ii

Profile of Performance

Audit profile of performance for the period October 1, 2011, to March 31, 2012

Results This reporting period

Recommendations that funds be put to better use $2,463,922,094

Recommended questioned costs $132,889,264

Collections from audits $139,548,631

Administrative sanctions 3

Subpoenas 46

Investigation profile of performance for the period October 1, 2011, to March 31, 2012

Results This reporting period

Recoveries and receivables $3,541,718,627

Arrests1 334

Indictments and informations 354

Convictions, pleas, and pretrial diversions 378

Civil actions2 62

Total administrative sanctions 308

 Suspensions 71

 Debarments 99

 Limited denial of participation 0

 Removal from program participation 45

 Systemic implication reports 0

Personnel actions3 42

Search warrants 32

Subpoenas 639

1 2 3 \

Hotline profile of performance for the period October 1, 2011, to March 31, 2012

Results This reporting period

Funds put to better use $856,344

Recoveries and receivables $143,405

Hotline complaints processed related to OIG mission 250

1

Included in the arrests is our focus on the nationwide Fugitive Felon Initiative.

2

Civil actions no longer include contact letters.

3

Personnel actions include 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 Chapter 1 - Single-Family Programs 

mortgage fraud scheme involved approximately 

35 properties and loans obtained in the amount 

of approximately $10 million. Current losses 

from the scheme are estimated to be at least $4.7 

million. Twelve of the properties involved in this 

scheme involve FHA-insured mortgages totaling 

approximately $2.8 million. To date, FHA has 

realized approximately $300,000 in losses. This 

case is being investigated by HUD OIG and the 

Federal Bureau of Investigation (FBI).

Home Builder-Seller Pleads Guilty 

in FHA Mortgage Fraud Case

A manufactured home and modular home dealer 

pled guilty to charges of conspiracy and wire 

fraud, false statements to HUD, and aiding and 

abetting. From 2004 to 2008, the defendant 

and others conspired and created or provided 

false information and fraudulent documents to 

qualify borrowers for FHA-insured manufactured 

and modular home mortgages. To date, HUD 

has realized losses in excess of $5.4 million 

on 81 claims. HUD OIG, the U.S. Postal 

Inspection Service, the North Carolina Bureau 

of Investigation, the North Carolina Office of 

the Commissioner of Banks, and the North 

Carolina Attorney General’s Office conducted 

this investigation.

Former Loan Officer and Lender 

Branch Manager Sentenced

A former loan officer and branch manager 

was sentenced to 48 months of incarceration, 

followed by 5 years of supervised release, 

for her earlier guilty plea to a criminal 

information charging her with conspiracy 

to commit mail fraud and wire fraud. The 

defendant conspired with at least four 

other individuals to obtain mortgages for 

unqualified borrowers, using fraudulent 

pay stubs, Internal Revenue Service forms 

W-2, income tax returns, verifications 

of employment, and seller-provided 

downpayments to make the borrowers appear 

to be qualified for at least 19 FHA-insured 

and 13 conventional mortgages. Fifteen of 

the FHA-insured mortgages are currently in 

default or foreclosure status. The defendant 

was ordered to pay restitution totaling more 

than $1.9 million, with $962,283 directed to 

HUD. HUD OIG and the FBI conducted 

this investigation.



8 Chapter 2 - Public and Indian Housing Programs

illegally accessed the accounts of five different 

housing authorities, altered landlord accounts, 

and activated direct deposits into the personal 

accounts of him and his girlfriend. The subject 

was ordered to pay $30,584 in restitution to 

HUD. 

Developer Suspended Following 

Superseding Indictment

A principal at a former HUD Indian Housing 

Block Grant (IHBG)-funded developer was 

suspended from participation in procurement 

and nonprocurement transactions as a 

participant or principal throughout the 

Executive Branch of the Federal Government.

The subject’s suspension was based on a 

superseding criminal indictment charging him 

with conspiracy, bribery relating to Federal 

program funds, embezzlement and theft from 

Indian tribal organizations, and aiding and 

abetting. According to the indictment, between 

June 2002 and November 2006, the defendant 

misapplied and converted funds for his own 

use from a subrecipient of IHBG funds. The 

defendant purportedly did this by submitting 

grant payment requests for specific construction 

costs and then using the money for personal 

expenses, while paying bribes with approximately 

$33,000 in casino gaming tokens. In total, the 

defendant has been charged with converting 

more than $2.3 million in IHBG funds to his own 

use.






Chapter 5 - American Recovery and Reinvestment Act of 2009 15

The U.S. Department of Housing and Urban 

Development (HUD) has received $13.61 billion 

in funding under the American Recovery and 

Reinvestment Act of 2009 (ARRA) in several 

HUD program areas. The following table shows 

the HUD program areas receiving funding and 

the amounts appropriated to each program.

HUD programs receiving ARRA funding

HUD program office Program area Funding amount

Office of Public and 

Indian Housing

Public Housing Capital Fund

Native American 

Housing Block Grant

$4,000,000,000

$510,000,000

Office of Community 

Planning and Development

Community Development 

Block Grant

Neighborhood 

Stabilization Program

HOME Investment 

Partnerships Program-Tax 

Credit Assistance Program

Homelessness Prevention Fund

$1,000,000,000

$2,000,000,000

$2,250,000,000

$1,500,000,000

Office of Multifamily Housing

Assisted Housing 

Stability Grant

Green Retrofit Grant

$2,000,000,000

$250,000,000

Office of Healthy Homes 

and Lead Hazard Control

Lead Hazard Reduction 

Demonstration Program

$100,000,000

$13,610,000,000

Chapter 5 - American Recovery and Reinvestment Act of 2009 17

Investigation

Housing Authority Executive 

Director Sentenced in 

Embezzlement Case

A former housing authority executive director 

was sentenced to 14 months incarceration and 36 

months probation and ordered to pay Beaufort, 

NC, $50,000 in restitution. The defendant 

pled guilty to charges of embezzlement and 

corporate malfeasance. From 2008 to 2010, the 

executive director embezzled and personally 

used between $50,000 and $80,000 in housing 

authority operating account funds that 

included comingled ARRA funds. HUD OIG, 

the Beaufort Police Department, the North 

Carolina State Bureau of Investigation, the 

Tennessee Bureau of Investigation, and the U.S. 

Government Accountability Office conducted 

this investigation.

HUD Employee Convicted

A HUD Office of Native American Programs 

employee and former community planner for a 

community housing department, an organization 

that receives HUD and ARRA-funded Indian 

Housing Block Grant funds, was convicted on 

charges of committing theft from a program 

receiving Federal funds. Between December 

2009 and January 2010, the employee diverted 

and personally used $13,000 in ARRA funds.

HUD OIG conducted this investigation. The 

employee has been terminated from employment 

at HUD, and the Office of Investigation has 

received a proposed debarment from the 

Departmental Enforcement Center.

Chapter 6 - Disaster Relief Programs 19

Introduction 

and Background

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. Over the past several years, 

disaster funding for the U.S. Department of 

Housing and Urban Development (HUD) has 

exceeded $29 billion, from which HUD provides 

flexible grants to help cities, counties, and States 

recover from presidentially declared disasters. 

These active disaster grants nationwide have 

approximately $26 billion in obligations and $20 

billion in disbursements. Of the total $29 billion 

in current HUD disaster funds, $19.6 billion 

was provided for Hurricanes Katrina, Rita, and 

Wilma. Regarding the $19.6 billion in funds 

provided to Gulf Coast States, $16.8 billion, or 

85.7 percent of the funds, has been disbursed for 

the period ending March 31, 2012.

Keeping up with communities in the recovery 

process can be a challenging position for HUD. 

HUD OIG continues to take steps to ensure that 

the Department remains diligent in assisting 

communities with their recovery efforts.

Audit

Strategic Initiative 3: Contribute to 

the strengthening of communities

Program results

Audit

1 audit7

Questioned costs $9.1 million

Funds put to better use $75 million

7

7

The disaster grant program audit is a community planning 

and development audit. The questioned costs and funds put 

to better use amounts relate only to disaster-related costs.

HUD OIG audited HUD’s Community 

Development Block Grant (CDBG) 2008 

Disaster Recovery assistance for Hurricane Ike 

and other disasters, administered by the Texas 

Department of Rural Affairs, to determine 

whether HUD’s Disaster Recovery funds used 

for infrastructure and revitalization contracts 

were administered in compliance with the 

supplemental appropriations requirements, 

HUD’s policies, and the State of Texas’ Disaster 

Recovery action plan. 

The State did not follow Federal and State 

requirements and best practices for its 

infrastructure and revitalization professional 

services and project management services 

contracts. Specifically, it (1) improperly 

procured its professional services and project 

management services contracts, (2) improperly 

increased the project management services 

company’s contract, (3) included ineligible 

contract provisions, (4) failed to ensure that 

the contract payment type was consistent, 

(5) failed to prevent questionable charges, 

(6) did not ensure that its budgets clearly 

assigned costs according to HUD CDBG cost 

categories, and (7) did not ensure that its project 

management services contract contained specific 

and quantifiable performance measures. As 

a result, the State paid more than $9 million 

in questioned costs. In addition, it failed to 

adequately monitor its professional and project 

management services contracts. Therefore, it did 

not review the contractor’s performance or its 

accounting for, allocation of, or support for the 

eligibility of its costs. The Texas General Land 

Office recognized that the project management 

services contract had problems and terminated 

it during the audit, which will prevent the State 

from improperly spending additional Disaster 

Recovery funds.

OIG recommended that HUD require the State 

to (1) repay nearly $920,000 in ineligible markup 

costs, (2) support or repay nearly $7.6 million 

in unsupported inflated costs, (3) repay more 

than $542,000 in unreasonable and unnecessary 

inflated costs, and (4) document its termination 

of the professional services contract and its 
20 Chapter 6 - Disaster Relief Programs

deobligation of the funds, which will result in 

more than $75 million in Disaster Recovery 

funding being put to better use. In addition, 

HUD should require the State to adopt and 

follow sound agency business procedures for 

its Disaster Recovery-funded procurements 

and payments to ensure that they comply with 

Federal and State policies. (Audit Report: 2012-

FW-1005)

Investigation

The HUD OIG Office of Investigation continues 

to pursue HUD disaster assistance crimes 

along with the Federal Bureau of Investigation 

and other Federal, State, and local partners. 

While the majority of prosecutions during 

this reporting period involved individuals who 

obtained disaster assistance through fraud, 

OIG is vigorously pursuing public corruption, 

infrastructure, and procurement crimes. 

Working with the Louisiana Recovery and 

Mississippi Development Authorities, OIG is 

taking a proactive role to prevent fraudulent 

disaster-related claim payments and assist 

with the recovery of deceptive or fraudulent 

grants. In addition, HUD OIG continues to be 

a dedicated partner in the National Center for 

Disaster Fraud Task Force (previously known as 

the Hurricane Katrina Fraud Task Force). HUD 

OIG provides personnel to support the joint 

command center in Baton Rouge, LA, continues 

to support disaster-related investigative efforts 

throughout the country, and actively participates 

in the sharing of information and the receipt 

and referral of complaints with other law 

enforcement agencies.

Disaster “Victim” Sentenced

A purported disaster victim was sentenced to 

18 months imprisonment, 3 years supervised 

release, and 100 hours of community service 

and ordered to pay restitution of $349,517. The 

defendant was also required to pay an additional 

forfeiture amount of $349,517, a fine of $5,000, 

and a $100 special assessment. The defendant 

pled guilty in February 2011 to theft of 

government funds for fraudulently applying for 

and receiving Mississippi Development Authority 

(MDA) Homeowner Assistance Program (HAP) 

funds for a residence that was not her primary 

residence at the time Hurricane Katrina struck 

the Mississippi Gulf Coast. She received 

$150,000 as a result of this application. She then 

applied for another MDA HAP grant as power of 

attorney for her mother’s property, receiving an 

additional $150,000. The defendant also applied 

for and received a Louisiana Road Home grant 

of $20,945, under another name, for another 

property that was not her primary residence at 

the time Hurricane Katrina struck Louisiana.

Former HUD Attorney 

Suspended by Bar Association 

in Disaster Fraud Case

A former HUD attorney, who was previously 

sentenced in U.S. District Court for her earlier 

guilty plea to committing theft of government 

funds, was suspended by the California Bar 

Association from practicing law for 3 years.

The defendant and her husband, who also 

pled guilty, applied for and received $150,000 

in CDBG Disaster Recovery assistance funds 

through the MDA and $50,000 in Small Business 

Administration (SBA) disaster assistance for 

hurricane-damaged residential property for a 

property that was not their primary residence 

during Hurricane Katrina. HUD OIG, SBA 

OIG, and the Mississippi State Auditor’s Office 

conducted this investigation.





26 Chapter 8 - Legislation, Regulation, 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 approximately 433 

hours to reviewing 112 issuances. The draft 

directives consisted of 10 notices of funding 

availability, 62 mortgagee letters and notices, and 

40 other directives. OIG provided comments 

on 29 percent of these draft directives. For 

example, OIG did not concur on one proposed 

rule to streamline the Federal Housing 

Administration’s (FHA) reporting requirements 

regarding financial statements for small lenders 

and mortgagees, supervised by a Federal banking 

agency, which have consolidated assets that do 

not meet the threshold set by Federal banking 

agencies’ individual regulations (currently set at 

$500 million in consolidated assets). 

Enacted Legislation 

The Federal Housing Commissioner continued 

to propose a number of risk management 

initiatives related to U.S. Department of 

Housing and Urban Development (HUD) 

single-family programs and has started the 

process of updating its multifamily program 

requirements. As part of the issuances reviewed, 

OIG provided comments on the preliminary 

rules. Many of the proposed changes required 

rule making. On January 25, 2012, HUD 

issued a final rule in Docket No. FR 5156-F02, which updates and enhances the lender 

insurance process and furthers HUD’s efforts 

to improve and expand FHA’s risk management 

activities. Based on comments received on the 

proposed rule, HUD has made the following 

changes: (1) HUD will review lender insurance 

mortgagee performance on an ongoing basis (as 

opposed to “continual” basis); (2) the automatic 

termination of a mortgagee’s lender insurance 

authority under 24 CFR (Code of Federal 

Regulations) 203.4(d)(3) is limited to actions 

taken at the institution level of the mortgagee, 

as opposed to its branches; (3) a mortgagee must 

indemnify HUD for an insurance claim if the 

mortgagee “knew or should have known” that 

fraud or misrepresentation was involved; and 

(4) mortgagees, the lender insurance authority 

of which has been terminated, may apply for 

reinstatement in accordance with procedures 

closely modeled on the existing procedures for 

a mortgagee seeking reinstatement following 

termination of its origination approval agreement 

or direct endorsement authority.

Notices and 

Policy Issuances

Single-Family Housing

On December 2, 2011, HUD issued Mortgagee 

Letter 2011-39, providing notice of the 

comprehensive update to FHA’s single-family 

loan limits, issued under the authority of H.R. 

2112, the Consolidated and Further Continuing 

Appropriations Act of 2012, Public Law 112-55. 

Specifically, the FHA national loan limit “floor” 

remains at 65 percent of the national conforming 

loan limit of $417,000. For areas designated as 

high cost in 2008 under the Economic Stimulus 

Act, the FHA national loan limit “ceiling” is 

$729,750 for a one-unit property. 

On December 20, 2011, HUD sent for 

departmental review a notice (Docket No. 

FR-5595-F-01) implementing another risk 

management initiative. Specifically, FHA is 

providing more definitive underwriting standards 

for mortgage loan transactions that are manually 

underwritten. The notice provides a manual 

underwriting matrix, which addresses three 

items: (1) borrowers who exceed the 31 percent 

housing-to-income ratio yet carry little or no 

discretionary debt and, therefore, do not exceed 

the maximum 43 percent debt-to-income ratio, 

(2) the relationship between compensating 

factors and “stretch ratios” that permits 

borrowers to exceed the housing payment 
Chapter 8 - Legislation, Regulation, and Other Directives 27

and total debt-to-income ratios under certain 

FHA mortgage insurance programs, and (3) 

the establishment of additional compensating 

factors that can be used to qualify borrowers who 

exceed FHA housing and debt-to-income ratios 

established by this notice. Public comments 

have been received, and HUD is expected 

to issue a mortgagee letter to assist in the 

implementation of the new requirements. 

On February 10, 2012, HUD issued Mortgagee 

Letter 2012-2, which clarified the requirements 

for the origination, closing, and submission for 

FHA insurance endorsement of loans via the 

sponsored third-party origination process. 

On February 23, 2012, HUD submitted for 

review a request for comments on Docket No. 

FR 5572-N-01, regarding HUD changes to the 

proposed cap to seller concessions. The proposal 

entails reducing the amount of seller concessions 

permitted as offsets to actual closing costs to 3 

percent or $6,000, whichever is greater, but not 

allow offsets to exceed the borrower’s actual 

costs. The last day for public comments was 

March 26, 2012. Therefore, this proposal has not 

been finalized. 

On February 28, 2012, HUD issued Mortgagee 

Letter 2012-3, which modified documentation 

requirements for self-employed borrowers, 

provided new guidance on disputed accounts, 

and expanded the current definition of family 

members for identity-of-interest transactions. 

On March 6, 2012, HUD issued Mortgagee 

Letter 2012-4, which announced changes to the 

FHA single-family annual mortgage insurance 

premium (MIP) and upfront mortgage insurance 

premium. For example, the President signed into 

law the Temporary Payroll Tax Cut Continuation 

Act of 2011, which requires FHA to increase the 

annual MIP it collects by 10 basis points. Also, 

HUD exercised its preexisting statutory authority 

to add an additional 25 basis points to mortgages 

with base loan amounts exceeding $625,000. 

These changes affect case numbers assigned 

on or after April 9, 2012, and June 11, 2012, 

respectively. 

Multifamily Housing

In response to our audit report 2010-LA-0001, 

issued November 12, 2009, HUD has revised 

the annual contributions contract which it 

executes with public housing agencies that act 

as performance-based contract administrators. 

In addition, in 2011, it issued a request for 

applications in awarding those contracts. This 

process was met with significant resistance from 

applicants. In response, HUD decided to issue 

a notice of funding availability. During this 

semiannual period, HUD drafted this notice 

and cleared all of OIG’s concerns provided 

during the departmental clearance process. The 

revised notice and annual contributions contract 

are expected to provide a significantly positive 

impact on HUD’s budget. 

Public and Indian Housing

Demolition and Disposition Program - OIG 

participated with the Office of Public and 

Indian Housing (PIH) in the development of 

revised regulations for the Demolition and 

Disposition Program described in 24 CFR Part 

970. Under the U.S. Government Accountability 

Office’s Government Auditing Standards, 

OIG’s participation was limited to a purely 

advisory capacity. OIG may provide advice 

in implementing its audit recommendations 

and establishing internal controls. OIG may 

also answer technical questions and provide 

information on best practices; however, it does 

not participate in decision making. Also, any 

decisions on whether to follow OIG’s advice 

would remain with HUD management officials.

These restrictions on OIG’s participation 

are needed to maintain its independence 

in performing audits as specified in the 

Government Auditing Standards. 

Capital Fund Financing Program - In 1996, 

the Quality Housing and Work Responsibility 

Act was passed with many changes to the 

Housing Act of 1937, including revisions to the 

Public Housing Capital Fund program and the 

establishment of a new Capital Fund Financing 
28 Chapter 8 - Legislation, Regulation, and Other Directives

Program. PIH has not published regulations to 

implement the changes to the Housing Act of 

1937. Instead, HUD has used notices to provide 

operating instructions. The notices contribute 

to the inconsistent processing of transactions.

One recent example is the statutory mandate 

that the Capital Fund program is precluded from 

funding energy systems and capital equipment 

unless they are obsolete. PIH did not provide 

a definition for the term “obsolete” and allows 

each housing agency to determine whether 

the energy systems and capital equipment are 

obsolete. OIG detected many transactions 

of premature replacement, but without a 

standard for obsolete energy systems and capital 

equipment, the statutory mandate cannot be 

enforced.

Rental Assistance Demonstration Program 

- HUD issued a notice for comments on the 

implementation of the Rental Assistance 

Demonstration Program in the Federal Register 

on March 8, 2012. This notice provides 

instructions for the program, including eligibility 

and selection criteria. OIG has the following 

concerns about the proposed notice:

•	 PIH issued the notice without conducting 

a front-end risk assessment. Without 

an inventory of all significant risks, PIH 

control measures in the draft notice may not 

mitigate all inherent risks. Another concern 

with the draft notice relates to Office of 

Management and Budget Circular A-4, 

which requires a cost-benefit study. HUD 

issued the draft notice without conducting 

this mandatory study. Without the costbenefit study, HUD cannot ensure that the 

most cost-effective means and methods were 

selected to implement the demonstration 

program.

•	 For this demonstration program, PIH 

decided on the need to control the number 

of units awarded to each public housing 

agency (PHA) participating in the program 

to obtain diversity. PIH provided an 

exception to New York and authorized 

more than 6 percent of the units available 

for the program. An effective control 

measure provides for an open competition 

among all participants. To establish an 

effective control measure to ensure an open 

competition, OIG strongly recommends that 

PIH establish a uniform limit on the number 

of units for all PHAs in the program. 

Almost any PHA is eligible to participate in 

the demonstration program except troubled 

PHAs, and these PHAs may participate if they 

provide HUD with evidence of their capacity to 

implement the program.

Community Planning 

and Development

Public interest and concern, resulting in 

congressional hearings, resulted in HUD’s 

publishing significant changes to the Office 

of Community Planning and Development’s 

HOME Investment Partnerships Program 

regulations. We generally agreed with the 

proposed changes but included additional 

changes which we believe will strengthen the 

program. The proposed changes have not 

become final.

30 Chapter 9 - Audit Resolution

In the audit resolution process, Office of 

Inspector General (OIG) and U.S. Department 

of Housing and Urban Development 

(HUD) management agree upon the needed 

actions and timeframes for resolving audit 

recommendations. Through this process, OIG 

hopes to achieve measurable improvements in 

HUD programs and operations. The overall 

responsibility for ensuring that the agreedupon changes are implemented rests with HUD 

managers. This chapter describes significant 

management decisions with which OIG 

disagrees. It also contains a status report on 

HUD’s implementation of the Federal Financial 

Management Improvement Act of 1996 

(FFMIA). In addition to this chapter on audit 

resolution, see appendix 2, table B, “Significant 

Audit Reports Described in Previous Semiannual 

Reports in Which Final Action Had Not Been 

Completed as of March 31, 2012.”

Audit Reports 

Issued Before 

the Start of the 

Period With No 

Management 

Decision as of 

March 31, 2012

HUD Lacked Adequate 

Controls To Ensure the Timely 

Commitment and Expenditure 

of HOME Funds, Issue 

Date: September 28, 2009

HUD OIG audited HUD’s HOME Investment 

Partnerships Program. The OIG report included 

a recommendation that the HUD Office of 

Community Planning and Development (CPD) 

establish and implement controls to ensure that 

field offices require participating jurisdictions 

to close out future HOME activities within a 

timeframe that will permit reallocation and use 

of the funds for eligible activities in time to avoid 

losing them to recapture by the United States 

Treasury under provisions of Public Law 101-510.

OIG rejected two management decisions 

proposed by CPD to address the 

recommendation because they did not provide 

for the establishment and implementation 

of all of the controls needed to address the 

recommendation. CPD has not responded 

to our follow-up regarding the need for a 

management decision for this recommendation.

OIG also recommended that CPD obtain a 

formal legal opinion from HUD’s Office of 

General Counsel regarding whether

•	 HUD’s cumulative technique for assessing 

compliance with commitment deadlines is 

consistent with and an allowable alternative 

to the 24-month commitment required by 42 

U.S.C. (United States Code) § 12748 and

•	 HUD’s first-in, first-out (FIFO) method 

for assessing compliance with HOME 

expenditure requirements is consistent with 

and an allowable alternative to the 8-year 

recapture deadline pursuant to Public Law 

101-510, codified at 31 U.S.C. § 1552.

CPD obtained a legal opinion from the Assistant 

General Counsel for Community Development 

on March 5, 2010. The legal opinion supports 

HUD’s use of the cumulative approach and 

FIFO accounting method. Based on this legal 

opinion, CPD does not plan to implement OIG’s 

recommendation to discontinue use of the FIFO 

method to account for the commitment and 

expenditure of HOME funds or the cumulative 

technique for assessing deadline compliance.

OIG requested reconsideration of the opinion.

On June 10, 2010, HUD’s General Counsel and 
Chapter 9 - Audit Resolution 31

Chief Financial Officer provided additional 

information regarding HUD’s recapture 

requirements for the HOME program statute 

and CPD’s use of cumulative accounting and 

the FIFO method for financial management.

HUD explained that CPD’s use of cumulative 

accounting in its financial management 

represents a reasonable interpretation of the 

statutory duties imposed on the HUD Secretary 

and addresses the complex administrative 

challenges inherent in managing the HOME 

Investment Trust. HUD also explained 

that obligations and expenditures under the 

HOME program are accounted for on a FIFO 

basis by fund type instead of by fiscal year 

and that CPD, in enforcing the obligation 

and expenditure requirements, looks to total 

cumulative obligations and expenditures instead 

of accounting for them by fiscal year. Based on 

the Chief Financial Officer’s financial analysis, 

given the origin of these requirements and the 

fundamental nature of this block grant program, 

HUD believed that the FIFO accounting 

method for obligations and expenditures by fund 

type was consistent with Federal accounting 

requirements and had no objection to the 

total cumulative obligations and expenditures 

methods used for assessing compliance with the 

24-month commitment and 5-year expenditure 

requirements.

OIG continues to disagree that CPD’s use of 

the FIFO method for recognizing commitments 

and expenditures that participating jurisdictions 

make against their HOME appropriations or 

CPD’s cumulative accounting is consistent 

with the legislation under 42 U.S.C. § 12748, 

requiring recapture of funds not committed by 

statutory deadline dates. These methods of 

accounting also potentially violate the closure of 

accounts under 31 U.S.C. § 1552. 

Another issue raised by CPD’s accounting 

methods is whether HUD’s FIFO accounting 

method complies with Federal accounting 

requirements for maintaining the U.S. Standard 

General Ledger and general appropriations 

law. The accounting issues require review for 

compliance with Federal accounting standards 

and appropriations law. Since OIG’s last 

semiannual report date, in conjunction with its 

annual audit of HUD’s financial statements, 

OIG has continued to discuss the FIFO 

accounting method with the U.S. Government 

Accountability Office (GAO) and has made a 

request for GAO to determine whether the FIFO 

accounting method violates Federal standards 

for appropriation accounting and whether the 

cumulative method is an acceptable alternative 

to the statutory recapture provision. (Audit 

Report: 2009-AT-0001) 

The City of Binghamton, NY, Did 

Not Always Administer Its Section 

108 Loan Program in Accordance 

With HUD Requirements, Issue 

Date: December 21, 2010

HUD OIG audited the operations of the City of 

Binghamton, NY, pertaining to its administration 

of its Community Development Block Grant 

(CDBG) Section 108 Loan Guarantee program. 

The audit objectives were to determine 

whether the City (1) administered its Section 

108 loan program effectively, efficiently, and 

economically in accordance with applicable 

rules and regulations; (2) used Section 108 loan 

proceeds on eligible activities that met a national 

objective of the program; and (3) expended 

additional CDBG funds for subsequent Section 

108 loan repayments and other related costs that 

were necessary, reasonable, and in accordance 

with all applicable contracts, agreements, and 

Federal regulations. 

The City did not ensure that its Section 108 

loans and related activities were administered 

effectively, efficiently, and economically in 

accordance with applicable rules and regulations 

and that loan proceeds were expended on eligible 

activities that met a national objective of the 

program. In addition, the City did not ensure 

that additional expenditures of CDBG funds 

for subsequent Section 108 loan repayments 

and other related costs were necessary, 
32 Chapter 9 - Audit Resolution

reasonable, and in accordance with all applicable 

contracts, agreements, and Federal regulations. 

Consequently, significant CDBG funds were 

disbursed for Section 108 debt repayments, 

and future CDBG funds will be required until 

the Section 108 debts have been fully paid. 

Therefore, the ability to provide program 

benefits to low- and moderate-income residents 

of Binghamton has been diminished. 

OIG recommended that HUD instruct the City 

to repay from non-Federal funds more than $1.5 

million in hotel sale proceeds that were used 

for City expenses to the established Section 

108 loan repayment account (recommendation 

1D). Further, OIG recommended that the 

City use the funds from the Section 108 loan 

repayment account to make all future Section 

108 payments that are due in accordance with 

the HUD-approved refinancing agreement. 

Should the account contain less than the 

$4.5 million in required payments, the City 

should pay the balance from non-Federal funds 

(recommendation 1F).

Recommendation 1D: HUD proposed a 

management decision contending that payments 

made using hotel sale proceeds to satisfy the 

tax liens were acceptable and that the City 

will be advised to repay $549,463 in hotel sale 

proceeds unless it can show that the use of funds 

to operate the hotel were necessary to preserve 

the collateral. Further, HUD contends that had 

the City initially sought permission to use the 

proceeds from the sale to operate the hotel for 

this purpose, permission would likely have been 

granted since failure to do so would have resulted 

in a loss in value of HUD’s lien on the property.

Recommendation 1F: HUD proposed a 

management decision agreeing that the City 

should use all available amounts in the Section 

108 loan repayment account to make payments 

on the guaranteed loan. However, HUD 

disagrees that the City should be required to 

make payments from non-Federal sources if the 

loan repayment account is insufficient. 

OIG initially rejected the proposed management 

decision on April 28, 2011. However, based on a 

legal opinion received on March 15, 2012, from 

OIG’s General Counsel, it was concluded that 

HUD regulations permit CDBG funds to be used 

for the reasonable cost of temporarily managing 

the hotel pending its sale. Therefore, it appears 

to be a reasonable exercise of HUD’s discretion 

to allow all of the sale proceeds to be used to pay 

the past-due hotel operating expenses. Further, 

there is no legal authority to prohibit the City’s 

use of its CDBG funds for the payment of its 

Section 108 loan obligations. Since OIG had 

initially rejected the proposed management 

decision, it is waiting for HUD to reenter the 

decisions into HUD’s Audit Resolution and 

Corrective Action Tracking System, so that OIG 

can enter its concurrence with recommendations 

1D and 1F (allowing $974,105 and disallowing 

$549,105). (Audit Report: 2011-NY-1004)

An Underwriting Review of 15 

FHA Lenders Demonstrated 

That HUD Missed Critical 

Opportunities To Recover Losses 

to the FHA Insurance Fund, 

Issue Date: March 2, 2011

HUD OIG conducted an initiative in 2010, 

known as Operation Watchdog, to review 

the underwriting of 15 Federal Housing 

Administration (FHA) direct endorsement 

lenders having default and claim rates indicating 

lender performance problems. The initiative 

took place because the FHA Commissioner had 

expressed concerns regarding the increasing 

default and claim rates against the FHA 

insurance fund for failed loans. OIG determined 

that the lenders did not properly underwrite 

140 of 284 loans reviewed, or 49 percent, 

because their underwriters did not follow FHA’s 

requirements. As a result, FHA’s insurance fund 

suffered or could expect to suffer losses of more 

than $11 million. 

In a larger perspective, OIG determined that 

HUD did not have a formal process established 

to review all claims paid on defaulted mortgages 

or at least all claims paid that met high-risk 
Chapter 9 - Audit Resolution 33

criteria, resulting in unrecovered losses to the 

insurance fund for loans that should not have 

been insured. Operation Watchdog indicated 

systemic problems in how lenders certified to 

loans’ being properly underwritten and eligible 

for FHA insurance when the loans were not 

eligible. Therefore, when HUD paid claims 

on defaulted loans and then did not review 

the underlying loans for insurance eligibility, 

it was missing critical opportunities to recover 

unnecessary losses from the lenders on the loans 

that should not have been insured. 

Not all defaults and resulting claims were caused 

by poor underwriting, as OIG pointed out in the 

report. However, poor underwriting played a 

major role in the 140 ineligible loans identified 

through Operation Watchdog. OIG concluded 

that reviewing loans that have had claims paid 

by using risk-based targeting or a statistically 

valid sample of quickly defaulting loans could 

provide HUD with an opportunity to recover 

unnecessary losses caused by these loans. OIG, 

therefore, recommended that HUD develop and 

implement procedures to review a statistical or 

risk-based selection of loans, for which FHA paid 

a claim on the mortgage insurance within the 

first 2 years of endorsement, to verify that the 

loans met FHA requirements and were qualified 

for insurance.

This was not the first time that OIG had 

expressed concerns about HUD’s unnecessary 

exposure when paying FHA insurance claims 

on loans that did not qualify for insurance. 

For example, OIG reported in July 2006 (OIG 

Audit Report No. 2006-SE-0001) that HUD 

did not independently validate that mortgage 

loans insured under the FHA program met 

requirements after paying billions in insurance 

claims. HUD paid the claims, as required by 

law, but did not review the loan documentation 

for compliance with program requirements, 

fraud, or misrepresentations. HUD relied on 

lender certifications that the loans were eligible 

for insurance. In response to the audit, HUD 

generally disagreed with OIG’s recommendation 

to establish procedures to review paid claims 

associated with early defaulted loans and related 

costs and independently verify that loans met 

FHA requirements and were, therefore, eligible 

for insurance. HUD ultimately agreed to review 

loans that had gone to claim through its Quality 

Assurance Division targeting process when it 

performed lender reviews. It further agreed 

that if claim file reviews showed inadequate 

documentation by the lender, HUD would take 

appropriate corrective actions regarding the 

responsible lender. 

In conjunction with Operation Watchdog, OIG 

reviewed HUD’s annual risk-based targeting 

plan, which included claims, defaults, and 

compare ratios, among other factors. HUD 

also used a case-level tool to select loans for 

review. HUD asserted that the tool prepared a 

statistically valid sample of loans based upon 

various risk factors, which included claims. 

However, OIG concluded that this method did 

not ensure that all claims were reviewed and may 

not have targeted a sufficient number of loans 

with claims paid to reasonably protect the fund.

Further, OIG recognized that HUD had recently 

tightened FHA lending requirements but stated 

that those improvements would affect future 

loans and not the rapidly growing influx of 

claims from lenders that had originated loans 

in the past few years. OIG also commended 

HUD for taking important steps in recent years 

to implement risk-based techniques to identify 

lenders and loans that pose significant risk to the 

FHA insurance fund. OIG encouraged HUD to 

continue to strengthen its requirements and hold 

lenders accountable but pointed out that HUD 

also needed to quickly confront the problem 

of billions being paid for defaulted loans and 

not being recovered when many loans were not 

eligible for FHA insurance.

On February 4, 2011, HUD responded to OIG’s 

draft report with a description of its multifaceted 

approach to minimizing losses to the FHA 

insurance fund, which it maintained would 

achieve the intent of OIG’s recommendation. 

The majority of the multifaceted approach 

was proactive and did not indicate an increase 

in the review of loans for which claims had 
34 Chapter 9 - Audit Resolution

already been paid. However, OIG agreed 

that HUD’s targeting tools and other recent 

initiatives generally met the intent of OIG’s 

recommendation, which was aimed at protecting 

the FHA insurance fund from unnecessary 

costs. Therefore, OIG committed to working 

with HUD, through the management decision 

process, to gain more insight into the risk-based 

factors used to select lenders and loans for 

review, the targeting enhancements that were 

under development, and the two new initiatives 

launched in fiscal year (FY) 2010.

However, no meaningful communication took 

place between report issuance on March 2, 

2011, and June 16, 2011, when OIG received the 

proposed management decision memorandum 

from the Deputy Assistant Secretary for Single 

Family Housing, which disagreed with OIG’s 

proposed actions. HUD acknowledged that 

some of the cases reviewed in the Operation 

Watchdog initiative were not underwritten 

in accordance with FHA requirements but 

mainly focused its response on HUD’s proactive 

approach for identifying high-risk lenders 

and initiating counterparty risk initiatives to 

minimize losses to the FHA insurance fund. 

As a result of providing what it deemed sufficient 

information to address OIG’s concerns, HUD 

determined that no further action was required. 

OIG disagreed. On July 5, 2011, OIG notified 

the Acting Deputy Assistant Secretary for 

Single Family Housing that OIG was rejecting 

the proposed management decision for further 

action. OIG maintained that claims paid 

on loans that should not have been insured 

continued to have a significant, negative impact 

on the FHA insurance fund and HUD needed to 

do more to identify ineligible loans and pursue 

recoveries from the responsible parties. OIG 

further stated that despite multiple efforts by 

OIG to obtain sufficient information from HUD 

to determine whether its current and planned 

actions sufficiently met the recommendation, 

HUD had not provided sufficient information 

for OIG to make that determination. OIG’s 

questions and concerns remained regarding 

what HUD was doing to look into a targeted, 

meaningful portion of paid claims and to take 

appropriate actions against lenders that caused 

FHA to pay claims on ineligible loans.

By August 11, 2011, HUD had not responded; 

therefore, OIG referred the matter to the 

Acting Assistant Secretary for Housing – FHA 

Commissioner. On September 30, 2011, the 

last day of the semiannual reporting period, the 

FHA Commissioner responded with a proposed 

revised management decision that essentially 

repeated HUD’s stance that it was in HUD’s 

best interest to take a proactive prospective 

approach that focuses on reviewing risky loans 

as early as possible before claims are filed. The 

revised management decision did not respond 

to the recommendation in question or provide 

a target date when HUD believed it would 

complete the final action to address the issue 

of claims noted in the report. After September 

30, 2011, HUD provided additional information 

related to its FHA transformation efforts and a 

response to specific questions OIG had posed 

months before; however, the information did not 

sufficiently address OIG’s concerns. OIG also 

held discussions with HUD in recent months 

but had not received an acceptable management 

decision. On March 30, 2012, OIG referred the 

matter to the Acting Deputy Secretary for action.

OIG maintains that the FHA insurance fund has 

incurred billions in losses annually that HUD 

could have recovered if more had been done to 

target and review loans for which claims were 

paid and pursue the lenders that caused these 

losses. The FHA fund has sustained historical 

losses in recent years and is poised to continue a 

high level of losses in the near future, which will 

surely include loans that should not have been 

insured. Without appropriate focus on claims, OIG 

maintains that FHA is missing critical opportunities 

to recover unnecessary losses. (Audit Report: 

2011-CF-1801)
Chapter 9 - Audit Resolution 35

FHA Has Improved Its Annual 

Lender Renewal Process, but 

Challenges Remain, Issue 

Date: June 14, 2011

HUD OIG audited FHA’s Title II single-family 

lender renewal process. The objective was to 

determine whether the Lender Approval and 

Recertification Division’s controls were adequate 

for determining whether lenders met FHA 

annual renewal requirements.

The Division had taken significant steps to 

strengthen its controls over the lender renewal 

process; however, additional improvements were 

needed. The process still had weaknesses related 

to Mortgagee Review Board (MRB) referrals, 

lender financial information review, and data 

and renewal fee calculations in the Division’s 

lender recertification tracking system. These 

weaknesses resulted in an increased risk that 

noncompliant lenders were allowed to continue 

participating in the FHA program, the Division’s 

inability to effectively monitor lenders, and 

lenders paying lower fees than required.

OIG recommended that HUD require the 

Division to improve controls over the lender 

recertification process (recommendation 1A), 

make changes to the Institutional Master File 

system to ensure data integrity (recommendation 

2A), and collect underpaid lender fees 

(recommendation 2B).

Recommendation 1A: In its October 12, 2011, 

management decision memorandum, HUD 

stated that it was in agreement with all four parts 

of the recommendation and was in the process 

of implementing changes that would satisfy 

the recommendation. Planned changes in its 

procedures were evidenced by attachments to the 

memorandum that included a copy of the Draft 

Standard Operating Procedures for the Lender 

Recertification Branch and a draft Lender 

Assessment SubSystem (LASS) certification. 

Based upon this response, HUD considered the 

entire recommendation to be closed. 

OIG disagreed with the proposed management 

decision and sent a referral memorandum to 

the Acting Assistant Secretary for Housing on 

November 14, 2011. In the memorandum, OIG 

acknowledged the efforts being made by HUD 

to improve procedures as evidenced by the Draft 

Standard Operating Procedures for the Lender 

Recertification Branch and the draft LASS 

certification. However, the recommendations 

should not have been considered “closed” 

because HUD did not provide implementation 

dates. In addition, the draft procedures and 

LASS certification did not include steps 

to ensure that high-risk lenders’ financial 

statements are manually reviewed.

Recommendation 2A: In its October 12, 

2011, management decision memorandum, 

HUD disagreed with the first item in 

recommendation 2A, stating “...the data in the 

IMF [Inside Mortgage Finance] is accurate; 

however the verbiage used by its staff to 

relate the numerical codes in the IMF to the 

OIG resulted in a misinterpretation of the 

information.” HUD agreed to the second item 

in the recommendation and indicated that the 

recommendation was closed, stating that it had 

provided an attached memorandum regarding 

the recalculation change. HUD disagreed with 

the third item in the recommendation, stating 

that it considers a cutoff date for the deletion 

of branches unwarranted. HUD stated that it 

does not believe that lenders are attempting to 

skirt its controls but are simply updating the 

records. According to HUD, a review of the loan 

data provided by OIG in support of the finding 

revealed that these were loans that were closed by 

the deleted branches but provided no evidence 

of originating activities by these branches. 

HUD also contended that recent changes to the 

Lender Recertification Branch’s business model 

make this recommendation obsolete. HUD also 

disagreed with OIG’s determination of $178,600 

in funds to be put to better use, stating that due 

to the recent changes to the minimum adjusted 

net worth requirement, the exclusion of loan 

correspondents, and consideration of other 

factors, HUD is unable to rely on the accuracy of 

OIG’s estimate.
36 Chapter 9 - Audit Resolution

In the referral memorandum to the Acting 

Assistant Secretary for Housing on November 14, 

2011, OIG outlined its disagreement with HUD’s 

position on recommendation 2A. Regarding the 

first item, OIG stated that the finding pointed 

out that the status codes within individual 

records were not consistent. This portion of the 

recommendation was designed to eliminate the 

conflicting data within each individual lender 

record in the IMF database. The management 

decision memorandum did not address the 

issue as reported. For the second item, the 

attachment referred to in HUD’s memorandum 

did not provide documentation showing that 

the calculation had been changed in the system. 

The attachment only gave examples of how the 

calculation was performed in comparison to 

how OIG recommended that the calculation be 

performed.

HUD’s response to the third item in 

recommendation 2A gave no indication that 

HUD had reviewed the lender branches referred 

by OIG to determine whether these deleted 

branches were performing origination activities, 

including the opening of FHA case numbers 

for new loans, after the yearend date. Further, 

there was no control in place to ensure that FHA 

case numbers were not generated by branches 

that were deleted after the yearend date. Unless 

HUD develops a procedure to verify that the 

deleted branches are not originating loans after 

the yearend date, a cutoff date should be built 

into the automated recertification process.

HUD’s statement that “recent changes to the 

Lender Recertification Branch’s business model 

make this recommendation obsolete” was vague 

and did not offer sufficient detail as to how the 

“business model” renders the recommendation 

obsolete. In regard to the fourth item in 

recommendation 2A, the November 14, 2011, 

memorandum to the Acting Assistant Secretary 

for Housing noted that OIG would be willing to 

review and consider an alternative calculation 

from HUD.

Recommendation 2B: In its October 12, 2011, 

management decision memorandum, HUD 

disagreed with recommendation 2B. HUD 

stated that the fees are not owed and that 66 

percent of the lenders referenced in the report 

are no longer active, making the collection of the 

fees very difficult. HUD noted that its revision 

of the fee calculation for the branches added 

7 months before recertification sufficiently 

addresses the recommendation. HUD further 

contended that the renewal fee is a payment 

which permits a lender to continue participation 

in FHA programs and should be based upon a 

lender’s operations for the upcoming period.

In the referral memorandum to the Acting 

Assistant Secretary for Housing on November 14, 

2011, OIG outlined its disagreement with HUD’s 

position on recommendation 2B. Although 

HUD maintains that the fees are not owed, 

it does not provide a valid reason why. Until 

HUD can show why there should not be a cutoff 

date for deleting branches, it should go back to 

the lenders and collect the fees for any deleted 

branches that originated loans beyond the prior 

year’s cutoff date. HUD agreed that the fee 

calculation for branches added in the seventh 

month before renewal was incorrect; therefore, 

there is no reason why HUD cannot collect the 

underpaid fees. OIG can accept that HUD may 

not be able to collect these fees from lenders that 

are no longer in business, but it should make an 

effort to do so for active FHA lenders.

After the November 14, 2011, referral 

memorandum was sent, OIG met with the 

Acting Assistant Secretary requesting a response. 

A formal response was not received, and OIG 

referred the management decision to HUD’s 

Acting Deputy Secretary on March 30, 2012. 

(Audit Report: 2011-KC-0001)
Chapter 9 - Audit Resolution 37

Prospect Mortgage, LLC, Sherman 

Oaks, CA, Did Not Always 

Comply With Federal Housing 

Administration Underwriting and 

Quality Control Requirements, 

Issue Date: July 8, 2011

HUD OIG audited FHA-insured loans 

underwritten by Prospect Mortgage, LLC, within 

Region IV of HUD OIG to determine whether 

Prospect complied with HUD’s requirements for 

(1) origination and underwriting relative to cash 

assets, income, and creditworthiness; (2) quality 

controls; and (3) branch office operations. 

Prospect did not always follow HUD’s 

underwriting and quality control requirements 

for FHA-insured loans. Specifically, Prospect 

did not properly underwrite 25 of the 33 loans, 

which placed the FHA insurance fund at risk 

for $550,257 in questioned costs and nearly $1.7 

million in funds to be put to better use. It also 

did not properly implement quality controls over 

its underwriting process for a specific group of 

defaulted loans approved by high-default-rate 

underwriters at two of its branch offices.

OIG recommended that HUD take appropriate 

administrative action against Prospect for the 

underwriting and quality control deficiencies 

identified by the audit. Specifically, Prospect 

should be required to reimburse or hold HUD 

harmless against any losses for the 25 improperly 

underwritten loans in finding 1 that involve 

$550,257 in questioned costs and nearly $1.7 

million in funds to be put to better use and for 

the improper management of its quality control 

function. The quality control deficiencies 

have placed the FHA insurance fund at a 

higher risk for losses on additional defaulted 

loans with mortgages totaling more than $26.1 

million that were underwritten by two highdefault-rate branch offices. Therefore, OIG 

also recommended that HUD review Prospect’s 

underwriting for any of the defaulted loans 

included in the $26.1 million, which have already 

gone to claim or on which a claim is filed within 

5 years of the loan endorsement dates. If HUD 

determines that the claim was filed for loans that 

did not meet requirements, Prospect should be 

required to reimburse HUD for the claim or the 

loss on the loans or indemnify HUD from losses. 

HUD disagreed with our recommendations 

that it refer Prospect to the MRB. Instead, it 

proposed to conduct its own review of Prospect 

in 2012 and refer Prospect to the MRB if 

that review uncovers serious and material 

noncompliance with HUD-FHA requirements.

OIG disagreed with HUD’s proposal to defer 

referral of Prospect to the MRB. The pattern 

of abuse presented in the audit warrants the 

recommended actions. HUD’s proposal to 

base its decision for MRB consideration on a 

subsequent review by its office is an unnecessary 

and wasteful use of HUD’s limited staff 

resources. Congress established the MRB 

to oversee performance of FHA lenders to 

ensure compliance with FHA requirements. 

Accordingly, OIG believes that HUD should refer 

Prospect to the MRB based on the results of the 

audit.

HUD disagreed with OIG’s recommendation 

to conduct a full underwriting review of the 18 

claim-terminated loans originated at the two 

high-default-rate branches to determine whether 

they met HUD requirements and if the loans did 

not meet the requirements, require Prospect to 

reimburse HUD for either the claim amounts 

paid or the actual loss HUD sustained. Instead, 

HUD proposed that it would be more effective 

to take a proactive, prospective approach that 

focuses on case-level reviews of mortgages 

just after the issuance of mortgage insurance 

certificates, or postendorsement reviews, to 

identify potential underwriting deficiencies at 

the earliest possible date.

HUD also disagreed with OIG’s recommendation 

to conduct a full underwriting review of any 

of the remaining 166 defaulted loans (184 - 18 

loans with filed claims) if a claim is filed against 

the FHA insurance fund within 5 years of 

the endorsement dates for the affected loans. 
38 Chapter 9 - Audit Resolution

Prospect should be required to indemnify HUD 

if a claim is filed on a loan that did not meet 

HUD’s requirement for approval. Instead, HUD 

proposed that it would be more effective to take 

a proactive, prospective approach that focuses 

on reviewing loan risk as early as possible before 

claims are filed.

OIG disagrees with the proposal by HUD to 

not conduct the requested full underwriting 

reviews for the 18 claim-terminated loans and 

166 defaulted loans originated at the two highdefault-rate branches to determine whether they 

met HUD requirements. OIG recognizes the 

benefits that can be derived from the approach 

proposed by HUD. However, the audit identified 

a pattern of loan origination abuses at the two 

branches that requires specific attention by HUD 

in addition to, rather than as an alternative to, 

the review process proposed by HUD to protect 

the insurance fund. OIG believes that HUD 

should implement the recommendations cited in 

the audit report. (Audit Report: 2011-AT-1011)

FHA Did Not Prevent Corporate 

Officers of Noncompliant 

Lenders From Returning 

to the FHA Program, Issue 

Date: September 26, 2011

HUD OIG audited FHA because it noted during 

previous audit work that FHA might not have a 

system in place to track lenders that voluntarily 

left the FHA program with outstanding 

indemnification agreements. The objective was 

to determine whether FHA prevented corporate 

officers from participating in FHA programs 

after those officers left other lenders that did not 

honor their FHA indemnification agreements.

FHA did not prevent lenders’ corporate officers 

from participating in FHA programs after those 

officers left other lenders that did not honor 

their FHA indemnification agreements. OIG 

found 12 different corporate officers who were 

participating in the FHA program after leaving 7 

lenders that did not honor their indemnification 

agreements and had lost their FHA approval. 

However, FHA lacked the authority to prevent 

these corporate officers from reentering the FHA 

program.

OIG recommended that FHA seek legislative 

and program rule changes to prevent lenders 

and their corporate officers with unsatisfied 

indemnification agreements from reentering the 

FHA program as the same or a new lender.

In its February 2, 2012, management decision 

memorandum, FHA stated that it disagreed with 

OIG’s finding and recommendation. FHA stated 

that it would seek a legal opinion from the Office 

of General Counsel on whether, as a matter of 

law, legislation can be enacted that confers upon 

HUD the authority to prohibit an individual 

from participating in the FHA program under 

the following circumstance:

The individual served as a corporate officer within 

an FHA-approved mortgagee at a time when that 

FHA-approved mortgagee was determined to have 

committed a knowing and material violation of FHA 

requirements. 

FHA also stated that since this measure would 

not require HUD to prove any knowledge 

or culpability on the part of the individual 

being excluded from FHA participation, such 

a standard would impose strict liability on 

corporate officers for the acts of the mortgagee.

OIG disagreed with the proposed management 

decision and sent a referral memorandum to 

the Acting Assistant Secretary for Housing on 

March 16, 2012. In the memorandum, OIG 

acknowledged that FHA does not have the 

authority to prevent individual officers from 

participating in the FHA program solely based 

on the fact that their previous lending institution 

did not honor its indemnification agreements 

with HUD. Further, OIG understands FHA’s 

concern about proving the knowledge or 

culpability of the individual being excluded 

from FHA participation. However, OIG’s 

concern remains that individual principals of 

some lending institutions are able to disregard 
Chapter 9 - Audit Resolution 39

the indemnification agreements with HUD and 

are allowed to continue FHA participation by 

hiding behind corporate law and forming a new 

corporation.

FHA’s proposed management decision only 

goes as far as to seek a legal opinion from the 

Office of General Counsel. It does not provide 

any other efforts by HUD to seek legislative or 

program rule changes in an effort to prevent 

known bad players from reentering the FHA 

program. Such program rule changes might 

include FHA’s conducting reviews of a mortgagee 

at the time FHA requests that mortgagee to 

enter into indemnification agreements. The 

review could include steps to determine the level 

of participation of the corporate officers in the 

day-to-day operations of the mortgagee to help 

establish the level of culpability the officers have 

within the corporation. (Audit Report: 2011-

KC-0004) 

The Office of Healthy 

Homes and Lead Hazard 

Control Needs To Improve 

Its Monitoring of American 

Recovery and Reinvestment 

Act Grant Recipients, Issue 

Date: September 30, 2011

HUD OIG audited the Office of Healthy Homes 

and Lead Hazard Control’s monitoring of its 

American Recovery and Reinvestment Act of 2009 

(ARRA) grant recipients to determine whether 

Healthy Homes monitored its recipients of ARRA 

grants in accordance with ARRA and HUD 

requirements. 

Healthy Homes did not maintain documentation 

in accordance with its requirements to support 

payments to four recipients totaling more 

than $4.2 million of the nearly $5 million in 

grant awards. The payments were made to 

reimburse the recipients for their claimed grant 

expenses. Additionally, Healthy Homes did not 

review the voucher requests for payment in a 

timely manner. Documentation to support the 

recipients’ voucher requests for payment was 

either missing or not adequate. Healthy Homes 

accepted operating ledgers, billing summaries, 

email lists, a list of expenditures, budgets 

showing the current request by category, and 

copies of check stubs as support for the voucher 

requests for payment. It also did not ensure that 

recipients’ working files included the required 

documents and reports such as annual and 

quarterly documents and reports.

OIG recommended that HUD (1) obtain 

adequate documentation to support the payment 

of more than $4.2 million in ARRA funds as 

cited in this finding, (2) ensure that recipients’ 

voucher requests for payment are reviewed 

in a timely manner, (3) implement adequate 

procedures and controls to correct voucher 

processing deficiencies, and (4) implement 

adequate policies and procedures to ensure that 

recipients’ files contain the documentation 

and reports required by Healthy Homes’ issued 

guidance.

During the reporting period, OIG rejected two 

management decisions proposed by Healthy 

Homes to address the audit recommendations.

The proposed management decisions and 

corrective actions were not adequately 

supported; therefore, OIG was unable to 

agree. For instance, Healthy Homes stated 

that it was confident that ARRA recipients 

expended Federal funds in compliance with 

applicable regulations and documented those 

expenditures compliantly. Nevertheless, 

to ensure consistency and compliance with 

financial and record-keeping requirements, it 

had reinforced financial and record-keeping 

requirements with all staff and ARRA recipients. 

In addition, its Grant Desk Guide was modified 

to reflect changes made to the time line for 

reimbursement processing as outlined in the 

new policy guidance. However, Healthy Homes 

did not provide documentation to support the 

expenditures of the four grant recipients cited in 

the report and its revised policy. (Audit Report: 

2011-CH-0003)
40 Chapter 9 - Audit Resolution

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 

significant revised management decisions made 

during the reporting period. During the current 

reporting period, there were significant revised 

management decisions on five audits.

The City of East St. Louis Did 

Not Properly Allocate Salary and 

Building Expenses or Properly 

Document Its Process To Secure 

a Consulting Services Contract, 

Issue Date: March 26, 2010 

HUD OIG audited the City of East St. Louis’ 

CDBG program to determine whether the City 

properly expended CDBG funds for salaries 

and building expenses and followed proper 

procurement processes while awarding significant 

administration contracts.

The City did not properly allocate salary and 

building expenses to the CDBG program. It also 

did not properly document the cost estimate and 

selection process used to procure a contract for 

developing its 5-year consolidated plan.

Among other things, OIG recommended that 

HUD require the City to develop and implement 

acceptable written policies and procedures. OIG 

also recommended that HUD require the City to 

provide documentation supporting the building 

rent payments or reimburse its CDBG program 

more than $58,000.

In its original management decision, HUD 

agreed to require the City to develop and 

implement acceptable written policies and 

procedures. HUD recently submitted a 

revised management decision because it had 

transferred full administrative responsibility 

for the grant program to St. Clair County, 

IL, and the old recommendations were no 

longer necessary. Beginning in FY 2012, 

the City became a member of the St. Clair 

County Urban County and will not have a 

CDBG program to administer. In addition, 

HUD revised its management decision for the 

building rent to reflect that it had received 

acceptable documentation and would not require 

reimbursement. On March 30, 2012, OIG 

agreed with the revised significant management 

decision. (Audit Report: 2010-KC-1003)

The City of East St. Louis Awarded 

Block Grant Program Funds to 

Recipients Without Adequately 

Verifying Their Eligibility, Issue 

Date: September 28, 2010 

HUD OIG audited the City of East St. Louis’ 

CDBG program to determine whether the City 

properly verified the eligibility of CDBG-funded 

housing rehabilitation recipients.

The City awarded CDBG funds to 143 recipients 

without adequately verifying their eligibility 

to receive housing rehabilitation assistance. 

Specifically, it did not verify eligibility 

criteria such as evidence of flood insurance, 

homeowners’ insurance, code compliance, and 

income eligibility.

Among other things, OIG recommended that 

HUD require the City to develop and implement 

a quality assurance plan to ensure that all 

program recipients meet program eligibility 

requirements and provide training to ensure 

future compliance.

In its original management decision, HUD 

agreed to require the City to implement a 

quality assurance plan and provide training 
Chapter 9 - Audit Resolution 41

to staff members. HUD recently submitted a 

revised management decision because it had 

transferred full administrative responsibility 

for the grant program to St. Clair County, IL, 

and the old recommendations were no longer 

necessary. Beginning in FY 2012, the City 

became a member of the St. Clair County Urban 

County and will not have a CDBG program to 

administer. On March 30, 2012, OIG agreed 

with the revised significant management 

decision. (Audit Report: 2010-KC-1008)

The City of East St. Louis, IL, Did 

Not Properly Manage Housing 

Rehabilitation Contracts Funded 

by the Community Development 

Block Grant Program, Issue 

Date: February 9, 2011 

HUD OIG audited the City of East St. Louis’ 

CDBG program to determine whether the City 

properly managed its housing rehabilitation 

contracts.

The City awarded more than $1 million in 

CDBG funds for 124 of the 147 rehabilitation 

contracts reviewed without adequately ensuring 

that it complied with requirements and that the 

work was completed in an acceptable manner.

Specifically, it did not ensure that contractors 

completed all of the contracted work as required 

and at a reasonable cost. Additionally, the City 

created scopes of work for the rehabilitation 

contracts that were not detailed and specific 

in nature. Finally, it did not comply with 

Federal procurement requirements and its own 

policies and procedures when it managed the 

rehabilitation contracts.

Among other things, OIG recommended that 

HUD require the City to develop and implement 

adequate internal controls to ensure compliance 

with procurement regulations, update its 

inspection software, and provide training and 

technical assistance to ensure future compliance. 

In its original management decision, HUD 

agreed to require the City to implement 

adequate internal controls and provide training 

to staff members. HUD recently submitted a 

revised management decision because it had 

transferred full administrative responsibility 

for the grant program to St. Clair County, IL, 

and the old recommendations were no longer 

necessary. Beginning in FY 2012, the City 

became a member of the St. Clair County Urban 

County and will not have a CDBG program to 

administer. On March 30, 2012, OIG agreed 

with the revised significant management 

decision. OIG also added 1 year’s funding of 

more than $1.6 million to the funds to be put to 

better use to recognize the benefit of this action.

(Audit Report: 2011-KC-1001)

HUD Subsidized an Estimated 

2,094 to 3,046 Households 

That Included Lifetime 

Registered Sex Offenders, 

Issue Date: August 14, 2009

HUD OIG audited HUD’s requirement 

prohibiting lifetime registered sex offenders from 

admission to HUD-subsidized housing. Based 

upon a statistical sample, OIG determined that 

HUD subsidized an estimated 2,094 to 3,046 

households that included lifetime registered sex 

offenders. As a result, it did not accomplish the 

objective of the statute to prevent admission of 

dangerous sex offenders, and the same offenders 

who were deemed too dangerous for admission 

were allowed to continue living in subsidized 

housing.

OIG recommended that HUD develop and 

implement controls to monitor housing authority 

use of the required application questions and 

retention of appropriate background check 

documentation (recommendation 1D).

In the original management decision, HUD 

agreed to change the monitoring questions used.

HUD recently submitted a revised management 

decision for this recommendation, proposing to 

incorporate the required application questions 

into a next generation management system that 
42 Chapter 9 - Audit Resolution

is being developed. This measure will allow 

HUD to streamline its monitoring of required 

application question use and monitor a greater 

number of housing authorities than would 

be possible through field office monitoring.

HUD estimates that the application module 

will be launched and a related monitoring plan 

developed by December 31, 2016. On March 

29, 2012, OIG agreed with the revised significant 

management decision. (Audit Report: 2009-

KC-0001)

The Owner of Ebony 

Lake Healthcare Center, 

Brownsville, TX, Violated Its 

Regulatory Agreement With 

HUD-Brownsville, TX, Issue 

Date: November 25, 2008 

HUD OIG issued an audit entitled “The Owner 

of Ebony Lake Healthcare Center, Brownsville, 

Texas, Violated Its Regulatory Agreement with 

HUD.” Among the issues reported was that the 

owner violated the regulatory agreement when its 

managers ignored HUD directives by making 96 

transfers from the project that totaled more than 

$4 million from January through December 31, 

2007. OIG’s recommendation 1B of the report 

was that HUD required the owner to deposit 

$497,000 from non-Federal funds into the 

project’s residual receipts account. HUD agreed 

to endeavor to incorporate into a management 

improvement and operating plan, developed 

with the owner, a requirement that the owner 

deposit $497,000 from non-Federal funds into 

the project’s residual receipts account. OIG 

concurred with the management decision on 

March 26, 2009.

At the time of the original management decision, 

HUD stated that the project was a singleasset entity with no revenues other than those 

generated by the facility and that the owner was 

a nonprofit organization, which asserted that 

it had no funds available to make the required 

deposit. HUD further stated that it might 

decide to approve repayment of advances by the 

affiliated entities that received those advances; 

however, its actions would be dictated by its 

responsibility to weigh the relative strengths 

of these organizations and the advantages and 

disadvantages to HUD and the residents served 

by these facilities.

Since agreement on the management decision, 

the property owner has sought to sell some 

or all of its properties. OIG and HUD had 

many discussions on how to resolve the 

recommendation in the event that the owner 

sold or transferred the property. Both OIG 

and HUD sought a solution that would most 

effectively meet the concerns of all parties. As 

a result of those conversations, on September 

8, 2010, HUD proposed a revised management 

decision which provided that in the event of a 

transfer of physical assets of Ebony Lake, HUD 

approval would require that the Governmental 

and Educational Assistance Corporation 

(GEAC)-Ebony Lake ensure that, at a minimum, 

$497,000 in funds would remain with the project 

in the residual receipts account. Alternatively, 

upon a sale by GEAC-Ebony Lake that would 

result in the payoff of the FHA mortgage, 

$497,000 would be paid to the multifamily-FHA 

mortgage insurance fund (or be put toward 

payoff of the mortgage’s unpaid principal 

balance) from the residual receipts account. 

OIG concurred with the revised management 

decision on September 13, 2010.

On October 26, 2011, due to an upcoming 

sale of two of the owner’s properties, including 

Ebony Lake, HUD submitted another revised 

management decision. In the event of a transfer 

of physical assets of Ebony Lake, HUD approval 

would require that GEAC ensure that, at a 

minimum, $497,000 in funds would remain with 

the remaining FHA-insured GEAC project(s), 

specifically Fort Stockton, in a residual receipts 

account. Alternatively, upon a sale of Ebony 

Lake that would result in the payoff of the FHA 

mortgages for all GEAC FHA-insured projects, 

$497,000 would be paid to the multifamily-FHA 

mortgage insurance fund (or be put toward 

payoff of the mortgages’ unpaid principal 

balances) from the residual receipts account. 
Chapter 9 - Audit Resolution 43

None of these conditions, however, is to be 

construed as solely sufficient to gain HUD 

approval of any proposed sales transaction(s) 

of the three remaining GEAC FHA-insured 

projects—Ebony Lake, Mission Oaks, and Fort 

Stockton. OIG concurred with this revised 

management decision on November 15, 2011. 

(Audit report: 2009-FW-1002)

Review of Selected FHA Major 

Applications’ Information 

Security Controls, Issue 

Date: June 12, 2008

HUD OIG audited FHA’s management of 

its information technology resources and 

compliance with HUD and other Federal 

information security requirements to determine 

whether FHA effectively managed security 

controls relating to its information technology 

resources. This audit supported OIG’s annual 

financial statement audits of FHA and HUD 

as well as OIG’s annual Federal Information 

Security Management Act (FISMA) review.

FHA did not develop or implement adequate 

information security controls for its business 

partners and outside entities that remotely 

access or develop, process, and maintain HUD 

data for the FHA Connection application. FHA 

depended on its business partners to generate, 

process, and store FHA mortgage data but had 

not established information security guidance 

or requirements. As a Federal entity, FHA is 

required by FISMA to ensure that its data are 

adequately protected from unauthorized access, 

use, destruction, disclosure, disruption, or 

modification even when the data are maintained 

on behalf of the agency. FHA program staff 

was not fully aware of its responsibility for the 

information collected, processed, and stored on 

its behalf. By not providing adequate security 

controls and safeguards over data maintained 

outside HUD’s secured physical perimeter, FHA 

did not comply with HUD regulations or Federal 

guidelines. As a result, data that were critical 

to FHA’s mission and its ability to operate 

efficiently and effectively were at risk of theft, 

loss, or destruction.

OIG recommended that HUD (1) identify 

the information security controls needed to 

protect data uploads; (2) design and implement 

guidance, tools, and the communications 

necessary for FHA’s business partners and their 

roles and responsibilities; (3) ensure that there is 

a requirement for an assessment of the business 

partners’ information security controls that 

protect FHA data; and (4) coordinate the quality 

assurance plans with business partners to include 

security measures. 

FHA concurred with our recommendations 

on June 4, 2008, and provided a corrective 

action plan on October 7, 2008. The original 

corrective action plan was designed to set up a 

certification process and possible memorandums 

of understanding with FHA lenders. However, 

after further review of the audit findings, 

FHA issued a revised management decision 

for recommendations 2A, 2B, 2C, and 2D on 

November 21, 2011. FHA determined that it 

would be able to issue a mortgagee letter that 

would mandate that FHA lenders comply with 

FISMA. By issuing the mortgagee letter, FHA 

would not be required to review and approve 

all lenders’ security plans but would be assured 

of lenders’ security measures through FISMA 

compliance. OIG concurred with the revised 

management decisions on December 5, 2011.

FHA plans to issue the mortgagee letter on April 

30, 2012. (Audit Report: 2008-DP-0004)
44 Chapter 9 - Audit Resolution

Significant 

Management 

Decision With 

Which OIG 

Disagrees

During the reporting period, there were no 

reports in which OIG disagreed with the 

significant management decision.

Federal Financial 

Management 

Improvement 

Act of 1996

In FY 2011, HUD did not substantially comply 

with FFMIA. In this regard, HUD’s financial 

management systems did not substantially 

comply with Federal financial management 

system requirements.

During FY 2011, HUD made limited progress 

in bringing the financial management systems 

into compliance with FFMIA. However, HUD’s 

financial management systems continued to 

not meet current requirements. HUD’s systems 

were not operated in an integrated fashion and 

linked electronically to efficiently and effectively 

provide agencywide financial system support 

necessary to carry out the agency’s mission and 

support the agency’s financial management 

needs.

HUD’s financial systems, many of which were 

developed and implemented before the issue 

date of current standards, were not designed to 

provide the range of financial and performance 

data currently required. HUD is in the process 

of modernizing its financial management 

systems by developing an integrated financial 

management system. The modernization 

development, HUD’s Integrated Financial 

Improvement Project (HIFMIP), was launched 

in FY 2003 but has been plagued by delays.

Originally planned for implementation in 

2006, the contract for HIFMIP was awarded on 

September 23, 2010. The 10-year contract plan 

was established based on the implementation 

project start date and current schedule. With 

the award of the contract, HUD anticipated 

implementation of phase I of the project in 

time to have all of the FY 2012 financial data 

within the new system. However, OIG remains 

concerned about the successful execution and 

completion of HIFMIP. Project requirements 

had not been updated, resulting in a 2-month 

schedule slip. Disagreements between HUD 

and the HIFMIP contractor with regard to 

interpretation of key contract provisions 

further threatened the project. Also, concerned 

about the successful execution of the project, 

HUD convened an independent government 

assessment team, composed of several subjectmatter experts from multiple government 

agencies, to rapidly evaluate the status of 

HIFMIP. The government assessment team also 

assessed the “go live” target date as high risk.

Based on recommendations made by the team, 

HUD has revised the target date to go live during 

the second quarter of FY 2013. OIG remains 

concerned that completion of the first phase of 

HIFMIP will not result in a truly integrated core 

financial system.

FFMIA requires OIG to report in its Semiannual 

Reports to the Congress instances and reasons 

when an agency has not met the intermediate 

target dates established in its mediation plan 

required by FFMIA. At the end of 2011, HUD 

reported that 3 of the 41 financial management 

systems were not in substantial compliance 

with FFMIA. These three systems are the 

HUD Procurement System (HPS), Small 

Purchase System (SPS), and Facilities Integrated 

Resources Management System. HUD acquired 

a new application, HUD Integrated Acquisition 
Chapter 9 - Audit Resolution 45

Management System (HIAMS), to replace the 

HPS and SPS on September 30, 2010. The 

HIAMS application went live on October 1, 

2011. Additionally, OIG determined that the 

Integrated Disbursement and Information 

System (IDIS) was not in substantial compliance 

with FFMIA. However, HUD continues to report 

IDIS as compliant. Although HUD certified 38 

individual systems as compliant with Federal 

financial management systems requirements, 

HUD did not perform independent reviews 

of all of its financial management systems in 

accordance with Office of Management and 

Budget Circular A-127. Collectively and in the 

aggregate, deficiencies continued to exist. 

Appendix 1 - Peer Review Reporting 47

Office of Audit

Background

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. Both the 

Office of Audit and Office of Investigation are required to undergo a peer review of their individual 

organizations every 3 years. The purpose of the reviews is to ensure that the work completed by 

the respective organizations meets the applicable requirements and standards. The following is a 

summary and status of the latest round of peer reviews for the organization.

Peer Review Conducted on HUD OIG

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

received a grade of pass (the highest rating) on the peer review report issued by the U.S. Treasury 

Inspector General for Tax Administration on September 22, 2009. There were no recommendations 

included in the System Review Report. The report stated: 

In our opinion, the system of quality control in effect for the year ended March 31, 2009, for the audit 

organization of the HUD OIG has been suitably designed and complied with to provide the HUD 

OIG with reasonable assurance of performing and reporting in conformity with applicable professional 

standards in all material respects. 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 USDA

The U.S. Department of Agriculture (USDA) OIG received a rating of pass on the peer review report 

issued by HUD OIG on September 30, 2009. The System Review Report contained no findings or 

recommendations.

Office of Investigation

Peer Review Conducted on HUD OIG

The most recent peer review of the Office of Investigation was conducted in 2011 by the U.S. 

Department of Health and Human Services OIG. The results of the peer review found HUD OIG 

compliant (the highest rating) with the quality of standards established by the inspector general 

community and the attorney general guidelines.

Appendix 2 - Audit Reports Issued 49

Internal Reports

Audit Reports

Chief Financial Officer

2012-DP-0001 Audit Report on the Fiscal Year 2011 Review of Information Systems 

Controls in Support of the Financial Statements Audit, 02/14/2012.

2012-FO-0003 Additional Details To Supplement Our Report on HUD’s Fiscal Years 2011 

and 2010 Financial Statements, 11/15/2011. Better Use: $2,372,591,000.

2012-FO-0005 Annual Evaluation of HUD’s Compliance With the Reporting 

Requirements of the Improper Payments Information 

Act of 2002, Executive Order 13520, and OMB Circular 

A-123 Implementing Guidance, 03/15/2012.

 Chief Information Officer

2012-DP-0003 Enterprisewide Improvements are Needed in HUD’s Computer Security 

Environment, 03/23/2012.

2012-FO-0004 Information System Deficiencies Noted During FHA’s Fiscal Year 2011 

Financial Statement Audit, 01/27/2012.

 Community Planning and Development

2012-PH-0001 HUD Needed to Improve Its Use of Its Integrated Disbursement 

and Information System To Oversee Its CDBG Program, 10/31/2011. 

Questioned: $66,849,658; Unsupported: $66,849,658.

 Government National Mortgage Association

2012-DP-0002 Improvements Are Needed In Ginnie Mae’s Controls Over Its Information 

Technology Resources, 03/16/2012.

2012-FO-0001 Audit of Ginnie Mae’s Financial Statement for 

Fiscal Years 2011 and 2010, 11/07/2011.

 Housing

2012-FO-0002 Audit of the FHA’s Financial Statement for Fiscal Years 2011 and 2010, 

11/07/2011.

2012-LA-0002 HUD’s Statement of Work for Appraisal Field Review Services Did Not 

Always Require Sufficient Confirmation of an Interior Review, 12/02/2011.

2012-PH-0002 HUD’s Philadelphia, PA, Homeownership Center Generally Monitored 

Loan Originations in Compliance With Requirements, 12/15/2011.
50 Appendix 2 - Audit Reports Issued

Internal Reports

Audit Reports

2012-PH-0003 HUD Approved MAP Program Lenders as Required but Did Not 

Adequately Select Lenders to Monitor, 01/12/2012.

2012-PH-0004 HUD Controls Did Not Always Ensure That Home Equity Conversion 

Mortgage Loan Borrowers Complied With Program Residency 

Requirements, 02/09/2012. Better Use: $3,960,192.

 Public and Indian Housing

2012-LA-0001 HUD Did Not Adequately Support the Reasonableness of the Fee-forService Amounts or Monitor the Amounts Charged, 11/16/2011.
Appendix 2 - Audit Reports Issued 51

External Reports

Audit Reports

 Community Planning and Development

2012-AT-1001 The Municipality of San Juan Generally Complied With HPRP 

Requirements, San Juan, PR, 10/24/2011.

2012-AT-1004 DeKalb County Had Inadequate Controls Over 

the Support for Commitments Entered in HUD’s 

Information System, Decatur, GA, 01/09/2012.

2012-AT-1008 The City of Orlando Had Inadequate Controls Over 

Commitments Entered Into HUD’s Information System 

and Charges for a Terminated Activity, Orlando, FL, 

03/29/2012. Questioned: $18,248; Better Use: $407,006.

2012-CH-1004 The State of Indiana’s Administrator Lacked Adequate Controls Over 

the State’s HOME Investment Partnerships Program Regarding CHDOs’ 

Activities and Income, Indianapolis, IN, 02/24/2012. Questioned: $589,343; 

Unsupported: $392,567; Better Use: $405,876.

2012-CH-1007 The State of Michigan Lacked Adequate Controls Over Its Use of 

NSP Funds Under the HERA for a Project, Lansing, MI, 03/30/2012. 

Questioned: $3,300,000; Unsupported: $3,300,000.

2012-DE-1003 A Hotline Complaint Against Colorado Coalition for the Homeless 

Regarding Weaknesses in Its Controls Over the HPRP Could Not Be 

Supported, Denver, CO, 03/22/2012.

2012-FW-1005 The State of Texas Did Not Follow Requirements for Its Infrastructure and 

Revitalization Contracts Funded With CDBG Disaster Recovery Program 

Funds, Austin, TX, 03/07/2012. Questioned: $9,061,794; Unsupported: 

$7,599,747; Better Use: $75,009,910.

2012-LA-1001 Housing Our Communities Did Not Administer Its NSP in Accordance 

With HUD Requirements, Mesa, AZ, 12/08/2011. Questioned: $787,004; 

Unsupported: $714,152.

2012-LA-1002 The Women’s Development Center Charged Unallowable 

Flat Fees and Miscalculated Resident Rents, Las 

Vegas, NV, 12/08/2011. Better Use: $13,192.
52 Appendix 2 - Audit Reports Issued

External Reports

Audit Reports

2012-LA-1003 The City of Modesto Did Not Always Comply With NSP2 Requirements, 

Modesto, CA, 12/22/2011. Questioned: $108,066; Unsupported: $8,154; 

Better Use: $62,500.

2012-LA-1005 The City of Los Angeles Did Not Expend Brownfields Economic 

Development Initiative and Section 108 Funds for the Goodyear Industrial 

Tract Project in Accordance With HUD Requirements, Los Angeles, CA, 

03/13/2012. Questioned: $5,339,821.

2012-NY-1001 Bergen County Generally Administered Its HPRP in Accordance With 

HUD Regulations, Bergen County, NJ, 10/04/2011.

2012-NY-1002 The City of New York Charged Questionable Expenditures to Its HPRP, 

New York, NY, 10/18/2011. Questioned: $423,373; Unsupported: $329,937.

2012-NY-1003 The City of Syracuse Did Not Always Administer Its CDBG Program 

in Accordance With HUD Requirements, Syracuse, NY, 10/25/2011. 

Questioned: $1,377,112; Unsupported: $1,160,922; Better Use: $408,282.

2012-NY-1004 The City of Buffalo Did Not Administer Its CDBG-R Program Funds 

in Accordance With HUD Requirements, Buffalo, NY, 12/13/2011. 

Questioned: $1,791,297; Unsupported: $1,791,297; Better Use: $159,388.

2012-NY-1005 The City of Newark Had Weaknesses in the Administration of Its HPRP, 

Newark, NJ, 01/27/2012. Questioned: $300,205; Unsupported: $261,875.

2012-NY-1007 The City of Syracuse Did Not Always Administer Its Economic 

Development Initiative Program in Accordance With HUD Requirements, 

Syracuse, NY, 02/21/2012. Questioned: $2,756,400; Unsupported: 

$2,558,000.

2012-PH-1001 Healthy Neighborhoods, Inc., Generally Ensured That Its Consortium 

Members Met Recovery Act Requirements, Baltimore, MD, 10/24/2011.

2012-PH-1004 Luzerne County Generally Administered Its CDBG-R Funds According 

to Applicable Requirements, Wilkes-Barre, PA, 01/13/2012. Questioned: 

$145,152; Unsupported: $145,152.
Appendix 2 - Audit Reports Issued 53

External Reports

Audit Reports

2012-PH-1006 Gloucester Township Did Not Always Administer Its CDBG-R Act Funds 

According to Applicable Requirements, Blackwood, NJ, 03/14/2012. 

Questioned: $28,850; Unsupported: $28,850.

2012-PH-1008 Mountain CAP of WV, Inc., Did Not Administer Its HPRP in Accordance 

With Applicable Recovery Act and HUD Requirements, Buckhannon, WV, 

03/15/2012. Questioned: $711,676; Unsupported: $711,676.

 Fair Housing and Equal Opportunity

2012-PH-1002 The National Community Reinvestment Coalition Did Not Comply 

With Conflict-of-Interest Provisions in Its Fair Housing Initiative Program 

Agreement With HUD, Washington, DC, 11/14/2011. Questioned: 

$59,800; Better Use: $338,483.

 Housing

2012-DE-1001 Five Star Services, Inc., Did Not Submit Monthly Accounting Reports and 

Section 236 Excess Income Reports to HUD, Fargo, ND, 11/02/2011.

2012-FW-1001 TXL Mortgage Corporation Did Not Comply With HUD-FHA Loan 

Requirements in Underwriting 16 of 20 Home Loans, Houston, TX, 

10/06/2011. Questioned: $171,621; Unsupported: $900; Better Use: 

$713,341.

2012-FW-1004 PrimeLending Mortgage, LLP, Did Not Always Follow HUD-FHA 

Underwriting Requirements for 12 of 20 Loans Reviewed, Plano, TX, 

02/28/2012. Questioned: $213,356; Better Use: $845,763.

2012-FW-1006 J&M Mortgage Brokers, Ltd., Did Not Comply With HUD-FHA Loan 

Requirements in Underwriting 6 of 20 Loans, Houston, TX, 03/14/2012. 

Questioned: $65,559; Better Use: $327,232.

2012-KC-1001 John Calvin Manor Violated Its Regulatory and Loan Agreements With 

HUD and Inappropriately Made Salary Payments to Its Board President, 

Lee’s Summit, MO, 01/20/2012. Questioned: $340,454.

2012-LA-1004 MetLife Bank’s Scottsdale, AZ, Branch Office Did Not Follow FHAInsured Loan Underwriting and Quality Control Requirements, 

01/26/2012. Questioned: $118,045; Unsupported: $16,490; Better Use: 

$1,096,774.
54 Appendix 2 - Audit Reports Issued

External Reports

Audit Reports

2012-NY-1006 MLD Mortgage, Inc., Did Not Always Comply With HUD-FHA Loan 

Origination and Quality Control Requirements, Florham Park, NJ, 

02/06/2012. Questioned: $607,193; Unsupported: $430,205; Better Use: 

$2,756,325.

2012-PH-1005 Second Northwest Cooperative Homes Association Did Not Identify and 

Remit Excess Income to HUD, Washington, DC, 01/26/2012. Questioned: 

$172,977; Better Use: $34,595.

2012-PH-1007 Four Freedoms House of Philadelphia, Inc., Generally Managed Its Section 

202 Housing Project in Accordance With Applicable Requirements, 

Philadelphia, PA, 03/14/2012.

 Lead Hazard Control

2012-CH-1005 The State of Wisconsin’s Department of Commerce Needs To Improve 

Its Oversight of Its Lead-Based Paint Hazard Control Recovery Act Grant, 

Madison, WI, 03/01/2012. Questioned: $53,919.

 Public and Indian Housing

2012-AO-1001 Opelousas Housing Authority Did Not Always Comply With Recovery 

Act and Federal Obligation, Procurement, and Reporting Requirements, 

Opelousas, LA, 02/23/2012. Questioned: $303,633; Unsupported: $115,595.

2012-AT-1002 The Sanford Housing Authority Lacked Adequate Management of and 

Controls Over Its Public Housing and Section 8 Programs, Sanford, FL, 

10/28/2011. Questioned: $1,291,232; Unsupported: $13,950.

2012-AT-1003 The Lumbee Tribe of North Carolina Did Not Follow Some Requirements 

for Its Native American Housing Block Grants Received Under the ARRA, 

Pembroke, NC, 12/06/2011. Questioned: $40,041.

2012-AT-1005 The Housing Authority of the City of Fort Lauderdale Did Not Fully 

Comply With Federal Requirements When Administering Its Public 

Housing Capital Fund Recovery Grants, Fort Lauderdale, FL, 01/09/2012. 

Questioned: $826,560; Unsupported: $504,933; Better Use: $170,136.

2012-AT-1006 The Housing Authority of the City of Sparta Did Not Maintain Adequate 

Control Over Its Federal Funds, Sparta, GA, 01/24/2012. Questioned: 

$524,916; Unsupported: $397,782.
Appendix 2 - Audit Reports Issued 55

External Reports

Audit Reports

2012-AT-1007 The Shelby County Housing Authority Mismanaged Its HUD-Funded 

Programs, Memphis, TN, 01/26/2012. Questioned: $541,745; Unsupported: 

$226,373; Better Use: $450,955.

2012-BO-1001 The Housing Authority of the City of Hartford Did Not Properly 

Administer its $2.5 Million Recovery Act Grant Construction Management 

Contract, Hartford, CT, 01/06/2012. Questioned: $415,692.

2012-BO-1002 The Housing Authority of the City of Stamford Did Not Properly 

Administer and Oversee the Operations of Its Federal Programs, Stamford, 

CT, 03/14/2012. Questioned: $17,775,730; Unsupported: $17,726,635.

2012-BO-1003 The Medford Housing Authority Needs to Improve Rent Reasonableness 

Determinations, Procurement, and Enforcement of Housing Quality 

Standards, Medford, MA, 03/21/2012. Questioned: $9,279,455; 

Unsupported: $9,242,681.

2012-CH-1001 The Gallia Metropolitan Housing Authority Did Not Always Administer Its 

Grant in Accordance with Recovery Act and HUD Requirements, Bidwell, 

OH, 01/26/2012. Questioned: $11,397.

2012-CH-1002 The Saginaw Housing Commission Did Not Administer Its Grant in 

Accordance With Recovery Act, HUD’s, and Its Requirements, Saginaw, 

MI, 01/26/2012. Questioned: $736,351; Unsupported: $530,536.

2012-CH-1003 The Springfield Housing Authority Needs To Improve Its ARRA Contract 

Administration Procedures, Springfield, IL, 02/23/2012. Questioned: 

$222,318; Unsupported: $135,454; Better Use: $4,346.

2012-CH-1006 Cuyahoga Metropolitan Housing Authority Did Not Operate Its Section 

8 Housing Choice Voucher Program According to HUD’s Requirements, 

Cleveland, OH, 03/29/2012. Questioned: $664,500; Unsupported: 

$390,463; Better Use: $1,433,893.

2012-DE-1002 Trinidad Housing Authority Did Not Always Follow Requirements When 

Expending and Reporting Information About Its Recovery Act Capital 

Funds, Trinidad, CO, 11/29/2011. Questioned: $355,701; Unsupported: 

$353,341.
56 Appendix 2 - Audit Reports Issued

External Reports

Audit Reports

2012-FW-1002 The Housing Authority of the City of Corpus Christi Generally 

Administered Recovery Act Capital Funds in Compliance With the 

Recovery Act, Corpus Christi, TX, 10/12/2011. Questioned: $6,475; 

Unsupported: $4,302; Better Use: $2,418.

2012-FW-1003 The Housing Authority of the City of Little Rock Generally Complied 

With Recovery Act Funding Requirements, Little Rock, AR, 11/21/2011. 

Questioned: $31,725.

2012-KC-1002 The East St. Louis Housing Authority Did Not Properly Manage or Report 

on Recovery Act Capital Funds, East St. Louis, IL, 03/02/2012. Questioned: 

$2,422,023; Unsupported: $2,374,276.

2012-PH-1003 The Housing Authority of the City of Camden Generally Calculated 

Housing Assistance Correctly, Properly Determined the Eligibility of 

Tenants, and Recertified Tenants in a Timely Manner, Camden, NJ, 

01/10/2012.

2012-SE-1001 The Bellingham Whatcom County Housing Authorities Generally 

Complied With ARRA Capital Fund Grant Requirements, Bellingham, 

WA, 10/14/2011.

2012-SE-1002 The Vancouver Housing Authority Did Not Always Manage or Report on 

Recovery Act Funds in Accordance With Requirements, Vancouver, WA, 

12/21/2011. Questioned: $1,262,033; Unsupported: $830,198.
Appendix 2 - Audit Reports Issued 57

Audit-Related Memorandums9

 General Counsel

2012-CF-1801 Settlement Agreement, U.S. Attorney’s Office, Central District of 

California, Los Angeles, CA, 03/30/2012. Better Use: $200,000.

2012-CF-1802 Settlement Agreement, U.S. Attorney’s Office, Central District of 

California, Los Angeles, CA, 03/30/2012. Better Use: $200,000.

2012-CF-1803 Settlement Agreement, U.S. Attorney’s Office, Central District of 

California, Los Angeles, CA, 03/30/2012. Better Use: $200,000.

2012-CF-1804 Final Civil Action, Diverting Operating Funds for Personal Use, Debra 

Waterman, former Executive Director, Superior Housing Authority, 

Superior, WI, 03/30/2012. Questioned: $73,295.

2012-CH-1802 Final Civil Action, Landlord Fraud, Section 8 Housing Choice Voucher 

Program, Gary Walczak, Section 8 Landlord, Portage Metropolitan Housing 

Authority, Revenna, OH, 03/30/2012. Questioned: $2,500.

2012-FW-1801 Actions Under Program Fraud Civil Remedies Act, Former Plano Housing 

Authority Employee, Plano, TX, 10/03/2011. Questioned: $13,160.

 Housing

2012-AT-1801 Wells Fargo Bank, Foreclosure and Claims Process 

Review, Fort Mill, SC, 03/12/2012.

2012-CH-1801 JPMorgan Chase Bank, N.A., Foreclosure and Claims 

Process Review, Columbus, OH, 03/12/2012.

2012-FW-1802 Bank of America Corporation, Foreclosure and Claims 

Process Review, Charlotte, NC, 03/12/2012.

2012-KC-1801 CitiMortgage, Inc., Foreclosure and Claims Process 

Review, O’Fallon, MO, 03/12/2012.

2012-PH-1801 Ally Financial, Incorporated, Foreclosure and Claims 

Process Review, Fort Washington, PA, 03/12/2012.

 Public and Indian Housing

2012-BO-1801 Corrective Action Verification, Housing Authority of the 

City of Danbury, Procurement Practices, Audit Report 

2004-BO-1004, Hartford, CT, 01/06/2012.

9

9

The memorandum format is used to communicate the results of reviews not performed in accordance with generally accepted 

government audit standards, to close out assignments with no findings and recommendations, to respond to requests for 

information, to report on the results of a survey, or to report the results of civil actions or settlements.

Appendix 3 - Tables 59

Table A

Audit reports issued before the start of period with no 

management decision as of March 31, 2012

*Significant audit reports described in previous semiannual reports

Report number and title Reason for lack of 

management decision Issue date 

* 2009-AT-0001, HUD Lacked Adequate 

Controls To Ensure the Timely Commitment 

and Expenditure of HOME Funds

See chapter 9, page 30. 09/28/2009

2011-NY-1004, The City of Binghamton, 

NY, Did Not Always Administer 

Its Section 108 Loan Program in 

Accordance With HUD Requirements

See chapter 9, page 31. 12/21/2010

2011-CF-1801, An Underwriting Review of 

15 FHA Lenders Demonstrated That HUD 

Missed Critical Opportunities to Recover 

Losses to the FHA Insurance Fund

See chapter 9, page 32. 03/02/2011

2011-KC-0001, FHA Has Improved Its 

Annual Lender Renewal Process, but 

Challenges Remain

See chapter 9, page 35. 06/14/2011

* 2011-AT-1011, Prospect Mortgage, 

LLC, Sherman Oaks, CA, Did Not 

Always Comply With Federal Housing 

Administration Underwriting and 

Quality Control Requirements

See chapter 9, page 37. 07/08/2011

2011-KC-0004, FHA Did Not Prevent 

Corporate Officers of Noncompliant Lenders 

From Returning to the FHA Program

See chapter 9, page 38. 09/26/2011

2011-CH-0003, The Office of 

Healthy Homes and Lead Hazard 

Control Needs To Improve Its 

Monitoring of American Recovery and 

Reinvestment Act Grant Recipients

See chapter 9, page 39. 09/30/2011
60 Appendix 3 - Tables

Table B 

Significant audit reports for which final action had not been completed 

within 12 months after the date of the Inspector General’s report

Report number Report title Issue date Decision 

date

Final 

action

2002-AT-1002 Housing Authority of the City 

of Tupelo, Housing Programs 

Operations, Tupelo, MS

07/03/2002 10/31/2002 07/01/2015

2002-KC-0002 Nationwide Survey of HUD’s 

Office of Housing Section 232 

Nursing Home Program

07/31/2002 11/22/2002 Note 2

2005-AT-1004 Housing Authority of the 

City of Durham, NC

11/19/2004 03/15/2005 03/15/2015

2005-AT-1013 Corporacion Para el Fomento 

Economico de la Ciudad Capital 

Did Not Administer Its Independent 

Capital Fund in Accordance With 

HUD Requirements, San Juan, PR

09/15/2005 01/11/2006 Note 1

2006-NY-1003 The Housing Authority of the City of 

Newark’s Controls Over Bond Financing 

Activities, Obtaining Supporting 

Documentation, and Legal Settlements 

Require Improvement, Newark, NJ

02/14/2006 08/17/2006 09/30/2012

2006-KC-1013 The Columbus Housing Authority 

Improperly Expended and Encumbered 

Its Public Housing Funds, Columbus, NE

08/30/2006 10/17/2006 11/30/2012

2006-DP-0802 Assessment of HUD’s Compliance 

With OMB Memorandum M-06-

16, “Protection of Sensitive 

Agency Information”

09/21/2006 11/24/2006 09/30/2014
Appendix 3 - Tables 61

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2007-KC-0002 HUD Can Improve Its Use of 

Residual Receipts To Reduce 

Housing Assistance Payments

01/29/2007 01/29/2007 Note 1

2007-KC-0003 HUD Did Not Recapture Excess Funds 

from Assigned Bond-Financed Projects

04/30/2007 08/27/2007 Note 1

2007-SE-0001 HUD’s Oversight of the Section 

8 Project-Based Contract

06/07/2007 10/05/2007 Note 1

2007-FW-1011 Capmark Finance, Inc., Misrepresented 

Asbury Square Apartments’ Financial and 

Physical Condition When Underwriting 

the $9.098 Million Loan, Tulsa, OK

07/02/2007 10/23/2007 Note 1

2007-AT-1010 The Cathedral Foundation of 

Jacksonville Used More Than $2.65 

Million in Project Funds for Questioned 

Costs, Jacksonville, FL

08/14/2007 12/03/2007 Note 1

2007-DP-0006 Review of HUD’s Personal Identity 

Verification and Privacy Program

08/28/2007 12/20/2007 Note 1

2007-KC-0801 Lenders Submitted Title II 

Manufactured Housing Loans for 

Endorsement Without the Required 

Foundation Certifications

09/24/2007 03/11/2008 Note 1

2008-LA-0001 The Los Angeles Multifamily Hub Did 

Not Properly Monitor Its PerformanceBased Contract Administrator, Los 

Angeles LOMOD

11/05/2007 03/03/2008 Note 1

2008-LA-1003 Home for Life Foundation Did 

Not Properly Administer Its 

Supportive Housing Program 

Grants, Los Angeles, CA

12/18/2007 02/26/2008 04/01/2013
62 Appendix 3 - Tables

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2008-AT-1005 The City of Fort Lauderdale Did 

Not Properly Administer Its CDBG 

Program, Fort Lauderdale, FL

01/11/2008 05/05/2008 05/01/2012

2008-AO-1002 State of Louisiana, Road Home 

Program, Funded 418 Grants Coded 

Ineligible or Lacking an Eligibility 

Determination, Baton Rouge, LA

01/30/2008 05/12/2008 Note 1

2008-AO-0801 Review of Duplication of Participants 

Benefits Under HUD’s Katrina 

Disaster Housing Assistance Program 

and Disaster Voucher Program

03/28/2008 08/01/2008 Note 1

2008-AT-0003 HUD Lacked Adequate Controls Over 

the Physical Condition of Section 8 

Voucher Program Housing Stock

05/14/2008 09/10/2008 09/30/2012

2008-CH-1010 The City of Cincinnati Lacked Adequate 

Controls Over Its System Reporting 

and Rental Rehabilitation Projects for 

Its HOME Investment Partnerships 

Program, Cincinnati, OH

06/11/2008 10/09/2008 06/02/2012

2008-DP-0004 Review of Selected FHA Major 

Applications’ Information 

Security Controls

06/12/2008 10/08/2008 04/30/2012

2008-LA-1012 The Housing Authority of the City 

of Calexico Did Not Comply With 

Public Housing Program Rules 

and Regulations, Calexico, CA

07/01/2008 10/14/2008 12/31/2013

2008-CH-1014 The City of Cincinnati Did Not 

Adequately Manage Its HOME 

Investment Partnerships Program, 

Cincinnati, OH

09/26/2008 01/22/2009 06/03/2012
Appendix 3 - Tables 63

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2009-FW-1002 The Owner of Ebony Lake Healthcare 

Center Violated Its Regulatory 

Agreement With HUD, Brownsville, TX

11/25/2008 03/25/2009 05/31/2012

2009-DP-0003 Review of the Centralized HUD 

Account Management Process

01/09/2009 04/30/2009 Note 1

2009-NY-1008 The City of Newburgh Did Not 

Always Administer Its CDBG 

Program in Accordance With HUD 

Requirements, Newburgh, NY

02/24/2009 06/11/2009 Note 1

2009-AO-1001 State of Louisiana, Road Home 

Program, Did Not Ensure That Road 

Home Employees Were Eligible To 

Receive Additional Compensation 

Grants, Baton Rouge, LA

05/05/2009 09/16/2009 Note 1

2009-AO-1002 State of Louisiana, Road Home 

Program, Did Not Ensure That 

Multiple Disbursements to a Single 

Damaged Residence Address Were 

Eligible, Baton Rouge, LA

05/05/2009 09/16/2009 Note 1

2009-CH-1008 The City of East Cleveland Did 

Not Adequately Manage Its HOME 

Investment Partnerships and CDBG 

Programs, East Cleveland, OH

05/11/2009 09/08/2009 07/31/2014

2009-NY-1012 The City of Rome Did Not Administer 

Its Economic Development 

Activity in Accordance With HUD 

Requirements, Rome, NY

05/20/2009 09/23/2009 Note 1

2009-DP-0005 Review of Implementation of Security 

Controls Over HUD’s Business Partners

06/11/2009 11/17/2009 12/31/2014
64 Appendix 3 - Tables

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2009-CH-1011 The Housing Authority of the City of 

Terre Haute Failed To Follow Federal 

Requirements and Its Employment 

Contract Regarding Nonprofit 

Development Activities, Terre Haute, IN

07/31/2009 11/24/2009 01/01/2030

2009-KC-0001 HUD Subsidized an Estimated 2,094 

to 3,046 Households That Included 

Lifetime Registered Sex Offenders

08/14/2009 03/31/2011 04/30/2013

2009-CH-0002 The Office of Affordable Housing 

Programs’ Oversight of HOME 

Investment Partnerships Program 

Income Was Inadequate

08/28/2009 12/26/2009 Note 2

2009-LA-1019 The Owner of Park Lee Apartments 

Violated Its Regulatory Agreement 

With HUD, Phoenix, AZ

09/15/2009 01/13/2010 09/30/2012

2009-DE-1005 Adams County Did Not Have 

Adequate Controls Over Its Block 

Grant Funds, Westminster, CO

09/17/2009 01/15/2010 Note 1

2009-DE-1801 Adams County Had Weaknesses That 

Could Significantly Affect Its Capacity 

To Administer Its Recovery Act Funding, 

Commerce City, CO

09/24/2009 01/14/2010 Note 1

2009-LA-1020 The Housing Authority of the City of 

Richmond Did Not Follow Procurement 

Requirements and Had Internal Control 

Weaknesses, Richmond, CA

09/24/2009 12/29/2009 10/01/2012

2009-AT-1012 The Municipality of Río Grande 

Needs To Improve Administration of 

Its CDBG Program and Its Recovery 

Act Funds, Rio Grande, PR

09/25/2009 01/22/2010 Note 1
Appendix 3 - Tables 65

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2009-AT-0001 HUD Lacked Adequate Controls To 

Ensure the Timely Commitment and 

Expenditure of HOME funds

09/28/2009 03/18/2011 Note 3

2009-AT-1013 The City of Atlanta Entered Incorrect 

Commitments Into HUD’s Integrated 

Disbursement and Information System 

for its HOME Program, Atlanta, GA

09/28/2009 11/05/2009 Note 1

2009-CH-1017 The Housing Authority of the City of 

Terre Haute Failed To Follow Federal 

Requirements Regarding Its Turnkey III 

Homeownership Program Units’ Sales 

Proceeds, Terre Haute, IN

09/29/2009 01/22/2010 04/06/2012

2009-CH-1020 The City of Flint Lacked Adequate 

Controls Over Its Commitment and 

Disbursement of HOME Investment 

Partnerships Program Funds, Flint, MI

09/30/2009 01/27/2010 Note 1

2010-PH-1001 The City of Altoona, Pennsylvania, Made 

Unsupported Community Development 

Block Grant Payments, Altoona, PA

10/02/2009 12/17/2009 05/31/2012

2010-NY-1002 Jersey Mortgage Company 

Did Not Always Comply With 

HUD/FHA Loan Underwriting 

Requirements, Cranford, NJ

10/09/2009 03/19/2010 Note 2

2010-LA-0001 HUD’s Performance-Based 

Contract Administration Contract 

Was Not Cost Effective

11/12/2009 03/12/2010 Note 1

2010-FO-0003 Additional Details To Supplement Our 

Report on HUD’s Fiscal Years 2009 and 

2008 Financial Statements

11/16/2009 04/02/2010 Note 2
66 Appendix 3 - Tables

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2010-AO-0801 HUD Needs To Ensure That the 

Housing Authority of New Orleans 

Strengthens Its Capacity To Adequately 

Administer Recovery Funding

12/15/2009 04/19/2010 04/30/2012

2010-AO-1002 State of Louisiana Did Not Always 

Ensure Compliance Under Its 

Recovery Workforce Training 

Program, Baton Rouge, LA

01/04/2010 05/14/2010 Note 1

2010-KC-1001 The State of Iowa Misspent CDBG 

Disaster Assistance Funds and 

Failed To Check for Duplicate 

Benefits, Des Moines, IA

03/10/2010 09/13/2010 10/31/2012

2010-KC-1003 The City of East St. Louis Did Not 

Properly Allocate Salary and Building 

Expenses or Properly Document Its 

Process To Secure a Consulting Services 

Contract, East St. Louis, IL

03/26/2010 07/22/2010 Note 2

2010-CH-0001 The Office of Block Grant Assistance 

Lacked Adequate Controls Over 

the Inclusion of Special Conditions 

in NSP Grant Agreements

03/29/2010 07/27/2010 Note 2

2010-AT-1003 The Housing Authority of 

Whitesburg Mismanaged Its 

Operations, Whitesburg, KY

04/28/2010 08/26/2010 11/29/2035

2010-AO-1003 The State of Louisiana’s Subrecipient 

Generally Ensured Costs Were 

Supported Under Its Tourism 

Marketing Program, Baton Rouge, LA

04/30/2010 08/27/2010 Note 1

2010-PH-1008 Sasha Bruce Youthwork, Incorporated, 

Did Not Support More Than $1.9 Million 

in Expenditures, Washington, DC

05/11/2010 11/03/2010 Note 2
Appendix 3 - Tables 67

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2010-CH-1007 The Michigan State Housing 

Development Authority Needs To 

Improve Its Controls Over Section 

8 Project-Based Housing Assistance 

Payments, Lansing, MI

05/14/2010 09/08/2010 05/31/2012

2010-AT-1006 The Puerto Rico Department of Housing 

Failed To Properly Manage Its HOME 

Investment Partnerships Program, San 

Juan, PR

06/11/2010 10/08/2010 Note 2

2010-CH-1008 The DuPage Housing Authority 

Inappropriately Administered Its 

Section 8 Project-Based Voucher 

Program, Wheaton, IL

06/15/2010 10/08/2010 12/31/2012

2010-NY-1012 The City of Jersey City’s CDBG 

Funds Used for a Float Loan Did 

Not Comply With Applicable 

Regulations, Jersey City, NJ

07/01/2010 01/25/2011 Note 2

2010-FW-1005 The Texas Department of Housing and 

Community Affairs Did Not Fully Follow 

Requirements or Best Practices in the 

Acquisition of Its Disaster RecoveryFunded Program Management Firm, 

Austin, TX

07/20/2010 11/16/2010 Note 2

2010-AT-1007 The Housing Authority, City of 

Wilson, Lacked the Capacity To 

Effectively Administer Recovery 

Act Funds, Wilson, NC

07/27/2010 11/24/2010 11/27/2013

2010-CH-1010 The Housing Authority of the City of 

Terre Haute Substantially Mismanaged 

Its Capital Fund Program and Lacked 

Capacity To Adequately Administer Its 

Recovery Act Funds, Terre Haute, IN

07/27/2010 12/07/2010 12/31/2012
68 Appendix 3 - Tables

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2010-LA-1014 The Retreat at Santa Rita Springs 

Did Not Comply With HUD Rules 

and Regulations and Other Federal 

Requirements, Green Valley, AZ

08/02/2010 11/29/2010 Note 2

2010-AO-1005 The State of Louisiana’s Subrecipient 

Did Not Always Meet Agreement 

Requirements When Administering 

Projects Under the Orleans Parish Long 

Term Community Recovery Program, 

Baton Rouge, LA

08/04/2010 01/13/2011 Note 2

2010-AT-1009 The Puerto Rico Public Housing 

Administration Needs To Improve Its 

Procurement Procedures, San Juan, PR

08/13/2010 10/29/2010 Note 2

2010-AT-1011 The Puerto Rico Department 

of Housing Did Not Ensure 

Compliance With HOME Program 

Objectives, San Juan, PR

08/25/2010 12/06/2010 Note 2

2010-FW-0003 HUD Was Not Tracking Almost 

13,000 Defaulted HECM Loans With 

Maximum Claim Amounts of Potentially 

More Than $2.5 Billion

08/25/2010 12/03/2010 12/31/2012

2010-KC-1007 The Missouri Housing Development 

Commission Did Not Always Obtain 

Required Documents and Properly 

Report on the Tax Credit Assistance 

Program Funded Under the Recovery 

Act, Kansas City, MO

09/10/2010 01/07/2011 Note 2

2010-LA-0002 HUD’s Office of Single Family 

Housing’s Management Controls Over 

Its Automated Underwriting Process

09/15/2010 01/13/2011 10/01/2012
Appendix 3 - Tables 69

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2010-KC-1008 The City of East St. Louis Awarded Block 

Grant Program Funds to Recipients 

Without Adequately Verifying Their 

Eligibility, East St. Louis, IL

09/28/2010 01/26/2011 05/12/2012

2010-CF-1801 Final Civil Action, Anchor Mortgage 

Corporation, Loan Origination 

Fraud - Violations of the False 

Claims Act, Chicago, IL

09/30/2010 02/18/2011 02/17/2013

2010-HA-0003 HUD Needs To Improve Controls Over 

Its Administration of Completed and 

Expired Contracts

09/30/2010 01/27/2011 Note 1

2011-DP-0001 HUD Did Not Properly Manage HITS 

Contracts and Contractors To Fully 

Comply With Contract Requirements 

and Acquisition Regulations

10/06/2010 02/03/2011 11/30/2012

2011-CH-1001 The City of Flint Lacked Adequate 

Controls Over Its HOME Program 

Regarding Community Housing 

Development Organizations’ HomeBuyer Projects, Subrecipients’ Activities, 

and Reporting Accomplishments in 

HUD’s System, Flint, MI

10/13/2010 02/03/2011 Note 2

2011-FW-1001 The Housing Authority of the City of 

Shreveport Mismanaged Its Recovery 

Act Funds by Entering Into Imprudent 

Contracts To Meet the Obligation 

Deadline, Shreveport, LA

10/14/2010 03/29/2011 04/01/2012

2011-AO-1002 The State of Louisiana Did Not Always 

Ensure That Disbursements Under 

Its First Time Homebuyer Program 

Complied With Federal Regulations and 

Program Requirements, Baton Rouge, LA

10/29/2010 02/25/2011 Note 2
70 Appendix 3 - Tables

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-CH-1002 ACORN Associates, Inc., Materially 

Failed To Use Its Lead Elimination 

Action Program Grant Funds 

Appropriately, New Orleans, LA

11/08/2010 01/19/2011 Note 2

2011-PH-1002 The City of Scranton Did Not 

Administer Its CDBG Program 

in Accordance With HUD 

Requirements, Scranton, PA

11/08/2010 03/08/2011 06/08/2012

2011-PH-1003 The Pennsylvania Housing Finance 

Agency Generally Administered Its Tax 

Credit Assistance Program Funded Under 

the Recovery Act in Accordance With 

Applicable Requirements, Harrisburg, PA

11/08/2010 03/08/2011 Note 2

2011-NY-1002 The City of Bayonne Did Not Adequately 

Administer Its Economic Development 

Program, Bayonne, NJ

11/12/2010 03/11/2011 Note 2

2011-FO-0003 Additional Details To Supplement Our 

Report on HUD’s Fiscal Years 2010 and 

2009 Financial Statements

11/15/2010 08/08/2011 06/30/2012

2011-CH-0001 HUD Can Improve Its Oversight of 

Public Housing Agencies’ Section 8 

Project-Based Voucher Programs

11/16/2010 03/10/2011 10/31/2012

2011-NY-1003 The Irvington Housing Authority 

Did Not Administer Its Capital Fund 

Programs in Accordance With HUD 

Regulations, Irvington, NJ

11/24/2010 03/23/2011 04/30/2013

2011-DP-0003 HUD Did Not Fully Comply With the 

Requirements of OMB Circular A-127

12/03/2010 05/05/2011 12/31/2013

2011-FO-0004 Annual Evaluation of HUD’s Compliance 

With Presidential Executive Order 

13520, Reducing Improper Payments

12/07/2010 08/01/2011 05/01/2012
Appendix 3 - Tables 71

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-LA-1005 The City and County of San Francisco 

Did Not Always Ensure That 

Homelessness Prevention and Rapid ReHousing Funds Were Used as Required, 

San Francisco, CA

12/21/2010 04/20/2011 04/19/2012

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 04/22/2012

2011-CH-1003 The City of Cleveland Lacked Adequate 

Controls Over Its HOME Investment 

Partnerships Program and American 

Dream Downpayment Initiative-Funded 

Afford-A-Home Program, Cleveland, OH

12/27/2010 04/26/2011 04/18/2012

2011-DP-0004 Fiscal Year 2010 Review of Information 

Systems Controls in Support of the 

Financial Statements Audit

01/14/2011 05/13/2011 05/13/2012

2011-AT-1802 The Municipality of Arecibo Charged 

the HOME Program With Expenditures 

That Did Not Meet Program Objectives, 

Arecibo, PR

01/27/2011 05/26/2011 04/20/2012

2011-CH-1004 The State of Indiana’s Administrator 

Lacked Adequate Controls Over the 

State’s HOME Investment Partnerships 

Program and American Dream 

Downpayment Initiative-Funded First 

Home/PLUS Program, Indianapolis, IN

01/31/2011 05/25/2011 04/30/2012

2011-NY-1005 The Lower Manhattan Development 

Corporation CDBG Disaster Recovery 

Assistance Funds, New York, NY

02/07/2011 06/20/2011 06/20/2012
72 Appendix 3 - Tables

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-KC-1001 The City of East St. Louis Did Not 

Properly Manage Housing Rehabilitation 

Contracts Funded by the CDBG 

Program, East St. Louis, IL

02/09/2011 06/09/2011 06/09/2012

2011-DP-0005 Although HUD Continued To Make 

Improvements to Its Entitywide Security 

Program, Challenges Remained in 

Its Efforts To Comply With Federal 

Information Security Requirements

02/10/2011 05/10/2011 05/09/2012

2011-PH-1007 The Philadelphia Housing Authority Did 

Not Comply With Several Significant 

HUD Requirements and Failed To 

Support Payments for Outside Legal 

Services, Philadelphia, PA

03/10/2011 06/07/2011 05/31/2012

2011-NY-1008 The Jersey City Housing Authority 

Did Not Always Obligate or 

Disburse Replacement Housing 

Factor Capital Fund Grants in a 

Timely Manner, Jersey City, NJ

03/18/2011 07/11/2011 07/09/2012

2011-PH-1008 The West Virginia Housing Development 

Fund Generally Administered Its 

Tax Credit Assistance Program 

Funded Under the Recovery Act 

in Accordance With Applicable 

Requirements, Charleston, WV

03/21/2011 07/19/2011 Note 2

2011-PH-1009 Deutsche Bank Berkshire Mortgage, Inc., 

Acquired a $45.6 Million Loan That Was 

Not Properly Underwritten in Accordance 

With HUD’s Multifamily Accelerated 

Processing Program, Bethesda, MD

03/22/2011 07/20/2011 07/11/2012

2011-CH-1006 The DuPage Housing Authority 

Inappropriately Administered Its Section 

8 Housing Choice Voucher Program, 

Wheaton, IL

03/23/2011 07/28/2011 12/31/2012
Appendix 3 - Tables 73

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-DP-0006 HUD’s Controls Over Selected 

Configuration Management Activities 

Need Improvement

03/24/2011 07/18/2011 06/30/2012

2011-LA-1008 The Hawthorne Housing Authority 

Failed To Maintain an Adequate 

Financial Management System, 

Hawthorne, CA

03/28/2011 07/20/2011 04/30/2012
74 Appendix 3 - Tables

Table B 

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 March 31, 2012

Report number Report title Issue date Decision 

date

Final 

action

2011-KC-1003 The Missouri Housing Development 

Commission Did Not Always Disburse 

Its Tax Credit Assistance Program Funds 

in Accordance With Recovery Act 

Requirements, Kansas City, MO

04/01/2011 07/29/2011 Note 2

2011-LA-1009 Special Services for Groups Approved 

Homelessness Prevention and Rapid 

Re-Housing Program Assistance for 

Unsupported and Ineligible Participants, 

Los Angeles, CA

04/06/2011 08/04/2011 08/04/2012

2011-FW-1007 Albuquerque Housing Services 

Mismanaged Its Recovery Act Funding, 

Albuquerque, NM

04/07/2011 08/03/2011 07/31/2012

2011-NY-1009 The East Orange Revitalization and 

Development Corporation Did Not 

Always Comply With HOME Program 

Requirements and Federal Regulations, 

East Orange, NJ

04/07/2011 08/03/2011 08/05/2012

2011-AO-1004 The New Orleans Redevelopment 

Authority Had Not Administered Its 

Recovery Act NSP2 in Accordance With 

Federal Regulations, New Orleans, LA

04/08/2011 08/06/2011 04/30/2012

2011-AT-1006 The Municipality of Mayaguez Did 

Not Ensure Compliance With HOME 

Program Objectives, Mayaguez, PR

04/08/2011 08/05/2011 07/08/2012
Appendix 3 - Tables 75

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-FW-0001 The National Servicing Center 

Implemented the FHA-HAMP Loss 

Mitigation Option in Accordance 

With Rules and Regulations

04/08/2011 08/05/2011 08/03/2012

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 01/24/2013

2011-AO-1005 The State of Mississippi Generally 

Ensured That Disbursements to 

Program Participants Were Eligible and 

Supported, Jackson, MS

04/18/2011 08/16/2011 08/15/2012

2011-LA-0002 HUD Did Not Always Follow Its 

Requirements for the Preclosing 

and Postclosing Review of 

Mortgage Files Submitted by New 

Direct Endorsement Lenders

04/18/2011 08/02/2011 04/28/2012

2011-AT-1008 Palm Beach County Did Not 

Fully Comply With Federal 

Requirements When Administering 

Its NSP, Palm Beach, FL

04/22/2011 08/16/2011 08/13/2012

2011-FW-0002 The Office of Healthcare Programs Could 

Increase Its Controls To More Effectively 

Monitor the Section 232 Program

04/26/2011 08/17/2011 08/17/2012

2011-LA-1802 The Housing Authority of the 

City of Los Angeles Charged Its 

Recovery Act Program Without 

Applying Cost Reductions or 

Credits Related to Insurance 

Reimbursements, Los Angeles, CA

05/05/2011 08/24/2011 08/24/2012
76 Appendix 3 - Tables

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-LA-1010 People Assisting the Homeless Did 

Not Always Ensure That Homelessness 

Prevention and Rapid Re-Housing 

Funds Were Used To Assist Eligible and 

Supported Participants, Los Angeles, CA

05/17/2011 09/14/2011 08/03/2012

2011-PH-1010 The Philadelphia Housing Authority 

Failed To Support Payments and 

Improperly Used Funds From the ARRA, 

Philadelphia, PA

05/17/2011 09/02/2011 07/31/2012

2011-CH-1008 The State of Michigan Lacked Adequate 

Controls Over Its NSP Regarding Awards, 

Obligations, Subgrantees’ Administrative 

Expenses and Procurement, and 

Reporting Accomplishments, Lansing, MI

06/03/2011 11/30/2011 04/27/2012

2011-CH-0002 HUD’s Oversight of Its Multifamily 

Housing Subsidy Payment Review Process 

Needs Improvement

06/06/2011 11/30/2011 09/30/2012

2011-AT-1009 The Georgia Department of Community 

Affairs Paid for Some Unsupported 

Program Participants, Atlanta, GA

06/07/2011 07/27/2011 06/06/2012

2011-BO-1008 The Housing Authority of the City of 

New Haven Could Not Show That It 

Always Complied With Environmental 

and Labor Standards Enforcement 

Requirements, New Haven, CT

06/10/2011 10/05/2011 09/17/2012

2011-FW-1012 The City of Tulsa Mismanaged Its 

Recovery Act Funding, Tulsa, OK

06/16/2011 10/13/2011 09/30/2012

2011-AO-0001 The Lafayette Parish Housing 

Authority Violated HUD Procurement 

Requirements and Executed 

Unreasonable and Unnecessary Contracts

06/22/2011 10/13/2011 10/31/2012
Appendix 3 - Tables 77

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-AT-1010 Crossfire Financial Network Did Not 

Follow HUD Requirements in Approving 

FHA Loans and Implementing Its 

Quality Control Program, Miami, FL

06/24/2011 10/11/2011 09/30/2012

2011-FW-1013 The City of Beaumont Should 

Strengthen Its Controls Over Its 

Homelessness Prevention and Rapid 

Re-Housing Program, Beaumont, TX

06/30/2011 10/27/2011 10/05/2012

2011-PH-1012 The City of Reading Generally Complied 

With NSP2 Requirements, Reading, PA

06/30/2011 10/13/2011 08/06/2012

2011-LA-1012 The City of Las Vegas Did Not Always 

Ensure That Homelessness Prevention 

and Rapid Re-Housing Funds Were Used 

as Required, Las Vegas, NV

07/06/2011 10/28/2011 06/30/2012

2011-AT-1011 Prospect Mortgage, LLC, Did 

Not Always Comply With FHA 

Underwriting and Quality Control 

Requirements, Sherman Oaks, CA

07/08/2011 01/04/2012 Note 3

2011-NY-1802 The City of Dunkirk Used CDBG 

Recovery Act Funding for an 

Ineligible Activity, Dunkirk, NY

07/14/2011 11/10/2011 11/09/2012

2011-LA-1015 Chicanos Por La Causa, Inc., Did 

Not Always Administer Its NSP2 

Grant In Accordance With HUD 

Requirements, Phoenix, AZ

07/22/2011 11/09/2011 06/30/2012

2011-CH-1010 The Rockford Housing Authority 

Needs To Improve Its ARRA Contract 

Administration Procedures, Rockford, IL

07/25/2011 11/08/2011 04/30/2012
78 Appendix 3 - Tables

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-DP-0008 The Disaster Recovery Grant Reporting 

System That Maintained Recovery 

Act Information Had Application 

Security Control Deficiencies

07/28/2011 11/25/2011 09/01/2012

2011-NY-1011 The Housing Authority of the 

City of Elizabeth Had Weaknesses 

in Its Capital Fund Program’s 

Financial Controls, Elizabeth, NJ

08/04/2011 11/30/2011 11/29/2012

2011-CH-1012 The Saginaw Housing Commission 

Did Not Fully Implement Prior Audit 

Recommendations and Continued To 

Use Its Public Housing Program Funds 

for Ineligible Purposes, Saginaw, MI

08/09/2011 11/10/2011 11/01/2012

2011-PH-1014 The Allegheny County Housing 

Authority Did Not Always Procure Goods 

and Services or Obligate Funds According 

to Recovery Act and Applicable HUD 

Requirements, Pittsburgh, PA

08/10/2011 12/22/2011 08/01/2012

2011-AO-1006 The Mississippi Regional Housing 

Authority VIII Generally Followed 

Requirements When Obligating 

and Expending Its Recovery 

Act Capital Funds but Did Not 

Accurately Report Recovery Act 

Grant Information, Gulfport, MS

08/16/2011 10/24/2011 04/30/2012

2011-CH-1013 The Youngstown Metropolitan Housing 

Authority Needs To Improve Its 

Procurement Process, Youngstown, OH

08/16/2011 12/13/2011 09/30/2012

2011-NY-1012 Ameritrust Mortgage Bankers, Inc., Did 

Not Always Comply With HUD-FHA 

Loan Origination and Quality Control 

Requirements, Lake Success, NY

08/16/2011 12/09/2011 07/31/2012
Appendix 3 - Tables 79

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-LA-1016 The City of Compton Did Not 

Administer Its HOME Program 

in Compliance With HOME 

Requirements, Compton, CA

08/18/2011 12/15/2011 11/30/2012

2011-AO-0002 The Lafayette Parish Housing Authority 

Generally Followed Requirements When 

Obligating and Expending Its Public 

Housing Capital Fund Stimulus Recovery 

Act Funds but Did Not Always Comply 

With Recovery Act Procurement and 

Reporting Requirements

08/26/2011 10/13/2011 10/13/2012

2011-BO-1009 Weymouth Housing Authority 

Did Not Always Administer Its 

Housing Choice Voucher Program 

and Public Housing Program in 

Accordance With HUD Regulations 

and Its Annual Contributions 

Contracts, Weymouth, MA

08/29/2011 12/22/2011 07/31/2012

2011-NY-1013 Long Branch Housing Authority 

Generally Complied With Capital Fund 

Program Regulations, Long Branch, NJ

09/01/2011 12/23/2011 08/31/2012

2011-NY-1014 All American Home Mortgage Corp. 

Did Not Always Comply With 

HUD-FHA Loan Underwriting 

Requirements, Brooklyn, NY

09/06/2011 01/05/2012 09/06/2012

2011-AT-1016 The City of Hialeah Did Not Accurately 

Report the Number of Jobs Created or 

Retained on the Recovery Act Web Site 

for Its Homelessness Prevention and 

Rapid Re-Housing Program, Hialeah, FL

09/14/2011 12/14/2011 09/13/2012

2011-FW-1015 The Housing Authority of the City of 

Las Cruces Complied With Recovery 

Act Capital Fund Obligation and 

Expenditure Requirements but 

Had Environmental and Reporting 

Exceptions, Las Cruces, NM

09/15/2011 01/05/2012 04/30/2012
80 Appendix 3 - Tables

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-NY-1015 Weaknesses Existed in Essex County’s 

Administration of Its Homelessness 

Prevention and Rapid Re-Housing 

Program, Essex County, NJ

09/20/2011 01/11/2012 10/01/2012

2011-LA-1017 Universal American Mortgage 

Company Branch Did Not Comply 

With HUD Regulations in the 

Origination and Quality Control of 

FHA-Insured Loans, Las Vegas, NV

09/21/2011 01/19/2012 09/21/2012

2011-LA-1018 The Tule River Indian Housing 

Authority Did Not Administer the 

Procurement and Contracting of Its 

Recovery Act Native American Housing 

Block Grant in Accordance With 

HUD requirements, Porterville, CA

09/22/2011 12/15/2011 07/30/2012

2011-NY-1016 The City of Buffalo Did Not 

Always Disburse Homelessness 

Prevention and Rapid Re-Housing 

Program Funds in Accordance 

With Regulations, Buffalo, NY

09/22/2011 01/25/2012 01/24/2013

2011-PH-1015 Camden County Generally Administered 

Its CDBG-R Act Funds According to 

Applicable Requirements, Camden, NJ

09/22/2011 01/12/2012 12/31/2012

2011-FW-1016 AmericaHomeKey, Inc., Did Not Follow 

HUD-FHA Loan Requirements in 

Underwriting 13 of 20 Manufactured 

Home Loans, Dallas, TX

09/23/2011 01/20/2012 09/23/2012

2011-SE-1008 The Idaho Housing and Finance 

Association Did Not Always 

Comply With HOME Investment 

Partnerships Project and Cost 

Eligibility Regulations, Boise, ID

09/23/2011 01/18/2012 07/12/2012
Appendix 3 - Tables 81

Table B 

Report number Report title Issue date Decision 

date

Final 

action

2011-DE-1005 The State of Montana Generally Used 

Its CDBG-R Funds in Compliance With 

Requirements but Improperly Negotiated 

and Serviced Loans, Helena, MT

09/26/2011 01/12/2012 09/25/2012

2011-AT-1018 The Municipality of San Juan Did Not 

Properly Manage Its HOME Investment 

Partnerships Program, San Juan, PR

09/28/2011 01/12/2012 11/30/2012

2011-AT-1019 The Alabama Department of 

Economic and Community Affairs 

Used Homelessness Prevention and 

Rapid Re-Housing Program Funds 

for Ineligible and Unsupported 

Purposes, Montgomery, AL

09/28/2011 01/10/2012 05/31/2012

2011-PH-1016 The Philadelphia Housing Authority Did 

Not Have Conflicts of Interest Related to 

Recovery Act Rehabilitation but Failed 

To Comply With Financial Disclosure 

Requirements, Philadelphia, PA

09/28/2011 11/21/2011 05/31/2012

2011-AO-1007 Jefferson Parish Housing Authority Did 

Not Always Comply With Public Housing 

Capital Fund Stimulus Recovery Act 

Obligation, Procurement, and Reporting 

Requirements, Marrero, LA

09/29/2011 01/26/2012 12/31/2012

2011-CH-1014 The City of Cleveland Lacked Adequate 

Controls Over Its HOME Investment 

Partnerships Program-Funded Housing 

Trust Fund Program Home-Buyer 

Activities, Cleveland, OH

09/29/2011 01/26/2012 01/05/2013

2011-CH-1015 The Springfield Metropolitan Housing 

Authority Did Not Administer Its Grant 

in Accordance With Recovery Act and 

HUD Requirements, Springfield, OH

09/30/2011 01/24/2012 09/30/2012



Appendix 3 - Tables 85

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.






92 OIG - Telephone Directory

Office of Audit

Headquarters Office of Audit, Washington, DC 202-708-0364

Region 1/2 Boston, MA 617-994-8380

 Hartford, CT 860-240-4837

New York, NY 212-264-4174

Albany, NY 518-462-2892

Buffalo, NY 716-551-5755

Newark, NJ 973-776-7339

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

Jackson, MS 601-965-4700

Jacksonville, FL 904-232-1226

Knoxville, TN 865-545-4400

Miami, FL 305-536-5387

San Juan, PR 787-766-5540

Region 5 Chicago, IL 312-353-7832

 Columbus, OH 614-469-5745

Detroit, MI 313-226-6280

Albuquerque, NM 505-346-7270

Region 6 Fort Worth, TX 817-978-9309

 Baton Rouge, LA 225-448-3976

Houston, TX 713-718-3199

New Orleans, LA 504-671-3715

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
OIG - Telephone Directory 93

Office of Investigation

Headquarters Office of Investigation, Washington, DC 202-708-0390

Region 1 Boston, MA 617-994-8450

 Hartford, CT 860-240-4800

Manchester, NH 603-666-7988

Region 2 New York, NY 212-264-8062

 Buffalo, NY 716-551-5755

Newark, NJ 973-776-7355

Region 3 Philadelphia, PA 215-430-6758

 Baltimore, MD 410-209-6533

Pittsburgh, PA 412-644-6598

Richmond, VA 804-822-4890

Washington, DC 202-314-5451

Region 4 Atlanta, GA 404-331-5001

 Birmingham, AL 205-745-4314

Columbia, SC 803-451-4318

Greensboro, NC 336-547-4000

Hattiesburg, MS 601-434-5848

Jackson, MS 601-965-4700

Louisville, KY 502-582-5251

Memphis, TN 901-969-0344

Miami, FL 305-536-3087

Nashville, TN 615-736-2332

San Juan, PR 787-766-5868

Tampa, FL 813-228-2026

Region 5 Chicago, IL 312-353-4196

 Cleveland, OH 216-357-7800

Columbus, OH 614-469-6677

Detroit, MI 313-226-6280

Grand Rapids, MI 616-309-2845

Indianapolis, IN 317-226-5427

Minneapolis-St. Paul, MN 612-370-3130

Region 6 Fort Worth, TX 817-978-5440

 Baton Rouge, LA 225-448-3941

Houston, TX 713-718-3221

Little Rock, AR 501-324-5931

New Orleans, LA 504-671-3700

Oklahoma City, OK 405-609-8603

San Antonio, TX 210-475-6819
94 OIG - Telephone Directory

Region 7 Kansas City, KS 913-551-5866

 St. Louis, MO 314-539-6559

Region 8 Denver, CO 303-672-5350

 Billings, MT 406-247-4080

Salt Lake City, UT 801-524-6090

Seattle, WA 206-220-5380

Region 9 Los Angeles, CA 213-894-0219

 Las Vegas, NV 702-366-2105

Phoenix, AZ 602-379-7252

Sacramento, CA 916-930-5693

San Francisco, CA 415-489-6683
OIG - Telephone Directory 95

Report fraud, waste, and mismanagement in HUD

programs and operations by

Calling the OIG hotline: 1-800-347-3735

Faxing the OIG hotline: 202-708-4829

Sending written information to

Department of Housing and Urban Development

Inspector General Hotline (GFI)

451 7th Street, SW

Washington, DC 20410

Emailing the OIG hotline: hotline@hudoig.gov

Internet: http://www.hudoig.gov/hotline/index.php

All information is confidential,

and you may remain anonymous.