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We audited the multifamily Section 8 project-based rental assistance (PBRA) program at the Villa Main Apartments.  We selected Villa Main in accordance with the Office of Inspector General’s (OIG) goal to review the U.S. Department of Housing and Urban Development’s (HUD) multifamily housing programs and because the OIG Office of Investigation conducted an investigation and suggested that the complex might not have had appropriate controls to ensure tenant eligibility.  Our objective was to determine whether the owner administered its Section 8 PBRA program in accordance with HUD regulations and guidance.  Specifically, we wanted to determine whether tenants were eligible for the program, housing assistance subsidies were accurate, and units received required inspections.

We found that the owner did not administer its Section 8 PBRA program at Villa Main in accordance with HUD regulations and guidance.  It assisted at least 82 tenants who were either ineligible for assistance because they did not exist or the tenant eligibility and the unit physical condition standards could not be supported.  These conditions occurred because the owner and former management agent lacked oversight of their staff.  They also failed to establish effective control systems, which allowed their onsite employees to commit fraud.  The employees falsified tenant eligibility, did not properly verify tenant income, and did not inspect the units as required by HUD.  As a result, HUD paid the owner $534,741 in subsidies for ineligible “ghost” tenants and incurred more than $1 million in subsidies for which the owner could not support the tenants’ subsidy amounts or that the subsidized units were in decent, safe, and sanitary condition.

We recommend that the Southwest Region Director of Multifamily Housing require the Villa Main owner to (1) repay HUD $534,741 for housing subsidies received for ineligible nonexistent “ghost” tenants and (2) support or repay HUD more than $1 million for tenants whose eligibility the owner could not support.  In addition, HUD should require its contract administrator to ensure that the Villa Main owner’s recently implemented quality control program is working as designed and in accordance with HUD requirements.  We also recommend that the Departmental Enforcement Center take appropriate administrative actions against the appropriate owner(s).

Recommendation Status Date Issued Summary
2018-FW-1002-001-A Abierta Enero 31, 2018 We recommend that the Southwest Region Director of Multifamily Housing require Villa Main Apartments owner to repay HUD $534,741 for 39 subsidized units with ineligible “ghost” tenants.
2018-FW-1002-001-B Abierta Enero 31, 2018 We recommend that the Southwest Region Director of Multifamily Housing require Villa Main Apartments owner to provide support that the subsidized 43 units without annual physical inspections, without required EIV reports, or with missing files were eligible or repay HUD $1,095,364 for those subsidies.
2018-FW-1002-001-C Abierta Enero 31, 2018 We recommend that the Southwest Region Director of Multifamily Housing require Villa Main Apartments owner to implement appropriate controls to ensure tenants are eligible, housing assistance subsidies are accurate, and that units are inspected as required.
2018-FW-1002-001-D Abierta Enero 31, 2018 We further recommend that the Southwest Region Director of Multifamily Housing verify that the owner is providing oversight to its onsite staff and its recently implemented quality control program is working as designed and in accordance with HUD requirements.
2018-FW-1002-001-E Abierta Enero 31, 2018 We further recommend that the Southwest Region Director of Multifamily Housing ensure that the project-based contract administrator’s review process includes steps to obtain reasonable assurance that tenants being reported as subsidized at Villa Main qualify for the program and live in the subsidized units.
2018-FW-1002-001-F Cerrado Enero 31, 2018 We also recommend that the Director of the HUD Departmental Enforcement Center consider whether administrative action against the appropriate owner(s) is warranted.