Update its QC plan and related processes and procedures to align with requirements for loan selection, including maintaining data and documenting how sample sizes and loan selections were determined.

Update its QC plan and related processes and procedures to align with requirements for (1) loan file reviews, including requirements to obtain new credit reports, reverify borrower information, and obtain appraisal field reviews; (2) documenting review results, including maintaining data on Read More

Provide annual training to its staff and management on HUD requirements for lender QC programs and provide proof of training to HUD.

Review the six EPD loans not previously selected for review and submit the results to HUD, including all findings of fraud or material misrepresentation, along with any other material findings that it is unable to mitigate. If required, Flat Branch should execute indemnification agreements or Read More

Obtain credit reports and reverify borrower information for up to 279 EPD reviews performed and evaluate the risk of both new findings identified and existing findings contained in its QC files to confirm whether it self-reported to HUD all findings of fraud or material misrepresentation, along Read More

Evaluate its QC files for the 29 post-closing QC reviews in which it identified material findings to confirm whether it self-reported to HUD all findings of fraud or material misrepresentation, along with any other material findings that its records did not show have been acceptably mitigated. Read More

Provide indemnification agreements or documentation to support the two loans in which it missed material deficiencies and the three loans in which it identified material findings that it did not acceptably mitigate or self-report to HUD. Implementation of this recommendation will protect the FHA Read More

Update HUD Handbook 1900.40, Do Not Pay policy, to clearly define the responsibilities for all parties and align it with current laws, processes, and procedures. This should include defining responsibilities for preaward and prepayment verification, and developing a process and governance Read More

Work with 134 grantees (29 NSP1 and 105 NSP3) that reported missing expenditure deadlines in DRGR to ensure that expenditure information submitted is accurate and up to date.

Implement procedures and controls for targeting non-FHA-insured RAD PBV projects to monitor the physical conditions and reserve for replacement accounts.

Implement procedures for monitoring property owners’ reserve for replacement accounts for compliance with HUD’s requirements, using reserve for replacement account data collected on projects from PHAs.

Provide inspection reports for the units identified in this report that failed to meet HQS showing that the units and associated buildings meet HUD’s current physical condition standards.

Implement a policy to ensure that monitoring of RAD PBV projects includes, at a minimum, a review of the accuracy of the reserve for replacement account balances and compliance with HUD’s physical condition and inspection requirements.

Review the reserve for replacement accounts for the 12 underfunded projects to ensure that the account balances are maintained in accordance with the applicable HUD requirements and executed HUD business documents and require owners to fully fund any underfunded reserves, as applicable.

Review the reserve for replacement accounts for the 14 project owners that did not make annual adjustments for inflation, as identified in the capital needs assessment, to determine whether the account balances are sufficient to meet anticipated capital needs. If the account balances are not Read More

Implement a plan to review the reserve for replacement accounts for all RAD PBV projects to ensure that reserve for replacement accounts are appropriately funded.

Obtain documentation from the PHAs to support that more than $1 million in withdrawals from the eight reserve accounts complied with HUD’s requirements or require the project owners to reimburse the reserve accounts for the unsupported withdrawals.

Implement a process, in conjunction with the Office of Recapitalization, to ensure that the reserve for replacement requirements in HUD’s business documents, such as the RAD conversion commitment, HAP contract, and operating agreement, are consistent for converted projects.

Collect data on projects’ reserve for replacement accounts to support the Office of Field Operations’ monitoring activities.

Either support or repay $441,027 disbursed for five unsupported grants.