We audited HUD's Region 3 Offices of Multifamily Housing to determine whether HUD ensured that rents and excess income for Section 236 properties were properly identified and remitted to HUD. We performed this audit based on our audit plan and problems identified during an external audit of a Section 236 property located in Washington, DC.

HUD's Region 3 Offices of Multifamily Housing generally ensured that Section 236 properties established basic and market rents and remitted excess income to HUD as required. However, the Washington, DC, program center did not ensure 6 of its 16 Section 236 properties' rents and excess income were properly identified. This condition occurred because the program center did not always review Section 236 rents and excess income when conducting management reviews. Without adequate oversight, there is no assurance that tenants are paying appropriate rents and excess income amounts reported are accurate.

We recommend that HUD direct the Washington, DC, program center to (1) require two Section 236 properties to establish appropriate rents, review excess income calculations totaling $19,121 to determine whether the income is adequately supported, and resubmit excess income from non-Federal funds as required; (2) require two Section 236 properties to repay from non-Federal funds excess income totaling $55,091 that was retained without HUD's approval; (3) require two Section 236 properties to submit monthly excess income reports as required; and (4) follow its own procedures to ensure adequate oversight of Section 236 rents and excess income.