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The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General performed an audit of Custom Closing Services, Incorporated (Custom), a contractor closing sales of HUD real estate-owned properties in the state of Michigan. The audit was conducted based on a complaint to our hotline alleging that Custom caused significant delays in the closing of HUD homes in Michigan. Our audit objective was to determine whether Custom complied with its contract for closing sales of HUD real estate-owned properties.

Custom did not fully comply with its contract when closing sales of HUD homes. Specifically, it did not request city pre-sale inspections and contract extensions in a timely manner. Additionally, Custom did not always cancel expired sales contracts and submit requests for payments to the marketing and management contractor for cancelled contracts in a timely manner. It also did not provide required information to HUD. Custom’s delays in requesting pre-sale inspections contributed to delays in the closings of HUD homes, which resulted in HUD incurring additional holding costs to maintain properties in its inventory. In addition, HUD lacked assurance that Custom represented HUD’s best interests and upheld a positive image of HUD as required under the performance measures of its contract.