Update the terms in the purchase agreement to ensure that the agreements define “extenuating circumstance” in reference to foreclosure avoidance, establish how long stabilization outcomes can continue to be reported as planned, and establish financial or other penalties to hold purchasers accountable in instances of nonreporting and noncompliance.

Provide training to its employees regarding HUD’s requirements related to prohibited restrictions on conveyance.

Develop and implement policies and procedures to identify prohibited restrictions on conveyance to ensure that it does not originate FHA loans with prohibited restrictive covenants.

Repay HUD $26,242 for partial claims paid on two FHA loans that contained prohibited restrictive covenants.

Work with HUD to nullify the restrictions on conveyance that violate HUD policy or indemnify HUD. This action will protect HUD against future losses of $2,434,204 for the 49 loans.

Evaluate the owner’s capability to effectively manage the project and consider whether independent professional management services are needed.

Request retroactive approval of the fees paid to the identity-of-interest entity totaling $402,975 and any fees incurred outside our audit period, including fiscal year 2017, when submitting the project owner’s or management agent’s certification for identity-of-interest agents in response to recommendation 2A. If the request is not approved retroactively, the owner should repay the project from nonproject funds for the amount that was not approved.

Submit a project owner’s or management agent’s certification for identity-of-interest agents, a management entity profile, a management plan, and other required documentation for review and approval.

Provide training and technical assistance to the owner and its management agent to ensure compliance with the terms of its regulatory agreement and applicable HUD requirements.

Provide training to its employees regarding HUD’s requirements related to prohibited restrictions on conveyance.