Review the non-life-threatening health and safety and other deficiencies observed by the audit team and ensure that property owners and agents make the necessary corrections to the deficiencies as appropriate.

Determine the appropriate timeframe for when initial MORs should be completed for all properties that convert under RAD and issue updated guidance that includes a system to track the timeliness of initial MORs.

Complete the initial MORs for RAD properties that have not had an initial MOR.

Develop and implement a plan to determine how to implement the risk-based approach to review the RAD properties that have not had subsequent MORs in more than 3 years and to require periodic MORs going forward.

Provide training to field staff members to ensure that they have the skills necessary to complete MORs of converted properties.

Review the reserve for replacement account balances for the 13 properties (11 underfunded and 2 overfunded) to determine whether the balances are maintained in accordance with the applicable HUD requirements and executed HUD business documents and require owners to fully fund any underfunded reserves and determine whether any overfunded accounts should have the deposits suspended for a specified period.

Review the HUD business documents, such as the RAD conversion commitment, HAP contract, and regulatory agreement, for the four properties that did not contain consistent reserve for replacement information and update the documents to be consistent as appropriate.

Issue guidance to RAD property owners clarifying that the owner is responsible to follow both the HUD business documents and the property’s business documents and that the most restrictive document indicates the amount and timing of the annual deposits into the reserve for replacement account.

Develop and implement a process to ensure that the reserve for replacement requirements in HUD’s business documents are consistent for all converted properties.

Develop and implement a plan to review the reserve for replacement accounts for all converted properties from the date on which the account was established to the date of the review. Based on the reviews completed, HUD should take appropriate actions to ensure that reserve for replacement accounts are appropriately funded or determine whether overfunded accounts should have the deposits suspended for a specified period.

Implement adequate procedures and controls to ensure that servicing lenders comply with HUD time requirements in scheduling initial inspections of FHA-insured RAD PBV properties.

Determine an appropriate timeframe in which non-FHA-insured PBRA properties converted under RAD should be initially inspected, work with REAC to ensure that inspections are ordered and completed within that timeframe, and update HUD’s publicly available and internal guidance to ensure consistent messaging in accordance with HUD’s determination.

Support unsupported expenditures of $60,750 that were drawn down for the grant. For any unsupported expenditures require grantee reimburse HUD.

Perform a complete agency-wide fraud risk assessment (which incorporates the fraud risk assessments performed at the program level) and use the results to develop and implement an agency-wide plan to move HUD’s fraud risk management program out of the ad hoc phase.

Update guidance to clarify the different roles and responsibilities of the ALU, CO, CS, and COR.

Develop ALU engagement standards and incorporate them into acquisition policies and procedures.

We recommend that the Chief Procurement Officer develop, implement, and communicate requirements for program offices to establish written minimum roles and responsibilities for their respective procurement management functions, including but not limited to CORs, PMs, and SMEs.

Require Carrington to remedy HUD and the 27 borrowers in our sample with improper foreclosure filings and take administrative actions if appropriate.

Require Carrington to perform a review of loans affected by the system errors and when appropriate, remedy the borrowers or HUD.

Require Carrington to update its policies and procedures to comply with HUD requirements by reviewing eligible borrowers for streamlined options without unnecessary documents, notifying borrowers if they are ineligible for any loss mitigation options, and using best efforts to review borrowers for loss mitigation within 37 days of the foreclosure sale date.