Support or repay HUD $17,025 from non-Federal funds for the questioned payroll costs charged to the programs.

Develop and implement written policies and procedures to ensure accurate and complete reporting of staff hours charged to each program.

Support the validity of its indirect cost allocations or repay HUD $8,605 from non-Federal funds.

Develop and implement an indirect cost allocation plan, which ensures that indirect costs are charged to the correct program.

Provide technical assistance to the Community to ensure that its staff receives training on documentation of matching contributions and the use of program funds.

Reclassify the $28,576 as program income to the specific permanent supportive housing program that generated it and ensure these funds are used for that specific program.

Develop and implement written policies and procedures to ensure that all program income is recorded and used in accordance with HUD requirements.

Support that $2,687 in payments to the board member for legal services was allowed through a HUD-approved waiver that occurred before the legal services or repay HUD from non-Federal funds.

Work with the City of Denver Office of Economic Development to recapture $37,000 in HOME funds not properly used for the affordable housing projects.

Require Del Norte to develop policies and procedures to prevent ineligible affordability period transfers.

Ensure that the HECM cash flow model assumptions capture all valid assignments or provide an analysis showing that the model results are not biased due to the exclusion of valid HECM assignments.

Document and implement policies and procedures to ensure that data observations for key assumptions that are inconsistent with FHA’s understanding of program operations are researched and further analyzed and that all results are concurrently documented and included in the model documentation.

Update the posting models to ensure that refunds relating to payments made in prior years are properly recorded in accordance with OMB Circular A-11.

Correct the programming error in the HERMIT system to ensure that the correct insurance-in-force balances are reported on the note disclosures.

Develop policies and procedures to ensure that the line items in the required note disclosures are understood, properly calculated, and properly disclosed in the financial statements in accordance with OMB Circular A-136.

We recommend that the Director of the Office of Block Grant Assistance require the Texas General Land Office to implement appropriate cost controls, including limits for reconstruction and rehabilitation costs, to ensure that it uses limited government resources in a more economical and efficient manner. Those costs should not exceed the costs that would be incurred by a prudent person under similar circumstances.

We recommend that the Director of the Office of Block Grant Assistance require the Texas General Land Office to evaluate whether its programs would benefit from a longer affordability period and take appropriate actions to ensure that low- and moderate-income communities have access to affordable homes for an adequate period.

We recommend that the Director of the Office of Block Grant Assistance require the Texas General Land Office to ensure that the tax burden implications are a part of the determination of whether to spend significantly more than the damaged home’s appraised value to replace the home. This measure would include ensuring that participants are fully informed of the substantial and material property tax consequences that they could incur based on the increased values of their reconstructed homes (appendix B).

Require lenders to obtain the borrowers’ consent to verify the existence of delinquent Federal taxes with the IRS during loan origination and deny any applicant with delinquent Federal tax debt and no payment plan or a noncompliant payment plan or an applicant refusing to provide consent from receiving FHA insurance to put at least $6.1 billion to better use by avoiding potential future costs to the FHA insurance fund.

Status

The Office of Single Family Housing will need additional tax information to complete the planned action. In July 2024, Single Family Housing proposed closing the recommendation with no action because the primary action discussed would require Congressional authorization, and another option discussed would place an undue burden on borrowers and lenders and was not practical. OIG disagreed with the request. Single Family maintains that without an automated solution from the Internal Revenue Service (IRS), it is not practical for individual borrowers and/or lenders to manually check tax status with the IRS. However, OIG’s position is that action is required since delinquent tax debtors are ineligible for FHA loans under existing FHA and Office of Management and Budget (OMB) guidelines.

Analysis

To fully address this recommendation, HUD will need to provide evidence that it established a method of borrower consent to verify the existence of delinquent federal taxes.

Implementation of this rule should result in HUD putting $6.1 billion to better use.

Revise HUD handbooks for forward and reverse mortgages to reflect that tax liens and judgments are no longer reported on credit reports.