PROFILE OF PERFORMANCE

For the period April 1, 2018, to September 30, 2018

AUDIT RESULTS1 THIS REPORTING PERIOD FISCAL YEAR 2018

Recommendations that funds be put to better use $1,491,520,766 $4,650,083,908

Recommended questioned costs $1,324,573,464 $1,343,904,387

Collections from audits $176,059,128 $193,246,149

Administrative sanctions 0 1

Civil actions 2 2

Subpoenas 3 78

Personnel actions 0 0

INVESTIGATION RESULTS1 THIS REPORTING PERIOD FISCAL YEAR 2018

Total restitutions and judgments $32,961,037 $122,089,089

Total recoveries and receivables to HUD programs2 $1,977,053 $61,758,951

Arrests 106 242

Indictments and informations 117 241

Convictions, pleas, and pretrial diversions 100 231

Civil actions 14 40

Total administrative sanctions 196 362

 Suspensions 15 42

 Debarments 39 89

 Program referrals 28 66

 Removal from program participation 0 0

 Evictions 96 129

 Other3 18 36

Systemic implication reports 1 2

Search warrants 30 59

Subpoenas 341 791

JOINT CIVIL FRAUD RESULTS1 THIS REPORTING PERIOD FISCAL YEAR 2018

Recoveries and receivables to HUD programs or 

HUD program participants $311,699 $357,199

Recoveries and receivables for other entities4 $0 $0

Recommendations that funds be put to better use $47,433,895 $47,529,664

Civil actions 0 2

Administrative sanctions 0 1

The Offices of Audit and Investigation and the Joint Civil Fraud Division periodically combine efforts and conduct joint civil fraud initiatives. Outcomes from these initiatives are shown in the 

Joint Civil Fraud Results profile and are not duplicated in the Audit Results or Investigation Results.

Does not include civil settlements worked jointly with the Office of Audit

Includes reprimands, suspensions, demotions, or terminations of the employees of Federal, State, or local governments or of Federal contractors and grantees as the result of OIG activities.

This amount represents funds that relate to HUD programs but were paid to other entities rather than to HUD, such as funds paid to the U.S. Treasury for general government purposes.

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OUR MISSION

We promote economy, efficiency, and effectiveness in 

the administration of the U.S. Department of Housing 

and Urban Development (HUD) programs through 

the use of traditional and innovative approaches. We 

protect the integrity of HUD’s programs and operations 

by identifying opportunities for HUD programs to 

progress and succeed.

OUR VISION

We are a collaborative team of diverse, empowered 

professionals committed to excellence, innovation, 

our core values, and sharing our knowledge and 

best practices with HUD and the Inspector General 

community. We leverage the specialized skill sets 

within the Office of Inspector General (OIG) to bring 

heightened awareness to HUD’s toughest challenges. 

We support HUD’s efforts to achieve stronger housing 

markets, quality and safer housing, and strengthened 

communities.

OUR VALUES 

Accountability

Accountability is taking ownership of our 

decisions and actions. We hold one another 

accountable to a higher standard of conduct.

Courage

Courage is doing what is right, no matter how difficult. 

We ask questions and raise concerns when needed.

Respect

Respect is appreciating the uniqueness of 

our workforce. We treat others with dignity, 

civility, and mutual consideration.

Stewardship

Stewardship is accepting our responsibility 

to serve the public good. We care about 

leaving things better than we found them.

Trust

Trust is the result of promises kept. We deliver 

on our commitments and communicate 

honestly with our stakeholders.

HIGHLIGHTS
It is with great pleasure that 

I submit the U.S. Department 

of Housing and Urban 

Development, Office of 

Inspector General’s (HUD OIG) 

Semiannual Report to Congress 

for the second half of fiscal year 

2018. This report describes the 

remarkable accomplishments 

of the dedicated employees of 

HUD OIG. Significant among 

our many accomplishments is 

our return on investment, which 

now exceeds a ratio of 42 to 1 

for dollars spent for our work compared to dollars returned to 

HUD and to the U.S. Treasury. By promoting better stewardship 

and accountability in HUD’s programs, HUD OIG staff ensures 

that we have a lasting, positive impact on the Department and 

on our communities for the benefit of the American people.

In addition to the investigative cases mentioned below, for 

this reporting period, HUD OIG has conducted a number of 

significant and impactful audits and evaluations. For example, 

our Office of Audit identified that HUD lacked adequate 

oversight of lead-based paint reporting and remediation in 

its public housing program and Housing Choice Voucher 

Program. In a request to 3,800 public housing agencies 

(PHA), to which 2,600 PHAs responded, the PHAs reported 84 

potential cases in public housing and 205 cases in the Housing 

Choice Voucher Program of children with environmental 

intervention blood lead levels. HUD lacked assurance that 

PHAs properly identified and mitigated lead hazards, thus 

increasing the potential of exposing children to lead poisoning 

due to unsafe living conditions.

We also audited HUD’s Federal Housing Administration’s 

(FHA) preforeclosure sale claims, noting that existing 

regulations may allow excessive preforeclosure claim interest 

costs. HUD paid an estimated $413 million in unnecessary 

interest and other costs for 27,634 preforeclosure claims 

because lenders failed to complete servicing actions for 

defaulted loans within established timeframes. Although 

the unnecessary amounts were caused by lenders’ inaction, 

HUD reimbursed lenders for these added costs through FHA 

insurance claims. This condition occurred because HUD’s 

requirements and procedures do not limit unnecessary 

preforeclosure claim interest and other costs that result from 

lenders’ servicing delays. As a result, the FHA insurance fund 

incurred unnecessary and unreasonable costs, and fewer funds 

were available to pay other claims or to apply toward reducing 

FHA borrower mortgage insurance premiums.

Based on congressional requests, our Office of Evaluation 

conducted an evaluation of the Alexander County Housing 

Authority. HUD had been aware of negative conditions at 

the Authority since at least 2010. HUD identified issues with 

the Authority’s governance, including the misuse of funds, 

conflicts of interest, and a failure to comply with HUD policies 

and Federal civil rights laws. Further, about 200 children and 

their families lived in units with peeling paint; graffiti; pest 

infestations; and other health and safety hazards, such as 

inoperable appliances and obstructed accessibility routes. 

Despite HUD’s attempts to bring the Authority into compliance, 

its efforts did not resolve the negative conditions at the 

Authority. Residents continued to live in deplorable conditions 

as the Authority declined, and Authority officials were generally 

uncooperative in addressing the negative conditions HUD 

identified. HUD hesitated to take the Authority into possession 

in part because Office of Public and Indian Housing officials 

believed that they had to allow the Authority an opportunity 

to improve instead of declaring it in substantial default. 

Additionally, HUD guidance and expertise on receiverships 

were limited. 

In addition, we issued a report on HUD information 

technology (IT) system management and oversight of the 

Indian Home Loan Guarantee Program (Section 184 program) 

in response to a congressional request. HUD had not 

successfully deployed an IT system that enabled effective 

management and appropriate oversight of all Section 184 

program processes. Multiple IT systems support the Section 

184 program with limited functionality and multiple methods 

for loan processing. Many Section 184 loan application 

processes are still performed manually or supported by a 

HUD Office of Housing legacy IT system. HUD developed 

a modernized Office of Native American Programs Loan 

Origination System (LOS), which was deployed in 2017 and was 

still under development during our review, with no projected 

timelines to complete additional functionality. LOS has 

significant limitations, requiring lenders and program officials 

to continue to use a HUD Office of Housing legacy IT system 

and manual processes for maintaining files, servicing loans, and 

managing claims. Only 1 of 38 lenders supporting the Section 

184 program is able to access LOS due to HUD’s inability to 

administratively resolve an access issue. 

Our Office of Investigation continues to uncover and seek 

prosecution of fraud affecting the Department. As part of 

one investigation in Newark, NJ, 13 people were sentenced 

to a cumulative 243 months in prison and ordered to pay 

restitution totaling more than $4.4 million, of which at least 

$625,220 was returned to HUD FHA. Over a period of 2 

years, the conspirators fraudulently obtained mortgages for 

properties located in New Jersey by recruiting straw buyers 

and submitting false and fraudulent loan applications and 

supporting documents so the straw buyers could qualify for the 

loans when they otherwise would not have qualified. Overall, 

the scheme involved 24 loans, including 17 FHA mortgages, 

and induced lenders to issue more than $6 million in loans, 

resulting in several defaults, exposing lenders and FHA to more 

than $2 million in potential losses.

In another investigation, conducted by our Joint Civil 

Fraud Division, HUD OIG demonstrated its commitment to 

proactively preventing loss to the Department and FHA’s 

insurance fund. We identified that HUD did not enforce 

the terms of a settlement agreement with an FHA lender 

when it failed to record indemnification agreements on 920 

FHA-insured loans. HUD’s failure to properly record the 

indemnifications led to claims being filed on 2 conveyed 

properties as well as 15 loss mitigation actions, resulting in a 

loss of $311,699. HUD required the lender to repay the loss 

and recorded the 920 loans in FHA Connection, avoiding more 

than $47.4 million in estimated losses.

In closing, these are just a few of the many important 

activities HUD OIG accomplished this year. We in HUD OIG 

are committed to working with Congress and the Department 

to improve HUD’s programs and operations and are proud of 

our many accomplishments, which are of consequence and 

impactful to our Nation’s citizens.

A MESSAGE FROM ACTING INSPECTOR GENERAL HELEN M. ALBERT

Helen M. Albert I Acting Inspector General
in coordination with several other OIGs to determine 

the extent to which HUD and each other participating 

agency are prepared to respond to future disasters.

AUDIT

In response to congressional concerns, OA continues 

to monitor progress of the Puerto Rico and U.S. 

Virgin Islands disaster recovery grantees’ preparation 

to administer assistance funds. OA is preparing 

to conduct capacity audits of the Puerto Rico 

Department of Housing and the U.S. Virgin Islands 

Housing Finance Authority in the coming months. 

Also, due to congressional concerns, OA completed 

capacity audits of the two grantees responsible for 

administering disaster funding for the States of 

Florida and Texas. OA concluded that Florida’s 

Department of Economic Opportunity should 

strengthen its capacity to administer its disaster 

recovery grants in accordance with applicable 

regulations and requirements. Specifically, it could 

strengthen capacity by improving its controls, 

finalizing disaster program policies and procedures, 

improving its process for preventing duplication 

of benefits, and continuing to increase staffing. 

Strengthening its capacity to administer disaster 

grants would help ensure that the Department 

properly spends more than $1.5 billion in disaster 

recovery funding in accordance with applicable 

requirements. 

TRENDING

2017 DISASTER RECOVERY 

OVERVIEW

In the wake of the destruction and aftermath caused 

by the 2017 natural disasters, the U.S. Department 

of Housing and Urban Development, Office of 

Inspector General (HUD OIG), continues to focus 

on the challenges and outcomes of the national 

Disaster Recovery Initiative. To address the 

enormous task of enforcement and oversight, HUD 

OIG has designated its Atlanta, Fort Worth, and Los 

Angeles regional offices to perform the bulk of 2017 

disaster recovery oversight. HUD OIG has initiated 

assignments to ensure that the lessons learned from 

previous disasters will be at the forefront in the 

approval of the grantees’ disaster recovery action 

plans and HUD’s disaster recovery guidance. Our 

audit and investigation staff will provide a continuing 

and comprehensive review of the expenditure and 

administration of funds. 

Recognized as a leader in disaster recovery oversight, 

HUD OIG’s Offices of Investigation (OI) and Audit 

(OA) continue to chair their respective subcommittees 

on the Council of the Inspectors General on Integrity 

and Efficiency, Disaster Assistance Working Group. 

Through these subcommittees and the larger working 

group, HUD OIG works closely with other OIGs to 

leverage our collective efforts to identify and address 

disaster-related fraud, waste, and mismanagement. 

For example, OA is continuing its cross-cutting audit 
Similarly, OA concluded that the Texas General 

Land Office should strengthen its capacity to follow 

Federal procurement regulations when procuring 

contracts with disaster recovery funds and to 

spend those funds in accordance with applicable 

requirements. Specifically, it could strengthen its 

capacity by reviewing and updating its procurement 

and expenditure policies and procedures, increasing 

staffing to ensure that appropriate resources are 

available to administer the disaster funds, and 

improving its processes for preventing duplication 

of benefits. Further, OA concluded that the agency 

could benefit from a standard set of basic disaster 

recovery guidelines, established by HUD, to assist it 

in providing needed relief to affected communities. 

Strengthening its capacity to administer disaster funds 

would help ensure that the agency properly spends 

more than $5 billion in disaster recovery funding in 

accordance with applicable requirements. 

In another audit completed this period, OA reported 

that although HUD had managed billions in disaster 

recovery funds since 2002, it had not codified its 

Disaster Recovery program in HUD regulations. 

Instead, to administer disaster recovery funds, 

HUD issued multiple requirements and waivers for 

each disaster recovery supplemental appropriation 

in Federal Register notices, many of which were 

repeated from disaster to disaster. HUD’s use of 

multiple Federal Register notices to operate the 

program presented challenges to grantees. For 

example, 59 grantees with 112 active disaster 

recovery grants, which totaled more than $47.4 billion 

as of September 2017, had to follow requirements 

contained in 61 different Federal Register notices to 

manage the program. OA concluded that codifying 

the Disaster Recovery program would ensure that a 

permanent framework is in place for future disasters, 

reduce the existing volume of Federal Register 

notices, standardize the rules for all grantees, and 

ensure that grants are closed in a timely manner.

INVESTIGATION

HUD OIG’s OI continues to provide impactful 

assistance to HUD’s Disaster Recovery program 

through its work associated with disaster recovery 

efforts. Agents continue to be involved with 

seeking financial recoveries for fraud involving past 

hurricanes. During fiscal years 2017 and 2018, OI 

headquarters and field staff provided law enforcement 

support through Emergency Support Function (ESF) 

13 under the Presidential declaration by means of the 

Robert T. Stafford Disaster and Emergency Relief 

Assistance Act as amended, 42 U.S.C. (United States 

Code) 5121 et seq. HUD OIG volunteered personnel 

and resources in support of ESF 13 during Hurricane 

Florence. 

In addition to OI agents’ providing substantial 

assistance with performing emergency support and 

continuity of operations functions, OI has been 

instrumental in coordinating and collaborating with 

law enforcement partners in support of disaster 

relief and fraud detection and prevention. OI special 

agents have close working relationships with law 

enforcement officials in the U.S. Virgin Islands, 

Puerto Rico, and throughout Texas. OI staff has 

provided outreach in these and other jurisdictions 

to United States Attorney’s Offices, grantees, HUD 

program staff, and other stakeholders to educate them 

about inherent risks in HUD’s Disaster Recovery 

program and best practices for fraud prevention. This 

year, OI committed to providing training to OIG’s 

many stakeholders. OI will continue to leverage 

the talent of a core team of agents, supervisors, and 

analysts to provide impactful assistance to HUD and 

its stakeholders in addressing the complex challenges 

presented in its Disaster Recovery program. 

Further, to develop a sound investigative strategy that 

integrates diverse perspectives, OI has leveraged the 

experience of a core team of agents and supervisory 

agents to serve as subject-matter experts in disasterrelated investigations and initiatives. OI continues to 

leverage the expertise of other OIG offices to tackle 

the most challenging and complex disaster-related 

issues.

OI partnered with OA and OIG’s Office of Legal 

Counsel in providing nonconcurring comments 

on a recent disaster recovery clearance item. This 

nonconcurrence resulted in HUD’s amending 

and strengthening false statement warnings and 

certifications contained in borrower eligibility 

documents for HUD’s 30-day disaster foreclosure 

moratorium. Certain FHA-insured mortgages in 

affected counties in Puerto Rico and the U.S. Virgin 

Islands that are still recovering from the devastation 

of Hurricane Maria fall within the guidelines of the 

moratorium. 

TABLE OF CONTENTS

Chapter 1– Single-Family Programs.................................................................................................................1

Audit............................................................................................................................................................................................ 1

Investigation..............................................................................................................................................................................3

Evaluation...................................................................................................................................................................................4

Joint Civil Fraud........................................................................................................................................................................5

Chapter 2 – Public and Indian Housing Programs......................................................................................... 6

Audit............................................................................................................................................................................................6

Investigation............................................................................................................................................................................12

Evaluation.................................................................................................................................................................................12

Chapter 3 – Multifamily Housing and Healthcare Programs...................................................................... 14

Audit..........................................................................................................................................................................................14

Investigation............................................................................................................................................................................16

Chapter 4 – Community Planning and Development Programs .................................................................17

Audit.......................................................................................................................................................................................... 17

Investigation........................................................................................................................................................................... 20

Chapter 5 – Disaster Recovery Programs ..................................................................................................... 21

Audit..........................................................................................................................................................................................21

Investigation............................................................................................................................................................................24

Chapter 6 – Other significant Audits and Evaluations ................................................................................ 25

Audit..........................................................................................................................................................................................25

Evaluation................................................................................................................................................................................ 28

Chapter 7 – Legislation, Regulations and Other Directives........................................................................ 30

Chapter 8 – Report Resolution ...................................................................................................................... 34

Chapter 9 – Whistleblower Ombudsman...................................................................................................... 58

Appendix 1 – Peer Review Reporting ............................................................................................................60

Appendix 2 – Audit Reports Issued................................................................................................................ 61

Appendix 3 – Tables......................................................................................................................................... 67

Appendix 4 – Inspector General Empowerment Act ...................................................................................94

OIG Telephone Directory ..............................................................................................................................100

Acronyms and Abbreviations List.................................................................................................................104

Reporting Requirements............................................................................................................................... 107
SEMIANNUAL REPORT TO CONGRESS

CHAPTER 1 – SINGLE-FAMILY PROGRAMS

The Federal Housing Administration (FHA) single-family programs provide mortgage insurance to mortgage 

lenders that, in turn, provide financing to enable individuals and families to purchase, rehabilitate, or 

construct homes. Some of the highlights from this semiannual period are noted below.

AUDIT

Strategic Initiative 1: Contribute to the reduction of fraud in single-family insurance 

programs

Key program results Questioned costs Funds put to better use

Audit 6 audits $121,334,767 $425,660,736 

INDEPENDENT AUDITORS FAILED TO CONFORM WITH GENERALLY ACCEPTED 

AUDITING STANDARDS

The U.S. Department of Housing and Urban Development, Office of Inspector General (HUD OIG), assisted the 

U.S. Department of Justice in a civil review of Deloitte and Touche, LLP, a Delaware limited liability partnership 

headquartered in New York City, NY. Deloitte is a professional services firm that provides auditing services to 

clients throughout the United States. Deloitte provided auditing services to its client, Taylor, Bean & Whitaker 

Mortgage Corporation (TBW). TBW was an FHA-approved direct endorsement lender and as such, was required to 

submit to HUD annual audited financial statements to maintain its status as a direct endorsement lender. Deloitte 

served as TBW’s independent outside auditor and submitted audit reports on TBW’s financial statements for its 

fiscal years ending April 30, 2002, through April 30, 2008. Deloitte stated in its reports that it had conducted its 

audits of TBW in accordance with generally accepted auditing standards. 

On February 28, 2018, Deloitte entered into a settlement agreement with the Federal Government, agreeing to pay 

$149.5 million, of which $115 million was restitution owed to HUD. Deloitte denied but settled allegations of 

alleged conduct in connection with its role as TBW’s independent outside auditor for fiscal years that ended April 

30, 2002, through April 30, 2008. The settlement agreement was neither an admission of liability by Deloitte nor a 

concession by the United States that its claims were not well founded. (Audit Memorandum: 2018-FO-1802) 

REVIEW OF HUD’S PREFORECLOSURE SALE CLAIM PROCESS

HUD OIG audited FHA’s preforeclosure sale claim process to determine the amount of unnecessary preforeclosure 

claim interest and other costs that resulted from lender noncompliance with HUD’s loan-servicing timeframe 

requirements.

HUD paid more than $413 million in unnecessary interest and other costs for 27,634 preforeclosure claims because 

lenders failed to complete servicing actions for defaulted loans within established timeframes. Although the 

unnecessary amounts were caused by lenders’ inaction, HUD reimbursed lenders for these added costs through FHA 

insurance claims. As a result, the FHA insurance fund incurred unnecessary and unreasonable costs, and fewer 

funds were available to pay other claims or apply toward reducing FHA borrower mortgage insurance premiums. 

1
SEMIANNUAL REPORT TO CONGRESS

OIG recommended that HUD implement a change to regulations at 24 CFR (Code of Federal Regulations) Part 203 

to require curtailment of preforeclosure interest and other costs caused by lender servicing delays, resulting in more 

than $413 million in funds to be put to better use. This requirement should include updating or seeking statutory 

authority to update HUD’s regulations as necessary before any changes go through departmental clearance to ensure 

that planned curtailment requirements can be consistently enforced through the claims process. (Audit Report: 

2018-LA-0007) 

REVIEW OF HUD’S PARTIAL CLAIMS PROGRAM

HUD OIG audited HUD to determine whether it identified and collected outstanding partial claims out of surplus 

proceeds from nonconveyance foreclosures. 

HUD did not always identify and collect partial claims out of surplus proceeds from nonconveyance foreclosures. 

This condition occurred because HUD lacked a policy enabling it to identify surplus funds and the partial claims 

program as designed did not always adequately protect HUD’s interests. As a result, HUD’s insurance fund did not 

receive the benefit of nearly $6.8 million, various third parties benefited at HUD’s expense, and the unclaimed 

funds sat dormant with the custodians.

OIG recommended that HUD (1) pursue the collection of $5.7 million in surplus proceeds that HUD is entitled to 

reclaim from 2017 loan terminations, (2) implement a policy to require servicers to send surplus proceeds 

notifications to HUD’s national loan-servicing contractor and establish procedures to improve HUD’s surplus 

proceeds collection efforts, and (3) redesign the partial claim program to eliminate its weaknesses and put HUD 

funds to better use. (Audit Report: 2018-KC-0004) 

HUD OIG audited HUD’s tracking of partial claim notes to determine whether HUD had adequate controls to 

ensure that partial claim notes were properly tracked for future collection.

HUD did not have adequate controls to ensure that partial claim notes were properly tracked for future collection, 

putting the collectability of $6 million in partial claim notes at risk. More specifically, HUD did not always enter 

partial claim notes and lender payments into its tracking system and ensure that note and mortgage documents 

adequately supported the partial claim notes. From January 1, 2013, to August 31, 2017, HUD’s Single Family 

Data Warehouse data showed that there were 407,984 partial claims. A review of 695 FHA loans with partial 

claims paid during the period January 1, 2013, to August 31, 2017, found 421 deficiencies in boarding (entering 

partial claims) and 394 deficiencies in tracking partial claim notes. In addition to the risk of partial claims 

collectability, HUD could be misreporting partial claim note balances. 

OIG recommended that HUD (1) enter more than $3 million in partial claims that were not in HUD’s Single Family 

Mortgage Asset Recovery Technology (SMART) system, (2) remove more than $697,000 in duplicate partial claim 

note entries from SMART, (3) obtain missing documents for partial claims totaling nearly $645,000, (4) enter more 

than $1 million in lender payments received that were not in SMART, (5) request that lenders rerecord mortgage 

documents for 18 inappropriately released loans totaling $451,000, (6) review 4 loans totaling more than $93,000 in 

partial claim notes and remove those for which HUD has not paid a partial claim, (7) develop procedures and 

controls to enter all partial claims paid and lender payments received, (8) develop controls to ensure that note and 

mortgage documents accepted are accurate and entered into SMART, and (9) develop and implement controls to 

ensure that mortgages are released only when they have been satisfied. (Audit Report: 2018-LA-0005) 

2
SEMIANNUAL REPORT TO CONGRESS

INVESTIGATION

Program Results

Administrative - civil actions 34 

Convictions - pleas - pretrial diversions 41 

Financial recoveries $25,814,204 

THIRTEEN PEOPLE SENTENCED FOR MORTGAGE FRAUD

Two loan officers, seven real estate professionals, a bank official, a contractor, an investor, and a borrower were 

sentenced in U.S. District Court to serve a cumulative 243 months incarceration and pay a cumulative $4.49 million

in restitution, of which at least $625,220 was returned to FHA. The conspirators were sentenced in connection with 

earlier guilty pleas to conspiracy, wire fraud, and tax fraud. Over a period of 2 years, the conspirators agreed to 

fraudulently obtain mortgage loans for properties located in northern New Jersey. After recruiting “straw buyers” to 

purchase the properties, the conspirators submitted false and fraudulent loan applications and supporting documents 

so the straw buyers could qualify for the loans, including those insured by FHA, when they otherwise would not 

have qualified. Overall, the scheme involved 24 loans, including 17 FHA mortgages, and induced lenders to issue 

more than $6 million in loans, resulting in several defaults, exposing lenders and FHA to more than $2 million in 

potential losses. HUD OIG, the Federal Bureau of Investigation, the Federal Housing Finance Agency (FHFA) OIG, 

and the United States Postal Inspection Service (USPIS) conducted this investigation. (Newark, NJ) 

HOUSING COUNSELING AGENCY VICE PRESIDENT SENTENCED TO 5 YEARS IN LOAN 

MODIFICATION SCAM

A vice president of a HUD-approved housing counseling agency was sentenced in U.S. District Court to 60 months 

incarceration and ordered to pay $611,740 in restitution, $274,303 of which was due to HUD, for his earlier guilty 

plea to mail fraud. Through his work at the nonprofit, the executive defrauded many homeowners under the guise 

that he was providing them with mortgage assistance. Instead, the executive falsified paperwork, stole 

homeowners’ mortgage payments, and extracted large payments from homeowners in a falsely claimed 

unsuccessful effort to save their homes from foreclosure. As a result of this fraud, these homeowners were 

defrauded of tens of thousands of dollars, and many lost their homes. The scheme involved 14 FHA loans, leaving 

HUD exposed to a possible loss of more than $1.2 million. HUD OIG, FHFA OIG, and USPIS conducted this 

investigation. (Dallas, TX) 

FIVE CONVICTED FOR SHORT SALE FRAUD SCHEME

A loan officer, two attorneys, a nonprofit official, and a real estate agent and owner of a foreclosure rescue company 

were sentenced in U.S. District court for their role in a scheme to defraud various banks via fraudulent short sales of 

homes in cities in Massachusetts in which purported sellers remained in their homes with their debt substantially 

reduced. The five conspirators were sentenced to a total of 57 months incarceration and ordered to pay more than 

$1.6 million in restitution in relation to earlier guilty pleas to bank fraud and conspiracy to commit bank fraud. 

3
SEMIANNUAL REPORT TO CONGRESS

During a period of almost 3 years, the conspirators submitted materially false and misleading documents to many

banks in an effort to induce them to permit short sales for homeowners who were in debt on their homes. Therefore, 

the purported sellers were released from their unpaid mortgage debts, the banks of the purported buyers provided 

financing for the short sales, and the sellers stayed in their homes, with their debt substantially reduced. Eight of the 

eleven homes involved were FHA insured, and the scheme led to a loss to HUD of $2.2 million. HUD OIG and the 

Special Inspector General for the Troubled Asset Relief Program conducted this investigation. (Boston, MA) 

SIX SENTENCED FOR MORTGAGE FRAUD CONSPIRACY

Two loan officers, a loan processor, a real estate agent, and an investor were sentenced in U.S. District Court in 

connection with their earlier guilty pleas to conspiracy to commit bank fraud, aggravated identity theft, bank fraud, 

and false statements. The conspirators were sentenced to a total of 66 months incarceration and ordered to pay a 

total of $551,793 in restitution, with $257,055 due to FHA. Over a period of 7 years, the conspirators orchestrated a 

scheme to defraud FHA and other financial institutions when they caused to be submitted materially false mortgage 

loan applications and fraudulent supporting documentation by prospective home buyers to their lenders. The six

then shared in the proceeds of the fraudulent mortgage loans, residential property sales, and various fees. Fifteen of 

the involved loans were FHA insured. HUD OIG, the United States Secret Service, and the Rhode Island State 

Police conducted this investigation. (Providence, RI) 

EVALUATION

MORTAGEE REVIEW BOARD ADMINISTRATIVE ACTIONS

The Mortgagee Review Board (MRB) rules on cases against FHA-approved lenders in which there is evidence of 

serious violations relating to loan origination, servicing activity, and failure to comply with FHA operational 

guidelines. When the MRB learns that a lender may not be in compliance with FHA requirements, it may take 

administrative actions to resolve problems with lenders. It does not consider “loss to the government” in these 

actions. Administrative actions may include notices of violation, civil monetary penalties, withdrawals and 

suspensions, and settlement agreements.

The MRB regularly takes administrative actions on FHA-approved single-family lenders but does not hear many 

larger multifamily cases. For fiscal years 2014, 2015, and 2016, the MRB issued 436 administrative actions and 56 

civil monetary penalties, withdrawals of FHA approval, suspensions, probations, reprimands, administrative 

payments, and settlements. The value of the MRB decisions totaled approximately $1.96 billion. 

The MRB has taken steps to improve since OIG’s last evaluation. Specifically, it has increased the consistency of 

penalties given to lenders for similar violations, met the requirement to publish each administrative action in the 

Federal Register, and resolved a longstanding backlog of cases. OIG had two findings and made no 

recommendations. (Evaluation Report: 2017-OE-0005) 

4
SEMIANNUAL REPORT TO CONGRESS

JOINT CIVIL FRAUD 

Program Results

Key program results Questioned costs Funds put to better use

Civil actions 1 $311,699 $47,433,895 

HUD OIG worked with HUD to resolve outstanding matters related to two September 2015 agreements with Fifth 

Third Bank (FTB) in Cincinnati, OH, and its principal subsidiary, Fifth Third Bancorp, an Ohio-based bank 

holding company. HUD had failed to properly record required indemnifications in its FHA Connection system; 

therefore, it did not hold FTB accountable to the terms of the settlement agreements. 

OIG recommended that HUD require FTB to reimburse HUD nearly $312,000 for 2 loans, for which HUD incurred 

losses when it sold the properties, and 15 loans, for which FHA insurance had been terminated and HUD had paid 

loss mitigation claims to FTB. OIG also recommended that HUD record in FHA Connection the remaining 

indemnified loans, avoiding more than $47.4 million in estimated losses, and that HUD develop and implement 

controls to ensure that indemnification agreements that result from U.S. Department of Justice settlements have 

been properly recorded in FHA Connection. Finally, OIG recommended that HUD take appropriate administrative 

action against FTB for violations of the settlement agreement. (Memorandum: 2018-CF-0802) 

5
SEMIANNUAL REPORT TO CONGRESS

CHAPTER 2 – PUBLIC AND INDIAN HOUSING PROGRAMS

The U.S. Department of Housing and Urban Development (HUD) provides grants and subsidies to more than 3,300 

public housing agencies (PHA) nationwide. Many PHAs administer both public housing and Section 8 programs. 

HUD also provides assistance directly to PHAs’ resident organizations to encourage increased resident 

management entities and resident skills programs. Programs administered by PHAs are designed to enable lowincome families, the elderly, and persons with disabilities to obtain and reside in housing that is safe, decent, 

sanitary, and in good repair. Some of the highlights from this semiannual period are noted below. 

AUDIT

Strategic Initiative 2: Contribute to the reduction of erroneous payments in rental 

assistance

Key program results Questioned costs Funds put to better use

Audit 27 audits $39,093,476 $651,526 

REVIEW OF HUD’S HOUSING CHOICE VOUCHER PROGRAM

HUD’s Office of Inspector General (OIG) audited the Housing Choice Voucher Program of the Housing Authority 

of the County of Lake in Grayslake, IL, to determine whether the Authority appropriately managed its program in 

accordance with HUD’s and its own requirements.

The Authority did not appropriately manage its Family Self-Sufficiency (FSS) program. As a result, HUD and the 

Authority lacked assurance that program participants benefited from the program and made progress toward selfsufficiency and more than $445,000 in coordinator grant funds was used appropriately. In addition, participants’ 

escrow accounts were overfunded, graduation disbursements were unsupported, ineligible escrow disbursements 

were paid, and participants’ escrow accounts were underfunded. The Authority also did not always correctly 

calculate and support housing assistance payments. As a result, it overpaid nearly $17,000, underpaid nearly 

$4,000, and was unable to support nearly $19,000 in housing assistance. If the Authority does not correct its 

certification process, it could overpay nearly $352,000 in housing assistance over the next year. 

In addition, the Authority did not always ensure that program funds were used for eligible expenses and 

inappropriately charged fees to its Project-Based Voucher Program developments. It also did not properly allocate 

expenses and lacked support that rent charged to its program was reasonable. As a result, the Authority 

inappropriately used nearly $14,000 in program funds and earned nearly $9,200 in fees. In addition, nearly $4,100 

in expenses was unsupported, and nearly $43,000 was not available for its program. 

OIG recommended that HUD require the Authority to (1) support or reimburse its program for the unsupported 

escrows, coordinator grant funds, housing assistance payment calculations, and expenditures; (2) reimburse its 

programs from non-Federal funds for the ineligible escrow disbursements, housing assistance payment calculations, 

and expenses; and (3) implement adequate procedures and controls to address the findings cited. (Audit Report: 

2018-CH-1007) 

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SEMIANNUAL REPORT TO CONGRESS

REVIEW OF HUD’S FAMILY SELF-SUFFICIENCY PROGRAM

HUD OIG audited HUD’s oversight of its FSS program to determine whether HUD provided adequate oversight of 

its program.

HUD did not provide adequate oversight of its FSS program. Specifically, it did not ensure that grantees (1) always 

had action plans that complied with regulations, (2) accurately calculated monthly escrow credits, (3) always 

reported accurately in its Office of Public and Indian Housing Information Center (PIC) database, (4) were 

adequately monitored by field offices for compliance with regulations, and (5) maintained supporting 

documentation showing that participants completed contractual agreement requirements. As a result, HUD lacked 

assurance that the program operated effectively and that participants moved toward self-sufficiency once they 

graduated from the program. In addition, a PHA made an ineligible escrow payment of nearly $2,000, and program 

funds totaling $7.8 million were unsupported because the action plans for 12 PHAs were incomplete.

OIG recommended that HUD (1) direct the 12 grantees to correct their action plans to comply with program 

requirements and submit the corrected plans to HUD for review or repay HUD from non-Federal funds for any 

program funds they received that they cannot support; (2) require the Housing Authority of Brevard County, FL, to 

repay the ineligible escrow funds to HUD from non-Federal funds for the program participant who exceeded 

allowable contract terms; (3) monitor grantees’ efforts for improved accuracy and completeness of PIC program 

data; (4) develop and implement a plan to monitor grantee FSS programs, including to ensure that escrow accounts 

are calculated correctly; and (5) develop and implement policies and procedures to ensure that grantees maintain 

documentation to support program participants’ contractual agreements. (Audit Report: 2018-PH-0002) 

REVIEW OF HUD’S PUBLIC HOUSING OPERATING AND CAPITAL FUND PROGRAMS 

HUD OIG audited the Public Housing Operating and Capital Fund programs of the Columbus Metropolitan 

Housing Authority in Columbus, OH, to determine whether the Authority administered its programs in accordance 

with HUD’s requirements.

The Authority invested Federal funds in non-HUD-approved investment accounts and did not properly record the 

proceeds from the sale of a public housing property. As a result, HUD and the Authority lacked assurance that 

nearly $21 million in Federal funds was protected. Also, nearly $14 million in sales proceeds may not have been 

available for the intended purposes. In addition, the Authority could not support the source of funds for a loan to an 

affiliated entity. As a result, HUD and the Authority lacked assurance that nearly $262,000 in Federal funds was 

available for program purposes.

In addition, the Authority did not comply with HUD’s procurement requirements for one contract. It also used nonFederal funds to pay Capital Fund expenses and inappropriately used capital funds as reimbursement. As a result, 

HUD and the Authority lacked assurance that more than $263,000 in capital funds used to pay for the contract was 

reasonable and that the Authority did not incur and pay expenses before the obligation start date of its Capital Fund 

grants.

OIG recommended that HUD require the Authority to (1) procure and use HUD-approved investment accounts for 

Federal funds, (2) ensure that sales proceeds are maintained in a restricted account, (3) support the source of funds

for the loan and the reasonableness for one contract or reimburse its program from non-Federal funds, and (4) 

implement adequate procedures and controls to address the findings cited. (Audit Report: 2018-CH-1006) 

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SEMIANNUAL REPORT TO CONGRESS

HUD OIG audited the Crisfield Housing Authority in Crisfield, MD, regarding its use of public housing program 

operating and capital funds to determine whether the Authority administered its public housing program in 

accordance with applicable HUD requirements and its annual contributions contract. 

The Authority did not properly administer its public housing program according to applicable HUD requirements 

and its annual contributions contract. It did not properly administer its operating funds, comply with conflict-ofinterest requirements, and comply with Capital Fund requirements. As a result, the Authority’s use of operating 

funds totaling nearly $138,000 for security services and more than $1.4 million for unit repairs was unsupported, 

and it made ineligible payments totaling nearly $112,000 for unit repairs and repairs to its public housing vehicles 

using operating funds. In addition, regarding its use of capital funds, the Authority could not show that the prices it 

paid for products and services totaling nearly $172,000 were fair and reasonable, and payments it made totaling 

more than $236,000 for salaries and other services were ineligible. 

OIG recommended that HUD direct the Authority to (1) provide documentation to support its payments for security 

services or reimburse its Operating Fund for any costs that it cannot support, (2) reimburse its Operating Fund for 

the ineligible payments, (3) submit a retroactive request for a waiver to the conflict-of-interest requirements to 

support payments of nearly $1.5 million or reimburse the appropriate program for any amount not covered by a 

waiver, (4) provide documentation to show that purchases of products and services using capital funds were at fair 

and reasonable prices, and (5) reimburse its Capital Fund nearly $171,000. OIG also recommended that HUD 

evaluate the apparent conflict-of-interest situations identified and pursue administrative sanctions if warranted. 

(Audit Report: 2018-PH-1007) 

HUD OIG audited the Buffalo Municipal Housing Authority in Buffalo, NY, to determine whether the Authority 

administered its operating funds in accordance with applicable HUD, Federal, and Authority requirements. 

The Authority did not administer its operating funds in accordance with applicable HUD, Federal, and Authority 

requirements. Specifically, it did not properly procure goods and services with related Operating Fund 

disbursements and improperly requested, received, and used operating funds. As a result, HUD did not have 

assurance that (1) the Authority conducted procurements in a manner that provided full and open competition, (2) 

more than $1.4 million in operating funds paid under five contracts and to two vendors for purchase orders was for 

prices that were fair and reasonable, and (3) more than $464,000 in operating funds was available and used for its 

intended purpose.

OIG recommended that HUD require the Authority to (1) provide documentation to show that the operating funds 

paid under five contracts and to two vendors for purchase orders were for prices that were reasonable; (2) evaluate 

apparent conflict-of-interest situations and pursue administrative sanctions if warranted; (3) provide documentation 

to justify nearly $373,000 in unsupported Operating Fund subsidies received and nearly $9,000 in excessive 

property management fees charged; (4) reimburse its Operating Fund account from non-Federal funds nearly 

$83,000 for document management services contract payments that should have been made with non-Federal funds; 

(5) strengthen its controls to ensure compliance with HUD, Federal, and Authority requirements; and (6) provide 

training to employees involved in the procurement, funding, and expenditure processes to ensure compliance with 

HUD, Federal, and Authority requirements. (Audit Report: 2018-NY-1006) 

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SEMIANNUAL REPORT TO CONGRESS

REVIEW OF HUD’S RENTAL ASSISTANCE DEMONSTRATION PROGRAM 

HUD OIG reviewed HUD’s approval of the Moving to Work (MTW) Demonstration plan and capital funds 

drawdowns of the Lexington-Fayette Urban County Housing Authority in Lexington, KY, to determine whether 

HUD properly approved the Authority’s exemption from HUD’s third-party requirements for unit inspections in its 

MTW plan for fiscal year 2017 and capital funds drawdowns after its Rental Assistance Demonstration Program 

(RAD) conversion. 

HUD improperly approved the Authority’s exemption from HUD’s third-party requirements for unit inspections in 

its MTW plan for fiscal year 2017 and capital funds drawdowns after its RAD conversion. Specifically, HUD’s 

approval of the Authority’s exemption resulted in the Authority’s failing to comply with HUD’s third-party 

requirements for an independent entity to conduct unit inspections on the Authority-owned units. HUD improperly 

approved a drawdown after the Authority’s RAD conversion, resulting in an inappropriate use of the Public 

Housing Capital Fund program. 

OIG recommended that HUD (1) ensure that more than $1.3 million used by the Authority is supported through a 

valid and retroactive exemption from HUD’s third-party requirements, (2) revise the standard MTW agreement for 

all 39 MTW PHAs to clearly and specifically support which provision(s) waive the third-party inspection 

requirements, and (3) ensure that reviews of MTW annual plans are thorough by verifying that the MTW plan 

accurately identifies the appropriate exemptions as authorized in the MTW agreements. In addition, OIG 

recommended that HUD (1) require the Authority to reimburse its Public Housing Capital Fund program more than 

$38,000 from nonproject funds for the inappropriate use of funds for its Section 8 Project-Based Voucher Program 

units and (2) ensure that it properly coordinates any requests it has received for approving capital funds 

expenditures after the RAD conversion is complete. (Audit Memorandum: 2018-AT-0801) 

HUD OIG audited the Housing Authority of the City of Evansville, IN’s RAD conversion to determine whether the 

Authority complied with HUD’s and its own requirements for the units converted under the program. 

The Authority did not follow HUD’s and its own requirements for the units converted under RAD. Specifically, it 

(1) did not ensure that units complied with HUD’s housing quality standards before it entered into a housing 

assistance payments contract, (2) failed to obtain the services of a HUD-approved independent third party to 

perform housing quality standards inspections for units owned by entities it substantially controlled, and (3) did not 

apply the correct contract rents for the converted units. As a result, the Authority could not support the eligibility of 

more than $1 million in housing assistance payments to the entities and more than $10,000 in program funds paid to 

a contractor for housing quality standards inspection services. Further, the application of incorrect rents led to the 

underpayment of housing assistance to the entities, so these funds were not available for the administration of the 

Authority’s Project-Based Voucher Program. 

OIG recommended that HUD require the Authority to (1) support that units met HUD’s housing quality standards or 

reimburse its program for the initial inspections of converted units that did not ensure compliance with the 

standards, (2) seek retroactive approval or reimburse its program for the program funds paid to contractors for 

unsupported housing quality standards inspection services completed by contractors that were not approved by 

HUD, and (3) implement adequate procedures and controls to address the findings cited. (Audit Report: 2018-CH1003) 

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SEMIANNUAL REPORT TO CONGRESS

REVIEW OF HUD’S OVERSIGHT OF LEAD-BASED PAINT REPORTING AND REMEDIATION

HUD OIG audited HUD’s oversight of lead-based paint reporting and remediation in its public housing program 

and Housing Choice Voucher Program to determine whether HUD had adequate oversight of lead-based paint 

reporting and remediation in these programs. 

HUD lacked adequate oversight of lead-based paint reporting and remediation in its public housing program and 

Housing Choice Voucher Program. Specifically, it did not (1) ensure that PHAs appropriately reported and 

mitigated cases involving children with environmental intervention blood lead levels (EIBLL) in its public housing 

program, (2) establish policies and procedures for PHAs to report a child with an EIBLL who resided in a household 

assisted under its Housing Choice Voucher Program and ensure that identified lead hazards had been mitigated, and 

(3) ensure that PHAs completed required lead-based paint inspections. In addition, for housing built after 1977, 

HUD did not require PHAs to report and mitigate cases involving children with EIBLLs residing in public or 

assisted housing. As a result, HUD lacked assurance that PHAs properly identified and mitigated lead hazards, thus 

increasing the potential of exposing children to lead poisoning due to unsafe living conditions. 

OIG recommended that HUD (1) update its regulations to expand the inspection and abatement requirements of 24 

CFR (Code of Federal Regulations) Part 35 to housing completed after 1977 in cases in which a child with an 

elevated blood lead level is reported and (2) implement adequate procedures and controls to ensure that PHAs

comply with the lead safe requirements. (Audit Report: 2018-CH-0002) 

REVIEW OF REAL ESTATE ASSESSMENT CENTER’S INSPECTION PROCESS

HUD OIG audited HUD’s Real Estate Assessment Center’s (REAC) inspections process to determine whether 

REAC had adequate processes for and controls over the certification and monitoring of contracted inspectors and its 

public housing units’ physical inspections processes. 

REAC could improve its inspections processes and controls related to the certification and monitoring of its 

contracted inspectors and its public housing units’ physical inspections processes. Specifically, REAC did not 

always ensure that (1) contract inspectors met requirements, (2) database system controls functioned properly, and 

(3) it verified the accuracy of sampled units for PHAs. As a result, REAC did not always have assurance that it (1) 

made the most effective and efficient use of its resources when training and certifying inspectors, (2) protected its 

database system data from unauthorized access and use, and (3) had accurate unit selections.

OIG recommended that HUD (1) develop written policies and procedures to ensure that inspectors meet program 

requirements, (2) support that inspector candidates met minimum qualifications and were properly monitored, (3) 

ensure that it performs annual assessments and continuous monitoring of its database, and (4) develop processes and 

procedures to verify the accuracy of sampled units. (Audit Report: 2018-FW-0003) 

REVIEW OF OFFICE OF NATIVE AMERICAN PROGRAMS’ INDIAN HOUSING BLOCK 

GRANT PROGRAM

HUD OIG audited HUD’s Office of Native American Programs’ Indian Housing Block Grant program to determine 

whether HUD ensured the accuracy of tribal enrollment numbers submitted by registered Native American tribes or 

their tribally designated housing entities.

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SEMIANNUAL REPORT TO CONGRESS

HUD did not ensure that grantees submitted accurate tribal enrollment numbers to support their allocated portion of 

program funding for fiscal years 2015, 2016, and 2017. As a result, there was an increased overall risk that more 

than $1.9 billion in program funding awarded to 377 grantees may not have been properly allocated. Additionally, 

the increased risk could result in grantees’ receiving more or fewer program funds than they are entitled to receive 

to address the housing needs within the Native American community. 

OIG recommended that HUD (1) update the program’s information collection requirements on form HUD-4117 to 

ensure that grantees report annually, (2) revise form HUD-4117 to include certification and false claim statements to 

hold grantees responsible for the accurate reporting of tribal enrollment numbers, (3) develop and implement 

policies and procedures to assist in formally challenging grantees’ reporting of tribal enrollment numbers, and (4) 

issue guidance to grantees on procedures to ensure the accurate reporting of tribal enrollment numbers. (Audit 

Report: 2018-LA-0002) 

HUD OIG audited HUD’s Indian Housing Block Grant program to determine whether HUD ensured that grantees 

invested, obligated, and spent program funds within HUD’s required time limits. 

HUD generally ensured that grantees obligated, spent, and invested program funds within HUD’s required time 

limits in fiscal years 2015, 2016, and 2017. However, for two of six grantees reviewed, HUD did not always ensure 

that the grantees maintained the required depository agreements to invest program funds in investment securities for 

use in carrying out affordable housing activities. In addition, its Indian Housing Block Grant Recipient SelfMonitoring Guidebook included an expired requirement for investing program funds. As a result, HUD did not 

fully ensure that all grantees maintained the required depository agreements to allow them to invest program funds 

for affordable housing activities, and the expired guidance in the Guidebook put grantees at risk of not complying 

with current requirements to meet program objectives.

OIG recommended that HUD (1) obtain the required depository agreements for two grantees to ensure that they 

invest program funds in investment securities for use in carrying out affordable housing activities, (2) strengthen 

monitoring controls to ensure that current and future grantees maintain the required depository agreements before 

allowing them to invest program funds, and (3) update HUD’s Indian Housing Block Grant Recipient SelfMonitoring Guidebook to replace the expired requirements with the latest requirements to ensure that grantees 

remain compliant with requirements for investing program funds. (Audit Report: 2018-LA-0004) 

HUD OIG audited HUD’s Section 184 Indian Home Loan Guarantee program to identify and evaluate actions taken 

by HUD since the issuance of a prior audit report (2015-LA-0002), including a review of $2.6 million received for 

administrative contract expenses to carry out the Section 184 program. 

HUD continued to operate without adequate oversight of the Section 184 program. Many of the issues identified in 

the prior OIG audit report continued to impact the program 3 years later. HUD officials inappropriately closed 6 of 

the 10 recommendations from the prior OIG audit report. The corrective actions for the six agreed-upon 

management decisions were not fully implemented or completed. One recommendation from the prior audit report 

remained open 3 years after the audit report was issued and was past due by 6 months, and the actions by HUD did 

not sufficiently address the recommendations. OIG also determined that HUD was not able to fully account for 

administrative contract expenses; had a nearly $2.3 million unobligated administrative contract expense fund 

balance; and would primarily use these funds, in addition to the annual appropriation of up to $750,000, for two 

contracts that cost nearly $111,000 per year. 

Based on the cited deficiencies, OIG will reopen the six improperly closed recommendations from the prior audit 

report until corrective action is fully developed and implemented. OIG will also reopen recommendation 1C, which 

was closed and moved to recommendation 1A, to ensure that it is properly tracked and addressed. In addition, OIG 

recommended that HUD (1) develop and implement internal policies and procedures to ensure that approved 

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SEMIANNUAL REPORT TO CONGRESS

underwriters are accurately maintained and kept current in the origination systems for the indemnification process to 

ensure that corrective actions have been adequately developed and fully implemented and to track and make 

administrative contract expense fund expenditures readily available for review; (2) support line item expenditures 

for the administrative contract expense fund for fiscal years 2015 to 2018; (3) develop and implement a 

comprehensive plan to use unobligated administrative contract expense funds; and (4) consider adding HUD staff, 

including a full-time director, to provide additional leadership and management oversight. (Audit Memorandum: 

2018-LA-0801) 

INVESTIGATION

Program Results

Administrative - civil actions 106 

Convictions - pleas - pretrial diversions 34 

Financial recoveries $3,151,734 

HOUSING AUTHORITY EXECUTIVE DIRECTOR SENTENCED TO 5 YEARS

A former executive director of a PHA was sentenced in a New Jersey Superior Court in relation to his earlier guilty 

plea to theft by unlawful taking. The executive director was sentenced to 60 months incarceration and ordered to 

pay $35,000 in restitution to the PHA. In addition, he agreed to give up his government-funded pension and the 

possibility of future public employment in the State of New Jersey. Over a period of 3 years, he misappropriated 

approximately $90,000 by, among other things, diverting PHA grant funds that were supposed to be used for 

training to a corporation he created and by inappropriately giving himself a salary increase. HUD OIG and the 

Monmouth County Prosecutor’s Office conducted this investigation. (Newark, NJ) 

TWO SENTENCED FOR BID-RIGGING SCHEME

A cook and a former executive director of a PHA, who was also the owner-president of a construction company, 

were sentenced in U.S. District Court to a total of 55 months incarceration. The two were sentenced in relation to 

their earlier guilty pleas to wire fraud and conspiracy to commit wire fraud. In addition, the cook, a legal permanent 

resident, faces deportation from the United States after his sentence has been completed. The executive directorowner and the cook falsified forms to show that the cook was a contractor, and they created and submitted fictitious 

bids to several local PHAs. As a result of their actions, the executive director-owner and the cook received several

contracts from local PHAs. HUD OIG and the Federal Bureau of Investigation conducted the investigation. 

(McAllen, TX) 

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SEMIANNUAL REPORT TO CONGRESS

EVALUATION

HUD’S OVERSIGHT OF ALEXANDER COUNTY HOUSING AUTHORITY

HUD had been aware of negative conditions at Alexander County Housing Authority since at least 2010. HUD 

identified issues with the Authority’s governance, including the misuse of funds, conflicts of interest, and a failure 

to comply with HUD policies and Federal civil rights laws. Further, about 200 children and their families lived in 

units with peeling paint; graffiti; pest infestations; and other health and safety hazards, such as inoperable 

appliances and obstructed accessibility routes.

Despite HUD’s attempts to bring the Authority into compliance, its efforts did not resolve the negative conditions at 

the Authority. Residents continued to live in deplorable conditions as the Authority declined, and Authority

officials were generally uncooperative in addressing the negative conditions HUD identified. Since 2010, the 

Office of Public and Indian Housing (PIH) had used several oversight tools to identify issues at the Authority, but 

major enforcement action against it occurred only after HUD assembled a cross-programmatic team. HUD 

hesitated to take possession of the Authority in part because PIH officials believed that they had to allow it an 

opportunity to improve instead of declaring it in substantial default. Additionally, HUD guidance and expertise on 

receiverships were limited.

OIG recommended that PIH (1) create agreements and strategies with other program offices that describe when 

cross-programmatic reviews and enforcement actions against PHAs are required, (2) train PIH officials on the 

authority and processes for declaring PHAs in substantial default and for taking PHAs into HUD possession, (3) 

update and strengthen the training program for HUD receivers of PHAs, and (4) update procedures for receiverships 

to include specific guidance on when initiating a receivership may be appropriate. HUD agreed with OIG’s

recommendations and provided approved management decisions for each. (Evaluation Report: 2017-OE-0014) 

HUD IT SYSTEM MANAGEMENT AND OVERSIGHT OF THE SECTION 184 PROGRAM

The Appropriations Committee requested that HUD OIG assess the information technology (IT) systems supporting 

the Office of Native American Programs’ Indian Home Loan Guarantee Program (Section 184 program) following 

concerns that HUD had not used provided resources to address shortcomings in internal controls and deploy a 

reliable IT system. This evaluation was completed, along with an audit that OIG conducted, to identify and evaluate 

actions taken by HUD since it last audited the Section 184 program in 2015 (2015-LA-0002). OIG determined that 

despite investing $4 million on a new IT system, called the Loan Origination System (LOS), the system does not 

satisfy all management and oversight objectives.

LOS has significant limitations, requiring lenders and program officials to continue to use a HUD legacy IT system 

and manual processes for maintaining files, servicing loans, and managing claims. Only 1 of 38 lenders was able to 

access and use LOS due to HUD’s inability to agree upon and resolve a system user access issue. Further, LOS had 

no capability to conduct loan servicing and claims, which are still conducted using an Excel spreadsheet. Finally, 

LOS lacked critical management reporting by providing program officials with only about 25 percent of the reports 

needed to ensure proper oversight of the program. 

LOS cost HUD $3 million in the base year of 2016 and costs $903,000 annually for operations and maintenance. 

To address the critical issues with IT system support of the Section 184 program, OIG made five recommendations 

to HUD. HUD concurred with the recommendations, with a suspense of November 26, 2018, to provide OIG with 

management decisions. (Evaluation Report: 2018-OE-0004) 

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SEMIANNUAL REPORT TO CONGRESS

CHAPTER 3 – MULTIFAMILY HOUSING AND HEALTHCARE 

PROGRAMS 

In addition to multifamily housing developments with U.S. Department of Housing and Urban Development (HUD)-

held or HUD-insured mortgages and the Office of Healthcare Programs, HUD subsidizes rents for low-income 

households, finances the construction or rehabilitation of rental housing, and provides support services for the 

elderly and disabled. Some of the highlights from this semiannual period are shown below. 

AUDIT

Strategic Initiative 2: Contribute to the reduction of erroneous payments in rental 

assistance

Key program results Questioned costs Funds put to better use

Audit 11 audits $24,952,082 $86,018,357 

REVIEW OF OFFICE OF HEALTHCARE PROGRAMS 

HUD’s Office of Inspector General (OIG) audited HUD’s monitoring of the financial performance of Section 232 

nursing homes to determine whether HUD had sufficient financial information and used this information to 

adequately assess and monitor the financial status of the nursing homes. 

HUD did not always have and use sufficient financial information to adequately assess and monitor nursing homes. 

Specifically, it (1) allowed four nursing homes with defaulted Federal Housing Administration (FHA)-insured 

mortgages to remain in its portfolio for up to 61⁄2 years; (2) made a partial payment to help one nursing home return 

to solvency, and it went bankrupt 14 months later; (3) insured a nursing home that did not operate as a single-asset 

entity and a nursing home that did not submit a marketing plan; (4) did not enforce its regulatory agreements at six 

nursing homes; and (5) did not properly classify nine nursing homes as troubled. In addition, HUD did not require 

owners, operators, and lenders to routinely submit financial data that were sufficient, accurate, complete, and 

timely. As a result, HUD could lose more than $32.1 million for the defaulted mortgages and owed more than $10 

million in carrying costs. It did not act on ineligible expenses of more than $7.8 million, unsupported expenses of 

more than $8.9 million, and accrued expenses of more than $44.4 million. Additionally, nine nursing homes, with 

more than $82.4 million in HUD-insured mortgages, were at risk of default.

OIG recommended that HUD (1) develop, implement, and enforce action plans with defined completion dates to 

address each nursing home’s challenges; (2) require support for the unsupported expenses and documentation for 

the validity of the accounts payable; (3) require repayment of the ineligible expenses; and (4) follow up on 

inaccurate, incomplete, conflicting, and late financial data. (Audit Report: 2018-BO-0001) 

HUD OIG audited the FHA-insured nursing home, Middlesex Health Care Center, in Middletown, CT, to 

determine whether the project was operated according to its regulatory agreement and HUD requirements.

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SEMIANNUAL REPORT TO CONGRESS

Although the owner, Athena Middlesex, LLC, generally complied with the regulatory requirements tested, it did not 

operate according to its regulatory agreement and HUD requirements when it transferred or distributed funds from 

the project to affiliated healthcare facilities while the project was not in a surplus-cash position. The owner’s 

regulatory agreement states that “Owners shall not without the prior written approval of the Secretary... assign, 

transfer, dispose of, or encumber any personal property of the project, including rents, or pay out any funds except 

from surplus cash, except for reasonable operating expenses and necessary repairs,” and “...make or receive and 

retain, any distribution of assets or any income of any kind of the project except surplus cash....” As a result of the 

violations, more than $1.1 million in project transfers or distributions made did not comply with the regulatory 

agreement and were not available to the project for necessary and reasonable expenses.

OIG recommended that HUD require the owner to (1) repay the project for the ineligible distributions made to 

affiliated healthcare facilities and (2) implement controls to ensure that project distributions are made from surplus

cash and comply with the regulatory agreement and HUD requirements. (Audit Report: 2018-BO-1004) 

REVIEW OF MULTIFAMILY PROPERTIES

HUD OIG audited Rainbow Terrace Apartments in Cleveland, OH, to determine whether the project’s owner and 

management agent operated the project in accordance with the regulatory agreement and HUD’s requirements.

The project’s owner and management agent did not always operate the project in accordance with the regulatory 

agreement and HUD’s requirements. Specifically, the project’s owner and management agent did not always 

provide sufficient documentation to support that project funds were used for reasonable operating expenses or 

necessary repairs of the project. In addition, project funds were not used for reasonable expenses or necessary 

repairs of the project, excess management fees and unsupported bookkeeping fees were charged to the project, and 

tenants’ security deposits were not maintained in the project’s security deposit bank account. As a result, HUD and 

the owner lacked assurance that more than $2.3 million in project funds was used for reasonable operating expenses 

or necessary repairs of the project. In addition, more than $141,000 in project funds was not used appropriately. 

OIG recommended that HUD require the owner to (1) support the reasonableness of or reimburse the project from 

nonproject funds for disbursements from the project’s operating account without sufficient documentation, (2) 

reimburse the project from nonproject funds for unreasonable operating expenses or unnecessary repairs of the 

project, (3) use the project’s security deposit bank account to deposit and disburse security deposits, and (4) 

implement adequate procedures and controls to address the findings cited. (Audit Report: 2018-CH-1009) 

HUD OIG audited Luther Towers II in Wilmington, DE, to determine whether the owner managed the project in 

accordance with its regulatory agreement and HUD requirements.

The owner of Luther Towers II did not manage the project in accordance with its regulatory agreement and HUD 

requirements. Specifically, the owner (1) could not show that it always used project funds for costs that were 

reasonable and necessary for the operation of the project because it commingled HUD funds totaling more than $1.7 

million with its own funds and those of its other activities, (2) pledged up to $100,000 in project funds as security 

for its line of credit, (3) used project funds totaling more than $407,000 to pay its line of credit liability, (4) 

managed the project without a HUD-approved management certification and management entity profile, and (5) did 

not ensure that all tenant security deposit funds were deposited into the project’s security deposit bank account. As 

a result, disbursements totaling more than $2.1 million were unsupported, and up to $100,000 in project funds could 

be put to better use. 

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SEMIANNUAL REPORT TO CONGRESS

OIG recommended that HUD require the owner to (1) provide documentation to show that disbursements were 

reasonable and necessary expenses for the operation of the project or repay the project from nonproject funds for 

any amount it cannot support, (2) segregate project bank accounts from the owner’s bank accounts, (3) remove 

project bank accounts as security for its line of credit, (4) submit a management certification and other required 

documentation to HUD for review and approval, and (5) develop and implement policies and procedures to ensure 

that project funds are used in accordance with its regulatory agreement and HUD requirements. (Audit Report: 

2018-PH-1006) 

REVIEW OF HUD’S MULTIFAMILY SECTION 8 PROGRAM 

HUD OIG audited the multifamily Section 8 Project-Based Rental Assistance program at the Eastwood Terrace 

Apartments in Nacogdoches, TX, to determine whether the owner administered its program in accordance with 

HUD regulations and guidance; specifically, whether the owner ensured that tenants were eligible for the program 

and housing assistance subsidies were correct.

The owner did not administer its program in accordance with HUD regulations and guidance. It did not ensure that 

tenants were eligible for the program and housing assistance subsidies were correct. Specifically, the owner (1) 

billed HUD for at least 81 tenants without the required documentation for recertifications and did not ensure that it 

could support the eligibility of its tenants, as certified on its reimbursement requests to HUD; (2) housed tenants in 

units larger than their family size should have allowed; and (3) failed to ensure that required annual inspections 

were conducted. As a result, HUD paid the owner more than $1.8 million for unsupported tenant subsidies and 

units that it could not assure HUD were decent, safe, and sanitary.

OIG recommended that HUD require the Eastwood Terrace owner to (1) support or repay HUD for tenants whose 

eligibility the owner could not support, (2) properly house tenants in the correct unit size, (3) perform annual 

inspections as required, and (4) ensure that its recently implemented quality control program is working as designed 

and in accordance with HUD requirements. (Audit Report: 2018-FW-1005) 

INVESTIGATION

Program Results

Administrative - civil actions 6 

Convictions - pleas - pretrial diversions 4 

Financial recoveries $344,085 

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SEMIANNUAL REPORT TO CONGRESS

CHAPTER 4 – COMMUNITY PLANNING AND 

DEVELOPMENT PROGRAMS 

The Office of Community Planning and Development (CPD) seeks to develop viable communities by promoting 

integrated approaches that provide decent housing, suitable living environments, and expanded economic 

opportunities for low- and moderate-income persons. The primary means toward this end is the development of 

partnerships among all levels of government and the private sector. Some of the highlights from this semiannual 

period are shown below. 

AUDIT

Strategic Initiative 3: Contribute to the strengthening of communities

Key program results Questioned costs Funds put to better use

Audit 23 audits5 $18,758,636 $930,403,309 

During this semiannual period, the U.S. Department of Housing and Urban Development, Office of Inspector 

General (HUD OIG), audited the community planning and development program, Community Development Block 

Grant (CDBG) program, HOME Investment Partnerships program, and Community Compass Technical Assistance 

and Capacity Building program. 

COMMUNITY PLANNING AND DEVELOPMENT PROGRAM

HUD OIG audited HUD CPD’s risk assessment and monitoring of its grantees to determine whether CPD 

appropriately assessed grantees’ risk to the integrity of community planning and development programs and 

adequately monitored its grantees. 

CPD’s risk assessment and monitoring did not provide effective oversight of programs and grantees. Risk analyses, 

annual work plans, and monitoring of grantees did not conform to requirements. As a result, CPD did not have 

assurance that it correctly assessed grantee risk, prepared accurate work plans, or monitored grantees in compliance 

with requirements. Accordingly, CPD could not have confidence regarding accuracy, validity, or conclusions 

drawn. 

OIG recommended that HUD require CPD headquarters’ substantive involvement and responsibility for risk 

assessment and monitoring, to include (1) overseeing risk assessment, including ensuring that all grantees are 

assessed; (2) reviewing annual work plans; (3) evaluating monitoring performance and findings; (4) implementing 

functional supervisory controls; (5) enforcing field office compliance with requirements; and (6) establishing a field 

office-based multiyear monitoring tracking system, allowing the assessment of monitoring findings, resolution, and 

coverage. (Audit Report: 2018-FW-0001) 

 5 The total CPD audits, questioned costs, and funds put to better use amounts include any disaster recovery audits included 

in the community planning and development area (six audits). The writeups for these audits may be shown separately in 

chapter 5 of this report.

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SEMIANNUAL REPORT TO CONGRESS

COMMUNITY DEVELOPMENT BLOCK GRANT

HUD OIG audited the State of Connecticut’s Small Cities CDBG program to determine whether the State ensured 

that its grantees properly administered their housing rehabilitation programs. OIG also assessed various complaints 

made against the program to determine whether they had merit and if so, whether they were addressed and resolved.

The State did not ensure that its grantees properly administered their housing rehabilitation programs. For example, 

the State did not ensure that its grantees always (1) conducted and documented environmental reviews, (2) properly 

procured contracts, (3) properly determined homeowner and project eligibility, and (4) correctly charged program 

costs. Additionally, the complaints reviewed generally had merit, but they were not all addressed and resolved. As 

a result, OIG identified more than $2.9 million in questioned costs. Additionally, the State did not meet its program 

goal to assist the maximum number of homeowners, and HUD did not have assurance that all costs were eligible, 

supported, reasonable, and necessary and that valid complaints were reasonably addressed and resolved.

OIG recommended that HUD require State officials to (1) repay more than $1.1 million in ineligible program costs, 

(2) repay nearly $435,000 in unreasonable program costs, (3) adequately support or repay more than $1.3 million in 

unsupported program costs, (4) strengthen controls over program oversight to ensure that grantees comply with their 

agreements and program requirements, and (5) develop policies and procedures to address program complaints in a 

timely manner. (Audit Report: 2018-BO-1005) 

HUD OIG audited the City of Erie, PA’s CDBG program to determine whether the City properly used its CDBG 

funds for its code enforcement and community policing activities in accordance with HUD and Federal 

requirements. 

The City did not always properly use its CDBG funds for code enforcement and community policing activities 

according to HUD and Federal requirements. It conducted code enforcement inspections in areas where most 

residents were low and moderate income, and CDBG funds are intended to benefit these residents. However, the 

City did not maintain documentation to show that it complied with program eligibility requirements and to support 

expenses. As a result, the City’s use of nearly $1.7 million in program funds was unsupported. 

OIG recommended that HUD require the City to (1) provide documentation to support nearly $672,000 in code 

enforcement costs or repay the program from non-Federal funds for any amount it cannot support; (2) provide 

documentation to support $1 million in community policing costs or repay the program from non-Federal funds for 

any amount it cannot support; and (3) develop and implement policies and procedures to ensure that its code 

enforcement and community policing activities costs comply with applicable program requirements, thereby 

ensuring that program funds totaling nearly $598,000 can be put to better use. (Audit Report: 2018-PH-1008) 

HUD OIG audited the City of Modesto, CA’s CDBG program to determine whether the City used CDBG funds in 

accordance with HUD requirements, focusing on its rehabilitation activities. 

The City did not use CDBG funds in accordance with HUD requirements. Specifically, it (1) did not follow HUD’s 

and its own requirements for its rental and homeowner rehabilitation projects, (2) drew CDBG funds in advance, (3) 

provided false information to HUD, (4) spent HUD funds inefficiently, (5) misclassified some delivery costs, and 

(6) did not include all recipients in its monitoring plan. As a result, the City was unable to support that its use of 

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SEMIANNUAL REPORT TO CONGRESS

more than $1.6 million in CDBG funds met HUD requirements, and it improperly used nearly $258,000 for 

duplicate costs. 

OIG recommended that HUD require the City to (1) support that its use of CDBG funds met program requirements 

or repay the program from non-Federal funds, (2) repay the program for the duplicate costs from non-Federal funds, 

(3) implement policies and procedures to ensure that CDBG funds are used in accordance with program 

requirements, (4) provide training to its staff to ensure sufficient knowledge of CDBG program requirements, and 

(5) implement policies and procedures to ensure that it includes all of its CDBG recipients in its monitoring plan 

and selects objective samples. (Audit Report: 2018-LA-1005) 

HOME INVESTMENT PARTNERSHIPS

HUD OIG audited the City of Providence, RI’s HOME Investment Partnerships program to determine whether the 

City properly committed and disbursed HOME funds in accordance with Federal and HUD rules and regulations. 

City officials did not properly administer their HOME program. Specifically, they did not properly commit and 

disburse HOME funds in accordance with Federal and HUD rules and regulations. They did not ensure that they (1) 

met the commitment deadline for their HOME funds for program year 2013, (2) properly documented and 

supported their underwriting of activities, (3) complied with environmental review requirements, (4) disbursed 

funds in accordance with requirements, (5) properly tracked and obtained program income, and (6) supported their 

administrative fees. As a result, they incurred more than $1.4 million in ineligible costs, more than $1.8 million in 

unsupported costs, and more than $1.2 million in unspent HOME funds that may need to be reallocated to eligible 

activities. 

OIG recommended that HUD require City officials to (1) repay the ineligible costs when commitment and 

environmental requirements were not properly completed and funds were not properly disbursed; (2) support that 

the unsupported costs were reasonable, supported, and allowable or repay the funds; (3) support that the unspent 

funds were reasonable and allowable or reallocate the funds; (4) cancel stalled activities in HUD’s Integrated 

Disbursement and Information System; and (5) develop and implement adequate underwriting and environmental 

policies and procedures and tools to improve record-keeping practices. (Audit Report: 2018-BO-1003) 

HUD OIG audited the City of Dallas, TX’s HOME program; specifically, its reconstruction program, to determine 

whether the City followed HOME regulations and its own policies and procedures when it reconstructed 13 homes 

and correctly administered its matching contributions.

The City did not follow HOME regulations and its own policies and procedures in its reconstruction program or its 

administration of its match contributions. It did not (1) follow environmental regulations, (2) properly assess 

contractors or ensure that they followed contract terms, (3) check the eligibility status of subcontractors, (4) sign 

loan agreements, or (5) support and calculate participant income correctly. As a result, the City rushed projects 

without ensuring that it followed HOME regulations or its own policies and misspent more than $1.3 million to 

reconstruct 13 single-family homes. Also, the City did not meet all HOME requirements for its match 

contributions. As a result, it claimed more than $2.9 million in ineligible match contributions. 

OIG recommended that HUD require the City to (1) repay HUD for the misspent funds, (2) perform environmental 

reviews in accordance with HUD regulations, (3) hire a qualified entity to determine the structural integrity of the 

reconstructed houses, (4) provide a plan to cover the costs of any potential warranty work needed on the properties, 

19
SEMIANNUAL REPORT TO CONGRESS

(5) develop procedures to include the review of subcontractors, (6) repay the ineligible match contributions, and (7) 

ensure that its employees understand and comply with HOME income requirements. (Audit Report: 2018-FW1004) 

COMMUNITY COMPASS TECHNICAL ASSISTANCE AND CAPACITY BUILDING

HUD OIG audited HUD’s oversight of its Community Compass Technical Assistance and Capacity Building 

program to determine whether HUD had adequate oversight of its program to ensure that it complied with 

applicable requirements.

HUD did not have adequate oversight of its Community Compass program to ensure that it complied with 

applicable requirements. Specifically, HUD did not ensure that expenditures always met program requirements, 

services were properly procured, and provider subcontractors were approved with consistent wage rates. As a 

result, HUD lacked assurance that providers administered program funds in accordance with requirements, as it 

incurred ineligible costs of more than $13,000 and unsupported costs of more than $845,000 

OIG recommended that HUD require the providers reviewed to (1) reimburse from non-Federal funds the ineligible 

costs paid to providers for overcharged labor or travel costs and (2) support or repay the unsupported wage and 

travel costs from non-Federal funds. In addition, OIG recommended that HUD develop and implement policies and 

procedures for the Community Compass program to ensure that providers comply with all applicable requirements, 

thereby putting more than $20.5 million to better use. (Audit Report: 2018-PH-0003) 

INVESTIGATION

Program Results

Administrative - civil actions 15 

Convictions - pleas - pretrial diversions 5 

Financial recoveries $1,109,534 

SUBGRANTEE SETTLES WITH GOVERNMENT FOR IMPROPER CHARGES

A subgrantee entered into a civil settlement agreement with the United States and the State of Connecticut to pay 

$362,000, of which more than $58,914 will go to HUD. The settlement was made to resolve allegations that the 

community action agency violated the Federal and State False Claims Acts. Over a period of 4 years, an agency 

official directed that certain employees work on a State-funded grant program while charging their time to HUD’s 

Supportive Housing Program and other government programs. HUD OIG, the U.S. Department of Health and 

Human Services OIG, and the U.S. Department Of Energy OIG conducted this investigation. (Hartford, CT) 

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SEMIANNUAL REPORT TO CONGRESS

CHAPTER 5 – DISASTER RECOVERY PROGRAMS 

In response to disasters, Congress may appropriate additional funding as Disaster Recovery grants to rebuild the 

affected areas and provide crucial seed money to start the recovery process. Since fiscal year 1993, Congress has 

appropriated $85.6 billion to the U.S. Department of Housing and Urban Development (HUD), from which HUD 

provides flexible grants to help cities, counties, and States recover from presidentially declared disasters. Of the 

$83.8 billion in active disaster grants, the funds have been allocated nationwide, with nearly $55.8 billion obligated 

and $39.5 billion disbursed as of September 30, 2018. 

Disaster Funds allocated Funds disbursed Percentage of 

funds disbursed

Fiscal year (FY) funds 

allocated

Harvey, Irma & 

Maria $35.4 billion $1.3 million 2 FY 2017 & FY 2018 

Louisiana, Texas & 

West Virginia $2.1 billion $523.2 million 24 FY 2016 

Hurricane Sandy $15.1 billion $10 billion 66 FY 2013 

Hurricanes Ike,

Gustav & Dolly $6.1 billion $5.5 billion 90 FY 2008 

Hurricanes Katrina,

Rita & Wilma $19.7 billion $19.3 billion 98 FY 2006 & FY 2008 

9-11 $3.5 billion $3.2 billion 92 FY 2001-2002 

Keeping up with communities in the recovery process can be a challenging position for HUD. HUD’s Office of 

Inspector General (OIG) continues to take steps to ensure that the Department remains diligent in assisting 

communities with their recovery efforts.

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SEMIANNUAL REPORT TO CONGRESS

AUDIT

Strategic Initiative 3: Contribute to the strengthening of communities

Key program results Questioned costs Funds put to better use

Audit 6 audits6 $1,113,048 $544 

REVIEW OF COMMUNITY DEVELOMPENT BLOCK GRANT DISASTER RECOVERY 

PROGRAM

HUD OIG audited the City of New York, NY’s Infrastructure Rehabilitation and Reconstruction of Public Facilities 

Program to determine whether the City used Community Development Block Grant Disaster Recovery (CDBG-DR) 

funds under its program for eligible and supported costs. 

The City did not always use CDBG-DR funds under its program for eligible and supported costs. Specifically, for 

one of two projects reviewed, the City did not (1) have sufficient documentation to show that the use of salary 

multipliers for overhead and profit, resulting in more than $594,000 in additional costs, was supported and eligible; 

(2) maintain adequate documentation to show compliance with requirements of the Davis-Bacon Act and related 

acts; and (3) identify billing and payroll errors made by subcontractors, including nearly $1,200 in overpaid wages 

and nearly $2,700 in wages that may have been overpaid. As a result, HUD did not have assurance that the City 

used nearly $598,000 in CDBG-DR funds as intended for matching requirements for other federally funded 

infrastructure projects, and HUD could not be assured that funds were disbursed for only eligible and supported 

costs that complied with applicable Federal requirements.

OIG recommended that HUD require the City to (1) provide documentation to show that the nearly $597,000 

disbursed due to the use of multipliers and a higher than required overtime rate was for eligible, reasonable, 

necessary, and supported costs or reimburse its program from non-Federal funds; (2) reimburse its program nearly 

$1,200 from non-Federal funds for overpaid wages; (3) provide documentation showing that it has strengthened its 

invoice review process to ensure that costs are eligible and supported before disbursing CDBG-DR funds; and (4) 

provide documentation showing compliance with Davis-Bacon requirements and that restitution has been made to 

affected workers for any underpayments identified. (Audit Report: 2018-NY-1007) 

HUD OIG audited HUD’s CDBG-DR program to determine whether HUD should codify the CDBG-DR funding as 

a program in the Code of Federal Regulations. 

Although HUD had managed billions in CDBG-DR funds since 2002, it had not codified the program because it 

believed it did not have the authority under the Robert T. Stafford Disaster Relief and Emergency Assistance Act 

and had not determined whether it had the authority under the Housing and Community Development Act of 1974 

as amended. It also believed a Presidential Executive order presented a barrier to codification, as it required HUD 

to identify two rules to eliminate before creating a new codified rule. 

OIG believes HUD has the authority under the Housing Act of 1974 and it should codify the program. HUD’s use 

of multiple Federal Register notices to operate the CDBG-DR program presented challenges to the grantees. For 

 6 Disaster-related audits consist of community planning and development audits. The questioned costs and funds put to 

better use amounts relate only to disaster-related costs.

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SEMIANNUAL REPORT TO CONGRESS

example, 59 grantees with 112 active CDBG-DR grants, which totaled more than $47.4 billion as of September 

2017, had to follow requirements contained in 61 different Federal Register notices to manage the program. 

Further, codifying the CDBG-DR program would (1) ensure that a permanent framework is in place for future 

disasters, (2) reduce the volume of Federal Register notices, (3) standardize the rules for all grantees, and (4) ensure 

that grants are closed in a timely manner.

OIG recommended that HUD work with its Office of General Counsel to codify the CDBG-DR program. (Audit 

Report: 2018-FW-0002) 

REVIEW OF STATES’ CAPACITY TO ADMINISTER DISASTER GRANTS

HUD OIG audited the Texas General Land Office in Austin, TX, to determine whether the State of Texas had the 

capacity to follow Federal procurement regulations when procuring contracts with CDBG-DR funds and spend its 

CDBG-DR funds in accordance with applicable requirements. 

The Texas General Land Office should strengthen its capacity to follow Federal procurement regulations when 

procuring contracts with CDBG-DR funds and spend those funds in accordance with applicable requirements. 

Specifically, it should (1) review and update its procurement and expenditure policies and procedures to ensure that 

they are implemented and working as designed, (2) increase staffing to ensure that appropriate resources are 

available to administer the funds, and (3) improve its processes for preventing duplication of benefits. It should also 

ensure that false statement and false claim warnings are included in all of its contract-related forms. Further, the 

agency could benefit from a standard set of basic guidelines, established by HUD, to assist it in providing needed 

relief to affected communities. Strengthening its capacity to administer disaster funds would help ensure that it 

properly spends more than $5 billion in CDBG-DR funding in accordance with applicable requirements. 

OIG recommended that HUD require the Texas General Land Office to (1) ensure that its procurement and 

expenditure policies and procedures are implemented and working as designed, (2) fill vacancies to ensure that 

staffing levels remain adequate and its staff is properly trained to administer disaster funds, (3) take steps to mitigate 

potential duplication of benefit risks, and (4) ensure that false statement and false claim warnings are included in all 

of its contract-related forms. (Audit Report: 2018-FW-1003) 

HUD OIG reviewed the State of Florida’s Department of Economic Opportunity’s CDBG-DR program to 

determine whether the Department had the capacity to administer its CDBG-DR grants in accordance with 

applicable regulations and requirements. 

The Department should strengthen its capacity to administer its CDBG-DR grants in accordance with applicable 

regulations and requirements. It could strengthen its capacity by (1) finalizing policies and procedures for its 

disaster program, (2) ensuring that subrecipient agreements are not executed before its policies and procedures are 

finalized, (3) improving its financial controls to address weaknesses, (4) improving its process for preventing 

duplication of benefits, and (5) continuing to increase its staffing. Strengthening its capacity to administer disaster 

grants would help ensure that the Department properly spends more than $1.5 billion in CDBG-DR funding in 

accordance with applicable requirements. 

OIG recommended that HUD instruct the Department to (1) obtain HUD approval of its disaster policies and 

procedures before executing its subrecipient agreements and ensure that its finalized policies and procedures include 

financial management, procurement, duplication of benefits, and monitoring; (2) establish and implement adequate 

23
SEMIANNUAL REPORT TO CONGRESS

financial controls to ensure that its disaster funds are properly classified and allocated to the correct grant; (3) 

continue establishing data-sharing agreements to prevent the risk of duplicated benefits; and (4) continue to fill its 

staffing vacancies and assess resources as it prepares for additional disaster funds. (Audit Report: 2018-AT-1010) 

INVESTIGATION

Program Results

Administrative - civil actions 2 

Convictions - pleas - pretrial diversions 13 

Financial recoveries $2,362,027 

*Figures included in public and Indian

housing and community planning and

development statistics

24
SEMIANNUAL REPORT TO CONGRESS

CHAPTER 6 – OTHER SIGNIFICANT AUDITS AND 

EVALUATIONS 

AUDIT

Strategic Initiative 4: Contribute to improving HUD’s execution of and accountability for 

fiscal responsibilities as a relevant and problem-solving advisor to the Department

Key program results Questioned costs Funds put to better use

Audit 9 audits $1,098,383,641 $2,542,373 

The U.S. Department of Housing and Urban Development, Office of Inspector General’s (HUD OIG) other 

significant audits and evaluations are discussed below.

INTERIM REPORT – POTENTIAL ANTIDEFICIENCY ACT AND GENERALLY ACCEPTED 

ACCOUNTING PRINCIPLE VIOLATIONS

While auditing HUD’s Office of Community Planning and Development (CPD) to determine whether CPD 

monitored grantees and ensured that they complied with the 24-month statutory expenditure requirement in the 

Disaster Relief Appropriations Act of 2013, OIG noted issues with the recording of grants in the Line of Credit 

Control System (LOCCS) and the grantees’ recording of expenditures in the Disaster Recovery Grants Reporting 

(DRGR) system. These issues require immediate action by the Office of the Chief Financial Officer (OCFO) as 

they are potential violations of the Antideficiency Act (ADA) and do not appear to follow generally accepted 

accounting principles (GAAP). 

As of January 19, 2018, two of the six grantees had recorded in the DRGR system total expenses of more than $160 

million, which exceeded CPD’s obligation for a grant round. Five grantees also recorded expenses of more than 

$435 million in the DRGR system before CPD executed a grant round amendment and after a grant round expired. 

In addition, four grantees made revisions to completed and revised vouchers totaling more than $496 million in the 

DRGR system a year or more after they entered the initial vouchers. These expenses appeared to have been 

potential ADA and GAAP violations and could potentially have a negative effect on both HUD’s and the grantees’ 

financial statements. If OCFO does not require corrections in how it and CPD account for Community 

Development Block Grant Disaster Recovery (CDBG-DR) funds, these issues will continue to occur with the 

remaining $6.4 billion in 2013 CDBG-DR funding and $35.4 billion for 2017 and 2018 CDBG-DR funding. 

OIG recommended that HUD determine whether (1) summary expenditures totaling more than $160 million, which 

exceeded the grant round obligations for the two grantees, and (2) revised and completed detail transactions totaling 

more than $435 million, which occurred before and after grant round obligation and expenditure dates, were ADA 

violations. OIG also recommended that HUD determine whether the revised and completed transactions made more 

than a year after the original DRGR voucher entry were GAAP violations. OIG further recommended that HUD

enter expiration terms into LOCCS for DRGR funding and require CPD to implement additional controls to prevent 

the identified issues from occurring in 2017 and 2018 CDBG-DR funding. (Audit Memorandum: 2018-FW-0802) 

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SEMIANNUAL REPORT TO CONGRESS

AUDIT OF HUD’S UNCLAIMED PROPERTY WEBSITE 

HUD OIG audited HUD to determine whether it located and recovered funds due to it as identified on States’ 

unclaimed property websites. 

HUD did not locate and recover its funds held by State unclaimed property administrators. As a result, it lacked the 

benefit of its portion of $1.9 million collected by the U.S. Department of the Treasury and will lack the benefit of its 

portion of an additional $2.2 million in current unclaimed funds. 

OIG recommended that HUD (1) designate an unclaimed asset recovery official as required by the Treasury 

Financial Manual, (2) work with Treasury to identify and obtain reimbursement for the Federal Housing 

Administration’s and Government National Mortgage Association’s portion of the $1.9 million in HUD funds that 

Treasury collected, and (3) establish and implement policies and procedures to ensure that all of its unclaimed funds 

are claimed and the money is appropriately routed to put $2.2 million to better use. (Audit Report: 2018-KC-0002) 

AUDIT OF LEAD HAZARD CONTROL AND HEALTHY HOMES 

HUD OIG audited the Kansas City, MO, Health Department’s Lead Safe KC program to determine whether the 

Health Department (1) properly and consistently calculated income for program participants, (2) spent grant funds 

on items that qualified as lead hazards, (3) properly spent grant funds for the relocation of owner-occupants, and (4) 

properly notified owners in accordance with HUD requirements.

The Health Department (1) did not consistently and correctly calculate annual income for program participants; (2) 

sometimes replaced windows that did not qualify as lead hazards; (3) did not determine whether relocation was a 

hardship for owner-occupants; and (4) did not properly notify property owners of lead-based paint disclosure 

requirements, timely risk assessment results, clearance reports, and ongoing reporting and maintenance 

recommendations. 

OIG recommended that the Health Department (1) repay more than $19,000 spent on ineligible assistance; (2) 

complete a cost breakdown for the nearly $11,000 spent for a rental property, which included assistance to an 

ineligible unit; (3) recalculate the annual income for participants assisted with the 2014 lead hazard control grant to 

support the $1.8 million spent and repay the U.S. Treasury from non-Federal funds for any property found to be 

ineligible; and (4) provide support showing that the nearly $80,000 spent on window replacement qualified or repay 

the U.S. Treasury from non-Federal funds. (Audit Report: 2018-KC-1002) 

HUD OIG audited the City of Chicago, IL’s Department of Public Health’s Lead Hazard Reduction Demonstration 

Grant Program to determine whether the Department administered the program in accordance with HUD’s and its 

own requirements. 

The Department did not administer the program in accordance with HUD’s and its own requirements. Specifically, 

it did not (1) properly procure its subcontractor, (2) make appropriate reimbursements to the subcontractor for 

program activities, (3) ensure that income was properly calculated for households residing in assisted units, (4) 

ensure that landlords gave preference in renting assisted units to targeted families, (5) properly document its lead 

inspection results to support that program activities were necessary, (6) ensure that program funds were adequately 

protected, and (7) ensure that it accurately reported the number of assisted units to HUD. As a result, the 

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SEMIANNUAL REPORT TO CONGRESS

Department lacked support that more than $512,000 in program funds was used in accordance with HUD’s 

requirements and did not have more than $122,000 in program funds available for eligible activities. In addition, 

HUD and the Department lacked assurance that more than $386,000 in program funds was protected and available 

for program use.

OIG recommended that HUD require the Department to (1) support that the contract for grant administration 

services was cost reasonable or reimburse the program, (2) reimburse its programs for duplicate reimbursements and 

for four units that had been sold within 3 years, (3) support the eligibility of households residing in assisted units 

and that landlords gave preference to targeted families in renting units or reimburse the program, and (4) implement 

adequate procedures and controls to address the findings cited. (Audit Report: 2018-CH-1010)

REVIEW OF HUD’S HOUSING COUNSELING PROGRAM 

HUD OIG reviewed HUD’s Housing Counseling Program to determine whether HUD adequately administered its 

program. 

HUD did not adequately administer its program in accordance with Federal regulations and its own requirements. 

Specifically, it (1) did not adequately perform its agency approval and performance review processes, (2) approved 

grant vouchers without ensuring that agencies provided sufficient supporting documentation to verify the related 

expenses, and (3) did not ensure that termination and posttermination processes were adequately performed. As a 

result, HUD did not have assurance that (1) agencies classified as approved in its system were properly qualified to 

provide services, (2) more than $1.3 million in grant funds disbursed to agencies was for eligible and supported 

costs, and (3) unqualified agencies stopped advertising and providing services as HUD-approved agencies in a 

timely manner.

OIG recommended that HUD (1) identify housing counseling agencies that were classified as reapproved without 

performance reviews being performed upon expiration of their approvals and determine whether they were properly 

qualified to provide services; (2) obtain documentation for seven housing counseling grants to show that the grant 

funds disbursed were for eligible and supported costs; (3) develop and implement updated standard operating 

procedures to ensure consistency and adequacy of the agency approval, performance review, voucher approval, and 

termination and posttermination processes; and (4) ensure that the new system being developed provides the ability 

to adequately oversee the work of its staff and track important housing counseling agency milestones, including 

HUD approval expirations and required terminations. (Audit Report: 2018-NY-0001) 

AUDIT OF HUD’S TRAVEL AND PURCHASE CARD PROGRAM

HUD OIG audited HUD’s travel and purchase card program for fiscal year 2017 to determine whether HUD travel 

cards were used for unauthorized, unsupported, or ineligible purchases. 

HUD’s travel cards were used for unauthorized, unsupported, or ineligible purchases in at least 950 instances 

totaling more than $95,000. Based on the results of a statistical sample drawn from a pool of 3,045 purchases with 

indicators of improper activity, OIG statistically projected with a 95 percent confidence level that at least 944 

government travel card purchases totaling nearly $91,000 were unauthorized or unsupported. OIG also identified 

15 purchases totaling more than $5,000 that were ineligible. Further, there could be additional unauthorized or 

27
SEMIANNUAL REPORT TO CONGRESS

ineligible purchases in the universe of more than 89,000 purchases that were not part of the targeted audit pool of 

3,045 purchases. 

OIG recommended that HUD (1) review the 17 travel cardholders with purchases that occurred without a travel 

authorization and the 6 travel cardholders with purchases that were not supported to determine whether they were 

allowable, proper, and paid in full by the cardholder, taking appropriate administrative actions as necessary; (2) 

perform an analysis of the remainder of the 3,045 potentially improper travel card transactions to determine whether 

they were allowable, proper, and paid in full by the cardholder, taking appropriate administrative actions as 

necessary; (3) refer the 15 ineligible travel card transactions to the appropriate program office for appropriate 

administrative actions; and (4) strengthen internal monitoring efforts. (Audit Report: 2018-KC-0005) 

AUDIT OF HUD’S COMPLIANCE WITH THE IMPROPER PAYMENTS ELIMINATION AND 

RECOVERY ACT OF 2010

HUD OIG audited HUD’s fiscal year 2017 compliance with the Improper Payments Elimination and Recovery Act 

of 2010 (IPERA).

Fiscal year 2017 marked the fifth consecutive year in which OIG determined that HUD did not comply with IPERA. 

OIG reviewed HUD’s compliance with the six IPERA requirements. HUD did not comply with two of the 

requirements (b and c) and complied with one. OIG could not determine compliance with the remaining three 

requirements (d, e, and f). Areas of noncompliance were related to HUD’s failure to (1) conduct risk assessments 

according to Office of Management and Budget requirements and (2) publish improper payment estimates for all 

programs and activities identified as susceptible to significant improper payments. 

OIG did not make additional audit recommendations. If implemented, OIG expects that all prior-year audit 

recommendations, which have not been closed, will continue to help HUD remediate repeat findings identified in 

this audit. (Audit Report: 2018-FO-0006)

EVALUATION

FIRE SAFETY PLANNING FOR THE WEAVER BUILDING NEEDS IMPROVEMENT 

On December 21, 2017, smoke spread in the Weaver Building, which is HUD headquarters, from a malfunctioning 

air-handling unit on the 11th floor to parts of many other floors. While a smoke detector in an air duct functioned 

properly and the fire department was notified, there was no audible alarm or public announcement to notify 

occupants to evacuate. People in one suite described the smoke as “heavy” and “thick.”

HUD and the General Services Administration believe that the fire safety system operated as designed. To sound an 

audible alarm for this incident, a person would have had to pull a manual alarm. However, no one did. Without an 

audible alarm or public notification, confusion spread about what was happening, how widespread the threat was, 

and what people should do. 

The occupant emergency plan for the Weaver Building did not accurately describe the fire safety system or how 

occupants were to report a fire or other emergencies; specifically, when to use manual pull stations. The plan did 

not comply with regulations that require employers to explain the preferred means of reporting emergencies and to 

list procedures for reporting a fire or other emergency.

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Additionally, on March 22, 2018, OIG sent a memorandum to the Assistant Secretary for Administration to inform 

her that fire drills had not been conducted at the Weaver Building for years, which posed a danger to occupants of 

the building. The Assistant Secretary responded to this memorandum by saying that a drill was being planned. On 

March 28, 2018, the fire drill took place. OIG is encouraged by HUD’s quick action, but a process is needed to 

ensure that drills occur at least every year.

To improve fire safety planning for the Weaver Building, OIG made the following recommendations to HUD: (1) 

update the occupant emergency plan so that it lists the ways occupants are to report fires or other emergencies, (2) 

periodically provide training on the occupant emergency plan once it is updated, and (3) create a process to help 

ensure that fire drills for the Weaver Building occur at least every year. HUD agreed with OIG’s recommendations 

and described planned actions to address them. (Evaluation Report: 2018-OE-0002) 

HUD 2018 PRIVACY PROGRAM EVALUATION

HUD OIG evaluated the effectiveness of the HUD privacy program to determine whether HUD was taking 

appropriate measures to protect privacy data and was in compliance with Federal privacy requirements. OIG also 

evaluated the progress, if any, HUD had made since OIG last evaluated the HUD privacy program in 2014. Overall, 

14 of 34 recommendations remain open from the 2014 evaluation. Through the course of these evaluations, OIG

determined that HUD maintains more than one billion records containing personally identifiable information (PII) 

of American citizens. It is critical that HUD establish and resource a mature privacy program to meet its legal 

requirements and protect the vast amount of sensitive data it stores and processes daily. A breach of these data 

would cause citizens undue difficulties and financial hardships and could create a lack of trust and willingness by 

external parties to share sensitive data with HUD.

HUD had improved certain aspects of its privacy program but continued to face challenges in establishing an 

adequate program for its extensive holdings of sensitive information. 

HUD had strengthened its privacy impact assessment and documentation processes, and the privacy program was 

taking a more active role in the development of HUD’s technology and business operations. However, the privacy 

strategic plan and other privacy program initiatives were on hold pending staffing of key privacy program 

management positions. In addition, HUD was not able to fully identify and inventory its extensive holdings of PII 

and had not instituted formal risk management or compliance processes to hold offices accountable for privacy 

protection. OIG made 24 recommendations in addition to the 14 remaining open recommendations made in its 2014 

privacy program report (2014-ITED-0001). HUD did not provide a written response to the report but offered verbal 

support for the report’s recommendations during the exit conference. (Evaluation Report: 2018-OE-0002) 

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CHAPTER 7 – LEGISLATION, REGULATIONS, AND OTHER 

DIRECTIVES

Reviewing and making recommendations on legislation, regulations, and policy issues is a critical part of the Office 

of Inspector General’s (OIG) responsibilities under the Inspector General Act. During this 6-month reporting 

period, OIG has committed more than 550 hours to reviewing 135 issuances. The draft directives consisted of 95 

notices, 11 mortgagee letters, and 29 other directives. OIG provided comments on 43 (or 32 percent) of the 

issuances, nonconcurred on 20 (or 15 percent), and lifted 5 nonconcurrences. Of the 29 other directives, OIG

reviewed 7 proposed rules and 2 final rules, 11 handbooks or guidebooks, 3 congressional reports, and 6 U.S. 

Department of Housing and Urban Development (HUD) legislative referral memorandum reports. On the seven 

proposed rules, OIG nonconcurred on one, provided comments on four, and had no position on two. OIG also had 

no position on the two final rules. Below is a summary of selected reviews for this 6-month period. 

NOTICES, POLICY ISSUANCES, AND FINAL RULES

OFFICE OF SINGLE FAMILY HOUSING

Appraiser Roster – On July 3, 2018, The Federal Housing Administration (FHA) published a final rule (Federal 

Register 5457–P–01), which streamlines the inspection requirements for FHA single-family mortgage insurance by 

removing the regulations for the FHA Inspector Roster. The Roster is a list of inspectors approved by FHA as 

eligible to determine whether the construction quality of a one- to four-unit property is acceptable as security for an 

FHA-insured loan. The removal of the Roster regulations is based on the recognition of the sufficiency and quality 

of inspections carried out by certified inspectors and other qualified individuals. This final rule follows publication 

of a February 6, 2013, proposed rule and takes into consideration the public comments received on the proposed 

rule. OIG provided a no position response regarding this final rule.

Loss mitigation in presidentially declared major disaster areas – On August 15, 2018, HUD issued Mortgagee 

Letter 2018-05, which was designed to provide greater alternatives to foreclosure for lenders to use with borrowers 

in designated presidentially declared major disaster areas by rearranging the FHA disaster loss mitigation waterfall 

so that borrowers may be considered earlier for disaster stand-alone partial claims. This change would provide an 

expedited permanent loss mitigation solution. Further, HUD is providing a 30-day foreclosure moratorium only for 

certain eligible FHA-insured mortgages secured by properties located in areas of Puerto Rico and the U.S. Virgin 

Islands that the U.S. Department of Homeland Security’s Federal Emergency Management Agency has declared to 

be eligible for individual assistance (affected counties) as a result of Hurricane Maria. The mortgagee letter was 

accompanied by a borrower certification for properties impacted by Hurricane Maria. OIG nonconcurred on the 

certification language and provided revised language explicitly stating that the signer is certifying under penalty of 

perjury, along with specific citations to the United States Code. These changes help to not only discourage fraud, 

but also effectively prosecute it when it happens. HUD made the revisions, and OIG lifted the nonconcurrence. 

Reverse mortgage – On September 28, 2018, HUD issued Mortgagee Letter 2018-06, announcing that FHA will 

require a second appraisal to be conducted when a collateral risk assessment of the initial appraisal submitted for 

use in the home equity conversion mortgage (HECM) origination determines that additional support for the 

collateral value is required. OIG’s review of the draft mortgagee letter resulted in a comment to HUD to clarify the 

procedures in case the second appraisal supports the same valuation as the first appraisal. In the final mortgagee 

letter, HUD addressed this comment, clarifying the procedures to be followed when a second appraisal supports an 

equal or higher value of the property. Specifically, the included procedures were to (1) notify FHA’s Resource 

Center that the second appraisal was obtained and that it supported a higher or equal valuation of the property; (2) 

include the second, equal or higher appraisal in the case binder, but the lender must not upload it into the Electronic 

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Appraisal Delivery or use it to calculate the maximum claim amount in originating the HECM; and (3) after 

notifying FHA, proceed with the underwriting process using the first, lower appraised value to calculate the 

maximum claim amount. 

OFFICE OF PUBLIC AND INDIAN HOUSING

Implementation of the Tribal HUD–VA Supportive Housing program – On May 22, 2018, HUD published a 

notice, which consolidates all Tribal HUD-U.S. Department of Veterans Affairs Supportive Housing (VASH) 

program requirements into one notice and establishes HUD’s procedures for issuing renewal funding, subject to the 

availability of future appropriations. The HUD-VASH program combines Housing Choice Voucher Program rental 

assistance for homeless veterans with case management and clinical services provided by or through VA through 

Veterans Administration Medical Centers. Under Tribal HUD-VASH, Indian tribes and tribally designated entity 

participants must partner with VA to provide healthcare assistance to eligible Native American veterans. This 

notice includes appropriate adjustments to program requirements through the issuance of statutory and regulatory 

waivers that HUD has deemed necessary for the effective delivery and administration of rental assistance under the 

program. OIG provided a no position response regarding this notice. 

Rental Assistance Demonstration Program: implementation of certain fiscal year 2018 Appropriations Act 

provisions – On July 3, 2018, HUD published a notice that implements several changes to HUD’s Rental 

Assistance Demonstration Program (RAD). For the first component (relating to public housing conversions) of 

RAD, this notice increases the number of public housing units that may be awarded competitively and extends the 

application deadline. For the second component (relating to Project-Based Rental Assistance conversions and 

Project-Based Voucher Program conversions), the notice implements two provisions of the 2018 Appropriations Act 

relating to initial rent setting for the conversion of rent supplement and rental assistance payment properties and the 

prohibition against rescreening residents. OIG provided a no position response regarding this notice.

Housing Opportunity Through Modernization Act of 2016: final implementation of public housing income 

limit – On July 26, 2018, HUD published a notice informing the public of how HUD is setting income limits and 

making the income limits effective, while also providing information to public housing agencies (PHA) on how to 

start the process for tracking overincome families. This notice finalizes how the overincome limit is determined and 

informs PHAs about how to begin implementing the statutory income limit for public housing. PHAs must update 

their admissions and continued occupancy policies to implement these changes. OIG provided a no position 

response regarding this notice. 

Relief from HUD requirements available during calendar year 2018 to public housing agencies to assist with 

recovery and relief efforts on behalf of families affected by presidentially declared major disasters – On 

September 12, 2018, HUD published a notice advising the public that to more effectively and quickly respond to 

presidentially declared major disaster declarations (MDD), for calendar year 2018, HUD is establishing an 

expedited process for the review of requests for relief from HUD regulatory or administrative requirements (HUD 

requirements) for PHAs that are located in counties included in MDDs. PHAs located in areas covered by MDDs 

issued for which a related disaster occurs during 2018 may request waivers of HUD requirements and receive 

expedited review of such requests, using the flexibilities and the expedited waiver process set out by this notice. 

OIG’s review of the draft notice resulted in a minor comment to HUD to clarify the acronyms in the notice. HUD

made the revisions. 

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OFFICE OF MULTIFAMILY HOUSING PROGRAMS

Updating the standardized firm commitment templates – On April 9, 2018, HUD published Housing Notice, H 

2018-03, which updates the current standardized firm commitment templates for section 220, 221(d)(4), 223(f), 

223(a)(7), 231, and 241(a) multifamily programs. These templates, along with a set of standard conditions, were 

updated to reflect changes in FHA policy requiring changes in processing and closing procedures and ensure that 

lenders and borrowers are current with the changes to FHA-insured policies. It is effective immediately following 

the date of publication. OIG provided a no position response regarding this notice. 

OFFICE OF RESIDENTIAL CARE FACILITIES

Proposed revisions and updates of healthcare facility documents for Section 232 program – On April 10, 2018, 

HUD published Federal Register Notice, FR-7001-N-09, to allow public review and input to the process that HUD 

used in establishing the healthcare facility documents for Section 232 of the National Housing Act, the Section 232 

program. The healthcare facility documents include 156 documents in which a majority of the documents are being 

renewed, and some include edits that were made to address changes in policies in recent years or inconsistencies 

across documents and other program obligations (such as the Section 232 Handbook 4232.1). The collection also 

includes new additions to incorporate tools previously found only in the multifamily housing document collections, 

as well as to create consistent formats for submitting information to the Office Residential Care Facilities (ORCF) 

that was not previously captured in the 2014 document collection but is required by ORCF. A few obsolete 

documents are being removed as well. These include resources that are no longer relevant to ORCF or duplicate 

information found in other documents. An example would include documents specifically related to “blended rate”

transactions. ORCF updated its policies after determining that, consistent with FHA Multifamily Housing’s 

approach, an otherwise eligible transaction could come within either the Section 223(f) criteria or the Section 232 

Substantial Rehabilitation criteria and that, therefore, a blending of the loan-to-value criteria of those two programs 

is not necessary. OIG provided a no position response regarding this notice.

OFFICE OF COMMUNITY PLANNING AND DEVELOPMENT

Disaster funding – On April 10, 2018, HUD allocated nearly $28 billion in Community Development Block Grant 

Disaster Recovery (CDBG-DR) funding appropriated by the Further Additional Appropriations for Disaster Relief 

Requirements Act of 2018. The funding included nearly $10.03 billion to address unmet needs from disasters 

occurring in 2017, $2 billion for improved electrical power systems in areas impacted by Hurricane Maria, and 

$15.9 billion for mitigation activities. On August, 10, 2018, HUD released a notice specifying that the nearly 

$10.03 billion would be used to supplement a prior allocation of $7.4 billion for addressing unmet recovery needs of 

California, Florida, Georgia, Missouri, Puerto Rico, Texas, and the U.S. Virgin Islands. During the clearance 

process, OIG nonconcurred with the notice. One item with which OIG did not agree was the definition of a 

proficient procurement process. OIG believes that the definition included in the notice weakened the previous 

definition because it no longer contained references to parts of 2 CFR (Code of Federal Regulations) Part 200. The 

notice also allowed grantees to request that HUD rely on previous certifications made by the HUD Secretary related 

to Public Laws 114-113, 114-223, 114-254, or 115-31. OIG audits have found that HUD had not always provided 

accurate and supported certifications to grantees regarding the procurement process, and HUD and OIG have not 

reached management decisions on those recommendations. OIG also disagreed with HUD’s providing a waiver to 

the Commonwealth of Puerto Rico to allow it to use up to $15 million in CDBG-DR funds to promote travel and 

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attract new businesses. OIG believes that the funding would be better used on activities that have a direct impact on 

the affected communities. HUD issued the notice without OIG’s lifting its nonconcurrence. 

Suspension of the 24-month HOME commitment requirement for deadlines occurring in 2016, 2017, 2018, 

2019, and 2020 – On August 27, 2018, HUD published a notice explaining the treatment of commitment and other 

deadlines occurring in the HOME Investment Partnerships program in years 2016, 2017, 2018, 2019, and 2020. 

Section 218(g) of the Cranston-Gonzalez National Affordable Housing Act of 1990 (NAHA), as amended, required 

that participating jurisdictions place HOME funds under a binding commitment within 24 months after receiving the 

grant. NAHA also stated that a participating jurisdiction loses its right to draw down HOME funds that are not 

committed within 2 months. The Consolidated Appropriations Acts of 2017 and 2018 (Public Laws 115-36 and 

115-141, respectively) suspend the 24-month commitment requirement for HOME funds. The notice clarified that 

the community housing development organization reservation requirement, HOME expenditure deadline 

requirement, and expiration of the HOME grant were not affected by the appropriation acts. OIG had no position in 

response to the draft notice.

ADMINISTRATIVE-OTHER

Adjusting the civil monetary penalty amounts – On July 16, 2018, HUD published a final rule, FR-6076-F-01, 

which provides for 2018 inflation adjustments of civil monetary penalty amounts required by the Federal Civil 

Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act 

Improvements Act of 2015. This final rule became effective on August 15, 2018. For each component, HUD 

provided a description of the penalty, the United States Code statutory citation providing for the penalty, the Code 

of Federal Regulations citation under Title 24 for the penalty, the amount of the penalty under the rule 

implementing the 2017 adjustment (82 FR 24521, May 30, 2017), and the corresponding penalties after applying the 

2018 inflation adjustment. OIG provided a no position response regarding this final rule. 

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CHAPTER 8 – REPORT RESOLUTION

In the report resolution process, Office of Inspector General (OIG) and U.S. Department of Housing and Urban 

Development (HUD) management agree upon needed actions and timeframes for resolving recommendations. 

Through this process, OIG strives to achieve measurable improvements in HUD programs and operations. The 

overall responsibility for ensuring that the agreed-upon changes are implemented rests with HUD managers. This 

chapter describes reports issued before the start of the period that do not have management decisions, have 

significantly revised management decisions, or have significant management decisions with which OIG disagrees. 

It also has a status report on HUD’s implementation of the Federal Financial Management Improvement Act of 

1996 (FFMIA). In addition to this chapter on report resolution, see appendix 3, table B, “Significant Audit Reports 

for Which Final Action Had Not Been Completed Within 12 Months After the Date of the Inspector General’s 

Report.” 

AUDIT REPORTS ISSUED BEFORE START OF PERIOD WITH NO MANAGEMENT 

DECISION AS OF SEPTEMBER 30, 2018

ADDITIONAL DETAILS TO SUPPLEMENT OUR REPORT ON HUD’S FISCAL YEARS 2013 

AND 2012 (RESTATED) FINANCIAL STATEMENTS, ISSUE DATE: DECEMBER 16, 2013

HUD OIG audited the Office of Public and Indian Housing’s (PIH) implementation of U.S. Treasury cash 

management regulations as part of the annual audit of HUD’s consolidated financial statements for fiscal years 2013 

and 2012. OIG found that HUD’s implementation of the new cash management process for the Housing Choice 

Voucher Program departed from Treasury cash management requirements and Federal generally accepted 

accounting principles (GAAP). HUD OIG also reported that there were not sufficient internal controls over the 

process to ensure accurate and reliable financial reporting. Due to weaknesses in the process, material financial 

transactions were not included in HUD’s consolidated financial statements; therefore, public housing agencies 

(PHA) were allowed to continue to hold Federal funds in excess of their immediate disbursing needs, which is in 

violation of Treasury cash management regulations. 

The OIG report included a recommendation (2C) that HUD PIH implement a cost-effective method for automating 

the cash management process, to include an electronic interface of transactions to the United States Standard 

General Ledger (USSGL).

HUD issued three proposals to address recommendation 2C. However, OIG rejected all three proposals because 

they were too vague and did not include a high-level plan showing the actions PIH will take until the final action 

date to implement corrective action. Further, the proposals included several contingencies from which OIG cannot 

determine whether PIH is making progress in addressing the recommendation. 

This issue was referred to the Assistant Secretary on June 19, 2014, and September 30, 2014, but, as of March 31, 

2015, a new proposal had not been made. Therefore, this issue was referred to the Deputy Secretary on March 31, 

2015. OIG met to brief the Deputy Secretary’s staff on the subject on April 20, 2015. On August 24, 2016, PIH 

indicated that in coordination with the Office of the Chief Information Officer (OCIO), plans were being developed 

to address the recommendation. However, PIH still has not provided a management decision, and it is difficult to 

determine whether or when these new systems would be implemented. OIG followed up with PIH and OCIO on 

September 19, 2017, about entering a management decision to reflect current plans, but as of September 30, 2017, 

OIG had not received a response. During the course of the fiscal year 2018 financial statement audit, OIG followed 

up with PIH again regarding this recommendation. PIH reported that it was waiting for the release of funding from 

the Office of the Chief Procurement Officer (OCPO) to procure a contract to automate the cash management 

process. OIG inquired with PIH about entering a management decision as it appeared that it was making progress 

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on addressing this recommendation, but no management decision had been submitted as of September 30, 2018. 

(Audit Report: 2014-FO-0003) 

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, IMPROPER PAYMENTS 

ELIMINATION AND RECOVERY ACT OF 2010, ISSUE DATE: APRIL 15, 2014 

HUD OIG audited HUD’s fiscal year 2013 compliance with the Improper Payments Information Act of 2002 as 

amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA). OIG found that HUD did not 

comply with IPERA reporting requirements because it did not sufficiently and accurately report its (1) billing and 

program component improper payment rates; (2) actions to recover improper payments; (3) accountability; or (4)

corrective actions, internal controls, human capital, and information systems. In addition, HUD’s supplemental 

measures and associated corrective actions did not sufficiently target the root causes of its improper payments 

because they did not track and monitor processing entities to ensure prevention, detection, and recovery of improper 

payments caused by errors in the calculation of HUD’s subsidy for tenant rent and billing errors, which are root 

causes identified by HUD’s contractor studies. 

The OIG report included several recommendations that required the Office of Chief Financial Officer (OCFO) to 

work with PIH and the Office of Multifamily Housing Programs to ensure sufficient and accurate IPERA reporting 

in its agency financial report (AFR). The report also recommended that OCFO conduct a current billing study and, 

if not performed annually in future years, report the reason for this in the AFR and update the previous study to 

reflect program and inflationary changes. Similarly, the report recommended a study to assess improper payments 

arising from the Housing Choice Voucher Program. Finally, the report also recommended that OCFO report on 

multifamily, public housing, and Section 8 program improper payment rates separately in the AFRs.

Initially, OCFO disagreed with several of OIG’s recommendations, citing (1) funding issues in conducting current 

billing studies, which it believes do not produce tangible results; (2) disagreement on the need to determine whether

improper payments exist as the result of changes in the funding of the Housing Choice Voucher Program; and (3) 

management’s position that formal policies and procedures for the IPERA reporting process are not necessary. OIG

generally disagreed with OCFO’s management decisions because they disregarded IPERA reporting requirements 

and Office of Management and Budget guidance and the management decisions did not reflect the Chief Financial 

Officer’s (CFO) responsibility as the lead official for directing and overseeing HUD’s actions to address improper 

payments. 

OIG sent a referral memorandum to the Acting CFO on September 23, 2014, regarding its disagreement, along with 

an untimely referral memorandum for two recommendations that had not had management decisions entered. 

Following OIG’s memorandum, OCFO entered management decisions for seven of nine recommendations, of 

which OIG agreed with only one. The remaining six recommendations, along with two recommendations for which 

management had not yet entered a management decision, were referred to the Deputy Secretary on March 31, 2015. 

OIG briefed the Deputy Secretary’s staff on the subject report on April 20, 2015, and in August 2015, meetings 

were held with OCFO to discuss what was needed to come to agreement. As of March 31, 2018, management 

decisions had been agreed upon for all recommendations except two. 

OCFO submitted a new management decision for one of the two recommendations on March 15 and September 17, 

2018. OIG disagreed with the management decision because OCFO indicated that HUD does not make payments to 

tenants, although one of its supplemental measures was to reduce improper payments made to deceased singlemember households. OIG also disagreed with the proposed management decision because it is too vague and does 

not reflect how the recommendation will be addressed. Further, the evidence to provide closure is “to be 

determined” and is dependent on funding. 

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OCFO has submitted several proposed management decisions for the other recommendation on September 30, 

2014, March 31, 2016, March 30, 2017, March 14, 2018, and September 13, 2018. Originally, HUD disagreed with 

OIG’s recommendation and refused to provide a corrective action plan, which would ensure that the true error rate 

in certain programs was not masked when reported in the AFR. Recently, OCFO agreed with this recommendation. 

However, OIG has continued to disagree with the proposed management decisions because they are dependent on 

funding and the final action target date is January 30, 2020. OCFO did not provide sufficient details in its proposed 

management decision to justify the need for a final action target date of January 30, 2020. (Audit Report: 2014-

FO-0004) 

HUD DID NOT ALWAYS RECOVER FHA SINGLE-FAMILY INDEMNIFICATION LOSSES AND 

ENSURE THAT INDEMNIFICATION AGREEMENTS WERE EXTENDED, ISSUE DATE: 

AUGUST 8, 2014

HUD OIG audited HUD’s controls over its Federal Housing Administration (FHA) loan indemnification recovery 

process to determine whether HUD had adequate controls in place to monitor indemnification agreements and 

recover losses on FHA single-family loans.

HUD did not always bill lenders for FHA single-family loans that had an indemnification agreement and a loss to 

HUD. Specifically, it did not bill lenders for any loans that were part of the Accelerated Claims Disposition (ACD) 

program or the Claims Without Conveyance of Title (CWCOT) program or loans that went into default before the 

indemnification agreement expired but were not in default on the expiration date. There were 486 loans from 

January 2004 to February 2014 that had enforceable indemnification agreements and losses to HUD, but lenders 

were not billed. This condition occurred because HUD’s Financial Operations Center was not able to determine 

loss amounts for loans that were part of the ACD program, was not aware of the CWCOT program, and considered 

only the final default date for billing. As a result, HUD did not attempt to recover a loss of $37.1 million for 486 

loans that had enforceable indemnification agreements.

In addition, HUD did not ensure that indemnification agreements were extended to 64 of 2,078 loans that were 

streamline refinanced into another FHA-insured loan. As a result, HUD incurred losses of $373,228 for 5 loans, and 

16 loans had a potential loss to HUD of approximately $1 million. The remaining 43 loans were either terminated 

or did not go into delinquency before the indemnification agreement expired, or the agreement did not state that it 

would extend to loans that were streamline refinanced.

OIG rejected three management decisions proposed by the Offices of Single Family Housing and Finance and 

Budget because they did not follow the plain language explicitly stated in signed indemnification agreements. The 

Offices of Single Family Housing and Finance and Budget disagreed with OIG’s determination that HUD should 

have billed lenders for FHA loans that either were in default or went into default during the indemnification 

agreement period.

OIG referred the matter to the Assistant Secretary for Housing – Federal Housing Commissioner on January 8, 

2015. OIG met with the HUD Office of General Counsel (OGC) and the Offices of Housing, Single Family 

Housing, and Finance and Budget on January 30, 2015. The meeting ended in disagreement; however, HUD OGC

and the OIG Office of Legal Counsel continued discussions. 

Single Family Housing received two legal opinions from HUD OGC, dated January 26 and February 24, 2015, 

respectively. Combined, the legal opinions support Single Family Housing’s and Finance and Budget’s position 

that they have collected in a manner consistent with longstanding policy that emphasized the definition of the “date 

of default.” Single Family Housing maintains that its collection practice is consistent with FHA’s regulatory 

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definition of “date of default” found in 24 CFR (Code of Federal Regulations) 203.331, which refers to the first 

“uncorrected” failure and the first failure to pay that is not satisfied by later payments.

OIG disagrees and believes that Single Family Housing and Finance and Budget have adopted a collection practice 

not supported by the plain language of the indemnification agreements or required by HUD regulations. Based on 

the plain language explicitly stated in signed indemnification agreements, OIG believes that the indemnification 

agreement should be enforced for any loan that “goes into default” during the indemnification agreement term, 

regardless of whether the loan emerged from a default status after the agreement expired. In response to HUD’s 

legal opinions, OIG received its own legal opinion from the OIG Office of Legal Counsel, which supports OIG’s 

position. 

OIG has had discussions with HUD OGC, Single Family Housing, and Finance and Budget regarding the 

recommendations in question but has not reached agreeable management decisions. On March 31, 2015, OIG 

referred the recommendations to the Deputy Secretary for a decision and as of September 30, 2018, was still 

awaiting that decision. (Audit Report: 2014-LA-0005) 

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION FISCAL YEARS 2014 AND 2013 

FINANCIAL STATEMENTS AUDIT, ISSUE DATE: FEBRUARY 27, 2015

HUD OIG audited the Government National Mortgage Association’s (Ginnie Mae) fiscal year 2014 stand-alone 

financial statements. OIG conducted this audit in accordance with the Chief Financial Officers Act of 1990, as 

amended. OIG found a number of material weaknesses in Ginnie Mae’s financial reporting specifically related to 

the auditability of several material assets and reserve for loss liability account balances. The audit report had 20 

audit recommendations to (1) correct the financial statement misstatements identified and (2) take steps to 

strengthen Ginnie Mae’s financial management operations. 

Initially, OIG did not reach consensus with Ginnie Mae on the necessary corrective actions for 9 of the 20 audit 

recommendations and referred the matter to the Deputy Secretary for a decision on September 21, 2015. In August 

2016, OIG reached an agreement on three of nine management decisions that it previously rejected. As a result, 

there are now six audit recommendations without a management decision. OIG’s audit recommendations request 

that the HUD CFO provide oversight of Ginnie Mae’s financial management operations, but HUD’s proposed 

corrective action plan to provide the oversight of Ginnie Mae lacked specificity. As of September 30, 2018, the 

Deputy Secretary had not provided a decision on the six recommendations referred. (Audit Report: 2015-FO0003) 

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION FISCAL YEARS 2015 AND 2014 

(RESTATED) FINANCIAL STATEMENTS AUDIT, ISSUE DATE: NOVEMBER 13, 2015

HUD OIG audited Ginnie Mae’s fiscal year 2015 stand-alone financial statements. OIG conducted this audit in 

accordance with the Chief Financial Officers Act of 1990 as amended. This report had new and repeat audit 

findings. Of 11 audit recommendations, OIG did not reach consensus on the necessary corrective actions for 3 

recommendations. Ginnie Mae did not provide a response to OIG to explain Ginnie Mae’s refusal to implement one 

audit recommendation related to compliance with the Debt Collection Improvement Act. 

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SEMIANNUAL REPORT TO CONGRESS

For the remaining two information technology (IT)-related audit recommendations, Ginnie Mae’s master 

subservicer (MSS) disagreed with one audit recommendation. The MSS believes that it has the proper segregation 

of duties for cash processes, payment processing, and reconciliation of all financial activities. However, OIG 

disagrees and maintains its original position that segregation of duties means that no single person should have 

control of two or more conflicting functions within a transaction or operation. Further, while a security camera 

system, criminal background checks, etc., are helpful, they do not take the place of good internal controls, which 

include the segregation of duties. 

Regarding the second IT audit recommendation, Ginnie Mae’s MSS agreed to regularly review the market discount 

fraction change report and confirm this review in its monthly self-evaluation. However, this response and 

management’s plan of action did not fully address OIG’s recommendation. The methods identified were neither 

sufficient nor adequate to address OIG’s (1) finding “that management had an ineffective monitoring tool in place” 

and (2) recommendation that management automate the approval process to include restricting the capability to 

make unauthorized changes unless evidence of approval is present or increase the scope of the “Admin Adjustment 

Report” to include all exceptions and adjustments. The issue was not that a review process was not in place but that 

the review was not meaningful or effective because the tool or report used to review financial adjustment changes 

was limited. The manual approval process also enabled staff to avoid obtaining approval before making 

adjustments because there were (1) no checks and balances and (2) no restrictions in the financial system to prevent 

unauthorized adjustments. Management’s plan of action did not address OIG’s concern. 

OIG referred this matter to the President of Ginnie Mae for a decision on April 21, 2016, and to the Deputy 

Secretary on March 6, 2017. 

On September 12, 2018, Ginnie Mae provided additional information in response to the recommendations. OIG

reviewed the information and concluded that the information did not adequately address the recommendations. As 

of September 30, 2018, OIG was awaiting a decision on the remaining three recommendations referred to the 

Deputy Secretary. (Audit Report: 2016-FO-0001) 

ADDITIONAL DETAILS TO SUPPLEMENT OUR FISCAL YEARS 2015 AND 2014 

(RESTATED) U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FINANCIAL 

STATEMENT AUDIT, ISSUE DATE: NOVEMBER 18, 2015 

HUD OIG audited HUD’s consolidated financial statements and reported on deficiencies including the areas of (1) 

accounting for liabilities for PIH programs in accordance with GAAP and FFMIA and (2) HUD’s financial 

management governance structure and internal controls over financial reporting. HUD disagreed with several 

recommendations made in each of these areas and as a result, OIG first referred them to the Principal Deputy 

Assistant Secretary for Public and Indian Housing and the Deputy Chief Financial Officer on April 21, 2016. OIG

received a response to only one recommendation, and disagreement remained on the actions necessary to correct the 

deficiencies identified in the report. OIG referred the remaining recommendations to the Deputy Secretary on 

September 20, 2016. OIG had received two new proposals as of March 31, 2018; however, OIG could not agree 

with them due to an insufficient proposal that was not clear on how to address the recommendations and insufficient 

evidence to support closure. 

Accounting for liabilities for PIH programs in accordance with GAAP and FFMIA: OIG reported that HUD is not 

recognizing the accounts payables arising from shortages identified in PIH’s cash management reconciliations. 

PIH’s position is that it does not record the payables because the cash management reconciliations are completed 

45-60 days after each quarter. By the time they are conducted, the PHA could have used either restricted or 

unrestricted net position balances or requested frontload funding to cover the shortages. OIG does not agree that 

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SEMIANNUAL REPORT TO CONGRESS

this complies with GAAP because adjusting the prepaid expense after payables have been paid is not accrual

accounting. PIH has not submitted a revised position on this matter. OIG believes that this recommendation cannot 

be resolved until PIH’s cash management process is automated, which OIG discusses in Audit Report 2014-FO0003 (discussed above). As of September 19, 2018, PIH had not entered a management decision for the 

recommendation OIG made in 2014-FO-0003 or this recommendation. 

HUD’s financial management governance structure and internal controls over financial reporting: OIG reported

on deficiencies found in the financial governance and financial reporting areas. OIG could not accept the proposed 

management decisions for eight recommendations because OCFO (1) requested final action target dates that were 

too far into the future, (2) claimed the deficiencies had been addressed by the new processes implemented by New 

Core when they had not, or (3) did not provide sufficient detail to support that the recommendations would be fully 

addressed. OIG communicated these issues to HUD on March 7, 2016, and April 6, 2017. New proposals were 

submitted for four of the eight recommendations and accepted. As of September 30, 2018, OIG had not received

new proposals for the remaining four outstanding recommendations. (Audit Report: 2016-FO-0003) 

HUD DID NOT ALWAYS PROVIDE ADEQUATE OVERSIGHT OF PROPERTY ACQUISITION 

AND DISPOSITION ACTIVITIES, ISSUE DATE: JUNE 30, 2016

HUD OIG audited HUD’s Community Development Block Grant (CDBG) program’s property acquisition and 

disposition activities. OIG’s audit objective was to determine whether HUD had adequate oversight of property 

acquisition and disposition activities under its CDBG program. 

OIG found that HUD did not always provide adequate oversight of property acquisition and disposition activities. 

Specifically, of 14 activities reviewed, 7 field offices did not provide adequate oversight of 8 property acquisition 

and disposition activities totaling more than $26.2 million. For the eight activities for which adequate oversight was 

not provided, two activities with draws totaling $6.1 million had outstanding program-related findings that HUD 

had not enforced, and six totaling $20.1 million had not been monitored. Additionally, four of the eight activities 

totaling nearly $11.9 million had not met a national objective. 

These conditions occurred because HUD did not have adequate controls to ensure that it enforced its monitoring 

findings and its grantee risk assessment procedures did not specifically address oversight of property acquisition and 

disposition activities. 

The OIG report included a recommendation that the Deputy Assistant Secretary for Grant Programs direct field 

offices to include property acquisition and disposition activities as an area of special emphasis when assessing 

grantee risk and establishing their monitoring plans and grantee monitoring strategies. 

The Deputy Assistant Secretary for Grant Programs proposed a management decision in December 2016. However, 

after discussions with HUD, OIG rejected the proposed management decision because it did not specifically address 

directing field offices to include property acquisition and disposition activities as an area of special emphasis when 

assessing grantee risk and establishing their monitoring plans and grantee monitoring strategies as recommended. 

For OIG to consider the proposed management decision as an acceptable alternative action, OIG requested 

clarification and documentation from HUD. However, HUD did not provide the requested information and 

documentation, and OIG referred this recommendation to the Assistant Secretary for Community Planning and 

Development on March 30, 2017. HUD proposed another management decision in April 2017; however, OIG 

rejected it because it also did not directly address the intent of the recommendation. OIG referred this 

recommendation to the Deputy Secretary on August 23, 2017, and as of September 30, 2018, had not received a 

decision. (Audit Report: 2016-PH-0001) 

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SEMIANNUAL REPORT TO CONGRESS

HUD DID NOT ALWAYS PROVIDE ACCURATE AND SUPPORTED CERTIFICATIONS OF 

STATE DISASTER GRANTEE PROCUREMENT PROCESSES, ISSUE DATE: SEPTEMBER 

29, 2016

HUD OIG audited HUD’s controls over its certifications of State disaster recovery grantee procurement processes 

to determine whether HUD’s certifications were accurate and supported. OIG found that HUD did not always 

provide accurate and supported certifications of State disaster grantee procurement processes. Specifically, it (1) 

allowed conflicting information on its certification checklists, (2) did not ensure that required supporting 

documentation was included with the certification checklists, and (3) did not adequately evaluate the supporting 

documentation submitted by the grantees. These conditions occurred because HUD did not have adequate controls 

over the certification process. Due to the weaknesses identified, HUD did not have assurance that State grantees 

had proficient procurement processes in place, and the Secretary’s certifications did not meet the intent of the 

Disaster Relief Appropriations Act of 2013.7

 

The report included five recommendations for the Deputy Assistant Secretary for Grant Programs. The Deputy 

Assistant Secretary proposed corrective actions on January 11, 2017, and OIG rejected the proposed actions on 

January 27, 2017. OIG referred the recommendations to the General Deputy Assistant Secretary for Community 

Planning and Development on February 6, 2017. The General Deputy Assistant Secretary responded to the referral 

on February 21, 2017. For all of the recommendations, the General Deputy Assistant Secretary stated that OIG’s 

disagreement regarding the definition of a proficient procurement process as it relates to State disaster grantees and 

the meaning of “equivalent” as it relates to a State’s procurement policies and procedures being “equivalent to” or 

“aligned with” the Federal procurement standards was closed by the Deputy Secretary in her decision regarding 

resolution of recommendations from OIG’s audit of New Jersey’s Sandy Integrated Recovery Operations and 

Management System.8

 In the January 10, 2017, decision, the Deputy Secretary wrote that the State certified that its 

procurement standards were equivalent to the Federal standards at 24 CFR 85.36 and HUD had also certified to the 

proficiency of the State’s policies and procedures. The Deputy Secretary noted that two legal opinions from OGC

concluded that the standards at 24 CFR 85.36 did not apply and, therefore, there was no legal basis for the finding 

and associated recommendations. The General Deputy Assistant Secretary asserted that the legal opinion for the 

New Jersey audit applied to this audit. Based on this information, the General Deputy Assistant Secretary believed 

it was appropriate to close all of the recommendations.

OIG disagreed with the General Deputy Assistant Secretary’s request to close the recommendations in this audit 

based on the Deputy Secretary’s decision to resolve recommendations from OIG’s audit of New Jersey’s Sandy 

Integrated Recovery Operations and Management System. OIG has two main areas of disagreement with the 

decision: (1) OIG continues to assert that 24 CFR 85.36 was applicable to the State because its procedures needed 

to be equivalent to these Federal standards, and (2) OIG asserts that the applicability of 24 CFR 85.36 was not the 

only basis for the recommendations in the New Jersey audit report and believes that the decision failed to consider 

the other bases of the recommendations. Further, the Deputy Secretary’s decision did not address all of the issues 

with HUD’s process for certifying State disaster grantee procurement processes that were identified in the subject 

audit report. OIG referred these recommendations to the Deputy Secretary on March 31, 2017, and as of September 

30, 2018, had not received a decision. (Audit Report: 2016-PH-0005) 

 7 Public Law 113-2, dated January 29, 2013 8 2015-PH-1003, dated June 4, 2015

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SEMIANNUAL REPORT TO CONGRESS

AUDIT OF FISCAL YEARS 2016 AND 2015 (RESTATED) FINANCIAL STATEMENTS AUDIT, 

ISSUE DATE: NOVEMBER 14, 2016

HUD OIG audited Ginnie Mae’s fiscal year 2016 stand-alone financial statements. OIG conducted this audit in 

accordance with the Chief Financial Officers Act of 1990 as amended. Of 19 recommendations issued, OIG did not 

reach consensus on the necessary corrective actions for 2 audit recommendations. 

The first disagreement was associated with OIG’s recommendation for Ginnie Mae to reverse the accounting 

writeoff of the advances account. In conjunction with the subledger data solution, Ginnie Mae needs to conduct a 

proper analysis to determine whether any of the $248 million balances in the advances accounts are collectible. 

Ginnie Mae believed that it could not reverse the $248 million residual balance in the advances account. Based on 

its analysis, Ginnie Mae explained that this residual balance should have been charged off by the realized losses 

incurred on liquidated loans from fiscal years 2009 through 2016, but it was not. Therefore, according to Ginnie 

Mae, this residual balance was no longer supportable or collectible after the sale of the mortgage servicing rights. 

Additionally, Ginnie Mae stated that it cannot pursue additional collection from its MSSs based on the terms of the 

settlement with them. OIG has concerns about the reliability of Ginnie Mae’s analysis because when OIG

attempted to review Ginnie Mae’s support for the advances writeoff, OIG was unable to validate the accuracy of the 

information used in its analysis. For example, of $248 million, OIG could not validate the $180 million in realized 

losses because this information was based on rough estimates ($50 million) and MSSs’ accounting reports that OIG

considered unauditable ($130 million). Ginnie Mae could not explain the other $68 million. Further, OIG’s audit 

showed that the $248 million residual balance may contain advances related to unliquidated nonpooled loans. 

Specifically, in fiscal year 2016, Ginnie Mae informed OIG that all advance balances associated with liquidated 

loans were removed from the advances account and attached (carried forward) to the liquidated loans balance. 

However, in fiscal year 2017, OIG learned that this was not the case. According to Ginnie Mae, the advance 

balances associated with these loans were not carried forward. Therefore, there are legitimate collection action 

claims that Ginnie Mae can pursue on these unliquidated nonpooled loans. 

The second disagreement was related to OIG’s recommendation for Ginnie Mae to appropriately exclude the loan 

impairment allowance on other indebtedness instead of reporting it as part of loan impairment allowance on the 

mortgage held for investment (MHI) account. Ginnie Mae partially agreed with OIG regarding the MHI allowance 

issue. Ginnie Mae agreed that it should have excluded from the MHI allowance account the allowance portion 

related to the reimbursable preforeclosure expense but not the nonreimbursable preforeclosure expense portion. 

According to Ginnie Mae, it included the nonreimbursable preforeclosure expense in the MHI allowance calculation 

because the expense was necessary to collect proceeds of the MHI loans. Ginnie Mae cited Accounting Standards 

Codification (ASC) 450-20 and the Interagency Policy Statement on the allowance for loan and lease losses as the 

bases for its conclusion with respect to the issue of nonreimbursable preforeclosure expense. Overall, Ginnie Mae 

concluded that in estimating the MHI allowance, the expected-anticipated recoveries from insurance, as well as the 

expected but not yet incurred preforeclosure costs, will need to be included in determining the collectability of cash 

flows from these loans. Regarding nonreimbursable preforeclosure expenses, OIG does not agree with Ginnie Mae 

that its inclusion in the ASC 450-20 or ASC 310-10 components of the MHI allowance was in accordance with 

GAAP. 

Both disagreements were referred to the Deputy Secretary on August 24, 2017. As of September 30, 2018, OIG 

was awaiting a decision. (Audit Report: 2017-FO-0001) 

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SEMIANNUAL REPORT TO CONGRESS

ADDITIONAL DETAILS TO SUPPLEMENT OUR FISCAL YEARS 2016 AND 2015 

(RESTATED) U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FINANCIAL 

STATEMENT AUDIT, ISSUE DATE: NOVEMBER 15, 2016

HUD OIG audited HUD’s consolidated financial statements and reported on deficiencies in the areas of (1) HUD’s 

loan guarantee balances, (2) significant reconciliations not completed in a timely manner, and (3) HUD’s lack of a 

policy and procedure framework. OIG issued several referrals regarding these recommendations to HUD senior 

management for untimeliness and disagreement between May 31 and July 24, 2017. For the recommendation 

regarding HUD’s loan guarantee balances, OIG rejected HUD’s initial management decision on April 24, 2017, as it 

did not contain adequate evidence to provide closure. This recommendation was referred to the Deputy Secretary 

on July 24, 2017; however, as of September 30, 2018, HUD had not submitted a revised management decision. For 

significant reconciliations not completed in a timely manner, OCFO submitted management decisions on September 

27, 2018, for reconciliations performed between the subledgers and general ledger, with requests to close 

concurrently. OIG did not agree because the provided documentation for evidence to provide closure did not 

include all items previously agreed upon between OIG and OCFO. Regarding HUD’s lack of a policy and 

procedure framework, OIG received a new proposed management decision on September 26, 2018, and it was under 

review by OIG as of September 30, 2018. (Audit Report: 2017-FO-0003) 

HUD’S TRANSITION TO FEDERAL SHARED SERVICE PROVIDER FAILED TO MEET 

EXPECTATIONS, ISSUE DATE: FEBRUARY 1, 2017

HUD OIG audited the effectiveness of the controls over the New Core Interface Solution (NCIS) and PRISMTM and 

the impact of the implementation of release 3 of phase 1 of the New Core Project on the preparation of HUD’s 

financial statements. 

HUD’s transition to a Federal shared service provider (FSSP) did not significantly improve the handling of its 

financial management transactions. Weaknesses identified with the controls over NCIS and PRISMTM contributed 

to this issue. A year after the transition, HUD had inaccurate data resulting from the conversions and continued to 

execute programmatic transactions using its legacy applications. The transition increased the number of batch 

processes required to record programmatic financial transactions and introduced manual processes and delays for 

budget and procurement transactions. In addition, the interface program that allowed for and translated the financial 

transactions between HUD and the U.S. Department of the Treasury’s Administrative Resource Center (ARC) was 

not covered under HUD’s disaster recovery plan. These conditions occurred because of funding shortfalls as well as 

HUD’s decisions to (1) separate phase 1 of the project into smaller releases, (2) move forward with the 

implementation despite unresolved issues, and (3) terminate the project before its completion. These system issues 

and limitations inhibited HUD’s ability to produce reliable, useful, and timely financial information. 

While HUD considered its New Core Project implementation successful, it acknowledged that not all of the 

originally planned capabilities were deployed. HUD needs to pursue new process improvement projects to address 

the functionalities that were not achieved with phase 1 of New Core, which will require additional time and funding. 

HUD will also need to pursue process improvements for the functionality planned in the future phases of the 

project. In April 2016, HUD ended the New Core Project and the transition to an FSSP after spending $96.3 

million; however, the transition did not allow HUD to decommission all of the applications it wanted to or achieve 

the planned cost savings. 

HUD OIG made two recommendations that were directed to the Deputy Secretary. Specifically, (1) reevaluate the 

functionality initially planned under the New Core Project and determine how the agency will implement the 

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SEMIANNUAL REPORT TO CONGRESS

functionality needed for budget formulation, cost accounting, property management, and the consolidation of 

HUD’s financial statements and (2) take an active role in the implementation of financial management improvement 

initiatives or projects moving forward to ensure collaboration within HUD and that adequate funding and 

governance are in place.

OIG has not received a response or a proposed management decision related to the two recommendations. OIG 

referred these recommendations to the Deputy Secretary on June 6, 2017. As of September 30, 2018, HUD had not 

submitted management decisions for these recommendations. (Audit Report: 2017-DP-0001) 

HUD’S OFFICE OF COMMUNITY PLANNING AND DEVELOPMENT DID NOT 

APPROPRIATELY ASSESS STATE CDBG GRANTEES’ RISK TO THE INTEGRITY OF CPD 

PROGRAMS OR ADEQUATELY MONITOR ITS GRANTEES, ISSUE DATE: JULY 10, 2017

HUD OIG audited HUD’s Office of Community Planning and Development’s (CPD) risk assessment and 

monitoring of its State CDBG recipients. OIG’s reporting objective was to determine whether CPD appropriately 

assessed State CDBG grantees’ risk to the integrity of CPD programs and adequately monitored its grantees.

OIG found that CPD did not appropriately assess State CDBG grantees’ risk to the integrity of CPD programs or 

adequately monitor its grantees. This condition occurred because its field office staff did not follow CPD risk 

assessment and monitoring requirements and field office management responsible for reviewing staff performance 

did not correct noncompliance of staff performing these responsibilities. In addition, the headquarters desk officer 

review function was administrative in focus and failed to note noncompliance. As a result, CPD cannot be assured 

that its field offices correctly identified the high-risk grantees or conducted adequate monitoring to mitigate risk to 

the integrity of CPD programs.

The report included five recommendations, including recommendations to (1) develop and implement a policy 

requiring field offices to rate grantees of at least medium risk that have not been monitored in their respective 

program area within the last 3 years on factors that require assessments of capacity, program complexity, and 

monitoring findings resulting in repayment or grant reductions; (2) develop and implement guidance for field 

offices to maintain supporting documentation in their official files with an adequate explanation of procedures 

performed to verify risk scores assigned, which could include upgrading CPD’s systems to allow for the attachment 

of supporting documentation for risk analyses; and (3) update monitoring exhibits to require staff to document 

procedures performed, provide sufficient explanation to verify procedures performed and conclusions drawn, and 

reference appropriate supporting documentation. 

CPD provided proposed management decisions on October 19, 2017, for all five recommendations. OIG concluded 

that the response did not adequately address the three recommendations discussed above. OIG advised HUD of its 

concerns on October 27, 2017, but was unable to reach agreement within 120 days. 

OIG referred the three recommendations without management decisions to the Assistant Secretary for Community 

Planning and Development on December 19, 2017. Following OIG’s referral, CPD submitted proposed 

management decisions, along with additional documentation, on March 30, 2018. Based on the documentation 

submitted, OIG was not able to reach a resolution on the remaining three recommendations. OIG referred these 

recommendations to the Deputy Secretary on June 25, 2018. On June 27, 2018, HUD submitted management 

decisions. However, the management decisions did not appropriately address the recommendations, and OIG could 

not concur. As of September 30, 2018, HUD had not resubmitted management decisions for these 

recommendations. (Audit Report: 2017-FW-0001) 

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SEMIANNUAL REPORT TO CONGRESS

HUD NEEDS TO CLARIFY WHETHER ILLEGAL-UNDOCUMENTED ALIENS ARE ELIGIBLE 

FOR ASSISTANCE UNDER THE HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS 

PROGRAM, ISSUE DATE: AUGUST 21, 2017 

HUD OIG assisted the U.S. Attorney’s Office, Southern District of New York, in a civil investigation related to 

illegal-undocumented aliens receiving Housing Opportunities for Persons with AIDS (HOPWA) assistance. The 

HOPWA program at 24 CFR Part 574 is a HUD CPD grant program that provides formula allocations and 

competitively awarded grants to eligible States, cities, and nonprofit organizations to provide housing assistance and 

related supportive services to meet the housing needs of low-income persons and their families living with HIVAIDS.

Noncitizen or alien ineligibility for federally funded programs is a recurring issue in Congress. Two laws primarily 

govern noncitizen or alien eligibility for housing programs: Title IV of the Personal Responsibility and Work 

Opportunity Reconciliation Act of 1996 - 8 U.S.C. (United States Code) 1611 (PRWORA) and Section 214 of the 

Housing and Community Development Act of 1980 as amended. PRWORA states that aliens, who are not qualified 

aliens, are not eligible for “Federal public benefits,” a term defined in the law to include public and assisted 

housing. Under this statute, illegal aliens do not meet the definition of qualified aliens and as a result, are ineligible 

for Federal public benefits. However, PRWORA exempted certain Federal public benefits from the alien eligibility 

restrictions, including programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, 

and short-term shelters) specified by the Attorney General, after consultation with the appropriate Federal agency.

The issue of nonqualified aliens receiving assistance under HOPWA or other homeless assistance programs has not 

been clearly addressed in HUD regulations and guidance. Specifically, OIG has not been able to identify clear 

guidance as to whether programs that are funded through HUD’s community development programs and 

administered through nonprofits (such as HOPWA) have been clearly designated as a “Federal public benefit.” This 

designation is important because aliens, who have not been qualified to be considered “qualified aliens” under 8 

U.S.C. 1611, are not eligible for Federal public benefits. Also, it is not clear whether homeless assistance grants are 

considered a Federal public benefit. There is a discord between “housing assistance,” which is considered a Federal 

public benefit and is limited to qualified aliens, and “homeless assistance.” If homeless assistance grants were 

considered a Federal public benefit, HOPWA would not be available to illegal-undocumented aliens. However, 

because it is unclear whether such grants are considered Federal public benefits, there is a potential for unqualified 

aliens to fall under the exceptions under 8 U.S.C. 1611 (which include emergency type programs) and qualify to 

receive benefits.

OIG recommended that HUD CPD (1) clarify whether assistance provided under its community development 

programs, such as HOPWA, are considered “Federal public benefits” and are, therefore, subject to PRWORA’s 

noncitizen eligibility restrictions and (2) consult with the Office of the Attorney General to establish whether 

HOPWA and other homeless assistance programs are a Federal public benefit that meets the definition of 

“providing assistance for the protection of life or safety” and are, therefore, exempt from PRWORA noncitizen 

eligibility restrictions. 

HUD CPD submitted management decisions for both recommendations on December 18, 2017, but the management 

decisions stated that CPD was not able to take action on the recommendations, and OIG rejected them. This issue 

was referred the Assistant Secretary on December 19, 2017. In January 2018, OIG attempted to meet with HUD 

regarding the recommendations but was unsuccessful. The issue was referred to the Deputy Secretary on February 

27, 2018. As of September 30, 2018, OIG was awaiting a decision from the Deputy Secretary. (Memorandum: 

2017-CF-0801) 

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SEMIANNUAL REPORT TO CONGRESS

HUD DID NOT PROVIDE SUFFICIENT GUIDANCE AND OVERSIGHT TO ENSURE THAT 

STATE DISASTER GRANTEES FOLLOWED PROFICIENT PROCUREMENT PROCESSES, 

ISSUE DATE: SEPTEMBER 22, 2017

HUD OIG audited HUD’s oversight of disaster grantee procurement processes to determine whether HUD provided 

sufficient guidance and oversight to ensure that disaster grantees followed proficient procurement processes when 

purchasing products and services. OIG found that HUD did not provide sufficient guidance and oversight to ensure 

that State disaster grantees followed proficient procurement processes. Since HUD agreed to correct procurement 

issues from a previous audit,9 OIG has issued 17 audit reports on disaster grantees with questioned costs totaling 

nearly $391.7 million related to procurement. These conditions occurred because HUD was so focused on 

providing maximum feasible deference to State grantees that it was unable to ensure that grantees followed 

proficient procurement processes. HUD also believed that State grantees were not required to have procurement 

standards that aligned with each of the Federal procurement standards. As a result, HUD lacked assurance that State 

grantees purchased necessary products and services competitively at fair and reasonable prices. 

OIG made four recommendations to the Deputy Assistant Secretary for Grant Programs. The Deputy Assistant 

Secretary proposed corrective actions on November 24, 2017. For two of the recommendations, the Deputy 

Assistant Secretary stated that the matter of the applicability of the Federal procurement standards at 2 CFR 200.318 

through 200.32610 (or 24 CFR 85.36(b) through (i)) and the requirements of the Federal Register notices on 

procurement was closed by the Deputy Secretary in her January 10, 2017, decision regarding resolution of 

recommendations from OIG’s audit of New Jersey’s Sandy Integrated Recovery Operations and Management 

System.11 In this decision, the Deputy Secretary wrote that the State certified that its procurement standards were 

equivalent to the standards at 24 CFR 85.36 and HUD had also certified to the proficiency of the State’s policies 

and procedures. The Deputy Secretary noted that two legal opinions from OGC concluded that the standards at 24 

CFR 85.36 did not apply and, therefore, there was no legal basis for the finding and associated recommendations. 

The Deputy Assistant Secretary also noted that the Senate Appropriations Committee report on fiscal year 2018 

U.S. Department of Transportation-HUD appropriations legislation12 addressed this issue. The report stated that the 

Committee believed that as long as HUD provided consistent and rigorous oversight of the procurement processes 

employed by the State and local recipients, an equivalent, though not identical, procurement standard that upholds 

the principles of fair and open competition can prevent Federal dollars appropriated for disaster recovery from being 

spent irresponsibly. The Deputy Assistant Secretary further stated that HUD clarified its definition of proficient 

procurement processes and policies when it published subsequent Federal Register notices allocating funds under 

Public Laws 114-113, 114-223 and 114-254. Based on this information, the Deputy Assistant Secretary believed it 

was appropriate to close these two recommendations.

OIG disagrees with the Deputy Assistant Secretary’s request to close these two recommendations based on the 

Deputy Secretary’s decision to resolve recommendations from OIG’s audit of New Jersey’s Sandy Integrated 

Recovery Operations and Management System. OIG continues to assert that the procurement standards at 24 CFR 

85.36 were applicable to the State because its procedures needed to be equivalent to these Federal standards. OIG 

acknowledges the Senate Committee’s belief that consistent and rigorous oversight of equivalent State procurement 

processes and standards that uphold the principles of fair and open competition can prevent Federal dollars from 

being spent irresponsibly. However, Federal procurement involves the acquisition of products and services at fair 

and reasonable prices, which OIG believes is a higher standard and necessitates cost estimates and cost analyses. 

 9 Audit Report 2013-FW-0001, Generally, HUD’s Hurricane Disaster Recovery Program Assisted the Gulf Coast States’ 

Recovery; However, Some Program Improvements Are Needed, issued March 28, 2013

10 Before December 26, 2014, the relevant procurement requirements were found at 24 CFR 85.36. HUD has since moved 

its uniform administrative requirements, cost principles, and audit requirements for Federal awards to 2 CFR Part 200. 11 2015-PH-1003, dated June 4, 2015 12 Senate Report 1115-138, dated July 27, 2017

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SEMIANNUAL REPORT TO CONGRESS

OIG believes that HUD weakened its interpretation of Federal procurement standards in the subsequent Federal 

Register notices because rather than considering a State’s procurement process proficient if its procurement 

standards were equivalent to the Federal standards, HUD considered a State’s procurement process proficient if its 

procurement standards operated in a manner that provided for full and open competition. Because of this

disagreement, OIG rejected the Deputy Assistant Secretary’s request to close the recommendations. 

In response to another recommendation, OIG rejected it because the proposed corrective action did not directly 

address improving controls by having HUD personnel who specialize in procurement evaluate the proficiency of 

State grantee procurement processes for those States that select the equivalency option to ensure that the State 

processes fully align with, or meet the intent of, each of the Federal procurement standards at 2 CFR 200.318 

through 200.326. 

In response to the remaining recommendation, OIG rejected it because the proposed guidance and training did not 

include State grantees that chose to certify that their procurement processes and standards were equivalent to the 

Federal procurement standards at 2 CFR 200.318 through 200.326. 

OIG referred the recommendations to the Assistant Secretary for Community Planning and Development on January 

25, 2018. The Assistant Secretary did not respond. OIG referred these recommendations to the Deputy Secretary 

on March 16, 2018, and as of September 30, 2018, had not received a decision. (Audit Report: 2017-PH-0002) 

HUD COULD IMPROVE ITS CONTROLS OVER THE DISPOSITION OF PROPERTIES 

ASSISTED WITH CDBG FUNDS, ISSUE DATE: SEPTEMBER 29, 2017 

HUD OIG audited HUD’s oversight of the disposition of real properties assisted with CDBG funds. OIG’s

objective was to determine whether HUD had adequate controls over the disposition of real properties assisted with 

CDBG funds. 

OIG found that HUD could improve its oversight of the disposition of real properties assisted with CDBG funds. 

Although HUD’s drawdown and reporting system allowed grantees to enter identifying information for assisted 

properties and its field offices performed risk-based monitoring of grantees, HUD’s controls were not always 

sufficient to ensure that grantees (1) entered addresses of assisted properties into its system, (2) provided proper 

notice to affected citizens before changing the use of assisted properties, (3) adequately determined the fair market 

value of assisted properties at the time of disposition, and (4) properly reported program income from the 

disposition of the properties. Further, HUD did not fully implement guidance related to the applicability of changeof-use requirements after voluntary grant reductions. OIG attributed these deficiencies to HUD’s lack of emphasis 

on verifying address information, its field office staff’s not being adequately trained to use data to monitor HUD’s 

interest in properties, and the Milwaukee field office’s incorrectly interpreting program requirements. As a result, 

HUD could not track and monitor its interest in the properties and did not have assurance that grantees properly 

handled changes in use and properly reported program income. 

OIG recommended that the Deputy Assistant Secretary for Grant Programs develop a process to ensure that grantees 

properly report the addresses of assisted properties in HUD’s Integrated Disbursement and Information System 

(IDIS) and properly calculate and report program income from the disposition of these properties regularly. OIG

indicated that this process could include but would not be limited to developing a process to extract data reported in 

IDIS on activities with the matrix codes related to real property and training and instructing CPD’s field office staff 

to extract these data and manually check for address and program income data on grantees’ activities, particularly 

activities that are completed but have properties that could still be subject to program income requirements. 

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The Deputy Assistant Secretary for Grant Programs proposed a management decision in January 2018, which OIG 

rejected. OIG referred this recommendation to the Assistant Secretary for Community Planning and Development 

on February 6, 2018, and to the Deputy Secretary on March 26, 2018. In an attempt to reach agreement, OIG held 

discussions with CPD officials on February 13 and March 8, 2018. On March 28, the Deputy Assistant Secretary 

for Grant Programs submitted a revised proposal. It proposed to (1) ensure that its staff is aware of a recent CPD 

notice; (2) ensure that its staff and grantees are aware of the record retention requirements related to change-of-use 

and reversion-of-asset requirements; (3) present a webinar for field staff on the importance of requirements related 

to real property, especially program income in relation to the acquisition and disposition of real properties, and the 

requirement to maintain inventories of real property; (4) identify, create, or revise a report that lists acquisitionrelated activities or includes addresses and accomplishment data for staff to use for monitoring; and (5) evaluate the 

adequacy of several sections of the CDBG Single Audit Compliance Supplement, to include reviews for real 

property acquisition and disposition and related to program income issues. 

On March 28, 2018, HUD proposed a management decision, which OIG rejected for several reasons. For example, 

HUD’s proposal (1) did not clearly cover all categories of activities related to real property assisted with CDBG 

funds but, rather, focused on those specifically related to acquisitions and dispositions and (2) did not commit to 

changes that would result in a process to ensure that grantees properly report the addresses of properties assisted 

with CBDG funds and properly calculate and report program income from the disposition of these properties 

regularly. While it alluded to a report that could be used by field staff to prepare for monitoring, it did not indicate 

that its monitoring process would be updated to require field offices to consider the relevant information. Further, 

while HUD committed to reviewing the CDBG Single Audit Compliance Supplement requirements, it did not 

commit to this review’s resulting in a process to ensure that grantees properly report the addresses of properties 

assisted with CDBG funds and that grantees properly calculate and report program income from the disposition of 

these properties. As of September 30, 2018, OIG had not reached a management decision. (Audit Report: 2017-

NY-0002) 

ADDITIONAL DETAILS TO SUPPLEMENT OUR FISCAL YEARS 2017 AND 2016 

(RESTATED) U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FINANCIAL 

STATEMENT AUDIT, ISSUE DATE: NOVEMBER 15, 2017

HUD OIG audited HUD’s consolidated financial statements and reported on deficiencies in the area of HUD’s 

administrative control of funds system and internal control documentation. Recommendations were made to OCPO 

to address the deficiency of not maintaining adequate records for interagency agreements in its procurement system 

of record, ARC’s PRISM. OIG issued a referral regarding two recommendations to address this deficiency to HUD 

OCPO on March 22, 2018, and could not reach agreement. These recommendations were then referred to the 

Deputy Secretary on May 31, 2018. After OIG issued the referral of disagreement, OCPO did not provide 

additional corrective action plans for resolving the missing interagency agreements and modifications in its

procurement system of record. However, on July 5, 2018, OCPO provided the remaining changes to its internal 

policies and procedures for one of the two recommendations. However, as of September 30, 2018, OIG had not 

received new proposed management decisions for the two recommendations. As a result, there continues to be no 

management decision. (Audit Report: 2018-FO-0004) 

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SEMIANNUAL REPORT TO CONGRESS

EVALUATION REPORTS ISSUED BEFORE START OF PERIOD WITH NO MANAGEMENT 

DECISION AS OF SEPTEMBER 30, 2018

RISK-BASED ENFORCEMENT COULD IMPROVE PROGRAM EFFECTIVENESS, ISSUE

DATE: FEBRUARY 12, 2016

HUD OIG evaluated the effectiveness of the Departmental Enforcement Center (DEC). Historically, HUD program 

managers have not wanted to enforce program requirements. That reluctance increases the risk that program funds 

will not provide maximum benefits to recipients and allows serious noncompliances to go unchecked. When it was 

created, DEC had independent enforcement authority, but it lost that authority when it moved from the Deputy 

Secretary’s office to OGC. DEC lost control of funding and staffing levels and contended with inadequate IT

systems and support. Although program offices were asking for more DEC financial analyses, they did not 

consistently use enforcement actions to remedy noncompliances. Further, managers’ reluctance to enforce program 

requirements limited DEC’s effectiveness in most programs. Turnover, retirements, and hiring limitations could 

leave DEC without enough skilled staff to support future workloads needed to service HUD programs and enforce 

program requirements. Risk-based monitoring and enforcement offers the opportunity to provide quality, affordable 

rental housing, improve the quality of life, and build strong, resilient communities. 

OIG made eight recommendations, seven of which remain open. In general, OGC initially disagreed that DEC 

could be more effective if it had more authority and independence. OIG met with the General Counsel on 

December 9, 2015, to discuss the findings, recommendations, and OGC’s response. Following the meeting, OGC 

generally agreed with the recommendations. 

Since that time, OIG has worked with OGC and other HUD offices to resolve the recommendations. However, OIG

still has not received a proposed management decision for seven of the recommendations. Originally, OGC 

indicated that it would provide OIG with updates for all eight recommendations, but it has recently decided to let 

each office work on its individual recommendations. In September 2018, OIG contacted the Office of Housing and 

PIH to obtain a proposed management decision on their respective recommendations. (Evaluation Report: 2014-

OE-0002) 

COMPREHENSIVE STRATEGY NEEDED TO ADDRESS HUD ACQUISITION CHALLENGES, 

ISSUE DATE: FEBRUARY 2, 2016

HUD OIG evaluated OCPO’s acquisition improvement initiatives. HUD has faced many acquisition challenges 

over the years, and OIG found that HUD had made progress in addressing those challenges. OIG observed that 

HUD had not developed a sound, cohesive strategy to address improvement initiatives, offices did not communicate 

or coordinate effectively, and offices did not agree on the best way to address acquisition challenges.

OIG made 10 recommendations, 1 of which remains open. The open recommendation requires OCPO to reach 

agreement on the staffing model and resources needed to implement the contracting officer’s representative 

professionalization initiative. OCPO concurred with the recommendation but has not provided OIG an estimated 

completion date for final action. OCPO said it has developed the professionalization initiative as part of a greater 

reform plan, but HUD senior leadership has not yet implemented it. OIG requested a complete corrective action 

plan in April 2018, again in July 2018, and most recently in September 2018. To date, OCPO has not proposed a 

timely and complete management decision. On September 26, 2018, OIG notified OCPO that it would refer the 

recommendation to the Deputy Secretary for resolution. (Evaluation Report: 2015-OE-0004) 

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SEMIANNUAL REPORT TO CONGRESS

DEPARTMENTWIDE APPROACH NEEDED TO ADDRESS HUD CONTRACTOR EMPLOYEE 

SECURITY RISKS, ISSUE DATE: MARCH 30, 2016

HUD OIG evaluated security policies and operations for contractor employees performed primarily by HUD’s 

Office of the Chief Human Capital Officer. OIG reviewed progress HUD had made in addressing previously 

identified background investigation issues. The Personnel Security Division had reduced the backlog of suitability 

adjudication cases, but on average it took about four times longer than the Office of Personnel Management 

standard of 90 days to complete a case, resulting in several hundred contractor employees working at HUD without 

a final suitability determination. The Personnel Security Division had not issued comprehensive policies and 

procedures or implemented an automated case management system. Administrative and program offices within 

HUD that were responsible for personnel, physical, and information security did not collaborate effectively at the 

policy-making level. During the evaluation, the Office of Administration established a security council to identify 

and address cross-HUD security issues. OIG identified successful practices of other Federal agencies that would 

address HUD’s contractor employee security risks and made recommendations to improve the timeliness and 

reliability of security processes.

OIG made nine recommendations, one of which remains open. HUD did not comment on the recommendations in 

the response to the draft report. Rather, HUD provided additional information on process improvements in or 

actions it planned to initiate. HUD has not provided a necessary estimated completion date for final action.

The open recommendation requires the Personnel Security Division to develop a comprehensive policy and clear 

guidance for all HUD personnel with roles and responsibilities related to contractor employee security. HUD has 

drafted a handbook for this purpose, but its ability to release the handbook is contingent upon resolving a bargaining 

unit bargaining obligation. HUD officials told OIG that they could not estimate when the bargaining unit 

bargaining obligation would be resolved or when the handbook would be released to close the recommendation. 

(Evaluation Report: 2015-OE-0008) 

HUD WEB APPLICATION SECURITY EVALUATION, ISSUE DATE: JUNE 6, 2017

HUD OIG completed a targeted web application security evaluation of HUD in support of a Counsel of the 

Inspectors General on Integrity and Efficiency Federal cross-cutting project, making nine recommendations for 

improvement to HUD. OIG assessed HUD’s capability to identify and mitigate critical IT vulnerabilities in HUD’s

publicly accessible web applications. OIG identified key deficiencies in HUD’s practices that put HUD’s extensive 

collection of sensitive data, including personal information of private citizens, at increased risk of unauthorized 

access and compromise. Of particular concern was the discovery of multiple operating web applications unknown 

to OCIO. 

To date, HUD has not provided management decisions for the nine recommendations or a required estimated 

completion date of final action. On June 2, 2017, HUD concurred with all recommendations and agreed to work 

with OIG to assign responsibility and complete resolution. The nine recommendations required multiple entities 

within HUD to develop resolution milestones, which were hindered due to key leadership changes and vacancies. 

(Evaluation Report: 2016-OE-0002) 

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SEMIANNUAL REPORT TO CONGRESS

OPPORTUNITIES FOR IMPROVEMENT WITHIN CPD’S RISK MANAGEMENT PROCESS 

FOR HURRICANE SANDY GRANTS

HUD OIG evaluated the risk analysis process for Hurricane Sandy grants performed by HUD CPD. CPD uses a 

risk analysis process to rank grantees that pose the greatest risk to the integrity of its programs. According to CPD, 

the risk analysis results guide how the monitoring phase of the risk management process is conducted. After CPD 

management certifies the risk analysis results, management develops a monitoring strategy. By monitoring 

grantees, CPD aims to ensure that a grantee performs and delivers on the terms of the grant while reducing the 

possibility of fraud, waste, and mismanagement. 

OIG observed that (1) CPD’s risk analysis worksheet did not consider risk related to performance outputs, (2) the 

risk analysis did not consider the likelihood of risk events occurring, (3) there was no clear correlation between the 

risk analysis and monitoring, (4) CPD made limited use of data analytics in its risk management process, and (5) 

CPD staff was not trained to conduct a risk analysis.

OIG made five recommendations, three of which remain open. CPD’s Office of Field Management disagrees with

two of these recommendations. OIG has attempted to meet and discuss the recommendations with the director of 

that office but has not been successful. OIG will elevate these recommendations to the next senior official for 

resolution. The Disaster Response and Special Issues Division concurred with the remaining recommendations and 

has closed one recommendation but has not provided an estimated completion date for the final action on the 

remaining open recommendation. (Evaluation Report: 2016-OE-0004S) 

SIGNIFICANTLY REVISED MANAGEMENT DECISIONS

Section 5(a)(11) of the Inspector General Act, as amended, requires that OIG report information concerning the 

reasons for any significantly revised management decisions made during the reporting period. During the current 

reporting period, there were 10 significantly revised management decisions.

HUD’S FISCAL YEARS 2016 AND 2015 (RESTATED) CONSOLIDATED FINANCIAL 

STATEMENTS AUDIT (REISSUED), ISSUE DATE: MARCH 1, 2017

ADDITIONAL DETAILS TO SUPPLEMENT OUR FISCAL YEARS 2016 AND 2015 

(RESTATED) U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FINANCIAL 

STATEMENT AUDIT, ISSUE DATE: NOVEMBER 15, 2016

In OIG’s fiscal years 2016 and 2015 consolidated financial statement audit, OIG reported on weaknesses in HUD’s 

internal controls over financial reporting. OIG has reported on these weaknesses for the last 3 years and has issued 

several recommendations to the CFO or Deputy CFO on the matter. Specifically, OIG made recommendations for 

OCFO to (1) improve its existing processes and related internal controls, (2) provide adequate training and 

resources to the individuals who execute the financial reporting process, and (3) develop standard operating 

procedures for its financial reporting process outlining roles and responsibilities. While HUD had provided 

corrective action plans for the prior-year recommendations, it did not immediately implement them, causing some 

of them to become invalid due to changes in processes or technology. During fiscal year 2018, OCFO began an 

initiative to implement corrective actions in a timely manner that would immediately address this repeat finding. In 

that effort, OCFO worked to develop a single corrective action that would address all of the prior-year 

recommendations that were outstanding as they related to the new processes and systems that had been or were 

being implemented during the current fiscal year. Revised management decisions were developed for several prioryear recommendations to reflect the new corrective action that was being implemented and tracked under the most 

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recent financial statement audit report and recommendations, 2018-FO-0004, issued on November 15, 2017.13 

Because the corrective action is being tracked under the most current audit report and several of the prior-year 

recommendations were no longer suitable due to changes in HUD’s financial reporting process, OIG agreed with 

these revised management decisions and with the closure of the prior-year recommendations. (Audit Reports: 

2017-FO-0005 and 2017-FO-0003) 

THE HOUSING AUTHORITY OF THE CITY OF ROCK ISLAND, ROCK ISLAND, IL, DID NOT 

ALWAYS COMPLY WITH HUD’S REQUIREMENTS REGARDING THE ADMINISTRATION OF 

ITS HOUSING CHOICE VOUCHER PROGRAM, ISSUE DATE: SEPTEMBER 28, 2016

HUD OIG audited the Housing Authority of the City of Rock Island, IL’s Housing Choice Voucher Program. OIG

found that the Authority did not always administer its program in accordance with HUD’s requirements. 

Specifically, it did not comply with HUD’s conflict-of-interest requirements when it did not obtain the services of 

an independent third party to perform housing quality standards inspections and rent reasonableness determinations 

for units it substantially controlled. As a result, the Authority inappropriately (1) paid nearly $454,000 in housing 

assistance to the entities and (2) earned nearly $44,000 in administrative fees. Further, HUD lacked assurance that 

the Authority acted in the best interests of its program households. In addition, the Authority did not appropriately 

manage its Family Self-Sufficiency program when it did not ensure that (1) required documentation to determine 

participants’ admission to and continued participation in the program was obtained and maintained and (2) program 

participants were connected to resources and supportive services. It also did not ensure that participants’ (1) escrow 

accounts were correctly calculated and recorded and (2) escrow account disbursements were fully supported. As a 

result, HUD and the Authority lacked assurance that (1) program participants benefited from the program or had 

made progress toward self-sufficiency and (2) more than $141,000 in program funds was used appropriately. 

OIG recommended that HUD require the Authority to (1) reimburse its program more than $507,000 from nonFederal funds for the ineligible housing assistance paid to the entities and the inappropriate escrow disbursements, 

(2) support or reimburse its program more than $130,000 from non-Federal funds for the unsupported coordinator 

grant funds and escrow payments, (3) transfer more than $2,100 to or from its program account for the underfunded 

and overfunded escrows, and (4) implement adequate procedures and controls to address the findings cited. 

HUD’s original management decisions, dated December 22, 2016, agreed with the recommendations. On July 23, 

2018, HUD submitted a revised management decision, stating that HUD intends to seek forgiveness for nearly 

$454,000 of the questioned costs and enter into a repayment agreement with the Authority for the remaining more 

than $44,000. On July 25, 2018, OIG concurred with the revised management decision. (Audit Report: 2016-CH1007) 

 13 Additional Details To Supplement Our Fiscal Years 2017 and 2016 (Restated) U.S. Department of Housing and Urban 

Development Financial Statement Audit, issued November 15, 2017

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SEMIANNUAL REPORT TO CONGRESS

THE GOSHEN HOUSING AUTHORITY, GOSHEN, IN, FAILED TO FOLLOW HUD’S AND ITS 

OWN REQUIREMENTS REGARDING THE ADMINISTRATION OF ITS PROGRAM, ISSUE 

DATE: AUGUST 14, 2014

HUD OIG audited the Goshen Housing Authority’s Section 8 program. OIG found that the Authority did not 

always administer its Section 8 program in accordance with HUD’s and its own requirements. Specifically, the 

Authority did not correctly calculate and maintain its net restricted assets. It also failed to maintain accurate books 

of record to support the appropriateness of credit card expenditures and employee loans. Further, the Authority did 

not properly manage its operating bank account. As a result, HUD and the Authority lacked assurance that program 

funds were (1) available to provide assistance to eligible families and (2) used appropriately. In addition, the 

Authority failed to ensure that 46 program units, including 19 that materially failed, complied with HUD’s housing 

quality standards and its program administration plan. As a result, the Authority’s households were subjected to 

health- and safety-related violations, and the Authority did not properly use its program funds. Further, the 

Authority did not always (1) correctly calculate housing assistance payments, (2) apply the appropriate payment 

standards, (3) maintain required eligibility documentation, and (4) ensure that assisted units were affordable. As a 

result, HUD lacked assurance that the Authority used its program funds appropriately.

OIG recommended that HUD require the Authority to (1) reimburse its program more than $83,000 from nonFederal funds, (2) reimburse its net restricted assets account from non-Federal funds for more than $640,000 or the 

current amount owed, (3) support or reimburse its program more than $274,000 from non-Federal funds, (4) pursue 

repayment or reimburse its program more than $10,000 from non-Federal funds, and (5) reimburse its households or 

landlords nearly $7,000. OIG also recommended that HUD consider a declaration of substantial default based on 

the issues cited. 

HUD’s original management decisions, dated October 30, 2014, agreed with the recommendations. On August 23, 

2018, HUD submitted a revised management decision, stating that the Authority has transferred its program to 

another PHA and the staff and board of the Authority no longer exist. The City intends to terminate the Authority, 

in accordance with State law. Therefore, the field office intends to pursue forgiveness of the questioned costs 

identified in the audit report, once the Authority’s termination is complete. On August 23, 2018, OIG concurred 

with the revised management decision. (Audit Report: 2014-CH-1006) 

THE HAMTRAMCK HOUSING COMMISSION, HAMTRAMCK, MI, DID NOT ALWAYS 

ADMINISTER ITS GRANT IN ACCORDANCE WITH THE RECOVERY ACT, HUD’S, OR ITS 

OWN REQUIREMENTS, ISSUE DATE: APRIL 30, 2014

HUD OIG audited the Hamtramck Housing Commission’s American Recovery and Reinvestment Act of 2009 

grant. The Commission did not comply with the Recovery Act, HUD’s, or its own requirements. Specifically, it (1) 

improperly awarded a noncompetitive Recovery Act-funded contract, (2) lacked support for the reasonableness of 

the price paid for its Recovery Act-funded activities, and (3) used Recovery Act funds to pay for work activities that 

were not included in its approved annual or 5-year action plan. As a result, the Commission subverted full and open 

competition, and both HUD and the Commission lacked assurance that more than $1.1 million in Recovery Act 

competitive grant funds was used appropriately. Further, the Commission did not (1) support that the upgrades to 

its electrical utilities resulted in purported energy savings; (2) issue payments to its contractor in accordance with 

HUD’s requirements; (3) ensure that its contractors complied with the buy American, Section 3, and Davis-Bacon 

Act requirements of the Recovery Act; and (4) file the required declaration of trust. It also did not accurately report 

its Recovery Act grant activities in FederalReporting.gov. As a result, HUD and the Commission lacked assurance 

that its Recovery Act competitive grant was administered in accordance with HUD’s requirements.

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OIG recommended that HUD require the Commission to (1) support or reimburse HUD more than $1.1 million 

from non-Federal funds, for transmission to the U.S. Treasury, for not complying with Federal procurement and 

Recovery Act requirements and (2) implement adequate procedures and controls to address the issues cited.

HUD’s original management decisions, dated August 8, 2014, agreed with the recommendations. On September 7, 

2018, HUD submitted a revised management decision, stating that it intends to seek forgiveness for the questioned 

costs. On September 12, 2018, OIG concurred with the revised management decision. (Audit Report: 2014-CH1003) 

THE HAMTRAMCK HOUSING COMMISSION, HAMTRAMCK, MI, DID NOT ADMINISTER ITS 

GRANT IN ACCORDANCE WITH THE RECOVERY ACT, HUD’S, AND ITS OWN 

REQUIREMENTS, ISSUE DATE: SEPTEMBER 30, 2013

HUD OIG audited the Hamtramck Housing Commission’s Recovery Act grant. OIG found that the Commission 

did not administer its grant in accordance with the Recovery Act, HUD’s, and its own requirements. While the 

Commission generally obligated and spent its Recovery Act funds in accordance with Recovery Act rules and 

regulations, it did not maintain adequate procurement documentation or ensure that it paid reasonable prices for 

Recovery Act-funded construction projects. It also failed to perform adequate independent cost estimates or prepare 

cost analyses of contract modifications. As a result, HUD and the Commission lacked assurance that Recovery Act 

grant funds were used appropriately. The Commission also did not ensure that (1) its contractors paid their 

employees the appropriate Federal labor standard wage rates as required by the Davis-Bacon Act, (2) eligible 

Section 3 participants were provided opportunities to become employed or receive employment training, and (3) it 

accurately reported in FederalReporting.gov the number of jobs created and retained. As a result, HUD and the 

Commission lacked assurance that (1) contractors’ employees were paid the appropriate labor wage rate in 

accordance with the Davis-Bacon Act, (2) opportunities to become employed or receive employment training were 

provided to eligible Section 3 participants, and (3) the public had access to accurate information regarding the 

number of jobs created and retained with formula grant funds, and the Commission’s use of formula grant funds 

was not transparent.

OIG recommended that HUD require the Commission to (1) provide documentation or reimburse more than 

$230,000 from non-Federal funds to HUD, (2) provide support for 11 apprentices or pursue collections from 

applicable contractors to reimburse the appropriate employees more than $14,000 from non-Federal funds, and (3) 

implement adequate procedures and controls to address the findings cited. 

HUD’s original management decisions, dated January 12, 2015, agreed with the recommendations. On September 

7, 2018, HUD submitted a revised management decision, stating that it intends to seek forgiveness for the 

questioned costs. On September 12, 2018, OIG concurred with the revised management decision. (Audit Report: 

2013-CH-1012)

THE FLINT HOUSING COMMISSION, FLINT, MI, DID NOT ALWAYS ADMINISTER ITS 

GRANT IN ACCORDANCE WITH RECOVERY ACT, HUD’S, AND ITS OWN REQUIREMENTS, 

ISSUE DATE: SEPTEMBER 27, 2013

HUD OIG audited the Flint Housing Commission’s Recovery Act grant. The Commission did not always comply 

with the Recovery Act, HUD’s, and its own procurement requirements. Specifically, it did not adequately support 

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SEMIANNUAL REPORT TO CONGRESS

the cost reasonableness of its architectural services’ contracts and Recovery Act-funded projects. As a result, HUD 

and the Commission lacked assurance that more than $960,000 in Recovery Act formula grant funds was used 

appropriately. Also, the Commission did not always follow HUD’s and its own contract management requirements 

for its Recovery Act Public Housing Capital Fund formula grant. Specifically, it did not (1) issue payments to its 

contractor in accordance with HUD’s requirements for one project, (2) adequately manage its force account labor 

unit renovations project, and (3) ensure that its own employees were paid the appropriate Federal labor standard 

wage rates as required by the Davis-Bacon Act. As a result, HUD and the Commission lacked assurance that 

Recovery Act formula grant funds were used appropriately. Further, the Commission underpaid employees nearly 

$22,000. OIG recommended that HUD require the Commission to (1) reimburse HUD more than $3 million in 

grant funds for the inadequate procedures used in the procurement process and (2) implement adequate procedures 

and controls to ensure that contracts are awarded and managed in accordance with HUD’s requirements and its own 

procurement policy. 

OIG recommended that HUD require the Commission to (1) provide sufficient documentation or reimburse HUD 

more than $960,000 for the unsupported cost estimates, wages, and materials and supplies and (2) reimburse its 

employees nearly $22,000 for Federal labor standard wage rates not paid. 

HUD’s original management decisions, dated January 14, 2014, agreed with the recommendations. On September 

7, 2018, HUD submitted a revised management decision, stating that HUD intends to seek forgiveness for the 

questioned costs. On September 12, 2018, OIG concurred with the revised management decision. (Audit Report: 

2013-CH-1009) 

HUD DID NOT HAVE EFFECTIVE CONTROLS TO ENSURE THAT LENDERS REPORTED 

DEFAULTS ACCURATELY AND IN A TIMELY MANNER, ISSUE DATE: SEPTEMBER 10, 

2013

HUD OIG audited HUD’s Office of Single Family Housing to determine whether it had effective controls in place 

to ensure that lenders reported default information on FHA-insured loans accurately and in a timely manner. 

Lenders report default information to HUD’s Single Family Default Monitoring System. This system collects and 

tracks the key significant events that occur during a default episode. 

OIG determined that HUD did not have effective controls to ensure that lenders reported default information 

accurately and in a timely manner. HUD’s controls included only minimal system error codes; basic monitoring of 

error code rates, nonreporting, and underreporting; and lender servicing reviews examining a sample of default 

information at selected lenders. HUD also did not have an adequate penalty process to deter future issues. As a 

result, the default data were not always accurate and timely.

OIG recommended that HUD develop and implement a data management policy, resume reviews of Default 

Monitoring System reporting, and implement a progressive penalty process for pursuing administrative action 

against lenders that fail to report, underreport, and submit inaccurate or unsupported data. HUD agreed with these 

recommendations and completed the corresponding actions in July 2014 and July 2015. 

OIG also recommended that HUD implement additional system error checks to identify potential reporting issues. 

In its original management decision, HUD agreed to modify its Single Family Default Monitoring System to create 

additional system error checks, subject to budgetary constraints. On August 10, 2018, HUD submitted a revised 

management decision, stating that due to funding restraints, it had not been able to enhance the system. Instead, 

HUD plans to implement its 4-year roadmap plan, which includes retiring the Single Family Default Monitoring 

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SEMIANNUAL REPORT TO CONGRESS

System and replacing it with a more modern and robust system. HUD plans to submit a business case for the 

roadmap through the fiscal year 2020 budget process. 

On August 16, 2018, OIG agreed with the revised significant management decision. (Audit report: 2013-KC-0003) 

THE FLINT HOUSING COMMISSION, FLINT, MI, DID NOT ALWAYS ADMINISTER ITS 

GRANTS IN ACCORDANCE WITH RECOVERY ACT, HUD’S, AND ITS OWN 

REQUIREMENTS, ISSUE DATE: SEPTEMBER 27, 2012

HUD OIG audited the Flint Housing Commission’s Recovery Act grants. OIG found that the Commission 

generally complied with the requirements of the Davis-Bacon Act for all four of its Recovery Act competitive 

grants. However, it failed to follow HUD’s and its own procurement requirements for its Recovery Act competitive 

grants. Specifically, it did not (1) provide an adequate rationale for using a noncompetitive procurement method for 

its Recovery Act contracts, (2) prepare an independent cost estimate or analysis before the solicitation of offers, and 

(3) obtain approval from HUD and its board before revising its plan for use of the funds. Additionally, the 

Commission did not (1) issue payments to its contractor in accordance with HUD’s requirements and (2) ensure that 

its contractor included Section 3 clauses in contracts for work funded by the Recovery Act grants. As a result, the 

Commission hindered full and open competition, and HUD and the Commission lacked assurance that more than 

$3.1 million in Recovery Act competitive grant funds was used appropriately. 

OIG recommended that HUD require the Commission to (1) reimburse HUD more than $3 million in grant funds 

for the inadequate procedures used in the procurement process and (2) implement adequate procedures and controls 

to ensure that contracts are awarded and managed in accordance with HUD’s requirements and its own procurement 

policy. 

HUD’s original management decisions, dated January 24, 2013, agreed with the recommendations. On September 

7, 2018, HUD submitted a revised management decision, stating that HUD intends to seek forgiveness for more 

than $2.7 million of the questioned costs and enter into a repayment agreement with the Commission for the 

remaining $355,007. On September 12, 2018, OIG concurred with the revised management decision. (Audit 

Report: 2012-CH-1013) 

PROSPECT MORTGAGE, LLC, SHERMAN OAKS, CA, DID NOT ALWAYS COMPLY WITH 

FEDERAL HOUSING ADMINISTRATION UNDERWRITING AND QUALITY CONTROL 

REQUIREMENTS, ISSUE DATE: JULY 8, 2011

HUD OIG audited FHA-insured loans underwritten by Prospect Mortgage, LLC, to assess whether Prospect 

complied with HUD’s requirements for (1) origination and underwriting relative to cash assets, income, and 

creditworthiness; (2) quality controls; and (3) branch office operations. OIG reported $550,257 in questioned costs 

and nearly $1.7 million in funds to be put to better use for putting FHA’s insurance fund at risk due to Prospect’s 

failure to ensure that it implemented and complied with HUD’s underwriting and quality control requirements for 

the underwriting of 25 of the 33 loans reviewed. Specifically, the 25 loans questioned contained deficiencies that 

affected the insurability of the loans, including improper documentation or assessment of borrowers’ credit, income, 

debts, cash assets, and compensating factors. OIG also questioned Prospect’s lack of quality controls over its 

underwriting process for a specific group of defaulted loans approved by high-default-rate underwriters at two of its 

branch offices. Specifically, the audit identified that the improper quality controls further placed the FHA insurance 

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SEMIANNUAL REPORT TO CONGRESS

fund at risk for losses on additional defaulted loans with mortgages of more than $26.1 million. The audit attributed 

the quality control deficiencies to a failure by Prospect management to ensure that it implemented and documented 

quality control practices that complied with HUD’s requirements.

OIG initially recommended and the Acting Deputy Assistant Secretary for Single Family Housing agreed to assess 

more than $2.244 million (recommendations 1A, 1B, 1C, and 1D) questioned by the audit to require Prospect to (1) 

reimburse HUD $344,326 for the actual loss sustained on 5 claim-terminated loans that were sold; (2) reimburse 

HUD for potential losses estimated to be $202,655 on 3 claim-terminated loans that were not resold; (3) indemnify 

HUD against potential losses totaling nearly $1.7 million on 17 defaulted loans; and (4) pay down the principal 

balance by $3,276 on 4 overinsured loans, reimbursing HUD for any claims paid on these 4 loans. These 

recommendations were in addition to other recommendations to conduct full underwriting reviews of remaining 

terminated and defaulted loans, refer Prospect to the Mortgagee Review Board for not complying with HUD’s 

requirements, and pursue civil and administrative action against Prospect.

After reaching management decisions in which HUD agreed to require repayment of more than $2.244 million by 

Prospect, HUD has determined that a settlement agreement, dated June 30, 2017, between the U.S. Department of 

Justice on behalf of HUD and Prospect in the amount of $4.157 million, which resulted from a separate review, was 

sufficient to not seek additional remedy from Prospect. As a result, Single Family revised its management decision 

to not seek additional remedy. Further, Single Family stated that it became aware as of April 1, 2018, that Prospect 

has not recertified or does it intend to recertify and remain as an active FHA lender. On April 26, 2018, OIG agreed 

with the revised management decisions. (Audit Report: 2011-AT-1011) 

SIGNIFICANT MANAGEMENT DECISION WITH WHICH OIG DISAGREES

During the reporting period, OIG did not disagree with any significant management decision. 

FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT OF 1996

Section 804 of FFMIA requires OIG to report in its Semiannual Reports to Congress instances and reasons when an 

agency has not met the intermediate target dates established in its remediation plans required by FFMIA. Section 

803(a) of FFMIA requires that each agency establish and maintain financial management systems that comply with 

(1) Federal financial management system requirements, (2) Federal accounting standards, and (3) the USSGL at the 

transaction level.

During fiscal year 2018, HUD made progress addressing a multitude of material weaknesses from OIG’s fiscal year 

(FY) 2017 and prior financial statement audits. However, OIG noted continued noncompliance with the three 

section 803(a) elements of FFMIA within HUD’s financial management system. HUD’s continued noncompliance 

is due to a high volume of material weaknesses related to (1) ineffective internal controls over financial reporting, 

(2) multiple instances of noncompliance with GAAP, (3) information processing and the completeness and accuracy 

of data between the HUD OCFO environment and the ARC-FSSP environment (that is, through NCIS), and (4) 

longstanding issues related to legacy component and program office system weaknesses that remain unresolved. 

In FY 2017, HUD took the important step of restarting FFMIA system compliance reviews and continued 

performing these reviews in FY 2018. However, HUD still needs to address weaknesses related to its IT 

governance and project management practices to remediate system noncompliance with FFMIA.

OIG noted a number of instances in which HUD has not met the intermediate target dates established in its prioryear remediation plans to address FFMIA noncompliance. HUD has struggled for more than a decade to modernize 

56
SEMIANNUAL REPORT TO CONGRESS

outdated legacy financial systems. While HUD expected its FY 2016 transition to an FSSP to remediate multiple 

instances of FFMIA noncompliance, significant financial management and IT governance weaknesses prevented 

planned gains. Specifically, changes to the New Core project’s scope kept remediation plans that relied on the 

retirement of legacy financial systems that are unable to meet current needs from being implemented. Additionally, 

the modified New Core Project scope delayed delivery of a longstanding need to establish a departmental 

managerial cost accounting capability. 

As of September 30, 2018, OIG noted continuing FFMIA noncompliance within HUD’s Ginnie Mae component. 

Ginnie Mae’s continued noncompliance was due primarily to unremediated material weaknesses in internal control 

over financial reporting and its inability to properly account for its defaulted issuer loan portfolio. While Ginnie 

Mae had planned to implement a loan-level accounting system in FY 2018, delays have pushed the implementation 

into FY 2019.

In addition to the noncompliance at Ginnie Mae, HUD’s CPD program office has been unable to address grant 

accounting system and process weaknesses in the timeframe initially planned. Specifically, significant issues within 

two CPD grant accounting systems have not been remediated in planned timeframes. CPD’s decision to not adopt 

compliant grant accounting and related controls within the IDIS application retrospectively continues the 

longstanding noncompliance with Federal system requirements, GAAP, and the USSGL. CPD also missed 

remediation target dates established to address FY 2017 FFMIA noncompliance related to disaster grant accounting 

processes and the Disaster Recovery Grants Reporting system application because management underestimated and 

overlooked significant system and process weaknesses. As a result, CPD was unable to prevent or detect invalid 

disaster grant activity and substantial noncompliance with laws and regulations identified by FY 2018 OIG program 

audits of CPD disaster grants. 

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SEMIANNUAL REPORT TO CONGRESS

CHAPTER 9 – WHISTLEBLOWER OMBUDSMAN 

Whistleblowers play a critical role in keeping our government programs honest, efficient, and accountable. The 

U.S. Department of Housing and Urban Development, Office of Inspector General (HUD OIG), continues to ensure 

that HUD and HUD OIG employees are aware of their rights to disclose misconduct, waste, or abuse in HUD 

programs without reprisal and to assist HUD and HUD OIG employees in seeking redress when employees believe 

that they have been subject to retaliation for whistleblowing. HUD OIG also investigates complaints of 

whistleblower retaliation by government contractors and grantees.

HUD OIG’s Whistleblower Protection Coordinator Program works with HUD and HUD OIG employees to provide 

information on 

• employee options for disclosing misconduct, waste, or abuse in HUD programs;

• statutory protections for Federal employees who make such disclosures; and

• how to file a complaint under the Whistleblower Protection Act when an employee believes

he or she has been retaliated against for making protected disclosures.

The HUD OIG Whistleblower Protection Coordinator Program continued its focus on staff training and individual 

assistance. The mandatory whistleblower training is presented in conjunction with the OIG annual ethics training. 

The 2018 training was presented on September 11, 2018. It was presented live and will be posted on HUD OIG’s

website for employees who could not attend in person. In addition, in October 2018, the Acting Inspector General 

will issue a written notice to all OIG employees, which provides information about prohibited personnel practices, 

avenues for making whistleblower disclosures, and employees’ rights to file complaints if they are subject to

retaliation.

In October 2017, Congress enacted the Dr. Chris Kirkpatrick Whistleblower Protection Act of 2017, which contains 

new training and performance standards for supervisors regarding the handling of whistleblowers. HUD OIG is

participating with the Inspector General community to develop consistent, new training and supervisor requirements 

in conjunction with the Office of Special Counsel and the Office of Personnel Management. HUD OIG plans to

have the new elements and training in place in fiscal year 2019. 

The Whistleblower Protection Coordinator meets with HUD employees individually, upon request. Generally,

HUD OIG will refer HUD employees with whistleblower retaliation complaints to the Office of Special Counsel 

(OSC). HUD OIG does not track these matters unless OSC requests HUD OIG assistance in investigating a 

complaint. During this semiannual period, HUD OIG did not substantiate any whistleblower retaliation complaints 

against HUD employees.

HUD OIG received a number of complaints filed under 41 U.S.C. (United States Code) Section 4712. In December

2016, Congress passed the Enhancement of Whistleblower Protection Act. It made the whistleblower protections 

under 41 U.S.C. 4712 permanent. Section 4712 extends whistleblower protection to employees of Federal

contractors, subcontractors, grantees, and subgrantees. If the employee of a HUD grantee or contractor believes he 

or she has been retaliated against for whistleblowing, he or she may file a complaint with OIG, and OIG will 

investigate the complaint and provide findings of fact to HUD. OIG is required to complete its investigation within

180 days, unless the complainant agrees to an extension. The chart below provides further information on those 

complaints.

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SEMIANNUAL REPORT TO CONGRESS

Number of complainants asserting 

whistleblower status14 10 (6 referred to hotline)

Complaints referred for investigation to the 

HUD OIG Office of Investigation (OI) 4 

Complaint investigations opened by OI 2 

Complaints declined by OI 2 

Complaints currently under review by OI 1 

Employee complaint investigations closed by 

OI 1 

 

14 Not all complainants are found to be whistleblowers under Section 4712. For example, many complainants raise 

questions regarding treatment by public housing agencies following their alleged disclosures of wrongdoing by the same 

housing agency. They claim to be whistleblowers, but they are not employees of the grantee. These complaints are 

referred to OIG’s hotline for appropriate referral and disposition.

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SEMIANNUAL REPORT TO CONGRESS

APPENDIX 1 – PEER REVIEW REPORTING 

BACKGROUND

The Dodd-Frank Wall Street Reform and Consumer Protection Act (No. 111-203), section 989C, requires inspectors 

general to report the latest peer review results in their semiannual reports to Congress. The purpose in doing so is to 

enhance transparency within the government. Both the Office of Audit and Office of Investigation are required to 

undergo a peer review of their individual organizations every 3 years. The purpose of the review is to ensure that 

the work completed by the respective organizations meets the applicable requirements and standards. The following 

is a summary of the status of the latest round of peer reviews for the organization. 

OFFICE OF AUDIT

PEER REVIEW CONDUCTED ON HUD OIG BY DOT OIG

The U.S. Department of Housing and Urban Development, Office of Inspector General (HUD OIG), received a 

grade of pass (the highest rating) on the peer review report issued by the U.S. Department of Transportation (DOT) 

OIG on September 28, 2018. There were no recommendations included in the System Review Report. The report 

stated: 

In our opinion, the system of quality control for the audit organization of the HUD OIG in effect for the year ended 

March 31, 2018, has been suitably designed and complied with to provide the HUD OIG with reasonable assurance 

of performing and reporting in conformity with applicable professional standards in all material respects. Audit 

organizations can receive a rating of pass, pass with deficiencies, or fail. The HUD OIG has received a peer 

review rating of pass.

PEER REVIEW CONDUCTED BY HUD OIG ON DOD OIG

HUD OIG conducted an external peer review of the U.S. Department of Defense (DoD) OIG, Office of Audit, and 

issued a final report September 27, 2018. DoD OIG received a peer review rating of pass. A copy of the external 

quality control review report can be viewed at https://media.defense.gov/2018/Oct/05/2002048826/-1/-

1/1/TRANSMITTAL%20MEMO%20AND%20SYSTEM%20REVIEW%20REPORT.PDF.

OFFICE OF INVESTIGATION

PEER REVIEW CONDUCTED ON HUD OIG BY DHS OIG 

The U.S. Department of Homeland Security (DHS) OIG conducted a peer review of the HUD OIG, Office of 

Investigation, and issued a final report on July 3, 2017. DHS OIG determined that HUD OIG was in compliance 

with the quality standards established by the Council of the Inspectors General on Integrity and Efficiency and the 

Attorney General’s guidelines.

PEER REVIEW CONDUCTED BY HUD OIG ON USDA OIG

HUD OIG conducted an external peer review of the U.S. Department of Agriculture (USDA) OIG, Office of

Investigation, and issued a final report on October 4, 2016. HUD OIG determined that USDA OIG was in

compliance with the quality standards established by the Council of the Inspectors General on Integrity and 

Efficiency

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SEMIANNUAL REPORT TO CONGRESS

APPENDIX 2 – AUDIT REPORTS ISSUED

Internal Reports

AUDIT REPORTS

CHIEF FINANCIAL OFFICER

2018-FO-0006 HUD Did Not Comply With the Improper Payments Elimination and Recovery Act of 2010, 

05/15/2018.

2018-KC-0002

HUD’s Office of the Chief Financial Officer Did Not Locate or Recover Its Funds Held by State 

Unclaimed Property Administrators, 08/07/2018. Questioned: $1,946,286. Unsupported: $1,946,286. 

Better use: $2,156,191.

2018-KC-0005 HUD’s Travel Cards Were Used for Unauthorized, Unsupported, or Ineligible Purchases in at Least 950 

Instances Totaling More Than $95,000, 09/27/2018. Questioned: $11,173. Unsupported: $5,780.

COMMUNITY PLANNING AND DEVELOPMENT

2018-AT-0001 HUD’s Oversight of the Use of Community Development Block Grant (CDBG) Funds To Repay 

Section 108 Loans Was Adequate, 09/26/2018.

2018-FW-0001 CPD’s Risk Assessment and Monitoring Program Did Not Provide Effective Oversight of Federal 

Funds, 06/26/2018. Better use: $907,982,874.

2018-FW-0002 HUD’s Office of Block Grant Assistance Had Not Codified the Community Development Block Grant 

Disaster Recovery Program, 07/23/2018.

2018-LA-0003 HUD’s Technical Assistance Award Selection and Assignment Process for Continuum of Care and 

Homeless Programs Was Conducted in an Appropriate Manner, 08/07/2018.

2018-LA-0006 Improvements Are Needed for HUD’s Code Enforcement Program, 09/25/2018.

2018-PH-0003

HUD Did Not Have Adequate Oversight of Its Community Compass Technical Assistance and 

Capacity Building Program, 09/28/2018. Questioned: $858,881. Unsupported: $845,497. Better use: 

$20,536,475.

HOUSING

2018-BO-0001

HUD’s Office of Residential Care Facilities Did Not Always Have and Use Financial Information to 

Adequately Assess and Monitor Nursing Homes, 09/17/2018. Questioned: $16,817,262. Unsupported: 

$8,974,000. Better use: $85,918,357.

2018-KC-0003 HUD’s DASP Note Sales Generally Resulted in Lower Loss Rates Than Conveyance Claims, 

09/06/2018.

2018-KC-0004 HUD Did Not Always Identify and Collect Partial Claims Out of Surplus Foreclosure Proceeds, 

09/20/2018. Questioned: $5,690,000. Better use: $6,770,000.

2018-LA-0005

HUD Did Not Have Adequate Controls To Ensure That Partial Claim Notes for FHA Loans Were 

Properly Tracked for Future Collection, 09/21/2018. Questioned: $644,767. Unsupported: $644,767. 

Better use: $5,376,761.

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SEMIANNUAL REPORT TO CONGRESS

2018-LA-0007 HUD Paid an Estimated $413 Million for Unnecessary Preforeclosure Claim Interest and Other Costs 

Due to Lender Servicing Delays, 09/27/2018. Better use: $413,513,975.

2018-NY-0001 HUD Did Not Adequately Administer Its Housing Counseling Program, 09/24/2018. Questioned: 

$1,310,719. Unsupported: $1,310,719.

2018-PH-0001 HUD’s Office of Healthcare Programs Generally Approved Section 232 FHA-Insured Loans in 

Accordance With HUD Requirements, 08/10/2018.

PUBLIC AND INDIAN HOUSING

2018-CH-0002 HUD Lacked Adequate Oversight of Lead-Based Paint Reporting and Remediation in Its Public 

Housing and Housing Choice Voucher Programs, 06/14/2018.

2018-FW-0003 REAC Could Improve Its Inspections Processes and Controls, 08/31/2018.

2018-LA-0002 HUD Did Not Have Adequate Controls To Ensure That Grantees Submitted Accurate Tribal 

Enrollment Numbers for Program Funding, 05/07/2018.

2018-LA-0004 HUD Did Not Always Ensure That Grantees Maintained the Required Depository Agreements for 

Investing Program Funds, 08/13/2018.

2018-PH-0002 HUD Did Not Provide Adequate Oversight of Its Family Self-Sufficiency Program, 09/10/2018. 

Questioned: $7,780,970. Unsupported: $7,779,450.

AUDIT-RELATED MEMORANDUMS15

CHIEF FINANCIAL OFFICER

2018-FW-0802

Interim Report - Potential Antideficiency Act and Generally Accepted Accounting Principle Violations 

Occurred With Disaster Relief Appropriation Act, 2013, Funds, 05/15/2018. Questioned: 

$1,092,537,217. Unsupported: $1,092,537,217.

2018-NY-0801 Risk Assessment of HUD’s Grant Closeout Process, 09/27/2018.

HOUSING

2018-CF-0802

HUD Failed To Enforce the Terms of a Settlement Agreement With Fifth Third Bank Because It Did 

Not Record Indemnified Loans in Its Tracking System, 09/29/2018. Questioned: $311,699. Better 

use: $47,433,895.

PUBLIC AND INDIAN HOUSING

2018-AT-0801

HUD’s Improper Approvals Resulted in Invalid Exemptions and an Ineligible Capital Funds 

Expenditure for the Lexington-Fayette Urban County Housing Authority, 09/28/2018. Questioned: 

$1,424,202. Unsupported: $1,385,791.

2018-LA-0801 The Office of Native American Programs Section 184 Program Continues To Operate Without 

Adequate Oversight 3 Years After the Prior OIG Audit, 08/27/2018.

 

15 The memorandum format is used to communicate the results of reviews not performed in accordance with generally accepted 

government auditing standards; to close out assignments with no findings and recommendations; to respond to requests for information; 

or to report on the results of a survey, attestation engagement, or civil actions or settlements.

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SEMIANNUAL REPORT TO CONGRESS

External Reports

AUDIT REPORTS

COMMUNITY PLANNING AND DEVELOPMENT

2018-AT-1003 The North Carolina Department of Commerce, Raleigh, NC, Generally Administered Its Grant Program 

in Accordance With HUD Regulations, 04/16/2018.

2018-AT-1005

The City of Margate, FL, Did Not Properly Administer Its Neighborhood Stabilization Program Grants 

1 and 3 in Compliance With HUD Regulations, 05/29/2018. Questioned: $820,490. Unsupported: 

$8,919.

2018-AT-1010 The Florida Department of Economic Opportunity, Tallahassee, FL, Should Strengthen Its Capacity To 

Administer Its Disaster Grants, 09/21/2018.

2018-AT-1011

The City of Hattiesburg, MS, Did Not Always Administer Its HOME Investment Partnerships Program 

in Accordance With HUD’s and Its Own Requirements, 09/28/2018. Questioned: $474,460. 

Unsupported: $441,202. Better use: $32,019.

2018-BO-1003 The City of Providence, RI, Did Not Properly Administer Its HOME Program, 06/20/2018. 

Questioned: $3,350,132. Unsupported: $1,898,573. Better use: $1,253,596.

2018-BO-1005 The State of Connecticut Did Not Ensure That Its Grantees Properly Administered Their Housing 

Rehabilitation Programs, 09/19/2018. Questioned: $2,974,484. Unsupported: $1,348,537.

2018-CH-1008

Hamilton County, OH, and People Working Cooperatively, Inc., Did Not Always Comply With HUD’s 

Requirements in the Use of Community Development Block Grant Funds for a Housing Repair 

Services Program, 09/27/2018. Questioned: $22,860. Unsupported: $12,741.

2018-FW-1003 The Texas General Land Office, Austin, TX, Should Strengthen Its Capacity To Administer Its 

Hurricane Harvey Disaster Grants, 05/07/2018.

2018-FW-1004 The City of Dallas, TX, HOME Investment Partnerships Program Was Not Always Administered in 

Accordance With Requirements, 05/08/2018. Questioned: $4,289,848.

2018-FW-1007

The State of Louisiana, Baton Rouge, LA, Did Not Always Maintain Adequate Documentation or 

Comply With Website Reporting Requirements, 09/28/2018. Questioned: $515,149. Unsupported: 

$515,149.

2018-LA-1004 The City of Moreno Valley, CA, Did Not Administer Its Code Enforcement Program in Accordance 

With HUD Requirements, 04/27/2018. Questioned: $797,222. Unsupported: $797,222.

2018-LA-1005 The City of Modesto, CA, Did Not Use Community Development Block Grant Funds in Accordance 

With HUD Requirements, 07/03/2018. Questioned: $1,944,476. Unsupported: $1,686,739.

2018-LA-1006

The Sacramento Housing and Redevelopment Agency, Sacramento, CA, Did Not Always Use 

Community Development Block Grant Funds in Accordance With HUD Requirements or Its Own 

Policies, 07/25/2018. Questioned: $440,897. Unsupported: $440,614.

2018-NY-1004 The Lower Manhattan Development Corporation, New York, NY, Generally Administered Its Disaster 

Recovery-Funded Programs in Accordance With Applicable Requirements, 05/23/2018.

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SEMIANNUAL REPORT TO CONGRESS

2018-NY-1007

The City of New York, NY, Did Not Always Use Disaster Recovery Funds Under Its Program for 

Eligible and Supported Costs, 09/27/2018. Questioned: $597,899. Unsupported: $596,701. Better 

use: $544.

2018-PH-1008

The City of Erie, PA, Did Not Always Administer Its Code Enforcement and Community Policing 

Activities in Accordance With HUD and Federal Requirements, 09/26/2018. Questioned: $1,671,838. 

Unsupported: $1,671,838. Better use: $597,801.

HOUSING

2018-AT-1007

The Pinellas County Housing Authority, Largo, FL, Generally Administered Its Rental Assistance 

Demonstration Conversion but Did Not Fully Comply With HUD’s Rent Reasonableness 

Determinations After Conversion, 07/13/2018.

2018-BO-1004 The Middlesex Health Care Center, Middletown, CT, Was Not Always Operated According to Its 

Regulatory Agreement and HUD Requirements, 06/29/2018. Questioned: $1,168,000.

2018-CH-1005 Towne Mortgage Company, Troy, MI, Generally Implemented Its Loss Mitigation Program in 

Accordance With HUD’s Requirements, 09/18/2018.

2018-CH-1009

The Owner and Management Agent for Rainbow Terrace Apartments, Cleveland, OH, Did Not Always 

Operate the Project in Accordance With the Regulatory Agreement and HUD’s Requirements, 

09/28/2018. Questioned: $2,490,615. Unsupported: $2,349,417.

2018-DE-1001 Meeker Housing Authority, Meeker, CO, Improperly Used Project Operating Funds for Its 221(d)(3) 

Multifamily Housing Insurance Program, 09/06/2018. Questioned: $205,560. Unsupported: $12,355.

2018-FW-1005

Eastwood Terrace Apartments, Nacogdoches, TX, Multifamily Section 8, Subsidized Questionable 

Tenants, Overhoused Tenants and Uninspected Units, 08/02/2018. Questioned: $1,865,344. 

Unsupported: $1,865,344.

2018-FW-1006 Louis Manor Apartments, Port Arthur, TX, Multifamily Section 8 Program, Subsidized Unsupported 

Tenants and Uninspected Units, 08/31/2018. Questioned: $268,452. Unsupported: $268,452.

2018-KC-1003 The Lender Generally Underwrote the Second and Delaware Project Loan in Accordance With HUD 

Rules and Regulations, 09/27/2018.

2018-PH-1004 The Owner of Diamond Park, Philadelphia, PA, Generally Managed Its HUD-Insured Property in 

Accordance With Applicable Requirements, 05/01/2018.

2018-PH-1006

The Owner of Luther Towers II, Wilmington, DE, Did Not Manage Its HUD-Insured Project in 

Accordance With Its Regulatory Agreement and HUD Requirements, 09/21/2018. Questioned: 

$2,136,849. Unsupported: $2,136,849. Better use: $100,000.

LEAD HAZARD CONTROL

2018-CH-1010

The City of Chicago’s Department of Public Health, Chicago, IL, Did Not Administer Its Lead Hazard 

Reduction Demonstration Grant Program in Accordance With HUD’s and Its Own Requirements,

09/30/2018. Questioned: $634,899. Unsupported: $512,423. Better use: $386,182.

2018-KC-1002 The Kansas City, MO, Health Department Did Not Spend Funds in Accordance With HUD 

Requirements, 04/06/2018. Questioned: $1,913,347. Unsupported: $1,894,174.

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SEMIANNUAL REPORT TO CONGRESS

PUBLIC AND INDIAN HOUSING

2018-AT-1004 The Greensboro Housing Authority, Greensboro, NC, Generally Administered Its Rental Assistance 

Demonstration Conversion in Accordance With HUD Requirements, 05/10/2018.

2018-AT-1006

The Lexington-Fayette Urban County Housing Authority, Lexington, KY, Did Not Always Comply 

With HUD’s and Its Own Section 8 Housing Choice Voucher Program Requirements, 07/13/2018. 

Questioned: $167,667.

2018-AT-1008

The Lexington-Fayette Urban County Housing Authority, Lexington, KY, Did Not Fully Comply With 

HUD’s Program Requirements After the Completion of Its Rental Assistance Demonstration Program 

Conversion, 07/13/2018. Questioned: $443,204.

2018-AT-1009

The Pell City Housing Authority, Pell City, AL, Did Not Always Administer Its and the Ragland 

Housing Authority, Ragland, AL’s Funds in Accordance With HUD Requirements, 07/23/2018. 

Questioned: $45,747. Unsupported: $44,454.

2018-CH-1001

The Grand Rapids Housing Commission, Grand Rapids, MI, Did Not Always Correctly Calculate and 

Pay Housing Assistance for Units Converted Under the Rental Assistance Demonstration, 06/11/2018. 

Questioned: $20,591. Unsupported: $44. Better use: $3,103.

2018-CH-1002

The Indianapolis Housing Agency, Indianapolis, IN, Did Not Always Comply With HUD’s Regulations 

and Its Own Requirements Regarding the Financial Administration of Its Housing Choice Voucher 

Program, 08/01/2018. Questioned: $199,604. Unsupported: $199,604. Better use: $1,284.

2018-CH-1003

The Housing Authority of the City of Evansville, Evansville, IN, Did Not Follow HUD’s and Its Own 

Requirements for Units Converted Under the Rental Assistance Demonstration, 08/02/2018. 

Questioned: $1,216,170. Unsupported: $1,216,170.

2018-CH-1004 The Cuyahoga Metropolitan Housing Authority, Cleveland, OH, Generally Administered Its Public 

Housing Program in Accordance With HUD’s and Its Own Requirements, 08/28/2018.

2018-CH-1006

The Columbus Metropolitan Housing Authority, Columbus, OH, Did Not Always Comply With HUD’s 

Requirements Regarding the Administration of Its Public Housing Operating and Capital Fund 

Programs, 09/18/2018. Questioned: $21,232,163. Unsupported: $525,301.

2018-CH-1007

The Housing Authority of the County of Lake, Grayslake, IL, Did Not Always Comply With HUD’s 

and Its Own Requirements Regarding the Administration of Its Housing Choice Voucher Program, 

09/25/2018. Questioned: $650,322. Unsupported: $587,897. Better use: $583,227.

2018-KC-1004

The Benkelman Housing Authority, Benkelman, NE, Did Not Follow HUD Rules and Regulations for 

Public Housing Programs Related to Procurement and Maintenance, Tenant Certifications, Laundry 

Machine Income, and Expenditures, 09/27/2018. Questioned: $86,314. Unsupported: $86,314.

2018-LA-1007 The Housing Authority of the City of Los Angeles, CA, Generally Administered Its Rental Assistance 

Demonstration in Accordance With HUD Requirements, 08/24/2018.

2018-LA-1008

The Housing Authority of the City of Los Angeles, Los Angeles, CA, Did Not Always Manage Its

Legal Services in Compliance With HUD Requirements, 09/27/2018. Questioned: $793,101. 

Unsupported: $793,101.

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SEMIANNUAL REPORT TO CONGRESS

2018-NY-1005

The Red Bank Housing Authority, Red Bank, NJ, Did Not Always Administer Its Operating and 

Capital Funds in Accordance With Requirements, 09/26/2018. Questioned: $622,646. Unsupported:

$622,646.

2018-NY-1006 The Buffalo Municipal Housing Authority, Buffalo, NY, Did Not Administer Its Operating Funds in 

Accordance With Requirements, 09/26/2018. Questioned: $1,891,017. Unsupported: $1,808,110.

2018-NY-1008 The Newark Housing Authority, Newark, NJ, Did Not Ensure That Units Met Housing Quality 

Standards and That It Accurately Calculated Abatements, 09/28/2018. Questioned: $116,110.

2018-PH-1005

The Adams County Housing Authority, Gettysburg, PA, Did Not Administer Its Housing Choice 

Voucher Program According to HUD Requirements, 09/19/2018. Questioned: $272,837. 

Unsupported: $272,558.

2018-PH-1007

The Crisfield Housing Authority, Crisfield, MD, Did Not Properly Administer Its Public Housing 

Program Operating and Capital Funds, 09/25/2018. Questioned: $2,090,811. Unsupported: 

$1,808,459. Better use: $63,912.

2018-SE-1001 The Spokane, WA, Housing Authority Did Not Follow Permanent Relocation Requirements for Its 

RAD Conversion of the Parsons Apartments, 04/24/2018.

AUDIT-RELATED MEMORANDUMS16

COMMUNITY PLANNING AND DEVELOPMENT

2018-FO-1801

Independent Attestation Review: U.S. Department of Housing and Urban Development, Office of 

Special Needs Assistance Continuum of Care, Regarding Drug Control Accounting for Fiscal Year 

2017, 05/04/2018.

GENERAL COUNSEL

2018-FO-1802

Final Civil Action: Deloitte & Touche, LLP, Settled Allegations That It Failed To Conduct Taylor, 

Bean & Whitaker Mortgage Corporation’s Audits in Conformance With Generally Accepted Auditing

Standards, 08/27/2018. Questioned: $115,000,000.

2018-FW-1801 Final Civil Action: BSR Trust, LLC, Settled Allegations of Making False Claims Related to Section 8 

Housing Assistance Payments, 05/21/2018. Questioned: $30,000.

2018-FW-1802

Final Civil Action: The Former Executive Director of the Housing Authority of the City of Beeville, 

TX, Et Al, Settled False Claims Allegations in the Housing Choice Voucher Program, 08/21/2018. 

Questioned: $40,000.

16 The memorandum format is used to communicate the results of reviews not performed in accordance with generally accepted 

government auditing standards; to close out assignments with no findings and recommendations; to respond to requests for information; 

or to report on the results of a survey, an attestation engagement, or civil actions or settlements.

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SEMIANNUAL REPORT TO CONGRESs

APPENDIX 3 – TABLES

TABLE A

AUDIT REPORTS ISSUED BEFORE START OF PERIOD WITH NO MANAGEMENT 

DECISION AT 9/30/2018 

*Significant audit reports described in previous Semiannual Reports 

REPORT NUMBER AND TITLE REASON FOR LACK OF MANAGEMENT 

DECISION ISSUE DATE

* 2014-FO-0003 Additional Details To Supplement 

Our Report On HUD’s Fiscal Years 2013 and 2012 

(Restated) Financial Statements

See chapter 8, page 34 12/16/2013

* 2014-FO-0004 HUD’s Fiscal Year 2013 

Compliance With the Improper Payments 

Elimination and Recovery Act of 2010

See chapter 8, page 35 04/15/2014

* 2014-LA-0005 HUD Did Not Always Recover 

FHA Single-Family Indemnification Losses and 

Ensure That Indemnification Agreements Were 

Extended

See chapter 8, page 36 08/08/2014

* 2015-FO-0003 Audit of the Government National 

Mortgage Association’s Financial Statements for 

Fiscal Years 2014 and 2013

See chapter 8, page 37 02/27/2015

* 2016-FO-0001 Audit of Fiscal Years 2015 and 

2014 (Restated) Financial Statements See chapter 8, page 37 11/13/2015

* 2016-FO-0003 Additional Details To Supplement 

Our Fiscal Years 2015 and 2014 (Restated) U.S. 

Department of Housing and Urban Development 

Financial Statement Audit

See chapter 8, page 38 11/18/2015

* 2016-PH-0001 HUD Did Not Always Provide 

Adequate Oversight of Property Acquisition and 

Disposition Activities

See chapter 8, page 39 06/30/2016

* 2016-PH-0005 HUD Did Not Always Provide 

Accurate and Supported Certifications of State 

Disaster Grantee Procurement Processes

See chapter 8, page 40 09/29/2016

* 2017-FO-0001 Audit of Fiscal Years 2016 and 

2015 (Restated) Financial Statements See chapter 8, page 41 11/14/2016

* 2017-FO-0003 Additional Details To Supplement 

Our Fiscal Years 2016 and 2015 (Restated) U.S. 

Department of Housing and Urban Development 

Financial Statement Audit

See chapter 8, page 42 11/15/2016

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SEMIANNUAL REPORT TO CONGRESS

REPORT NUMBER AND TITLE REASON FOR LACK OF MANAGEMENT 

DECISION ISSUE DATE

* 2017-DP-0001 HUD’s Transition to a Federal 

Shared Service Provider Failed To Meet 

Expectations

See chapter 8, page 42 02/01/2017

2017-FW-0001 HUD’s Office of Community 

Planning and Development Did Not Appropriately 

Assess State CDBG Grantees’ Risk to the Integrity 

of CPD Programs or Adequately Monitor Its 

Grantees

See chapter 8, page 43 07/10/2017

2017-CF-0801 HUD Needs To Clarify Whether 

Illegal-Undocumented Aliens Are Eligible for 

Assistance Under the Housing Opportunities for

Persons With AIDS Program

See chapter 8, page 44 08/21/2017

* 2017-PH-0002 HUD Did Not Provide Sufficient 

Guidance and Oversight To Ensure That State 

Disaster Grantees Followed Proficient Procurement 

Processes

See chapter 8, page 45 09/22/2017

* 2017-NY-0002 HUD Could Improve Its Controls 

Over the Disposition of Real Properties Assisted 

With Community Development Block Grant Funds

See chapter 8, page 46 09/29/2017

* 2018-FO-0004 Additional Details To Supplement 

Our Fiscal Years 2017 and 2016 (Restated) U.S. 

Department of Housing and Urban Development 

Financial Statement Audit

See chapter 8, page 47 11/15/2017

EVALUATION REPORTS ISSUED BEFORE START OF PERIOD WITH NO MANAGEMENT 

DECISION AT 9/30/2018

REPORT NUMBER AND TITLE REASON FOR LACK OF MANAGEMENT 

DECISION ISSUE DATE

2014-OE-0002 Risk-Based Enforcement Could 

Improve Program Effectiveness See chapter 8, page 48 02/12/2016

2015-0E-0004 Comprehensive Strategy Needed To 

Address HUD Acquisition Challenges See chapter 8, page 48 02/02/2016

2015-OE-0008 Departmentwide Approach Needed 

To Address HUD Contractor Employee Security 

Risks

See chapter 8, page 49 03/20/2016

2016-OE-0002 HUD Web Application Security 

Evaluation See chapter 8, page 49 06/06/2017

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SEMIANNUAL REPORT TO CONGRESS

REPORT NUMBER AND TITLE REASON FOR LACK OF MANAGEMENT 

DECISION ISSUE DATE

2016-OE-0004S Opportunities for Improvement 

Within CPD’s Risk Management Process for 

Hurricane Sandy Grants

See chapter 8, page 50 03/29/2017

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SEMIANNUAL REPORT TO CONGRESS

TABLE B

SIGNIFICANT AUDIT REPORTS FOR WHICH FINAL ACTION HAD NOT BEEN COMPLETED 

WITHIN 12 MONTHS AFTER THE DATE OF THE INSPECTOR GENERAL’S REPORT

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2005-AT-1013

Corporacion para el Fomento Economico de la 

Ciudad Capital, San Juan, Puerto Rico, Did 

Not Administer Its Independent Capital Fund 

in Accordance with HUD Requirements

09/15/2005 01/11/2006 Note 1

2006-CH-1021

Housing Authority of the County of Cook, 

Chicago, Illinois, Had Weak Controls over Its 

Section 8 Housing Choice Voucher Program

09/30/2006 01/26/2007 09/30/2037

2007-AT-1010

The Cathedral Foundation of Jacksonville, FL, 

Used More Than $2.65 Million in Project 

Funds for Questioned Costs

08/14/2007 12/03/2007 Note 1

2009-NY-1012

The City of Rome Did Not Administer Its 

Economic Development Activity in 

Accordance With HUD Requirements, Rome, 

NY

05/20/2009 09/23/2009 01/30/2032

2009-AT-0001

HUD Lacked Adequate Controls to Ensure the 

Timely Commitment and Expenditure of 

HOME funds

09/28/2009 03/18/2011 Note 1

2010-AT-1003 The Housing Authority of Whitesburg 

Mismanaged Its Operations, Whitesburg, KY 04/28/2010 08/26/2010 11/29/2035

2010-CH-1008

The DuPage Housing Authority 

Inappropriately Administered Its Section 8 

Project-Based Voucher Program, Wheaton, IL

06/15/2010 10/08/2010 10/18/2018

2011-FO-0003

Additional Details To Supplement Our Report 

on HUD’s Fiscal Years 2010 and 2009 

Financial Statements

11/15/2010 08/08/2011 Note 1

2011-PH-1005

The District of Columbia Did Not Administer 

Its HOME Program in Accordance With 

Federal Requirements, Washington, DC

12/23/2010 04/22/2011 Note 1

2011-CH-1006

The DuPage Housing Authority 

Inappropriately Administered Its Section 8 

Housing Choice Voucher Program, Wheaton, 

IL

03/23/2011 07/28/2011 10/18/2018

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SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2011-NY-1010

The City of Buffalo Did Not Always 

Administer Its CDBG Program in Accordance 

With HUD Requirements, Buffalo, NY

04/15/2011 01/25/2012 Note 1

2011-FW-0002

The Office of Healthcare Programs Could 

Increase Its Controls To More Effectively 

Monitor the Section 232 Program

04/26/2011 08/17/2011 08/01/2024

2011-AT-1018

The Municipality of San Juan Did Not 

Properly Manage Its HOME Investment 

Partnerships Program, San Juan, PR

09/28/2011 01/12/2012 Note 2

2012-NY-1002 The City of New York Charged Questionable 

Expenditures to Its HPRP, New York, NY 10/18/2011 02/16/2012 Note 1

2012-PH-0001

HUD Needed To Improve Its Use of Its 

Integrated Disbursement and Information 

System To Oversee Its CDBG Program

10/31/2011 02/28/2012 Note 1

2012-LA-0001

HUD Did Not Adequately Support the 

Reasonableness of the Fee-for-Service 

Amounts or Monitor the Amounts Charged

11/16/2011 03/27/2012 Note 2

2012-AT-1009

The Municipality of Bayamón Did Not Always 

Ensure Compliance With HOME Investment 

Partnerships Program Requirements, 

Bayamon, PR

05/23/2012 09/18/2012 Note 1

2012-PH-1011

Prince George’s County Generally Did Not 

Administer Its HOME Program in Accordance 

With Federal Requirements, Largo, MD

08/03/2012 11/30/2012 Note 1

2012-CH-1012

The Saginaw Housing Commission Did Not 

Always Administer Its Section 8 Housing 

Choice Voucher Program in Accordance With 

HUD’s and Its Own Requirements, Saginaw, 

MI

09/27/2012 01/07/2013 01/01/2023

2012-CH-1013

The Flint Housing Commission Did Not 

Always Administer Its Grants in Accordance 

With Recovery Act, HUD’s, and Its Own 

Requirements, Flint, MI

09/27/2012 01/24/2013 11/29/2019

2013-PH-1001

Luzerne County Did Not Properly Evaluate, 

Underwrite, and Monitor a High-Risk Loan, 

Wilkes-Barre, PA

10/31/2012 01/31/2013 Note 1

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SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2013-FO-0003

Additional Details To Supplement Our Report 

on HUD’s Fiscal Years 2012 and 2011 

Financial Statements

11/15/2012 05/15/2013 Note 1

2013-LA-1003

Bay Vista Methodist Heights Violated Its 

Agreement With HUD When Administering 

Its Trust Funds, San Diego, CA

03/14/2013 05/15/2013 Note 1

2013-AT-1003

The Municipality of Arecibo Did Not Always 

Ensure Compliance With CDBG Program 

Requirements, Arecibo, PR

03/22/2013 06/14/2013 Note 1

2013-NY-1006

Nassau County Did Not Administer Its HOME 

Investment Partnerships Program in 

Accordance With HUD Requirements, Nassau 

County, NY

05/13/2013 09/06/2013 Note 1

2013-KC-0002

HUD Did Not Enforce the Reporting 

Requirements of Section 3 of the Housing and 

Urban Development Act of 1968 for Public 

Housing Authorities

06/26/2013 10/24/2013 Note 1

2013-LA-1009

The City of Hawthorne Inappropriately Used 

Nearly $1.6 Million in HOME Funds for 

Section 8 Tenants, Hawthorne, CA

09/13/2013 01/06/2014 Note 1

2013-LA-1010

The City of Hawthorne Did Not Administer Its 

CDBG Program Cost Allocations in 

Accordance With HUD Rules and 

Requirements, Hawthorne, CA

09/20/2013 01/06/2014 Note 1

2013-NY-1010

The City of Auburn Did Not Always 

Administer Its CDBG Program in Accordance 

With HUD Requirements, Auburn, NY

09/26/2013 01/24/2014 Note 1

2013-CH-1009

The Flint Housing Commission Did Not 

Always Administer Its Grant in Accordance 

With Recovery Act, HUD’s, and Its Own 

Requirements, Flint, MI

09/27/2013 01/14/2014 11/29/2019

2013-CH-1011

The Michigan State Housing Development 

Authority Did Not Follow HUD’s 

Requirements Regarding the Administration of 

Its Program, Lansing, MI

09/30/2013 01/15/2014 07/31/2029

72
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2013-CH-1012

The Hamtramck Housing Commission Did Not 

Administer Its Grant in Accordance With 

Recovery Act, HUD’s, and Its Own 

Requirements, Hamtramck, MI

09/30/2013 01/21/2014 11/29/2019

2013-DE-1005

The Jefferson County Housing Authority Did 

Not Properly Use Its Disposition Sales 

Proceeds, Wheat Ridge, CO

09/30/2013 01/24/2014 02/28/2020

2014-AT-1001 The Municipality of Arecibo Did Not Properly 

Administer Its HOME Program 12/03/2013 01/24/2014 Note 1

2014-FO-0001

Government National Mortgage Association 

Fiscal Years 2013 and 2012 Financial 

Statements Audit

12/06/2013 05/02/2014 Note 1

2014-FO-0003

Additional Details To Supplement Our Report 

On HUD’s Fiscal Years 2013 and 2012 

(Restated) Financial Statements

12/16/2013 07/09/2014 Note 3

2014-PH-1001 The City of Norfolk Generally Failed To 

Justify Its CDBG Activities, Norfolk, VA 12/17/2013 04/16/2014 11/01/2018

2014-AT-1004

The State of Mississippi Did Not Ensure That 

Its Subrecipient and Appraisers Complied 

With Requirements, and It Did Not Fully 

Implement Adequate Procedures for Its 

Disaster Infrastructure Program, Jackson, MS

12/30/2013 04/15/2014 Note 1

2014-CH-1002

The City of Detroit Lacked Adequate Controls 

Over Its Neighborhood Stabilization ProgramFunded Demolition Activities Under the 

Housing and Economic Recovery Act of 2008, 

Detroit, MI

01/06/2014 05/05/2014 Note 1

2014-FW-0001

The Boston Office of Public Housing Did Not 

Provide Adequate Oversight of Environmental 

Reviews of Three Housing Agencies, 

Including Reviews Involving Recovery Act 

Funds

02/07/2014 03/17/2015 12/31/2018

2014-NY-0001 HUD Did Not Provide Effective Oversight of 

Section 202 Multifamily Project Refinances 02/19/2014 06/10/2014 Note 1

2014-AT-0001 Violations Increased the Cost of Housing’s 

Administration of Its Bond Refund Program 03/14/2014 07/11/2014 Note 1

73
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2014-FO-0004

HUD’s Fiscal Year 2013 Compliance With the 

Improper Payments Elimination and Recovery 

Act of 2010

04/15/2014 01/07/2015 Note 3

2014-CH-1003

The Hamtramck Housing Commission Did Not 

Always Administer Its Grant in Accordance 

With Recovery Act, HUD’s, or Its Own 

Requirements, Hamtramck, MI

04/30/2014 08/08/2014 11/29/2019

2014-FW-0002

Improvements Are Needed Over 

Environmental Reviews of Public Housing and 

Recovery Act Funds in the Kansas City Office

05/12/2014 03/17/2015 12/31/2018

2014-AT-1005 

The City of Huntsville, Community 

Development Department, Did Not Adequately 

Account for and Administer the Mirabeau 

Apartments Project, Huntsville, AL

05/29/2014 09/23/2014 Note 1

2014-LA-0004

HUD Could Not Support the Reasonableness 

of the Operating and Capital Fund Programs’ 

Fees and Did Not Adequately Monitor Central 

Office Cost Centers

06/30/2014 10/20/2014 Note 2

2014-KC-0002 The Data in CAIVRS Did Not Agree With the 

Data in FHA’s Default and Claims Systems 07/02/2014 10/27/2014 10/12/2018

2014-NY-1008

Palladia, Inc., Did Not Administer Its 

Supportive Housing Program in Accordance 

With HUD Requirements, New York, NY

07/25/2014 11/21/2014 Note 1

2014-AT-1007 The Municipality of Carolina Did Not Properly 

Administer Its HOME Program, Carolina, PR 08/08/2014 12/05/2014 Note 1

2014-LA-0005

HUD Did Not Always Recover FHA SingleFamily Indemnification Losses and Ensure 

That Indemnification Agreements Were 

Extended

08/08/2014 12/03/2014 Note 3

2014-CH-1006

The Goshen Housing Authority Failed To 

Follow HUD’s and Its Own Requirements 

Regarding the Administration of Its Program, 

Goshen, IN

08/14/2014 01/21/2015 12/31/2019

2014-PH-1008

The State of New Jersey Did Not Fully 

Comply With Federal Procurement and Cost 

Principle Requirements in Implementing Its 

Tourism Marketing Program

08/29/2014 09/02/2015 Note 1

74
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2014-NY-0003

Asset Repositioning Fees for Public Housing 

Authorities With Units Approved for 

Demolition or Disposition Were Not Always 

Accurately Calculated

09/04/2014 12/29/2014 12/31/2020

2014-AT-1010 Miami-Dade County Did Not Always Properly 

Administer Its HOME Program, Miami, FL 09/11/2014 12/11/2014 Note 1

2014-NY-1009

The City of Jersey City’s HOME Investment 

Partnerships Program Administration Had 

Financial and Administrative Controls 

Weaknesses, City of Jersey City, NJ

09/18/2014 01/13/2015 Note 1

2014-FW-0005

Improvements Are Needed Over 

Environmental Reviews of Public Housing and 

Recovery Act Funds in the Detroit Office

09/24/2014 03/17/2015 12/31/2018

2014-LA-1007

The City of Los Angeles Did Not Always 

Ensure That CDBG-Funded Projects Met 

National Program Objectives, Los Angeles, 

CA

09/29/2014 01/27/2015 Note 1

2014-CH-0001

HUD Did Not Always Provide Adequate 

Oversight of Its Property-Flipping Waiver 

Requirements

09/30/2014 03/24/2015 Note 1 

2015-FO-0001

Audit of the Federal Housing Administration’s 

Financial Statements for Fiscal Years 2014 and 

2013

11/14/2014 04/14/2015 Note 1

2015-NY-1001

The City of New York Did Not Always 

Disburse CDBG Disaster Recovery Assistance 

Funds to Its Subrecipient in Accordance With 

Federal Regulations, New York, NY

11/24/2014 03/23/2015 Note 1

2015-FO-0002 Interim Report on HUD’s Internal Controls 

Over Financial Reporting 12/08/2014 09/28/2015 04/15/2019

2015-PH-1804

Final Civil Action: Court Ordered a Former 

Executive Director of the Philadelphia 

Housing Authority To Pay Civil Penalties for 

Violating Federal Lobbying Disclosure 

Requirements and Restrictions

02/19/2015 09/13/2016 Note 1

2015-CH-1001

The Chicago Housing Authority Moving to 

Work Housing Choice Voucher Program, 

Chicago, IL

02/24/2015 06/10/2015 04/30/2019

75
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2015-FO-0003

Audit of the Government National Mortgage 

Association’s Financial Statements for Fiscal 

Years 2014 and 2013

02/27/2015 06/25/2015 Note 3

2015-AT-0001

HUD’s Office of Community Planning and 

Development Did Not Always Pursue 

Remedial Actions but Generally Implemented 

Sufficient Controls for Administering Its 

Neighborhood Stabilization Program

03/31/2015 08/28/2015 Note 1

2015-NY-1005

The City of Paterson, NJ’s HOME Investment 

Partnerships Program Controls Did Not Ensure 

Compliance With Regulations

04/30/2015 06/03/2015 Note 1

2015-FO-0005 Compliance With the Improper Payments 

Elimination and Recovery Act 05/15/2015 10/02/2015 Note 2

2015-LA-1004

The Housing Authority of the County of San 

Bernardino, San Bernardino, CA, Used Shelter 

Plus Care Program Funds for Ineligible and 

Unsupported Participants

05/29/2015 09/16/2015 Note 2

2015-PH-1003

The State of New Jersey Did Not Comply With 

Federal Procurement and Cost Principle 

Requirements in Implementing Its Disaster 

Management System

06/04/2015 10/02/2015 Note 1

2015-FW-0001

HUD Did Not Adequately Implement or 

Provide Adequate Oversight To Ensure 

Compliance With Environmental 

Requirements

06/16/2015 10/07/2015 Note 1

2015-LA-0002

HUD Did Not Provide Adequate Oversight of 

the Section 184 Indian Home Loan Guarantee 

Program

07/06/2015 10/28/2015 10/11/2018

2015-LA-1005

NOVA Financial & Investment Corporation’s 

FHA-Insured Loans With Downpayment 

Assistance Gifts Did Not Always Meet HUD 

Requirements

07/09/2015 09/11/2015 Note 1

2015-CH-0001

HUD Did Not Always Provide Adequate 

Oversight of Its Section 203(k) Rehabilitation 

Loan Mortgage Insurance Program

07/31/2015 11/27/2015 Note 2

76
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2015-KC-0002

The Office of Community Planning and 

Development’s Reviews of Matching 

Contributions Were Ineffective and Its 

Application of Match Reductions Was Not 

Always Correct

08/11/2015 12/09/2015 Note 1

2015-AT-0002

HUD’s Office of Multifamily Asset 

Management and Portfolio Oversight Did Not 

Comply With Its Requirements For Monitoring 

Management Agents’ Costs

08/21/2015 12/16/2015 Note 1

2015-NY-1010

New York State Did Not Always Administer 

Its Rising Home Enhanced Buyout Program in 

Accordance With Federal and State 

Regulations

09/17/2015 03/01/2016 Note 1

2015-NY-1011

Program Control Weaknesses Lessened 

Assurance That New York Rising Housing 

Recovery Program Funds Were Always 

Disbursed for Eligible Costs

09/17/2015 03/18/2016 Note 1

2015-LA-1802

Veterans First Did Not Administer or Spend Its 

Supportive Housing Program Grants in 

Accordance With HUD Requirements

09/24/2015 10/29/2015 02/01/2019

2015-CH-1009

The State of Illinois’ Administrator Lacked 

Adequate Controls Over the State’s 

Community Development Block Grant 

Disaster Recovery Program-Funded Projects

09/30/2015 01/28/2016 06/28/2021

2015-LA-1009

loanDepot’s FHA-Insured Loans With 

Downpayment Assistance Funds Did Not 

Always Meet HUD Requirements

09/30/2015 01/12/2016 Note 1

2015-LA-1010

loanDepot’s FHA-Insured Loans With Golden 

State Finance Authority Downpayment 

Assistance Gifts Did Not Always Meet HUD 

Requirements

09/30/2015 01/12/2016 Note 1

2015-LA-1803

The City of Richmond, CA, Did Not 

Adequately Support Its Use of HUD-Funded 

Expenses for Its Filbert Phase 1 and Filbert 

Phase 2 Activities

09/30/2015 01/08/2016 12/31/2018

2016-FO-0001 Audit of Fiscal Years 2015 and 2014 

(Restated) Financial Statements 11/13/2015 03/24/2016 Note 3

77
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2016-FO-0002 Fiscal Years 2015 and 2014 Financial 

Statements Audit 11/16/2015 03/16/2016 Note 1

2016-FO-0003

Additional Details To Supplement Our Fiscal 

Years 2015 and 2014 (Restated) U.S. 

Department of Housing and Urban 

Development Financial Statement Audit

11/18/2015 03/22/2016 Note 3

2016-DP-0801

Review of Information System Controls Over 

the Government National Mortgage 

Association

11/30/2015 03/30/2016 Note 1

2016-AT-1002

The Municipality of Toa Alta, PR, Did Not 

Properly Administer Its Section 108 Loan 

Guarantee Program

12/17/2015 04/12/2016 Note 1

2016-DP-0002 Single Family Insurance System and Single 

Family Insurance Claims Subsystem 12/21/2015 03/31/2016 Note 1

2016-NY-1003

The City of Rochester, NY, Did Not Always 

Administer Its Community Development 

Block Grant Program in Accordance With 

HUD Requirements

02/05/2016 06/17/2016 Note 1

2016-CH-0001

HUD Lacked Adequate Oversight of Public 

Housing Agencies’ Compliance With Its 

Declaration of Trust Requirements

02/26/2016 06/20/2016 10/01/2019

2016-SE-1001

Homewood Terrace, Auburn, WA, Did Not 

Always Conduct Timely Reexaminations, 

Properly Request Assistance Payments, or 

Verify Income Information

03/09/2016 07/06/2016 Note 1

2016-NY-1006

New York State Did Not Always Disburse 

Community Development Block Grant 

Disaster Recovery Funds in Accordance With 

Federal and State Regulations

03/29/2016 07/27/2016 Note 2

2016-NY-1007

The City of Jersey City, NJ’s Community 

Development Block Grant Program Had 

Administrative and Financial Control 

Weaknesses

03/30/2016 06/08/2016 Note 1

2016-FO-0005 Compliance With the Improper Payments 

Elimination and Recovery Act 05/13/2016 10/04/2016 Note 2

2016-AT-0001

HUD Did Not Enforce and Sufficiently Revise 

Its Underwriting Requirements for Multifamily 

Accelerated Processing Loans

05/20/2016 09/16/2016 Note 1

78
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2016-LA-1006 The Richmond Housing Authority, Richmond, 

CA, Mismanaged Its Financial Operations 06/03/2016 09/21/2016 12/01/2018

2016-AT-1006 The City of Miami Beach Did Not Always 

Properly Administer Its HOME Program 06/17/2016 10/05/2016 Note 2

2016-BO-1003

The State of Connecticut Did Not Always 

Administer Its Neighborhood Stabilization 

Program in Compliance With HUD 

Regulations

06/28/2016 10/25/2016 Note 2

2016-PH-0001

HUD Did Not Always Provide Adequate 

Oversight of Property Acquisition and 

Disposition Activities

06/30/2016 02/16/2017 Note 3

2016-CH-1005

The Jefferson Metropolitan Housing Authority, 

Steubenville, OH, Failed To Manage Its 

Procurements and Contracts in Accordance 

With HUD’s and Its Own Requirements

08/03/2016 11/17/2016 08/31/2019

2016-AT-1010

The Mobile Housing Board, Mobile, AL, Did 

Not Disclose an Apparent Conflict of Interest 

and Occupy One-Third of Its Public Housing 

Units

08/04/2016 11/18/2016 11/30/2018

2016-PH-1005

The Richmond Redevelopment and Housing 

Authority, Richmond, VA, Did Not Always 

Charge Eligible and Reasonable Central Office 

Cost Center Fees

08/17/2016 12/13/2016 11/01/2075

2016-FO-0802

Independent Attestation Review: U.S. 

Department of Housing and Urban 

Development, DATA Act Implementation 

Efforts

08/26/2016 03/29/2018 12/31/2018

2016-LA-1008

The Dolores Frances Affordable Housing 

Project, Los Angeles, CA, Was Not 

Administered in Accordance With Its 

Regulatory Agreement and HUD 

Requirements

08/26/2016 12/12/2016 12/31/2018

2016-LA-1009

The City and County of Honolulu, HI, Did Not 

Administer Its Community Development 

Block Grant in Accordance With 

Requirements

08/26/2016 12/12/2016 10/01/2018

79
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2016-AT-1012

The Municipality of Bayamon, PR, Did Not 

Always Ensure Compliance With HUD 

Program Requirements

08/29/2016 12/15/2016 Note 2

2016-DP-0003 Additional Review of Information System 

Controls Over FHA Information Systems 08/31/2016 12/22/2016 Note 2

2016-FW-1006

The State of Louisiana’s Subrecipient Did Not 

Always Comply With Its Agreement and HUD 

Requirements When Administering Its Disaster 

Assistance Programs

08/31/2016 12/16/2016 Note 2

2016-NY-0001 Operating Fund Calculations Were Not 

Always Adequately Verified 09/12/2016 12/22/2016 10/31/2018

2016-DP-0004 HUD Rushed the Implementation of Phase 1 

Release 3 of the New Core Project 09/20/2016 01/10/2017 Note 2

2016-NY-1010

Folts, Inc., Herkimer, NY, Did Not Administer 

the Folts Adult Home and Folts Home Projects 

in Accordance With Their Regulatory 

Agreements

09/29/2016 03/28/2017 12/31/2018

2016-CH-1009

The Condominium Association and 

Management Agent Lacked Adequate Controls 

Over the Operation of West Park Place 

Condominium, Chicago, IL

09/30/2016 01/25/2017 Note 2

2016-FW-1010

The State of Oklahoma Did Not Obligate and 

Spend Its Community Development Block 

Grant Disaster Recovery Funds in Accordance 

With Requirements

09/30/2016 01/17/2017 03/31/2019

2016-PH-1009

The State of New Jersey Did Not Disburse 

Disaster Funds to Its Contractor in Accordance 

With HUD, Federal, and Other Applicable 

Requirements

09/30/2016 01/27/2017 12/31/2018

2017-BO-1001

The State of Connecticut Did Not Always 

Comply With CDBG Disaster Recovery 

Assistance Requirements

10/12/2016 02/01/2017 Note 2

2017-KC-0001

FHA Paid Claims for an Estimated 239,000 

Properties That Servicers Did Not Foreclose 

Upon or Convey on Time

10/14/2016 02/28/2017 02/24/2019

80
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2017-BO-1002

The City of Springfield, MA, Needs To 

Improve Its Compliance With Federal 

Regulations for Its CDBG Disaster Recovery 

Assistance Grant

10/17/2016 01/04/2017 01/11/2019

2017-NY-1001

The City of New York, NY, Implemented 

Policies That Did Not Always Ensure That 

CDBG Disaster Recovery Funds Were 

Disbursed in Accordance With Its Action Plan 

and Federal Requirements

11/02/2016 05/08/2017 Note 2

2017-FO-0001 Audit of Fiscal Years 2016 and 2015 

(Restated) Financial Statements 11/14/2016 04/06/2017 Note 3

2017-FO-0002

Audit of the Federal Housing Administration’s 

Financial Statements for Fiscal Years 2016 and 

2015 (Restated)

11/14/2016 07/13/2017 Note 2

2017-FO-0003

Additional Details To Supplement Our Fiscal 

Years 2016 and 2015 (Restated) U.S. 

Department of Housing and Urban 

Development Financial Statement Audit

11/15/2016 09/13/2017 Note 3

2017-KC-1001

Majestic Management, LLC, a Multifamily 

Housing Management Agent in St. Louis, MO, 

Did Not Always Comply With HUD’s 

Requirements When Disbursing Project Funds

12/16/2016 04/14/2017 Note 2

2017-NY-1004

The City of New York, NY, Lacked Adequate 

Controls To Ensure That the Use of CDBGDR Funds Was Always Consistent With the 

Action Plan and Applicable Federal and State 

Requirements

12/21/2016 04/17/2017 Note 2

2017-PH-1801

Final Civil Action: Borrower Settled Alleged 

Violations of Home Equity Conversion 

Mortgage Program

01/06/2017 01/06/2017 Note 2

2017-NY-1005

Union County, NJ’s HOME Investment 

Partnerships Program Was Not Always 

Administered in Compliance With Program 

Requirements

01/13/2017 05/11/2017 05/07/2019

2017-KC-0002

The U.S. Department of Housing and Urban 

Development Did Not Always Prevent 

Program Participants From Receiving Multiple 

Subsidies

01/20/2017 05/09/2017 12/31/2018

81
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2017-LA-0002

HUD Failed To Follow Departmental 

Clearance Protocols for FHA Programs, 

Policies, and Operations

01/25/2017 09/22/2017 Note 2

2017-DP-0001 HUD’s Transition to a Federal Shared Service 

Provider Failed To Meet Expectations 02/01/2017 05/25/2017 Note 3

2017-DP-0002

Review of Information Systems Controls Over 

FHA’s Single Family Premiums Collection 

Subsystem – Periodic and the Single Family 

Acquired Asset Management System

02/09/2017 06/12/2017 Note 2

2017-KC-1801

Final Action Memorandum: Purchaser of 

HUD-Insured Single-Family Property Settled 

Allegations of Causing the Submission of a 

False Claim

02/23/2017 02/23/2017 06/15/2021

2017-FO-0801

Independent Attestation Review: U.S. 

Department of Housing and Urban 

Development, DATA Act Implementation 

Efforts

03/02/2017 06/19/2017 12/31/2018

2017-LA-0003

HUD Failed To Adequately Oversee FHAInsured Loans With Borrower-Financed 

Downpayment Assistance

03/03/2017 06/22/2017 06/15/2019

2017-NY-1008

The Irvington, NJ, Housing Authority Did Not 

Always Administer Its Public Housing 

Program in Accordance With Program 

Requirements

03/10/2017 07/07/2017 10/31/2018

2017-BO-0001

HUD’s OCPO Did Not Always Comply With 

Acquisition Requirements When Planning and 

Monitoring Major Service Contracts

03/22/2017 06/28/2017 02/28/2019

2017-PH-1001

The City of Pittsburgh, PA, Did Not Always 

Administer Its CDBG Program in Accordance 

With HUD and Federal Requirements

03/22/2017 07/19/2017 Note 2

2017-CF-1803

United Shore Financial Services, LLC, Settled 

Allegations of Failing To Comply With HUD’s 

Federal Housing Administration Loan 

Requirements

03/29/2017 03/29/2017 03/27/2022

82
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2017-CH-1801

Final Civil Action: Judgment Imposed on the 

Former President and Founder of MDR 

Mortgage Corporation Regarding Allegations 

of Failing To Comply With HUD’s Federal 

Housing Administration Requirements

03/31/2017 08/31/2017 Note 2

2017-AT-0001

HUD’s Oversight of Section 108 Loans Was 

Not Adequate To Ensure Compliance With 

Program Requirements

04/27/2017 10/06/2017 Note 2

2017-FO-0006

HUD Did Not Comply With the Improper 

Payments Elimination and Recovery Act of 

2010

05/11/2017 03/27/2018 01/15/2019

2017-NY-0001 HUD PIH’s Required Conversion Program 

Was Not Adequately Implemented 05/18/2017 09/15/2017 10/20/2018

2017-KC-0003

HUD Did Not Ensure That Lenders Properly 

Processed Voluntary Terminations of 

Insurance Coverage on FHA Loans and 

Disclosed All Implications of the Terminations 

to the Borrowers

05/22/2017 09/19/2017 11/01/2019

2017-PH-1003

The Yorkville Cooperative, Fairfax, VA, Did 

Not Administer Its HUD-Insured Property and 

Housing Assistance Contract According to 

Applicable Requirements

05/22/2017 09/19/2017 Note 2

2017-AT-1006

The Housing Authority of DeKalb County, 

Decatur, GA, Generally Administered RAD 

Appropriately but Did Not Accurately Report 

on Its Capital Fund Program

06/09/2017 10/05/2017 12/07/2018

2017-KC-0005

Owners of Cooperative Housing Properties 

Generally Charged More for Their Section 8 

Units Than for Their Non-Section 8 Units

06/12/2017 10/06/2017 Note 2

2017-LA-1004

Cypress Meadows Assisted Living, Antioch, 

CA, Was Not Administered in Accordance 

With Its Regulatory Agreement and HUD 

Requirements

06/13/2017 09/29/2017 Note 2

2017-LA-1005

The City of Huntington Park, CA, Did Not 

Administer Its Community Development 

Block Grant Program in Accordance With 

Requirements

06/16/2017 10/17/2017 10/13/2018

83
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2017-FW-1009

Beverly Place Apartments, Groves, TX, 

Subsidized Nonexistent Tenants, Unqualified 

Tenants, and Tenants With Questionable 

Qualifications

06/29/2017 10/20/2017 10/18/2018

2017-CH-1002

The Youngstown Metropolitan Housing 

Authority, Youngstown, OH, Did Not Always 

Comply With HUD’s and Its Own 

Requirements Regarding the Administration of 

Its Housing Choice Voucher Program

07/07/2017 11/03/2017 11/03/2018

2017-KC-0006

HUD Did Not Conduct Rulemaking or 

Develop Formal Procedures for Its SingleFamily Note Sales Program07/14/2017 10/19/2017 09/30/2019

2017-AT-1010

The Louisville Metro Housing Authority, 

Louisville, KY, Did Not Comply With HUD’s 

and Its Own Section 8 Housing Choice 

Voucher Program Requirements

08/04/2017 12/01/2017 11/30/2018

2017-LA-1006

The City of Fresno, CA, Did Not Administer 

Its Community Development Block Grant in 

Accordance With HUD Requirements

08/09/2017 11/21/2017 11/21/2018

2017-PH-1005

The State of New Jersey Did Not Always 

Disburse Disaster Funds for Its Sandy 

Homebuyer Assistance Program To Assist 

Eligible Home Buyers

08/14/2017 11/15/2017 Note 2

2017-FW-1010

The City of Albuquerque, NM, Did Not 

Administer Its Community Development 

Block Grant Program in Accordance With 

Requirements

08/16/2017 11/14/2017 02/28/2019

2017-BO-1006

The West Warwick Housing Authority, West 

Warwick, RI, Needs To Improve Its 

Compliance With Federal Regulations for Its 

Housing Choice Voucher and Public Housing 

Programs 

08/18/2017 12/15/2017 12/31/2018

2017-AT-1011

The Lexington Housing Authority, Lexington, 

NC, Did Not Administer Its RAD Conversion 

in Accordance With HUD Requirements

08/21/2017 12/11/2017 12/10/2018

2017-AT-1801

Final Civil Action: Prospect Mortgage, LLC, 

Settled Alleged Violations of Federal Housing 

Administration Loan Requirements

08/21/2017 08/21/2017 Note 2

84
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2017-LA-1007

The Chukchansi Indian Housing Authority, 

Oakhurst, CA, Did Not Always Follow HUD’s 

Requirements for Its Indian Housing Block 

Grant Program

08/24/2017 11/15/2017 10/15/2018

2017-FW-1011

BLM Companies LLC Failed To Ensure That 

It Protected and Preserved HUD Properties 

Under Its Field Service Manager Contract for 

Area 1D

08/29/2017 12/26/2017 11/30/2018

2017-CH-1006

The Cooperative and Management Agent 

Lacked Adequate Controls Over the Operation 

of Lakeview East Cooperative

09/05/2017 12/19/2017 12/19/2018

2017-FW-1012

The City of New Orleans, New Orleans, LA, 

Did Not Always Properly Administer Its 

HOME Program

09/06/2017 12/19/2017 11/30/2018

2017-KC-0007 HUD Subsidized 10,119 Units for Tenants 

Who Were Undercharged Flat Rents 09/12/2017 12/01/2017 12/31/2018

2017-LA-0004

HUD Did Not Have Adequate Controls To 

Ensure That Servicers Properly Engaged in 

Loss Mitigation

09/14/2017 01/11/2018 12/14/2018

2017-NY-1010

The State of New York Did Not Show That 

Disaster Recovery Funds Under Its NonFederal Share Match Program Were Used for 

Eligible and Supported Costs

09/15/2017 01/12/2018 Note 2

2017-BO-1007

The Housing Authority of the City of Hartford, 

CT, Did Not Always Comply With 

Procurement Requirements

09/21/2017 12/19/2017 12/07/2018

2017-KC-0008 Ginnie Mae Did Not Adequately Respond to 

Changes in Its Issuer Base 09/21/2017 01/18/2018 01/02/2019

2017-LA-0005

HUD Did Not Always Follow Applicable 

Requirements When Forgiving Debts and 

Terminating Debt Collections

09/21/2017 01/17/2018 Note 2

2017-LA-0006

HUD Did Not Administer Economic 

Development Initiative – Special Project and 

Neighborhood Initiative Congressional Grants 

in Accordance With Program Requirements

09/21/2017 01/18/2018 01/03/2019

85
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2017-PH-1006

The Owner of Schwenckfeld Manor, Lansdale, 

PA, Did Not Always Manage Its HUD-Insured 

Property in Accordance With Applicable HUD 

Requirements

09/25/2017 01/23/2018 01/23/2019

2017-KC-1003

Majestic Management, LLC, St. Louis, MO, a 

Management Agent for the East St. Louis 

Housing Authority, Mismanaged Its Public 

Housing Program

09/26/2017 01/12/2018 01/12/2019

2017-CF-1806

Final Civil Action: PHH Corporation Settled 

Allegations of Failing To Comply With HUD’s 

Federal Housing Administration Loan 

Requirements

09/28/2017 09/28/2017 Note 2

2017-CF-1807

Residential Home Funding Corp. Settled 

Allegations of Failing To Comply With HUD’s 

Federal Housing Administration Loan 

Requirements

09/28/2017 09/28/2017 09/30/2021

2017-CH-1007

The Menard County Housing Authority, 

Petersburg, IL, Did Not Comply With HUD’s 

and Its Own Requirements Regarding the 

Administration of Its Housing Choice Voucher 

Program

09/28/2017 01/25/2018 01/24/2019

2017-CH-1008

Travelers Aid Society of Metropolitan Detroit, 

Detroit, MI, Did Not Always Administer Its 

Continuum of Care Program in Accordance 

With Federal Regulations

09/28/2017 02/15/2018 10/05/2018

2017-DP-0003

New Core Project: Although Transaction 

Processing Had Improved Weaknesses 

Remained

09/28/2017 01/25/2018 01/09/2019

2017-LA-1803

RMS & Associates, Las Vegas, NV, 

Improperly Originated FHA-Insured Loans 

With Restrictive Covenants

09/28/2017 01/05/2018 12/28/2018

2017-NY-1013

The New Brunswick Housing Authority, NJ, 

Did Not Always Administer Its Operating and 

Capital Funds in Accordance With HUD 

Requirements

09/28/2017 01/26/2018 12/28/2018

2017-NY-0002

HUD Could Improve Its Controls Over the 

Disposition of Real Properties Assisted With 

Community Development Block Grant Funds

09/29/2017 01/26/2018 Note 3

86
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2017-PH-0003

HUD Did Not Provide Sufficient Guidance and 

Oversight To Ensure That FHA-Insured 

Properties Nationwide Had Safe Water

09/29/2017 01/26/2018 07/19/2019

2017-CH-1009

The Owner and Management Agents Lacked 

Adequate Controls Over the Operation of Mary 

Scott Nursing Center, Dayton, OH

09/30/2017 01/26/2018 06/30/2019

2017-CH-1011

BLM Companies LLC, Hurricane, UT, Did 

Not Provide Property Preservation and 

Protection Services in Accordance With Its 

Contract With HUD and Its Own 

Requirements

09/30/2017 01/25/2018 01/10/2019

SIGNIFICANT AUDIT REPORTS ISSUED WITHIN THE PAST 12 MONTHS THAT WERE 

DESCRIBED IN PREVIOUS SEMIANNUAL REPORTS FOR WHICH FINAL ACTION HAD NOT 

BEEN COMPLETED AS OF 09/30/2018 

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2018-FO-0001 HUD’s Office of the Chief Financial Officer Did 

Not Comply With the Digital Accountability and 

Transparency Act of 2014

11/03/2017 03/20/2018 09/30/2019

2018-FW-0801 HUD’s Office of Public Housing Did Not 

Clearly Define or Provide Guidance for Public 

Housing Agency Certifications

11/06/2017 02/27/2018 12/31/2018

2018-BO-1001 The Riverside Health and Rehabilitation Center, 

East Hartford, CT, Was Not Operated Under the 

Required Controlling Documents of the Section 

232 Program

11/13/2017 09/30/2018 01/30/2019

2018-FO-0002 Audit of the Government National Mortgage 

Association’s Financial Statements for Fiscal 

Years 2017 and 2016 (Restated)

11/14/2017 03/19/2018 Note 2

2018-FO-0003 Fiscal Years 2017 and 2016 (Restated) Financial 

Statements Audit

11/15/2017 04/03/2018 Note 2

2018-FO-0004 Additional Details To Supplement Our Fiscal 

Years 2017 and 2016 (Restated) U.S. 

Department of Housing and Urban Development 

Financial Statement Audit

11/15/2017 07/02/2018 Note 3

87
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2018-CH-0001 HUD Needs To Improve Its Oversight of Grants 

Funded Through Its Resident Home-Ownership 

Program

12/22/2017 02/14/2018 12/01/2018

2018-AT-1802 Yabucoa Housing Project, Yabucoa Volunteers 

of America Elderly Housing, Inc., Yabucoa, PR, 

Section 202 Supportive Housing for the Elderly 

Program

12/29/2017 04/20/2018 04/19/2019

2018-CF-0801 Management Alert: HUD Did Not Provide 

Acceptable Oversight of the Physical Condition 

of Residential Care Facilities

01/05/2018 08/14/2018 12/31/2019

2018-NY-1002 Glen Cove Housing Authority, Glen Cove, NY, 

Did Not Always Use Property Disposition 

Proceeds in Accordance With Requirements

01/19/2018 05/11/2018 01/30/2019

2018-FW-1001 Jefferson Parish, Jefferson, LA, Did Not Always 

Properly Administer Its Rehabilitation Program

01/29/2018 05/22/2018 05/13/2019

2018-FW-1002 Villa Main Apartments, Port Arthur, TX, 

Subsidized Nonexistent Tenants, Unsupported 

Tenants, and Uninspected Units

01/31/2018 05/23/2018 11/01/2018

2018-NY-1003 The Housing Authority of the City of Asbury 

Park, NJ, Did Not Always Administer Its 

Operating and Capital Funds in Accordance 

With Requirements

02/08/2018 06/07/2018 02/22/2019

2018-PH-1001 The Fairmont-Morgantown Housing Authority, 

Fairmont, WV, Did Not Always Administer Its 

Housing Choice Voucher Program in 

Accordance With Applicable Program 

Requirements

02/12/2018 06/11/2018 06/11/2019

2018-DP-0002 Review of Selected FHA Information Systems 

and Credit Reform Estimation and Reestimation 

Process Applications

02/13/2018 05/07/2018 01/31/2019

2018-PH-1002 The Fairmont-Morgantown Housing Authority, 

Fairmont, WV, Did Not Always Ensure That Its 

Program Units Met Housing Quality Standards 

and That It Accurately Calculated Housing 

Assistance Payment Abatements

02/16/2018 06/12/2018 06/12/2019

88
SEMIANNUAL REPORT TO CONGRESS

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2018-KC-1001 CitiMortgage, Inc., O’Fallon, MO, Improperly 

Filed for FHA-HAMP Partial Claims Before 

Completing the Loan Modifications and 

Reinstating the Loans

03/05/2018 06/13/2018 05/31/2019

2018-DP-0003 Fiscal Year 2017 Review of Information 

Systems Controls in Support of the Financial 

Statements Audit

03/09/2018 06/07/2018 12/31/2018

2018-KC-0802 Limited Review of HUD Multifamily Waiting 

List Administration

03/22/2018 07/25/2018 02/28/2019

2018-CF-1801 MetLife Home Loans, LLC, and a Borrower’s 

Son Settled Allegations of Failing To Comply 

With HUD’s Federal Housing Administration 

HECM Loan Requirements

03/23/2018 08/09/2018 12/31/2018

2018-KC-0001 FHA Insured $1.9 Billion in Loans to Borrowers 

Barred by Federal Requirements

03/26/2018 07/11/2018 01/31/2020

2018-LA-1003 The City of South Gate, CA, Did Not Administer 

Its Community Development Block Grant 

Program in Accordance With HUD 

Requirements

03/29/2018 07/25/2018 07/24/2019

Audits excluded: 

85 audits under repayment plans 

34 audits under debt claims collection processing, formal judicial review, investigation, or legislative solution

Notes: 

1 Management did not meet the target date. Target date is more than 1 year old. 

2 Management did not meet the target date. Target date is less than 1 year old. 

3 No management decision

89
SEMIANNUAL REPORT TO CONGRESS

SIGNIFICANT EVALUATION REPORTS FOR WHICH FINAL ACTION HAD NOT BEEN 

COMPLETED WITHIN 12 MONTHS AFTER THE DATE OF THE INSPECTOR GENERAL’S 

REPORT

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE FINAL ACTION

2013-ITED-0001 FY 2013 Federal Information Security 

Management Act (FY13 FISMA)

11/29/2013 11/29/2013 Note 1

2014-ITED-0001 HUD Cybersecurity Privacy Programs 

(Privacy)

04/30/2014 04/30/2014 Note 1

2014-OE-0003 FY 2014 Federal Information Security 

Modernization Act (FY14 FISMA)

11/15/2014 11/15/2014 Note 1

2015-OE-0001 FY 2015 Federal Information Security 

Modernization Act (FY15 FISMA)

11/15/2015 11/15/2015 Note 1

2015-OE-0002 HUD IT Modernization 09/28/2015 09/25/2015 Note 1

2016-OE-0001 Records Management in the Office of 

Hospital Facilities Needs Improvement

09/23/2016 11/03/2016 10/01/2018

2016-OE-0006 FY 16 Federal Information Security 

Modernization Act of 2014 (FY16 FISMA)

11/10/2016 11/10/2016 Note 1

SIGNIFICANT EVALUATION REPORTS ISSUED WITHIN THE PAST 12 MONTHS THAT 

WERE DESCRIBED IN PREVIOUS SEMIANNUAL REPORTS FOR WHICH FINAL ACTION 

HAD NOT BEEN COMPLETED AS OF 09/30/2018 

REPORT 

NUMBER REPORT TITLE ISSUE DATE DECISION DATE

FINAL 

ACTION

2017-OE-0007 FY 17 Federal Information Security 

Modernization Act of 2014 (FY17 FISMA)

10/31/2017 Unavailable 12/31/2023

Notes: 

1 Management did not meet the target date. Target date is more than 1 year old. 

2 Management did not meet the target date. Target date is less than 1 year old. 

90
SEMIANNUAL REPORT TO CONGRESS

TABLE C

INSPECTOR GENERAL-ISSUED REPORTS WITH QUESTIONED AND UNSUPPORTED 

COSTS AT 9/30/2018 (IN THOUSANDS)

AUDIT REPORTS

NUMBER OF 

AUDIT 

REPORTS 

QUESTIONED 

COSTS

UNSUPPORTED 

COSTS

A1 For which no management decision had been made by the 

beginning of the reporting period 18 $68,054 $27,347

A2 For which litigation, legislation, or investigation was 

pending at the beginning of the reporting period 3 25,110 2,946

A3 For which additional costs were added to reports in 

beginning inventory - 22,051 80

A4 For which costs were added to noncost reports 0 0 0 

B1 Which were issued during the reporting period 49 1,302,834 1,141,851

B2 Which were reopened during the reporting period 0 0 0 

Subtotals (A+B) 70 1,418,049 1,172,224

C For which a management decision was made during the 

reporting period 2717 169,181 22,123

(1) Dollar value of disallowed costs:

 Due HUD 

 Due program participants 

1118

19 

142,927

26,254

4,797

17,326

(2) Dollar value of costs not disallowed 0 0 0 

D 

For which a management decision had been made not to 

determine costs until completion of litigation, legislation, 

or investigation

2 24,559 2,744

E For which no management decision had made by the end 

of the reporting period

41

<120>19

1,224,309

<95,971>19

1,147,357

<41,533>19

 

17 Eleven audit reports also contain recommendations with funds to be put to better use. 18 Three audit reports also contain recommendations with funds due program participants. 19 The figures in brackets represent data at the recommendation level as compared to the report level. See Explanations of 

Tables C and D below table D.

91
SEMIANNUAL REPORT TO CONGRESS

TABLE D

INSPECTOR GENERAL-ISSUED REPORTS WITH RECOMMENDATIONS THAT FUNDS BE 

PUT TO BETTER USE AT 9/30/2018 (IN THOUSANDS)

AUDIT REPORTS NUMBER OF AUDIT 

REPORTS DOLLAR VALUE

A1 For which no management decision had been made by the beginning 

of the reporting period 16 10,777,938

A2 For which litigation, legislation, or investigation was pending at the 

beginning of the reporting period 1 1,694

A3 For which additional costs were added to reports in beginning 

inventory - 46,244

A4 For which costs were added to noncost reports 0 0 

B1 Which were issued during the reporting period 18 1,492,711

B2 Which were reopened during the reporting period 0 0 

Subtotals (A+B) 35 12,318,587

C For which a management decision was made during the reporting 

period 1320 2,200,281

(1) Dollar value of recommendations that were agreed to by 

management:

 Due HUD

 Due program participants 

5 

8 

288,552

1,911,729

(2) Dollar value of recommendations that were not agreed to by 

management 

0 0 

D For which a management decision had been made not to determine 

costs until completion of litigation, legislation, or investigation 0 0 

E For which no management decision had made by the end of the 

reporting period 

22

<36>21

10,118,306

<6,609,371>21

 

20 Eleven audit reports also contain recommendations with questioned costs. 21 The figures in brackets represent data at the recommendation level as compared to the report level. See Explanations of Tables C and D.

92
SEMIANNUAL REPORT TO CONGRESS

EXPLANATIONS OF TABLES C AND D

The Inspector General Act Amendments of 1988 require inspectors general and agency heads to report cost data on 

management decisions and final actions on audit reports. The current method of reporting at the “report” level 

rather than at the individual audit “recommendation” level results in misleading reporting of cost data. Under the 

Act, an audit “report” does not have a management decision or final action until all questioned cost items or other 

recommendations have a management decision or final action. Under these circumstances, the use of the “report” 

based rather than the “recommendation” based method of reporting distorts the actual agency efforts to resolve and 

complete action on audit recommendations. For example, certain cost items or recommendations could have a 

management decision and repayment (final action) in a short period of time. Other cost items or nonmonetary 

recommendation issues in the same audit report may be more complex, requiring a longer period of time for 

management’s decision or final action. Although management may have taken timely action on all but one of many 

recommendations in an audit report, the current “all or nothing” reporting format does not recognize these efforts.

The closing inventory for items with no management decision in tables C and D (line E) reflects figures at the report 

level as well as the recommendation level. 

93
SEMIANNUAL REPORT TO CONGRESS

APPENDIX 4 – INSPECTOR GENERAL EMPOWERMENT 

ACT

The Inspector General Empowerment Act (Public Law 114-317) (IGEA), enacted in December 2016, contains

several reporting requirements in the Offices of Inspector General’s (OIG) Semiannual Reports to Congress (SAR). 

Below are the U.S. Department of Housing and Urban Development, Office of Inspector General (HUD OIG), 

statutory requirements as stipulated in the IGEA, with hyperlinks to the detailed information located on its website 

at www.hudoig.gov. 

Summary of Reports With No Establishment Comment

The IGEA requires OIGs to report on each audit and evaluation report for which the Department did not return 

comments within 60 days of HUD OIG’s providing the report to the Department. 

On March 23, 2018, HUD OIG’s Office of Investigation (OI) delivered Systemic Implication Report [SIR] FY

[fiscal year] 17-002, Systemic Implication Report Pertaining to Lead-Based Paint Hazards in Housing, to HUD’s 

Office of Public and Indian Housing. Specifically, the SIR recommended that HUD strengthen its testing 

requirements as they pertain to lead-based paint. It was suggested that all initial headquarters inspections of pre1978 units, in which the age of the occupants is 6 years or less, should incorporate the use of wipe samples or x ray 

fluorescence spectrum analyzers when determining the presence of lead-based paint. Likewise, HUD OIG 

recommended that soil samples be analyzed for lead contamination in pre-1978 units and drinking water be 

analyzed for lead contamination regardless of the units’ construction date. This SIR did not recommend abatement 

of the hazard, only that more comprehensive testing occur. The Department did not respond within the requisite 60 

days, and HUD OIG has still not received a response.

On January 29, 2018, HUD OIG OI delivered Systemic Implication Report FY17-001, Systemic Implication Report 

Pertaining to the Lump-Sum/Upfront Payment Option With Regard to the Relocation Housing Payment, to HUD’s 

Office of Community Planning and Development. Specifically, the SIR recommended that HUD amend the 

regulation, modifying the Uniform Relocation Act to require monthly payment assistance only and remove the 

lump-sum, upfront payment option with regard to the relocation housing payment (RHP). In addition, the SIR 

recommended that the RHP payer be notified to end the RHP assistance payments when a person, who is currently 

receiving RHP benefits, begins to receive housing assistance payment benefits. Finally, it was recommended that 

the regulation include a requirement that RHP benefits be used solely toward housing payments and that the 

displaced tenants be required to sign an acknowledgment certifying such. The Department did not respond within 

the requisite 60 days, and HUD OIG has still not received a response. 

Summary of Reports With Open Recommendations

The IGEA requires OIGs to report on each audit and evaluation report for which there are any outstanding 

unimplemented recommendations, including the combined potential cost savings of these recommendations. 

Summaries for the Office of Audit and Office of Evaluation are presented below. 

The details of each open recommendation can be found on OIG’s website at https://www.hudoig.gov/openrecommendations. 

94
SEMIANNUAL REPORT TO CONGRESS

AUDIT

The Department currently has 2,117 outstanding (open) unimplemented recommendations with a combined 

potential cost savings of more than $19 billion. The following table and charts reflect the reasons why they remain 

unimplemented: 

• 1,692 recommendations have active corrective action plans in place or valid repayment plans, but

HUD has not yet finished implementing the recommendation.

• 425 recommendations are currently without management decisions (agreement between the

Department and OIG); 47 are beyond the 180-day statutory requirements due to disagreement and

were reported in table A of the SAR. The remainder are within the 180-day limit, during which time

management and OIG can arrive at an agreed-upon corrective action plan.

• 418 open recommendations have management decisions in place but are currently under investigative,

legislative, or judicial action or under a valid repayment plan and are, therefore, suspended pending

resolution. 

OFFICE OF AUDIT OPEN RECOMMENDATIONS

Calendar year Number of open 

recommendations

Cumulative estimated cost savings from 

open recommendations

Pre-2001 6 $3,992,169

2001 1 280,000

2002 8 1,382,626

2003 14 1,813,658

2004 8 8,303,357

2005 5 3,006,373

2006 32 14,299,086

2007 27 6,227,340

2008 38 72,607,328

2009 31 80,040,545

2010 33 51,674,541

2011 47 100,086,158

2012 47 22,775,518

2013 116 429,751,829

2014 205 2,050,371,280

2015 195 1,267,002,728

2016 301 8,840,262,135

2017 457 1,947,404,944

2018 547 4,601,620,434

Total 2,117 19,502,902,049

95
SEMIANNUAL REPORT TO CONGRESS

EVALUATION

The following table summarizes Office of Evaluation (OE) reports with open recommendations: 

OFFICE OF EVALUATION OPEN RECOMMENDATIONS

Reporting period Number of open recommendations

Pre-2013 0 

2013 11

2014 24

2015 25

2016 29

2017 18

2018 35

Total 142

OE conducts evaluations focused on improving departmental process and programs. As of the writing of this SAR, 

OE’s recommendations have not focused on producing direct cost savings but, rather, improving program 

effectiveness and reducing the likelihood of negative outcomes. For example, during this reporting period, some of 

OE’s recommendations addressed HUD’s oversight of public housing agencies (PHA) and its impact on PHA 

residents and the safety of workers and other occupants of HUD headquarters. 

Statistical Table Showing Investigative Report Metrics

The IGEA requires the SAR to include statistical tables and metrics for investigative cases. 

For the information below, the data used in this statistical table were extracted from HUD OIG’s Case Management 

System (CMS). CMS and its underlying infrastructure allow for data input and maintain data integrity during the 

complete investigative case cycle, while ensuring data privacy and confidentiality. The system was developed in 

.Net 4.5.1, and the database is SQL 2012. HUD OIG develops queries to extract data from CMS to meet business

requirements, such as the information used to create this statistical table. The table below provides additional 

guidance pertaining to each requested category of information. HUD OIG’s CMS is not currently configured to 

quantify persons referred for prosecution or differentiate whether a case or person was referred for Federal 

prosecution or State or local prosecution. HUD OIG is developing a solution to the system configuration to allow a 

query to quantify persons referred for State and Federal prosecution. 

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SEMIANNUAL REPORT TO CONGRESS

Office of Investigation IGEA Statistical Table

Requirement Total

A. Total number of investigative reports issued during the reporting period.23 223 

B. Total number of persons referred to the U.S. Department of Justice for criminal prosecution

during the reporting period.24 122* 

C. Total number of persons referred to State and local prosecuting authorities for criminal

prosecution during the reporting period. 64* 

D. Total number of indictments and criminal informations during the reporting period that

resulted from any prior referral to prosecuting authorities. 117

* The data used in this statistical table were extracted from HUD OIG’s CMS. CMS and its underlying infrastructure allow

for data input and maintain data integrity during the complete investigative case cycle, while ensuring data privacy and

confidentiality. The system was developed in .Net 4.5.1, and the database is SQL 2012. HUD OIG develops queries to

extract data from CMS to meet business requirements, such as the information used to create this statistical table. The

footnotes referenced in the table provide additional guidance pertaining to each requested category of information.

Investigations of Senior Government Employees 

The IGEA requires OIG to summarize in the SAR each investigation involving a senior government employee when 

allegations of misconduct were substantiated. Listed below are the cases for this reporting period: 

• It was alleged that senior HUD officials violated the HUD nepotism policy when they advocated for

the hiring of their children under the Pathways Student Temporary Employment Program. HUD OIG

referred this case to the United States Attorney’s Office; however, the matter was declined for

prosecution. Disciplinary action was taken against the HUD officials for nepotism.

• It was alleged that a senior HUD official submitted false official documentation by claiming “travel

compensation” in lieu of compensation time or overtime as a way to circumvent the pay cap. HUD

OIG referred this case to the United States Attorney’s Office; however, the matter was declined for

prosecution. Disciplinary action was taken against the HUD officials for submitting false

documentation.

• It was alleged that a senior HUD official engaged in retaliatory actions as a result of one of her

employees’ submitting a resignation. HUD OIG did not refer this case to the United States

Attorney’s Office as no criminal violations occurred. Disciplinary action was taken against the HUD

official for retaliation.

• It was alleged that a HUD official was provided preferential treatment and may have been committing

time and attendance fraud while working remotely for an extended amount of time from another State

while caring for a family member. The investigation revealed that the HUD manager was authorized

to work remotely out of State to care for a family member. However, the investigation identified

other instances in which the HUD employee failed to accurately record telework on time and

23 Includes approved reports of investigations 

24 Includes all charging documents reported: criminal complaints, indictments, informations, and superseding indictments 

97
SEMIANNUAL REPORT TO CONGRESS

attendance submissions. Disciplinary action was taken against the HUD employee for failure to 

accurately report telework time on time and attendance records. 

Instances of Whistleblower Retaliation

The IGEA requires OIG to include in the SAR a detailed description of any instance of whistleblower retaliation, 

including information about the official found to have engaged in retaliation and what, if any, consequences the 

establishment imposed to hold that official accountable. 

INVESTIGATION

A former employee with a local PHA filed a whistleblower retaliation complaint after claims that the employee was 

harassed, reprimanded, and eventually dismissed for filing a previous complaint to HUD OIG. The previous HUD 

OIG complaint allegations involved a conflict of interest relating to a PHA board member as well as gross 

mismanagement on the part of the PHA’s executive director. The complainant was an employee of the local PHA, a 

grantee receiving Federal funds from HUD. The employee filed a complaint disclosing possible violations of law, 

rules, or regulations and possibly gross mismanagement. The timeframe of personnel actions implemented against 

the complainant occurred in a timeframe that allows a presumption that the disclosures contributed to the personnel 

actions. HUD OIG reviewed emails, conducted interviews, analyzed evidence, and completed a report of findings. 

The report of findings was delivered to the HUD Secretary’s Office. HUD’s Office of General Counsel responded 

to the report, denying any relief to the complainant. HUD’s Office of General Counsel did not provide a basis for 

its decision. 

OIG Independence

The IGEA requires OIG to include in the SAR a detailed description of any attempt by the establishment to interfere 

with the independence of OIG, including incidents in which the establishment has resisted or objected to oversight 

activities or restricted or significantly delayed access to information. 

There are no instances to report this period. 

Reports That Were Closed During the Period That Were Not Disclosed to the Public

Section 5(a)(22) of the IGEA, as amended, requires that OIG report on each audit conducted by the office that is 

closed during the reporting period and was not disclosed to the public. During the current reporting period, OIG 

had one report that was closed but not disclosed to the public. 

AUDIT

AUDIT REPORT 2015-DP-0001, SINGLE FAMILY HOUSING ENTERPRISE DATA 

WAREHOUSE, ISSUED ON OCTOBER 21, 2014, AND CLOSED ON JULY 3, 2018 

This was a LIMITED DISTRIBUTION audit report. OIG reviewed the general and application controls over the 

Federal Housing Administration’s (FHA) Single Family Housing Enterprise Data Warehouse as part of the internal 

control assessments of FHA’s principal financial statements for fiscal year 2014. OIG’s objective was to determine 

the effectiveness of general and application controls over the data warehouse for compliance with HUD information 

technology policies and Federal information system security and financial management requirements. OIG found 

that (1) access to some privacy information was not sufficiently restricted to individuals as necessary to perform 

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SEMIANNUAL REPORT TO CONGRESS

their duties, (2) reconciliations of data from source systems that interface with the data warehouse were not 

sufficient, (3) passwords for a majority of data warehouse user accounts were not changed every 90 days, and (4) 

the web server software in use was not kept up to date. OIG made recommendations that FHA (1) ensure that 

system users can access only the data necessary to perform their assigned duties, (2) improve the interface 

reconciliation process for business-critical system interfaces, (3) ensure that system user account passwords are 

changed every 90 days, and (4) update the web server software to the current release or use an alternative 

application environment software that remains current to a supported release.

INVESTIGATION

During the current reporting period, OIG has seven investigative reports that were closed but not disclosed to the 

public. The allegations include the following: 

• A senior HUD official granted two separate time-off incentive awards in an attempt to obtain 

concessions. This case was not referred to the United States Attorney’s Office, nor was disciplinary 

action taken against the HUD OIG official because this allegation was unsubstantiated.

• It was alleged that senior HUD officials violated the HUD nepotism policy when they advocated for 

the hiring of their children under the Pathways Student Temporary Employment Program. HUD OIG 

referred this case to the United States Attorney’s Office; however, the matter was declined for 

prosecution. Disciplinary action was taken against the HUD officials for nepotism.

• It was alleged that a senior HUD official submitted false official documentation by claiming “travel 

compensation” in lieu of compensation time or overtime as a way to circumvent the pay cap. HUD 

OIG referred this case to the United States Attorney’s Office; however, the matter was declined for 

prosecution. Disciplinary action was taken against the HUD official for submitting false 

documentation. 

• It was alleged that a senior HUD official engaged in retaliatory actions as a result of one of her 

employees’ submitting a resignation. HUD OIG did not refer this case to the United States 

Attorney’s Office as no criminal violations occurred. Disciplinary action was taken against the HUD 

official for retaliation.

• It was alleged that a HUD official was provided preferential treatment and may have been committing 

time and attendance fraud while working remotely for an extended amount of time from another State 

while caring for a family member. The investigation revealed that the HUD manager was authorized 

to work remotely out of State to care for a family member. However, the investigation identified 

other instances in which the HUD employee failed to accurately record telework on time and 

attendance submissions. Disciplinary action was taken against the HUD employee for failure to 

accurately report telework time on time and attendance records. 

99
OIG TELEPHONE DIRECTORY

OFFICE OF AUDIT

HEADQUARTERS OFFICE Washington, DC 202-708-0364

REGION 1 Boston, MA 617-994-8380

 Hartford, CT 860-240-9739

REGION 2 New York, NY 212-264-4174

 Buffalo, NY 716-551-5755

 Newark, NJ 973-622-7900

REGION 3 Philadelphia, PA 215-656-0500

 Baltimore, MD 410-962-2520

 Pittsburgh, PA 412-644-6372

 Richmond, VA 804-771-2100

REGION 4 Atlanta, GA 404-331-3369

 Greensboro, NC 336-547-4001

 Miami, FL 305-536-5387

 San Juan, PR 787-766-5540

REGION 5 Chicago, IL 312-913-8499

 Columbus, OH 614-280-6138

 Detroit, MI 313-226-6190

100
REGION 6 Fort Worth, TX 817-978-9309

 Baton Rouge, LA 225-448-3975

 Houston, TX 713-718-3199

 New Orleans, LA 504-671-3000

 Albuquerque, NM 505-346-6463

 Oklahoma City, OK 405-609-8606

 San Antonio, TX 210-475-6800

REGION 7-8-10 Kansas City, KS 913-551-5870

 St. Louis, MO 314-539-6339

 Denver, CO 303-672-5452

 Seattle, WA 206-220-5360

REGION 9 Los Angeles, CA 213-894-8016

 Las Vegas, NV 702-366-2100

 Phoenix, AZ 602-379-7250

 San Francisco, CA 415-489-6400

OFFICE OF EVALUATION

HEADQUARTERS Washington, DC 202-708-0430

 Denver, CO 202-708-0430

OFFICE OF INVESTIGATION

HEADQUARTERS Washington, DC 202-708-5998

101
REGION 1-2 New York, NY 212-264-8062

 Boston, MA 617-994-8450

 Hartford, CT 860-240-4800

 Manchester, NH 603-666-7988

 Newark, NJ 973-776-7347

REGION 3 Philadelphia, PA 215-430-6756

 Baltimore, MD 410-209-6695

 Pittsburgh, PA 412-644-2668

 Richmond, VA 804-822-4890

REGION 4 Atlanta, GA 404-331-5001

 Greensboro, NC 336-547-4000

 Miami, FL 305-536-3087

 San Juan, PR 787-766-5868

REGION 5 Chicago, IL 312-353-4196

 Cleveland, OH 216-357-7800

 Columbus, OH 614-469-5737

 Detroit, MI 313-226-6280

 Indianapolis, IN 317-957-7377

 Minneapolis-St. Paul, MN 612-370-3130

REGION 6 Fort Worth, TX 817-978-5440

 Baton Rouge, LA 225-448-3941

 Houston, TX 713-718-3220

 Little Rock, AR 501-918-5792

 New Orleans, LA 504-671-3700

 Oklahoma City, OK 405-609-8601

 San Antonio, TX 210-475-6822

102
REGION 7-8-10 Denver, CO 303-672-5350

 Billings, MT 406-247-4080

 Kansas City, KS 913-551-5566

 Salt Lake City, UT 801-524-6091

 St. Louis, MO 314-539-6559

 Seattle, WA 206-220-5380

REGION 9 Los Angeles, CA 213-534-2496

 Las Vegas, NV 702-366-2144

 Phoenix, AZ 602-379-7252

 Sacramento, CA 916-930-5693

 San Francisco, CA 415-489-6685

JOINT CIVIL FRAUD

Audit Kansas City, KS 913-551-5566

Investigation Kansas City, KS 913-551-5566

103
ACRONYMS AND ABBREVIATIONS LIST

ACD......................................................................Accelerated Claims Disposition program

ADA......................................................................Antideficiency Act

AFR....................................................................... agency financial report

ARC......................................................................Administrative Resource Center

ASC ......................................................................Accounting Standards Codification

CAIVRS ................................................................Credit Alert Verification Reporting System

CDBG...................................................................Community Development Block Grant

CDBG-DR ............................................................Community Development Block Grant Disaster Recovery

CFO......................................................................chief financial officer

CFR ......................................................................Code of Federal Regulations

CIGIE ...................................................................Counsel of the Inspectors General on Integrity and Efficiency

CPD......................................................................Office of Community Planning and Development

CMS......................................................................Case Management System

CWCOT ...............................................................Claims Without Conveyance of Title program

DATA Act .............................................................Digital Accountability and Transparency Act of 2014

DEC......................................................................Departmental Enforcement Center

DHS......................................................................U.S. Department of Homeland Security

DoD......................................................................U.S. Department of Defense

DOT......................................................................U.S. Department of Transportation

EIBLL....................................................................environmental intervention blood lead level

FFMIA................................................................... Federal Financial Management Improvement Act of 1996

FHA ...................................................................... Federal Housing Administration

FHFA .................................................................... Federal Housing Finance Agency

FISMA .................................................................. Federal Information Security Modernization Act

FSS ....................................................................... Family Self-Sufficiency program

FSSP..................................................................... Federal shared service provider

FTB....................................................................... First Third Bank

FY .........................................................................fiscal year

104
ACRONYMS AND ABBREVIATIONS LIST (CONTINUED)

GAAP....................................................................generally accepted accounting principles

Ginnie Mae..........................................................Government National Mortgage Association

HECM...................................................................home equity conversion mortgage

HOPWA ...............................................................Housing Opportunities for Persons With AIDS

HUD .....................................................................U.S. Department of Housing and Urban Development

IDIS ......................................................................Integrated Disbursement and Information System

IGEA.....................................................................Inspector General Empowerment Act

IPERA...................................................................Improper Payments Elimination and Recovery Act of 2010

IT.......................................................................... information technology

LOCCS ................................................................. Line of Credit Control System

LOS ...................................................................... Loan Origination System

MDD.....................................................................major disaster declaration

MHI......................................................................mortgage held for investment

MRB .....................................................................Mortgagee Review Board

MSS......................................................................master subservicer

MTW ....................................................................Moving to Work Demonstration program

NAHA...................................................................Cranston-Gonzales National Affordable Housing Act of 1990

NCIS.....................................................................New Core Interface Solution

OA ........................................................................Office of Audit

OCFO...................................................................Office of the Chief Financial Officer

OCIO....................................................................Office of the Chief Information Officer

OCPO...................................................................Office of the Chief Procurement Officer

OE ........................................................................Office of Evaluation

OGC .....................................................................Office of General Counsel

OI .........................................................................Office of Investigation

OIG.......................................................................Office of Inspector General

ORCF ...................................................................Office of Residential Care Facilities

OSC......................................................................Office of Special Counsel

105
PHA......................................................................public housing agency

PIC .......................................................................Office of Public and Indian Housing Information Center

PIH .......................................................................Office of Public and Indian Housing

PII.........................................................................personally identifiable information

PRWORA..............................................................Personal Responsibility and Work Opportunity Reconcilliation Act of 

1996

RAD......................................................................Rental Assistance Demonstration Program

REAC....................................................................Real Estate Assessment Center

SAR.......................................................................Semiannual Report to Congress

SMART.................................................................Single Family Mortgage Asset Recovery Technology system

TBW .....................................................................Taylor, Bean & Whitaker Mortgage Corporation

U.S.C. ...................................................................United States Code

USDA....................................................................U.S. Department of Agriculture

USPIS...................................................................United States Postal Inspection Service

USSGL..................................................................United States Standard General Ledger

VASH....................................................................U.S. Department of Veterans Affairs Supportive Housing program

ACRONYMS AND ABBREVIATIONS LIST (CONTINUED)

106
REPORTING REQUIREMENTS

The specific reporting requirements as prescribed by the Inspector General Act of 1978, as amended by the 

Inspector General Act of 1988, are listed below.

SOURCE-REQUIREMENT PAGES

Section 4(a)(2)-review of existing and proposed legislation and regulations. 5

Section 5(a)(1)-description of significant problems, abuses, and deficiencies relating to the 

administration of programs and operations of the Department.

1-24,

58-59

Section 5(a)(2)-description of recommendations for corrective action with respect to 

significant problems, abuses, and deficiencies.

30-59

Section 5(a)(3)25-identification of each significant recommendation described in previous 

Semiannual Report on which corrective action has not been completed.

Appendix 3, 

Table B, 70

Section 5(a)(4)-summary of matters referred to prosecutive authorities and the 

prosecutions and convictions that have resulted.

1-24

Section 5(a)(5)-summary of reports made on instances where information or assistance 

was unreasonably refused or not provided, as required by Section 6(b)(2) of the Act.

No 

instances

Section 5(a)(6)-listing of each audit report completed during the reporting period, and for 

each report, where applicable, the total dollar value of questioned and unsupported costs 

and the dollar value of recommendations that funds be put to better use.

Appendix 2,

61

Section 5(a)(7)-summary of each particularly significant report. 1-24

Section 5(a)(8)-statistical tables showing the total number of audit reports and the total 

dollar value of questioned and unsupported costs.

Appendix 3, 

Table C, 92

Section 5(a)(9)-statistical tables showing the total number of audit reports and the dollar 

value of recommendations that funds be put to better use by management.

Appendix 3, 

Table D, 93

Section 5(a)(10)-summary of each audit report issued before the commencement of the 

reporting period for which no management decision had been made by the end of the period.

Appendix 3, 

Table A, 67

Section 5(a)(11)-a description and explanation of the reasons for any significant revised 

management decisions made during the reporting period.

Appendix 4, 

95

Section 5(a)(12)-information concerning any significant management decision with which 

the Inspector General is in disagreement.

50

Section 5(a)(13)-the information described under section 05(b) of the Federal Financial 

Management Improvement Act of 1996.

56

Unsupported costs are a subset of questioned costs that the Inspector General Act requires be identified separately from the cumulative 

questioned costs identified.

25

107
FRAUD ALERT

Every day, loan modification and foreclosure rescue scams rob vulnerable homeowners of their money and their 

homes. The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), 

is the Department’s law enforcement arm and is responsible for investigating complaints and allegations of 

mortgage fraud. Following are some of the more common scams.

COMMON LOAN MODIFICATION SCAMS

Phony counseling scams: The scam artist says that he or she can negotiate a deal with the lender to modify 

the mortgage — for an upfront fee. 

Phony foreclosure rescue scams: Some scammers advise homeowners to make their mortgage payments 

directly to the scammer while he or she negotiates with the lender. Once the homeowner has made a few 

mortgage payments, the scammer disappears with the homeowner’s money.

Fake “government” modification programs: Some scammers claim to be affiliated with or approved by the 

government. The scammer’s company name and website may appear to be a real government agency, but 

the website address will end with .com or .net instead of .gov. 

Forensic loan audit: Because advance fees for loan counseling services are prohibited, scammers may sell 

their services as “forensic mortgage audits.” The scammer will say that the audit report can be used to avoid 

foreclosure, force a mortgage modification, or even cancel a loan. The fraudster typically will request an 

upfront fee for this service.

Mass joinder lawsuit: The scam artist, usually a lawyer, law firm, or marketing partner, will promise that he 

or she can force lenders to modify loans. The scammers will try to “sell” participation in a lawsuit against the 

mortgage lender, claiming that the homeowner cannot participate in the lawsuit until he or she pays some 

type of upfront fee. 

Rent-to-own or leaseback scheme: The homeowner surrenders the title or deed as part of a deal that will let 

the homeowner stay in the home as a renter and then buy it back in a few years. However, the scammer has 

no intention of selling the home back to the homeowner and, instead, takes the monthly “rent” payments and 

allows the home to go into foreclosure.

Remember, only work with a HUD-approved housing counselor to understand your options for assistance. 

HUD-approved housing counseling agencies are available to provide information and assistance. Call 

888-995-HOPE to speak with an expert about your situation. HUD-approved counseling is free of charge.

If you suspect fraud, call HUD OIG.

108
Diversity and Equal Opportunity

The promotion of high standards and equal employment opportunity for

employees and job applicants at all levels. HUD OIG reaffirms its commitment

to nondiscrimination in the workplace and the recruitment of qualified employees

without prejudice regarding their gender, race, religion, color, national origin,

sexual orientation, disability, or other classification protected by law. HUD OIG

is committed and proactive in the prevention of discrimination and ensuring

freedom from retaliation for participating in the equal employment opportunity

process in accordance with departmental policies and procedures.
Faxing the OIG hotline: 202-708-4829

Emailing the OIG hotline: hotline@hudoig.gov

Sending written information to

Department of Housing and Urban Development

Inspector General Hotline (GFI)

451 7th Street SW

Washington, DC 20410

Internet

https://www.hudoig.gov/report-fraud

ALL INFORMATION IS CONFIDENTIAL, AND 

YOU MAY REMAIN ANONYMOUS.

Report fraud, waste, and mismanagement

in HUD programs and operations by
U.S. DEPARTMENT 

OF HOUSING 

AND URBAN 

DEVELOPMENT

Report Number 80

www.hudoig.gov