Update relevant policies and procedures for appraiser roster management so that they align with each other and with regulations and reflect HUD practice. At a minimum, the policies and procedures should clearly cover appraiser roster status, license expiration, disciplinary actions, removals, data accuracy, and documentation.

Maintain historical data for each appraiser record, including history on expiration dates, when appraisers are moved on or off the appraiser roster and when they are and are not allowed to be assigned to conduct appraisals.

Improve quality assurance processes by adding steps to verify that the appraiser roster is accurate and reliable over time through testing of its logic-based system controls and data fields.

Develop and implement written policies and procedures regarding the designation of legal representation for applicants.

Establish and implement a process to ensure that The Office of Multifamily Housing Programs’ policies, procedures, and supervisory controls are effective. This process should include addressing postdisaster damage assessments, properly updating iREMS, and executing loan forbearances. This process should also integrate with other HUD program offices as appropriate to improve consistency with HUD’s overall disaster response and to ensure the effectiveness of disaster controls.

Require lenders to obtain the borrowers’ consent to verify the existence of delinquent Federal taxes with the IRS during loan origination and deny any applicant with delinquent Federal tax debt and no payment plan or a noncompliant payment plan or an applicant refusing to provide consent from receiving FHA insurance to put at least $6.1 billion to better use by avoiding potential future costs to the FHA insurance fund.

Status

As of January 2026, the Office of Multifamily has developed standard operating procedures for its field office staff and plans to issue additional guidance to HUD staff and multifamily property owners on addressing lead in the water for multifamily properties.  Although the final action target date has passed, the guidance is undergoing HUD's internal review clearance process.  HUD did not provide an estimated date for issuance of the guidance to close the recommendation.

Analysis

To fully address this recommendation, the Office of Multifamily Housing must provide evidence of an action plan or policy that includes procedures to ensure households living in multifamily units have a sufficient supply of safe drinking water.

Implementation of this recommendation will enable HUD to have sufficient oversight and control activities in place to ensure households living in multifamily housing have a sufficient supply of safe drinking water.

Require lenders to obtain the borrowers’ consent to verify the existence of delinquent Federal taxes with the IRS during loan origination and deny any applicant with delinquent Federal tax debt and no payment plan or a noncompliant payment plan or an applicant refusing to provide consent from receiving FHA insurance to put at least $6.1 billion to better use by avoiding potential future costs to the FHA insurance fund.

Reimburse HUD $30,037 from nonproject funds for the overpayment of housing assistance and utility allowances due to incorrect calculations.

Support or reimburse HUD $159,938 from nonproject funds for the unsupported payments of housing assistance cited in the finding.

Pursue collection from the applicable household or reimburse HUD $26,915 from nonproject funds for the overpayment of housing assistance due to unreported income.

Implement adequate quality control procedures to ensure that housing assistance payments are appropriately calculated and supported. These procedures and controls should ensure that $54,257 in program funds is appropriately used for future payments.

Ensure that the management agent’s staff is properly trained and familiar with HUD’s and the project’s requirements regarding housing assistance payments calculations.

Design controls to protect the insurance fund from improper partial claims that did not reinstate the loans to put $27.1 million to better use.

Implement a change to regulations at 24 CFR Part 203 to require curtailment of preforeclosure interest and other costs that are caused by lender servicing delays, resulting in $413,513,975 in funds to be put to better use. This should include updating or seeking statutory authority to update HUD’s regulations as necessary and coordinating with HUD’s Office of Finance and Budget, well before any changes go through departmental clearance, to ensure that planned curtailment requirements can be consistently enforced through the claims process.

Coordinate with the Deputy Assistant Secretary for Finance and Budget to board 350 manually paid partial claims that were not boarded into SMART, resulting in funds to be put to better use in the amount of $2,297,706.

Obtain the missing mortgage documents for 33 loans and the missing note documents for 40 loans, totaling $644,767 in partial claim notes, and require any unrecorded mortgage documents to be recorded at the appropriate county’s office to ensure that HUD’s interests are protected. For any missing documents that cannot be obtained, the Deputy Assistant Secretary should require the lender to reimburse HUD for the partial claim note.

Coordinate with the Deputy Assistant Secretary for Finance and Budget to record lender payments to update the balances for 139 loans in SMART, resulting in funds to be put to better use in the amount of $1,055,113.

Pursue the collection of the $5,690,000 in surplus proceeds that HUD was entitled to receive from 2017 loan terminations.

Implement a policy to require servicers to send surplus proceeds notifications to the HUD Secretary-held assets servicing contractor and establish procedures to improve HUD’s surplus proceeds collection efforts.

Redesign the partial claim program to eliminate its weaknesses and ensure that partial claims benefit from a stronger lien position to put $6,770,000 to better use.