Ensure that $399.1 million identified as invalid obligations in fiscal year 2018 is deobligated as appropriate.

Document the rationale and policy for the crosswalks used to prepare the financial statement note line items.

Document and implement policies and procedures, which include a review process to ensure that the general ledger accounts are correctly crosswalked to financial statement note line items.

Restate the fiscal year 2017 financial statement notes to correct inaccurate classifications, expenses, and market value balances reported by FHA.

In conjunction with the loan-servicing contractor, determine what actions can be taken to ensure that recorded assignments are reviewed in a timely manner after receipt.

Develop and implement a billing and sanctioning process to ensure that FHA bills servicers for the costs incurred to obtain recorded assignments from the counties’ recorder’s offices and sanctions the servicers when they do not provide the recorded assignments within 6 months of claim payment.

Improve the tracking of recording assignments by modifying the HERMIT assignment timeline to include date fields for servicers’ (1) receipt of recorded assignments from counties and (2) mailing of recorded assignments to the loan-servicing contractor.

Establish a timeframe and process to notify the Office of Single Family Housing that funds or documents were not received so noncompliant lenders can be referred to the MRB within 14 business days for temporary suspension or termination and notify FHA of any noncompliant lenders accordingly.

Require the City to support $441,202 ($370,729 $20,000 $50,473) or reimburse its program from non-Federal funds for commitments and expenditures not adequately supported.

Require the City to reimburse its program $33,258 from non-Federal funds for inappropriate costs incurred before the written agreements were executed.

Recapture and thereby put $32,019 to better use, which the City did not commit by its 24-month statutory commitment deadline in fiscal year 2015 funding for activity 1464.

Require the City to develop and implement HOME procedures, including training for the City’s employees, to ensure that (1) commitments are accurately entered into IDIS to maintain data integrity and (2) the HOME program is administered in accordance with HUD’s and its own requirements.

Verify that the remaining 14 (Footnote 5 - As detailed in the Scope and Methodology section of this report, we reviewed 23 of the 37 commitments entered into IDIS by the City.) commitments made during the period January 1, 2013, through December 31, 2017, were properly supported with written agreements and accurately entered into IDIS.

Require the City to follow its newly developed policy regarding the execution of a written agreement that is signed and dated by all parties before the commitment of any funds in IDIS.

We recommend that the Deputy Assistant Secretary for Grant Programs require the State to support that seven applicants met the ownership and occupancy requirements or repay $396,905 to its program from non-Federal funds.

We recommend that the Deputy Assistant Secretary for Grant Programs require the State to support that it complied with the elevation requirements for two applicants or repay $118,244 to its program from non-Federal funds.

We recommend that the Deputy Assistant Secretary for Grant Programs require the State to implement additional controls and revise policies and procedures to ensure that adequate documentation is maintained in its files to support (1) recapture decisions, (2) eligibility related to ownership or occupancy, (3) ineligible decisions, (4) elevation considerations, and (5) mitigation of duplication of benefits issues related to override procedures and incorrect data provided by other agencies.

We recommend that the Deputy Assistant Secretary for Grant Programs require the State to implement additional controls and revise policies and procedures to ensure that the website is maintained and updated in compliance with requirements.

Require the four Community Compass providers reviewed to reimburse HUD $13,384 from non-Federal funds for ineligible costs from overcharged labor or travel costs.

Require the four Community Compass providers reviewed to either provide documentation to support $845,497 in unsupported labor and travel costs, for personnel not on approved work plans, and for work performed that was not described on the payment request or reimburse HUD from non-Federal funds for any costs that it cannot support.