Develop and implement written policies and procedures to periodically reconcile all NSP3 tracking spreadsheets to ensure that data remain accurate and up to date.

Provide training to all employees responsible for NSP3 to ensure that the City adequately determines repayment amounts and tracks and records NSP3 activities.

We recommend that the Director of HUD’s Houston Office of Community Planning and Development require the Department to support the $240,010 in unsupported procurement payments or repay its CDBG program from non-Federal funds.

We recommend that the Director of HUD’s Houston Office of Community Planning and Development require the Department to report $22,872 in program income to HUD and properly use program income.

We recommend that the Director of HUD’s Houston Office of Community Planning and Development require the Department to correct its HOME matching liability report to include the recalculated amount for 2014 and pay the matching liability of $3,301.

We recommend that the Director of HUD’s Houston Office of Community Planning and Development require the Department to confirm that it has developed and implemented written procurement procedures to ensure that future contracts and subrecipient agreements address the procurement and required provision issues identified in the report.

We recommend that the Director of HUD’s Houston Office of Community Planning and Development require the Department to ensure that all program files include required documentation and support.

We recommend that the Director of HUD’s Houston Office of Community Planning and Development require the Department to monitor subrecipients annually as stated in its monitoring policy.

We recommend that the Director of HUD’s Houston Office of Community Planning and Development require the Department to train its staff regarding HUD requirements and regulations or seek technical assistance.

Revise servicing review and monitoring policies and procedures to emphasize increased controls on reviewing claim loans showing that no loss mitigation evaluation occurred. Revising the policies and procedures would reduce the risk to HUD and result in a projected $120,902,564 in funds to be put to better use (appendix A).

Develop and implement policies and procedures to ensure that the Office of Single Family Asset Management and Office of Lender Activities and Program Compliance communicate the results of their servicing reviews to each other.

Update and revise policies and procedures, including reinforcement of guidance (for example, mortgagee letters, notifications to servicers, or training) to ensure that servicers accurately report the status of delinquent loans to HUD.

Require indemnification for the 26 loans that had significant servicing deficiencies. In these cases, the loss to HUD was $1,673,117 (appendixes A and D).

Reinforce existing guidance (such as mortgagee letters, notifications to servicers, and training) to servicers to ensure that they engage in required loss mitigation.

Require that the servicers with significant and other deficiencies revise and update their policies and procedures, as necessary, to ensure that they comply with HUD requirements and guidance on loss mitigation evaluation.

Reevaluate the feasibility of the project to determine the eligibility of the $1,014,211 in State Block Grant funds disbursed. If HUD determines that the project has been canceled or is not feasible, the Government of Puerto Rico or its designee must reimburse all project costs to its State Block Grant program from non-Federal funds.

Instruct the Office for the Socioeconomic and Community Development to submit a plan for how it will proceed with the fine arts center project. The plan should include a schedule that HUD can track to ensure the project’s completion without proposing the use of additional HUD funds.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct the State to provide documentation to show that the $18,782,054 used for four activities was for eligible and supported costs and did not duplicate other benefits or repay from non-Federal funds any amount that it cannot support.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct the State to Implement procedures to ensure that remaining program costs reimbursed with disaster recovery funds are adequately reviewed for eligibility and support, thereby putting up to $8,932,630 to better use.

We recommend that HUD’s Deputy Assistant Secretary for Grant Programs direct the State to provide training to its staff on applicable HUD and Federal requirements for eligibility, documentation of costs, and duplication of benefits reviews.