Federal Reports

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We prepared this memorandum to provide the Office of Housing at the U.S. Department of Housing and Urban Development (HUD) with key considerations from prior audits of the HUD Single Family Default Monitoring System (SFDMS) and the partial claim loss mitigation option. These audits identified HUD’s lack of effective controls to ensure that lenders reported default information accurately and in a timely manner, lenders promptly filed and reported partial claims, and partial claims fully reinstated delinquent loans. Prior audits also identified that the current design of partial claims results in an inferior lien position on the securing property during a foreclosure sale. HUD should address these situations now to ensure program integrity and minimize the risk of financial loss during the novel coronavirus (COVID-19) national emergency.

The objective of the performance audit was to assess the extent to which the implementation of the project assignment and allocation process by the CNAs is effective and follows applicable laws and regulations as well as established policies and procedures. To answer the audit objective, the auditors interviewed key officials from the CNAs and the Commission and spoke with selected leaders from the NPA community. Overall, the performance audit concluded that while the CNAs’ project distribution processes were generally effective and followed applicable laws, regulations, and established guidance from the Commission, the CNAs’ distribution processes could be improved with updated guidance, better Commission management, and additional oversight from the Commission. The auditors identified several opportunities for the Commission to improve the CNAs’ processes by clarifying their current guidance and requiring the CNAs to fully align their project distribution policies with Commission policy 51.301 (Selection of NPAs for Project Assignment and Allocation of Orders and its related Interim Pilot Test).

We determined that U.S Customs and Border Protection’s (CBP) mail inspection processes and physical security at the John F. Kennedy (JFK) International Airport International Mail Facility (IMF) are ineffective, showing limited progress since our prior audit. CBP inspected approximately [REDACTED} of the 1.3 million pieces of mail it received during our June 2019 site visit. CBP also did not timely inspect and process mail from high-risk countries, creating unmanageable backlogs. These deficiencies were largely because of inadequate resources and guidance. Consequently, more than [REDACTED] pieces of mail were sent out for delivery without physical inspection. We made eight recommendations aimed at improving international mail processes at JFK International Airport. CBP concurred with six, but non-concurred with two of the recommendations.