Develop and implement policies and procedures to ensure that the Office of Single Family Asset Management and Office of Lender Activities and Program Compliance communicate the results of their servicing reviews to each other.

Revise servicing review and monitoring policies and procedures to emphasize increased controls on reviewing claim loans showing that no loss mitigation evaluation occurred. Revising the policies and procedures would reduce the risk to HUD and result in a projected $120,902,564 in funds to be put to better use (appendix A).

Make a preliminary determination as to whether the Cooperative is in default of the grant agreement. If it is preliminarily determined that the Cooperative is in default, HUD should provide the Cooperative notice of the determination and propose corrective or remedial actions to address the default and prevent the Cooperative from repaying the remaining $18,149,023, which HUD disbursed for the project ($18,607,467 in funds disbursed for the project – $458,444 in proceeds from initial membership sales the Cooperative remitted to HUD).

Consider removing from the Cooperative’s board the member who did not maintain their unit as their principal residence.

Ensure that the Cooperative’s board members and responsible staff of the Cooperative’s management agent are provided training on HUD’s requirements and the grant agreement.

Implement adequate procedures and controls to ensure that it submits the required reports to HUD to show continued compliance with the program.

Implement adequate procedures and controls to ensure that the project’s units are used for rental or cooperative housing unless otherwise approved by HUD.

Rent the unit that was used to provide rent-free housing to former employees of the management agent to a very low-, low-, or moderate-income household selected from a waiting list for rental units that meets the requirements of the resident home-ownership plan and considers the tenant profile.

Implement adequate procedures and controls to ensure that members maintain their units at the project as their principal residence or sell their memberships.

Provide sufficient documentation to support that the single occupant of a unit was a member of the Cooperative. If the Cooperative cannot do this, it should determine who has the right to membership associated with the unit, transfer the membership to that person if appropriate, and require him or her to move into or sell the unit.