HUD Auditor Finds Problems

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The Department of Housing and Urban Development’s Inspector General released a stack of almost 20 audits late last week. Although the reports aren’t earth-shattering, the fact that almost every audit found problems was a striking reminder of the bureaucratic bungling that comes with government programs, particularly at HUD.  

 The following are the titles of ten of the audits: 

  • “First Tennessee Bank, N.A., Memphis, NY, Did Not Properly Underwrite a Selection of FHA Loans.”
  • “Pine State Mortgage Corporation, Atlanta, GA, Did Not Properly Underwrite a Selection of FHA Loans.”
  • “The City of East St. Louis Awarded Block Grant Program Funds to Recipients Without Adequately Verifying Their Eligibility.”
  • “Housing Authority of the City of Terre Haute, IN, Did Not Materially Operate Its Programs According to HUD’s Requirements and Did Not Effectively Operate Its Section 8 Program.”
  • “HUD’s Oversight of the Hurricane Ike Disaster Housing Assistance Program in Texas Needed Improvement.”
  • “The Omaha, Nebraska Housing Authority Did Not Comply With Recovery Act Requirements When Reporting on Recovery Act Capital Funds.”
  • “The City of Deerfield Beach, FL, Did Not Properly Administer Its Community Development Block Grant Program.”
  • “Polk County, FL, Did Not Comply With Procurement and Contract Requirements in Its NSP and HOME Program.”
  • “The Lake Metropolitan Housing Authority, Painesville, OH, Needs To Improve Its Administration of Its Section 8 Housing Choice Voucher Program.”
  • “Final Civil Action, Anchor Mortgage Corporation, Chicago, IL, Loan Origination Fraud - Violations of the False Claims Act.”
The problems include financial mismanagement, fraud, and failure to comply with red tape. These problems were found in a broad array of programs. A Cato essay on HUD scandals explains why the department is particularly susceptible to such problems: 
A root cause of HUD scandals is that the department has a large number of costly subsidy programs, and each involves a tangled web of stakeholders. Many HUD programs divide responsibilities between federal, state, and local policymakers, and they involve private interests such as developers and financial companies. The multiplicity of interests and the complexity of the programs create opportunities for people in the public and private sectors to take personal advantage of programs.