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We audited HUD’s oversight of Community Development Block Grant (CDBG) funds used for Section 108 repayments.  This audit was part of our annual audit plan.  The objective of this audit was to determine whether HUD effectively monitored the use of CDBG funds in repaying Section 108 loans and whether it was feasible to enact a threshold or maximum amount of CDBG funds that grantees may use to repay loans.

HUD’s oversight of the use of CDBG allocations to repay Section 108 loans was adequate.  In addition, HUD’s information system tracked the extent to which communities and States used CDBG allocations to repay Section 108 loans.  Our review of the six recipients that had used their CDBG allocations to repay Section 108 loans did not identify any adverse effect, which would justify establishing thresholds to limit the amount of program funds that may be used to repay loans.

There are no recommendations.