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We performed an audit of the National Foundation for Credit Counseling based on a citizen’s complaint alleging that it misused Federal funds. Our objective was to determine whether the Foundation complied with U.S. Department of Housing and Urban Development (HUD) requirements when administering its housing counseling program.

The complaint alleging that the Foundation misused Federal funds could not be substantiated. The Foundation generally complied with HUD requirements when administering its housing counseling program. However, it did not always ensure that home equity conversion mortgage (HECM) counseling requirements were met. Specifically, it did not always ensure that HECM (1) counselors met eligibility requirements, (2) counseling expenditures were adequately supported, (3) counseling documentation requirements were followed, and (4) counseling funds were disbursed in a timely manner. The above conditions occurred because the Foundation did not have adequate monitoring procedures to ensure that sub grantees complied with requirements.

We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing require the Foundation to remit to HUD from non-Federal funds ineligible funds totaling $46,850, (2) provide documentation demonstrating that $28,771 was used for eligible housing counseling expenditures or repay HUD from non-Federal funds, and (3) provide documentation demonstrating that housing counseling fees totaling $525 met housing counseling documentation requirements or repay HUD from non-Federal funds. We also recommend that the Foundation follow grant agreement requirements, maintain documentation to ensure that expenditures charged to the grant are adequately supported, and implement improved monitoring procedures.