Update and implement controls to the Nationstar internal system to ensure the correct application of COVID-19 partial claims.

Identify loans with COVID-19 recovery partial claims that were affected by the improper application of partial claims funds and update the accounts.

Identify FHA borrowers who received a non-HUD-approved loss mitigation option and ensure that the borrowers receive an updated approved HUD loss mitigation option.

Update the servicing script to include information related to the HAF program, identify borrowers who may benefit from HAF, and conduct outreach to these borrowers.

We recommend that the Deputy Assistant Secretary instruct the Virgin Islands Housing Finance Authority to develop and implement procedures, including financial controls, to enhance its tracking of payments made with CDBG-DR funds and payments made with FEMA funds to ensure that payments are not made for the same invoices, match requirements are not exceeded before closeout, and a thorough review is conducted for award increases and cost reasonableness.

We recommend that the Deputy Assistant Secretary instruct the Virgin Islands Housing Finance Authority to enforce its subrecipient agreement requirement to submit monthly status reports.

We recommend that the Deputy Assistant Secretary instruct the Virgin Islands Housing Finance Authority to develop and implement procedures to ensure that all Match Program activities are monitored, and guidance is provided to its Match Program recipients.

We recommend that the Deputy Assistant Secretary instruct the Virgin Islands Housing Finance Authority to develop and implement detailed policies and procedures to guide staff in reporting performance outcomes in the QPR and on its disaster recovery website.

We recommend that the Deputy Assistant Secretary instruct the Virgin Islands Housing Finance Authority to revise its policies and procedures to include requirements to document its basis for activities’ meeting the national objective, including the rationale for the service area used and a list of acceptable documents to support that the area was primarily residential for the low- and moderate- income area benefit national objective.

We recommend that the Deputy Assistant Secretary instruct the Virgin Islands Housing Finance Authority to conduct training for Authority staff on the newly developed or revised policies and procedures

We recommend that the Deputy Assistant Secretary require HUD program staff to provide technical assistance to the Authority to address deficiencies noted throughout the audit report.

We recommend that the Deputy Assistant Secretary instruct the Authority to develop and implement monitoring policies and detailed procedures to guide the Authority’s CMU staff in assessing activity performance to meet the subrecipient monitoring requirements and establish written performance metrics to progressively achieve the performance outcome for those activities the Authority administers.

We recommend that the Deputy Assistant Secretary instruct the Authority to revise subrecipient agreements to include performance metrics and milestones tailored to the activity in sufficient detail to enable the Authority to collect information to effectively assess the activity’s performance.

We recommend that the Deputy Assistant Secretary instruct the Authority to revise the monthly status report template to allow the subrecipient to report its current progress against the established performance metrics.

We recommend that the Deputy Assistant Secretary instruct the Authority to develop a tracking process to ensure that the Authority issues monitoring reports and receives responses to these reports within the timeframe required by its policy. This process should also include a referral to management when the timeframe requirements are not met.

We recommend that the Deputy Assistant Secretary instruct the Authority to develop detailed procedures to ensure that the corrective action tracking process is consistently followed to ensure proper resolution.

We recommend that the Deputy Assistant Secretary instruct the Authority to develop and implement policies and detailed procedures to establish the CMU’s responsibilities related to verifying that the CDBG-DR activity meets the stated national objective.

We recommend that the Deputy Assistant Secretary instruct the Authority to develop and implement policies and detailed procedures to identify the risk analysis process for monitoring all CDBG-DR-funded activities during the course of the activity and require that the monitoring files document the basis for why an activity is or is not monitored.

We recommend that the Deputy Assistant Secretary instruct the Authority to train the CMU staff on the newly developed policies and procedures and obtain technical assistance from HUD as needed.

Develop and implement a nationwide inspection review protocol, which includes but is not limited to (1) whether field office staff should mark verification of PHA corrections of life-threatening deficiencies in PASS or any future tracking systems, (2) acceptable documentation for offsite verifications, and (3) whether field office staff should discuss or verify corrections of non-life-threatening deficiencies.

Corrective Action Taken

HUD's Office of Field Operations (OFO) created a protocol describing how it would perform quality control reviews of field office oversight of PHAs’ corrections of life-threatening deficiencies. The implementation of this recommendation resulted in HUD creating a protocol that established consistency in the way HUD field office staff monitored public housing agencies’ corrections of life-threatening deficiencies.