We audited the City of Camden's (City) asset control area (ACA) program following a request from the U.S. Department of Housing and Urban Development's (HUD) Office of Single Family Asset Management for a review of the City's compliance with its ACA agreement with HUD. Our objective was to determine whether the City complied with specific requirements in the ACA agreement pertaining to the resale of properties it acquired from HUD.

The City did not comply with the specific provisions in the ACA agreement pertaining to the resale of its acquired ACA properties. It did not (1) ensure that 17 (or 25 percent) of 68 properties it acquired from HUD were rehabilitated and sold within the required timeframe, (2) ensure that all expenses included in net development costs for rehabilitated properties were eligible, and (3) verify homebuyers' eligibility and maintain the appropriate related supporting documentation. As a result, the City was unable to support $441,500 in property discounts from HUD for the 17 outstanding properties. It also included more than $11,600 in ineligible expenses in the net property development costs for four properties, which increased their sales prices and, consequently, the related mortgages by more than $11,700.

We recommend that HUD direct the City to obtain and provide evidence that it has the necessary resources to complete the rehabilitation and sale of the 17 outstanding properties. If the City cannot provide evidence of its ability to rehabilitate the outstanding properties, it should pay HUD $441,500. In addition, we recommend that the City buy down the mortgages for the four properties which had more than $11,600 in ineligible expenses included as part of their net development costs, and that the City verify and document the eligibility of each homebuyer in the future. We further recommend that HUD not renew the ACA agreement with the City until it has demonstrated that it is in compliance with the requirements of the agreement.