We audited the City of Las Vegas’, Homebuyer Assistance Program under the U.S. Department of Housing and Urban Development’s (HUD) Neighborhood Stabilization Program 3 (NSP3). We initiated this review because of a prior HUD Office of Inspector General audit of Evergreen Home Loans issued September 12, 2016 (audit report 2016-LA-1011). The Evergreen Home Loans audit report identified 14 loans that received home-buyer assistance as part of the City’s NSP3 Homebuyer Assistance Program. Contrary to HUD requirements, the home-buyer assistance agreements included recapture provisions that required borrowers to repay more than the assistance provided. Our audit objective was to determine whether the City administered its NSP3 home-buyer assistance agreements and payments in accordance with HUD requirements.
The City did not administer its NSP3 home-buyer assistance agreements and payments in accordance with HUD requirements. Specifically, the City included language in its agreements that did not meet HUD’s recapture requirements, and it did not adequately track or document NSP3 payments and activities. As a result, the City’s agreements may require 35 recipients who received $488,519 in assistance to repay more than required. In addition, the City’s inadequate tracking and documentation for overpayment of closing costs resulted in (1) recipients’ overpaying $95, (2) inadequate tracking of $12,275 in potential overpayments from recipients, and (3) the City’s improperly receiving $1,495 in NSP3 funds for closing costs not incurred.
We recommend that the Acting Director of HUD’s San Francisco Office of Community Planning and Development require the City to (1) modify the recapture provisions of the 35 loan agreements totaling $488,519 to meet HUD requirements, (2) repay $95 to program recipients who overpaid on their agreements, (3) develop policies and procedures for tracking overpayments to ensure that program recipients are not at risk of overpaying an additional $12,275, and (4) repay the program $1,495 for closing costs not incurred.