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The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General performed an audit of Consumer Credit Counseling Services of the Midwest (Consumer Credit), an affiliate of the National Foundation for Credit Counseling, Inc. (National Foundation). We selected Consumer Credit based on a citizen’s complaint received by our office. Our objective was to determine whether Consumer Credit complied with HUD’s requirements for housing counseling. The audit was part of the activities in our fiscal year 2010 annual audit plan.

Consumer Credit did not comply with HUD’s regulations and/or its agreement with the National Foundation. Specifically, it did not ensure that its (1) clients’ housing counseling action plans were accurate and/or properly completed and (2) clients’ files contained supporting documentation of the housing counseling activities. Further, Consumer Credit did not ensure that uncertified housing counselors were adequately trained and/or monitored and its housing counseling sessions were appropriately reimbursed by HUD. As a result, HUD lacked assurance that Consumer Credit’s housing counseling services were effective and resulted in the best outcome for clients.

The results of this audit substantiated the complainant’s allegations regarding Consumer Credit’s failure to provide adequate housing counseling services that complied with HUD’s requirements.

We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing require Consumer Credit to: (1) reimburse HUD $8,874 from non-Federal funds for the housing counseling sessions that received duplicate reimbursements, or were funded by both HUD and an Ohio Department of Development grant, (2) maintain records of its housing counselors’ training and monitoring of its housing counselors’ housing counseling activities; and (3) implement adequate procedures and controls to ensure compliance with HUD’s requirements and its agreement with the National Foundation, if its contract is not cancelled. Such procedures and controls would ensure that more than $126,310 in anticipated HUD grant funds for fiscal year 2011 (grant year October 1, 2010, through September 30, 2011) are used in accordance with established requirements and for its intended purposes.

We also recommend that HUD’s Deputy Assistant Secretary for Single Family Housing require the National Foundation to cancel its agreement(s) with Consumer Credit to provide services under its housing counseling program(s). Further, we recommend that HUD’s Associate General Counsel for Program Enforcement determine legal sufficiency, and if legally sufficient, pursue remedies under the Program Fraud Civil Remedies Act against Consumer Credit for incorrectly submitting claims for reimbursement for housing counseling sessions that were already reimbursed or did not comply with HUD’s requirements and/or its agreement with the National Foundation.