Provide evidence to support that the Authority corrected the 3 non-life-threatening health and safety, and 19 non-health and safety deficiencies.

Develop and implement adequate procedures and controls to ensure that (1) the deficiencies identified during REAC inspections are corrected in a timely manner and (2) documentation is maintained to support that repairs were made.

Implement adequate controls to ensure that the Authority’s information system properly tracks the completion of work orders.

Implement adequate controls to ensure that the correction of life-threatening deficiencies is reported to HUD accurately and in a timely manner.

We recommend that HUD work with Connecticut and Shelby County to fully realize the program benefits by (1) assessing whether any of the current project activities need to be replaced with more viable project activities, thereby ensuring that any modifications to the project activities will lessen the susceptibility of rain and flood events; (2) assessing whether administrative funds have been properly allocated and charged to identify any possible cost savings; (3) determining whether enough administrative funds or other available funds exist to complete the administration of the grant project activities; and (4) developing and implementing a written plan of action that will assist with expediting the project activities that could reasonably be expected to be completed by the September 30, 2029, deadline.

We recommend that HUD conduct onsite or remote monitoring for the City of Minot and Tennessee, which have not had any monitoring since grant inception, to ensure that these grantees are on track to meet their program goals.

We recommend that HUD for grantees with delayed project activities (California, Connecticut, Louisiana, Tennessee, Virginia, New York City, Minot, and Shelby County), require each grantee to provide a detailed timeline with milestone dates of when projects should be completed and provide updates to ensure that grantees stay on schedule.

We recommend that HUD for its disaster-related program wide activities, revise the action plan and quarterly performance review checklists to a format that more specifically and directly addresses the subject program.

We recommend that HUD for its disaster-related program wide activities, require grantees to provide documentation showing that they have upfront collaboration with partnering entities in executing the grant program. If the grantee plans to hire contractors, HUD should ensure that grantees have a plan to quickly onboard contractors early in the program.

Require Carrington to remedy HUD and the 27 borrowers in our sample with improper foreclosure filings and take administrative actions if appropriate.

Require Carrington to perform a review of loans affected by the system errors and when appropriate, remedy the borrowers or HUD.

Require Carrington to update its policies and procedures to comply with HUD requirements by reviewing eligible borrowers for streamlined options without unnecessary documents, notifying borrowers if they are ineligible for any loss mitigation options, and using best efforts to review borrowers for loss mitigation within 37 days of the foreclosure sale date.

Require Carrington to implement improved controls to prevent manual errors by performing additional review of all foreclosure actions and performing timely review of all documentation provided by the borrowers and third parties.

Require MidFirst to remedy the 24 borrowers in our sample with improper foreclosure filings or take administrative actions if appropriate.

Analyze MidFirst’s resolution of the manual process issues identified during its 2022 quality control review to verify that it remedied the borrowers or HUD and corrected the issues identified related to manual processing.

Require MidFirst to update its policies and procedures to comply with HUD requirements by placing foreclosure holds for loss mitigation requests made before the first legal filing.

Review the non-life-threatening health and safety and other deficiencies observed by the audit team and ensure that property owners and agents make the necessary corrections to the deficiencies as appropriate.

Determine the appropriate timeframe for when initial management and occupancy reviews (MORs) should be completed for all properties that convert under the Rental Assistance Demonstration and issue updated guidance that includes a system to track the timeliness of initial MORs.

Status

Given current resource constraints, HUD agreed to create guidance based on risk-based Management and Occupancy Review (MOR) parameters to ensure that field staff and leadership perform the initial MOR for PBRA RAD-converted properties. This guidance will specify which assessments can be done on-site or remotely (such as desk reviews). Furthermore, the guidance will require that the existing MOR tracking tools (e.g., PowerApps) be used to monitor planning for the MORs and progress throughout, until final closing of the review. As of January 2026, HUD has trained its staff on performing MORs and is in the process of finalizing the policy for the timeframe for when initial MORs are due. The final target completion date is April 15, 2026.

Analysis

To implement this recommendation, HUD needs to provide evidence that it has updated guidance with appropriate timeframe for conducting MORs and a system to track the timeliness of initial MORs. Failure to determine the timing of the initial MORs could delay HUD's performance of them, which may result in property owners' untimely corrective actions, and thus potentially impact the health and safety of families.

The implementation of this recommendation has the potential to directly impact the health and safety of families.

Complete the initial management and occupancy reviews (MORs) for the Rental Assistance Demonstration properties that have not had an initial MOR.

Status

Given current resource constraints, HUD will create guidance based on risk-based Management and Occupancy Review (MOR) parameters to ensure that field staff and leadership perform the initial MOR for PBRA RAD-converted properties. This guidance will specify which assessments can be done on-site or remotely (such as desk reviews). The guidance will outline the timing requirements for when the initial MOR should be completed. To date, HUD staff have completed 233 MORs for the 834 RAD-converted properties.  HUD anticipates completing the initial MORs for the remaining 501 properties by the end of 2027.  HUD HQ and field staff will use the Power BI MOR tool to track the MOR through the stages: scheduling, review, issuance of report and finally the closing of the report. As of January 2026, due to restrictions regarding travel funds for fiscal year 2025 and HUD’s need for staff training, HUD stated it was unable to make progress in conducting additional MORs. HUD anticipates having travel funds in fiscal year 2026 that will enable it to begin working through the backlog. The target date is March 31, 2026.

Analysis

Completing initial MORs would assist HUD in holding property owners accountable for maintaining the conditions of their properties and sufficient reserve for replacement accounts balances, which could impact property owners' ability to make needed capital repairs.

The recommended corrective action has the potential to directly impact the health and safety of families.

Develop and implement a plan to determine how to implement the risk-based approach to review the Rental Assistance Demonstration properties that have not had subsequent management and occupancy reviews (MORs) in more than 3 years and to require periodic MORs going forward.

Status

Given the current resource constraints, HUD will create guidance based on risk-based MOR parameters to ensure that field staff and leadership perform MORs using a risk-based model for PBRA RAD-converted properties. This guidance will specify which assessments can be done on-site or remotely (such as desk reviews) and the timing requirements for when ongoing MORs should be scheduled once the initial MOR is completed. As of January 2026, 641 MORs need to be scheduled for the Office of Asset Management's portfolio of 834 RAD-converted properties. Of those, 85 properties are managed by Performance-Based Contract Administrators (PBCA).  Depending on risk indicators for each property, MORs will be scheduled accordingly. HUD reported that its staff resources are limited in comparison to the PBCAs and will therefore take a risk-based approach for prioritizing the MORs that HUD staff must complete. The Office of Asset Management will develop a plan to address the backlog of RAD-converted MORs using the current risk factors which include the physical condition, last MOR score, financial health of the property and other indicators. As of January 2026, HUD was unable to complete its plan due to staff training needs and the restrictions regarding travel in fiscal year 2025.  HUD anticipates having travel funds in fiscal year 2026 that will enable it to begin working through the backlog. Target completion date is March 31, 2026.

Analysis

Developing a plan to implement the risk-based approach would establish the criteria for identifying properties that are at a higher risk of noncompliance.  

The recommended corrective action would help HUD to monitor property owners' compliance with its requirements and thus, potentially protect families from living in unsafe units.