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.
Recommendations
Community Planning and Development
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Status2017-LA-1008-001-AOpenClosed$488,519.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on March 30, 2020Modify the recapture provisions of the 35 home-buyer assistance agreements totaling $488,519 to meet HUD recapture requirements relating to the sales price, closing costs, and net proceeds.
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Status2017-LA-1008-001-BOpenClosedClosed on July 31, 2018
Update its procedures to ensure that any additional home-buyer assistance agreements contain recapture provisions that meet HUD recapture requirements relating to the sales price, closing costs, and net proceeds.
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Status2017-LA-1008-001-COpenClosedClosed on July 06, 2018
Train its staff to ensure that recapture amounts do not exceed net sales proceeds.
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Status2017-LA-1008-002-AOpenClosed$12,275.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on July 31, 2018Revise and implement written policies and procedures for managing and accurately tracking all NSP3 activity to ensure that the $12,275 in identified closing cost refunds and any additional refunds identified in recommendation 2B are not overpaid by recipients.
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Status2017-LA-1008-002-BOpenClosedClosed on July 31, 2018
Identify any additional closing cost refunds for NSP3 properties using the general ledger, DRGR supporting documentation, and the property file and either repay the recipients from non-Federal funds or update its tracking spreadsheet.
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Status2017-LA-1008-002-COpenClosed$95.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on May 18, 2018Repay $95 from non-Federal funds to the two recipients who paid more than the assistance provided (appendix E).
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Status2017-LA-1008-002-DOpenClosed$1,495.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on July 31, 2018Repay the program $1,495 for closing cost expenses not incurred from non-Federal funds and remove the expenses from program records if the City incorrectly recorded the refunds as program income.
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Status2017-LA-1008-002-EOpenClosedClosed on May 24, 2019
Reclassify home-buyer assistance expenses and refunds from the City’s NSP3 ARR program to its NSP3 Homebuyer Assistance Program in DRGR and the general ledger.
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Status2017-LA-1008-002-FOpenClosedClosed on July 31, 2018
Consolidate and reconcile all NSP3 home-buyer assistance tracking spreadsheets and the general ledger with HUD’s DRGR to ensure that all information is accurate and up to date.
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Status2017-LA-1008-002-GOpenClosedClosed on July 31, 2018
Develop and implement written policies and procedures to periodically reconcile all NSP3 tracking spreadsheets to ensure that data remain accurate and up to date.
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Status2017-LA-1008-002-HOpenClosedClosed on July 06, 2018
Provide training to all employees responsible for NSP3 to ensure that the City adequately determines repayment amounts and tracks and records NSP3 activities.