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We initiated an audit of the U.S. Department of Housing and Urban Development’s (HUD) oversight of Federal Housing Administration (FHA) refunds to determine whether HUD appropriately, effectively, and efficiently tracked, monitored, and issued FHA refunds owed to homeowners with terminated loans. During the audit field work, the Coronavirus 2019 (COVID-19) pandemic began and as a result, we developed a second, more urgent audit objective to determine how COVID-19 affected policies, procedures, and distribution of FHA refunds and whether HUD’s response was appropriate. We determined that COVID-19 generally did not affect the Single Family Insurance Operations Division’s (SFIOD) FHA refund policies and procedures; however, the SFIOD did not fully notify homeowners of operational changes to its physical mail procedures, which potentially impacted its distribution of refunds. We issued this interim report to ensure HUD was made aware of the issues identified during its review and could act in a timely manner to address them. The audit prompted HUD to take immediate corrective action for all three recommendations, one of which was closed concurrently with the issuance of this memorandum and two that will be completed during audit resolution.

Recommendation Status Date Issued Summary
2021-LA-0802-001-A Cerrado Diciembre 02, 2020 Adequately notify homeowners that, due to COVID-19, all FHA refund applications and supporting documents should be sent electronically to avoid delay in processing. This process should include (1) developing and expediting implementation of correspondence sent to homeowners with the application, (2) a notice of operational changes on HUD’s FHA refunds websites, (3) ensuring that HUD’s Does HUD Owe You a Refund website is updated to the most recent FHA Homeowners Fact Sheet, (4) an updated voice message from the call center including an accurate email, and (5) developing an updated script for call center agents for the initial contact with the homeowner, follow up, and contact with homeowners who already submitted their application by mail.
2021-LA-0802-001-B Cerrado Diciembre 02, 2020 Conduct a privacy impact assessment for accepting homeowner FHA refund applications and supporting documentation that contain PII electronically to identify potential risks and develop and implement plans to mitigate those risks.
2021-LA-0802-001-C Cerrado Diciembre 02, 2020 Develop and implement written policies and procedures for SFIOD to quickly respond to emergency situations when staff cannot return to the office. Procedures should include steps to quickly notify homeowners of any changes made to the FHA refund process.