Work with program offices through remediation activities to determine the underlying causes of the control deficiencies identified by the AIR program.
 

Based on the causes identified, coordinate with the program offices through remediation activities to develop corrective action plans with defined milestones, responsible parties, and timelines. Progress should be tracked, documented, and periodically reported to senior management.
 

Require targeted, role-specific training for program office staff and managers in areas where deficiencies were identified, including approvals, segregation of duties, recordkeeping, and delegated authority. This training should reinforce the importance of compliance with internal control requirements and include HUD escalation and enforcement mechanisms.

Assess and address barriers to timely and adequate responses from program offices during AIR program internal control testing. This assessment should:
a) Identify recurring causes for delayed or incomplete responses from program offices and implement escalation protocols or incentives to ensure timely fulfillment of AIR program requests;
b) Identify and implement efficiencies in the testing process to optimize the time program offices spend on the AIR program, such as streamlining communication, clarifying expectations, finding alternatives to time consuming tasks, and optimizing scheduling;
c) Provide additional guidance, training, or resources to program offices as needed to improve the quality and timeliness of submissions; and
d) Monitor response rates and timeliness, reporting persistent issues to senior leadership for corrective action.

Re-examine and enhance HUD’s process for evaluating the potential financial impact of control deficiencies identified by the AIR program or other sources to ensure that:
a) Assessments of financial impact are initiated promptly upon identification of control deficiencies;
b) The evaluation process is structured to deliver clear, actionable conclusions in sufficient time to inform any necessary adjustments to financial statements prior to the financial report date; and
c) Documentation of the assessment process and results is maintained to support audit requirements and management’s assertions.
 

Coordinate with the Principal Deputy Assistance Secretary for each Program Office to:
a) Define governance protocols to include reassessing HUD’s escalation protocols and enforcement mechanisms for repeated or willful noncompliance with documented controls, such as additional oversight, retraining, or disciplinary action as appropriate. Based on the assessment, update those protocols and mechanisms, as warranted.
b) Establish and resource a HUD-wide centralized digital repository for artifacts and key supporting documentation to provide consistent documentation retention and accessibility. Based on this initiative, define governance protocols for repository use, including security, version control, timely review/update requirements, and periodic audits to validate compliance.
 

The OIG has determined that the contents of this recommendation would not be appropriate for public disclosure and has therefore limited its distribution to selected officials.

The OIG has determined that the contents of this recommendation would not be appropriate for public disclosure and has therefore limited its distribution to selected officials.

The OIG has determined that the contents of this recommendation would not be appropriate for public disclosure and has therefore limited its distribution to selected officials.

The OIG has determined that the contents of this recommendation would not be appropriate for public disclosure and has therefore limited its distribution to selected officials.
 

The OIG has determined that the contents of this recommendation would not be appropriate for public disclosure and has therefore limited its distribution to selected officials.
 

The OIG has determined that the contents of this recommendation would not be appropriate for public disclosure and has therefore limited its distribution to selected officials.

Issue guidance, including technical assistance, to all disaster recovery grantees that waivers for issues related to a disaster’s impact, like waivers of procurement policies, should be for reasonable and limited time periods after a disaster’s occurrence to ensure full and open competition.
 

Update its QC plan and related processes and procedures to align with requirements for loan selection, including documenting how loan selections were determined.

Update its QC plan and related processes and procedures to align with requirements for (1) loan file reviews, including requirements to reverify borrower information, obtain appraisal field reviews, and complete reviews in a timely manner; (2) assessment of findings; (3) reporting findings internally and documenting response to findings; (4) mitigation of findings; and (5) reporting findings to HUD when required.

Provide annual training to its staff and management on HUD requirements for lender QC programs and provide proof of training to HUD.

Review the 101 EPD loans not previously selected for review and submit the results to HUD, including any findings of fraud, material misrepresentations, or other material findings that it is unable to mitigate. If required, Neighborhood Loans should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

Review its QC files for up to the 432 loans with post-closing reviews in which it may not have performed complete reverifications of borrower information and reverify information where appropriate. Neighborhood Loans should then evaluate the risk of any new findings identified, and if required, it should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

Evaluate its QC files for the 59 loans with EPD reviews in which it did not assess the risk of findings identified to confirm whether it self-reported to HUD all findings of fraud or material misrepresentation, along with any other material findings that its records did not show had been acceptably mitigated. If required, Neighborhood Loans should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

Evaluate its QC files for the 96 loans in which it identified material findings to confirm whether it self-reported to HUD all findings of fraud or material misrepresentation, along with any other material findings that its records did not show have been acceptably mitigated. If required, Neighborhood Loans should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.