The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the City of East St. Louis, Illinois’ (City) Community Development Block Grant (Block Grant) program. Our objective was to determine whether the City properly verified the eligibility of Block Grant-funded housing rehabilitation recipients. We found that the City awarded Block Grant funds to 143 recipients without adequately verifying their...

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited HUD’s Office of Lender Activities and Program Compliance, Quality Assurance Division. We did this review because during a prior audit, we saw instances in which indemnification agreements were not obtained from lenders under certain circumstances. Our objective was to determine whether the U.S. Department of Housing and Urban Development (HUD...

HUD OIG conducted this audit based on a confidential complaint submitted through the U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) hotline. The complaint alleged several improprieties involving the County’s NSP and HOME programs. Our objectives were to determine whether the County (1) complied with requirements in the procurement, award, and execution of its NSP administrative contract and (2)...

We conducted a review of Federal Housing Administration (FHA) loans underwritten by First Tennessee Bank, N.A. (First Tennessee), an FHA direct endorsement lender. This review was conducted as part of our Operation Watchdog initiative to review the underwriting of 15 direct endorsement lenders at the suggestion of the FHA Commissioner. The Commissioner expressed concern regarding the increasing claim rates against the FHA insurance fund for...

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General conducted a review of the City of Augusta, GA’s (City) Neighborhood Stabilization Program (NSP1) to determine whether the City had demonstrated the capacity to properly obligate all NSP1 grant funds and at least 25 percent of the grant toward occupants with incomes below 50 percent of the median income in the locality (LH25) set-aside by the September 5...

We conducted a review of Federal Housing Administration (FHA) loans underwritten by Security Atlantic Mortgage Company, Inc. (Security Atlantic), an FHA direct endorsement lender. This review was conducted as part of the Office of Inspector General’s (OIG) Operation Watchdog initiative to review the underwriting of 15 direct endorsement lenders at the suggestion of the FHA Commissioner. The Commissioner expressed concern regarding the...

HUD OIG reviewed the Louisville/Jefferson County Metropolitan Government’s (Louisville Metro) Neighborhood Stabilization Program (program). We selected Louisville Metro for review based on its low percentage of obligations and the approaching September 20, 2010, deadline for obligating funds. Our objective was to evaluate Louisville Metro’s use of program funding, including the propriety of its activities, obligations, expenditures, and...

While performing an internal audit of the U. S. Department of Housing and Urban Development’s (HUD) Home Equity Conversion Mortgage (HECM) program, we noted one HECM loan underwritten by Financial Freedom Senior Funding Corporation, (Financial Freedom) of Irvine, CA, that was improperly insured as the property had several years of deferred property taxes, which is a violation of the HECM regulations. Neither Financial Freedom’s loan...

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, audited the City and County of Denver’s (City) Neighborhood Stabilization Program I (NSP I). We selected the City for review based on our risk assessment considering the amount of Housing and Economic Recovery Act of 2008 (HERA) and American Recovery and Reinvestment Act of 2009 NSP funds it received and expended along with other evaluative factors. The...

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General (OIG) audited Michaelson, Connor, and Boul, Incorporated (MCB), a management and marketing contractor for HUD real estate-owned properties in Michigan. We selected MCB based on the results of our audit of Custom Closing, a HUD-designated closing agent for the State of Michigan (see OIG audit report #2009-CH-1021, issued September 2009). Our objective was...

We completed an audit of U.S. Department of Housing and Urban Development (HUD) Single Family Program Development Office’s automated underwriting process. We assessed whether HUD had in place appropriate and effective management controls over its automated underwriting process. The audit was performed as part of the HUD Office of Inspector General’s (OIG) fiscal year 2010 annual audit plan and supported the audit plan objective to contribute...

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited the Missouri Housing Development Commission’s (Commission) Recovery Act funded Tax Credit Assistance Program (TCAP). Our audit objectives were to determine whether the Commission obtained wage reports and lobbying certifications required by Federal law and accurately reported job creation to Recovery.gov. We concluded that the Commission did...

We reviewed 20 Federal Housing Administration (FHA) loans Alethes, LLC (Alethes), underwrote as a FHA direct endorser. Our review objective was to determine whether Alethes underwrote the 20 loans in accordance with FHA requirements. This review was part of Operation Watchdog, an Office of Inspector General (OIG) initiative to review the underwriting of 15 direct endorsement lenders, at the suggestion of the FHA Commissioner. The Commissioner...

We audited the Avesta Housing Management Corporation (Avesta), located in Portland, ME, in response to a request from the U.S. Department of Housing and Urban Development’s (HUD) Manchester, NH, Office of Housing field office. The request came after the completion of an Office of Inspector General (OIG) audit of the Orchard Court project. Avesta was the previous manager of Orchard Court and is the current manager of 30 other HUD projects....

HUD OIG reviewed the City of Chattanooga’s (City) Neighborhood Stabilization Program (program). We selected the City for review based on its low percentage of obligations and the approaching September 6, 2010, deadline for obligating funds. Our objective was to determine whether the City administered its program in accordance with U.S. Department of Housing and Urban Development (HUD) rules and regulations. The City generally administered its...

We conducted a review of Federal Housing Administration (FHA) loans underwritten by Webster Bank (Webster), an FHA direct endorsement lender. This review was conducted as part of our “Operation Watchdog” initiative to review the underwriting of 15 direct endorsement lenders at the suggestion of the FHA Commissioner. The Commissioner expressed concern regarding the increasing claim rates against the FHA insurance fund for failed loans. The...

The U.S. Department of Housing and Urban Development, Office of the Inspector General, audited the Washington State Department of Commerce (State). Our audit objective was to determine whether the State disbursed Homelessness Prevention and Rapid Re-Housing Program (HPRP) grant in accordance with American Recovery and Reinvestment Act of 2009 requirements. The State paid for HPRP services for ineligible participants and participants whose...

We performed an internal audit of the U. S. Department of Housing and Urban Development’s (HUD) Home Equity Conversion Mortgage (HECM) program because we found that an increasing number of borrowers had not paid taxes or homeowners insurance premiums as required, thus placing the loan in default. Also, we noted that HUD had granted foreclosure deferrals routinely on defaulted loans, but it had no formal procedures. Our audit objective was to...

We reviewed 12 Federal Housing Administration (FHA) loans that American Sterling Bank (American) underwrote as an FHA direct endorsement lender. Our review objective was to determine whether American underwrote the 12 loans in accordance with FHA requirements. This review is part of Operation Watchdog, an Office of Inspector General (OIG) initiative to review the underwriting of 15 direct endorsement lenders at the suggestion of the FHA...

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, audited the State of Kansas' (State) Neighborhood Stabilization Program I (NSP I). Our audit objectives were to determine whether the State properly obligated its NSP I funds and to determine whether the State's contracts contained all of the required provisions. We concluded the State improperly obligated more than $12 million of its NSP I funds...