Develop and implement procedures and controls to ensure that graffiti abatement expenditures, including salaries and benefits, are accurately charged to CDBG grants and properly supported.

Develop a method for using the Do Not Pay portal during the underwriting process to identify delinquent child support and delinquent Federal debt to prevent future FHA loans to ineligible borrowers to put $1.9 billion to better use.

Status

The Office of Housing has approved prioritization of funding for Integration between Do Not Pay portal and CHUMS. Funding was allocated to the CHUMS IT contractor on January 26, 2024, to integrate Treasury’s Do Not Pay system with CHUMS, and the IT development project was kicked off the week of February 5, 2024.

As of June 2024, the Office of Single Family Housing reported that it is working with OCIO and Treasury on the business needs for the project, and estimated that the project would be complete by September 30, 2024.

Analysis

To fully address this recommendation, HUD must provide evidence that it has implemented applicant screening against the Do Not Pay portal to identify delinquent child support and delinquent Federal debt to prevent future FHA loans going to ineligible borrowers.

Implementation of this rule should result in HUD putting $1.9 billion to better use.

Revise the single-family handbook to comply with regulations that prevent loans to borrowers with delinquent child support subject to Federal offset.

Enforce the indemnification agreement in the attached settlement agreement to prevent an estimated $95,769 loss to HUD. This represents an amount due HUD from MetLife for indemnifying and holding HUD harmless for any and all losses HUD incurs or has incurred in connection with FHA loan number 137-4740973.

Implement written procedures to include the confirmation of match funds as part of its annual monitoring reviews of each subgrantee.

Develop and implement a written plan for its subgrantees to provide and submit supporting documentation for match funds at the end of each grant term.

Identify retroactive payroll for remaining grants (CA1162L9D011504, CA1024L9D011501, CA0694L9D011508, and CA0693L9D011508) and provide adequate documentation to support the cost or repay HUD from non-Federal funds.

Develop and implement additional procedures and controls to ensure that payroll costs charged to the grant reconcile to actual hours worked on the grants.

We recommend that the Director of HUD’s Newark Office of Public Housing require the Authority to provide documentation to show that the $1,294,062 paid to the Long Branch Housing Authority was for eligible, reasonable, necessary, and allocable costs or reimburse its Operating and Capital Fund programs from non-Federal funds for any amount that it cannot support or that is not considered reasonable.

We recommend that the Director of HUD’s Newark Office of Public Housing require the Authority to provide documentation to show that the $326,096 paid for goods and services was reasonable or reimburse its Operating and Capital Fund programs from non-Federal funds for any amount that it cannot support or that is not considered reasonable.

We recommend that the Director of HUD’s Newark Office of Public Housing require the Authority to provide documentation to show that it had valid contracts in place before disbursing $125,589 to three vendors or reimburse its Operating and Capital Fund programs from non-Federal funds for any amount that it cannot support.

We recommend that the Southwest Region Director of Multifamily Housing require Villa Main Apartments owner to repay HUD $534,741 for 39 subsidized units with ineligible “ghost” tenants.

We recommend that the Southwest Region Director of Multifamily Housing require Villa Main Apartments owner to provide support that the subsidized 43 units without annual physical inspections, without required EIV reports, or with missing files were eligible or repay HUD $1,095,364 for those subsidies.

We recommend that the Southwest Region Director of Multifamily Housing require Villa Main Apartments owner to implement appropriate controls to ensure tenants are eligible, housing assistance subsidies are accurate, and that units are inspected as required.

We further recommend that the Southwest Region Director of Multifamily Housing verify that the owner is providing oversight to its onsite staff and its recently implemented quality control program is working as designed and in accordance with HUD requirements.

We further recommend that the Southwest Region Director of Multifamily Housing ensure that the project-based contract administrator’s review process includes steps to obtain reasonable assurance that tenants being reported as subsidized at Villa Main qualify for the program and live in the subsidized units.

Track and ensure that Volunteers returns to the Treasury any funds recovered through the ongoing litigation pertaining to the Yabucoa housing project.

Return to the Puerto Rico Department of Housing $1,057,467, plus any interest earned, for the duplicate special escrow fund payments it received.

Adequately support or reimburse its NSP3 grant subrecipient $53,760 from non-Federal funds for the disbursements not adequately supported.

We recommend that the Deputy Assistant Secretary for Grant Programs develop a process to ensure that grantees properly report the addresses of assisted properties in IDIS and properly calculate and report program income from the disposition of these properties regularly. This process could include but is not limited to developing a process to extract data reported in IDIS on activities with the matrix codes related to real property, and training and instructing the Office of Community Planning and Development’s field office staff to extract this data and manually check for address and program income data on grantees’ activities, particularly activities that are completed but have properties that could still be subject to program income requirements.