Require New Horizons to support that $16,687 in tenant rents was collected and deposited as required or repay the project from nonproject funds.

Require New Horizons to obtain independent management.

Require New Horizons to conduct a review to determine who currently lives in the units and verify their eligibility.

Monitor New Horizons to ensure that it properly maintains tenant files, completes required annual recertifications, and supports disability exemptions in accordance with HUD requirements.

Reconsider HUD’s position on questioned borrower-financed downpayment assistance programs, including an analysis of the financial impact to FHA borrowers, risk to the FHA program, and whether current statute prohibits borrower-financed downpayment assistance programs as they are currently structured.

Develop and implement policies and procedures to strengthen HUD’s comprehensive loan-level, postendorsement, and lender reviews by evaluating loans containing downpayment assistance (for example, interest rates, fees, borrower certifications, lender reviews, impact to borrower, related agreements, etc.). Policies and procedures should include evaluating the structure of downpayment assistance programs, including whether the programs’ structure…

Develop specific requirements and guidance for lenders to review HFA downpayment assistance programs (for example, interest rates, fees, borrower certifications, lender reviews, impact to borrower, related agreements, etc.). Requirements and guidance should include evaluating the structure of downpayment assistance programs, including whether the programs’ structure and funding mechanisms comply with all HUD requirements and guidelines.

Require lenders to obtain a borrower certification that details their participation in an HFA downpayment assistance program, including relevant details of the specific program (for example, impact on interest rate, mortgage payments, fees, equity, acknowledgement of other less costly loan products, etc.).

Ensure that lenders enter accurate and missing downpayment assistance gift data into FHA Connection when identified by HUD.

Implement new data fields where lenders would be required to enter specific downpayment assistance information (for example, name of the source, name of assistance program, name of government entity or HFA, etc.) to allow for auditability and for HUD to generate reports and perform risk assessments.

Review fees identified in this report that were charged as part of borrower-financed downpayment assistance programs and determine whether they are reasonable or necessary. HUD should immediately notify lenders to discontinue charging any fees that are determined to be unreasonable and unnecessary.

Require any participating lender to reimburse borrowers that received an FHA loan with borrower-financed downpayment assistance for any fees that were determined to be unreasonable and unnecessary.

We recommend that the Acting Director of HUD’s Newark Office of Public Housing instruct Authority officials to provide supporting documentation to justify the $88,534 in unsupported travel and training costs related to out-of-State trainings, meetings, and conferences. Any amount determined to be ineligible should be repaid from non-Federal funds to the Operating Fund.

We recommend that the Acting Director of HUD’s Newark Office of Public Housing instruct Authority officials to provide supporting documentation to justify the $27,599 in unsupported training travel and per diem expenses related to quarterly meetings and trainings offered by HAI. Any amount determined to be ineligible should be repaid from non-Federal funds to the Operating Fund.

We recommend that the Acting Director of HUD’s Newark Office of Public Housing instruct Authority officials to provide supporting documentation to justify the $27,487 reimbursed to Authority officials for various costs, such as health coverage waiver incentives, supplies, food, and decorations. Any amount determined to be ineligible should be repaid from non-Federal funds to the Operating Fund.

We recommend that the Acting Director of HUD’s Newark Office of Public Housing instruct Authority officials to implement policies and procedures to ensure accountability for travel and training costs and require the Authority to maintain adequate supporting documents for travel, training, health coverage waiver incentives, supplies, food, decorations, and any other costs charged to the Capital Fund and Operating Fund to ensure that costs were…

We recommend that the Acting Director of HUD’s Newark Office of Public Housing instruct Authority officials to reimburse the Operating Fund from non-Federal funds for $61,145 in ineligible expenditures for personal expenses, such as meals, grocery items, gift cards, flowers, golf, an award dinner, Costco and AAA memberships, and a church deduction.

We recommend that the Acting Director of HUD’s Newark Office of Public Housing instruct Authority officials to reimburse the Operating Fund from non-Federal funds for $8,190 in ineligible salary advance.

We recommend that the Acting Director of HUD’s Newark Office of Public Housing instruct Authority officials to reimburse the Operating Fund from non-Federal funds for the $4,048 in ineligible civil service fines.

We recommend that the Acting Director of HUD’s Newark Office of Public Housing instruct Authority officials to obtain retroactive approval from HUD for the $90,000 lawsuit settlement related to a former employee. If approval is not obtained, the Authority should reimburse $90,000 to the Operating Fund from non-Federal funds.