HUD OIG assisted U.S. Attorney’s Office, Southern District of New York in a civil investigation related to illegal-undocumented aliens receiving Housing Opportunities for Persons with AIDS (HOPWA) assistance. The HOPWA program at 24 CFR (Code of Federal Regulations) Part 574 is a HUD Office of Community Planning and Development (CPD) grant program that provides formula allocations and competitively awarded grants to eligible States, cities, and nonprofit organizations to provide housing assistance and related supportive services to meet the housing needs of low-income persons and their families living with HIV-AIDS.
Noncitizen or alien ineligibility for federally funded programs is a recurring issue in Congress. Two laws primarily govern noncitizen or alien eligibility for housing programs: Title IV of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 - 8 U.S.C. (United States Code 1611 (PRWORA) and Section 214 of the Housing and Community Development Act of 1980 as amended. PRWORA states that aliens, who are not qualified aliens, are not eligible for “Federal public benefits,” a term defined in the law to include public and assisted housing. Under this statute, unauthorized (illegal aliens) do not meet the definition of qualified aliens and as a result are ineligible for Federal public benefits. However, PRWORA exempted certain Federal public benefits from the alien eligibility restrictions, including programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelters) specified by the Attorney General, after consultation with the appropriate Federal agency.
The issue of nonqualified aliens receiving assistance under HOPWA or other homeless assistance programs has not been clearly addressed in HUD regulations and guidance. Specifically, there does not appear to be any clear guidance as to whether programs that are funded through HUD’s community development programs and administered through nonprofits (such as HOPWA) have been clearly designated as a “Federal public benefit.” This designation is important because aliens, who have not been qualified to be considered “qualified aliens” under 8 U.S.C. 1611, are not eligible for Federal benefits. Also, it is not clear whether homeless assistance grants are considered a Federal public benefit. There is a discord between “housing assistance,” which is considered a Federal benefit and is limited to qualified aliens, and “homeless assistance.” If homeless assistance grants were considered a Federal public benefit, HOPWA would not be available to illegal-undocumented aliens. However, since it is unclear whether such grants are considered Federal public benefits, there is a potential for unqualified aliens to fall under the exceptions under 8 U.S.C. 1611 (which include emergency type programs) and qualify to receive benefits.
We recommend that HUD’s Office of Community Planning and Development (1) Clarify whether assistance provided under its community development programs, such as HOPWA, are considered “Federal public benefits” and are, therefore, subject to PRWORA’s noncitizen eligibility restrictions and (2) Consult with the Office of the Attorney General to establish whether HOPWA and other homeless assistance programs are a Federal public benefit that meets the definition of “providing assistance for the protection of life or safety” and are, therefore, exempt from PRWORA noncitizen eligibility restrictions.
The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted the U.S. Department of Justice (DOJ), Washington, DC, and the U.S. Attorney’s Office for the Middle District of Florida in a civil investigation of Financial Freedom Acquisition, a division of CIT Bank, N.A. Financial Freedom was originally owned by IndyMac Bank until its failure in 2008, when the Federal Deposit Insurance Corporation was appointed as conservator. On March 18, 2009, OneWest Bank, N.A., based in Pasadena, CA, acquired the assets of Financial Freedom. On August 3, 2015, CIT Group acquired OneWest Bank, including Financial Freedom. The home equity conversion mortgage (HECM) servicing operations for Financial Freedom were located in Austin, TX.
On May 16, 2017, Financial Freedom entered into a settlement agreement with the Federal Government to pay $68,274,944 to avoid the delay, uncertainty, inconvenience, and expense of lengthy litigation. Financial Freedom also had paid HUD more than $21,000,000 related to the covered conduct through HUD’s Supplemental Claims system, for a total settlement value of $89,274,944. The Federal Government alleged that Financial Freedom sought to obtain insurance payments for debenture interest from HUD and did not disclose on the insurance claim forms that the lender was not eligible for such interest payments. The settlement was neither an admission of liability by Financial Freedom nor a concession by the United States that its claims were not well founded.
As a result of Financial Freedom’s conduct, lenders on relevant HECMs obtained additional debenture interest that they were not entitled to receive. HUD incurred substantial losses when it paid additional debenture interest on HECM claims on the loans covered by the settlement agreement. Of the total $89,274,944 settlement, the Federal Housing Administration received $41 million, and the remaining amount was paid to other Federal entities.
The U.S. Department of Housing and Urban Development, Office of Inspector General audited the Denver Housing Authority of Denver, CO for calendar years 2013-2015. The audit was initiated because of deficiencies found in other procurement audits in our region. The Authority is the largest recipient of U.S. Department of Housing and Urban Development (HUD) funds in the region, and we wanted to ensure that it did not have the deficiencies found in other audits. The audit objective was to determine whether the Authority properly procured goods and services with its capital funds from 2013 to 2015.
The Authority generally complied with HUD’s and its own procurement regulations for the five contracts reviewed. It properly completed the presolicitation process, the solicitation process, the evaluation process, the award process, and the postaward and administration process for those contracts.
There were no recommendations for this audit due to the positive nature of the report.
We audited the Housing Choice Voucher and public housing programs at the West Warwick Housing Authority as a result of concerns from the U.S. Department of Housing and Urban Development (HUD) and a hotline complaint. The audit objectives were to determine whether (1) procurements were executed in accordance with Federal regulations, (2) West Warwick officials established adequate controls over the Housing Choice Voucher and public housing programs to ensure compliance with HUD regulations, and (3) purchases and inventory were reasonable and adequately supported.
West Warwick’s procurements did not comply with Federal requirements. Thirteen procurements totaling more than $2 million had deficiencies, including no independent cost estimates, no contracts, no record of bids or requests for proposals, no price evaluations, no completion certifications, and only one notice to proceed. West Warwick’s Housing Choice Voucher and public housing programs did not operate in compliance with HUD requirements due to a lack of policies and procedures and inadequately trained staff. In addition, its credit card charges and petty cash purchases were not supported, and its assets were not protected.
We recommend that the Director of Public Housing require West Warwick to (1) provide support for procurements totaling more than $2 million or repay HUD from non-Federal funds, (2) develop and implement controls over its procurement process, (3) develop and implement policies and procedures for the Housing Choice Voucher and public housing programs, (4) provide support for $18,501 in credit card charges or repay HUD from non-Federal funds, (5) provide support for $4,530 in petty cash purchases or repay HUD from non-Federal funds, and (6) develop and maintain property records and conduct an inventory in accordance with Federal regulations.
