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REPORTAR FRAUDE, DESPERDICIO O ABUSO
Septiembre 29, 2011
2011-CH-1014
ig1151014.pdf

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the City of Cleveland’s HOME Investment Partnerships Program. The audit was part of the activities in our fiscal year 2011 annual audit plan. We selected the City based upon our analysis of risk factors related to Program grantees in Region V’s* jurisdiction, recent media coverage regarding the City’s Program, and a request from the U.S. Department of Housing and Urban Development’s (HUD) Columbus Office of Community Planning and Development. Our objectives were to determine whether the City complied with HUD’s requirements in its use of Program funds to provide interest-free second mortgage loans to home buyers through its Housing Trust Fund program and its use of recapture provisions for Housing Trust Fund program home-buyer activities. This is the second of three audit reports on the City’s Program.

The City did not comply with HUD’s requirements in its use of Program funds to provide interest-free second mortgage loans to home buyers through its Housing Trust Fund program and its use of recapture provisions for activities. It (1) provided assistance for an ineligible activity, (2) lacked sufficient documentation to support that activities were eligible, (3) did not implement appropriate recapture provisions for all of the activities reviewed, and (4) did not ensure that its Program was reimbursed for Program funds used to assist a home buyer in purchasing a home that was later sold through a sheriff’s sale and ownership of the home had been transferred.

As a result, it inappropriately provided $20,000 in Program funds to assist a household that was not income eligible and was unable to support its use of $795,000 in Program funds. Further, its Program was not reimbursed for $20,000 in Program funds used for a home that was sold through a sheriff’s sale and ownership of the home had been transferred. In addition, the City is at risk of being required to reimburse its Program additional non-Federal funds if the ownership of additional homes acquired under its Housing Trust Fund program is transferred through foreclosures.

We recommend that the Director of HUD’s Columbus Office of Community Planning and Development require the City to (1) reimburse its Program from non-Federal funds for the $20,000 in Program funds inappropriately used to assist an activity, (2) provide supporting documentation or reimburse its Program $775,000 from non-Federal funds, (3) reimburse its Program $20,000 from non-Federal funds for the home that had been sold through a sheriff’s sale and ownership of the home had been transferred, and (4) implement adequate procedures and controls to address the findings cited in this audit report.

* Region V includes the States of Indiana, Illinois, Ohio, Michigan, Minnesota, and Wisconsin.