Work with borrowers and lenders to develop a plan to address the issues for each of the 58 defaulted loans within a reasonable time frame and implement corrective actions for the 58 loans; thereby protecting HUD’s investment of $329,541,272.

Quantify the amount of unauthorized distributions in the portfolio of 21 properties with 35 loans reported by the independent public accountant on the borrowers’ audited financial statements covering fiscal years 2018 to 2024 and require the borrowers to repay the amount of unauthorized distributions or pursue enforcement of the borrowers’ regulatory agreements by a written referral to HUD’s DEC.

Flag all principals of the borrowers with unreimbursed and unauthorized distributions in the Active Partners Performance System (APPS) to ensure that HUD appropriately evaluates the risks associated with doing business with these principals.

Refer any borrowers to the DEC for a civil money penalty or any other appropriate enforcement actions within 60 days of borrowers’ financial statement receipts for all unauthorized distributions not repaid within 30 days. If HUD ORCF chooses to allow a longer repayment period, document in iREMS the amount of the loan, the longer repayment period, and the reasons for the longer period.

Document DEC decisions and any penalties awarded in iREMS for each affected property for any ORCF referrals to the DEC about unauthorized loans.

Flag any borrowers in APPS for each unpaid penalty to ensure that HUD appropriately evaluates the risks associated with doing business with these principals.

Determine and document in iREMS the reasons that the borrowers did not make the mortgage payments and the specific steps HUD is taking to address the borrowers’ failure to make mortgage payments for all failures to make mortgage payments listed in borrowers’ audited financial statements.

Train HUD Account Executives on how to evaluate borrower action plans to ensure that action plans identify specific risks, identify the root causes of each risk, develop actions to address each root cause, identify specific measurable goals for each risk, and establish a timetable to complete the planned actions. Also, train HUD Account Executives on how to work with borrowers and lenders to ensure that borrowers properly develop, implement, and adhere to their action plans.

Develop and implement policies and procedures to ensure that borrowers and lenders execute action plans that properly list all specific risks at a property, identify the root causes of each risk, specify the actions to address each root cause, and establish a timetable to complete each action.

Develop and implement policies and procedures to ensure that HUD Account Executives document each action plan, properly list all specific risks at a property, identify the root causes of these risks, specify the actions to address the root causes, establish the timetables for completion, and document monthly progress towards completion of the actions in iREMS.

Develop and implement policies and procedures for a course of action when borrowers and/or lenders do not timely develop action plans. These policies and procedures should include civil money penalties, flagging the borrower in APPS, and inclusion in the Excluded Parties List System.

Update the protocols to ensure that all HUD ORCF teams working with any subset of the portfolio have insight into the entire portfolio for any portfolio split amongst lenders.

Require PRDOH to submit supporting documentation so HUD can evaluate the basis of the contract amendments and determine the eligibility of more than $31 million in disaster recovery funds. If HUD determines that the contract amendments were not supported, PRDOH must reimburse HUD from non-Federal funds.

Use the OIG’s fraud risk inventory to enhance its program-specific fraud risk inventory for the Single Family Housing program.

Include lenders and servicers in the fraud risk identification process and communicate the fraud risks and schemes identified for the Single Family Housing program to relevant stakeholders, including relevant HUD program and support staff, lenders, and servicers.

Incorporate data and system enhancements such as those mentioned in this report into its plans to improve HUD’s ability to monitor and respond to fraud risks in the Single Family Housing program.

Implement a process and procedure to ensure a complete and accurate Missing Documents Report is submitted to the General Ledger Division for recording a monthly reclassification entry between HECM loans receivable and accounts receivable.

Develop a process to (1) monitor receipt of original first notes and mortgages and recorded assignments, (2) follow up with mortgagees who fail to submit documents by the required deadline, and (3) initiate repurchase requests for HECM mortgagees who fail to meet assignment requirements.

Implement procedures to (a) ensure all HECM loan terminations are accurately reported, (b) prevent HECM terminated loans from being included in the loans receivable balance, and (c) prevent inspections and tax payments on HECM terminated loans.

Implement comprehensive controls to (a) identify all Single Family partial claims related to terminated first mortgages, (b) update the system record of partial claims that will become due and payable when the refinanced mortgages are terminated, and (c) remove partial claims related to terminated mortgages from SMART.