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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General reviewed HUD’s Section 242 Mortgage Insurance for Hospitals program to determine whether HUD established controls to approve and administer projects under the Section 242 program and whether HUD used an updated handbook to administer its Section 242 program and used and provided to program participants written guidance that had been approved through HUD’s Directives System. HUD generally established controls to approve and administer projects under the Section 242 program. However, the Office of Healthcare Programs used an outdated handbook to administer its Section 242 program, and the written guidance it used and provided to participants had not been cleared through HUD’s Directives System.

We recommend that the Deputy Assistant Secretary, Office of Healthcare Programs, (1) continue to place a priority on developing an updated handbook and ensure that it is implemented in a timely manner and (2) submit its written guidance for approval through HUD’s Directives System.