We audited the U.S. Department of Housing and Urban Development (HUD), Section 184 Indian Home Loan Guarantee program based on a Senate Appropriations Committee request to review the management and oversight of the program. OIG had previously audited the Section 184 program in 2015 (audit report 2015-LA-0002) and determined that the Office of Loan Guarantee (OLG) did not provide adequate oversight of the program. The objective of this review was to identify and evaluate actions taken by OLG since the issuance of the prior audit report, including a review of $2.6 million received for administrative contract expenses to carry out the Section 184 program.
OLG continued to operate without adequate oversight of the Section 184 program. Many of the issues identified in the prior OIG audit report continued to impact the program 3 years later. HUD officials inappropriately closed 6 of the 10 closed recommendations from the prior OIG audit report. The corrective actions for the six agreed upon management decisions were not fully implemented or completed. One recommendation from the prior audit report remained open 3 years after the audit report was issued and past due by 6 months, and the actions by OLG did not sufficiently address the recommendations. We also determined that OLG was not able to fully account for administrative contract expenses; had a nearly $2.3 million unobligated administrative contract expense fund balance; and would primarily use these funds, in addition to the annual appropriation of up to $750,000, for two contracts that cost approximately $111,000 per year.
Based on the cited deficiencies, we will reopen the six recommendations from OIG audit 2015-LA-0002 that were inappropriately closed (1B, 1D, 1H, 1I, 1J, and 1K) until corrective action is fully developed and implemented. We will also reopen recommendation 1C, which was closed and moved to recommendation 1A, to ensure that it is properly tracked and addressed. In addition, we recommend HUD’s Deputy Assistant Secretary for the Office of Native American Programs 1) develop and implement internal policies and procedures to ensure that approved underwriters are accurately maintained and kept current in the origination systems, for the indemnification process, for the audit resolution process to ensure corrective actions have been adequately developed and fully implemented, and to track and make administrative contract expense fund expenditures readily available for review, 2) support line item expenditures for the administrative contract expense fund for fiscal years 2015 to 2018, 3) develop and implement a comprehensive plan to use unobligated administrative contract expense funds, and 4) consider adding additional OLG staff, including a full time director to provide additional leadership and management oversight.