We audited Healthy Neighborhoods, Inc.’s Neighborhood Stabilization Program 2 based on a complaint received by our office and as part of our annual audit plan to review activities funded by the American Recovery and Reinvestment Act of 2009. The grantee received $26 million in Program funds under the Recovery Act. Our objective was to determine whether the grantee ensured that its consortium members properly awarded Program contracts and resold homes according to the requirements of the Recovery Act and applicable HUD regulations. We found that the grantee generally ensured that its consortium members properly awarded Program contracts and resold homes according to the requirements of the Recovery Act and applicable HUD regulations. However, the grantee had to provide additional documentation. The grantee also ensured home buyers met income eligibility requirements. We recommended that HUD require the grantee to develop and implement controls to make sure that it (1) adequately monitors its developers to ensure that Program requirements are followed, and (2) establishes an internal audit function as required.