Determine the appropriate timeframe for when initial MORs should be completed for all properties that convert under RAD and issue updated guidance that includes a system to track the timeliness of initial MORs.

Status

HUD has not provided a draft plan for corrective action yet.

Analysis

Failure to determine the timing of the initial MORs could delay HUD's performance of the MORs, which may result in property owners' untimely corrective actions, and thus potentially impact the health and safety of families.

The implementation of this recommendation has the potential to directly impact the health and safety of families.

Complete the initial MORs for RAD properties that have not had an initial MOR.

Status

HUD has not provided a draft plan for corrective action yet.

Analysis

Completing initial MORs would assist HUD in holding property owners accountable for maintaining the conditions of their properties and sufficient reserve for replacement accounts balances, which could impact property owners' ability to make needed capital repairs.

The recommended corrective action has the potential to directly impact the health and safety of families.

Develop and implement a plan to determine how to implement the risk-based approach to review the RAD properties that have not had subsequent MORs in more than 3 years and to require periodic MORs going forward.

Status

HUD has not provided a draft plan for corrective action yet.

Analysis

Developing a plan to implement the risk-based approach would establish the criteria for identifying properties that are at a higher risk of noncompliance.

The recommended corrective action would help HUD to monitor property owners' compliance with its requirements and thus, potentially protect families from living in unsafe units.

Determine an appropriate timeframe in which non-FHA-insured PBRA properties converted under RAD should be initially inspected, work with REAC to ensure that inspections are ordered and completed within that timeframe, and update HUD’s publicly available and internal guidance to ensure consistent messaging in accordance with HUD’s determination.

Status

HUD has not provided a draft plan for corrective action yet.

Analysis

Determining the appropriate timeframe for initial inspections would result in the timely identification and correction of life-threatening and non-life-threatening deficiencies.

The recommended corrective action has the potential to directly impact the health and safety of families.

The CDO should coordinate with HUD’s Records Office, Privacy Office, and program offices to develop data policies and procedures for data inventory, categorization, and labeling in support of zero trust architecture.

Status

HUD is working on a plan to address the recommendation. HUD OIG anticipates receiving a corrective action plan no later than April 11, 2025, with a plan for resolving this recommendation.

Analysis

By addressing the recommendation, HUD will be positioned better to protect and prioritize protection for data in its IT systems. This will allow HUD to have a better understanding of the specifics of the most sensitive data as well as allow recommendation 2024-OE-0002a-003 to be addressed by HUD.

HUD maintains billions of records of PII and sensitive data within IT systems and the IT environment. Knowing more specifics about the data is essential in the ability to protect and recover from attempted exfiltration attempts.

Develop and implement adequate procedures and controls to ensure that (1) staff issues notices of violation and default within 15 calendar days of the inspection report release date and (2) the Office of Multifamily Asset Management and Portfolio Oversight is made aware when notices are not issued within 15 calendar days after the inspection report release date and takes action as appropriate to ensure that future notices are issued in a timely manner.

Status

HUD has implemented a process of sending notifications to the field offices' centralized inboxes when a failed inspection has been released with instructions to issue a Notice of Default or Notice of Violation within 15 days. The field office logs this task into the Asset Management Processing System (AMPS) and assigns it to an Account Executive. Field office management tracks the progress of the task in AMPS. HUD is building a reporting tool to see if the task has been properly entered into iREMS and addresses the field office instances where it has not. The construction of this tool has been delayed due to limited staff resources. As of January 2025, the reporting tool was undergoing review and testing prior to implementation. The final action target date was November 29, 2024.

Analysis

Implementing procedures and controls for the timely issuing of notices would ensure that property owners are held accountable for correcting life-threatening deficiencies in a timely manner thus reducing the risk of families living in units that are unsafe for longer periods.

The implementation of this recommendation has the potential to directly impact the health and safety of families.

Include language in future notices of violation and default clearly stating that owners are required to inspect all units (including vacant units), common areas, grounds, building systems, and sites as part of the owner survey and require owners to include sufficient detail in the surveys to show (1) when the survey was conducted and (2) that the survey was a complete survey of the project.

Status

HUD will update the Notice of Default and Notice of Violation in conjunction with updates related to NSPIRE. These updates have been delayed by limited staff resources and pending policy clarifications and system changes for NSPIRE.

The final action target was November 29, 2024.

Analysis

The inclusion of language in the notices would ensure that property owners are aware of their responsibilities to inspect all units, common areas, grounds, building systems, and sites and perform repairs of identified deficiencies to protect families from living in units that are not decent, safe, and sanitary.

The implementation of this recommendation has the potential to directly impact the health and safety of families.

We recommend that the Deputy Secretary Develop and execute a detailed plan and timeline for both testing and reporting estimates of improper payments in the PIH-TBRA and PBRA programs in compliance with Federal law and OMB guidance.

Status

In response to the Management Alert, the Deputy Secretary stated that she would provide a plan in 30 days. On April 10, 2024, the Chief Financial Officer, Assistant Secretary for Housing, and Principal Deputy Assistant Secretary for Public and Indian Housing (PIH) stated their respective executives had been working together to develop a plan to accelerate HUD’s ability to produce statistically valid estimates. With respect to PBRA, HUD plans to use ongoing data collection for fiscal year (FY) 2023 tier 1 and tier 2 payments to develop a statistical estimate in FY 2024.

However, our ongoing Payment Integrity Information Act audit has determined that neither program produced a compliant estimate in fiscal year 2024. For multifamily-PBRA, HUD made some progress and reported an estimate that captured part of the payment cycle; however, the estimate did not include testing to ensure that housing assistance payments from contract administrators to owners were calculated correctly and supported by tenant-level documentation. The PIH-TBRA program did not produce an estimate at all, noting that IT system modernization must occur first. However, PIH has not yet provided a plan that indicates how the system upgrades will address this issue or a timeline for implementation. As of January 31, 2025, a detailed plan or timeline has not been provided.

Analysis

As of January 31, 2025, HUD has not provided a detailed plan or timeline for OIG review. It remains unclear how HUD will produce a complete estimate of the PBRA programs in future years, and when it will be able to produce an estimate for PIH-TBRA.

For HUD to close this recommendation, it must finish testing the full life cycle of payments in these programs and publicly report estimates of the improper payments in them. Merely producing a plan with future action target dates is not sufficient to meet the spirit of this recommendation.

PBRA and PIH-TBRA are the two largest program expenditures in HUD's portfolio, totaling $50 billion in FY 24, or 62.4 percent of HUD's total expenditures. HUD has been challenged with developing a compliant sampling methodology that can test the full payment cycle and that can be executed within the required timeframes. To fully address this recommendation, the sampling methodology should test the full payment cycle, and the associated sample testing and statistical estimation must be completed in time to be included in the Annual Financial Report.

Implementation of this recommendation will result in HUD better-safeguarding taxpayer dollars and decrease improper payments.

HUD (a) identify all contracts related to its programs that pre-date July 1, 2013 and that have not yet been modified to include Section 4712 whistleblower protections; and (b) review all contracts entered into on or after July 1, 2013, to ensure they include a clause that requires contractors to comply with Section 4712.

Status

HUD provided a Management Plan that identifies actions HUD is taking to address the recommendation. The OIG and HUD have not reached an agreement that the actions proposed will fully address the recommendations. Additionally, HUD has not completed several of the proposed actions and is still collecting information that responds to the recommendations.

Analysis

To fully address this recommendation, HUD must (a) identify all contracts related to its programs that pre-date July 1, 2013, and that have not yet been modified to include Section 4712 whistleblower protections; and (b) review all contracts entered on or after July 1, 2013, to ensure they include a clause that requires contractors to comply with Section 4712.

Implementation of this recommendation will ensure that Section 4712 whistleblower protections will apply to all individuals working for HUD contractors.

Seek voluntary cooperation from program participants to proactively modify pre-2013 contracts for the purpose of including a clause requiring compliance with Section 4712.

Status

HUD provided a Management Plan that identifies actions HUD is taking to address the recommendation. The OIG and HUD have not reached an agreement that the actions proposed will fully address the recommendations. Additionally, HUD has not completed several of the proposed actions and is still collecting information that responds to the recommendations.

Analysis

To fully address this recommendation, HUD must provide evidence that it has sought voluntary cooperation from program participants to proactively modify pre-2013 contracts for the purpose of including a clause requiring compliance with Section 4712.

Implementation of this recommendation will ensure that Section 4712 whistleblower protections will apply to all individuals working for HUD contractors.

Use its best efforts to include a clause requiring compliance with Section 4712 at the time of major modifications to contracts with program participants with whom HUD is unable to gain voluntary cooperation.

Status

HUD provided a Management Plan that identifies actions HUD is taking to address the recommendation. The OIG and HUD have not reached an agreement that the actions proposed will fully address the recommendations. Additionally, HUD has not completed several of the proposed actions and is still collecting information that responds to the recommendations.

Analysis

To fully address this recommendation, HUD must provide evidence that it has taken steps to ensure that it includes a clause requiring compliance with Section 4712 at the time of major modifications to contracts with program participants with whom HUD is unable to gain voluntary cooperation.

Implementation of this recommendation will ensure that Section 4712 whistleblower protections will apply to all individuals working for HUD contractors.

Develop and implement a nationwide inspection review protocol, which includes but is not limited to (1) whether field office staff should mark verification of PHA corrections of life-threatening deficiencies in PASS or any future tracking systems, (2) acceptable documentation for offsite verifications, and (3) whether field office staff should discuss or verify corrections of non-life-threatening deficiencies.

Corrective Action Taken

HUD's Office of Field Operations (OFO) created a protocol describing how it would perform quality control reviews of field office oversight of PHAs’ corrections of life-threatening deficiencies. The implementation of this recommendation resulted in HUD creating a protocol that established consistency in the way HUD field office staff monitored public housing agencies’ corrections of life-threatening deficiencies.

Develop and implement training for field offices that addresses reviewing or following up with PHAs about the correction of life-threatening and non-life-threatening deficiencies and how (1) to review physical inspection reports to effectively ensure that PHAs correct physical deficiencies, (2) PHAs should address or correct each type of deficiency observed in the REAC physical inspection report, and (3) to use PASS or any future tracking system.

Corrective Action Taken

HUD developed and provided training to the field offices on their roles and responsibilities for following up with PHAs on the correction of life-threatening and non-life-threatening deficiencies observed during REAC inspections, the NSPIRE system and standards, protocols, and timelines for deficiency correction and verification. Implementation of the recommendation will help HUD to ensure that field office staff are clear on their roles and responsibilities to communicate with PHAs on how deficiencies should be addressed and verify that PHAs’ inspection deficiencies have been corrected.

Implement a system to track field office inspection review activities and create a repository for the support documentation collected to verify the correction of life-threatening deficiencies.

Corrective Action Taken

HUD’s Office of Field Operations (OFO) had created a quality assurance tracker as well as a life-threatening deficiency tracker, which contained data specific to the inspections selected by OFO HQs, for quality assurance reviews. The documentation (photographs, work orders, etc.) of the life-threatening deficiency correction was maintained in HUD’s NSPIRE Salesforce system.

Implementation of the recommendation resulted in HUD creating a system to track HUD field offices’ verifications of PHA

Develop and implement a nationwide protocol for field offices, describing how PHA self-inspections should be reviewed, based on REAC's determination of the number and frequency of PHA self-inspections.

Status

HUD closed this recommendation in August 2024, an action which HUD OIG disagrees with. HUD provided guidance for field office staff to send to PHAs with NSPIRE inspections that scored below 60 points. However, HUD did not provide a protocol detailing how it would receive and review PHAs’ self-inspections for compliance with HUD requirements. Therefore, HUD has not fully addressed the gap in controls identified in the audit that hinders HUD’s oversight over PHA self-inspections.

Analysis

To fully resolve this recommendation, HUD needs to provide a policy or procedure that provides guidance to the field offices on how public housing self-inspections should be reviewed for compliance with its requirements.

Implementation of this recommendation will result in public housing units that are decent, safe, and sanitary because it mandates oversight to ensure PHAs are addressing identified deficiencies.

Implement adequate policies, procedures, and controls to ensure that public housing properties will be inspected within required timeframes.

Status

NSPIRE regulations clarified and modified the timing for which inspections should occur. The date for inspection of each public housing property must then be programmed into HUD's system to ensure that inspections occur within the required timeframes. The Real Estate Assessment Center (REAC) continues to work with its management and system support contractors on the list of public housing properties to inspect and the date the inspections should be completed under the new NSPIRE regulations. REAC is in the process of adjusting the list based on information relating to small, rural public housing. As of November 2024, the NSPIRE regulations on inspection timing are completed. However, REAC is not able to make the required modifications in the NSPIRE system to enforce the regulatory guidelines. REAC previously indicated that new IT funding is needed to make the system modifications but had not provided information about whether additional funding has been allocated. The final action target date was revised from May 31, 2024, to September 30, 2025.

Analysis

To fully address this recommendation, HUD must provide evidence demonstrating that it has implemented control activities that ensure public housing properties are inspected within the required timeframes.

Implementation of this recommendation will result in HUD accurately tracking the dates on which public housing properties should be inspected and that they are timely completed. Due to the uncertainty of when software changes to NSPIRE can take place to enforce the timing of inspections, REAC cannot enforce the requirements of inspection timing.

Update its policy and procedures to define its authority for marketing troubled issuer portfolios and the conditions that must exist to extinguish issuers using rapid relocation.

Corrective Action Taken

As of February 2024, HUD addressed this recommendation in a Management Decision by providing the updated extinguishment SOP, the Rapid Relocation Process Flow, and the Rapid Relocation Extinguishment Process Steps, updated to include the conditions that must be present to execute an extinguishment using rapid relocation. We believe that these guidance enhancements will help Ginnie Mae to reduce exposure to risk when facilitating a sale and transfer of a troubled issuer’s portfolio and ensure that it sells portfolios with limited loss to the Government and with minimal disruption to the mortgage market.

Update its policy and procedures to define what type of information Ginnie Mae may disclose and how it will handle protected information before extinguishment.

Corrective Action Taken

Ginnie Mae provided the updated SOP to clarify data and information handling through all phases of the termination/extinguishment process. Specifically, the updated procedures state that Ginnie Mae does not disclose Issuer or portfolio information within the Rapid Relo process. Ginnie Mae provided clarity in this enhancement that will reduce exposure to risk when facilitating a sale and transfer of a troubled issuer’s portfolio and ensure that it sells portfolios with limited loss to the Government and with minimal disruption to the mortgage market.

Update its Policies and procedures to define how Ginnie Mae will determine the portfolio value and price before Sale.

Corrective Action Taken

Ginnie Mae updated its Rapid Relocation Extinguishment SOP to specify the valuation model for rapid relocations will use the same valuation models as other extinguishment options, including examples of portfolio valuation. We believe this guidance enhancement will help Ginnie Mae to reduce exposure to risk when facilitating a sale and transfer of a troubled issuer’s portfolio and ensure that it sells portfolios with limited loss to the Government and with minimal disruption to the mortgage market.

Update its policies and procedures to define how Ginnie Mae intends to identify and evaluate prospective buyers to ensure its ability to absorb the extinguished portfolio before executing the purchase and sale agreement.

Corrective Action Taken

Ginnie Mae updated its Rapid Relocation Extinguishment SOP to require an Impact Analysis Evaluation of each prospective buyer under the Rapid Relocation Extinguishment program. The Impact Analysis Evaluation mirrors similar activities performed on select standard Pool Transfer participants and includes details (such as adjusted net worth, delinquency, loan court and total unpaid principle balance) to confirm prospective buyers are able to absorb the extinguished portfolio before executing the purchase and sale agreement. We believe this guidance enhancement will help Ginnie Mae to reduce exposure to risk when facilitating a sale and transfer of a troubled issuer’s portfolio and ensure that it sells portfolios with limited loss to the Government and with minimal disruption to the mortgage market.