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We audited the U. S. Department of Housing and Urban Development’s (HUD) Section 232 program as part of the Office of Inspector General’s (OIG) goal of contributing to the improvement of HUD’s execution and accountability of fiscal responsibilities. Our objective was to determine whether HUD had implemented adequate controls to properly monitor Section 232-insured mortgages.

We found that HUD’s Office of Healthcare Programs had taken steps to strengthen the Section 232 program by implementing new monitoring controls. However, additional steps can be taken to strengthen the controls which were sometimes inconsistent or vague, and ensure punch lists are followed. Further, the Office of Healthcare Programs could place a higher priority on enforcing regulatory issues. By increasing these controls, it will more effectively monitor the program and be aware of ongoing regulatory violations, which increase the likelihood of undetected program fraud, waste, and abuse at its at-risk properties.

We recommend that the Deputy Assistant Secretary, Office of Healthcare Programs, develop and implement additional policies and procedures to strengthen controls and detect, correct, and prevent regulatory violations.