Improve its procedures and controls to ensure that the County administers the program in accordance with Federal requirements.

Determine legal sufficiency and if legally sufficient, pursue civil and administrative remedies, civil money penalties, or both against Venta, its principals, or both for incorrectly certifying to the eligibility for FHA mortgage insurance or that due diligence was exercised during the origination of FHA loans.

We recommend that the Deputy Assistant Secretary for Single Family Housing require MB Financial to indemnify HUD against potential losses of $178,811 for the four loans that did not comply with underwriting requirements (appendix C). HUD provided us copies of the four executed indemnification agreements in August and September 2017. Therefore, upon issuance of this report, we will enter a management decision into HUD’s Audit Resolution and…

We recommend that the Deputy Assistant Secretary for Single Family Housing require MB Financial to provide training to its underwriters on HUD’s underwriting requirements for approving and rejecting loans.

We recommend that the Deputy Assistant Secretary for Single Family Housing require MB Financial to update its policies and procedures to ensure that its staff understands underwriting requirements and the requirement that loans be manually underwritten when a refer decision is received from automated underwriting systems or when a loan is downgraded to a manual underwrite.

We recommend that the Deputy Assistant Secretary for Single Family Housing require MB Financial to update its quality control plan to include the specific procedures to be used when reviewing rejected loan applications.

Support that $2,533,377 in costs were reasonable and allowable program expenses in accordance with requirements or repay from non-Federal funds the appropriate programs any amounts they cannot support.

Repay the appropriate programs from non-Federal funds the $1,524,604 in ineligible funds paid when costs exceeded contract terms.

Determine the appropriateness of the remaining balance of $1,242,154 on unsupported contracts to ensure costs were reasonable, reprocure the subject contracts, or reallocate the funds to the appropriate program.

Reprocure expired service contracts to ensure estimated balances of $375,526 are used on eligible contract.

Reprocure any service contracts necessary and ensure that the contracts are properly awarded in accordance with HUD requirements.

Strengthen and implement controls and procedures over procurement, including monitoring consultants, to ensure that procurement activities meet HUD requirements.

Establish and implement an effective system to ensure that payments do not exceed approved contract values.

Establish and implement an effective system to maintain a complete and accurate contract register to ensure proper contract planning and administration.

Provide technical assistance to the Authority to ensure that responsible staff and board members receive necessary procurement training.

Develop and implement controls over owner contributions and owner distributions to ensure compliance with its regulatory agreement and HUD regulations.

Complete HUD-approved training regarding owner contributions and distributions.

Repay its project’s operating account for the ineligible $15,000 disbursement from non-project funds.

Perform an analysis of all security deposits and ensure that the security deposit account is fully funded.

Implement controls to ensure existing procedures are followed to maintain the project’s security deposit funds separately from all other accounts by depositing and disbursing all security deposit funds directly into and from the security deposit account.