Connecticut Audit Reports
Issue Date: June 30, 2006
Audit
Report No.: 2006-BO-1008
File Size: 616.33KB
Title: Hall Commons Inc. Bridgeport, Connecticut, Did Not Administer
its $4.1 Million Section 202 Capital Advance Construction Grant
in Accordance With Federal Requirements
At the request of HUD, we audited Hall Commons Inc.'s administration
of its Section 202 Supportive Housing for the Elderly capital advance
construction funds. Our audit objective was to determine whether
Hall Commons administered the Section 202 funds advanced for construction
in accordance with federal requirements. Hall Commons Inc. did not
administer its Section 202 capital advance construction funds in
accordance with federal requirements.
Hall Commons failed to maintain adequate and essential financial
records to accurately account for project financial transactions
and safeguard project assets. They also made unauthorized disbursements
and allowed required insurance policies to lapse due to non-payment
of premiums. This occurred because Hall Commons did not establish
adequate internal controls over its cash accounts to safeguard project
assets, and had inadequate board of directors oversight. As a result,
more than $2 million in capital advances and payments to vendors
and contractors were not properly recorded, $199,411 in project
funds were disbursed in violation of the governing project agreements,
the project was not always covered by builder's risk or crime insurance,
and real estate taxes were delinquent. The serious deficiencies
indicate that Hall Commons does not have the capacity needed to
successfully develop the project.
We recommend that the Connecticut multifamily program center director
pursue applicable sanctions available under the regulatory agreement
to protect HUD's $4,079,100 investment including issuing a notice
of default and if the violations are not corrected within 30 days
declaring a default, taking possession of the project, foreclosing
on the mortgage, or requiring a transfer of physical assets to a
HUD approved nonprofit corporation; and require Hall Commons Inc.
to support and/or repay the $199,411 in project funds that were
disbursed in violation of the governing project agreements. If Hall
Commons is allowed to remain the owner, we recommend the Connecticut
multifamily program center director require Hall Commons to establish
a financial accounting system and maintain current and accurate
books and accounts, and a functioning board of directors to provide
adequate oversight over project operations.
Issue Date: June 2, 2006
Audit
Report No.: 2006-BO-1007
File Size: 488.27KB
Title: Capital Mortgage Associates, LLC (North Haven, Connecticut),
Did Not Always Comply with HUD Requirements Regarding Its Single-Family
Loan Originations and Quality Control Plans
We audited Capital Mortgage Associates LLC (Capital Mortgage),
a nonsupervised loan correspondent approved by the U.S. Department
of Housing and Urban Development (HUD) to originate Federal Housing
Administration- insured single-family loans. We selected Capital
Mortgage based on a lender risk analysis, which showed that the
loans it originated had a higher default percentage than those of
other lenders in the area. Our objectives were to determine whether
Capital Mortgage acted in a prudent manner and complied with HUD
regulations, procedures, and instructions in the origination of
the Federal Housing Administration-insured single-family mortgages
selected for review and whether its quality control plan as implemented
met HUD requirements.
Capital Mortgage did not always comply with HUD requirements regarding
its single-family loan originations. It engaged in a prohibited
net branch arrangement. There was also material loan origination
deficiencies with two of the loans originated from this branch.
These deficiencies affected the credit quality of the loans and
represented a risk of loss to the Federal Housing Administration
insurance fund. Capital Mortgage also charged ineligible fees to
borrowers because it was not fully aware of HUD-allowable fees or
written disclosure requirements regarding certain closing fees.
This resulted in borrowers paying excessive and/or unreasonable
fees. In addition, Capital Mortgage did not establish or implement
a quality control plan that met all of HUD's requirements. As a
result, it may not identify and correct potential deficiencies in
a timely manner, resulting in an unnecessary risk to the Federal
Housing Administration insurance fund.
We recommend that HUD's assistant secretary for housing-federal
housing commissioner require Capital Mortgage to (1) revise its
branch agreements to comply with HUD requirements or cease originating
Federal Housing Administration-insured loans from the affected branch
office, (2) refund the ineligible fees, and (3) update and fully
implement its quality control plan. We also recommend that the assistant
secretary refer Capital Mortgage to the Mortgagee Review Board for
consideration of administrative sanctions and/or civil money penalties
for the violation of HUD requirements disclosed in this report.
Issue Date: March 10, 2006
Audit
Report No.: 2006-BO-1005
File Size: 739.25KB
Title: Hartford Housing Authority, Hartford, Connecticut, Had
Housing Choice Voucher Program Deficiencies Resulting in More Than
$2.6 Million in Cost Exceptions
As part of our fiscal year 2005 annual audit plan, we reviewed
the Housing Choice Voucher program at the Hartford Housing Authority
(Authority). Our audit objective was to determine whether the Authority
properly administered its Section 8 Housing Choice Voucher program
(Voucher program) in accordance with its annual contributions contracts
and U.S. Department of Housing and Urban Development (HUD) requirements
The Authority did not properly administer its Voucher program
in compliance with its annual contributions contracts and HUD requirements.
As a result, we identified questioned costs and opportunities for
funds to be put to better use totaling more than $2.6 million because
the Authority
Inaccurately reported leasing and cost data to HUD and incorrectly
received more than $841,000 in funding.
Improperly charged more than $714,000 in administrative costs
to the Voucher program.
Approved unreasonable rents, resulting in ineligible and
prospective ineligible costs totaling more than $595,000.
Improperly awarded and managed its housing inspection contract
and also paid the contractor $158,492 in unreasonable costs.
Failed to ensure subsidized housing met minimum standards
and paid for substandard housing.
Did not account for its portable voucher receivables and
failed to collect past-due receivables.
We recommend that the Office of Public Housing, Boston, Massachusetts,
require the Authority to
Implement
procedures to properly track and report housing assistance payments
and administrative fees and repay HUD $841,245,) of which $425,725
was repaid during our review.
Repay the Voucher program $714,678 and properly allocate administrative
costs, thereby reducing future expenses by $177,542.
Repay the Voucher program $1,395 for unreasonable rents and
establish quality controls to ensure rents are reasonable, which
may reduce subsidized rent payments by $594,270 this year.
Repay the Voucher program $158,491 for unreasonable inspection
costs and perform housing inspections in house, which should reduce
program expenses by $119,723 this year.
Develop
and implement an effective quality control process to ensure reliable
inspections, correction of substandard housing, and abatement of
payments for housing that does not meet HUD's standards, which will
reduce payments for substandard housing by a minimum of $37,758
this year.
Establish procedures implementing HUD's Public and Indian
Housing Notice 2004-12, reconcile all portability bills with receipts,
reimburse authorities for any overpayments, and follow up on past
due accounts, thereby resulting in funds to be put to better use
totaling $31,039.
Issue Date: October 7, 2005
Audit
Report No.: 2006-BO-1001
File Size: 1.21MB
Title: The Division of Grants Management, City of Hartford, Connecticut,
Paid $1,039,296 for Ineligible Community Development Block Grant
Activities and Failed to Return Income to the Program
We audited the City of Hartford's (City) Division of Grants Management's
administration of the Community Development Block Grant (Block Grant)
program. The audit was initiated based on an Office of Inspector
General (OIG) Hotline complaint. The objectives were to determine
whether the City (1) awarded grants to subrecipients for eligible
activities and adequately monitored their performance to ensure
its subrecipients were paid in accordance with the contract terms
and met contract objectives, and (2) properly accounted for Emergency
Demolition and Repair program income.
The City did not always award grants to subrecipients for eligible
activities. This occurred because the City's evaluation and award
process did not include steps to ensure that the subrecipient's
activities were eligible under the Block Grant program. As a result,
the City paid $1,039,296 in ineligible costs associated with five
of the 17 activities we reviewed. Of the $1,039,296 in ineligible
costs, $831,796 related to activities ineligible under the Block
Grant program and $207,500 related to an activity that was ineligible
under the cited eligibility category. We also identified funds to
be put to better use for an additional $394,461 allocated for ineligible
activities for the City's Block Grant program year beginning July
1, 2005. In addition, the City paid subrecipients in accordance
with the contracts, but we could not always determine whether the
contract objectives were met because the City did not have formalized
monitoring procedures that documented whether the contract objectives
were being met.
The City also did not properly account for Block Grant program
income generated through its Emergency Demolition and Repairs program
because the City did not have adequate controls to ensure repayments
from Block Grant-assisted properties were properly returned to the
program account. We identified $62,515 in program income that was
not returned to the program and an additional $85,581 in receipts
that were credited to the City's general fund, for which the City
was unable to provide a breakdown by property. Without a breakdown,
we could not determine how much of the $85,581 represents program
income. We also noted that an additional $525,900 in receivables
is at risk of not being returned because of the ineffective internal
controls over the program receipts.
We recommend that the Hartford Office of Community Planning and
Development require the City to
- Develop and implement procedures to ensure that only eligible
activities meeting Block Grant program objectives are funded.
- Repay the Block Grant program account the $831,796 in ineligible
costs from nonfederal sources or through future grant reductions.
- Repay $207,500 in costs that were improperly classified as direct
homeownership assistance category by applying an offsetting lower
public service cap in future grant years.
- Reprogram the $394,461 allocated for ineligible activities in
the program year beginning July 1, 2005.
- Repay $62,515 in Emergency Demolition and Repair program income
from the City's general fund.
- Identify the source of funding for the $85,581 in unsupported
Emergency Demolition, Repair program repayments, and repay applicable
income to the Community Development Block Grant program.
Issue Date: September 26, 2005
Audit
Report No.: 2005-BO-1007
File Size: 549.29KB
Title: Fairfield Financial Mortgage Group, Inc., Danbury, Connecticut,
Did Not Always Comply with Federal Housing Administration Requirements
We audited Fairfield Financial Mortgage Group, Inc. (Fairfield
Financial), a nonsupervised lender approved by the U.S. Department
of Housing and Urban Development (HUD) to originate Federal Housing
Administration-insured single-family mortgages. Our objectives were
to determine whether Fairfield Financial complied with HUD regulations,
procedures, and instructions in the origination of Federal Housing
Administration loans and whether Fairfield Financial's quality control
plan, as implemented, met HUD requirements.
Fairfield Financial did not always comply with HUD regulations,
procedures, and instructions in the origination of Federal Housing
Administration loans. It improperly originated 4 of the 24 loans
reviewed. These four loans contained deficiencies that affected
the insurability of the loans, including unsupported income, underreported
liabilities, excessive qualifying ratios, and derogatory credit
information. As a result, HUD insured loans that placed the insurance
fund at risk for $1,204,981. In addition, Fairfield Financial did
not properly disclose to borrowers $11,390 for commitment fees in
20 of the 24 loans reviewed.
Further, Fairfield Financial's quality control plan, as implemented,
did not meet HUD requirements. As a result, HUD lacks assurance
that Fairfield Financial is able to ensure the accuracy and completeness
of its loan origination operations.
We recommend that the assistant secretary for housing-federal housing
commissioner require Fairfield Financial to (1) indemnify HUD against
future losses on the four loans totaling $1,204,981 and (2) revise
its procedures to ensure that each borrower charged a commitment
fee is properly informed, in writing, of the fee, the amount of
the fee, and the purpose of the fee, and that the actual fee charged
coincides with the amount disclosed to the borrower. Additionally,
HUD should require Fairfield Financial to implement controls to
ensure that it follows HUD's quality control requirements and verify
that it has implemented proper controls.
Issue Date: September 6, 2005
Audit
Report No.: 2005-BO-1006
File Size: 395.25KB
Title: The Hartford Housing Authority Improperly Used $3.7 Million
in Public Housing Operating Subsidies for Its State and Other Federal
Programs
As part of our fiscal year 2005 annual audit plan, we reviewed
the low-income public housing (public housing) program at the Hartford
Housing Authority (Authority). Our objective was to determine whether
the Authority used low-income public housing (public housing) operating
subsidies in compliance with the financial provisions of its annual
contributions contract.
The Authority did not administer its public housing operating
subsidies in compliance with the financial provisions of its annual
contributions contract. It used public housing operating subsidies
to pay expenditures of its state-subsidized housing program and
other federal housing programs. This condition occurred because
the Authority failed to establish internal controls to ensure compliance
with its annual contributions contracts for public housing and prevent
the use of federal funds to pay nonprogram expenses. As a result,
the Authority did not have $3.7 million available to administer
its public housing program.
We recommend that the director of the Regional Office of Public
Housing, Boston, Massachusetts, require that the Authority repay
the public housing operating fund $3.7 million plus interest. In
addition, the Authority should establish and implement policies
and procedures to ensure that public housing operating subsidies
are used only for program purposes.
Issue Date: July 29, 2005
Audit
Report No.: 2005-BO-1004
File Size:
Title: Housing Choice Voucher and Low-Income Public Housing Program
Deficiencies at the Bridgeport Housing Authority, Bridgeport, Connecticut,
Resulted in $3.8 Million in Questioned Costs
We audited the Bridgeport Housing Authority's (Authority) Section
8 Housing Choice Voucher (Voucher) and low-income public housing
programs. The audit was conducted because recent U.S. Department
of Housing and Urban Development (HUD) rental integrity management
reviews and independent public accountant audit reports identified
program deficiencies. Our audit objective was to determine whether
the programs were administered according to program requirements.
The programs were not administered according to program requirements.
As a result, the Authority
Mismanaged the $1.5 million purchase and renovation of
additional Office space.
Spent $2.6 million on the Pembroke green development project,
of which $1.3 million failed to benefit eligible families.
Improperly used $636,811 in low-income public housing funds
for voucher program expenses.
Improperly charged $409,311 in administrative costs to the
Voucher program.
Did not properly calculate and support housing assistance
payments.
We identified questioned costs and opportunities for funds put
to better use totaling $3.8 Million.
Issue
Date: April 25, 2005
Audit
Report No. 2005-BO-1003
File Size: 5.8MB
Title:
Audit of Milford, CT, Housing Authority's Capital Fund Program,
Development Grants for Scattered Sites, Section 8 Voucher Program,
and Specific Administrative Policies and Procedures
As
part of our annual plan, we audited the Milford Housing Authority's
(Authority) Capital Fund program. Our audit objective was to determine
whether the Authority was operating in an effective and efficient
manner and in compliance with the U.S. Department of Housing and
Urban Development's (HUD) Annual Contributions Contract, applicable
laws, and contractual requirements. Our initial survey results identified
additional risk areas. Therefore, we expanded the scope of our audit
to include the Authority's public housing development grants for
scattered sites, Section 8 Voucher program, and specific administrative
policies and procedures.
We found that the Authority did not comply with HUD's rules and
regulations in administering its programs. The audit identified
eight findings, resulting in questioned costs and opportunities
for funds to be put to better use totaling $1,525,796. Specifically,
we determined that the Authority failed to: 1) address exigent health
and safety issues at its Foran Towers Project; 2) manage its Harrison
Avenue Renovation Project in an effective and efficient manner;
3) use development funds for scattered site units on necessary and
needed expenditures, maintain an inventory for the prematurely replaced
or newly purchased scattered site equipment, and comply with Section
504 handicapped requirements for the development of scattered site
units; 4) comply with Federal requirements and its own contracts
for legal services incurred; 5) implement adequate management controls
and procedures over Section 8 inspections; 6) lease-up Section 8
units at an acceptable rate; 7) comply with HUD procurement regulations
and its own procurement policy; and 8) follow proper procedures
in several administrative areas relating to the Executive Director's
employment contract and performance evaluations, properly handle
personnel functions and employee benefits, and comply with requirements
for executive sessions conducted during Board of Commissioner meetings.
We
recommend that HUD's Director of Public Housing, Boston Regional
Office, assure that the Authority:
Prioritize the repair and/or replacement of the brick fa�ade and
sanitary piping at Foran Towers using available operating reserves
and Capital Funds; Reimburse the Scattered Site Development fund
$135,824 from nonfederal funds for the premature replacement of
kitchen appliances, kitchen cabinets and countertops, furnaces,
and roofs;
Comply with the Section 504 handicapped-accessible regulations covering
the development of scattered sites;
Reimburse its applicable programs from nonfederal funds for the
ineligible legal costs and develop adequate management controls
over legal expenditures, including the requirement to obtain the
concurrence of HUD's Regional Counsel before incurring any legal
costs related to matters involving litigation;
Reimburse HUD $26,280 from nonfederal funds for the Section 8 administrative
fees collected by the Authority when its Section 8 program units
did not meet housing quality standards;
Implement an effective system to ensure all outstanding housing
quality standards deficiencies are monitored and corrected within
the required time. This will result in future housing assistance
payments being put to better use than the $280,628 paid for substandard
housing;
Submit a monitoring plan to ensure they use all available Section
8 funding;
Implement
controls to ensure it complies with HUD regulations and its own
procurement policy in awarding competitive and noncompetitive contracts;
Submit the Executive Director's current contract for HUD approval
and establish specific goals and measurements to evaluate the Executive
Director's performance;
and Reimburse its applicable programs from nonfederal funds $25,347
for the Executive Director's personal use of vehicle.
Issue Date: October 13, 2004
Audit
Report No. 2005-BO-1001
File Size: 1.66MB
Title: Waterbury Housing Authority, Audit of Selected Programs
Waterbury, Connecticut
At the request of HUD's Hartford Field Office, HUD's Office of
Inspector General completed an audit of the Waterbury Housing Authority's
selected Programs. The selected Programs included: Capital Fund
Program; disposition of the South End project; Public Housing Development
Grant Program; Section 5(h) Homeownership Program; multifamily projects
owned, managed, and administered by the Authority. The primary purposes
of our audit were to determine whether the Authority: administered
its selected Programs efficiently, effectively, and economically;
and complied with the terms and conditions of its Annual Contributions
Contract, applicable laws, relative directives, and HUD's regulations.
The Housing Authority did not administer its selected Programs
in an efficient, effective, and economical manner. Additionally,
the Authority's management controls were very weak to ensure that
it complied with the terms and conditions of its Annual Contributions
Contract, applicable laws, relative directives, and HUD's regulations.
We recommend that HUD's Acting Director of Public Housing Hub,
Boston Regional Office, assures the Authority:
- reimburse the applicable Program over $676,000 from non-Federal
funds for the inappropriate expenses cited in this report;
- provide documentation to support over $850,000 for the unsupported
funds cited in this report or reimburse the applicable Program
from non-Federal funds;
- recapture over $2.3 million in Program funds not used; and
- implement procedures and controls to correct the weaknesses
cited in this report.
Issue
Date: February 18, 2004
Audit
Report No.: 2004-BO-1006
File Size: 1.84MB
Title: Nuestra Casa (also known as La Casa Elderly Housing) Project
Number 017-EH125 Hartford, Connecticut
We performed an audit of Nuestra Casa (also known as La Casa Elderly
Housing). Our report contains three findings with recommendations
requiring action. Our review disclosed that Nuestra Casa's management
agent: (1) Used the Operating Account to Fund Affiliates; (2) Charged
Ineligible, Unsupported, and Unnecessary/Unreasonable Costs to the
Project; and (3) Failed to Adequately Manage Project Operations.
Our audit determined that the management agent improperly managed
project funds totaling $371,430 by: *Improperly transferring $244,103
in project funds to affiliates. *Spending $16,385 in project funds
on other ineligible, unsupported, and unnecessary/unreasonable costs.
*Circumventing HUD's Reserve Fund for Replacement (RFR) requirements
leaving the RFR under funded by $110,942.
As a result, $371,430 in project funds is not available for the
project's normal operations and maintenance. Therefore, HUD's and
the residents' interests in the project are not sufficiently protected.
Issue December 05, 2003
Audit
Report No.: 2004-BO-1004
File Size: 987KB
Title: Danbury Housing Authority Capital Fund Program Danbury,
Connecticut
We performed an audit of the Danbury Housing Authority's Capital
Fund Program (CFP). Our report contains five findings with recommendations
requiring action. Our review disclosed that the Danbury Housing
Authority: (1) Defaulted on their $11 Million General Obligation
Bonds; (2) Lacked the Financial Viability to Obtain the $11 Million
General Obligation Bonds; (3) Performed Inadequate Management Oversight
of Authority Property and Financial Records; (4) Incurred Ineligible,
Unsupported and Unreasonable Costs; and (5) Had Ineffective Procurement
Practices.
Issue Date: October 30, 2003
Audit
Report No.: 2004-BO-1001
File Size: 114.8KB
Title: Housing Authority of the City of Hartford Disposition of
Vacant Land at Charter Oak Terrace Hotline Case Number HL-03-0465
We performed a review of the Housing Authority of the City of Hartford's
(the Authority) application to dispose of 49 acres of vacant land
located at its Charter Oak Terrace public housing site. We initiated
our review in response to a hotline complaint alleging that the
Authority did not follow Federal regulations in its proposed leasing
of the Charter Oak Terrace housing site. Our objectives were to
determine the merits of the allegations made against the Authority
and to identify areas or subjects warranting further review based
on these allegations. Our review found that the Authority adhered
to Federal regulations and additional work is not warranted.
Issue Date: May 16, 2003
Audit
Report No.: 2003-BO-1003
File Size: 1.11MB
Title: City of Bridgeport
HOME Investment Partnership Program, Bridgeport, Connecticut
We performed an audit of the City of Bridgeport's (City) HOME Investment
Partnership Program located in Bridgeport, Connecticut. The primary
purpose of our audit was to determine if the program was operated
in an efficient, effective, and economical manner, and if the City
complied with HUD regulations and other applicable laws.
A draft discussion report was provided to the City on June 14,
2002. As a result of the issues disclosed in the discussion draft,
the City provided a written response on August 14, 2002 and additional
documentation thereafter. The Office of Inspector General (OIG)
performed additional audit work based on the City's response and
additional documents. This subsequent audit work resulted in the
OIG questioning additional costs. An exit conference was held with
the City on March 12, 2003. The City provided its final response
to the OIG on April 25, 2003. Our final report contains one finding:
Administration of HOME Program Needs Improvement. We identified
$989,929 in unsupported costs.
Issue Date: March 7, 2003
Audit
Report No.: 2003-BO-1001
File Size: 1.55MB
Title: Farmington Health Care Center
FHA Loan Number 017-22015
Farmington, Connecticut
We have completed an audit of the Farmington Health Care Center
(FHCC) located in Farmington, Connecticut. The primary purpose of
our audit was to assess the project's performance relating to: a)
utilizing project funds appropriately; b) maintaining the property
in a satisfactory physical condition; and c) other general management
practices.
Issue Date: August 29, 2001
Audit
Memorandum No.: 2001-BO-1006
File Size: 252KB
Title: State of Connecticut, HOME Investment Partnerships Program,
Hartford, Connecticut
We performed a review of the State of Connecticut's HUD HOME Investment
Partnerships Program (HOME program) administered by the Department
of Economic and Community Development (DECD). Our objective was
to determine whether the DECD is administering its HOME program
in compliance with HUD requirements and program objectives.
Our review disclosed that DECD used HOME funds in accordance with
HOME program objectives and requirements pertaining to the selection,
cost eligibility, and resale/recapture provisions. However, we determined
that annual performance reviews are not consistently performed.
We observed that tenant file records for one project were not in
accordance with HOME requirements; one project was not completed
in a timely manner in accordance with the written HOME assistance
agreement; and one project was occupied in May of 1999, however,
no annual performance monitoring reviews have been performed. HUD
identified monitoring concerns in their previous monitoring reports
dating back to 1999, and DECD concurred with our results. Consequently,
there may be instances where decent, safe, sanitary, and affordable
housing, with primary attention to rental housing, for very low-income
and low-income families may be limited.
Issue Date: May 21, 2001
Audit
Report No.: 2001-BO-1005
File Size: 1,492KB
Title: City of Meriden Housing Authority, Meriden, Connecticut
We performed an audit of the Low-Income Public Housing (LIPH)
and Section 8 Programs of the Housing Authority of the City of Meriden,
Connecticut (PHA). The purpose of our review was to determine if
the PHA's management of its public housing and Section 8 activities
is effective and provides decent, safe and sanitary housing for
its tenants.
Our review disclosed that the PHA has not strictly followed procurement
requirements. Furthermore, the PHA has not administered its Section
8 Existing Certificate and Voucher programs in an efficient and
effective manner.
Issue Date: January 5, 2001
Audit
Report No.: 2001-BO-1002
File Size: 252KB
Title: Waller, Smith & Palmer, PC HUD Closing Agent New London,
CT
We performed an audit of HUD's closing agent, Waller, Smith &
Palmer, P.C. (WSP), as part of a nationwide effort to review closing
agents. The primary purpose of our audit was to determine whether
WSP complied with the terms of its closing agent contract and HUD
regulations.
HUD was overcharged $20,347 for wire transfer and closing agent
fees. WSP overcharged HUD $1,960 to wire transfer the proceeds from
392 HUD property sales to the Department of the Treasury between
March 16, 2000 and September 19, 2000. In addition, WSP overcharged
HUD $18,387 by improperly charging the full closing agent fee for
42 of a sample of 69 third party closings rather than the required
50 percent of the full fee.
Potentially HUD may have also been overcharged an additional $58,905.
We question $54,540 in wire transfer fees charged during the period
June 1, 1996 to March 15, 2000. We believe these fees were included
in WSP's closing agent fee, resulting in duplication of cost, which
is a violation of Section 8 of the Real Estate Settlement Procedures
Act (RESPA). Further, WSP may have charged HUD an additional $4,365
in excess of their closing agent fee for 27 closings, which occurred
subsequent to their current contract.
Although prohibited by its contract, WSP collects a sixty percent
title insurance premium fee split for each case whereby a title
insurance policy was issued by WSP, on behalf of the specific title
insurance company. In addition, WSP may be collecting duplicative
fees for the same services required by both the closing agent contract
and its agreements with title insurance companies. Section 8 of
RESPA prohibits fee splitting and collecting unearned fees, including
duplicative payments. Although RESPA allows fees to be collected
for actual services rendered, WSP did not bill title insurance companies
based on actual services rendered, but rather collected a fixed
sixty percent fee for each title insurance policy issued. WSP staff
advised that they believe Connecticut law permits them to collect
a sixty percent fee for the issuance of a title insurance policy
where WSP is the title insurance agent.
WSP did not comply with all of its closing agent contract requirements.
Specifically, WSP did not always ensure that only allowable expenses
were paid by HUD on the buyer's behalf. Furthermore, WSP did not
deposit sales proceeds timely; wire sales proceeds to the Department
of the Treasury timely; or submit a complete closing package to
CitiWest New England, Inc., Management and Marketing Contractor
for HUD. We are recommending the Homeownership Center direct and
ensure that WSP complies with the terms of their closing agent contract
and HUD regulations.
We are recommending that the Homeownership Center require WSP to
reimburse HUD a total of $20,347 for overcharges related to wire
transfer and closing agent fees for the period March 2000 to September
2000. Additional overcharges for wire transfers since September
19, 2000 should be calculated and reimbursed. Support for $54,540
in wire transfer fees prior to March 15, 2000 should be obtained.
Closing agent fees on the 27 closings occurring subsequent to the
current contract effective date should also be reviewed. In addition,
we are recommending the Homeownership Center require WSP to provide
support for fees earned from title insurance companies and require
WSP to claim only actual costs up to sixty percent of the premium
to comply with regulations. Further, we are recommending the Homeownership
Center instruct and ensure that WSP includes only allowable expenses
in the amount HUD pays on the buyer's behalf. Finally, we are recommending
that the Homeownership Center instruct and ensure that WSP submits
a complete closing package to HUD's Designee, and comply with all
sales closing requirements.
We discussed the findings in this report with WSP staff during
the course of the audit. On November 20, 2000, we provided WSP a
copy of the draft audit report for comment. We received WSP's written
response by letter dated December 7, 2000. Appropriate revisions
were made where deemed necessary. We included WSP's pertinent comments
in the Findings section of this report. Due to its voluminous content,
WSP's entire response was forwarded to program staff under a separate
letter. WSP's letter forwarding their response is included in Appendix
C.
Issue Date: January 5, 2001
Audit
Memorandum No.: 2001-BO-1802
File Size: 51KB
Title: Department of Mental Health and Addiction Services and
Continuum of Care Program Hartford, CT
We performed a review of the Continuum of Care Program (Supportive
Housing and Shelter Plus Care Programs) administered by the Department
of Mental Health and Addiction Services (DMHAS). Our objective was
to determine whether the Continuum of Care Program was operated
in accordance with DMHAS' approved application and HUD regulations.
Our review disclosed that the Supportive Housing Program is operated
in accordance with HUD regulations and requirements. However, our
review of the Shelter Plus Care Program disclosed violations of
HUD regulations and requirements. We determined that rental payments
by SPC tenants exceed the contract rent; administrative fees may
surpass the amount allowed; and the minimum number of grant participants
are not served.
Issue Date: September 29, 2000
Audit
Report No.: 00-BO-222-1005
File Size: 1,043KB
Title: CitiWest New England, Inc., Management and Marketing Contractor,
Hartford, Connecticut
We performed an audit of HUD's Management and Marketing Contractor,
CitiWest New England, Inc. (CitiWest). The objective of our audit
was to determine whether CitiWest is managing HUD single family
properties in compliance with HUD policies, procedures, and regulations
and with the terms and conditions of CitiWest's Management & Marketing
(M&M) Contract.
The report contains two findings. We found that CitiWest is not
properly inspecting and maintaining HUD's property inventory and
that CitiWest is not complying with case management processing requirements
cited in their M&M Contract.
Issue Date: July 5, 2000
Audit
Report No.: 00-BO-204-1004
File Size: 1,318KB
Title: Housing Authority of the City of Bridgeport Bridgeport,
Connecticut
We performed an audit of the Low-Income Housing Program and Section
8 Program operated by the Housing Authority of the City of Bridgeport.
Our objectives were to determine if the Authority was operating
its program in an efficient, effective and economical manner; and
was complying with the terms and conditions of its Annual Contributions
Contract, applicable laws, and HUD regulations.
Our audit disclosed that the Authority did not operate in an efficient,
effective and economical manner; and did not always comply with
the terms of its Annual Contributions Contract and HUD regulations.
In each area reviewed (occupancy, procurement, obtaining replacement
units, and internal control) we found substantial deficiencies in
the Authority's operations that had existed for a number of years.
Date Issued: June 14, 2000
Audit
Memorandum No: 00-BO-219-1801
File Size: 45KB
Title: Computer Learning Center Greater Hartford Realty Management
Corporation, Hartford, Connecticut
We have determined that GHRM has not implemented its Computer
Learning Center in accordance with its approved proposal and HUD
regulations. Although the cost was expended in accordance with the
HUD approved budget, GHRM did not prepare status reports or evaluations
of the Center's progress and there are no outside resources other
than the funds authorized by HUD from insured and/or assisted housing
projects managed by GHRM. The Computer Learning Center still operates
on a limited basis, although HUD has no assurances of the Center's
success in achieving its objective to provide resident education
and social advancement.
Date Issued: June 12, 2000
Audit
Report No: 00-BO-202-1003
File Size: 378KB
Title: Housing Authority of the City of New Britain, New Britain,
Connecticut
We performed a review of the Low-Income Public Housing and Section
8 Programs of the Housing Authority of the City of New Britain,
Connecticut (PHA). The objective of our review was to determine
if the PHA is operating its programs in an efficient and effective
manner.
The report contains two findings. We found that the PHA incurred
substantial unnecessary legal expenses, and they need to improve
certain aspects of its administration and management operations.
Date Issued: December 22, 1998
Audit
Memorandum No: 99-B0-183-1801
File Size: 107KB
Title: Analysis of Project Funds West Street Apartments New Haven,
Connecticut
Per your request, we examined the Project's three bank accounts
to determine the disposition of funds from September 1, 1996 to
July 24, 1998. Our review identified $1,871,062.09 disbursed to
a total of 103 payees. Payees who received a total disbursement
of less than $750 were not reviewed, ($11,864.90). Because of the
inadequate accounting records, we could only substantiate $195,086.81
as eligible project related expenses. As a result, $1,664,110.38
should be considered as a possible diversion from Project operations
during this period. In our prior review, we identified $347,254.84
as unauthorized distributions to the Owner, thus, we suggest you
seek damages for equity skimming in the amount of $2,011,365.22.
The Owner was unable to demonstrate that the disbursements made
during this period of time were incurred in accordance with the
Regulatory Agreement. In addition, the Owner needs to account for
$16,723 in tenant rents and $16,442 in negative rents owed tenants.
If these amounts are not substantiated, you should also seek damages
against the Owner for these potential diversions.
Issue Date: May 7, 1998
Audit
Report No: 98-BO-249-1004
File Size: 177KB
Title: City of New Haven, New Haven, CT
This report contains one finding. We are recommending that the
City evaluate the Subgrantee's performance to assure the accountability
of program funds and institute controls to assure the program is
cost effective.
Issue Date: October 28, 1997
Audit
Report No.: 98-BO-204-1002
File Size: 82KB
Title: HOPE VI Grant Program, New Haven, CT
The PHA did not establish accountability over its HOPE VI Program
funds. The PHA operated without effective managerial and internal
control systems over its HOPE VI Program expenditures; operated
without maintaining adequate documentation to support expenditures
of $3.4 Million charged to its HOPE VI Program; and transferred
the management of its HOPE VI Program to the Elm Haven Homes Partnership
(EHHP) without an approved contract and proper oversight.
Issue Date: October 6, 1997
Audit
Report No.: 98-BO-209-1001
File Size: 73KB
Title: Public Housing, New Haven, CT
On June 2, 1997, we issued an interim report (97-BO-101-0804)
pertaining to the PHDEP's law enforcement activities. That report
disclosed the PHA failed to establish fiscal accountability and
effective managerial and internal controls in regards to the program's
law enforcement expenditures totalling $949,944. Since this time,
the PHA has changed its management and is in the process of establishing
accountability and controls over the PHDEP expenditures.
In view of the lack of controls disclosed in this report, it is
imperative that the PHA take immediate corrective actions to assure
that the remaining unexpended funds are controlled, properly accounted
for and used in an economical and effective manner.
Content Archived: September 10, 2010