Require that the current or future lender ensure that the project uses a contractor that is proven to be qualified and capable of completing the project.

We recommend that HUD’s Deputy Assistant Secretary for Housing Counseling ensure that the new Housing Counseling Agency Management System provides HUD with the ability to adequately oversee the work of its staff and track important housing counseling agency milestones, including HUD approval expirations and required terminations.

We recommend that HUD’s Deputy Assistant Secretary for Housing Counseling update its policies and procedures to ensure consistency and adequacy of the agency approval, performance review, voucher approval, and termination and posttermination processes.

We recommend that HUD’s Deputy Assistant Secretary for Housing Counseling obtain and provide documentation for the four housing counseling agency reapprovals and the three housing counseling agency voucher approvals to show that the $1,310,719 in Housing Counseling Grant funds5 disbursed was for eligible and supported costs or repay from non-Federal funds any amount that cannot be supported.

We recommend that HUD’s Deputy Assistant Secretary for Housing Counseling identify additional housing counseling agencies that were classified as reapproved when it had not completed a performance review upon expiration of the approved period and determine whether they are properly qualified to provide counseling services to consumers.

Provide training and technical assistance to the owner’s executive director and staff to ensure compliance with the terms of its regulatory agreement and applicable HUD requirements.

Develop and implement controls to ensure that the project complies with the regulatory agreement and applicable HUD requirements, including but not limited to policies and procedures for maintaining project funds in separate bank accounts in the project’s name, using project funds only for necessary expenses of the project, and reconciling bank accounts to the project’s computerized accounting records.

Submit a project owner’s or management agent’s certification, management entity profile, current budget and other required documentation to HUD for review and approval.

Take immediate action to remove project bank accounts as security for the owner’s line of credit and, thereby put up to $100,000 to better use.

Provide documentation to show that project funds are segregated in the project’s name, in accordance with the regulatory agreement and HUD requirements.