We audited the U.S. Department of Housing and Urban Development’s (HUD) multifamily program based on the results of our audit of Village North Apartments, Salt Lake City, UT (HUD Office of Inspector General (OIG) audit report 2017-DE-1001).  During that audit, we found indications that tenants were able to move into units and become heads of household without being put on the established waiting list.  Our objective was to determine whether HUD had adequate policies to prevent multifamily tenants from being able to move into units and become heads of household without being put on the established waiting list.

We found that HUD did not have adequate policies to prevent multifamily tenants from improperly bypassing waiting lists.  HUD policies did not address situations in which tenants improperly bypassed waiting lists to be placed into HUD-assisted multifamily units.  HUD Handbook 4350.3 REV-1, chapter 4-16 required multifamily project owners to use a waiting list if appropriate-size units were not available for applicants.  The Handbook also required owners to mark the date the application was received from the potential tenant and to select applicants from the waiting list in chronological order to fill vacancies.  But HUD policies did not provide guidance to owners when there were indications of tenants bypassing waiting lists.  For example, if HUD policies allowed owners to request additional eligibility documentation when a new person assumed the position of head of household within 6 months of being added to the tenant household, owners could have additional assurance that any required waiting lists would be properly administered for all prospective applicants.

We recommend that the Office of Multifamily Housing strengthen current written policies on occupancy requirements for subsidized multifamily housing programs to ensure that prospective tenants do not improperly bypass waiting lists.

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