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Report Fraud, Waste and Abuse
April 13, 2010
  • Community Planning and Development
2010-CH-0002
ig1050002.pdf

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited HUD’s Office of Affordable Housing Programs’ (Office) oversight of resale and recapture provisions for HOME Investment Partnerships Program (Program)-assisted homeownership projects (project). The audit was part of the activities in our fiscal year 2009 annual audit plan to contribute to improving HUD’s execution of and accountability for its fiscal responsibilities and our strategic plan to help HUD resolve its major management challenges. Our objective was to determine whether HUD’s Office had adequate oversight of participating jurisdictions’ use of resale and recapture provisions to enforce HUD’s affordability requirements for Program-assisted projects.

HUD’s Office did not ensure that participating jurisdictions complied with HUD’s requirements in their use of resale and recapture provisions to enforce HUD’s affordability requirements for Program-assisted projects. Of the 40 projects selected for review, 27 participating jurisdictions did not include appropriate resale and/or recapture provisions in their 29 consolidated and/or action plans that were in effect at the time the participating jurisdictions set up 32 projects in HUD’s Integrated Disbursement and Information System. Further, 18 participating jurisdictions did not ensure that appropriate resale or recapture provisions were implemented for 21 projects. In addition, three participating jurisdictions did not ensure that HUD’s interest was sufficiently protected in three projects for which more than $43,000 in Program funds was used for home-buyer assistance.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs require the Office to

Ensure that the State of New York and Cobb County, GA, Consortium, reimburse their Programs $30,000 and $9,947, respectively, for the two projects for which they did not ensure that they met HUD’s affordability requirements;
Ensure that the State of Montana places a deed restriction, land covenant, affidavit, and/or lien on a property to ensure that it would recoup all or a portion of the $3,139 in Program funds used for a project if the housing does not continue to be the principal residence of the household for the duration of the affordability period or reimburse its Program $3,139; and
Implement adequate procedures and controls to address the finding cited in this audit report.