We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of grants funded through its resident home-ownership program under the Low-Income Housing Preservation and Resident Homeownership Act of 1990, based on the results we reported for HUD’s program grants for Carmen-Marine Apartments (2015-CH-1010) and West Park Place Condominium (2016-CH-1009) and the preliminary results of our audit of HUD’s program grant for Lakeview East Cooperative.  The audit was part of the activities in our fiscal year 2017 audit plan.  Our objective was to determine whether HUD had adequate oversight of grants funded through its program to ensure that the projects were operated in accordance with HUD’s requirements.

HUD did not have adequate oversight of grants to ensure that the projects were operated in accordance with HUD’s requirements.  Specifically, it did not sufficiently monitor the projects and ensure that grantees submitted reports showing continued compliance with the program.  It also had not provided technical assistance to the grantees or management agents, ensured the grantees and management agents received training, or issued guidance concerning requirements in the grant and use agreements.  As a result, the grantees did not operate the projects in accordance with HUD’s requirements and were at risk of having to reimburse HUD for the program grants.

We recommend that the Director of HUD’s Multifamily Midwest Region conduct onsite management reviews of the projects to ensure that the projects are operated in accordance with HUD’s requirements and the grant agreements and work with HUD’s Office of Multifamily Asset Management and Portfolio Oversight to develop and issue guidance on requirements in the grant and use agreements.