For the period April 1, 2020, to September 30, 2020

OFFICE

INSPECTOR GENERAL

UNITED STATES DEPARTMENT OF

HOUSING AND URBAN DEVELOPMENT 

o f 

OFFICE OF INSPECTOR GENERAL

U.S. Department of Housing and Urban Development 

SEMIANNUAL REPORT 

TO CONGRESS

OFFICE

INSPECTOR GENERAL

UNITED STATES DEPARTMENT OF

HOUSING AND URBAN DEVELOPMENT 

o f 
INTRODUCTION

2 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
$1,124,611

Recommendations that funds 

be put to better use

288

Subpoenas

$6,043,007

Recommended

questioned costs

51

Arrests

$14,212,818

Collections from audits

66

Indictments-informations

$26,805,629

Investigative recoveries and 

receivables to HUD programs

39

Convictions-pleas-pretrial 

diversions

3 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

HIGHLIGHTS

For the period April 1, 2020, 

to September 30, 2020
AUDIT RESULTS This Reporting Period Fiscal Year 2020

INVESTIGATIVE RESULTS

Recommendations that funds be put to better use $1,124,611 $2,730,036

Recommended questioned costs $6,043,007 $11,862,510

Collections from audits $14,212,818 $35,712,526

Administrative sanctions 1 3

Civil actions 0 0

Subpoenas 0 6

Total restitutions and judgments $43,203,680 $72,725,844

Total recoveries and receivables to HUD programs $26,805,629 $39,510,316

Arrests 51 148

Indictments and informations 66 158

Convictions, pleas, and pretrial diversions 39 133

Civil actions 24 35

Total administrative sanctions 27 98

Suspensions 0 18

Debarments 6 17

Program referrals 11 16

Evictions 10 42

Other1 0 5

Systemic implication reports 0 0

Search warrants 21 52

Subpoenas 288 562

1

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

4 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

PERFORMANCE

For the period April 1, 2020, 

to September 30, 2020

PROFILE OF
IG MESSAGE......................................................................................................................................................................6

PRIORITY AREAS.............................................................................................................................................................8

PROGRAM AREAS........................................................................................................................................................ 13

Chapter 1– Single Family Housing..................................................................................................................... 14

Chapter 2 – Public and Indian Housing............................................................................................................ 19

Chapter 3 – Multifamily Housing and Healthcare........................................................................................ 25

Chapter 4 – Community Planning and Development................................................................................ 28

Chapter 5 – Disaster Relief.................................................................................................................................... 33

ADDITIONAL REPORTS............................................................................................................................................. 31

Chapter 6 – Other Significant Audits and Evaluations................................................................................ 34

Chapter 7 – Legislation, Regulations, and Other Directives..................................................................... 37

Chapter 8 – Report Resolution............................................................................................................................ 45

Chapter 9 – Whistleblower Ombudsman........................................................................................................ 72

Chapter 10 - Peer Review Reporting................................................................................................................. 74

APPENDIXES.................................................................................................................................................................. 76

Appendix 1 – Reports Issued............................................................................................................................... 77

Appendix 2 – Tables................................................................................................................................................ 82

Appendix 3 – Inspector General Empowerment Act................................................................................119

Appendix 4 – Reporting Requirements.........................................................................................................125

Appendix 5 – Acronyms and Abbreviations.................................................................................................127

Appendix 6 – OIG Telephone Directory .........................................................................................................128

TABLE OF

CONTENTS

5 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
6 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

INSPECTOR GENERAL

A MESSAGE FROM THE

I am pleased to submit the U.S. Department of Housing 

and Urban Development (HUD), Office of Inspector 

General’s (OIG) Semiannual Report to Congress, which 

covers the period April 1 to September 30, 2020. During 

this reporting period, we faced challenges unlike any that 

we have seen before, and as the period closes, we know that the fight against the 

novel coronavirus disease of 2019 (COVID-19) pandemic will continue. My office 

moved swiftly to adjust to the operational changes required during this difficult 

time. We remain focused on producing quality reports that are relevant and 

influential for our stakeholders, with the ultimate goal of assisting the Department 

in carrying out its programs effectively and efficiently.

HUD has a key role in the Federal response to the COVID-19 pandemic. During 

this reporting period, HUD was tasked with disbursing and overseeing more than 

$12 billion in funding provided under the Coronavirus Aid, Relief, and Economic 

Stability (CARES) Act, as well as implementing program changes to provide 

relief for renters and homeowners. The assistance and relief provided through 

HUD’s pandemic response is crucial to the stability of American housing and 

communities.

We conducted and initiated several reviews during this period to assess HUD’s 

implementation of the CARES Act, disbursement of grant funds, and ability 

to perform mission operations during the pandemic. The majority of our 

pandemic work has been limited in scope and designed to provide information 

to policymakers and the public more quickly. Initially, we focused on oversight 

efforts on the information that the public received about HUD’s pandemic 

response. Our staff completed multiple reviews of the accuracy and completeness 

of the information that HUD and mortgage servicers provided to homeowners 

about mortgage loan forbearance required by the CARES Act. We also examined 

the Department’s overall communication with renters about the CARES Act 

eviction moratorium and identified opportunities for improvement. In addition, 

we issued several bulletins to increase public awareness of potential fraud 

schemes and identify best practices for program participants.

We have also initiated a number of engagements to ensure that timely and 

effective relief is provided to the intended recipients and those relief efforts 

are not undermined by fraud, waste, and abuse. Pandemic-related oversight 

will be an OIG priority moving forward, as HUD continues to fulfill its important 

role in responding to the unprecedented challenges brought on by the 

pandemic.

During this period, we also concluded a number of audits, evaluations, 

and investigations that began before the COVID-19 pandemic. The work 

highlighted in this report demonstrates our emphasis on oversight that 

delivers systemic, enterprise-level impact, but also leverages our oversight 

toolkit to help deter fraud, waste, and abuse at the program-participant level. 

Examples of this work include the following:

• OIG Priority – Ensuring Safe and Affordable Housing

We issued two audit reports that identified opportunities for HUD to 

improve oversight of lead in the water of HUD-assisted housing units. 

We recommended that several HUD program offices develop and 

implement an action plan to ensure that residents living in units assisted 

through public housing, the Housing Choice Voucher Program, and HUD’s 

multifamily housing programs have access to safe drinking water.

• OIG Priority – Protecting the Mortgage Insurance Funds

Our investigative efforts with the U.S. Department of Justice and HUD’s 

Office of General Counsel helped secure a $15.3 million settlement related 

to alleged fraud in the origination and underwriting of a loan to fund 

development of a hospital, which later resulted in a $122 million loss for 

HUD. Our work not only resulted in a substantial recovery for HUD, but it 

serves as an important deterrent in HUD’s insurance programs designed 

to help underserved communities and vulnerable populations. 

• OIG Priority – Monitoring and Oversight

Our Office of Evaluation also issued a report detailing challenges HUD 

program offices face in protecting billions of records containing personally 

identifiable information and identified several recommendations for HUD 

to strengthen records management practices.
7 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

During this period, we also collaborated with HUD to address OIG 

recommendations through a “tiger team” process that we established with the 

Offices of the Chief Financial Officer and the Chief Information Officer. This effort 

has helped the Department improve its maturity in financial management and 

information security in particular, and the collaboration has contributed to a 

substantial reduction in open recommendations departmentwide. The number of 

open recommendations has been reduced from 2,259 at the conclusion of fiscal 

year 2018 to 1,430 at the end of fiscal year 2020.

I want to recognize the entire HUD OIG staff for its resilience and dedication to 

our work. I also want to thank the Department and Congress for their continued 

support for our important oversight work. I am optimistic and hopeful that we 

will continue to find ways to improve and help HUD fulfill its important mission.

Thank you,

Rae Oliver Davis

Inspector General
8 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

PRIORITY AREAS

OVERSIGHT WORK

The U.S. Department of Housing and Urban Development, Office of Inspector General’s (HUD OIG) mission is to protect the integrity of HUD and its programs 

and to promote their efficiency and effectiveness. To ensure that the right work is done at the right time, OIG has established a set of Oversight Priority 

Areas, which are informed by what OIG finds each year to be HUD’s Top Management Challenges. OIG also includes primary, cornerstone functions of the 

Department as well as emerging issues and recent strategic priorities that the Department has identified. Below is an overview of OIG’s 12 Oversight Priority 

Areas.
2

The Section 3 program requires that recipients of certain HUD financial assistance, to the greatest extent possible, provide training, employment, contracting, and other economic opportunities to lowand very low-income persons, especially recipients of government assistance for housing, and to businesses that provide economic opportunities to low- and very low-income persons.

9 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

 Ensuring Safe and Affordable Housing

HUD is responsible for providing quality homes for all. HUD continues to 

be challenged by the increasing scarcity of safe and affordable housing, 

which increasingly impacts persons above very low-income levels. Over 

time, the balance of HUD support has shifted from public housing to 

providing rental housing assistance through subsidies, depending more 

and more on private rental stock. HUD-funded housing stock is aged 

and sometimes environmentally impacted by lead-based paint hazards, 

elevated radon levels, and increased risk of hazardous waste sites. Further, 

HUD’s housing stock remains in need of critical repairs at a time in which 

HUD temporarily suspended inspections due to the 2019 coronavirus 

(COVID-19) pandemic and was introducing a demonstration program to 

improve its 20-year-old inspection process. HUD seeks to extend the life 

of these units through various financing and programmatic vehicles, such 

as the Rental Assistance Demonstration Program and low-income housing 

tax credits, which also shifts HUD oversight to a private rental model. The 

Housing Choice Voucher Program, which provides tenants assistance to 

access the private rental market, has been highly successful for low-income 

persons but depends on available private rental housing, and need for the 

subsidy far outstrips appropriations. Moreover, HUD has limited tools to 

address safety and affordability issues impacting such housing. 

 Advancing Economic Opportunities Initiatives

Advancing economic opportunity is the first priority goal of HUD’s 

Strategic Plan and has been a signature focus of Secretary Carson. 

HUD initiatives and programs in this priority area focus on economic 

development in local communities that increases opportunities 

for individuals and families receiving government benefits to find 

employment and become self-sufficient. Many of these initiatives are 

entirely new, such as EnVision Centers and Opportunity Zones. Other 

programs are longstanding self-sufficiency programs, such as Moving 

to Work Demonstration, Family Self-Sufficiency, and Section 3.2

 HUD’s 

strategic plan also includes as a priority the goal of reducing the length 

of homelessness in communities. Examining the effectiveness of the 

Department’s efforts to combat homelessness is a focus for OIG in this 

priority area. 

 Fair Housing

HUD is the Federal entity tasked with eliminating housing discrimination 

and promoting inclusive communities. HUD’s enforcement of fair housing 

laws extends beyond HUD programs into all fair housing issues throughout 

the country, and it accomplishes its mission through both education 

and enforcement in local communities and in Federal housing programs 

and by promoting economic opportunity for protected classes. During 

the pandemic, HUD’s ability to conduct investigations and respond to 

complaints may have been impacted. HUD is also empowered to mandate 

compensation to victims of discriminatory housing practices. According 

to the Office of Fair Housing and Equal Opportunity’s fiscal year 2018-2019 

Annual Report to Congress, HUD and State and local agencies filed more 

than 15,500 complaints in housing discrimination cases and achieved 

more than $34.7 million in monetary relief during those years. HUD’s fair 

housing work extends to sexual harassment associated with housing as a 

form of sex discrimination, and this is an area of particular focus for HUD 

OIG.
10 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

 Protecting the Mortgage Insurance Funds

The Federal Housing Administration (FHA) maintains a portfolio of more 

than 8 million insured mortgages with an outstanding balance of more 

than $1.3 trillion. When borrowers default on their mortgage payments, 

FHA reimburses lenders for their losses using the Mutual Mortgage 

Insurance Fund. The solvency of the fund is impacted by excessive claims 

caused by lenders approving borrowers who do not meet statutory, 

regulatory, and program eligibility requirements and the lengthy 

foreclosure and conveyance process. The reverse mortgage program also 

impacts the solvency of the fund to the extent that forward mortgages 

are effectively subsidizing the program. The reverse mortgage program 

continues to pay claims in which borrowers are not maintaining the 

property as their primary residence or failing to pay their property taxes or 

homeowners’ insurance. Further, the forbearance legally mandated by the 

Coronavirus Aid, Relief, and Economic Security (CARES) Act could create a 

liquidity crunch for servicers, a collapse in mortgage servicing asset values, 

and a tightening of credit as lenders reduce risk. 

The Government National Mortgage Association’s (Ginnie Mae) mortgageback securities (MBS) program creates liquidity for FHA lenders. For the 

first three quarters of fiscal year 2020, Ginnie Mae issued $525.1 billion in 

MBS, bringing the outstanding unpaid principal balance to $2.1 trillion. 

Ginnie Mae steps in to make the principal and interest payments to MBS 

investors in cases in which the issuer of the security is not able to make 

the payment. Ginnie Mae faces additional risks when its issuers are 

nonbanks, but forbearance could impact all issuers if a significant number 

of homeowners cannot make their payments that support what is due to 

investors.

 Monitoring and Oversight

HUD’s annual and supplemental budgets in excess of $50 billion are 

predominantly made up of grants and other subsidies to be passed 

through to governments, organizations, and individuals. HUD continues 

to face challenges with effective management controls, lack of reliable 

information from program partners to assess program performance and 

compliance, and oversight of its programs and program participants. Lack 

of appropriate staffing plays a major role in this challenge. To ensure that 

funding is used properly and reaches the intended beneficiaries, HUD 

must regularly evaluate its programs’ effectiveness and the use of funds. 

Several monitoring areas of concern have existed for years, and nominal 

progress has been made. Since 2015, OIG has consistently found that HUD 

conducts little or no monitoring of community planning and development 

program grantees. Additionally, HUD had not been referring troubled 

public housing agencies to the Assistant Secretary for Public and Indian 

Housing for receivership as the law and regulations require. Further, HUD 

continues to allow Section 232 residential care facilities to be exempt 

from its own physical inspections because nursing homes are subject 

to inspections by other government agencies that do not accurately 

capture the physical conditions of the facilities. HUD’s ability to monitor 

its partners during the pandemic has been hampered by limiting onsite 

monitoring visits and suspending physical inspections at various program 

participant locations.

 Administering Disaster Assistance

HUD is a primary actor in the Federal effort to assist communities in 

recovering from disasters. Congress has appropriated $83.7 million to HUD 

in the aftermath of presidentially declared disasters since 2001. A recordbreaking $20 billion was allocated to Puerto Rico in the wake of Hurricanes 

Maria and Irma. Despite the multiyear timespan of disaster recovery and 

the expectation that such activity will not decrease, HUD continues to 
11 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

use Federal Register Notices to administer disaster appropriations. Since 

2017, HUD OIG has recommended that HUD codify the Community 

Development Block Grant Disaster Recovery program to simplify the 

process and standards and to speed up allocation. Secretary Carson 

testified in May 2019 that he would support codification, and legislation 

has been introduced. HUD also faces continuing challenges to clarify and 

simplify its requirements; ensure that systems have capacity to oversee 

the delivery of funding to grantees; ensure that it has sufficient resources 

and staff to efficiently monitor grants; ensure that expenditures are eligible 

and supported and proper financial and procurement controls are in 

place to reduce fraud, waste, and abuse; ensure that citizens who seek 

disaster assistance understand their options and obligations; and reduce 

administrative delays in the funds disbursement process.

 Information Technology and Cybersecurity

HUD depends on its systems to maintain more than a billion personally 

identifiable information records, confidential business information, 

and nonpublic HUD information. HUD is making progress with its 

longstanding information technology (IT) deficiencies. HUD’s outdated 

IT systems cannot be adapted to handle HUD’s current complex mission 

and its demands for accountability. In addition, IT resources have been 

distributed across multiple program offices, rather than consolidated 

under the Chief Information Officer’s authority. HUD has made a 

concerted effort to fill key IT leadership positions that have been vacant 

for multiple years and continues to rely heavily on contract support for 

its operational and modernization efforts. HUD’s information security 

program remains at a maturity level that is determined to not be effective.

 Financial Management

HUD continued to make progress in addressing its financial management 

weaknesses during fiscal year 2020. However, it continues to have many 

of its financial and operational internal controls reported as ineffective and 

an antiquated financial management system. HUD received a disclaimer 

of opinion on its consolidated financial statements for 5 years before its 

modified opinion in fiscal year 2019. However, one of HUD’s component 

entities, Ginnie Mae, has been unable to achieve an unmodified opinion 

and has received a disclaimer of opinion for the last 6 years due to poor 

governance and a weak internal control framework. HUD will need to 

be able to sustain the improvements it has made as it deals with new 

challenges brought on by the COVID-19 pandemic.

 Human Resource Management and Procurement

Over the past 10 years, HUD’s staffing level has declined while its programs 

and responsibilities have increased. Between fiscal years 2015 and 2018, 

HUD’s attrition rate outpaced its current hiring capacity. In fiscal year 2020, 

HUD reported that it experienced its largest increase in staffing in more 

than a decade. According to HUD’s Office of the Chief Financial Officer, 

receiving 2-year funding instead of annual funding has had a significantly 

positive impact on the hiring process. For HUD to sustain improvement, 

it must also address challenges posed by the pandemic, including hiring 

more program staff to manage the additional funding from the CARES Act. 

Many, if not all, of the challenges HUD faces are impacted by its staffing 

issues. Although HUD has increasingly relied on contractors to fill staffing 

gaps, HUD faces challenges with properly directing and monitoring 

contractors that have significant influence on the development, 

implementation, and oversight of HUD programs.
12 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

 Ethical Conduct

The American public relies on HUD officials and the entities that 

participate in HUD programs to perform their duties ethically and with 

integrity. Ethical lapses or failures undermine program effectiveness and 

ultimately diminish the public trust in HUD and its programs. HUD is at 

risk due to the vast number of HUD programs, the significant amount 

of Federal funds flowing through these programs, and HUD’s resource 

constraints. HUD employees set policies in the financial services industry 

and make decisions affecting the financial positions of external entities. 

To promote ethical conduct, HUD must provide these staff members 

with training and guidance on the requirements for disclosing financial 

interests and effectively mitigating potential conflicts of interest. OIG is 

also mindful of the risk that, during an election year, political appointees 

may be inappropriately “burrowing” into career-employee status.

 Emerging Issues and Opportunities

The environment in which HUD operates is ever changing. HUD must 

strive for success in its mission in ways that are sustainable in – and 

take advantage of – the changing environment. Some environmental 

changes may become a Top Management Challenge or contribute to a Top 

Management Challenge; others may offer new solutions to old problems. 

HUD OIG strives to be aware of emerging issues and opportunities facing 

the Department and proactive in assessing risks and opportunities for 

HUD to more effectively address these issues. For example, during this 

period, HUD has had to adapt to performing its operations under safe 

distancing restrictions caused by the COVID-19 pandemic. In addition, the 

passing of the CARES Act provided $12.4 billion in addition to its normal 

appropriations and significant changes in some program requirements. 

These changes required HUD to increase communication to the public to 

ensure that they understood their rights and could protect themselves. 

 Mandatory Work

HUD OIG is required to perform certain functions by law, such as financial 

statement audits and the Federal Information Security Modernization Act 

evaluation, and as a result, must plan around a series of annually required 

mandatory reports and reporting requirements. Likewise, HUD receives 

appropriations and supplemental funding that also provide constraints or 

emphases for our work. This priority area focuses on ensuring that HUD 

OIG is meeting its mandatory requirements but also performing them in a 

way that is most efficient and effective, despite the ongoing pandemic.
PROGRAM AREAS

13 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
SINGLE FAMILY HOUSING

CHAPTER 1

The Federal Housing Administration (FHA) singlefamily 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 

in this chapter.

14 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
REVIEW OF HUD’S RESPONSES TO INQUIRIES REGARDING 

RELIEF PROVIDED BY THE CORONAVIRUS AID, RELIEF, AND 

ECONOMIC SECURITY ACT

The U.S. Department of Housing and Urban Development, Office of 

Inspector General (HUD OIG), evaluated the accuracy of HUD’s responses 

to inquiries from borrowers, industry partners, and the general public 

regarding forbearance and foreclosure relief provided by the Coronavirus 

Aid, Relief, and Economic Security Act.

OIG found that HUD could improve its customer service to borrowers, 

industry partners, and the general public by providing more direct, 

accurate, and complete responses to their inquiries. (Audit Report: 2020-

PH-0801) 

(HUD OIG Priority Area: Emerging Issues and Opportunities)

Key program results Questioned costs Funds put to 

better use

1 audit $0 $0

15 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

OFFICE OF AUDIT
on the estimates and agreements submitted to the lenders, and kept the 

remaining funds. In some instances, the contractors performed little to no 

work, and any work that was performed was shoddy and incomplete. 

Also, in violation of the Title I Loan program, Ziglar fraudulently charged 

the homeowners a $2,500 referral fee for the financing. The majority of 

Ziglar’s victims were elderly. HUD OIG, the IRS, the Newport News Virginia 

Police Department, and the United States Postal Inspection Service 

conducted this investigation. (Norfolk, VA) 

(HUD OIG Priority Area: Protecting the Mortgage Insurance Funds)

HUD-APPROVED DIRECT ENDORSEMENT LENDER AGREES TO 

PAY $15.06 MILLION

Guaranteed Rate, Inc., a HUD-approved direct endorsement lender, 

entered into a $15.06 million settlement agreement with the United States, 

of which $7.8 million will be paid to FHA to resolve allegations that the 

lender violated the False Claims Act and the Financial Institutions Reform, 

Recovery and Enforcement Act of 1989 by knowingly violating the material 

program requirements when it originated and underwrote mortgages 

insured by FHA and guaranteed by the U.S. Department of Veterans Affairs 

(VA). 

Guaranteed Rate failed to comply with program rules that require lenders 

to maintain quality control programs and failed to follow the self-reporting 

requirements. In violation of the program’s rules, Guaranteed Rate’s FHA 

underwriters received commissions and gifts and in certain instances, 

failed to review documents that were relevant to the underwriting 

decision. As part of the settlement agreement, Guaranteed Rate 

acknowledged that it certified and approved loans that were not eligible 

INVESTIGATION

Program Results

HOME-REPAIR CON MAN SENTENCED TO 11 YEARS 

INCARCERATION

Businessman Gregory Ziglar was sentenced in U.S. District Court to 11 

years incarceration and 5 years supervised release and ordered to pay 

$325,522 in restitution, of which $18,310 is to be paid to FHA, $54,147 to 

the Internal Revenue Service (IRS), and $253,065 to individual victims. 

For more than 4 years, Ziglar orchestrated a scheme to defraud 

homeowners through FHA’s Title I Home and Property Improvement Loan 

Program. Ziglar, who used aliases and multiple shell companies, would 

solicit homeowners through newspaper and direct mail advertisements 

that offered home repair services and assistance with federally insured 

financing. Upon meeting with prospective clients, Ziglar claimed that 

he would obtain financing on behalf of the homeowners and that all 

construction would be performed by his contractors. He then created false 

estimates or purported agreements, which he sent to Title I Loan lenders 

to secure the loans. Ziglar was not authorized to create the estimates 

or agreements on behalf of the contractors. He inflated the estimates 

and agreement amounts to maximize the loan amounts. Once the 

homeowners provided the loan proceeds to Ziglar, he hired contractors 

to perform the work, paid them substantially less than what was listed 

Administrative - 

civil actions

Convictions - pleas - 

pretrial diversions Financial recoveries

13 6 $19,086,792

16 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
for FHA mortgage insurance or VA guarantees and that, without the 

lender’s actions, HUD and the VA would not have insured or guaranteed 

the loans. The lender also indicated in the agreement that it had made 

changes to its self-reporting procedures, underwriter compensation 

practices, and underwriting filing and documentation procedures. HUD 

OIG conducted this investigation. (Albany, NY) 

(HUD OIG Priority Area: Protecting the Mortgage Insurance Funds)

INVESTIGATION LEADS TO RETURN OF MORE THAN $1.6 

MILLION TO FHA 

NOVA Financial & Investment Corporation, a lender approved to 

participate in HUD’s FHA Title II Single Family Mortgage Insurance 

Program, entered into a $752,518 settlement agreement after HUD’s 

Mortgagee Review Board (MRB) issued a notice of violation and notice 

of intent to seek civil money penalties for violations of FHA underwriting 

requirements. 

The MRB action was due to the successful criminal prosecution of Valerie 

Schones, a former loan originator with NOVA; Patrick Healey, a former 

recruiter of a limited liability company (LLC), the mission of which was to 

renovate, market, and sell single-family residences; and Jared Castellaw, 

a former operations director of the LLC. The trio were sentenced in U.S. 

District Court to time served plus 5 years supervised release and ordered 

to pay $852,415 in joint and several restitution to FHA. From October 2008 

through May 2009, Schones, Healey, and Castellaw made false statements 

and created false loan documents for the purpose of influencing NOVA’s 

lending actions and persuading NOVA to qualify borrowers for FHAinsured loans. The false statements and documents concealed the true 

source of the borrowers’ “gift” funds and made it appear as though the 

borrowers’ family members provided the funds, when the defendants 

had provided the gift funds. The FHA loan program prohibits sellers and 

other interested parties with a financial interest in the sale of a residence 

from providing closing costs to borrowers but permits closing costs to be 

“gifted” to borrowers from family members. The FHA loan program also 

prohibits sellers and other parties with a financial interest in the sale of 

the residence from using funds to satisfy other debts. HUD OIG and the 

Federal Bureau of Investigation (FBI) conducted this investigation. (New 

Orleans, LA) 

(HUD OIG Priority Area: Protecting the Mortgage Insurance Funds)

17 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
FORMER TITLE INSURANCE UNDERWRITER TO PAY MORE THAN 

$400,000 IN RESTITUTION FOR TITLE INSURANCE SCAM

Former title insurance underwriter, Ginger Cunningham, was sentenced 

in U.S. District Court to a total of 14 months incarceration and 3 years 

supervised release and ordered to pay more than $412,344 in restitution 

to the title company and other individual victims. For approximately 

19 months after she was dismissed by the title company, Cunningham 

continued to represent herself as an independent agent of the title 

company, sold fictitious title insurance policies, and collected premium 

payments. During this time, Cunningham collected premium payments 

for approximately 973 fictitious title insurance policies with associated 

mortgage loans totaling more than $123 million, of which more than $9.1 

million was attributable to FHA-insured mortgages. As a result of this 

investigation, legitimate title insurance policies were retroactively issued 

for the affected mortgages to protect the FHA insurance fund, mortgage 

lending institutions, and mortgage borrowers. HUD OIG, the Federal 

Housing Finance Agency OIG, and the North Carolina Department of 

Insurance conducted this investigation. (Asheville, NC) 

(HUD OIG Priority Area: Protecting the Mortgage Insurance Funds)

HUSBAND AND WIFE SENTENCED TO A COLLECTIVE 214 

MONTHS IN PRISON FOR ORCHESTRATING A RESIDENTIAL 

EQUITY SKIMMING SCHEME

Michael Roush and Dana Roush, owners and operators of Kingdom 

Connected Investments LLC (KCI), were sentenced in U.S. District Court to a 

collective 214 months incarceration and 72 months supervised release and 

ordered to pay more than $2.6 million in restitution jointly and severally 

to individual victims. For more than 5 years, the Roushes marketed KCI as 

a Christian organization and promised to create “win-win” situations for 

home sellers and buyers. They often sought homeowners who owed more 

on their home than the property was worth and buyers who lacked good 

credit and could not obtain a conventional mortgage. KCI promised to 

relieve homeowners of their mortgage by “buying” the home, paying off 

the mortgage, and immediately removing them from the property’s title. 

KCI then sought potential buyers for the homes and presented them with 

the opportunity to build equity through a rent-to-own agreement with 

KCI. The buyers were required to make a downpayment to KCI, typically 

around 10 percent of the purchase price. 

KCI concealed from the buyers that the homes were not owned by KCI and 

that the true owners had an existing mortgage on the property, which KCI 

was responsible for paying. Rather than pay the mortgages, the Roushes 

used the money for personal expenses and to expand their real estate 

business. The sellers received foreclosure notices, often lost their homes 

to foreclosure, had their credit ruined, and found themselves much worse 

off financially than they were before dealing with KCI. The buyers often 

learned that they had no real ownership interest when the home was 

purchased by a third party at a foreclosure sale and the new owner started 

eviction proceedings. Twenty-one FHA-insured mortgages were impacted 

by this scheme. HUD OIG and the FBI conducted this investigation. 

(Anderson, SC) 

(HUD OIG Priority Area: Protecting the Mortgage Insurance Funds)

18 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
PUBLIC AND INDIAN HOUSING

CHAPTER 2

The U.S. Department of Housing and Urban 

Development (HUD) provides grants and subsidies 

to more than 3,100 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 low-income 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 in this chapter.

19 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
AUDIT

Key program results Questioned costs Funds put to 

better use

7 audits $1,404,246 $899,611

20 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

REVIEW OF THE PUBLIC HOUSING OPERATING AND CAPITAL 

FUNDS

HUD’s Office of Inspector General (OIG) audited the Philadelphia, PA, 

Housing Authority’s use of public housing operating funds to determine 

whether allegations from a complaint had merit; specifically, whether 

the Authority properly procured (1) relocation services, (2) job training 

services, (3) a vehicle, (4) tablet computers, and (5) an office chair in 

accordance with HUD requirements. OIG also wanted to determine 

whether the Authority was owed funds from its agent, the City of 

Philadelphia’s Redevelopment Authority, for past projects and followed its 

procedures for approving its chief executive officer’s salary.

Of the seven allegations in the complaint, two allegations had merit. The 

Authority could not show that its proposals for relocation services were 

evaluated based on the established evaluation criteria. It also violated 

conflict-of-interest requirements when procuring job training services. As 

a result, (1) HUD had no assurance that the vendor’s proposal, to which 

the Authority paid more than $860,000 for relocation services, was the 

most advantageous to the project, and (2) the Authority made ineligible 

payments totaling nearly $157,000 for job training services. The Authority 

properly procured a vehicle for its chief executive officer, tablet computers, 

and an office chair. Additionally, it was not owed funds from its agent and 

followed its procedures for approving its chief executive officer’s salary.

OIG recommended that HUD require the Authority to (1) either provide 

documentation to show that the proposal for relocation services was the 

most advantageous or reimburse its program with non-Federal funds 

for any amounts that it cannot support, (2) develop and implement 

monitoring controls to ensure that it procures products and services in 

accordance with procurement requirements, (3) reimburse its program 

with non-Federal funds for the ineligible payments it made due to a 

conflict-of-interest situation identified by the audit, and (4) develop and 

implement controls to ensure that it obtains waivers from HUD before 

entering into agreements that create conflict-of-interest situations. (Audit 

Report: 2020-PH-1001) 

(HUD OIG Priority Area: Monitoring and Oversight)

REVIEW OF THE SECTION 184 INDIAN HOME LOAN 

GUARANTEE PROGRAM

HUD OIG audited the Section 184 Indian Home Loan Guarantee program 

of Mid America Mortgage, doing business as 1st Tribal Lending, in Pinole, 

CA, to determine whether the lender underwrote Section 184 loans in 

accordance with HUD’s requirements.

The lender did not always follow HUD’s Section 184 program requirements. 

Specifically, it did not always (1) underwrite Section 184 loans in 

accordance with program requirements and (2) follow HUD’s quality 

control requirements when reviewing loan files. As a result, there was 

an increased risk to the Section 184 program and HUD’s Loan Guarantee 

Fund. The lender had 11 loans with material underwriting deficiencies, 
21 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

7 of which had a total unpaid mortgage balance of $1.3 million with an 

estimated potential loss to HUD of nearly $608,000.

OIG recommended that HUD (1) request indemnification for the seven 

loans cited above, (2) require the lender to develop and implement 

enhanced policies and procedures to ensure that electronic signatures 

from borrowers are properly supported, and (3) require the lender to fully 

implement its quality control plan for reverifications and provide HUD with 

periodic reports for 12 months to ensure that its quality control reviews are 

conducted in accordance with requirements. (Audit Report: 2020-LA1005) 

(HUD OIG Priority Area: Monitoring and Oversight)

REVIEW OF HUD’S HOUSING CHOICE VOUCHER AND PUBLIC 

HOUSING PROGRAMS

Based on a congressional inquiry from Senator Grassley’s office, HUD OIG 

audited HUD’s oversight of portability in the Housing Choice Voucher 

Program to determine whether (1) HUD had adequate policies and 

procedures to identify and evaluate the impacts portability may have 

on PHAs’ Housing Choice Voucher Programs and (2) HUD’s financial 

information relating to portability set-aside and additional administrative 

fees was correctly calculated and distributed in accordance with its 

requirements.

HUD generally had adequate oversight of portability in the Housing 

Choice Voucher Program; however, improvements could be made. 

Although HUD reviewed PHAs’ programs, it did not specifically identify 

and evaluate the effects of portability. As a result, HUD could miss the 

opportunity to assess the impact of portability on PHAs’ programs and use 

this information to make decisions that could (1) assist PHAs experiencing 

difficulties with managing the portability component of the program 

and (2) result in programmatic or process improvements. Generally, HUD 

correctly calculated portability set-aside funding for increased costs and 

special administrative fees for portability. However, HUD overpaid more 

than $115,000 in set-aside funding and more than $133,000 in special 

administrative fees. It also underpaid more than $35,000 in special 

administrative fees.

OIG recommended that HUD (1) conduct an assessment of the impact of 

portability and determine whether technical assistance is necessary for 

certain PHAs, (2) pursue the collection of or recapture the overpayments 

and distribute the underpayments of set-aside funds and special 

administrative fees, and (3) review the calculations and distributions of 

funds for the category 2b portability set-aside and special administrative 

fees for portability to ensure accuracy. (Audit Report: 2020-CH-0006) 

(HUD OIG Priority Area: Ensuring Safe and Affordable Housing)
22 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

HUD NEEDS TO IMPROVE ITS OVERSIGHT OF LEAD IN THE 

WATER OF HOUSING CHOICE VOUCHER AND PUBLIC HOUSING 

PROGRAM UNITS

HUD OIG audited HUD’s oversight of lead in the water of Housing 

Choice Voucher Program and public housing program (assisted) units to 

determine whether HUD had sufficient policies, procedures, and controls 

to ensure that households living in assisted units had a sufficient supply of 

safe drinking water.

HUD did not have sufficient policies, procedures, and controls to ensure 

that households living in assisted units had a sufficient supply of safe 

drinking water. PHAs had assisted units served by public water systems 

that reported levels of lead above the Environmental Protection Agency’s 

lead action level. However, HUD had limited requirements concerning lead 

in the drinking water of assisted units and generally did not require PHAs 

to take action regarding the potential for lead in the drinking water. As a 

result, HUD lacked assurance that households, including households with 

children age 6 or under, lived in assisted units that had a sufficient supply 

of safe drinking water.

OIG recommended that HUD develop and implement an action plan 

that includes sufficient policies, procedures, and controls to ensure that 

households living in assisted units have a sufficient supply of safe drinking 

water. (Audit Report: 2020-CH-0004)

(HUD OIG Priority Area: Ensuring Safe and Affordable Housing)
23 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

REAL ESTATE FRAUDS SENTENCED FOR THEFT OF HOUSING 

ASSISTANCE PAYMENTS

Ronald Wilson, Sherri Wilson, and Murphy Feeny were sentenced in U.S. 

District Court after previously pleading guilty to committing a conspiracy, 

bank fraud, wire fraud, mail fraud, and theft of government funds. 

Ronald and Sherri Wilson were sentenced to 90 months and 45 months 

incarceration, respectively, and ordered to pay more than $3.9 million 

in restitution jointly and severally, of which, $250,789 was due to a PHA. 

Feeny was sentenced to 3 years probation and ordered to pay $32,000 in 

restitution jointly and severally with the Wilsons. 

From September 2016 until April 2019, the Wilsons ran a fraudulent real 

estate investment scheme, primarily through Sierra Real Estate. In doing 

so, they assisted investors with obtaining a limited liability company (LLC), 

while Ronald Wilson listed himself as the statutory agent. Investors would 

open a joint checking account with Sierra Real Estate and their individual 

LLC at a local bank. Investors would then wire money into this account for 

purchasing properties or for renovations with total investments of more 

than $5.5 million. 

INVESTIGATION

Program Results

Administrative - 

civil actions

Convictions - pleas - 

pretrial diversions Financial recoveries

15 16 $5,131,163

However, the Wilsons converted the money to personal use before the 

investors noticed. Further, Ronald Wilson located subsidized housing 

tenants for the investors and completed landlord paperwork at the PHA. 

The housing assistance payments were supposed to be deposited into the 

joint accounts opened by Wilson and the investors; however, Wilson kept 

more than $250,000 in payments made by the PHA. As part of the overall 

scheme, Ronald Wilson conspired with Murphy Feeny to burn down one 

of the investment buildings to collect insurance money. HUD OIG and 

the Federal Bureau of Investigation (FBI) conducted this investigation. 

(Toledo, OH) 

(HUD OIG Priority Area: Ensuring Safe and Affordable Housing)

FORMER HOUSING CHOICE VOUCHER PROGRAM PARTICIPANT 

TO REPAY ALMOST $175,000 TO PUBLIC HOUSING AGENCY

Frances Parker, a former Housing Choice Voucher Program participant, 

was sentenced in State Circuit Court to 5 years probation and ordered to 

pay $173,122 in restitution to the PHA. For more than 20 years, Parker 

violated Housing Choice Voucher Program requirements when she failed 

to report to the PHA that she owned a subsidized rental unit and that the 

purported landlord for the unit was her husband, whom she allowed to 

reside in the unit as an unauthorized tenant. As a result of the scheme, 

the PHA continuously mailed Parker’s housing assistance payments to her 

husband at an address different from that of the subsidized unit. HUD OIG 

conducted this investigation. (Baltimore, MD)

(HUD OIG Priority Area: Ensuring Safe and Affordable Housing)
24 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

PUBLIC HOUSING TENANT SENTENCED FOR TRAFFICKING GUN 

PARTS OVERSEAS AND HOUSING FRAUD

Public housing tenant Vladimir Volgaey was sentenced in U.S. District Court 

to 33 months incarceration and 12 months supervised release and ordered 

to pay $6,835 in restitution to the PHA. For nearly 7 years, Volgaey shipped 

more than 1,600 firearm components, including barrels, slides, receivers, 

and frames, from the United States to Ukraine. These components were 

used to construct fully functional firearms, including handguns and rifles. 

While engaged in this conduct, Volgaev lived in HUD-subsidized housing. 

During periodic renewal applications, Volgaev lied to the PHA about his 

personal finances, including the income he had gained from illicit firearm 

trafficking. HUD OIG, the FBI, U.S. Department of Homeland Security 

Investigations, and the United States Postal Inspection Service conducted 

this investigation. (Tampa, FL)

(HUD OIG Priority Area: Ensuring Safe and Affordable Housing)
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 noted in this 

chapter.

MULTIFAMILY HOUSING AND

HEALTHCARE

CHAPTER 3

25 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
REVIEW OF HUD’S OVERSIGHT OF LEAD IN THE WATER OF 

MULTIFAMILY HOUSING 

HUD’s Office of Inspector General (OIG) audited HUD’s oversight of lead 

levels in the water of multifamily housing units to determine whether HUD 

had sufficient policies, procedures, and controls to ensure that households 

living in multifamily housing units had a sufficient supply of safe drinking 

water.

HUD did not have sufficient policies, procedures, and controls to ensure 

that households living in multifamily housing units had a sufficient supply 

of safe drinking water. Multifamily housing properties were served by 

public water systems that reported levels of lead above the Environmental 

Protection Agency’s lead action level. However, HUD had limited 

requirements concerning lead in the drinking water of multifamily housing 

units and did not require multifamily property owners or management 

agents to take action regarding the potential for lead in the drinking water. 

As a result, HUD lacked assurance that households living in multifamily 

housing units had a sufficient supply of safe drinking water.

OIG recommended that HUD develop and implement an action plan 

that includes sufficient policies, procedures, and controls to ensure that 

households living in multifamily housing units have a sufficient supply of 

safe drinking water. (Audit Report: 2020-CH-0005) 

(HUD OIG Priority Area: Ensuring Safe and Affordable Housing)

LAKEWAY REGIONAL MEDICAL CENTER LLC AND 

CODEFENDANTS AGREE TO PAY MORE THAN $15.3 MILLION

Lakeway Regional Medical Center LLC (LRMC) entered into a settlement 

agreement with the United States and agreed to pay more than $13.5 

million to HUD. As part of the same settlement, Surgical Development 

Partners LLC, Surgical Development Partners of Austin Enterprises LLC, 

G. Edward Alexander, Frank Sossi, and John Prater collectively agreed 

to pay $1.8 million to HUD to resolve allegations that they violated the 

False Claims Act and other statutes in connection with the development 

of LRMC, a hospital in Lakeway, TX. LRMC was formed to develop and 

operate the hospital, while the other settling parties assisted in the 

hospital development and the management and operations of LRMC. 

When they applied for a mortgage loan insured by FHA to fund 

construction of the hospital, the defendants allegedly made a number of 

INVESTIGATION

Program Results

Administrative - 

civil actions

Convictions - pleas - 

pretrial diversions Financial recoveries

9 1 $17,530,922

AUDIT

Key program results Questioned costs Funds put to 

better use

2 audits $401,403 $0

26 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
false statements and material omissions to overstate physician support 

for the hospital and understate other key credit risks, thereby obtaining 

the loan under false pretenses. In particular, the United States alleged 

that the defendants delayed refunds to investors who had canceled 

their investments to make it appear as if the project satisfied mortgage 

covenants regarding the amount of cash on hand required to close the 

loan. 

The settlement also resolves claims that after obtaining the loan for 

LRMC, the defendants distributed project funds in violation of FHA’s 

requirements. HUD purchased the mortgage note and suffered a loss 

of $122 million when LRMC defaulted. HUD OIG and HUD’s Office of 

General Counsel conducted this investigation. HUD OIG would like to 

acknowledge the professional accomplishments of Attorney Sean Brown, 

whose efforts and passion for justice were exemplified in this case. We 

lost Sean on July 7, 2019. His dedication to HUD’s mission will be missed 

tremendously. (Austin, TX) 

(HUD OIG Priority Area: Protecting the Mortgage Insurance Funds)

27 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 

outlined in this chapter.

COMMUNITY PLANNING

AND DEVELOPMENT

CHAPTER 4

28 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
REVIEW OF COMMUNITY DEVELOPMENT BLOCK GRANT 

PROGRAM 

The U.S. Department of Housing and Urban Development, Office of 

Inspector General (HUD OIG), audited the City of Mesa, AZ’s Community 

Development Block Grant (CDBG) program to determine whether the 

City administered its CDBG program funds in compliance with HUD 

requirements; specifically, whether it (1) awarded funds that met a CDBG 

national objective, (2) spent funds only for activities that were eligible and 

supported, and (3) adequately monitored subrecipients.

The City did not administer its program in accordance with HUD 

requirements. Specifically, it did not always (1) ensure that its CDBG 

activities met a national objective or that its subrecipients followed HUD’s 

requirements or its own subrecipient agreements, (2) maintain adequate 

documentation, and (3) implement adequate internal controls. As a result, 

the City was unable to support that more than $3.1 million spent on CDBG 

activities met HUD requirements. There was also little assurance that the 

City would use an additional $225,000 allocated for similar activities in 

compliance with HUD requirements. 

OIG recommended that HUD require the City to (1) support the eligibility 

of the unsupported costs or repay its program with non-Federal funds, (2) 

suspend similar activities until it can show that the activities meet program 

requirements, (3) implement its policies and procedures that require adequate 

documentation to be maintained, and (4) develop and implement adequate 

and effective internal controls. (Audit Report: 2020-LA-1003) 

(HUD OIG Priority Area: Monitoring and Oversight)

INVESTIGATION

Program Results

Administrative - 

civil actions

Convictions - pleas - 

pretrial diversions Financial recoveries

4 5 $1,454,801

FORMER EXECUTIVE DIRECTOR OF NONPROFIT SENTENCED FOR 

THEFT OF HOPWA FUNDS

Aaron Guldenschuh-Gatten, the former executive director of a nonprofit 

organization that received financial support through HUD-funded Housing 

Opportunities for Persons With AIDS (HOPWA) grants, was sentenced to 5 

months incarceration and 3 years supervised release and ordered to pay 

$111,821 in restitution, of which $81,155 was ordered back to HUD. 

For almost 19 months, Guldenschuh-Gatten exceeded his authority by 

accessing the nonprofit’s bank accounts to pay for his personal expenses and 

to obtain cash. As part of the scheme, Guldenschuh-Gatten intentionally 

wrote checks to the nonprofit from his personal bank account for a value 

greater than his personal bank account’s balance, both to artificially inflate 

the apparent balance of the nonprofit’s accounts and to take advantage of the 

AUDIT

Key program results Questioned costs Funds put to 

better use

1 audit $3,155,305 $225,000

29 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
30 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

“float” time to access funds from the nonprofit’s accounts. GuldenschuhGatten concealed his theft by providing the nonprofit’s board of directors 

with inaccurate information regarding the state of the nonprofit’s bank 

accounts. HUD OIG conducted this investigation.(Louisville, KY) 

(HUD OIG Priority Area: Monitoring and Oversight)

CITY OF TEMECULA AGREES TO REPAY HUD MORE THAN 

$400,000 FOR A PLAYGROUND THAT WAS NEVER BUILT

After a HUD OIG investigation, the City of Temecula, CA, agreed to repay 

HUD $412,055 from non-Federal funds. Between February 9, 2015, and 

September 1, 2017, Temecula withdrew more than $400,000 in HUD 

CDBG funds to build a playground at its Sam Hicks Monument Park. The 

investigation found that no playground had been built or installed on the 

site and the money had not been used for any other qualifying national 

objective for the use of the funds. Due to the investigation, HUD CPD 

ordered Temecula to repay the funds in full. HUD OIG conducted this 

investigation. (Los Angeles, CA) 

(HUD OIG Priority Area: Financial Management)
3

The more than $1.5 billion difference between appropriated and allocated funds is due to nonmajor program appropriations made since fiscal year 2001.

4

In addition to Louisiana, Texas, and West Virginia (LTW is the name of the grant), funding was included for North and South Carolina and Florida in fiscal year 2017, but the grant name 

(LTW) remained the same.

DISASTER RELIEF

CHAPTER 5

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 2001, Congress has appropriated $91 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 $89.5 

billion3

 in active disaster grants, the funds have been allocated nationwide, with nearly $61.3 billion obligated and more than $44.8 billion disbursed as of 

September 30, 2020.

Disaster Funds allocated Funds disbursed % of funds 

disbursed

Fiscal year 

funds allocated

Harvey, Irma, Maria & 

mitigation $42.7 billion $1.9 billion 4% 2017 & 2018

Louisiana, Texas, 

& West Virginia4 2.5 billion 1.3 billion 52% 2016 & 2017

Hurricane Sandy 15.2 billion 12.1 billion 80% 2013

Hurricanes Ike, 

Gustav & Dolly 6.1 billion 5.8 billion 95% 2008

Hurricanes Katrina, 

Rita & Wilma 19.7 billion 19.4 billion 99% 2006 & 2008

9-11 3.5 billion 3.28 billion 94% 2001 & 2002

31 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
STATE SENATOR SENTENCED FOR DISASTER FRAUD

Wesley Bishop, a Louisiana State Senator, was sentenced in U.S. District 

Court to 4 years probation and ordered to pay restitution in the amount 

of $188,000 to the State of Louisiana, Office of Community Development, 

Disaster Recovery Unit. Bishop was sentenced in relation to his earlier 

guilty plea to making false statements for defrauding the Louisiana 

Road Home Program, Small Rental Property Program (SRPP). Bishop 

received $188,000 in Disaster Recovery funds as an incentive to repair 

his rental property. In exchange, Bishop agreed to rent out the property 

at affordable rates to low-income tenants. Bishop provided falsified 

documents to the SRPP by misrepresenting that the property was 

occupied by low-income tenants when it was vacant. The documents in 

question were backdated and contained forged signatures. HUD OIG and 

the Federal Bureau of Investigation conducted this investigation. (New 

Orleans, LA) 

(HUD OIG Priority Area: Administering Disaster Assistance)

INVESTIGATION

Program Results*

Administrative - 

civil actions

Convictions - pleas - 

pretrial diversions Financial recoveries

1 2 $188,100

*Figures included in community planning and development stats

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. OIG is conducting a broad range of audit assignments 

related to disaster recovery, which include a survey of grantees to 

understand challenges they face in the COVID-19 pandemic, as well as 

reviews of grantees’ capacity, spending rates, and operation of significant 

recovery programs.

AUDIT

32 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
ADDITIONAL REPORTS

33 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
REVIEW OF HUD’S COMPLIANCE WITH THE IMPROPER 

PAYMENTS ELIMINATION AND RECOVERY ACT OF 2010

HUD OIG audited HUD’s fiscal year 2019 compliance with the Improper 

Payments Elimination and Recovery Act of 2010 (IPERA) to determine 

whether HUD complied with IPERA reporting and improper payment 

reduction requirements according to Office of Management and Budget 

(OMB) Circular A-123, appendix C.

Fiscal year 2019 marked the seventh consecutive year in which HUD did 

not comply with IPERA. In fiscal year 2019, HUD did not comply with two 

requirements, and one requirement was not applicable. Specifically, HUD 

OTHER SIGNIFICANT AUDITS

AND EVALUATIONS

CHAPTER 6

AUDIT

The U.S. Department of Housing and Urban Development (HUD), Office of 

Inspector General’s (OIG) more significant reports are highlighted in this 

chapter.

did not (1) always publish improper payments estimates for all required 

programs and (2) meet the reduction targets for its Federal Housing 

Administration (FHA)-single-family insurance claims (FHA-SFIC) program. 

No recommendations were made because (1) OIG open recommendations 

from prior years will, if implemented, help HUD remediate the repeat 

finding of not always publishing improper payments estimates and (2) 

OMB relieved HUD from reporting improper payments, which included 

meeting a reduction target for the FHA-SFIC program beginning next fiscal 

year. (Audit Report: 2020-AT-0001) 

(HUD OIG Priority Area: Financial Management)

REVIEW OF RISK ASSESSMENT OF HUD’S TRAVEL CARD 

PROGRAM

HUD OIG conducted a risk assessment of HUD’s travel cards, as required by 

the Government Charge Card Abuse Prevention Act of 2012 (Public Law 

112-194), to assess the risks of illegal, improper, or erroneous purchases 

and payments within HUD’s travel card program.

HUD’s travel card program has been associated with a medium risk level. 

The risk assessment was based on OIG’s analysis of HUD’s fiscal year 2019 

travel card spending, compliance with the program requirements, and 

other program risk factors.

OIG made no recommendations. It will use the risk assessment to 

determine the scope, frequency, and number of periodic travel card 

program audits or reviews. (Audit Report: 2020-KC-0801) 

(HUD OIG Priority Area: Financial Management)

Key program results Questioned costs Funds put to 

better use

5 audits $0 $0

34 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
EVALUATION

SOME MORTGAGE LOAN SERVICERS’ WEBSITES OFFER 

INFORMATION ABOUT CARES ACT LOAN FORBEARANCE THAT 

IS INCOMPLETE, INCONSISTENT, DATED, AND UNCLEAR

HUD OIG assessed what information the mortgage loan servicers insured 

by FHA provided to borrowers on their public facing websites regarding 

forbearance.

On March 27, 2020, the President signed into law the Coronavirus Aid, 

Relief, and Economic Security Act (CARES Act) to provide economic relief 

to individuals and businesses impacted by the COVID-19 pandemic. On 

April 17, 2020, 22 days after the enactment of the Act, OIG reviewed the 

top 30 servicers’ websites to identify whether the necessary information for 

borrowers related to the COVID-19 crisis was readily accessible.

OIG’s review of the 30 servicers’ websites, which service approximately 

90 percent of FHA loans, revealed that not all websites provided readily 

accessible information about forbearance and some provided inconsistent 

information about the durations of forbearances. Additionally, some 

servicers’ website information was either dated before the enactment 

of the CARES Act, did not specifically meet the mandates of the Act, 

or indicated that they were awaiting further guidance. Finally, several 

servicers’ websites gave the false impression that lump sum payments 

would be required at the end of the forbearance period. 

(HUD OIG Priority Area: Emerging Issues and Opportunities)

HUD FISCAL YEAR 2019 FEDERAL INFORMATION SECURITY 

MODERNIZATION ACT OF 2014

HUD OIG assessed HUD’s information security (IS) program’s effectiveness 

in accordance with the Federal Information Security Modernization Act 

of 2014 (FISMA) metrics. The metrics consist of eight domains aligned 

with the five functional areas (identify, protect, detect, respond, and 

recover) identified in the National Institute of Standards and Technology 

Framework for Improving Critical Infrastructure Cybersecurity. 

OIG evaluated HUD’s IS program as not effective, based on the fiscal 

year 2019 Inspectors General FISMA metrics. Key components of the IS 

program remain ineffective or have inconsistent processes throughout 

HUD’s program offices and their information technology (IT) contracts. 

Significant limitations and challenges negatively impact the Chief 

Information Officer’s (CIO) ability to establish an effective IS program. 

HUD has begun to address recommendations that HUD OIG has made 

in previous years. HUD’s Office of the Chief Information Officer had 

early successes in modernizing some of the HUD infrastructure, such 

as the data centers, cloud adoption, and a mainframe system. Further, 

the CIO initiated a “tiger team” to address and create remediation plans 

for past outstanding FISMA recommendations. OIG recommended that 

HUD continue to address all outstanding FISMA recommendations and 

refine and implement its IT strategic modernization roadmap, which 

will encourage a focused and accountable method for IS program 

improvements. OIG has made 26 recommendations to assist HUD in 

increasing its IS posture. (Evaluation Report: 2019-OE-0002)

(HUD OIG Priority Area: Mandatory Work, Information Technology 

and Cybersecurity)

35 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
HUD PERSONALLY IDENTIFIABLE INFORMATION RECORDS 

PROTECTION AND MANAGEMENT

HUD OIG assessed HUD’s current capabilities to properly manage and 

protect personally identifiable information (PII) and to properly maintain 

paper and electronic PII records. OIG conducted this assessment in 

conjunction with the fiscal year 2019 FISMA review.

HUD has taken steps to improve its records management practices. It 

initiated modernization efforts to transition paper-based processes to 

electronic processes, began to address and close OIG privacy-related 

recommendations that had been open for several years, and developed a 

formal communications plan to increase program awareness. The records 

officer increased and improved training for records specialists in program 

offices and was directing an extensive records inventory project. HUD had 

also recently filled the longstanding Chief Privacy Officer vacancy and was 

in the process of appointing a Chief Data Officer. 

However, HUD faced critical challenges in its efforts to properly 

manage and protect the billions of PII records in its possession. OIG 

documented key prior recommendations and provided nine additional 

recommendations designed to address HUD’s most significant legal and 

regulatory obligations, along with other critical challenges. (Evaluation 

Report: 2019-OE-0002a)

(HUD OIG Priority Area: Monitoring and Oversight)

SOME MORTGAGE LOAN SERVICERS’ WEBSITES CONTINUE 

TO OFFER INFORMATION ABOUT CARES ACT LOAN 

FORBEARANCE THAT COULD MISLEAD OR CONFUSE 

BORROWERS OR PROVIDE LITTLE OR NO INFORMATION

Given that forbearances have continued at high rates, HUD OIG conducted 

a followup review to determine what servicers’ websites said about 

forbearance 4 months and 15 days after the enactment of the CARES 

Act. Although 29 of the 30 servicers’ websites reviewed had updated 

their information about forbearance, 9 suggested that initial forbearance 

periods were less than the 180 days included in the CARES Act, 9 did not 

contain information about forbearance extensions, and 1 continued to 

offer a repayment example that falsely suggested that borrowers would 

need to repay the forbearance amount as a lump sum. 

(HUD OIG Priority Area: Emerging Issues and Opportunities)

36 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 850 hours to reviewing 168 

issuances. The draft directives consisted of 105 notices, 27 mortgagee letters, 

and 36 other directives. OIG provided comments on 52 (or 31 percent) of the 

issuances and nonconcurred on 10 (or 6 percent) but lifted 7 nonconcurrences. 

Of the 36 other directives, OIG reviewed 2 proposed rules, 2 interim rules, and 

3 final rules, taking no position on 6 and nonconcurring on 1; 13 handbooksguidebooks; 9 research reports; 4 U.S. Department of Housing and Urban 

Development (HUD) legislative referral memorandum reports; 1 advance 

notice of proposed rulemaking; and 2 frequently asked questions for the 

eviction moratorium and preventing homelessness after the moratorium 

expires. A summary of selected reviews for this 6-month period is included 

within this chapter.

Notices, Mortgagee Letters, and Other Directives

 OFFICE OF SINGLE FAMILY HOUSING

FHA’s loss mitigation options for single-family borrowers affected 

by the presidentially declared COVID-19 national emergency in 

accordance with the CARES Act - On April 1, 2020, the Federal Housing 

Administration (FHA) issued Mortgagee Letter (ML) 2020-06. The notice 

informed lenders of special loss mitigation home retention options 

that are available to all FHA Title II single-family borrowers, as well as 

an extension period for home equity conversion mortgages (HECM) 

affected by the presidentially declared the 2019 coronavirus (COVID-19) 

national emergency, in accordance with the Coronavirus Aid, Relief, and 

Economic Security Act (CARES Act). This mortgagee letter superseded 

FHA’s presidentially declared major disaster areas guidance listed in HUD 

Handbook 4000.1, Single Family Handbook, for borrowers impacted by 

the COVID-19 national emergency. The mortgagee letter did not come 

through the clearance process; therefore, OIG did not have an opportunity 

to review and comment on it.

FHA Catalyst: updates to the case binder, claims, and electronic 

appraisal delivery modules – HUD issued several mortgagee letters (ML 

2020-07, dated April 6, 2020; ML 2020-08, dated April 6, 2020; ML 2020-18, 

dated June 12, 2020; ML 2020-26, dated August 18, 2020; and ML 2020-

29, dated August 31, 2020), announcing additional functionalities to the 

implementation of FHA Catalyst, a new web-based platform, and provided 

information to assist lenders in electronically preparing and submitting 

case binders for endorsement through FHA’s new platform for singlefamily forward and HECM loans. OIG provided no position responses to 

these mortgagee letters.

CHAPTER 7

37 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Extension of foreclosure and eviction moratorium in connection with 

the presidentially declared COVID-19 national emergency and new 

reporting requirements related to FHA Single Family’s CARES Act loss 

mitigation options – On May 14, 2020, FHA issued ML 2020-13, informing 

lenders of an extension to the foreclosure and eviction moratoriums, 

originally issued in ML 2020-04, for borrowers with FHA-insured singlefamily mortgages covered under the CARES Act for an additional period 

through June 30, 2020, and to announce new Single Family Default 

Monitoring System reporting requirements. FHA issued subsequent 

mortgagee letters (ML 2020-19, dated June 17, 2020, and ML 2020-27, 

dated August 27, 2020), extending the effective dates through August 31, 

2020, and December 31, 2020, respectively. The original ML 2020-04 did 

not come through the clearance process; therefore, OIG did not have an 

opportunity to review and comment on it. OIG provided comments in 

response to ML 2020-13 related to the extension dates and clarification of 

the eviction moratorium language. OIG provided no position responses to 

ML-20-19 and ML-20-27.

Extension of the effective date of Mortgagee Letter 2020-05 

reverification of employment and exterior-only and desk-only 

appraisal and scope of work options for FHA single-family programs 

impacted by COVID-19 – On May 14, 2020, FHA issued ML 2020-14, 

announcing an extension of the effective date of ML-2020-05, published 

on March 27, 2020. The extension of appraisal guidance in ML-2020-05 

was effective immediately for all appraisal inspections completed on or 

before June 30, 2020, while the reverification of employment guidance 

was effective immediately for any cases closed on or before June 30, 

2020. FHA later reextended the effective date in ML 2020-20, dated June 

29, 2020, and ML 2020-28, dated August 28, 2020. These mortgagee 

letters reextended the effective dates through August 31, 2020, and 

October 31, 2020, respectively. The original mortgagee letter, ML 2020-

05, did not come through the clearance process; therefore, OIG did not 

have an opportunity to review and comment on it. However, OIG had 

the opportunity to review and comment on the subsequent mortgagee 

letters. OIG provided a no position response to these mortgagee letters. 

Endorsement of mortgages under forbearance for borrowers 

affected by the presidentially declared COVID-19 national emergency 

consistent with the CARES Act – On June 4, 2020, FHA issued ML 2020-16, 

informing lenders of endorsement processes for mortgages that had been 

granted a forbearance related to the presidentially declared COVID-19 

national emergency before the loan was endorsed for FHA insurance. 

The provisions of this mortgagee letter were effective for endorsements 

submitted on or after June 15, 2020, and lenders were allowed to use this 

guidance for eligible pending endorsements through November 30, 2020. 

OIG provided a no position response on this mortgagee letter. 

FHA’s COVID-19 loss mitigation options – On July 8, 2020, FHA issued 

ML 2020-22, informing lenders of the full list of COVID-19 loss mitigation 

options available to single-family borrowers affected by the COVID-19 

presidentially declared national emergency when the mortgage was 

current or less than 30 days past due as of March 1, 2020, including 

additional loss mitigation home retention options and home disposition 

options. OIG provided comments responding to the mortgagee letter 

related to ensuring that the borrower is eligible for loss mitigation 

and identifying mortgages that took advantage of the COVID-19 loss 

mitigation options.

38 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
COVID-19 multisubject updated temporary guidelines for verification 

of self-employment, rental income, and 203(k) rehabilitation escrow 

account – On July 28, 2020, FHA issued ML 2020-23, informing lenders 

of Single Family’s requirement modifications in response to the impacts 

of the presidentially declared COVID-19 national emergency, including 

(1) modification to self-employment income requirements by issuing 

guidance for verification of business operations, (2) modification to rental 

income requirements, and (3) modification to the approval of extension 

requests and release of funds under FHA’s 203(k) Rehabilitation Mortgage 

Insurance Program. On July 29, 2020, FHA issued ML 2020-24, revising the 

effective date of the verification of business operations for self-employed 

borrowers and the rental income guidance for case numbers assigned on 

or after August 12, 2020, through November 30, 2020, superseding the 

effective date announced in the original mortgagee letter. OIG provided a 

no position response to this mortgagee letter.

FHA underwriting guidelines for borrowers with previous mortgage 

payment forbearance – On September 10, 2020, FHA issued ML 2020-

30, informing lenders of FHA’s underwriting guidelines for mortgages 

involving borrowers who were granted a previous mortgage forbearance 

on the subject property or other residence. OIG provided a no position 

response to this mortgagee letter.

FHA defect taxonomy – appendix to Handbook 4000.1 – On September 

22, 2020, FHA issued ML 2020-31, announcing the incorporation of the 

FHA defect taxonomy as an appendix to Single Family Housing Policy 

Handbook 4000.1. The defect taxonomy is FHA’s method of identifying 

defects at the loan level, and it is used to describe findings through the 

Loan Review System based on HUD requirements. The defect taxonomy 

provides useful data and feedback through a structured list of defects, 

categorized by their sources, causes, and severities. For more consistent 

review outcomes, potential remedies that align with severity tiers are listed 

in each defect area. OIG provided comments related to strengthening 

statements in the defect taxonomy on resolving loan defects. 

FHA Catalyst: claims module – expanded functionality for reacquired 

claims – On September 28, 2020, FHA issued ML 2020-32, announcing a 

new submission method through FHA Catalyst for reacquisition claims 

by lenders. This notice extends the FHA Catalyst functionality to include 

reacquisition claims and updates the language in the requirement to more 

closely align with FHA processes. The updates to the FHA Catalyst will 

improve efficiency and provide lenders with a more standardized process 

for reacquisition claims. Submission of a claim through the FHA Catalyst 

platform is optional. Lenders remain responsible for proper submission 

of claims and ensuring that they meet FHA’s requirements and standards 

for such submissions. By transmitting a claim via FHA Catalyst, the lender 

is certifying that the statements and information submitted are true and 

correct. OIG provided a no position response to this mortgagee letter.

 OFFICE OF PUBLIC AND INDIAN HOUSING

Section 8 housing choice vouchers: implementation of the housing 

choice voucher mobility demonstration – On July 15, 2020, HUD 

published a notice (Federal Register Notice FR–6191–N–01), which 

implements the Housing Choice Voucher Program mobility demonstration. 

The notice defines public housing agency (PHA) eligibility criteria; 

establishes the application process, including setting forth the factors 

HUD will employ in rating and ranking PHA applications; and explains 

the special rules and requirements applicable to the PHAs selected 

to participate in the demonstration. In addition, the notice identifies 

the specific waivers and alternative requirements established by the 

39 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
HUD Secretary for the demonstration. The primary purposes of the 

demonstration are to provide voucher assistance and mobility-related 

services to families with children to encourage such families to move 

to lower poverty areas, as well as to expand their access to opportunity 

areas and to evaluate the effectiveness of the strategies pursued under 

the demonstration. The Appropriations Acts require that demonstration 

participants be families with children, with at least one child aged 17 

and under. The demonstration will be open to families with children 

already participating in the Housing Choice Voucher Program and who are 

interested in moving. The demonstration will also be open to families with 

children who are new admissions to the Housing Choice Voucher Program 

and are selected from the participating PHA waiting lists. 

HUD estimates that there is enough available mobility-related service 

funding to provide services to at least 9,500 families and anticipates 

that the demonstration will be implemented over a 6-year period. Grant 

funding of up to $50 million is available through this notice. OIG’s review 

of the notice resulted in a nonconcur due to false claims statement 

language included in form HUD-2880, Applicant/Recipient Disclosure/

Update Report. OIG suggested that the language be changed to “I/We, 

the undersigned, certify that the information provided above is true and 

correct. WARNING: Anyone who knowingly submits a false claim or makes 

a false statement is subject to criminal and/or civil penalties, including 

confinement for up to 5 years, fines, and civil and administrative penalties. 

(18 U.S.C. §§ 287, 1001, 1010, 1012; 31 U.S.C. §3729, 3802).” HUD agreed to 

issue the notice with the suggested changes, and the nonconcurrence was 

lifted. 

Operations notice for the expansion of the Moving to Work 

Demonstration Program – On August 28, 2020, HUD published a 

notice (FR 5994-N-05), which establishes the requirements for the 

implementation and continued operation of the Moving to Work (MTW) 

demonstration program under the 2016 MTW Expansion Statute, which 

authorizes HUD to expand the MTW demonstration program from the 

current size of 39 agencies to an additional 100 agencies over a period 

of 7 years. This notice was published three times (January 23, 2017, May 

4, 2017, and October 5, 2018), with revisions made each time based on 

public comments. This is the final notice, incorporates feedback from the 

three previous publications, and reflects final policy decisions. Some of 

the primary changes made include term of participation, which is now 20 

years; a simplified agency-specific waiver request process; and a funding 

cap for local, nontraditional activities. This notice also provides waivers 

of certain provisions of the Housing Act of 1937, to include safe harbor 

waivers, agency-specific waivers, and cohort-specific waivers. These 

changes and waivers afford MTW agencies the opportunity to use their 

MTW authority to pursue locally driven policies, procedures, and programs 

to further the goals of the demonstration. This notice did not come 

through the clearance process; therefore, OIG did not have an opportunity 

to review and comment on it.

Streamlining and implementation of Economic Growth, Regulatory 

Relief, and Consumer Protection Act changes to Family SelfSufficiency program – On September 21, 2020, HUD published a 

proposed rule (FR 6114–P–01), which includes suggested changes to 

reduce the burden for PHAs, owners, and eligible families; streamline 

the Family Self-Sufficiency (FSS) program; and update definitions, as 

required by the Economic Growth Act. Some of the specific changes to 

40 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
the regulations include (1) the addition of a nonparticipation paragraph to 

clarify that a family’s rental assistance may not be delayed or terminated 

by reason of a family’s electing not to participate in an FSS program; (2) a 

change clarifying that HUD will evaluate the performance of a local FSS 

program using a scoring system that measures its graduation from the 

program, increased earned income, program participation, and similar 

factors; (3) streamlining and adding clarity to the definition of eligible 

families, to include current public housing residents and families receiving 

tenant-based or project-based assistance under section 8(o); (4) clarifying 

that when determining the minimum program size (that is, the minimum 

number of families that a PHA must serve in its FSS program), the relevant 

figure is the total number of public housing units plus the total number 

of Section 8 units; and (5) adding that a PHA or owner may use FSS funds 

for costs associated with families who are enrolled in an FSS program, 

including through a cooperative agreement with an owner of multifamily 

assisted housing. This notice did not come through the clearance process; 

therefore, OIG did not have an opportunity to review and comment on it.

 OFFICE OF MULTIFAMILY HOUSING PROGRAMS

Streamlining administrative regulations for multifamily housing 

programs and implementing family income reviews under the Fixing 

America’s Surface Transportation Act – On May 7, 2020, HUD published 

a final rule, FR 5743-F-05, which finalizes the regulatory language used 

to implement the Fixing America’s Surface Transportation (FAST) Act 

contained in the December 2017 interim rule, with one change to clarify 

that owners are not required to make adjustments to non-fixed-incomes. 

On December 4, 2015, the President signed the FAST Act into law. The law 

contained language that allowed PHAs and owners to conduct full income 

recertifications for families, with 90 percent or more of their income 

coming from fixed income, every 3 years instead of annually. HUD issued 

an interim rule on December 12, 2017, to align the current regulatory 

flexibilities with those provided in the FAST Act. In addition, the interim 

rule sought to extend certain multifamily housing programs with some 

of the streamlining changes that were proposed for and made only to 

the Housing Choice Voucher Program and public housing programs. OIG 

provided a no position response regarding this final rule. 

Electronic signature transmission and storage – On May 26, 2020, 

HUD issued Housing Notice, H 20-4, which provides guidance to HUD 

multifamily assisted housing industry partners regarding the electronic 

signatures, transmission, and storage of documents and forms required by 

HUD’s Office of Asset Management and Portfolio Oversight in the Office 

of Multifamily Housing Programs. For purposes of this notice, “industry 

partners” include owners of HUD multifamily assisted housing properties, 

management agents and service providers, and HUD and contract 

administrator staff. OIG provided a no position response regarding this 

notice. 

Exclusion from annual income of temporary employment from the 

U.S. Census Bureau – On June 5, 2020, HUD issued Housing Notice, H 20-

06, which provides for the exclusion of temporary employment payments 

received from the U.S. Census Bureau from annual income. Under 24 

CFR (Code of Federal Regulations) 5.609(c)(9), owners and management 

agents of housing occupied by tenants who receive Section 8 benefits 

are to exclude from the calculation of annual income payments received 

by those tenants from the U.S. Census Bureau. For the purpose of this 

notice, temporary is defined as employment lasting no longer than 180 

days per year and not culminating in permanent employment. Employer 

verification of both the employment dates and income amount must 

be maintained in the tenant’s file. This notice applies to administrators 

41 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
of Section 8 Project-Based Rental Assistance, Section 202-162 project 

assistance contract, Section 202 project rental assistance contract, Section 

811, Section 236, and Section 221(d)(3). OIG provided a no position 

response regarding this notice. 

Rent adjustments in the Mark-to-Market program – On July 16, 2020, 

HUD published a proposed rule, FR-6122-P-01, which revises the Markto-Market (M2M) program regulations by clarifying that all annual rent 

adjustments for projects subject to a restructuring plan are, by application 

of an operating cost adjustment factor (OCAF), established by HUD. The 

current regulations contain a provision authorizing HUD to approve a 

request for a budget-based rent adjustment in lieu of an OCAF. However, 

this provision is both contrary to the governing statutory framework and 

inconsistent with M2M renewal contracts, which allow only OCAF rent 

adjustments. The proposed rule would conform the regulations to the 

governing statutory provision, the terms of M2M renewal contracts, and 

the programmatic practice of adjusting rents annually only by OCAF. 

HUD preserves the affordability of eligible multifamily housing projects 

by modifying above-market rents while restructuring project debt to an 

amount supportable by the modified rents. OIG provided a no position 

response regarding this proposed rule. 

Availability of funds for COVID-19 supplemental payments for 

properties receiving project-based rental assistance – On July 23, 2020, 

HUD issued Housing Notice, H 20-8, which announces the availability of 

supplemental operating funds for Section 8, Section 202, and Section 811 

properties to prevent, prepare for, and respond to the COVID-19 pandemic 

and establishes an application process for owners of properties assisted 

under these programs to request funds for one or more of these purposes. 

This guidance includes an August 5, 2020, filing deadline for owners of 

properties assisted under these programs. OIG provided minor editorialrelated comments regarding this notice.

Guidelines for certain HUD approvals regarding encumbered 

multifamily properties – On August 28, 2020, HUD published a notice, 

FR-6232-N-01, which announces that HUD has posted a draft notice, 

“Guidelines for Certain HUD Approvals Regarding Properties Encumbered 

by HUD-Held Mark-to-Market Program Debt and Portfolio Reengineering 

Demonstration Program (Demo Program) Debt,” on the HUD website’s 

Multifamily Drafting Table for public feedback. The draft notice is 

intended to replace Housing Notice 2012-10, “Guidelines for Assumption, 

Subordination, or Assignment of Mark-to-Market (M2M) Loans in Transfer 

of Physical Assets (TPA) and Refinance Transactions,” in its entirety. The 

draft notice provides new instructions for the acquisition and refinancing 

of projects after they have been through an M2M debt restructuring or 

a demonstration program restructuring and are encumbered by HUDheld debt (collectively referred to as “Post-M2M” activities). In addition, 

Section 3 of the draft notice would replace appendix C of the Mark-toMarket Operating Procedures Guide regarding transfers of assets to 

qualified nonprofits, Section 4 covers matured and outstanding M2M 

or demonstration program debt, and Section 5 contains guidance that 

supplements HUD’s previously issued 8(bb) notice (H-2015-03). Section 

5’s supplemental guidance may also be relied upon by the owners of 

projects with satisfied M2M subordinate debt obligations that remain 

encumbered by an M2M use agreement and continue to benefit from a 

full M2M renewal contract. OIG provided a no position response regarding 

this notice. 

42 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
COVID-19 HUD Contingency Plan on closing documents – On 

September 4, 2020, HUD published a notice, FR-7027-N-28, which 

proposes a new collection of information related to the COVID-19 HUD 

Contingency Plan for multifamily rental project closing documents. The 

new collection of information will be based on situational conditions 

relating to the COVID-19 outbreak and the presidentially declared national 

emergency. This collection will serve as the authority for any new or future 

changes or revisions to multifamily programs impacted by COVID-19 or 

related pandemics. The Lender’s Certificate, form HUD-92434, establishes 

the conditions that the lender agrees to abide by in consideration of 

HUD’s commitment to FHA-insured mortgages and by which the lender 

certifies that the conditions have been fulfilled to date, including any work 

done before endorsement of the note that has been approved by HUD in 

writing and all HUD-imposed conditions that have been met with respect 

to such work. The information collection requirements contained in the 

Lender’s Certificate will be used to oversee the parties’ compliance with 

all applicable legal requirements and, therefore, ensure protection of the 

FHA insurance fund. The form HUD-92434M is required by the closing 

checklists via the firm commitment (Housing Notice 2018-03) and due to 

the fact that the underlying forms require hardcopy submission (because 

HUD historically has not accepted electronic document submission 

for closing purposes). The lender’s certification regarding electronic 

submission of closing documents is a modification of the form HUD92434M, which will set the Office of General Counsel’s temporary uniform 

electronic closing protocols until normal closing can resume after the 

COVID-19 pandemic. OIG provided a no position response regarding this 

notice. 

 HEALTHCARE – RESIDENTIAL CARE FACILITIES PROGRAM

Interim procedures related to Section 232 mortgage insurance 

applications during COVID-19 pandemic – On April 10, 2020, HUD 

issued ML 20-10, which provides interim procedures to help ensure the 

continued effectiveness of the Section 232 program’s facilitation in the 

construction, rehabilitation, purchase, and refinancing of residential care 

facilities, despite the limitations on third-party site access brought on by 

the COVID-19 pandemic. OIG commented that the residential facilities’ 

basements should be included for radon testing because there are 

recommendations (although not Federal laws or regulations) that require 

testing on the lowest level of a property. In addition, OIG believed that 

property capital needs assessment photos should also include photos of 

carbon monoxide alarms.

Extension of interim procedures to address site access issues related 

to Section 232 mortgage insurance applications during the COVID-19 

pandemic – On May 28, 2020, HUD issued ML 2020-15, which informs 

lenders of an extension of interim procedures detailed in ML 20-10, which 

addresses site access issues related to Section 232 mortgage insurance 

applications during the COVID-19 pandemic. OIG observed that this 

mortgagee letter used different phrasing regarding COVID-19. Under the 

“Subject” and “Purpose” sections, it was called COVID-19 pandemic; under 

the “Status of State Historic Preservation Offices” section, it was called 

COVID-19 outbreak; and under the “Expiring Appraisals” section and the 

addendum, it was called COVID-19 National Emergency. For consistency, 

OIG suggested not using multiple phrases regarding COVID-19.

Updating Section 232 program regulations for memory care residents 

– On June 26, 2020, HUD published a final rule, FR 6022-F-02, which 

43 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
5

Published on February 3, 2012, HUD’s Equal Access to Housing in HUD Programs Regardless of Sexual Orientation or Gender Identity implemented a policy to ensure that its core programs were open to 

all eligible individuals and families regardless of actual or perceived sexual orientation, gender identity, or marital status.

updates the bathroom location requirements for board and care and 

assisted living facilities insured under HUD’s Section 232 program. The 

Section 232 program insures mortgage loans to facilitate the construction, 

substantial rehabilitation, purchase, and refinancing of nursing homes, 

intermediate care facilities, board and care homes, and assisted-living 

facilities. This final rule allows providers to configure the facilities to 

meet the needs of memory care residents and allows for flexibility of the 

bathroom requirements when financing or refinancing existing facilities. 

OIG provided a no position response regarding this final rule. 

 OFFICE OF COMMUNITY PLANNING AND DEVELOPMENT

Proposed rule on making admission or placement determinations 

based on sex in facilities under CPD housing programs – On July 24, 

2020, HUD issued Federal Register Docket No. FR-6152-P-01, requesting 

comments on a proposed rule that would allow grant recipients, 

subrecipients, owners, operators, managers, and providers under HUD 

programs that permit single-sex or sex-specific facilities to establish a 

policy, consistent with Federal, State, and local law, to accommodate 

persons based on sex. The proposed rule would maintain requirements 

from HUD’s 2012 final rule, “Equal Access to Housing in HUD Programs 

Regardless of Sexual Orientation or Gender Identity,”5

 and would require 

shelters to uniformly and consistently apply the policy. The proposed rule 

would require the shelter provider’s determination of sex to be based on 

a good faith belief and require the shelter provider to provide transfer 

recommendations if a person is of the sex that is not accommodated 

by the shelter. The proposed rule did not come through the clearance 

process; therefore, OIG did not have an opportunity to review and provide 

comments.

 DISASTER FUNDING

Waivers, alternative requirements, and extensions for Community 

Development Block Grant Disaster Recovery grantees – On August 

17, 2020, HUD published a notice allowing grantees with expenditure 

deadlines, established in the Federal Register notices published on June 

17, 2016 (paragraph VI.A.24, 81 FR 39687); November 21, 2016 (section 

II. and paragraph VI.A.24., 81 FR 83254); January 18, 2017 (section II., 82 

FR 5591); August 7, 2017 (sections I.E. and III.B., 82 FR 36812); February 

9, 2018 (paragraph VI.A.28. and section VII., 83 FR 5844); and August 14, 

2018 (section V., 83 FR 40314) (the ‘‘Prior Notices’’), a 1-year extension 

of their spending deadlines. If a grantee determined that an extension 

was required beyond the 1-year extension, within 90 days of the notice, 

the grantee could request a further extension of 1 additional year (for a 

total maximum extension of 2 years). This waiver was granted because 

HUD determined that the rapidly emerging needs of States and local 

governments responding to the COVID-19 pandemic provided good cause 

to allow extensions. OIG provided a no position response regarding this 

notice. 

44 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
REPORT RESOLUTION

CHAPTER 8 AUDIT REPORTS ISSUED BEFORE START OF PERIOD WITH 

NO MANAGEMENT DECISION AS OF SEPTEMBER 30, 2020

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 U.S. Treasury cash management requirements and Federal generally 

accepted accounting principles (GAAP). HUD OIG also reported that there 

were no 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 U.S. 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 standard 

general ledger.

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 to implement 

corrective action until the final action date. Further, the proposals 

included several contingencies from which OIG cannot determine whether 

PIH is making progress in addressing the recommendation. 

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 2, table B.

45 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 briefed 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. OIG follows up during each 

audit cycle to determine the status of this recommendation. 

In fiscal year 2019, PIH worked with a contractor to develop the 

Enterprise Voucher Management System (eVMS), which should address 

OIG’s recommendation. As of fiscal year 2020, PIH had completed 

the application design of eVMS. However, it is not in use because the 

eVMS data warehouse is under moratorium until the Chief Information 

Officer completes a securities and vulnerabilities assessment. Once the 

moratorium is lifted, PIH will work with PHAs in waves to transition them 

from the current disbursement process to eVMS calculated disbursements. 

PIH plans to have all PHAs under the new process by September 2022 

and is working on a management decision. However, as of September 

30, 2020, HUD had not submitted a new proposed management decision. 

(Audit Report: 2014-FO-0003) 

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 the 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. 

Since that time, OIG has reached an agreement on six of nine management 

decisions that OIG had previously rejected. As a result, there are now 

three audit recommendations without a management decision. OIG’s 

audit recommendations request that HUD’s Office of the Chief Financial 

Officer (OCFO) provide oversight of Ginnie Mae’s financial management 

operations, but HUD’s proposed corrective action plan to provide 

oversight of Ginnie Mae lacked specificity. As of September 30, 2020, three 

of the nine recommendations previously referred to the Deputy Secretary 

remained unresolved. (Audit Report: 2015-FO-0003)

46 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 a 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 

unclear 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. 

In 2016, PIH’s position was that it did not record the payables because 

cash management reconciliations are completed 45-60 days after each 

quarter. By the time the cash management reconciliations are conducted, 

the PHA could have used either restricted or unrestricted net position 

balances or requested frontload funding to cover the shortages. PIH 

believed that adjusting the prepaid expense was the most practical 

way to account for the cash reconciliation activities. OIG did not agree 

that this complied with GAAP because adjusting the prepaid expense 

after payables have been paid is not accrual accounting. In fiscal year 

2020, PIH submitted documentation indicating that it has changed its 

position and now believes that the implementation of eVMS will address 

this recommendation. PIH is working on a management decision for 

this recommendation that will coincide with the management decision 

it is drafting for Audit Report 2014-FO-0003. OIG maintains that this 

recommendation cannot be resolved until PIH’s cash management process 

is automated, as detailed in Audit Report 2014-FO-0003 (discussed above). 

As of September 30, 2020, PIH had not submitted a new management 

decision for the recommendation made in 2014-FO-0003 or this 

recommendation. (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 for 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 program47 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
6

Public Law 113-2, dated January 29, 2013

related findings that HUD had not enforced, and six activities with draws 

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 its 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, 2020, had not received a decision. (Audit Report: 2016-

PH-0001)

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 for State 

disaster grantee procurement processes. Specifically, it (1) allowed 

conflicting information on its certification checklists, (2) did not ensure 

that the 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 2013.6

 

The report included five recommendations for the Deputy Assistant 

Secretary for Grant Programs, who, in turn, proposed corrective actions 

48 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
on January 11, 2017. 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.7

 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 (Code of Federal Regulations) 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 the Office of General 

Counsel 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, 2020, had not received a decision. (Audit Report: 

2016-PH-0005)

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 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. OIG referred this 

recommendation to the Deputy Secretary on July 24, 2017; however, as 

of September 30, 2020, OIG had not received a decision. (Audit Report: 

2017-FO-0003)

7

2015-PH-1003, dated June 4, 2015

49 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 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 listed 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 

analysis; 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 for all five 

recommendations on October 19, 2017. OIG concluded that the response 

did not adequately address the three recommendations specified above. 

OIG informed HUD of its concerns in October 2017 but was ultimately 

unable to reach agreement. 

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 resolution on the remaining three recommendations. OIG referred 

these recommendations to the Deputy Secretary on June 25, 2018. On 

June 27, 2018, HUD again submitted proposed management decisions. 

However, the management decisions did not appropriately address the 

three recommendations, and OIG could not concur. OIG has attempted to 

resolve the disagreement; however, as of September 30, 2020, it had not 

received a decision from the Deputy Secretary. (Audit Report: 2017-FW0001) 

50 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 that provide housing assistance 

and related supportive services to meet the housing needs of low-income 

persons and their families living with HIV-AIDS.

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 nonqualified 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 conflict as to whether “housing assistance” and “homeless assistance” 

are synonymous. If homeless assistance grants were considered a 

Federal public benefit, HOPWA benefits 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 exceptions 

for unqualified aliens under 8 U.S.C. 1611 (which include emergency type 

programs) to 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 HUD 

OIG rejected them. This issue was referred the Assistant Secretary on 

December 19, 2017. In January 2018, OIG attempted to meet with HUD 

51 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
regarding the recommendations but was unsuccessful. The issue was 

referred to the Deputy Secretary on February 27, 2018. As of September 

30, 2020, OIG was awaiting a decision from the Deputy Secretary. (Audit 

Memorandum: 2017-CF-0801)

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,8

 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 the 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 the necessary products and services 

competitively at fair and reasonable prices. 

OIG made four recommendations to the Deputy Assistant Secretary for 

Grant Programs, who, in turn, proposed corrective actions on November 

24, 2017. For two of the recommendations, the Deputy Assistant Secretary 

for Grant Programs stated that the matter of the applicability of the Federal 

procurement standards at 2 CFR 200.318 through 200.3269

 (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 decision 

regarding resolution of recommendations from OIG’s audit of New Jersey’s 

Sandy Integrated Recovery Operations and Management System.10 In 

the January 10, 2017, 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 the Office of General Counsel 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 for Grant Programs also noted that 

the Senate Appropriations Committee report on fiscal year 2018 U.S. 

Department of Transportation-HUD appropriations legislation11 addressed 

this issue. The report stated that the Committee believed that as long 

as HUD provided consistent and rigorous oversight of the procurement 

8

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

9

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.

102015-PH-1003, dated June 4, 2015

11Senate Report 1115-138, dated July 27, 2017

52 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 for Grant Programs 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 performing cost estimates and 

cost analyses. OIG believes that HUD weakened its interpretation of 

the Federal procurement standards in the subsequent Federal Register 

notices because, rather than considering a State’s procurement process 

as 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. 

OIG rejected another recommendation 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, 2020, 

had not received a decision. (Audit Report: 2017-PH-0002)

53 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 its 

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 change of 

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 incorrect 

interpretation of 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 the 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 is not 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.

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, 2018, and March 8, 2018. On March 

28, 2018, the Deputy Assistant Secretary for Grant Programs submitted 

a revised proposal. CPD 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 the change-of-use and 

reversion-of-asset requirements; (3) present a webinar to 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 acquisition-related 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 

54 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Compliance Supplement to include reviews for real property acquisition 

and disposition and related to program income issues. 

OIG rejected HUD’s March 28, 2018, proposal for several reasons. 

Specifically, HUD’s proposal (1) did not clearly cover all categories of 

activities related to real properties 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 

CDBG 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, 2020, OIG 

was awaiting a decision from the Deputy Secretary. (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 HUD’s administrative control of funds system and internal 

control documentation. OIG made recommendations to the Office of the 

Chief Procurement Officer (OCPO) to address its deficiency in maintaining 

adequate records for interagency agreements (IAA) in its procurement 

system of record, the U.S. Treasury Administrative Resource Center’s 

PRISM. OIG issued a referral regarding two recommendations to address 

this deficiency to HUD OCPO on March 22, 2018, but could not reach 

agreement. OCPO stated that it no longer had access to the documents in 

question because the previous system was shut down and data migration 

had not yet occurred. OCPO indicated that it was not willing to correct a 

deficiency with the maintenance of IAAs within PRISM because it would 

not be a prudent use of taxpayer funds.

On May 31, 2018, OIG referred these recommendations to the Deputy 

Secretary due to disagreement. On July 5, 2018, OCPO provided the 

remaining changes to its internal policies and procedures for one of the 

two recommendations, and OIG concurred with the management decision 

on October 30, 2018. However, OCPO did not provide additional corrective 

action plans for resolving the missing IAAs and modifications in its 

procurement system of record. OIG worked with OCPO in fiscal year 2020 

to reach an agreeable management decision. As of September 30, 2020, 

OCPO had submitted a revised management decision, and OIG was in the 

process of reviewing it. (Audit Report: 2018-FO-0004)

55 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
HUD’S OFFICE OF BLOCK GRANT ASSISTANCE HAD NOT CODIFIED 

THE COMMUNITY DEVELOPMENT BLOCK GRANT DISASTER 

RECOVERY PROGRAM

ISSUE DATE: JULY 23, 2018

HUD OIG audited the HUD Office of Block Grant Assistance’s (OBGA) CDBG 

Disaster Recovery program. OIG found that, although OBGA had managed 

billions in Disaster Recovery funds since 2002, it had not codified the CDBG 

Disaster Recovery program. 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 it 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 CPD to identify two rules 

to eliminate in order to create a new codified rule. OIG believes OBGA 

has the necessary authority under the Housing Act of 1974 and it should 

codify the program. OBGA’s use of multiple Federal Register notices 

to operate the Disaster Recovery program presented challenges to the 

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. Further, codifying the CDBG Disaster Recovery 

program would (1) ensure that a permanent framework is in place for 

future disasters, (2) reduce the existing volume of Federal Register notices, 

(3) standardize the rules for all grantees, and (4) ensure that grants are 

closed in a timely manner.

In April 2019, OBGA acknowledged that the issuance of multiple Federal 

Register notices created a compliance burden for CDBG Disaster Recovery 

grantees, but it disagreed that codification was necessary. OBGA stated 

that OIG did not consider the following items:

1. There is no requirement for codification.

2. Congress has not established CDBG Disaster Recovery as an 

authorized program.

3. Publication of the Federal Register notices is predicated on the 

authorities granted in each appropriation.

Further, OBGA made the following statements to support why it will not 

implement the recommendation: (1) codification is not necessary, (2) 

Federal Register notices are required, and (3) codification has limited or no 

applicability for future disasters.

On September 30, 2019, OIG referred the disagreement and 

recommendation to the Deputy Secretary for resolution, and as of 

September 30, 2020, OIG was awaiting a decision. (Audit Report: 2018-

FW-0002) 

56 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
THE STATE OF NEW YORK DID NOT ENSURE THAT PROPERTIES 

PURCHASED UNDER THE ACQUISITION COMPONENT OF ITS 

PROGRAM WERE ELIGIBLE

ISSUE DATE: MARCH 29, 2019 

HUD OIG audited the State of New York’s CDBG Disaster Recovery-funded 

New York Rising Buyout and Acquisition program. OIG’s objective was to 

determine whether the State ensured that properties purchased under the 

acquisition component of the program met applicable HUD, Federal, and 

State requirements.

OIG found that the State did not ensure that properties purchased under 

the acquisition component of its program met eligibility requirements. 

Specifically, it did not ensure that properties (1) were substantially 

damaged and (2) complied with flood hazard requirements. Further, it 

may have improperly purchased properties that did not comply with 

flood insurance requirements. These deficiencies occurred because the 

State did not have adequate controls and relied on applicants and other 

entities to ensure requirement compliance. For example, the State relied 

on letters from local governments provided by its applicants to show that 

properties were substantially damaged, and it did not have a process to 

ensure that the substantial damage determination letters were accurate 

and supported. As a result, the State disbursed more than $3.5 million 

for ineligible properties and incentives and more than $5.9 million for 

properties for which it could not show that the properties met applicable 

requirements, and HUD did not have assurance that Disaster Recovery 

funds were used for their intended purpose.

OIG recommended that HUD require the State to (1) reimburse more than 

$3.5 million in settlement costs and incentives paid for properties that did 

not meet eligibility requirements or should not have received incentives; 

(2) provide documentation showing that 15 properties met requirements 

related to substantial damage, flood hazards, and flood insurance or 

reimburse more than $5.9 million paid to purchase the properties; and 

(3) conduct a review of the other properties purchased under its program 

to ensure that properties were eligible and reimburse the amount 

paid for any additional properties found to be ineligible. Further, OIG 

recommended that HUD require the State to provide documentation 

showing that the acquisition component of its program has ended or 

improve its controls to ensure that properties purchased are eligible.

The Principal Deputy Assistant Secretary for Community Planning and 

Development proposed management decisions on October 8, 2019. 

OIG rejected the proposed actions and referred the recommendations 

to the Assistant Secretary for Community Planning and Development 

on September 30, 2020. As of September 30, 2020, HUD and OIG had 

scheduled meetings in October 2020 to discuss possible management 

decisions. (Audit Report: 2019-NY-1001)

THE STATE OF NEW YORK DID NOT ENSURE THAT APPRAISED 

VALUES USED BY ITS PROGRAM WERE SUPPORTED AND APPRAISAL 

COSTS AND SERVICES COMPLIED WITH REQUIREMENTS

ISSUE DATE: MAY 29, 2019

HUD OIG audited the State of New York’s CDBG Disaster Recovery-funded 

New York Rising Buyout and Acquisition program. OIG’s objectives 

were to determine whether the State ensured that (1) the appraised fair 

market values used to determine award amounts under its program were 

supported and (2) appraisal costs for its program complied with applicable 

requirements and were for services performed in accordance with Federal, 

State, and industry standards.

57 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
OIG found that the State did not ensure that (1) the appraised fair market 

values used to determine award amounts under its program were 

supported and (2) appraisal costs complied with applicable requirements 

and were for services performed in accordance with applicable Federal, 

State, and industry standards. The State also did not ensure that it had a 

clear and enforceable agreement with the City of New York before relying 

on appraisal services provided by the City’s contractor and did not ensure 

that the appraisal services were properly procured and performed. These 

issues occurred because the State did not have adequate controls over its 

program. As a result, HUD and the State did not have assurance that (1) 

more than $367.3 million paid to purchase properties was supported; (2) 

more than $3.4 million disbursed for appraisal services was for costs that 

were reasonable, necessary, and adequately documented; and (3) appraisal 

services were properly procured and performed. If the State improves 

controls over its program, it can ensure that up to $93.4 million not yet 

disbursed is put to better use.

OIG recommended that HUD require the State to (1) provide 

documentation to support the appraised values of the properties 

purchased; (2) provide support to show that appraisal costs were 

reasonable, necessary, supported, and for services that were performed 

in accordance with program requirements; (3) execute an agreement 

with the City for the use of appraisal services and show that services were 

properly procured; and (4) strengthen controls to ensure that Disaster 

Recovery funds used for appraisal services are for costs that are reasonable, 

necessary, supported, and for services that comply with applicable 

requirements.

The Deputy Assistant Secretary for Grant Programs did not propose 

management decisions to address the 10 recommendations contained 

in this audit report. In an attempt to reach agreement, OIG held 

discussions with CPD officials on June 17, 2019, September 10, 2019, and 

September 24, 2019. Due to not reaching agreement, OIG referred the 10 

recommendations to the Assistant Secretary for Community Planning and 

Development on October 3, 2019. In another attempt to reach agreement, 

OIG held a discussion with CPD officials on November 21, 2019, but 

when agreement was not reached, OIG referred the recommendations to 

the Deputy Secretary on February 20, 2020. On February 26, 2020, CPD 

indicated that it was preparing management decisions. However, as of 

September 30, 2020, OIG had not received a decision from the Deputy 

Secretary. (Audit Report: 2019-NY-1002)

HUD PAID RENTAL SUBSIDIES TO BENEFIT PUBLIC HOUSING AND 

VOUCHER TENANTS REPORTED AS EXCLUDED FROM FEDERAL 

PROGRAMS OR DECEASED

ISSUE DATE: JUNE 25, 2019

HUD OIG audited HUD to determine whether HUD provided PHAs 

with access to the information contained in the Do Not Pay system. 

OIG performed this audit because the Housing Opportunity Through 

Modernization Act of 2016 (HOTMA) requires HUD to ensure that PHAs 

have access to information contained in the Bureau of the Fiscal Service’s 

Do Not Pay system, established by the Improper Payments Elimination 

and Recovery Improvement Act of 2012. Do Not Pay is a collection of data 

sources, one of which is the General Services Administration’s System for 

Award Management (SAM) database of excluded parties.

58 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
OIG found, among other things, that HUD paid potentially improper rental 

subsidies to benefit 1,550 tenants who were reported as excluded from 

Federal programs. OIG recommended that HUD issue guidance to PHAs 

to ensure that any applicant for or tenant of public or assisted housing 

whose name appears on the SAM excluded parties list is reviewed by PHAs 

to determine eligibility in a manner consistent with the regulations in 2 

CFR parts 180 and 2424 so that ineligible applicants or tenants are not 

admitted or recertified, putting an estimated $13.7 million in annual rental 

subsidies to better use.

In its October 8, 2019, management decision, PIH disagreed with this 

recommendation. PIH submitted a legal opinion from HUD’s Office of 

General Counsel in support of its position. PIH maintains that persons 

included on the excluded parties list are eligible for admission to and 

continued occupancy in public housing programs and the Housing 

Choice Voucher Program. PIH also asserted that section 102(E) of HOTMA 

addresses electronic income verification but HUD provides a mechanism 

for compliance through the Enterprise Income Verification system. Further, 

HOTMA requires only that HUD give PHAs access to the Do Not Pay system 

and does not explicitly mandate that HUD require PHAs to deny admission 

and terminate the tenancy of individuals on the excluded parties list. HUD 

has never mandated that individuals be ineligible on the basis of being on 

the excluded parties list. 

OIG rejected this management decision because it does not resolve the 

recommendation. It is the position of OIG that 2 CFR parts 180 and 2424 

apply to the tenants indicated in the report. Office of Management and 

Budget (OMB) guidance does not limit the reach of its debarment and 

suspension provisions to procurement transactions. The purpose of 

the nonprocurement debarment and suspension system is to protect 

the public interest by ensuring the integrity of Federal programs by 

conducting business only with responsible persons. In this regard, 

assistance and subsidy contracts are considered nonprocurement 

covered transactions under OMB regulations, and HUD regulations 

define subsidized tenants as being covered by this restriction. OMB 

guides agencies to check the governmentwide SAM exclusions to 

determine whether a person is excluded and whether that person is 

ineligible as a result. HUD’s regulations define recipients under HUD 

assistance agreements, as well as ultimate beneficiaries of HUD programs, 

as principals or participants in the transaction. Assisted or subsidized 

tenants are either recipients under HUD assistance agreements, ultimate 

beneficiaries of HUD programs, or both. Therefore, OIG continues to 

recommend that HUD issue guidance to PHAs to ensure that any applicant 

for or tenant of public or assisted housing whose name appears on the 

SAM excluded parties list is reviewed by PHAs to determine eligibility.

Because OIG did not reach an agreement with the Deputy Assistant 

Secretary for Public Housing and Voucher Programs, on February 19, 

2020, OIG referred its disagreement to the Assistant Secretary for Public 

and Indian Housing. However, OIG did not reach agreement with the 

Assistant Secretary for Public and Indian Housing on the actions necessary 

to correct the deficiencies identified in the report. Therefore, OIG referred 

the recommendation to the official serving in the Deputy Secretary role on 

March 31, 2020, for his final decision as the Departmental Audit Resolution 

Official. As of September 30, 2020, OIG had not received a decision from 

the Deputy Secretary. (Audit Report: 2019-KC-0002)

59 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
 EVALUATION REPORTS ISSUED BEFORE START OF PERIOD 

WITH NO MANAGEMENT DECISION AS OF SEPTEMBER 30, 2020

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 been reluctant 

to enforce program requirements, which 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 the Office of General Counsel. 

DEC lost control of its funding and staffing levels and contended with 

inadequate information technology (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, two of which remained open. OIG 

had not reached an agreed-upon management decision for both of these 

recommendations. To address one of these recommendations, HUD 

needs to strengthen DEC’s authority to enforce program requirements. In 

April 2019, OIG changed the status of this recommendation to resolvedopen based on HUD’s proposed actions in response to a Government 

Accountability Office (GAO) report. However, after reviewing the protocols 

developed between DEC and PIH, OIG determined that the protocol 

does not strengthen DEC’s authority to enforce program requirements 

or include any provisions for DEC to make independent assessments. 

Therefore, OIG changed the status of this recommendation to unresolvedopen. On March 31, 2020, OIG referred this recommendation to the 

Deputy Secretary for final action and was awaiting a response on the final 

action.

To address the other recommendation, HUD plans to develop protocols 

that would provide data-driven referrals to DEC on financial and physical 

performance failures. HUD plans to develop two protocols, one among 

the Real Estate Assessment Center (REAC), DEC, and PIH and another 

among REAC, DEC, and the Office of Multifamily Housing Programs. In 

April 2020, OIG sent a memorandum to PIH, REAC, and DEC, encouraging 

the collaboration necessary to resolve and close this recommendation. 

Later that month, PIH sent a response summarizing the collaborative 

actions PIH, REAC, and DEC had taken to date. During the next reporting 

period, OIG will determine whether PIH’s response meets the intent of 

OIG’s findings and whether this recommendation can be resolved, closed, 

or both. (Evaluation Report: 2014-OE-0002) 

60 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
HUD WEB APPLICATION SECURITY EVALUATION

ISSUE DATE: JUNE 6, 2018 

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, which resulted in OIG’s making 

nine recommendations for improvement to the Department. HUD OIG 

assessed HUD’s ability to identify and mitigate critical IT vulnerabilities 

in the Department’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 

an increased risk of unauthorized access and compromise. Of particular 

concern was the discovery of multiple operating web applications that 

were unknown to OCIO. 

To date, HUD has not provided management decisions for the nine 

open recommendations or a required estimated completion date for 

providing the management decisions. On June 2, 2017, HUD concurred 

with all recommendations and agreed to work with HUD OIG to assign 

responsibility and complete resolution. Due to key leadership changes 

and a priority focus on providing HUD OIG with management decisions 

for the fiscal years 2017 and 2018 FISMA evaluations, management 

decisions for this report have not been provided. However, HUD 

OCIO is working closely with HUD OIG to address the remaining open 

recommendations. HUD OIG agreed to close five recommendations based 

on HUD OCIO closure requests and associated evidence, leaving four open 

recommendations. (Evaluation Report: 2016-OE-0002) 

OPPORTUNITIES FOR IMPROVEMENT WITHIN CPD’S RISK 

MANAGEMENT PROCESS FOR HURRICANE SANDY GRANTS

ISSUE DATE: MARCH 29, 2017

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) no clear correlation between the 

risk analysis and monitoring existed, (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, two of which remained open. OIG 

had not reached an agreed-upon management decision for one of these 

recommendations. To address this recommendation, CPD plans to 

improve the risk analysis process, namely through data automation. The 

intent of the recommendation is to include the likelihood of future risk 

occurrence in the risk analysis, but CPD’s planned changes do not address 

how it has or plans to incorporate the likelihood of risk occurrence into 

its updated risk analysis. In August 2019, OIG notified CPD officials that 

CPD should specify how its planned changes to the risk analysis process 

will incorporate the likelihood of risk occurrence into its updated risk 

61 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
analysis and when it expects to complete these changes. To date, CPD 

has not provided this information. Due to the COVID-19 pandemic, OIG 

suspended followup activity on this recommendation until October 1, 

2020. OIG plans to refer this recommendation to the Deputy Secretary 

for final action during the next reporting period. (Evaluation Report: 

2019-OE-0004S) 

HUD IT SYSTEMS MANAGEMENT AND OVERSIGHT OF THE SECTION 

184 PROGRAM

ISSUE DATE: AUGUST 13, 2018

HUD OIG evaluated the IT systems supporting the Office of Native 

American Programs’ (ONAP) Indian Home Loan Guarantee Program 

(Section 184 program) following concerns that HUD had not used 

provided resources to address its shortcomings in internal controls and 

the ability to deploy a reliable IT system. OIG observed that a newly 

developed IT system, called the Loan Origination System (LOS), had the 

following issues: (1) the LOS had 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; (2) only 1 of 38 lenders was able to access and use the LOS due 

to HUD’s inability to resolve and implement a user access solution; (3) 

the LOS had no capability to conduct loan servicing and claims, which 

are still conducted using Excel spreadsheets; and (4) the LOS lacked 

critical management reporting capabilities. Despite HUD’s investing $4 

million into the development of the LOS, the system does not satisfy all 

management and oversight objectives.

OIG made five recommendations, and HUD and ONAP concurred with all 

five recommendations in August 2018, with a suspense of November 26, 

2018, to provide HUD OIG with management decisions. OIG received a 

management decision for the fourth recommendation from HUD OCIO. 

However, due to the LOS contract lapse in September 2018 and the 

inability to award a new contract, HUD and ONAP have been unable to 

provide management decisions for the remaining four recommendations. 

In August 2020, HUD reported that the LOS contract will not be renewed 

and that the Federal Housing Administration (FHA) Catalyst system will 

be used to provide ONAP the IT system capabilities needed. However, 

HUD OCIO requested to close a second recommendation, with HUD 

OIG concurring. Three of the five recommendations remained open. 

(Evaluation Report: 2018-OE-0004)

HUD HAS NOT REFERRED TROUBLED PUBLIC HOUSING AGENCIES 

AS THE LAW AND REGULATIONS REQUIRE

ISSUE DATE: FEBRUARY 4, 2020

HUD OIG evaluated whether PIH refers troubled PHAs, as law and 

regulations require. PIH is responsible for monitoring PHAs’ performance, 

including those that are troubled. A troubled PHA should be given a 

maximum of 2 years to cure its negative conditions. If the PHA does not 

meet the 1- or 2- year recovery requirements, law and regulations require 

PIH to refer the PHA to the Assistant Secretary for Public and Indian 

Housing for action.

PIH had not been referring troubled PHAs to the Assistant Secretary for 

Public and Indian Housing to take them over, as the law and regulations 

require. Without this referral mechanism, a PHA could remain troubled 

for an indefinite period, while conditions stagnate or deteriorate. OIG 

identified 18 PHAs that remained troubled for more than 2 years without 

being referred

62 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
PIH is creating a process for referring troubled PHAs, but two problems 

exist with its approach. First, the draft process that OIG reviewed in this 

evaluation would provide more options to the Assistant Secretary than 

the law and regulations allow. Second, PIH cannot meet the statutory 

deadlines for a troubled PHA referral without substantial changes to the 

assessment process or changes to the law and regulations, which PIH 

is not making as part of its new process. The new process would allow 

some troubled PHAs more time to recover than the law and regulations 

allow. PIH’s training that existed at the time of OIG’s fieldwork on the 

authority and process for declaring a PHA in substantial default and for 

taking PHAs into possession suggested remedies that do not fully comply 

with the law and regulations. Finally, PIH had not submitted, as the law 

requires, an annual troubled PHAs report to Congress for at least 11 years, 

thereby missing another opportunity to strengthen the accountability and 

transparency of its recovery process.

OIG made five recommendations, four of which remained open. OIG 

had not reached an agreed-upon management decision for these four 

recommendations. On September 15, 2020, PIH provided a proposed 

management decision for these recommendations and requested 

closure of them. OIG is reviewing the documentation provided. During 

the next reporting period, OIG will determine whether PIH’s proposed 

management decision meets the intent of OIG’s findings and whether 

these recommendations can be resolved, closed, or both. (Evaluation 

Report: 2019-OE-0001)

 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 four significantly revised 

management decisions. 

THE CITY OF BUFFALO DID NOT ALWAYS ADMINISTER ITS 

COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM IN 

ACCORDANCE WITH HUD REQUIREMENTS

ISSUE DATE: APRIL 15, 2011

HUD OIG audited the City of Buffalo, NY, to determine whether the City (1) 

administered its CDBG program effectively, efficiently, and economically 

in accordance with applicable rules and regulations and (2) spent CDBG 

funds for eligible activities that met a national objective of the program.

OIG determined that the City did not always follow applicable HUD 

regulations in its administration of the CDBG program. In addition, it did 

not always ensure that CDBG funds were spent for eligible activities that 

met a national objective of the program. Specifically, the City (1) disbursed 

CDBG program funds for questionable street improvement expenditures, 

(2) did not adequately monitor its subrecipient-administered economic 

development program, and (3) charged ineligible and unsupported costs 

for its clean and seal program activities to the CDBG program. As a result, 

program funds were used for ineligible and unsupported expenses, and 

the City’s ability to administer its CDBG program effectively and efficiently 

and ensure that the program’s objectives were met was diminished. 

OIG made 12 recommendations to the Director of HUD’s Buffalo 

63 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Office of Community Planning and Development to improve the City’s 

administration of its CDBG program and to ensure that it made the best 

use of CDBG funds to meet the community’s needs. HUD has taken actions 

to address some of these recommendations and is working to address 

those that are still outstanding. 

For the finding related to the City’s clean and seal activities, OIG 

recommended that HUD instruct the City to develop administrative 

control procedures that would ensure compliance with CDBG program 

requirements, including ensuring that costs were eligible and necessary 

before being charged to its clean and seal program. On September 28, 

2020, HUD submitted a revised management decision showing that the 

City had not used CDBG funds for clean and seal activities since OIG’s 

audit and stated that the City’s current practices do not include this 

program. HUD requested that this recommendation be closed as it was no 

longer applicable. On September 29, 2020, OIG agreed with the revised 

management decision and closed this recommendation. (Audit report: 

2011-NY-1010)

HUD’S PROPOSED HOME REGULATIONS ADDRESSED SYSTEMIC 

DEFICIENCIES BUT FIELD OFFICE MONITORING AND DATA 

VALIDATION NEED IMPROVEMENT

ISSUE DATE: FEBRUARY 12, 2013

HUD OIG audited HUD’s HOME Investment Partnerships program to 

determine whether HUD’s proposed regulation changes and controls 

would mitigate the systemic deficiencies identified in prior OIG audit 

reports.

OIG determined that if properly implemented, HUD’s proposed changes to 

HOME regulations and controls should mitigate the systemic deficiencies 

identified in prior OIG audit reports, with the exception of (1) the program 

office’s oversight of grantee monitoring and (2) validating the reliability of 

HOME data. Oversight of field office monitoring and grantee compliance 

required improvement because the quality management review process 

HUD relied on failed to identify systemic monitoring flaws and onsite 

monitoring data were not used to assess monitoring efforts. As a result, 

HUD could not ensure that monitoring was complete and effective.

OIG recommended that HUD develop and implement controls to validate 

HOME program data recorded in its system and formal procedures to 

continually assess the effectiveness and completeness of field office 

monitoring efforts. HUD agreed with these recommendations and 

completed the corresponding actions in April 2020 and February 2020. 

OIG also recommended that HUD develop and implement procedures to 

assess the effectiveness and completeness of its monitoring efforts and 

to evaluate the field office testing of non-high-risk grantees to ensure 

the soundness of risk assessments and obtain early warnings of potential 

deficiencies. In its original management decisions, HUD agreed to review 

64 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
the results of the previous monitoring cycle to identify common findings 

and to provide this information and appropriate guidance related to the 

risk analysis process or monitoring plans for the coming year to its field 

offices. On September 25, 2020, HUD submitted a revised management 

decision stating that it was overcome by events and could not locate the 

data promised for closure. Instead, HUD provided a copy of its current 

monitoring procedures and highlighted the areas that (1) address the 

effectiveness and completeness of monitoring and (2) evaluate the field 

office testing of non-high-risk grantees to ensure the soundness of risk 

assessments and obtain early warning of potential deficiencies. OIG 

believes that these actions satisfy the original intent of the management 

decisions. On September 28, 2020, OIG agreed with the revised 

management decisions. The audit is closed. (Audit Report: 2013-BO0001)

HUD SUBSIDIZED 10,119 UNITS FOR TENANTS WHO WERE 

UNDERCHARGED FLAT RENTS

ISSUE DATE: SEPTEMBER 12, 2017

HUD OIG audited PHAs’ compliance with HUD’s flat rent requirements 

based on multiple external audits conducted by OIG showing that PHAs 

were unaware of or did not properly implement the flat rent requirements. 

OIG determined that PHAs did not properly implement HUD’s flat rent 

requirements for more than half of the flat rent tenants reviewed. They 

undercharged a projected total of 10,119 flat rent tenants by an estimated 

$527,052 nationwide during December 2016, equating to annually 

undercharging flat rent tenants by approximately $6.3 million if HUD does 

not correct the problem. 

Among other things, OIG recommended that HUD finalize and implement 

monitoring procedures to ensure that more than $6.3 million in flat 

rents was appropriately charged to tenants over the following year. In a 

previously agreed-upon management decision, HUD stated that it was 

developing a three-tier monitoring procedure, which would include 

flat rent monitoring. HUD planned to complete the new monitoring 

procedure in late fiscal year 2019. On April 8, 2020, HUD submitted a 

revised management decision, explaining that due to a change in senior 

leadership, the Office of Field Operations was no longer planning to 

implement the three-tier monitoring procedure but instead updated its 

compliance monitoring checklist to include flat rent monitoring. HUD 

provided the updated compliance monitoring checklist with its revised 

management decision. On April 10, 2020, OIG agreed with the revised 

management decision. (Audit Report: 2017-KC-0007)

INTERIM REPORT - POTENTIAL ANTIDEFICIENCY ACT AND 

GENERALLY ACCEPTED ACCOUNTING PRINCIPLE VIOLATIONS 

OCCURRED WITH DISASTER RELIEF APPROPRIATION ACT, 2013, 

FUNDS

ISSUE DATE: MAY 15, 2018

While performing audit work to determine whether HUD CPD 

monitored and ensured that grantees complied with the 24-month 

statutory expenditure requirement contained in the 2013 Disaster Relief 

Appropriations Act, OIG noted issues with (1) the recording of grants 

in the Line of Credit Control System and (2) the grantees’ recording 

of expenditures in the Disaster Recovery Grants Reporting system. 

Specifically OIG found that grantees had recorded expenses (1) in excess 

of a grant round’s total obligation amount, (2) before CPD had obligated 

65 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
a grant round, and (3) after a grant round had expired. These issues 

required immediate action by OCFO, as they were potential violations of 

the Antideficiency Act (ADA)12 and did not appear to follow GAAP. In two 

separate recommendations, OIG recommended that OCFO determine 

whether transactions totaling more than $596 million were ADA violations. 

OCFO’s management decisions, dated August 22, 2018, stated that it 

would investigate to determine whether ADA violations occurred. On 

May 30, 2019, OCFO determined that there were no ADA violations, and 

on June 28, 2019, it requested that OIG close the open recommendations. 

OIG decided to refer the issues to GAO as OIG continued to assert that 

there were potential ADA violations. On August 11, 2020, OIG’s Office of 

Legal Counsel formally requested a legal opinion from GAO concerning 

these issues. Based on OIG’s referral, OCFO revised its management 

decision to state that it would review GAO’s determination and evaluate 

whether its decision should be reconsidered. (Audit Memorandum: 

2018-FW-0802)

 SIGNIFICANT MANAGEMENTS DECISION WITH WHICH OIG 

DISAGREES

Section 5(a)(12) of the Inspector General Act, as amended, requires that OIG 

report information concerning any significant management decision with 

which it disagrees. 

During the reporting period, there were four significant management 

decisions with which OIG disagreed.

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 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 

was a total of 486 loans from January 2004 to February 2014 that had 

enforceable indemnification agreements and losses to HUD but 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 

the final default date for billing only. 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 the 2,078 loans that were streamline refinanced. As 

a result, HUD incurred losses of $373,228 for 5 loans, and 16 loans had 

12HUD Handbook 1830.2, REV-6, Administrative Control of Funds Policies, issued March 22, 2017, designated the Chief Financial Officer’s Appropriations Law staff responsible for determining whether an 

ADA violation occurred.

66 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
a potential loss 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.

During the audit, OIG made five recommendations, three of which were 

referred to the Deputy Secretary on March 31, 2015, because OIG could 

not agree on a management decision. The disagreement centered on 

OIG’s determination that the Offices of Single Family Housing and Finance 

and Budget did not follow the plain language explicitly stated in the 

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.

For two of the recommendations, a management decision was reached. 

HUD agreed with the OIG recommendations to review and initiate the 

billing process for the loans in question. In implementing these corrective 

actions, HUD determined that certain loans were not billable due to its 

position that it billed lenders in a manner consistent with a longstanding 

HUD policy that emphasized the definition of the “date of default.” OIG 

disagreed and determined that HUD should have billed lenders for 

FHA loans that either were in default or went into default during the 

indemnification agreement period. 

Due to the lack of action from the office of the Deputy Secretary to render 

a decision, the 6-year statute of limitations (28 U.S.C. (United States Code) 

2415) rendered every loan under disagreement as time barred and not 

billable, impacting all five open recommendations. During this reporting 

period, HUD submitted the three recommendations that were referred 

to the Deputy Secretary for closure and significantly revised the two 

management decisions because the loans in question were deemed no 

longer billable due to the 6-year statute of limitations. Despite never 

reaching agreement on enforcement of the loans and indemnification 

agreements in question, OIG concurred with the two revised management 

decisions and closed the three referred recommendations. One of the 

revised management decisions remains open to allow HUD to reconcile 

collections for loans that were billed. The second revised management 

decision was closed concurrently. OIG’s concurrence relies solely on the 

statute of limitations and does not constitute agreement with HUD’s 

position regarding the date of default, enforcement of the indemnification 

agreements in question, or the billable loans. Combined, the two revised 

management decisions questioned more than $22.5 million. To date, 

OIG has sustained more than $20.8 million, and more than $1.6 million in 

collections was determined to be uncollectible. (Audit Report: 2014-LA0005)

67 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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

ISSUE DATE: JULY 13, 2018

HUD OIG audited the Lexington-Fayette Urban County Housing Authority’s 

Section 8 Housing Choice Voucher Program based on OIG’s risk assessment 

of all Kentucky PHAs and as part of OIG’s annual audit plan. The audit 

objective was to determine whether the Authority administered its 

program units in accordance with HUD’s and its own requirements.

The Authority did not always administer its program units in accordance 

with HUD’s and its own requirements. Specifically, it did not always 

comply with (1) HUD’s third-party requirements for conducting inspections 

and rent reasonableness determinations for Authority-owned units, (2) its 

requirements for conducting unit inspections in a timely manner, and (3) 

HUD’s housing quality standards for the program units. These conditions 

occurred because the Authority did not follow HUD’s requirements for 

performing unit inspections and was not familiar with the requirements 

for rent reasonableness determinations, the Authority’s inspection 

software was inadequate for scheduling inspections, and the Authority 

did not perform the required quality control inspections. As a result, 

HUD and the Authority lacked assurance that the unit inspections and 

rent reasonableness determinations were properly conducted and units 

were eligible to be on the program, allowing some tenants to live in 

inadequately maintained units. In addition, the Authority inappropriately 

paid nearly $147,000 in housing assistance and received more than 

$20,000 in administrative fees for the units cited in this report.

OIG issued nine recommendations to fix these issues, and HUD agreed 

with all but one of them, recommendation 1A. Recommendation 1A 

related to the Authority’s failure to have an independent third party 

conduct inspections for compliance with housing quality standards on 

units owned by the Authority. 

HUD believes that the housing assistance provided for units inspected 

by the Authority should not be questioned because the Authority has a 

minimum of 30 days to correct the deficiency noted during the inspection. 

However, OIG questioned the housing assistance because the Authority 

conducted inspections of units that it owned, which is not related to the 

amount of time needed for correcting any failed items. Specifically, HUD’s 

requirements at 24 CFR 982.352(b)(1)(iv)(A)(3) and 24 CFR 982.352(b)

(1)(iv)(B) state that the Authority-owned units must be inspected by an 

independent agency that is approved by HUD. While HUD had approved 

another housing agency, the City of Richmond Section 8 Housing Program, 

to perform unit inspections of the Authority-owned units on the Housing 

Choice Voucher Program, the Authority improperly conducted inspections 

on units for 27 of 35 (77 percent) tenants OIG reviewed.

Further, OIG found that 26 of 30 (87 percent) unit inspections conducted 

by OIG failed to meet the housing quality requirements and that 4 of the 

26 (15 percent) failing units were in material noncompliance with HUD’s 

housing quality requirements.

HUD stated that unless OIG can allow a period after OIG’s inspections 

for addressing noncompliance and then note whether the deficiencies 

continue to exist, it could not agree with recommendation 1A, which 

68 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
was to require the Authority to reimburse its Section 8 Housing Choice 

Voucher Program $124,075 ($108,687 in housing assistance payments and 

$15,388 in associated administrative fees) from non-Federal funds for the 

payments related to the Authority-owned units that were not inspected by 

an independent entity. Instead, HUD proposed to require the Authority to 

reimburse only the administrative fees totaling $15,388.

Due to the disagreement on the necessary corrective action on 

recommendation 1A, on October 25, 2019, OIG referred the issue to the 

Deputy Assistant Secretary for Field Operations for PIH programs. On 

April 27, 2020, after continued disagreement with the Deputy Assistant 

Secretary, OIG decided not to pursue the necessary corrective actions any 

further, and the recommendation was closed with disagreement. (Audit 

Report: 2018-AT-1006) 

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

ISSUE DATE: JULY 13, 2018

In accordance with the annual audit plan, HUD OIG audited the 

Lexington-Fayette Urban County Housing Authority’s Rental Assistance 

Demonstration Program (RAD) conversion to the Section 8 ProjectBased Voucher Program and its compliance with requirements after 

the conversion. The audit objective was to determine whether the 

Authority complied with HUD’s program requirements for conducting 

unit inspections and rent reasonableness determinations after the RAD 

conversion.

After its RAD conversion, the Authority did not obtain the services of a 

HUD-approved independent entity for conducting unit inspections in 

compliance with HUD’s housing quality standards and rent reasonableness 

determinations for the units it owned. This condition occurred because the 

Authority initially did not realize that the independent entity inspections 

for housing quality standards and rent reasonableness determinations 

requirements remained applicable after the RAD conversion, although the 

rents were set by HUD and the units were substantially rehabilitated. As a 

result, the Authority inappropriately paid more than $394,000 in housing 

assistance and received more than $49,000 in administrative fees. In 

addition, HUD and the Authority lacked assurance that the unit inspections 

and rent reasonableness determinations were properly conducted.

OIG issued four recommendations to address the issues noted, and HUD 

agreed with all of them but one, recommendation 1A. Recommendation 

1A related to the Authority’s failure to have an independent HUDapproved third party conduct inspections for compliance with housing 

quality standards on units owned by the Authority. 

HUD states that significant evidence exists to support that the Authorityowned units met the minimum standards required in the housing quality 

standards inspection protocol. Further, HUD certified that the field office 

reviewed the associated inspection protocols and that there is evidence 

that the RAD units met or exceeded the minimum housing quality 

standards assessment requirements, which resulted in the intent of the 

regulation being met.

Due to the disagreement on the necessary corrective action in 

recommendation 1A, on October 25, 2019, OIG referred the issue to 

Deputy Assistant Secretary for Field Operations for the PIH programs. On 

69 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
April 27, 2020, after continued disagreement with the Deputy Assistant 

Secretary, OIG decided not to pursue the necessary corrective actions any 

further, and the recommendation was closed with disagreement. (Audit 

Report: 2018-AT-1008)

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION FISCAL YEARS 

2015 AND 2014 FINANCIAL STATEMENTS AUDIT

ISSUE DATE: NOVEMBER 12, 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. OIG determined that Ginnie 

Mae was not in compliance with the Debt Collection Improvement Act of 

1990 (DCIA) and recommended that Ginnie Mae obtain an opinion from 

the U.S. Department of the Treasury on whether Ginnie Mae was subject to 

DCIA requirements. Ginnie Mae’s noncompliance with DCIA was reported 

in the following years, from fiscal year 2016 through fiscal year 2019. 

OIG did not reach consensus with Ginnie Mae on whether DCIA was 

applicable to the Government Corporation Control Act, as amended, or 

the corrective actions needed to resolve the audit recommendations. OIG 

referred the matter to the Deputy Secretary for a management decision 

on March 6, 2017. Since that time, HUD’s Department Audit Followup 

Official (DAFUO) has directed that this recommendation be closed as of 

September 18, 2020. The basis for the DAFUO’s directed decision was that 

“the recommendation should be closed since no action was necessary, 

due to no impact to the current financial statement audit.” The DAFUO 

stated in the management decision that “if there are issues related to this 

recommendation identified in compliance testing for the current year 

financial statement audit; the OIG may document and include a new 

recommendation in the current year financial statement audit report 

based on that evidence.” OIG disagrees that this compliance issue has no 

impact on the financial statement audit. The fiscal year 2020 audit work 

is ongoing, and a final determination on compliance and whether there 

is a material impact on the financial statements has not yet been made. 

(Audit Report: 2016-FO-0001)

70 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
 FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT 

OF 1996

Section 804(b) 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 United States Standard General Ledger at the 

transaction level.

As of September 30, 2020, OIG and HUD noted noncompliance with 

the three section 803(a) elements of FFMIA. Specifically, there were five 

financial systems13 that were noncompliant with one or more of the three 

section 803(a) requirements. The latest target date for remediation is 

August 2021. While some intermediate management decisions and target 

dates have been revised, HUD was on track to meet the intermediate 

target dates in its remediation plans as of September 30, 2020.

13The five financial systems that were noncompliant with FFMIA as of September 30, 2020, 

were the Disaster Recovery Grant Reporting system, the Tenant Rental Assistance Certification 

System, the Single Family Information System, the Single Family Information System Claims 

Subsystem, and the Ginnie Mae Financial Accounting System.

71 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
WHISTLEBLOWER

OMBUDSMAN

CHAPTER 9

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 2020 training was presented on September 18, 

2020, via a memorandum from the Inspector General, which explained 

employees’ rights to make disclosures of wrongdoing, free from 

retaliation. The memorandum also provided information about other 

prohibited personnel practices.

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 in the process of implementing these 

requirements.

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 

72 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Whistleblower Ombudsman Data

Number of complainants asserting whistleblower status14 18

Complaints opened by the Office of Investigation (OI) 18

Complaints declined by OI 15

Complaints currently under review by OI 3

Employee complaint investigations closed by OI 2

14Not all complainants are found to be whistleblowers under Section 4712. For example, many complainants raise questions regarding treatment by public housing agencies (PHA) following their alleged 

disclosures of wrongdoing by the same PHA. 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.

Special Counsel (OSC). HUD OIG does not track these matters unless OSC requests HUD OIG assistance in investigating a complaint. During this semiannual 

reporting period, HUD OIG did not substantiate any whistleblower retaliation complaints against HUD employees. 

HUD OIG did receive a number of complaints filed under 41 U.S.C. (United States Code) 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.

The chart below provides further information on those complaints.

73 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
PEER REVIEW REPORTING

CHAPTER 10

 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), Office of Audit, 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, was 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. Federal 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 (CIGIE) and the Attorney General’s guidelines.

Peer Review Conducted by HUD OIG on DHS OIG

HUD OIG conducted an external peer review of the DHS OIG, Office 

of Investigation, and issued a final report on June 5, 2020. HUD OIG 

determined that DHS OIG was in compliance with the quality standards 

established by CIGIE.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 

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. The Offices of Audit, 

Investigation, and Evaluation 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. 

74 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
 OFFICE OF EVALUATION

Peer Review Conducted on HUD OIG by CIGIE Team

A CIGIE external review team reviewed the HUD OIG, Office of Evaluation. 

The team concluded that the Office of Evaluation’s policies and procedures 

generally complied with the Quality Standards for Inspection and 

Evaluation. The team also offered observations regarding four reports 

reviewed. The team concluded that one report did follow all policies 

and procedures and quality standards. The team also concluded that all 

reviewed reports did not follow select quality standards. HUD OIG did not 

agree with all team observations and offered a written rebuttal. However, 

the Office of Evaluation made changes to its policies and procedures and 

reporting approaches to address the team observations.

Peer Review Conducted by HUD OIG on FHFA OIG

HUD OIG conducted an external peer review of the Federal Housing 

Finance Agency (FHFA) OIG’s inspection and evaluation functions and 

issued a final report September 10, 2019. All six reports in OIG’s sample 

met the seven standards under review.

A copy of the external quality control review report can be viewed at 

https://www.fhfaoig.gov/sites/default/files/Final%20Report%20-%20

External%20Peer%20Review%20of%20FHFA%20OIG.pdf.

75 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
APPENDIXES

76 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Internal Audit Reports

APPENDIX 1 - REPORTS ISSUED

Chief Financial Officer

2020-AT-0001 HUD Did Not Always Comply With the Improper Payments Elimination and Recovery Act of 

2010, 05/14/2020.

Chief Information Officer

2020-DP-0002 HUD, Washington, DC, Information Security Weaknesses Existed Within NCIS, 09/22/2020.

Government National Mortgage Association

2020-DP-0001 Government National Mortgage Association, Washington, DC, Deficiencies in the Ginnie Mae 

Financial Accounting System and Its Subledger Database, 09/18/2020.

Housing

2020-CH-0005 HUD Needs To Improve Its Oversight of Lead in the Water of Multifamily Housing Units, 

08/21/2020.

77 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
APPENDIX 1 - REPORTS ISSUED

Internal Audit Reports continued...

Policy Development and Research

2020-LA-0002 HUD Had Implemented Most of the Required Responsibilities Stated in the Geospatial Data Act 

of 2018, 09/24/2020.

Public and Indian Housing

2020-BO-0001 HUD Could Strengthen Controls Over Employee Benefits Expensed at Public Housing Agencies, 

08/12/2020.

2020-CH-0004 HUD Needs To Improve Its Oversight of Lead in the Water of Housing Choice Voucher and 

Public Housing Program Units, 08/21/2020.

2020-CH-0006 HUD Could Improve Its Oversight of Portability in the Housing Choice Voucher Program, 

09/09/2020. Questioned: $248,514. Better use: $35,189.

78 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
APPENDIX 1 - REPORTS ISSUED

Audit-Related Memorandums15

Chief Financial Officer

2020-KC-0801 Medium Risk Identified in HUD’s Fiscal Year 2019 Travel Card Program Risk Assessment, 

09/15/2020.

Housing

2020-PH-0801

Opportunities Exist To Improve HUD’s Responses to Inquiries From Borrowers, Industry 

Partners, and the General Public Regarding Forbearance and Foreclosure Relief Provided by the 

CARES Act, 09/22/2020.

15The 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.

External Audit Reports

Community Planning and Development

2020-LA-1003

The City of Mesa, AZ, Did Not Administer Its Community Development Block Grant in 

Accordance With HUD Requirements, 04/13/2020. Questioned: $3,155,305. Unsupported: 

$3,155,305. Better use: $225,000.

79 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Housing

2020-KC-1001 Englewood Apartments, Kansas City, MO, Did Not Comply With Tenant Eligibility and 

Recertification Requirements, 06/08/2020. Questioned: $401,403. Unsupported: $24,295.

Public and Indian Housing

2020-AT-1003

The Housing Authority of the City of Macon-Bibb County, GA, Improperly Executed the HAP 

Contract for Vineville Christian Towers’ RAD Conversion, 08/31/2020. Questioned: $138,925. 

Better use: $256,824.

2020-LA-1004 The Los Angeles County Development Authority, Alhambra, CA, Generally Met HUD Goals and 

Requirements in Managing Its Family Self-Sufficiency Program, 06/18/2020.

2020-LA-1005 Mid America Mortgage, dba 1st Tribal Lending, Pinole, CA, Did Not Always Follow HUD’s 

Section 184 Program Requirements, 09/03/2020. Better use: $607,598.

2020-PH-1001

The Philadelphia Housing Authority, Philadelphia, PA, Did Not Comply With Procurement 

and Conflict-of-Interest Requirements, 04/20/2020. Questioned: $1,016,807. Unsupported: 

$860,132.

APPENDIX 1 - REPORTS ISSUED

External Audit Reports continued...

80 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
APPENDIX 1 - REPORTS ISSUED

Information Technology

2019-OE-0002 HUD Fiscal Year 2019 Federal Information Security Modernization Act of 2014 

2019-OE-0002a HUD Personally Identifiable Information (PII) Records Protection and Management 

Memorandum Report

Single Family Housing and the Federal Housing Administration

Topic brief Some Mortgage Loan Servicers’ Websites Offer Information About CARES Act Loan Forbearance 

That Is Incomplete, Inconsistent, Dated, and Unclear

Followup topic brief Some Mortgage Loan Services’ Websites Continue To Offer Information About CARES Act Loan 

Forbearance That Could Mislead or Confuse Barrowers or Provide Little or No Information at All

Internal Evaluation Reports

Evaluation-Related Memorandums

81 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
TABLE A

APPENDIX 2 - TABLES

Report number Report title Issue date

* 2014-FO-0003 Additional Details To Supplement Our Report on HUD's Fiscal Years 

2013 and 2012 (Restated) Financial Statements 12/16/2013

* 2015-FO-0003 Audit of the Government National Mortgage Association’s Financial 

Statements for Fiscal Years 2014 and 2013 02/27/2015

* 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

11/18/2015

* 2016-PH-0001 HUD Did Not Always Provide Adequate Oversight of Property 

Acquisition and Disposition Activities 06/30/2016

* 2016-PH-0005 HUD Did Not Always Provide Accurate and Supported Certifications of 

State Disaster Grantee Procurement Processes 09/29/2016

82 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

AUDIT REPORTS ISSUED BEFORE START OF PERIOD WITH NO MANAGEMENT DECISION AS 

OF SEPTEMBER 30, 2020

*SIGNIFICANT REPORTS DESCRIBED IN PREVIOUS SEMIANNUAL REPORTS
Report number Report title Issue date

* 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

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

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

08/21/2017

* 2017-PH-0002 

HUD Did Not Provide Sufficient Guidance and Oversight To Ensure 

That State Disaster Grantees Followed Proficient Procurement 

Processes

09/22/2017

* 2017-NY-0002 HUD Could Improve Its Controls Over the Disposition of Real 

Properties Assisted With Community Development Block Grant Funds 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

11/15/2017

* 2018-FW-0002 HUD’s Office of Block Grant Assistance Had Not Codified the 

Community Development Block Grant Disaster Recovery Program 07/23/2018

* 2019-NY-1001 The State of New York Did Not Ensure That Properties Purchased 

Under the Acquisition Component of Its Program Were Eligible 03/29/2019

83 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date

* 2019-NY-1002 

The State of New York Did Not Ensure That Appraised Values Used 

by Its Program Were Supported and Appraisal Costs and Services 

Complied With Requirements

05/29/2019

* 2019-KC-0002 HUD Paid Rental Subsidies To Benefit Public Housing and Voucher 

Tenants Reported as Excluded From Federal Programs or Deceased 06/25/2019

Report number Report title Issue date

2014-OE-0002 Risk-Based Enforcement Could Improve Program Effectiveness 02/12/2016

2016-OE-0002 HUD Web Application Security Evaluation 06/06/2018

2016-OE-0004S Opportunities for Improvement Within CPD’s Risk Management 

Process for Hurricane Sandy Grants 03/29/2017

2018-OE-0004 HUD IT System Management and Oversight of the Section 184 

Program 08/13/2018

2019-OE-0001 HUD Has Not Referred Troubled Public Housing Agencies as the Law 

and Regulations Require 02/04/2020

84 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020

EVALUATION REPORTS ISSUED BEFORE START OF PERIOD WITH NO MANAGEMENT 

DECISION AS OF MARCH 31, 2020
TABLE B

APPENDIX 2 - TABLES

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 10/01/2020

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

2009-AT-0001 HUD Lacked Adequate Controls to Ensure the Timely 

Commitment and Expenditure of HOME funds 09/28/2009 03/18/2011 10/01/2020

2010-AT-1003 The Housing Authority of Whitesburg Mismanaged Its 

Operations, Whitesburg, KY 04/28/2010 08/26/2010 11/29/2035

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 10/01/2020

85 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 10/01/2020

2012-NY-1002 The City of New York Charged Questionable Expenditures to Its 

HPRP, New York, NY 10/18/2011 02/16/2012 10/01/2020

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 10/01/2020

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 10/01/2020

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

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

86 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 10/01/2020

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 10/01/2020

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 10/01/2020

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 10/01/2020

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 10/01/2020

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

87 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

2014-AT-1001 The Municipality of Arecibo Did Not Properly Administer Its 

HOME Program 12/03/2013 01/24/2014 10/01/2020

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-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 10/01/2020

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 10/01/2020

2014-NY-0001 HUD Did Not Provide Effective Oversight of Section 202 

Multifamily Project Refinances 02/19/2014 06/10/2014 10/01/2020

2014-AT-0001 Violations Increased the Cost of Housing’s Administration of Its 

Bond Refund Program 03/14/2014 07/11/2014 10/01/2020

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 10/01/2020

88 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 10/01/2020

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 10/01/2020

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 Note 1

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 10/01/2020

2014-LA-0005

HUD Did Not Always Recover FHA Single-Family Indemnification 

Losses and Ensure That Indemnification Agreements Were 

Extended

08/08/2014 12/03/2014 01/31/2021

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

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

89 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 10/01/2020

2014-LA-1007

The City of Los Angeles Did Not Always Ensure That CDBGFunded Projects Met National Program Objectives, Los Angeles, 

CA

09/29/2014 01/27/2015 Note 1

2015-FW-1801 The Management of the Housing Authority of the City of Taylor, 

Taylor, TX, Did Not Exercise Adequate Oversight of Its Programs 10/02/2014 01/21/2015 10/02/2021

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 10/01/2020

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 10/01/2020

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 10/01/2020

90 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 10/01/2020

2015-LA-0002 HUD Did Not Provide Adequate Oversight of the Section 184 

Indian Home Loan Guarantee Program 07/06/2015 10/28/2015 12/31/2021

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 1

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 10/01/2020

91 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 10/01/2020

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 10/01/2020

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

2016-FO-0001 Audit of Fiscal Years 2015 and 2014 (Restated) Financial 

Statements 11/13/2015 03/24/2016 10/01/2020

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

92 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

2016-DP-0801 Review of Information System Controls Over the Government 

National Mortgage Association 11/30/2015 03/30/2016 10/01/2020

2016-DP-0002 Single Family Insurance System and Single Family Insurance 

Claims Subsystem 12/21/2015 03/31/2016 10/01/2020

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 10/01/2020

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 10/01/2020

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 10/01/2020

2016-AT-0001 HUD Did Not Enforce and Sufficiently Revise Its Underwriting 

Requirements for Multifamily Accelerated Processing Loans 05/20/2016 09/16/2016 10/01/2020

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 10/01/2020

93 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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-NY-0001 Operating Fund Calculations Were Not Always Adequately 

Verified 09/12/2016 12/22/2016 04/01/2025

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 10/01/2020

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 Note 1

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 Note 1

2017-BO-1001 The State of Connecticut Did Not Always Comply With CDBG 

Disaster Recovery Assistance Requirements 10/12/2016 02/01/2017 10/01/2020

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 10/01/2020

94 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 1

2017-FO-0001 Audit of Fiscal Years 2016 and 2015 (Restated) Financial 

Statements 11/14/2016 04/06/2017 Note 1

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-NY-1004

The City of New York, NY, Lacked Adequate Controls To Ensure 

That the Use of CDBG-DR Funds Was Always Consistent With the 

Action Plan and Applicable Federal and State Requirements

12/21/2016 04/17/2017 Note 1

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 10/01/2020

2017-LA-0002 HUD Failed To Follow Departmental Clearance Protocols for FHA 

Programs, Policies, and Operations 01/25/2017 09/22/2017 10/01/2020

2017-DP-0001 HUD’s Transition to a Federal Shared Service Provider Failed To 

Meet Expectations 02/01/2017 05/25/2017 10/01/2020

95 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 10/01/2020

2017-KC-1801

Final Action Memorandum: Purchaser of HUD-Insured SingleFamily Property Settled Allegations of Causing the Submission 

of a False Claim

02/23/2017 02/23/2017 06/15/2021

2017-LA-0003 HUD Failed To Adequately Oversee FHA-Insured Loans With 

Borrower-Financed Downpayment Assistance 03/03/2017 06/22/2017 Note 1

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 10/01/2020

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

2017-NY-0001 HUD PIH’s Required Conversion Program Was Not Adequately 

Implemented 05/18/2017 09/15/2017 12/31/2023

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 Note 1

96 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 10/01/2020

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 10/01/2020

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 10/01/2020

2017-KC-0006 HUD Did Not Conduct Rulemaking or Develop Formal 

Procedures for Its Single-Family Note Sales Program 07/14/2017 10/19/2017 10/01/2020

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 10/01/2020

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 1

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 Note 1

97 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 02/26/2021

2017-LA-0004 HUD Did Not Have Adequate Controls To Ensure That Servicers 

Properly Engaged in Loss Mitigation 09/14/2017 01/11/2018 10/01/2020

2017-NY-1010

The State of New York Did Not Show That Disaster Recovery 

Funds Under Its Non-Federal Share Match Program Were Used 

for Eligible and Supported Costs

09/15/2017 01/12/2018 10/01/2020

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 10/01/2020

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-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

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 10/01/2020

98 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

2018-FO-0003 Fiscal Years 2017 and 2016 (Restated) Financial Statements Audit 11/15/2017 04/03/2018 Note 1

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

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 10/01/2020

2018-FW-1001 Jefferson Parish, Jefferson, LA, Did Not Always Properly 

Administer Its Rehabilitation Program 01/29/2018 05/22/2018 02/26/2021

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 01/28/2050

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 10/01/2020

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 10/01/2020

99 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

2018-DP-0003 Fiscal Year 2017 Review of Information Systems Controls in 

Support of the Financial Statements Audit 03/09/2018 06/07/2018 10/01/2020

2018-KC-0802 Limited Review of HUD Multifamily Waiting List Administration 03/22/2018 07/25/2018 Note 1

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 10/01/2020

2018-KC-0001 FHA Insured $1.9 Billion in Loans to Borrowers Barred by Federal 

Requirements 03/26/2018 07/11/2018 Note 2

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 10/01/2020

2018-KC-1002 The Kansas City, MO, Health Department Did Not Spend Funds 

in Accordance With HUD Requirements 04/06/2018 08/02/2018 10/01/2020

2018-LA-0002

HUD Did Not Have Adequate Controls To Ensure That Grantees 

Submitted Accurate Tribal Enrollment Numbers for Program 

Funding

05/07/2018 08/23/2018 12/31/2020

100 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

2018-FW-1004 The City of Dallas, TX, HOME Investment Partnerships Program 

Was Not Always Administered in Accordance With Requirements 05/08/2018 08/30/2018 10/01/2020

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 09/12/2018 10/01/2020

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 12/06/2018 12/31/2021

2018-BO-1003 The City of Providence, RI, Did Not Properly Administer Its HOME 

Program 06/20/2018 09/28/2018 10/01/2020

2018-FW-0001 CPD’s Risk Assessment and Monitoring Program Did Not Provide 

Effective Oversight of Federal Funds 06/26/2018 10/16/2018 Note 2

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 12/21/2018 12/31/2021

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 04/05/2019 10/01/2020

101 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 03/07/2019 10/01/2020

2018-BO-1005 The State of Connecticut Did Not Ensure That Its Grantees 

Properly Administered Their Housing Rehabilitation Programs 09/19/2018 03/27/2019 10/01/2020

2018-KC-0004 HUD Did Not Always Identify and Collect Partial Claims Out of 

Surplus Foreclosure Proceeds 09/20/2018 04/18/2019 12/31/2021

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 03/08/2019 10/01/2020

2018-NY-0001 HUD Did Not Adequately Administer Its Housing Counseling 

Program 09/24/2018 02/26/2019 03/31/2021

2018-PH-1007

The Crisfield Housing Authority, Crisfield, MD, Did Not Properly 

Administer Its Public Housing Program Operating and Capital 

Funds

09/25/2018 03/01/2019 10/31/2020

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 02/28/2019 10/01/2020

102 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

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 03/07/2019 10/01/2020

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 04/03/2019 04/02/2021

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 02/28/2019 10/01/2020

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 02/13/2019 10/01/2020

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 03/29/2019 10/01/2020

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 03/14/2019 10/01/2020

2019-FO-0002 Audit of the Federal Housing Administration’s Financial 

Statements for Fiscal Years 2018 and 2017 (Restated) 11/14/2018 05/30/2019 10/01/2020

103 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

2019-FO-0003

Additional Details To Supplement Our Fiscal Years 2018 and 2017 

(Restated) U.S. Department of Housing and Urban Development 

Financial Statement Audit

11/15/2018 07/11/2019 10/01/2020

2019-CH-1001

The Housing Authority of the City of North Chicago, North 

Chicago, IL, Did Not Always Comply With HUD’s Requirements 

and Its Own Policies Regarding the Administration of Its Housing 

Choice Voucher Program

12/20/2018 03/28/2019 02/28/2024

2019-CH-1002

The Detroit Housing Commission, Detroit, MI, Did Not Always 

Administer Its Moderate Rehabilitation Program in Accordance 

With HUD’s and Its Own Requirements

02/06/2019 06/05/2019 10/01/2020

2019-AT-1002

Louisville Metro, Louisville, KY, Did Not Always Administer the 

TBRA Activity in Its HOME and CoC Programs in Accordance With 

Program Requirements

03/18/2019 07/16/2019 10/01/2020

2019-DP-0004 Fiscal Year 2018 Review of Information Systems Controls in 

Support of the Financial Statements Audit 03/27/2019 06/20/2019 10/01/2020

2019-KC-0001 FHA Improperly Paid Partial Claims That Did Not Reinstate Their 

Related Loans 04/11/2019 08/02/2019 07/31/2021

2019-FW-1001 The Little Rock Housing Authority, Little Rock, AR, Did Not Fully 

Meet Rental Assistance Demonstration Program Requirements 04/23/2019 09/20/2019 10/31/2022

104 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

2019-BO-1001 The City of Bridgeport, CT, Did Not Properly Administer Its HOME 

Program 04/25/2019 08/07/2019 10/01/2020

2019-BO-1002

The Housing Authority of the City of Woonsocket, RI, Did Not 

Always Comply With Capital Fund Program and Procurement 

Requirements

05/07/2019 10/22/2019 10/01/2020

2019-FW-1003

Northline Point Apartments, Houston, TX, Multifamily Section 

8 Program, Subsidized Unsupported Tenants and Uninspected 

Units

06/10/2019 09/18/2019 10/01/2020

2019-AT-1004

The North Carolina Department of Commerce Did Not 

Administer Its Neighborhood Stabilization Program Grants as 

Required by HUD

06/14/2019 01/14/2020 10/10/2020

2019-FW-1004

The City of Dallas, Dallas, TX, Did Not Follow Environmental 

Requirements or Effectively Manage Its Community Housing 

Development Organizations

06/17/2019 10/10/2019 10/01/2020

2019-KC-0002

HUD Paid Rental Subsidies To Benefit Public Housing and 

Voucher Tenants Reported as Excluded From Federal Programs 

or Deceased

06/25/2019 10/17/2019 Note 3

2019-FW-1005 Northlake Homeless Coalition, Mandeville, LA, Did Not Always 

Follow Continuum of Care Program Requirements 07/11/2019 10/23/2019 10/31/2020

105 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

2019-LA-1008

The Compton Housing Authority, Compton, CA, Did Not 

Administer Its Housing Choice Voucher Program in Accordance 

With HUD Requirements

07/11/2019 10/23/2019 10/22/2020

2019-LA-0801

HUD Completed the Agreed-Upon Corrective Actions for One 

of the Two Recommendations Reviewed From Prior OIG Audit 

Report 2015-LA-0001 on FHA-HAMP Partial Claims

07/15/2019 10/08/2019 10/08/2020

2019-NY-1003

New York City Department of Housing Preservation and 

Development, New York, NY, Did Not Always Ensure That Units 

Met Housing Quality Standards but Generally Abated Payments 

When Required

08/02/2019 11/25/2019 11/25/2020

2019-BO-1003

The Commonwealth of Massachusetts Did Not Always Ensure 

That Its Grantees Complied With Applicable State and Federal 

Laws and Requirements

08/05/2019 12/03/2019 10/01/2020

2019-FW-1006

The Bogalusa Housing Authority, Bogalusa, LA, Did Not Always 

Administer Its Public Housing Programs in Accordance With 

Requirements

08/16/2019 11/26/2019 11/30/2020

2019-CH-1003

The Management Agent for Lake View Towers Apartments, 

Chicago, IL, Did Not Always Comply With HUD’s Section 8 HAP 

Program Requirements

09/03/2019 12/18/2019 12/01/2020

2019-AT-1006 Palm Beach County Housing Authority, West Palm Beach, FL, Did 

Not Support and Spend HUD Funds According to Regulations 09/30/2019 12/13/2019 12/31/2020

106 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

2019-CF-1803

Pacific Horizon Bancorp, Inc., and Two Loan Officers Settled 

Allegations of Failing To Comply With HUD’s Federal Housing 

Administration Loan Requirements

09/30/2019 09/30/2019 08/01/2024

2019-CH-1004

The Taylor Housing Commission, Taylor, MI, Did Not Always 

Comply With HUD’s and Its Own Requirements for Its Program 

Household Files

09/30/2019 01/14/2020 01/13/2021

2019-KC-0003 FHA Insured at Least $13 Billion in Loans to Ineligible Borrowers 

With Delinquent Federal Tax Debt 09/30/2019 01/15/2020 01/31/2022

107 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 SEPTEMBER 30, 2020

Report number Report title Issue date Decision date Final action 

2020-CH-1001

The City of Detroit’s Housing and Revitalization Department, 

Detroit, MI, Did Not Administer Its Lead Hazard Reduction 

Demonstration Grant Program in Accordance With HUD’s 

Requirements

10/02/2019 01/31/2020 12/09/2020

2020-AT-1001

The Christian Church Homes, Oakland, CA, Did Not Ensure That 

the Rental Assistance Demonstration Program Conversion Was 

Accurate and Supported for Vineville Christian Towers

11/04/2019 03/03/2020 03/02/2021

2020-CH-0001

HUD’s Office of the Chief Financial Officer Generally Complied 

With the Digital Accountability and Transparency Act of 2014 

With a Few Exceptions

11/07/2019 02/11/2020 02/11/2021

2020-KC-0002 HUD’s Travel Cards Were Used for Illegal, Improper, or Erroneous 

Purchases and Were Not Always Used When Required 01/31/2020 05/29/2020 11/30/2021

2020-LA-1001

Community Action North Bay, Fairfield, CA, Did Not Administer 

Its Continuum of Care Program in Accordance With HUD 

Requirements

01/31/2020 05/14/2020 05/13/2021

2020-AT-0801

HUD Had Not Established Deadlines for Reporting FHA-HAMP 

Nonincentivized Loan Modifications and Filing Nonincentivized 

Partial Claims

02/04/2020 06/01/2020 05/31/2022

108 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action 

2020-FO-0003

Additional Details To Supplement Our Fiscal Year 2019 U.S. 

Department of Housing and Urban Development Financial 

Statements Audit

02/07/2020 09/08/2020 08/13/2021

2020-AT-0802

HUD Inaccurately Allotted Funding for Tenant Protection 

Assistance and Improperly Approved a Proposed RAD 

Conversion

02/18/2020 06/04/2020 03/31/2021

2020-FW-0001

HUD Did Not Have Adequate Oversight To Ensure That Its 

Payments to Subsidized Property Owners Were Accurate and 

Supported When It Suspended Contract Administrator Reviews

02/26/2020 06/09/2020 12/31/2021

2020-LA-1002

The Housing Authority of the City of Long Beach, CA, Did Not 

Administer Its Housing Choice Voucher Program in Accordance 

With HUD Requirements

03/05/2020 06/19/2020 06/30/2021

2020-AT-1002 The Puerto Rico Department of Housing, San Juan, PR, Should 

Strengthen Its Capacity To Administer Its Disaster Grants 03/16/2020 07/13/2020 03/31/2021

2020-CH-0003 HUD Lacked Adequate Oversight of Public Housing Agencies’ 

Compliance With the Lead Safe Housing Rule 03/18/2020 09/03/2020 12/10/2022

2020-BO-1002

The Housing Authority of the City of Springfield, MA, Did Not 

Always Comply With Procurement and Contract Administration 

Requirements

03/19/2020 06/23/2020 10/31/2020

109 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Audits Excluded:

81 audits under repayment plans 

39 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 

110 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 FY14 HUD Privacy Program Evaluation 04/30/2014 04/30/2014 Note 1

2014-OE-0002 Risk-Based Enforcement Could Improve Program Effectiveness 02/12/2016 04/09/2019 Note 2

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-0002 HUD Web Application Security Evaluation 06/06/2018 n/a Note 2

111 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Report number Report title Issue date Decision date Final action

2016-OE-0004S Opportunities for Improvement Within CPD’s Risk Management 

Process for Hurricane Sandy Grants 03/29/2017 08/20/2019 Note 2

2016-OE-0006 FY 2016 Federal Information Security Modernization Act (FY16 

FISMA) 11/10/2016 11/10/2016 Note 1

2017-OE-0007 FY 2017 Federal Information Security Modernization Act (FY17 

FISMA) 10/31/2017 08/16/2018 Note 1

2018-OE-0001 HUD Privacy Program Evaluation Report 09/13/2018 11/27/2018 Note 1

2018-OE-0002 Fire Safety Planning for the Weaver Building Needs Improvement 06/12/2018 11/29/2018 Note 1

2018-OE-0003 FY 2018 Federal Information Security Modernization Act (FY18 

FISMA) 10/31/2018 05/17/2019 Note 1

2018-OE-0004 HUD IT System Management and Oversight of the Section 184 

Program 08/13/2018 n/a Note 2

112 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Notes: 

1 Management did not meet the target date. Target date is more than 1 year old.

2 No management decision

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

2019-OE-0001 HUD Has Not Referred Troubled Public Housing Agencies as the 

Law and Regulations Require 02/04/2020 09/30/2020 Note 2

2019-OE-0002 HUD Fiscal Year 2019 Federal Information Security 

Modernization Act of 2014 (FISMA) Evaluation Report 06/24/2020 n/a Note 2

2019-OE-0002a HUD Personally Identifiable Information (PII) Records Protection 

and Management 06/25/2020 n/a Note 2

113 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
TABLE C

APPENDIX 2 - TABLES

INSPECTOR GENERAL-ISSUED REPORTS WITH QUESTIONED AND 

UNSUPPORTED COSTS AT SEPTEMBER 30, 2020

(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 11 $449,795 $408,542

A2  For which litigation, legislation, or investigation was 

pending at the beginning of the reporting period 1 20,157 0

A3  For which additional costs were added to reports in 

beginning inventory - 1,082 509

A4  For which costs were added to noncost reports 0 0 0

B1  Which were issued during the reporting period 5 4,961 4,040

B2  Which were reopened during the reporting period 0 0 0

Subtotals (A+B) 17 475,995 413,091

114 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
TABLE C CONTINUED...

Audit reports Number of 

audit reports

Questioned

costs

Unsupported

costs

C     For which a management decision was made during 

the reporting period 1016 80,971 22,178

 (1) Dollar value of disallowed costs:

 Due HUD

 Due program participants

4

6

39,420

29,634

1,167

9,094

 (2) Dollar value of disallowed costs: 217 11,917 11,917

D    For which a management decision had been made 

not to determine costs until completion of litigation, 

legislation, or investigation 

0 0 0

E     For which no management decision had been made by 

the end of the reporting period 

7

<15>18

395,024

<380,892>18

390,913

<376,786>18

16Six audit reports also contain recommendations with funds to be put to better use.

17Two audit reports also contain recommendations with funds agreed to by management.

18The figures in brackets represent data at the recommendation level as compared to the report level. See Explanations of Tables C and D.

115 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
TABLE D

APPENDIX 2 - TABLES

INSPECTOR GENERAL-ISSUED REPORTS WITH RECOMMENDATIONS 

THAT FUNDS BE PUT TO BETTER USE AT SEPTEMBER 30, 2020

(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 13 $8,748,897

A2  For which litigation, legislation, or investigation was 

pending at the beginning of the reporting period 0 0

A3  For which additional costs were added to reports in 

beginning inventory - 0

A4  For which costs were added to noncost reports 0 0

B1  Which were issued during the reporting period 4 1,124

B2  Which were reopened during the reporting period 0 0

Subtotals (A+B) 17 8,750,021

116 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
TABLE D CONTINUED...

Audit reports Number of 

audit reports Dollar value

C     For which a management decision was made during 

the reporting period 719 250,498

 (1) Dollar value of recommendations that were agreed

 to by management:

 Due HUD

 Due program participants

1

5

1,040

1,441

 (2) Dollar value of recommendations that were not

 agreed upon by management 1 248,017

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 been made by 

the end of the reporting period 

10

<6>20

8,499,523

<4,979,976>20

19Six audit reports also contain recommendations with questioned costs.

20The figures in brackets represent data at the recommendation level as compared to the report level. See Explanations of Tables C and D.

117 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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 their 

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.

118 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
INSPECTOR GENERAL

EMPOWERMENT ACT

APPENDIX 3

SUMMARY OF REPORTS WITH NO ESTABLISHMENT 

COMMENT

The Inspector General Impowerment Act (IGEA) requires the Office of 

Inspector General (OIG) to report on each audit and evaluation report for 

which the U.S. Department of Housing and Urban Development (HUD) did 

not return comments within 60 days of HUD OIG’s providing the report to the 

Department.

On February 22, 2019, HUD OIG’s Office of Investigation delivered 

Systemic Implication Report FY (fiscal year) 19-001, “Systemic Implication 

Report (SIR) Pertaining to the Housing Choice Voucher Program Initial 

Certification and Annual Recertifications,” to HUD’s Office of Public and 

Indian Housing. The SIR recommended that HUD standardize the initial 

certification and annual recertification questionnaire for the Housing 

Choice Voucher Program. It specifically recommended that HUD 

standardize and require the use of a personal declaration form regarding 

a tenant’s declaration of his or her income and assets. The Department 

did not respond within the requisite 60 days, and HUD OIG had not 

received a response as of September 30, 2020.

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 (OE) are presented below.

OFFICE OF AUDIT

The Department currently has 1,295 outstanding (open) unimplemented 

recommendations with a combined potential cost savings of more than 

$21 billion. The following table and charts reflect the reasons why they 

remain unimplemented:

1. 1,220 recommendations have active corrective action plans in 

place or valid repayment plans, but HUD has not yet finished 

implementing the recommendation. 

2. 75 recommendations are currently without management decisions 

(agreement between the Department and OIG), 43 of which are 

beyond the 180-day statutory requirement due to disagreement and 

were reported in table A of OIG’s Semiannual Report to Congress 

(SAR). The remainder are within the 180-day limit, during which time 

management and OIG can arrive at an agreed-upon corrective action 

plan.

3. 434 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.

119 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Calendar year Number of open 

recommendations

Cumulative estimated cost savings from 

open recommendations

Pre-2001 4 $1,851,998

2001 1 200,000

2002 7 1,379,626

2003 14 1,811,658

2004 8 8,275,883

2005 5 3,006,373

2006 14 10,736,031

2007 16 5,081,749

2008 29 71,766,547

2009 27 78,886,410

2010 19 23,636,037

2011 37 100,042,538

2012 18 14,416,217

2013 68 374,998,402

2014 120 397,607,476

2015 116 344,391,399

2016 155 7,582,067,245

2017 159 907,061,704

2018 171 4,456,713,816

2019 168 6,678,612,864

2020 139 11,004,699

Total 1,295 21,073,548,672 

Office of Audit Summary

120 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
OFFICE OF EVALUATION

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, reducing the likelihood of negative outcomes, and addressing HUD’s top 

management challenges.

The following table summarizes OE’s open recommendations by calendar year.

Calendar year Number of open recommendations

2013 4

2014 14

2015 18

2016 5

2017 17

2018 38

2019 0

2020 39

Total 135

121 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Statistical Table Showing Investigative Report Metrics 

The data used in this statistical table were extracted from HUD OIG’s Case Management System. The Case Management System 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 the Case Management System 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.

Reporting Period: FY 2020, Period 2 (SAR 84), April 1, 2020 , through September 30, 2020

Measure Total

A. Total number of investigative reports issued during 

the reporting period21 140

B. Total number of persons referred to the U.S. 

Department of Justice for criminal prosecution during 

the reporting period 

132

C. Total number of persons referred to State and local 

prosecuting authorities for criminal prosecution during 

the reporting period 

29

D. Total number of indictments and criminal 

informations during the reporting period that resulted 

from any prior referral to prosecuting authorities22

66

21Includes approved reports of investigations

22Includes all charging documents reported: criminal complaints, indictments, informations, and superseding indictments

122 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
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.

HUD OIG has no instances of substantiated misconduct involving Senior 

Government employees to report this SAR period.

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. 

HUD OIG has no instances of whistleblower retaliation to report in this SAR 

period.

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.

HUD OIG has no instances of attempts to interfere with OIG independence 

to report in this SAR 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 and investigation conducted by the office that is closed during the 

reporting period and was not disclosed to the public

OFFICE OF AUDIT

The office of audit did not close any audits this semiannual period that 

were not disclosed to the public.

OFFICE OF INVESTIGATION

During the current reporting period, OIG has one investigative report that 

was closed but not disclosed to the public. The allegations include the 

following:

HUD OIG initiated an investigation regarding allegations that a HUD 

subcontractor was terminated after notifying a senior HUD official that 

the subcontractor’s supervisor (the contractor) was convicted of a crime 

and failed to notify HUD about the conviction. The subcontractor alleged 

that the contractor was not held accountable for the criminal conduct 

and the senior HUD official disclosed the subcontractor’s complaint to 

the contractor but, otherwise, did not take action. The investigation 

determined that the contractor did not provide false information to HUD 

and was not deceptive about the criminal conviction. The investigation 

did not substantiate the claim that the subcontractor notified the senior 

HUD official or that the contractor was not held accountable for the 

criminal conduct. The investigation determined that the contractor 

123 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
received administrative disciplinary action in the form of a warning letter 

through a different HUD division. The investigation was not referred for 

criminal prosecution.

OFFICE OF EVALUATION

HUD Fiscal Year 2019 Federal Information Security Modernization Act of 

2014, Issue Date: June 24, 2020

HUD OIG assessed the effectiveness of HUD’s information security (IS) 

program in accordance the Federal Information Security Modernization 

Act (FISMA), which directs OIGs to conduct an evaluation using the OIG 

FISMA metrics. The metrics consisted of eight domains aligned with 

the five functional areas (identify, protect, detect, respond, and recover) 

from the National Institute of Standards and Technology Framework for 

Improving Critical Infrastructure Cybersecurity. 

HUD’s IS program was evaluated as not effective based on the FY 2019 

Inspectors General FISMA metrics. Key components of HUD’s IS program 

remain ineffective or have inconsistent processes throughout the HUD 

program offices and among their information technology (IT) contracts. 

Significant limitations and challenges negatively impact the Chief 

Information Officer’s (CIO) ability to establish an effective IS program. 

HUD began to address recommendations that HUD OIG made in previous 

years. HUD’s Office of the Chief Information Officer had early successes 

in modernizing some of the HUD infrastructure, such as the data centers, 

cloud adoption, and a mainframe system. Further, the CIO initiated a 

tiger team to address and create remediation plans for the past FISMA 

recommendations. OIG recommended that HUD continue to address 

all outstanding FISMA recommendations and refine and implement its 

IT strategic modernization roadmap. This approach will encourage a 

focused and accountable method to improve the IS program. OIG has 

made 26 recommendations to assist HUD in increasing its IS posture. OIG 

determined that the contents of this report would not be appropriate for 

public disclosure and has, therefore, limited its distribution to selected 

officials. (Evaluation Report: 2019-OE-0002)

124 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
23Unsupported costs are a subset of questioned costs that the Inspector General Act requires be identified separately from the cumulative questioned costs identified.

Source requirement Pages

Section 4(a)(2)-review of existing and proposed legislation and regulations. 37-44

Section 5(a)(1)-description of significant problems, abuses, and deficiencies relating to the 

administration of programs and operations of the Department.

13-30

72-73

Section 5(a)(2)-description of recommendations for corrective action with respect to 

significant problems, abuses, and deficiencies. 45-70

Section 5(a)(3)23-identification of each significant recommendation described in previous Semiannual Report on which corrective action has not been completed.

Appendix 2,

table B, 85

Section 5(a)(4)-summary of matters referred to prosecutive authorities and the prosecutions 

and convictions that have resulted. 13-30

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 instance

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.

REPORTING REQUIREMENTS

APPENDIX 4

125 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Source requirement Pages

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 1,

77

Section 5(a)(7)-summary of each particularly significant report. 13-30

Section 5(a)(8)-statistical tables showing the total number of audit reports and the total dollar 

value of questioned and unsupported costs.

Appendix 2,

table C, 114

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 2,

table D, 116

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 2,

table A, 82

Section 5(a)(11)-a description and explanation of the reasons for any significant revised 

management decisions made during the reporting period. 63-70

Section 5(a)(12)-information concerning any significant management decision with which the 

Inspector General is in disagreement. 66-70

Section 5(a)(13)-the information described under section 05(b) of the Federal Financial 

Management Improvement Act of 1996. 71

REPORTING REQUIREMENTS CONTINUED...

126 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
ACRONYMS AND ABBREVIATIONS

ACD...............................................................................Accelerated Claims Disposition

ADA........................................................................................................Antideficiency Act

CARES Act...........................Coronavirus Aid, Relief, and Economic Security Act

CDBG.............................................................Community Development Block Grant

CFR.....................................................................................Code of Federal Regulations

CIGIE..................Council of the Inspectors General on Integrity and Efficiency

CIO.............................................................................................Chief Information Officer

COVID-19...............................................................................................2019 coronavirus

CPD...........................................Office of Community Planning and Development

CWCOT................................................................Claims Without Conveyance of Title

DAFUO............................................................Development Audit Followup Official

DCIA........................................................Debt Collection Improvement Act of 1990

DEC........................................................................Departmental Enforcement Center

DHS...............................................................U.S. Department of Homeland Security

DoD.....................................................................................U.S. Department of Defense

DOT........................................................................U.S. Department of Transportation

eVMS........................................................Enterprise Voucher Management System

FAST.....................................................Fixing America’s Surface Transportation Act

FBI.................................................................................Federal Bureau of Investigation

FFMIA......................................Federal Financial Management Improvement Act

FHA.............................................................................Federal Housing Administration

FHFA.........................................................................Federal Housing Finance Agency

FISMA.........................Federal Information Security Modernization Act of 2014

FR.................................................................................................................Federal Register

FSS...............................................................................Family Self-Sufficiency program

FY.............................................................................................................................fiscal year

GAAP.......................................................generally accepted accounting principles

GAO...............................................................U.S. Government Accountability Office

Ginnie Mae.....................................Government National Mortgage Association

HECM...................................................................home equity conversion mortgage

HOPWA...........................................Housing Opportunities for Persons With AIDS

HOTMA..................Housing Opportunity Through Modernization Act of 2016

HUD.................................U.S. Department of Housing and Urban Development

IAA...............................................................................................interagency agreement

IDI............................................Integrated Disbursement and Information System

IGEA.........................................................................................Inspector General Empowerment Act

IPERA.............................................Improper Payments Elimination and Recovery Act of 2010

IRS.....................................................................................................................Internal Revenue Service

IS.................................................................................................................................information security

IT..........................................................................................................................information technology

LLC....................................................................................................................limited liability company

LOS....................................................................................................................Loan Origination System

LTW................................................................................................Louisiana, Texas, and West Virginia

M2M................................................................................................................Mark-to-Market program

ML....................................................................................................................................mortgagee letter

MRB.................................................................................................................Mortgagee Review Board

MTW................................................................................................................Moving to Work program

OBGA..................................................................................................Office of Block Grant Assistance

OCAF...............................................................................................operating cost adjustment factor

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

OI.............................................................................................................................Office of Investigation

OIG................................................................................................................Office of Inspector General

OMB..............................................................................................Office of Management and Budget

ONAP.........................................................................................Office of Native American Programs

OSC...................................................................................................................Office of Special Counsel

PHA.......................................................................................................................public housing agency

PIH...............................................................................................Office of Public and Indian Housing

PII..................................................................................................personally identifiable information

PRWORA........................Personal Responsibility and Work Opportunity Reconciliation Act

RAD................................................................................Rental Assistance Demonstration Program

REAC.....................................................................................................Real Estate Assessment Center

SAM.....................................................................................................System for Award Management

SAR......................................................................................................Semiannual Report to Congress

SFIC.........................................................................................................single-family insurance claim

SIR...............................................................................................................systemic implication report

SRPP....................................................................................................Small Rental Property Program

TPA..................................................................................................................transfer of physical assets

SRPP....................................................................................................Small Rental Property Program

U.S.C............................................................................................................................United States Code

USDA....................................................................................................U.S. Department of Agriculture

VA.................................................................................................U.S. Department of Veterans Affairs

APPENDIX 5

127 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Headquarters 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

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 AUDIT

Headquarters Washington, DC 202-708-0430

OFFICE OF EVALUATION

OIG TELEPHONE DIRECTORY

APPENDIX 6

128 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Headquarters Washington, DC 202-708-5998

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

 

Region 6 Fort Worth, TX 817-978-5440

 Baton Rouge, LA 225-448-3941

 Houston, TX 713-718-3220

 New Orleans, LA 504-671-3700

 Oklahoma City, OK 405-609-8601

 San Antonio, TX 210-475-6822

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

OFFICE OF INVESTIGATION

Minneapolis- 612-370-3130

St. Paul, MN

OIG TELEPHONE DIRECTORY CONTINUED...

129 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
Fraud.

Waste.

Abuse.

hotline@hudoig.gov

www.hudoig.gov/hotline

FOR REPORTING

130
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.

131 HUD OIG Semiannual Report to Congress for the period ending September 30, 2020
www.hudoig.gov

Report fraud, waste, and mismanagement

in HUD programs and operations by

Calling the HUD OIG hotline: 

1-800-347-3735

Emailing the HUD OIG hotline: 

hotline@hudoig.gov

Visiting online at

https://www.hudoig.gov/hotline

Sending written information:

Department of Housing and Urban Development

Inspector General Hotline (GFI)

451 7th Street SW

Washington, DC 20410

Scan to Report Fraud

Report #84