Federal Reports

Charge Card Risk Assessment

We audited the U.S. Department of Housing and Urban Development’s (HUD) efforts to proactively communicate information related to the coronavirus disease of 2019 (COVID-19) to homeowners with Federal Housing Administration (FHA)-insured mortgages. We initiated this work based on a U.S. Government Accountability Office report that identified helping borrowers understand the protections available to them as a key challenge and prior audit and evaluation work that found issues related to communication and COVID-19. Our audit objective was to assess HUD’s communication to homeowners with FHA-insured mortgages through its website, joint website, and other proactive methods about protections, repayment options, loss mitigation options, and responsibilities related to COVID-19.HUD proactively communicated critical information to homeowners during the COVID-19 pandemic. However, there are several areas in which HUD could improve its communication. For example, HUD’s COVID-19 Resources for Homeowners webpage did not (1) clearly present the deadline for requesting forbearance, (2) detail loss mitigation options available after forbearance, and (3) include detailed information for homeowners with reverse mortgages. Additionally, letters mailed to homeowners may not have been timely for some and did not discuss loss mitigation. This condition occurred in part because HUD chose to direct certain information to lenders only and relied on them to communicate with borrowers, and because it did not have a strategy for sending letters. As a result, homeowners may not have been aware of available protections and loss mitigation options. If HUD addresses the issues identified, it could better serve homeowners through the end of the COVID-19 pandemic and during future disasters and national emergencies.We recommend that HUD’s Office of Single Family Housing update its COVID-19 Resources for Homeowners webpage to adequately cover key information related to forbearance for forward mortgages, extension periods for reverse mortgages, loss mitigation, and other assistance available. We also recommend that HUD develop a communication strategy detailing how and when it plans to use websites, letters, and other methods to proactively notify homeowners about relief programs, protections, and loss mitigation options during disasters and national emergencies.

Ever since Congress created the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) under the Emergency Economic Stabilization Act (EESA), SIGTARP has delivered for American taxpayers. As a law enforcement office, SIGTARP has a proven record of identifying and investigating fraud and other crime. SIGTARP investigations have resulted in the recovery of at least $11.3 billion, criminal prosecutions by the Department of Justice and others of 469 defendants—321 of them sentenced to prison, including 75 bankers. Our investigations have also resulted in enforcement actions against 25 corporations/entities, including enforcement actions against many of the largest U.S. financial institutions. As an independent watchdog, SIGTARP has consistently identified fraud, waste, abuse, ineffectiveness, inefficiency, and risk in EESA programs, and brought transparency to EESA.

The PRAC’s Pandemic Analytics Center of Excellence (PACE) data scientists identified $5.4 Billion in potential identity fraud associated with over 69,000 questionable Social Security Numbers (SSNs) used on applications across disbursed loans in the Small Business Administration’s COVID-19 Economic Injury Disaster Loan Program and Paycheck Protection Program. Through collaborative verification methods with the Social Security Administration, we identified that these SSNs were used in connection with over 99,000 applications and warrant further scrutiny. The results of this Fraud Alert demonstrate the benefit of a consent-based verification process to authenticate basic applicant information. This leading practice can be facilitated by legislative language requiring federal agencies to use a such a process when making applicant eligibility determinations and by authorizing agencies such as SSA to verify information.

An Amtrak trainmaster based in New Orleans, Louisiana, was terminated from employment on January 27, 2023, after our investigation found that the employee violated company policies by intentionally submitting an application containing false statements and information to the Small Business Administration in order to qualify for a CARES Act Economic Injury Disaster Loan for a business that does not exist. Additionally, when interviewed by our agents, the employee failed to be forthright, honest, or cooperative. We also found that the employee violated company policy by not disclosing any outside business activities on his certificates of compliance.