We audited the U.S. Department of Housing and Urban Development’s (HUD) monitoring of its Multifamily Accelerated Processing program lenders. The audit was performed based on a hotline complaint and the Office of Inspector General’s annual audit and strategic plan to help HUD improve its fiscal responsibilities. The objective of the audit was to determine whether HUD adequately approved and selected program lenders to monitor.

HUD generally approved program lenders as required but did not adequately select lenders to monitor. The audit showed that 5 of 51 program lenders with loan originations totaling almost $88 million had not been monitored as recommended by its written policy. This occurred because HUD did not ensure all lenders were monitored and its existing policy failed to define which lenders should be classified as low-, moderate-, or high-volume lenders. We recommend that HUD complete and fully implement its new procedures for selecting lenders to monitor. We also recommend that it immediately classify its approved lenders as low-, moderate-, or high-volume lenders in accordance with its updated policy. After it appropriately classifies its lenders, we recommend that HUD prepare and implement a monitoring schedule based on the number and type of monitoring reviews it will perform for each lender.