We audited the U.S. Department of Housing and Urban Development’s (HUD) monitoring of the financial performance of Section 232 nursing homes based on the size of their program, the inherent risks in the program, the length of time since our last audit, and the inclusion of this review in the annual audit plan.  Our audit objective was to determine whether HUD had sufficient financial information and used this information to adequately...

We audited the Federal Housing Administration-insured nursing home, Middlesex Health Care Center in Middletown, CT, because we identified profitability and solvency issues during ongoing work with the Section 232 program.  Additionally, the U.S. Department of Housing and Urban Development (HUD) identified the project as potentially troubled as of November 2017.  Our audit objective was to determine whether the project was operated...

The U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) reviewed concerns from a complaint within HUD regarding the physical condition of HUD-insured residential care facilities (RCF).  This review is part of an ongoing effort of the Office of Inspector General (OIG).  At least 10 RCFs had received a score below 31 out of a possible 100 on their most recent Real Estate Assessment Center (...

We audited general and application controls over the Ginnie Mae Financial Accounting System (GFAS) as part of the internal control assessments required for the fiscal year 2017 financial statements audit under the Chief Financial Officer’s Act of 1990.  Our objective was to review internal controls over the security, integrity, confidentiality, and availability of the data maintained in GFAS. We also reviewed the functionality and...

This report presents the results of our audit of Ginnie Mae’s fiscal years 2017 and 2016 (restated) financial statements, including our report on Ginnie Mae’s internal control and test of compliance with selected provisions of laws and regulations applicable to Ginnie Mae.  In fiscal year 2017, for the fourth consecutive year, we were unable to obtain sufficient, appropriate evidence to express an opinion on the fairness of the $3.6...

The U.S. Department of Housing and Urban Development, Office of Inspector General audited Ginnie Mae’s oversight of nonbanks due to the growth of nonbank issuers in the mortgage servicing industry.  Our objective was to determine whether Ginnie Mae responded adequately to changes in its issuer base. We found that Ginnie Mae did not adequately respond to changes in its issuer base.  Specifically, it did not implement policies and...

Very low REAC scores are not prevalent across ORCF’s portfolio.  The majority of RCFs that received a REAC score scored at least 80 on their last inspection, and more than three quarters scored at least 60.  Despite the small percentage of RCFs that scored below 31, we noticed an overall decline in REAC inspection scores across ORCF’s portfolio from 2000 to 2016. REAC has adopted an inspection process that applies uniformly to all...

We audited Health Concepts Ltd., a management agent that administers six Federal Housing Administration (FHA)-insured nursing homes.  We conducted this audit based on our review of the Pine Grove Health Center.  The review found that Pine Grove’s owners paid salaries for onsite staff that were covered under the management agreement and charged for services that should have been included in the management fee.  Our objectives for...

Twenty-two Promise Zones were selected through three rounds of national competition. The U.S. Department of Housing and Urban Development (HUD), oversees 14 urban Promise Zones, and the U.S. Department of Agriculture (USDA) oversees 8 rural and tribal Promise Zones. The Office of Management and Budget (OMB) tasked HUD and USDA to lead the Promise Zone initiative and play essential roles in gathering information about progress in Promise Zones...

This briefing paper highlights challenges the Government National Mortgage Association (Ginnie Mae) faces in monitoring nonbanks and outlines our past, current, and future efforts to help it address those challenges. We are highlighting these challenges so HUD leadership is aware of and can be better prepared to address them.  OIG is focusing on Ginnie Mae’s capacity to monitor nonbanks with an ongoing audit.

In accordance with the Chief Financial Officers Act of 1990, as amended, we are required to annually audit the consolidated financial statements of the U.S. Department of Housing and Urban Development (HUD). HUD reissued its fiscal year 2016 and 2015 (Restated) consolidated financial statements due to pervasive material errors that were identified by us. Our objective was to express an opinion on the fairness of HUD’s consolidated...

This page previously contained our independent auditor’s report on HUD’s fiscal year 2016 and 2015 (Restated) consolidated financial statements  (OIG Audit Report 2017-FO-0004), issued November 15, 2016.  In the report, one basis for our disclaimer of opinion was that HUD was unable to provide final consolidated financial statements and accompanying notes in a timeframe that would allow us to obtain sufficient, appropriate evidence to...

This report presents the results of our audit of Ginnie Mae’s fiscal years 2016 and 2015 (restated) financial statements, including our report on Ginnie Mae’s internal control and test of compliance with selected provisions of laws and regulations applicable to Ginnie Mae.  For the third consecutive year, in fiscal year 2016, we were unable to obtain sufficient, appropriate evidence to express an opinion on the fairness of the $ 4.2...

Sons of Divine Providence did not properly oversee the HUD-insured nursing home to ensure that it operated in accordance with its regulatory agreement.  By not informing HUD of the lawsuits, the changes in management agents, and the loans, Sons of Divine Providence did not provide HUD the necessary data to understand the risk to the HUD insurance fund.  However, when Sons of Divine Providence sold the nursing home and paid off the HUD...

We audited Folts, Inc.’s management of the Folts Adult Home and Folts Home projects to address our concern with U.S. Department of Housing and Urban Development (HUD)-assisted health care facilities.  We selected this auditee as the result of a risk assessment of nursing homes located in New York State, which considered HUD’s risk indicators and factors such as loan default; internal control issues; and financial statements not being filed...

The Office of Hospital Facilities (OHF) provides mortgage insurance for acute care hospitals.  The insurance it provides reduces risk to lenders and lowers borrowing costs for hospitals.  As of May 2016, the unpaid principal balance for its 105 insured mortgages was approximately $7 billion. OHF collects and generates many records to support its mission.  These records include application materials, internal reports, and...

The U.S. Department of Housing Urban Development (HUD), Office of Inspector General audited the Government National Mortgage Association’s (Ginnie Mae) process for identifying and removing uninsured single-family Federal Housing Administration loans from mortgage-backed securities (MBS) pools.  Our audit objective was to determine whether loans remained in Ginnie Mae MBS pools for 1 year or longer without the required mortgage insurance....

We are conducting an audit survey of Saltillo Assisted Living (project) based on a referral from the U.S. Department of Housing and Urban Development’s (HUD) Departmental Enforcement Center and the activities included in our 2015 annual audit plan.  Our survey objective is to determine whether the owners and management agents of Saltillo Assisted Living complied with the executed regulatory agreement and HUD’s requirements.  Our...

This report presents the results of our audit of Ginnie Mae’s fiscal years 2015 and 2014 (restated) financial statements, including our report on Ginnie Mae’s internal control and test of compliance with selected provisions of laws and regulations applicable to Ginnie Mae.  For the second consecutive year, in fiscal year 2015, we were unable to obtain sufficient appropriate evidence to express an opinion on the fairness of the $ 5.4...

This report presents the results of our fiscal year 2014 audit of Ginnie Mae’s financial statements, including our report on Ginnie Mae’s internal control and test of compliance with selected provisions of laws and regulations applicable to Ginnie Mae.  We contracted with the independent certified public accounting firm of CliftonLarsonAllen LLP to audit Ginnie Mae’s fiscal year 2013 financial statements.  CliftonLarsonAllen was...