any data changes
and accounting adjustments processed by OCFO Systems staff that
impact the general ledger are sufficiently documented, identifying a
2016-FO-0003 11/18/2015 007-A $0
description of the event, the preparers of the adjustment, the
approving officials of the adjustment, and dates when adjustments
occurred.
Develop and implement a monitoring plan to review outstanding
disaster grant activity to ensure that the expenditure rates are
consistently tracked and evaluated and that there are specific
2016-FO-0003 11/18/2015 008-C criteria to identify slow-moving projects. The procedures should $0
include a process to follow up and recommend corrective actions
for the slow-moving projects identified, to include recapturing
funds if necessary.
Design and implement a policy to ensure that reconciliations of
expenditure activity between HUD’s financial management
systems and DRGR are periodically performed for all active
2016-FO-0003 11/18/2015 008-D $0
disaster grant balances to ensure that expenditure activity is
accurate in DRGR. The policy should also include procedures for
follow-up and resolution of identified differences.
Implement a payment recapture audit for the HOME program,
2016-FO-0003 11/18/2015 012-A specifically to identify and recapture improper payments made as a $0
result of the continued use of the cumulative method.
Include the HOME program in the next annual improper payment
risk assessment and ensure that the impact of the cumulative
2016-FO-0003 11/18/2015 012-B method to meet commitment deadlines is included in the risk $0
assessment process to evaluate the susceptibility to significant
improper payments
Perform a detailed review of the procurement procedures for each
of the State grantees that received funds under the Disaster Relief
Act. If the State did not demonstrate that its procedures
incorporated the specific procurement standards included in 24
CFR 85.36(b) through (i) or that its procedures were equivalent to
each individual procurement provision of 24 CFR 85.36(b) through
(i), HUD should (1) require the grantee to update its procedures and
2016-PH-0005 9/29/2016 001-A $4,872,056,594
provide an updated certification and (2) review the updated grantee
certification to confirm that the State meets requirements and has a
proficient procurement process in place, thereby putting up to
$4,872,056,594 to better use. In cases in which HUD has not yet
awarded all of the allocated funds to the State, HUD should
complete these steps before it executes any additional grant
agreements with the State.
205
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Issue a change to regulations at 24 CFR Part 203, which would
avoid unnecessary costs to the FHA insurance fund, allowing an
2017-KC-0001 10/14/2016 001-A estimated $2.23 billion to be put to better use. These changes $2,238,721,464
include (1) a maximum period for filing insurance claims and (2)
disallowance of expenses incurred beyond established timeframes.
Implement adequate procedures and controls to ensure that public
housing agencies maintain valid declarations of trust that are
recorded in public records to prevent more than $509 million in
annual operating subsidy funds from being provided to projects in
which HUD’s interests and investments are not protected. Such
procedures and controls should include but not be limited to (1)
issuing additional guidance regarding declarations of trust to assist
2016-CH-0001 2/26/2016 001-D HUD’s field office staff, public housing agencies, and independent $509,000,000
auditors in clarifying HUD’s requirements and appropriately
evaluating the declarations of trust and (2) amending the A-133
Compliance Supplement to require auditors to review an entire
project at a time and include steps for determining whether all
property of the project is included on declarations of trust and
whether the declarations of trust were properly recorded in public
records.
Ensure that the $276.5 million identified as invalid obligations in
2017-FO-0002 11/14/2016 002-D $276,567,940
fiscal years 2015 and 2016 are deobligated as appropriate.
Reverse the accounting write-off of the advances accounts. In
conjunction with the subledger data solution, conduct a proper
2017-FO-0001 11/14/2016 002-F $248,016,624
analysis to determine whether any of the $248 million balances in
the advances accounts are collectible.
Close out and deobligate the remaining balances on 3,121 expired
homeless assistance contracts of $151,719,152. Further, deobligate
2017-FO-0003 11/15/2016 008-A $162,715,936
$10,996,784 in 234 program obligations marked for deobligation
during the department-wide open obligations review.
Complete any outstanding validation reviews and transition back as
2017-FO-0003 11/15/2016 012-A much as $168.3 million in Housing Choice Voucher program $150,100,000
funding from PHAs.
Record the deobligations provided by OCPO totaling as much as
$86.4 million for the contracts identified during our review.
2017-FO-0003 11/15/2016 008-Q Additionally, Ginnie Mae should deobligate the $587,505 in three $86,987,505
administrative obligations marked for deobligation during the
department-wide open obligations review.
We recommend that the Acting Deputy Assistant Secretary for
Grant Programs require the State to develop and implement policies
and procedures to document and perform detailed review and
2016-FW-1010 9/30/2016 001-A testing to establish eligibility, existence, disaster event $81,982,712
qualifications, reasonableness of cost estimates, prioritization, and
fund allocation, both retroactively and prospectively, which would
put $81,982,712 to better use.
Acknowledge that the attached settlement agreement for $70
2016-CF-1801 9/8/2016 001-A $59,000,000
million represents an amount due HUD.
206
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Revise FHA’s internal control procedures to realign with its
regulatory requirements so that the first reimbursement letter is sent
2017-FO-0002 11/14/2016 003-B immediately after 60 days instead of after 6 months and establish a $55,350,830
timeframe for collection once partial claims are referred to the
Mortgagee Review Board.
Acknowledge that $76 million of the $113 million in the attached
2016-CF-1806 9/19/2016 001-A $50,000,000
settlement agreement represents an amount due HUD.
Establish a process for requiring removal of pooled loans that
2016-KC-0002 9/21/2016 001-B remain uninsured at the maximum time to put $49.3 million to $49,300,000
better use.
Provide documentation to show that the $40,046,144 disbursed
under the contract was for costs that met a national objective or
2016-PH-1009 9/30/2016 001-A direct the State to repay HUD from non-Federal funds any amount $40,046,144
that it cannot support (excluding any amount repaid as a result of
recommendations 1B, 1C, 1D, 1E, and 1F).
Review and if necessary deobligate the 785 expired or inactive
Section 235-236, Section 202-811, and Project Based Section 8
2017-FO-0003 11/15/2016 008-G $34,720,566
projects totaling $22,075,052, $12,261,389, and $384,125,
respectively.
We recommend that HUD’s Deputy Assistant Secretary for Grant
Programs direct State officials to provide documentation showing
that the approximately $22 million disbursed for the identified
2016-NY-1009 8/12/2016 001-A $21,958,549
procurements complied with the applicable procurement
requirement at 24 CFR 85.36(f) and repay any amounts determined
to be unsupported from non-Federal funds.
Deobligate all obligations marked for deobligation during the
department-wide open obligations review, including as much as
2017-FO-0003 11/15/2016 008-F $18,290,686 in 307 administrative obligations and $3,420,032 in $21,710,718
202 program obligations marked for deobligation as of September
30, 2016.
Require the contractor to complete the necessary debt collection
2016-KC-0001 8/17/2016 001-A efforts for $21,526,130 in uncollected partial claims associated $21,526,130
with FHA mortgages terminated during fiscal year 2015.
Add a performance requirement measuring partial claims collection
to the contractor’s performance work statement to effectively hold
2016-KC-0001 8/17/2016 001-B $21,526,130
the contractor to an acceptable level of performance to put more
than $21,526,130 to better use.
We recommend that HUD’s Acting Deputy Assistant Secretary for
Grant Programs instruct City officials to reimburse the Program
2017-NY-1004 12/21/2016 001-A $18,274,054
from non-Federal funds $18,274,054 in exempt State sales tax on
repairs and maintenance services.
Review the status of the remaining balances on 1,356 expired ESG
2017-FO-0003 11/15/2016 008-B contracts totaling $17,986,109 and determine whether these $17,986,109
balances should be recaptured.
207
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Make a preliminary determination as to whether the Condominium
Association is in default of the grant agreement. If it is
preliminarily determined that the Condominium Association is in
default, HUD should provide the Condominium Association notice
of the determination and propose corrective or remedial actions to
2016-CH-1009 9/30/2016 001-V address the default and prevent the Condominium Association from $13,878,088
the possible repayment of the remaining $13,878,088 in program
funds, which HUD disbursed for the project ($14,156,600 in
program funds disbursed for the project – $278,512 in proceeds
from initial unit sales the Condominium Association remitted to
HUD).
Support that the $13,333,151 awarded for the architect, engineer,
and construction management services contracts was fair and
2017-BO-1001 10/12/2016 001-A $13,333,151
reasonable in accordance Federal procurement requirements or
repay to HUD from non-Federal funds any amounts not supported.
We recommend that the Acting Deputy Assistant Secretary for
2016-FW-1010 9/30/2016 001-B Grant Programs require the State to support or properly obligate $11,717,288
$11,717,288 in unsupported obligations.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
reimburse the City’s CDBG local bank account for the $11,532,769
2016-NY-1007 3/30/2016 001-A $11,532,769
in uncollected program income generated from the disposition of
real property previously assisted with CDBG funds, thus ensuring
that these funds can be used for eligible activities.
Support that the Hibiscus Hill Apartments acquisition was
necessary and served the purpose intended and support that the
2016-LA-1009 8/26/2016 001-A premium paid for the acquisition over the market value was $10,000,000
reasonable and that HUD received an adequate value, or repay its
CDBG program line of credit $10,000,000 from non-Federal funds.
We recommend that the Director of HUD’s Buffalo Office of
Public Housing instruct Town officials to develop and implement
procedures and controls to ensure that program units meet housing
quality standards, thereby ensuring that an estimated $9,351,175 in
future program funds is spent for units that are decent, safe, and
2017-NY-1003 12/14/2016 001-C $9,351,175
sanitary. These procedures should include but not be limited to
regular, updated training for the contractor’s housing inspectors to
ensure that they are familiar with all relevant regulations and
rotating its contractor’s housing inspectors to prevent units from
always being inspected by the same official.
We recommend that the Director of the Public Housing Financial
Management Division obtain adequate supporting documentation
2016-NY-0001 9/12/2016 001-D of the utility expense level amounts and verify the computation of $8,993,484
$8,993,484 in operating funds is accurate or recapture ineligible
amounts.
Develop and implement procedures and controls to ensure that
program units meet housing quality standards, thereby ensuring that
2016-PH-1008 9/29/2016 001-E $7,576,867
an estimated $7,576,867 in program funds is spent for units that are
decent, safe, and sanitary.
208
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Implement adequate procedures and controls to ensure that all
program units meet HUD’s and Authority’s own housing quality
standards to prevent $7,560,158 in program funds from being spent
on units that do not comply with requirements over the next year.
2016-AT-1005 5/10/2016 001-C $7,560,158
The procedures should include but not be limited to ensuring that
inspectors are properly trained and familiar with HUD’s and the
Authority’s requirements to ensure that they conduct complete and
accurate inspections.
Direct the applicable lenders to provide evidence that the properties
for the 99 FHA-insured loans, which closed after October 1, 2015,
but were not included in our sample, had a safe and potable water
source at the time the loans closed and were endorsed, or, if the
2016-PH-0003 7/29/2016 001-C $7,514,800
lenders cannot provide this evidence, direct them to perform water
testing and any necessary remediation to ensure that the properties
have a safe and potable water source, or indemnify HUD against
any future loss, thereby putting up to $7,514,800 to better use.
Research grants with no drawdown activity and if a bonafide need
2017-FO-0003 11/15/2016 008-E no longer exists, close out and deobligate remaining balances on $6,966,585
the 16 grants with no drawdown activity totaling $6,966,585.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
provide documentation in the loan file that HUD approved the
withdrawal of funds after the required deadline, and provide an
2016-NY-1003 2/5/2016 001-E $6,724,820
explanation and obtain approval for the untimely disbursement of
the $6,724,820 after it had been drawn down. Any costs
determined to be inadequately supported should be reimbursed
from non-Federal funds.
Provide adequate documentation to support HUD approval for the
$6,340,504 loan between Dolores Frances and Pico Union and how
2016-LA-1008 8/26/2016 001-D $6,340,504
the funds were used or remove the loan and any associated
encumbrance from the project.
Work with HUD to develop a plan to ensure that energy savings are
realized to prevent a potential default on the $5,869,770 energy
2016-CH-1005 8/3/2016 001-C $5,869,770
conservation loan used to purchase energy conservation equipment
attached to the Authority’s public housing properties.
We recommend that HUD’s Acting Deputy Assistant Secretary for
Grant Programs instruct City officials to submit an amended action
plan for approval to ensure that it agrees with the City’s policies
regarding the use of $4,467,299 and planned use of $1,314,068 in
2017-NY-1001 11/2/2016 001-A additional CDBG-DR assistance covering up to 100 percent of $5,781,367
eligible reimbursable expenses incurred by homeowners with SBA
loans. If an amended action plan is not submitted and approved,
repay the Program from non-Federal funds for additional
reimbursements provided solely to homeowners with SBA loans.
Provide adequate support that $5,573,214 ($866,235 in Capital
Fund program and $4,706,979 in American Recovery and
2016-BO-1002 6/27/2016 001-E Reinvestment Act funds) was spent for eligible costs. Any amounts $5,573,214
that cannot be supported should be repaid to the program from non-
Federal funds.
209
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s Office of Block Grant
Assistance require the State to develop and implement written
procedures and actions that would correct and prevent the
deficiencies outlined in the finding to ensure that the Parish
adequately supports program participant eligibility. The written
procedures and actions should include but not be limited to (1)
reviewing and amending the Parish’s program policies,
documentation checklist, and income calculation worksheet to
ensure the consistency of file documentation and eligibility
2016-FW-1006 8/31/2016 001-A determinations; (2) providing training and assistance to the Parish $5,365,327
and its contractors regarding program participant eligibility
determinations and documentation requirements; and (3)
conducting a final file review before disbursing funds on behalf of
program participants to ensure that files have complete
documentation, appropriate follow-ups are conducted, and the
participant remains eligible for disaster assistance. Implementing
this recommendation should better ensure that the Parish spends at
least $5,365,327 in CDBG disaster assistance funds obligated for
its disaster assistance programs in accordance with requirements.
Direct the New Orleans, LA, field office to enforce its monitoring
findings and require the grantee to provide documentation to
2016-PH-0001 6/30/2016 001-A support costs totaling $4,959,911 or the grantee must reimburse its $4,959,911
program from non-Federal funds for any costs that it cannot
support.
Provide documentation to show that fees it charged for
maintenance services totaling $4,927,176 were reasonable or
2016-PH-1005 8/17/2016 001-B $4,927,176
reimburse its public housing projects from non-Federal funds for
any amount that it cannot support.
Provide adequate documentation to support that the $4,586,471
loan between Dolores Frances and Alliant Tax Credit Fund, LTD,
2016-LA-1008 8/26/2016 001-E $4,586,471
was approved by HUD or remove the loan and any associated
encumbrance from the project.
Direct the Minneapolis, MN, field office to require the grantee to
provide documentation to support the $4,299,963 in unsupported
2016-PH-0001 6/30/2016 001-D $4,299,963
payments identified or the grantee must reimburse its program from
non-Federal funds for any costs that it cannot support.
Repay the U.S. Treasury $2,096,528 ($1,637,704 in public housing
funds and $458,823 in Housing Choice Voucher program funds)
2016-LA-1006 6/3/2016 001-C $4,193,056
for its ineligible use of Federal funds for payment of debt to the
City.
Develop and implement controls to ensure that program units meet
housing quality standards, thereby ensuring that an estimated
2016-PH-1002 4/27/2016 001-F $4,014,032
$4,014,032 in program funds is spent for units that are decent, safe,
and sanitary.
We recommend that the Director of the Public Housing Financial
Management Division determine whether any of the overpayment
2016-NY-0001 9/12/2016 001-A $3,630,286
of $3,630,286 was ineligible and take appropriate actions to recoup
the ineligible payments.
210
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Provide documentation to show that prices paid for services and
products totaling $3,028,666 were fair and reasonable or reimburse
2016-PH-1007 9/27/2016 001-A $3,028,666
the applicable program from non-Federal funds for any amount that
it cannot support.
We recommend that the Director of the Houston Office of Public
Housing require the Authority to support or repay $3,014,541 to its
2017-FW-1003 12/27/2016 001-D $3,014,541
public housing and voucher programs from non-Federal funds for
the contractor payments listed in appendix C.
Improve its quality control procedures to ensure that all properties
in its active inventory comply with its contract with HUD and its
2016-CH-1008 9/29/2016 001-D own requirements to prevent $2,532,000 in monthly ongoing $2,532,000
property management fees from being spent for properties that are
not adequately maintained over the next year.
Direct the applicable lenders to provide evidence that the properties
for the 28 FHA-insured loans, which closed before October 1,
2015, and were endorsed after October 1, 2015, but were not
included in our sample, had a safe and potable water source at the
2016-PH-0003 7/29/2016 001-D time the loans closed and were endorsed, or, if the lenders cannot $2,512,464
provide this evidence, direct them to perform water testing and any
necessary remediation to ensure that the properties have a safe and
potable water source, or indemnify HUD against any future loss,
thereby putting up to $2,512,464 to better use.
Provide documentation to show that $2,377,970 disbursed for
other direct costs was supported and was for prices that were fair
2016-PH-1009 9/30/2016 001-C and reasonable or repay HUD from non-Federal funds any amount $2,377,970
that it cannot support (excluding any amount repaid as a result of
recommendation 1B).
Repay to HUD from non-Federal funds the $2,138,469 in ineligible
2017-BO-1001 10/12/2016 002-C CDBG-DR funds committed and spent without publishing the $2,138,469
required notice of intent and request for release of funds.
We recommend that the Director of HUD’s Office of Residential
Care Facilities instruct project officials to provide documentation to
justify $2,047,444 in unsupported costs. Any costs determined to
2016-NY-1010 9/29/2016 001-C be ineligible and paid from project funds should be reimbursed by $2,047,444
the responsible party to the proper project account from nonproject
funds. Any costs determined to be ineligible that were charged but
not paid should be removed from the projects’ books and accounts.
We recommend that the Director of HUD’s Office of Residential
Care Facilities instruct project officials to reimburse the proper
project account from nonproject funds for any of the $1,812,777
2016-NY-1010 9/29/2016 001-B $1,812,777
($252,823 + $1,559,954) in ineligible expenses paid with project
funds. Those ineligible expenses that were charged but not paid
should be removed from the projects’ books and accounts.
Provide documentation to support that $1,807,359 in NSP funds
was spent for reasonable, necessary, and supported costs. Any
2016-BO-1003 6/28/2016 001-C $1,807,359
amount for which adequate support cannot be provided should be
repaid to the Treasury from non-Federal funds.
211
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Direct the Washington, DC, field office to require the grantee to
provide documentation to support the $1,766,778 in unsupported
2016-PH-0001 6/30/2016 001-E $1,766,778
payments identified or the grantee must reimburse its program from
non-Federal funds for any costs that it cannot support.
Provide documentation to support that $750,000 in Housing Choice
Voucher and $1,000,000 in low-rent program reserve funds were
2016-BO-1002 6/27/2016 001-G used for eligible Housing Choice Voucher and low-rent program $1,750,000
costs. Any amount determined to be unsupported should be repaid
from non-Federal funds.
Fully implement its procedures to ensure that all program units
meet HUD’s housing quality standards to prevent $1,709,556 in
program funds from being spent on units that do not comply with
2016-AT-1013 9/13/2016 001-C $1,709,556
HUD’s requirements over the next year. The procedures should
include but not be limited to ensuring that inspectors consistently
conduct accurate and complete inspections.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
provide documentation to support the $1,652,223 in CDBG funds
2016-NY-1007 3/30/2016 001-F $1,652,223
used for developing the 22 affordable townhouses. Any amount
determined to be ineligible should be reimbursed to the City’s
CDBG program line of credit from non-Federal funds.
Support that the noncompetitively procured fire apparatus costs
were reasonable and that potential bidders were not harmed by the
2016-LA-1009 8/26/2016 001-D City’s arbitrary action or repay its CDBG program line of credit $1,615,516
$1,615,516 from non-Federal funds for the noncompetitively
procured fire apparatus contracts.
Fully implement its policies and procedures to ensure that its staff
complies with HUD regulations and its administrative plan when
2016-AT-1013 9/13/2016 002-D administering its program to prevent disbursing $ 1,607,706 in $1,607,706
program funds for improper housing assistance payments over the
next year.
We recommend that the Director of HUD’s Office of Block Grant
Assistance require the State to ensure that the Parish supports the
2016-FW-1006 8/31/2016 001-D cost reasonableness of the grant management contract or repay $1,534,629
$1,534,629 to its CDBG disaster assistance program from non-
Federal funds.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
reimburse the $1,500,000 in CDBG funds spent for the delinquent
2016-NY-1003 2/5/2016 001-G float loan that defaulted in 1998 through one of the options $1,500,000
identified in HUD regulations so that it can be closed out as bad
debt, thereby making the funds available for use on other eligible
activities
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
record the mortgages on the five CDBG-assisted properties that
2016-NY-1007 3/30/2016 001-I $1,475,674
were demolished and acquired with CDBG assistance of
$1,475,674, thus ensuring that these properties are administered in
compliance with program requirements.
212
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Support that the costs for a contract awarded to one of the property
owner’s affiliates was reasonable and the integrity of the
subrecipient’s procurement was not compromised by the
2016-LA-1009 8/26/2016 001-C $1,450,000
relationship or repay its CDBG program line of credit $1,450,000
from non-Federal funds for the subrecipient’s procurement
violation.
Provide adequate documentation to support that $1,448,663 in
CDBG-DR funds was spent for supported, necessary and
2017-BO-1002 10/17/2016 001-A $1,448,663
reasonable costs. Any amount for which adequate support cannot
be provided should be repaid from non-Federal funds.
Require the Housing Board to provide support showing that a
conflict of interest did not exist between the Mobile Development
2016-AT-1010 8/4/2016 001-A $1,241,958
Enterprises and Superior Masonry or reimburse HUD $1,241,958
from non-Federal funds.
We recommend that the Director of the Public Housing Financial
2016-NY-0001 9/12/2016 001-B Management Division validate the $1,191,767 in underpayments $1,191,767
and determine if any corrections should be made.
We recommend that the Director of HUD’s Buffalo Office of
Community Planning and Development instruct City officials to
provide documentation to support that the $1,166,000 public
2016-NY-1003 2/5/2016 001-J facilities and improvements procurement contract price was fair $1,166,000
and reasonable and that the sole-source method used was justified.
Any costs determined not to be fair and reasonable should be
reimbursed from non-Federal funds.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
2016-NY-1007 3/30/2016 001-C strengthen administrative controls to ensure that future Section 108 $1,162,801
income of $1,162,801 will be recorded in IDIS, thus ensuring that
these funds can be used for eligible activities.
Enforce the Miami, FL, field office’s monitoring findings and
require the grantee to provide documentation to support costs
2016-PH-0001 6/30/2016 001-B $1,161,616
totaling $1,161,616 or the grantee must reimburse its program from
non-Federal funds for any costs that it cannot support.
Provide documentation to support the $999,977 in unsupported
2016-PH-1801 4/4/2016 001-A payments identified by the review or reimburse its program from $999,977
non-Federal funds for costs that it cannot support.
Provide support that $944,687 (Footnote 2: Emergency funds of
more than $1.1 million drawn between July 1, 2011, and December
31, 2015, were adjusted to consider $158,800 questioned in
recommendation 1C and $38,164 questioned in recommendation
2016-AT-1012 8/29/2016 001-B $944,687
1D.) in Emergency funds drawn from HUD is reconciled with the
accounting records and that such funds have not been used in
violation of the restrictions and prohibitions of applicable statutes
or reimburse the Emergency programs from non-Federal funds.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
record $930,241 in Section 108 income generated from the
2016-NY-1007 3/30/2016 001-B $930,241
refinancing of the Section 108 loan in IDIS, thus ensuring that
$930,241 in Section 108 income is properly accounted for and put
to better use.
213
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Require the Authority to provide support to HUD showing that it
received the best value in all instances when it incorrectly awarded
2016-DE-1005 9/28/2016 001-B a contract based on a faxed bid. For any portion the $918,766 the $918,766
Authority cannot support, HUD should require the Authority to
repay its HOME and NSP programs from non-Federal funds.
Require the members to provide support or reimburse HUD’s FHA
2016-AT-1009 8/2/2016 001-B $865,142
insurance fund $865,142 for unsupported project disbursements.
We recommend that HUD’s Acting Deputy Assistant Secretary for
Grant Programs coordinate with the Office of Healthy Homes and
Lead Hazard Control to provide technical assistance and instruct
City officials to provide supporting documentation that lead-based
2017-NY-1001 11/2/2016 002-C paint testing was performed, identified hazards were removed, and $833,199
clearance was achieved for the 41 properties for which
homeowners received $833,199 in CDBG-DR assistance. If
supporting documentation is not provided, City officials should
repay the $833,199 from non-Federal funds.
Reimburse its program $707,091 from non-Federal funds
($645,509 in housing assistance payments and $61,582 in
2016-CH-1004 7/28/2016 001-A $707,091
associated administrative fees) for the inappropriate payments cited
in this finding.
Provide support showing that the $684,020 charged by the City for
2016-LA-1006 6/3/2016 001-L $684,020
general liability coverage was reasonable.
We recommend that the Director of HUD’s New Orleans Office of
Community Planning and Development require the City to Support
2016-FW-1001 3/21/2016 002-A $677,948
the cost reasonableness of the 64 housing rehabilitation contracts or
repay $677,948 to its CDBG program from non-Federal funds.
Repay to the Treasury from non-Federal funds the $666,668 in NSP
2016-BO-1003 6/28/2016 001-A funds spent for ineligible activity costs and funds that had already $666,668
been paid by another Federal program.
Provide support for the proper allocation of the $650,990 in
information technology costs charged to the Capital Fund program.
2016-BO-1002 6/27/2016 001-F $650,990
Any amounts that cannot be supported should be repaid from non-
Federal funds.
Deobligate all obligations marked for deobligation during the
department-wide open obligations review, including as much as
2017-FO-0003 11/15/2016 008-K $384,703 in 27 administrative obligations and $234,619 in 6 $619,322
program obligations marked for deobligation as of September 30,
2016.
Support the eligibility of $605,614 used for unsupported allocated
overhead costs charged for the fiscal year ending September 30,
2016-LA-1013 9/30/2016 001-A 2015, and its current fiscal year through June 30, 2016, or $605,614
reimburse its administrative fee reserve account using non-Federal
funds.
Provide adequate support for $575,855 in CDBG unsupported
2016-KC-1005 9/28/2016 001-A salary costs or reimburse the affected programs from non-Federal $575,855
funds any portion it cannot support.
214
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Direct the applicable lenders to provide evidence that the properties
for the seven additional FHA-insured loans reviewed, for which the
files did not contain evidence of water testing, had a safe and
potable water source at the time the loans closed and were
2016-PH-0003 7/29/2016 001-B endorsed, or, if the lenders cannot provide this evidence, direct $570,827
them to perform water testing and any necessary remediation to
ensure that the properties have a safe and potable water source, or
indemnify HUD against any future loss, thereby putting up to
$570,827 to better use.
Provide documentation to support $516,560 disbursed for wages
and salaries charged to its programs by its contractor’s employees
2016-PH-1009 9/30/2016 001-D $516,560
or repay HUD from non-Federal funds any amount that it cannot
support.
Acknowledge that the attached settlement agreement for $510,000
2016-CF-1813 9/30/2016 001-A $510,000
represents an amount due HUD.
Reimburse its public housing projects $507,800 from non-Federal
2016-PH-1005 8/17/2016 001-A funds related to the ineligible duplication of the information $507,800
technology fee.
Reimburse its program $497,668 ($453,995 in housing assistance
2016-CH-1007 9/28/2016 001-A payments + $43,673 in associated administrative fees) from non- $497,668
Federal funds for the inappropriate payments cited in this finding.
Support or reimburse its program $496,585 from non-Federal funds
($467,426 + $444 in housing assistance payments + $28,715 in
2016-CH-1006 8/23/2016 001-A $496,585
administrative fees) for the missing eligibility documentation and
unsupported housing assistance payments.
Provide support showing that the contracts for which $488,150
($216,142 and $272,008 for legal services and public relations
services, respectively) was paid were procured at the most
2016-BO-1002 6/27/2016 001-K $488,150
competitive and best price and the costs paid were necessary and
reasonable. Any unnecessary or unreasonable costs should be
repaid from non-Federal funds to the program(s) that paid the costs.
We recommend that the Director of HUD’s Office of Public
Housing instruct Authority officials to provide documentation
2017-NY-1002 11/22/2016 001-A showing that the $474,571 in identified procurements was $474,571
reasonable or repay any amounts not supported from non-Federal
funds.
Obtain adequate support to document the reasonableness and
necessity of $472,246 or reprogram the funds to other allowable
2017-BO-1002 10/17/2016 001-B $472,246
activities, thus ensuring that the funds will be put to their intended
use.
Support or reimburse its program $964,365 ($619,750 + $344,615)
2016-CH-1005 8/3/2016 001-A from non-Federal funds for the unsupported procurement and $463,885
contracting cited in this finding.
Require Majestic Management to provide support that $462,281
2017-KC-1001 12/16/2016 002-B paid for procurements was reasonable or reimburse the appropriate $462,281
projects for the balance.
Provide documentation to support that it paid itself $447,345 for
2017-KC-1001 12/16/2016 001-B eligible purposes or reimburse the appropriate projects for the $447,345
balance.
215
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
Repay the program from non-Federal funds the $444,876 disbursed
2016-BO-1002 6/27/2016 001-A for Capital Fund program operating costs that exceeded the $444,876
allowable amount.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
record the mortgage on the CDBG-assisted rental property that was
2016-NY-1007 3/30/2016 001-H $426,296
rehabilitated or reimburse the $426,296 from non-Federal funds to
the City’s CDBG program line of credit, thus ensuring that the
funds are put to their intended use.
Acknowledge that the attached settlement agreement for $425,000
2016-SE-1801 9/12/2016 001-A $416,145
represents an amount due to HUD.
Deobligate the remaining $404,126 from its task letter for the
2016-CH-1013 9/30/2016 001-B $404,126
housing unit renovations project.
We recommend that the Director of HUD’s Newark, NJ, Office of
Community Planning and Development instruct City officials to
record the receipt and expense of $397,031 in the City’s accounting
2016-NY-1007 3/30/2016 002-C records and correctly classify the amount in IDIS to show the use $397,031
of the City’s CDBG funds for repayment of a guaranteed Section
108 loan, thus ensuring that the funds were put to their intended
use.
We recommend that the Director of HUD’s New Orleans Office of
Community Planning and Development require the City to support
2016-FW-1001 3/21/2016 001-C that project 3, to build a bike path along the Mississippi River, met $396,836
a national objective or repay $396,836 to its CDBG program from
non-Federal funds.
Reimburse HUD for $379,547 in ineligible costs related to
2016-AT-1006 6/17/2016 001-A $379,547
activities 831and 843 from non-Federal funds.
Reimburse HUD, for transmission to the U.S. Treasury, $372,783
from non-Federal funds for the unnecessary interest the U.S.
Treasury paid on the program funds that the Office of the
2016-CH-1003 6/30/2016 001-A $372,783
Lieutenant Governor drew down from the U.S. Treasury to
reimburse the Authority for program income that it used or when
the Authority had available program income.
Provide supporting documentation or reimburse its program for
2016-AT-1006 6/17/2016 001-B $362,723 in unsupported expenditures related to activities 831, 747, $362,723
and 800 from non-Federal funds.
Support the cost reasonableness of the nine contracts or reimburse
2016-AT-1008 7/19/2016 001-A $408,958 to the appropriate Operating Fund, Capital Fund, and $352,228
Housing Choice Voucher programs from non-Federal funds.
Coordinate with the appropriate HUD offices to provide sufficient
documentation to support what HUD did with $341,230 in
2017-CH-0001 10/25/2016 001-B proceeds from initial sales. If any proceeds were not remitted to $341,230
the U.S. Treasury, coordinate with the appropriate offices to ensure
that the proceeds are remitted to the U.S. Treasury.
216
SEMIANNUAL REPORT TO CONGRESS
ESTIMATED
REPORT REPORT
REC # RECOMMENDATION TEXT COST
NUMBER DATE
SAVINGS
We recommend that the Director of HUD’s New Orleans Office of
Community Planning and Development require the City to support
2016-FW-1001 3/21/2016 001-A that project 1, to recruit and train low-income persons for $338,176
construction jobs in the Baton Rouge area, met a national objective
or repay $338,176 to its CDBG program from non-Federal funds.
Require the City to repay its program $317,803 for the
2016-PH-1003 5/24/2016 001-A disbursements it made for activity 3061 after the subrecipient $317,803
agreement expired.
Repay to HUD from non-Federal funds the $316,850 in payments
2017-BO-1001 10/12/2016 001-B $316,850
made for services outside the scope of the seven contracts.
Require the Authority to provide support to HUD showing the
necessity of drug testing every house and that the Authority
received the best value for amounts spent on testing and
2016-DE-1005 9/28/2016 001-A $315,166
remediation. For any portion the $315,166 the Authority cannot
support, HUD should require the Authority to repay its HOME and
NSP programs from non-Federal funds.
We recommend that the Acting Director of the HUD Southwest
Region Office of Multifamily Housing Programs require the
Corporation to develop and implement a HUD-approved written
plan and checklists that will correct the project’s physical condition
and other deficiencies outlined in the finding and prevent a
recurrence of such issues to ensure compliance with HUD
requirements. The written plan should include actions to (1) obtain
a fully functioning board and operate in compliance with the
Corporation’s bylaws and any HUD requirements, (2) correct all
hazardous and unsafe physical deficiencies, including those cited in
the February 2016 REAC inspection; (3) revise its operating budget
to ensure the most economical use of funds and that the project
2016-FW-1004 7/27/2016 001-A $314,184
income covers operating expenses; (4) establish written board-
approved policies and procedures; and (5) obtain HUD-approved
training for management and the Corporation’s board regarding
their roles and responsibilities. The checklists should include
systems and procedures to ensure that the Corporation meets all
requirements, including but not limited to fully funding its reserve
fund for replacements, spending funds for eligible costs, and
submitting all required forms and documents. Implementing this
recommendation should better ensure that the Corporation spends
and better manages at least $314,184 in housing subsidies that it is
set to receive in the next 12 months in accordance with
requirements.
Indemnify HUD against potential losses of $304,871 for the three
2016-LA-1011 9/12/2016 001-B loans that did not comply with FHA underwriting requirements $304,871
(appendix E).
Recapture the remaining balance of $300,278 allocated to the
2016-AT-1006 6/17/2016 001-C $300,278
stalled Barclay Apartment activity 843.
Acknowledge that the attached settlement agreement for
2016-DE-1802 9/12/2016 001-A SAR 77 - Semiannual Report to Congress for the period Ending March 31, 2017
Published by the Department of Housing and Urban Development, Office of Inspector General on 2017-06-16.
Below is a raw (and likely hideous) rendition of the original report. (PDF)