Review 249 loans labeled with “DNV” in appendix D to identify any missing note or mortgage documents for the partial claims. For loans identified with missing documents, the Deputy Assistant Secretary should obtain the documents or require the lender to reimburse HUD for the partial claim note. For loans identified with unrecorded mortgage documents, the Deputy Assistant Secretary should require them to be recorded at the county’s office to ensure that HUD’s interests are protected.

Rerecord the mortgage documents at the respective counties’ offices for 18 loans for which the partial claim mortgages were inappropriately released, resulting in funds to be put to better use in the amount of $451,000.

Review four loans with partial claim notes already recorded in SMART and remove those loans in which HUD has not paid a partial claim, resulting in funds to be put to better use in the amount of $93,409.

Reverse the transaction for one loan for which the transaction removing a partial claim note was made in error, resulting in funds to be put to better use in the amount of $63,591.

Collect on one partial claim note for which the loan had matured, resulting in funds to be put to better use in the amount of $1,905.

Review two loans in which the partial claim note amount entered was different from the note or mortgage amount to ensure that the appropriate partial claim note amount is entered into SMART, resulting in funds to be put to better use in the amount of $622.

Update its procedures to allow automatic boarding for all partial claims paid to eliminate errors caused by manual boarding, including partial claim notes not boarded, and partial claim notes boarded but not yet paid by HUD.

Develop and implement procedures and controls to board all manually paid partial claims and record all lender payments received via claim remittances.

Develop and implement additional controls to ensure that it accepts only note and mortgage documents with correct amounts that could be matched to the amount recorded in SMART and that the note and mortgage documents marked as received are entered into SMART.

Develop and implement additional controls to ensure that it releases mortgages only when they have been satisfied.

Provide documentation to show that disbursements totaling $2,136,849 and any bank transfers to the owner’s non-project accounts that occurred outside of our audit period were reasonable and necessary expenses for the operation of the project or repay the project from non-project funds for any amount that it cannot support.

Provide documentation to show that project funds are segregated in the project’s name, in accordance with the regulatory agreement and HUD requirements.

Take immediate action to remove project bank accounts as security for the owner’s line of credit and, thereby put up to $100,000 to better use.

Submit a project owner’s or management agent’s certification, management entity profile, current budget and other required documentation to HUD for review and approval.

Develop and implement controls to ensure that the project complies with the regulatory agreement and applicable HUD requirements, including but not limited to policies and procedures for maintaining project funds in separate bank accounts in the project’s name, using project funds only for necessary expenses of the project, and reconciling bank accounts to the project’s computerized accounting records.

Provide training and technical assistance to the owner’s executive director and staff to ensure compliance with the terms of its regulatory agreement and applicable HUD requirements.

Repay from non-Federal funds the $1,190,977 in ineligible costs charged to the program.

Repay from non-Federal funds the $434,970 in unreasonable costs charged to the program

Support $249,015 in program costs spent on a 2014 grant for which the grantee was unable to provide a tier one environmental review record or repay from non-Federal funds any amount that cannot be supported

Support $676,922 for contracts that were improperly procured or repay from non-Federal funds any amount that cannot be supported.