We audited the U.S. Department of Housing and Urban Development (HUD), Office of Multifamily Housing Programs’ implementation of use agreement restrictions for affordable set-aside units because it was included in our audit plan based on a prior audit, which determined that a multifamily project owner did not comply with project use agreement restrictions.  The objective of the audit was to determine whether HUD ensured compliance with use agreement restrictions for affordable set-aside units as a condition of partial payment of claims (PPC).

HUD did not ensure compliance with use agreement restrictions for affordable set-aside units as a condition of PPCs.  This condition occurred because HUD did not have written procedures to ensure that staff used the Integrated Real Estate Management System (iREMS) to track receipts of annual certifications from owners and to ensure that owners complied with project use agreement restrictions.  As a result, HUD had no assurance that owners made available the affordable set-aside units required by the PPC use agreements.

We recommend that the Acting Director for the Office of Asset Management and Portfolio Oversight, Office of Multifamily Housing Programs (1) develop and implement written procedures to track the required annual certifications using iREMS, (2) develop and implement written procedures to verify that properties comply with their PPC use agreement restrictions, and (3) obtain the missing annual certifications for two properties and record them in iREMS.