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.

We recommend that the Director of HUD’s Newark, NJ, Office of Community Planning and Development instruct County officials to reimburse $3,536,974 to the County’ HOME program line of credit for assistance spent on the four activities that were partially terminated or noncompliant with program requirements.

We recommend that the Director of HUD’s Newark, NJ, Office of Community Planning and Development instruct County officials to provide disbursement documentation to support the eligibility of the $435,094 made for the two activities or repay the County’s HOME program line of credit from non-Federal source.

We recommend that the Director of HUD’s Newark, NJ, Office of Community Planning and Development instruct County officials to provide documentation to support that laborers associated with the activity are compensated in compliance with Davis-Bacon wage rates. If documentation cannot be provided, $567,767 needs to be reimbursed to the County’s HOME line of credit from non-Federal sources.

We recommend that the Director of HUD’s Newark, NJ, Office of Community Planning and Development instruct County officials to reimburse $242,269 to the County’s HOME program line of credit for CHDO reserve fund disbursed to the ineligible CHDO.

We recommend that the Director of HUD’s Newark, NJ, Office of Community Planning and Development instruct County officials to provide documentation to support that at least one-third of the Homefirst board were representatives of a low-income community. If documentation cannot be provided, reimburse the $227,903 to the County’s HOME program line of credit from non-Federal sources.

We recommend that the Director of HUD’s Newark, NJ, Office of Community Planning and Development instruct County officials to reimburse the $536,507 in program income to the County’s HOME program local bank account and record the income in IDIS.

We recommend that the Director of HUD’s Newark, NJ, Office of Community Planning and Development instruct County officials to provide documents, such as pay stubs and bank statements, to support the eligibility of the two home buyers. If documentation cannot be provided, reimburse $260,736 from non-Federal sources to the County’s HOME program line of credit.

We recommend that HUD’s Acting Deputy Assistant Secretary for Grant Programs instruct City officials to reimburse the Program from non-Federal funds $18,274,054 in exempt State sales tax on repairs and maintenance services.

We recommend that HUD’s Acting Deputy Assistant Secretary for Grant Programs instruct City officials to strengthen controls over disbursements to ensure that all costs charged to the Program are allowable, reasonable, and necessary in compliance with the HUD-approved action plan and Federal and State regulations.

Provide support showing that $17,414 in management fees charged to the projects using a budgeted amount represented actual amounts or repay the difference to each affected project.

Provide documentation to support that it paid itself $447,345 for eligible purposes or reimburse the appropriate projects for the balance.

Verify all management fees charged to the projects from 2013 through 2015 were appropriate.

Require Majestic Management to reimburse the appropriate projects their portion of $231,091 for work not completed or overbilled.

Require Majestic Management to provide support that $462,281 paid for procurements was reasonable or reimburse the appropriate projects for the balance.

Reimburse the appropriate projects their portion of $11,184 that it charged for ineligible items.

Provide documentation to support that $48,891 was spent for eligible purposes or reimburse the appropriate projects for the balance.

Issue a change to regulations at 24 CFR Part 203, which would avoid unnecessary costs to the FHA insurance fund, allowing an estimated $2.23 billion to be put to better use. These changes include (1) a maximum period for filing insurance claims and (2) disallowance of expenses incurred beyond established timeframes.

Status

The Federal Housing Administration (FHA) reported that the recommendation cannot be closed out without the publication of the FHA Maximum Claim Rule. The proposed changes have been on HUD’s regulatory agenda since Spring 2020 but, as of February 2025, the Office of Single Family Housing does not have an estimated publication date.

Analysis

To fully address this recommendation, HUD must publish the FHA Maximum Claim Rule. Implementation of this rule should result in HUD putting $2.23 billion to better use.

Acknowledge that the attached settlement agreement for $510,000 represents an amount due HUD.

We recommend that the Acting Deputy Assistant Secretary for Grant Programs require the State to support or properly obligate $11,717,288 in unsupported obligations.