We audited Alpine First Preston Joint Venture II, LLC, a contracted asset manager in HUD’s real estate-owned Management and Marketing III program, as part of the activities included in our 2017 annual audit plan and because it was the sole contractor to market and sell U.S. Department of Housing and Urban Development (HUD) owned properties located in Illinois. Our audit objective was to determine whether Alpine complied with its contract with HUD’s and its own requirements for the marketing and sale of HUD-owned properties in the State of Illinois.
Alpine did not always comply with its contract with HUD and its own requirements for the marketing and sale of HUD-owned properties. Specifically, it did not ensure that properties were in ready-to-show condition. As a result, HUD lacked assurance that it received the highest net return on the sale of the properties and that its holding costs for maintaining properties in inventory were minimized.
We recommend that HUD require Alpine to implement adequate procedures and controls to ensure that it adequately monitors the conditions of the properties to ensure that they are maintained in ready to show condition in accordance with HUD’s and its own requirements; and update its quality control plan to include physical inspections of properties in its inventory.