HUD watchdog finds insufficient payment controls for eighth year running

These are the Office of Public and Indian Housing’s Tenant Based Rental Assistance (PIH-TBRA) program and the Office of Multifamily Housing’s Project-Based Rental Assistance (MF-PBRA) program. Combined, the total program payments reached $50 billion in fiscal year 2024, accounting for about two-thirds of HUD’s total expenditures, the OIG said.

“HUD leadership has failed to coordinate effectively across offices to collect and test payment information made by the thousands of local housing administrators who determine payment amounts and eligibility for HUD rental assistance recipients,” the OIG said in its announcement of the report.

“Prior OIG audits noted that the lack of a detailed plan and timeline is a major contributing factor to HUD’s noncompliance.”

The last time that the department was able to submit a compliant estimate for these programs was in 2016, during the Obama administration, when it was under the leadership of Secretary Julián Castro. That year, HUD estimated $1.7 billion in improper payments. Over the past eight years, payments from these programs have totaled $315 billion.

“We are encouraged that HUD leadership has committed to addressing the department’s systemic challenges with estimating and preventing improper payments,” said Stephen Begg, HUD’s acting inspector general.

“Protecting taxpayer funds from fraud, waste, and abuse starts with identifying and assessing the most critical risks to payment integrity.”

The OIG’s audit also found that in 2019, the department allowed an agreement with the U.S. Department of the Treasury to lapse. The agreement provided “critical data sharing” between HUD and Treasury through the latter party’s “Do Not Pay” system, which allowed HUD to “check multiple data sources to verify its recipients’ eligibility for payment.”

That yielded a priority recommendation in the new report for HUD to “improve its governance of the Do Not Pay program to define responsibilities for payment verification to ensure that preaward  and prepayment verification are consistently performed,” according to the OIG.

Irving Dennis, HUD’s chief financial officer, said in a response to the report’s findings that while “significant progress” on these fronts were made during the first Trump administration, efforts in two specific programs “were not prioritized during the Biden-Harris administration, leaving the two high-risk rental assistance programs untested and with unresolved issues.”

The OIG expressed appreciation for HUD’s response to the findings.

“We appreciate HUD’s commitment to ongoing improvements to strengthen payment integrity and oversight across all of its programs,” the OIG said in response to Dennis’s letter. “We look forward to working with HUD during the audit resolution process and in future efforts to move HUD forward to full payment integrity compliance.”