Federal Reports

An Amtrak carman based in Miami, Florida, resigned from his position on March 2, 2025, while under investigation. Our investigation found that the former employee violated company policies by leaving work early so he could report to a second job as an airline mechanic at the Miami airport. The former employee is not eligible for rehire.

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG) is auditing the use of Community Development Block Grant Disaster Recovery (CDBG-DR) funds as non-Federal match for the Federal Emergency Management Agency’s (FEMA)Public Assistance Program.  Our objectives are to determine whether four CDBG-DR grantees made improper payments and whether the Office of Community Planning and Development’s Office of Disaster Recovery (CPD ODR) had sufficient and adequate controls to prevent improper payments.  While performing this work, we identified an issue that was outside the scope of our current work and requires prompt attention from CPD ODR.  The objective of this interim report is to notify CPD ODR officials of the issue so they can take immediate action.

We determined that CPD does not collect accurate, reliable financial and activity data related to activities in which disaster recovery funds were used to satisfy the matching requirement for other Federal, State, or local programs (match activities).  In our ongoing audit, our sample of four disaster recovery grantees either did not report or reported incomplete information related to their match activities.  This condition occurred because CPD recommends but does not require that such information be reported.  Therefore, there is a risk of incomplete or inaccurate reporting of match activity data for the remaining 75 active disaster recovery grantees.  Due to the increased fraud risk that match activities may result in the possible duplication of payments for the same expenses, the collection of this information would be valuable to HUD’s fraud risk management program.  Requiring this data would also assist HUD in advancing its data analytics strategy and could result in the prevention and detection of potential improper payments or fraud in this area.  Additionally, it would provide increased transparency and could improve HUD’s overall grantee oversight.

We are recommending that CPD ODR require active disaster recovery grantees to report in DRGR other sources of funding used for non-Federal match activities.  In addition, CPD ODR needs to develop and implement internal controls to ensure that grantees completely and accurately report non-Federal match activities in DRGR.

We substantiated allegations that management and staff of Panoche Water District conspired to illegally divert water from CA and BOR waterways.

We performed an audit of CMG Mortgage, Inc., to evaluate its quality control (QC) program for originating and underwriting Single Family Federal Housing Administration (FHA)-insured loans.  We selected CMG for review based on its loan volume and delinquency rate and because its rate of self-reporting loans to HUD when it identified fraud, material misrepresentations, and other material findings that it could not mitigate was below average for more than a 5-year period.

We found that CMG’s QC program for originating and underwriting FHA-insured loans was not sufficient.  Specifically, CMG (1) did not select the proper number of loans for review and maintain complete and accurate data to document its loan selection process; (2) did not always complete key review steps and sometimes missed material deficiencies; and (3) did not adequately mitigate and report loan review findings, which included self-reporting loans to HUD when required.  These issues occurred because CMG had insufficient controls over its QC program and was not always familiar with HUD requirements.  As a result, HUD did not have assurance that CMG’s QC program fully achieved its intended purposes, which include, among other things, protecting the FHA insurance fund and lender from unacceptable risk, guarding against fraud, and ensuring timely and appropriate corrective action.

We recommended that HUD require CMG to (1) update its QC plan and related procedures to align with HUD requirements; (2) demonstrate that its training for staff and management has been updated to reflect changes to its QC plan and related procedures, and to cover the underlying requirements for lender QC programs; (3) review the loans that it had not selected and take appropriate actions when applicable; (4) evaluate its QC files for the loans in which it identified material findings to confirm whether it self-reported to HUD all findings of fraud or material misrepresentation, along with any other material findings that it did not acceptably mitigate.