Open Recommendations

We recommend that the Acting Director of HUD's Newark Office of Public Housing instruct Authority officials to provide documentation to support that $13,340 in rent collected in March 2016 was deposited into an appropriate bank account or repay the Operating Fund from non-Federal funds for any amount not properly deposited.

We recommend that the Acting Director of HUD's Newark Office of Public Housing instruct Authority officials to provide documentation to justify the $106,971 in unsupported rent that was written off for 52 tenants. Any amount determined to be ineligible should be repaid from non-Federal funds to the Operating Fund.

We recommend that the Acting Director of HUD's Newark Office of Public Housing instruct Authority officials to reimburse the program income account from non-Federal funds for $21,857 in ineligible expenditures for golf outings, banquets, or dinner shows.

We recommend that the Acting Director of HUD's Newark Office of Public Housing instruct Authority officials to provide documentation to justify $37,671 that did not have receipts or other support showing how these transactions were used for low-income housing and benefited the residents or repay the program income account from non-Federal funds for any amount not supported.

We recommend that the Acting Director of HUD's Newark Office of Public Housing instruct Authority officials to provide documentation to show that the $710,721 paid for services procured was for costs that were reasonable or repay from non-Federal funds approximately $500,000 to the Operating Fund and approximately $200,000 to the Capital Fund. Footnote: Regulations at 24 CFR 905.306(f) require that all capital funds be spent within 48 months after the date on which they become available.

Require New Horizons to repay HUD from project funds if available (otherwise, from nonproject funds) $144,556 in housing assistance payments for tenants who were not eligible for assistance or not living in units.

Require New Horizons to provide support for the $726,399 in housing assistance payments based on missing or incomplete tenant files or repay the assistance from project funds if available (otherwise, from nonproject funds) to HUD.

Require New Horizons to support that $16,687 in tenant rents was collected and deposited as required or repay the project from nonproject funds.

Reconsider HUD's position on questioned borrower-financed downpayment assistance programs, including an analysis of the financial impact to FHA borrowers, risk to the FHA program, and whether current statute prohibits borrower-financed downpayment assistance programs as they are currently structured.

Develop specific requirements and guidance for lenders to review HFA downpayment assistance programs (for example, interest rates, fees, borrower certifications, lender reviews, impact to borrower, related agreements, etc.). Requirements and guidance should include evaluating the structure of downpayment assistance programs, including whether the programs' structure and funding mechanisms comply with all HUD requirements and guidelines.

Require lenders to obtain a borrower certification that details their participation in an HFA downpayment assistance program, including relevant details of the specific program (for example, impact on interest rate, mortgage payments, fees, equity, acknowledgement of other less costly loan products, etc.).

Ensure that lenders enter accurate and missing downpayment assistance gift data into FHA Connection when identified by HUD.

Implement new data fields where lenders would be required to enter specific downpayment assistance information (for example, name of the source, name of assistance program, name of government entity or HFA, etc.) to allow for auditability and for HUD to generate reports and perform risk assessments.

Review fees identified in this report that were charged as part of borrower-financed downpayment assistance programs and determine whether they are reasonable or necessary. HUD should immediately notify lenders to discontinue charging any fees that are determined to be unreasonable and unnecessary.

Require any participating lender to reimburse borrowers that received an FHA loan with borrower-financed downpayment assistance for any fees that were determined to be unreasonable and unnecessary.

Submit a plan showing how it will use the $7,984,429 in unspent escrow funds to meet program objectives and increase the supply of low- and moderate-income housing for the residents of Puerto Rico, including a schedule HUD can track to ensure the expenditure.

Submit supporting documentation so HUD can reevaluate the feasibility of the three activities and determine the eligibility of the $2,432,271 in escrow funds already disbursed. If HUD determines that an activity has been canceled or is not feasible, the Department must reimburse the escrow account from non-Federal funds.

Submit a plan showing how it will proceed regarding the Yabucoa, Juncos, and Barceloneta housing projects, including a schedule that HUD can track to ensure their completion.

Submit supporting documentation showing the reasonableness and allowability of $2,176,733 disbursed or reimburse its escrow account from non-Federal funds.

Develop and implement written policies detailing procedures and responsibilities related to program administration and monitoring of the escrow program.

Submit required certifications and supporting documentation showing that residents of escrow-funded activities met the established income limit requirements. Any amounts determined ineligible must be reimbursed to the escrow account from non-Federal funds.

Evaluate the results of its actions for the 77 beneficiaries and determine whether it should review the remaining population of 224,164 beneficiaries we identified.

The Executive Committee should direct Railroad Retirement Board management to elevate Railroad Retirement Board - Office of Inspector General auditor concerns regarding application of authoritative guidance and laws and regulations for Executive Committee determinations when Railroad Retirement Board management disagrees with Railroad Retirement Board - Office of Inspector General auditor assessments.