Department of Housing and Urban Development

Please note: Overpayment amounts recovered are reported in the year they were recovered, not the year they were identified. Therefore it is possible in some years to have a recovery rate greater than 100%.

Overpayment amount identified through recovery activities	$17.06 M
Overpayment amount recovered through recovery activities	$23.08 M
Recovery activities recovery rate	135.29 %
Overpayment amount identified through recovery audits	$7.75 M
Overpayment amount recovered through recovery audits	$0.78 M
Recovery audit recovery rate	10.06 %
Overpayment amount identified for recapture	$24.81 M
Overpayment amount recovered	$23.86 M
Overpayment recovery rate	96.17 %

Conditions giving rise to improper payments identified in recovery audits, how those conditions are being resolved, and the methods used to recover those payments

Lead Hazard Reduction

During grant or contract execution, the Office of Lead Hazard Control and Healthy Homes (OLHCHH) reviews funding recipient invoices, vouchers and supporting documentation. If an improper payment is identified, the Government Technical Representative (GTR) or the Contracting Officer’s Representative (COR), as applicable, provides the funding recipient with documentation of the determination of the improper payment, the regulatory, grant-specific, and/or contractual basis for recovering the improper payment, a due date for recoupment, a request for the funding recipient explanation for the problem, and a description of the appeal process the funding recipient may choose to use.

OLHCHH’s grant and contract monitoring processes assure quality spending and monitoring for reimbursable funding. The likelihood of grant payments (virtually all the OLHCHH’s payments) being improper is low for several reasons: OLHCHH’s grant programs are a reimbursement programs; the funds distributed are for services that have already been completed and invoiced, and have had the invoices and supporting documentation reviewed and approved by the GTR. Additionally, every three months, grantees submit detailed information on work performed and provide a financial statement using the Federal Financial Report (SF-425), HUD-Part 3 Budget form, and supporting documentation. The SF-425, HUD-Part 3 Budget form, and the LOCCS VRS Request Voucher for Grant Payment (form HUD-27053) must match data in LOCCS and all totals must be the same. Under remote monitoring, a GTR performs a review to ensure accuracy, as needed. On-site monitoring is conducted once a year (provided OLHCHH travel funds are available) after a risk analysis is completed and/or a grant is determined to be high risk. A poorly performing grantee is required to submit weekly or monthly progress reports (vs. the standard quarterly reports), as determined by the GTR based on the severity of the grantee’s performance.

A funding recipient may appeal a GTR’s or COR’s finding of improper payment to the Grants Division Director (for grants) or the Business Operations Division Director (for contracts). If the appeal is denied, the funding recipient may submit a second-level appeal to the Office’s Deputy Director. If the funding recipient does not refund the improper payment although the request for recovery was not appealed, or although the highest-level appeal was denied, the matter is sent to OGC for action.

If the funding recipient submits a check for overpayment, the GTR or COR forwards the check, the funding recipient’s letter of explanation, and a cover message to the OLHCHH’s Budget Officer to initiate recapturing the funds. For grants, the Grants Officer documents the returned funds on form HUD-1044 (Assistance Award/Assistance). For contracts, the COR documents the returned funds in the Contract File. The Budget Officer works with HUD’s OCFO and, as applicable, with Treasury on having the proceeds of the check deposited in the applicable OLHCHH or Treasury account. "

Home Equity Conversion Mortgage (HECM) Claims

The Office of Housing-Federal Housing Administration’s (HSNG–FHA) recovery audit program is part of its overall program of effective internal control over payments. Internal control policies and procedures establishes a system to monitor improper payments and their causes, and includes controls and actions for detecting, preventing, and recovering improper payments. On a recurring basis, these programs generate reports that identify potentially duplicate disbursements. These disbursements are researched, and recovery actions are initiated for payments deemed improper. As part of the recapture audit plan, internal control documents and files are reviewed, and post claim reviews are performed.

Under Title I and Other Debt Collection Guidance Handbook 4740.2, the Financial Operation Center (FOC) is primarily responsible for generic debt collection and customer service activities, including responding to debtor inquiries regarding pay-off, payment plans, compromises, disputes, and appeals. The debt referral package primarily consists of copies of legal documents, mortgages, deeds of trust, judgments and other recorded lien documents, lien assignment documents, repayment agreements, credit reports, correspondence to/from debtors, and compromise agreements and supporting documents.

The Debt Collection Asset Management System (DCAMS) is the application used to support the generic debt collection process. DCAMS is designed to automatically send collection letters, report delinquent debt to credit bureaus and HUD’s Credit Alert Interactive Voice Response System (CAIVRS), assess penalties and administrative costs, and refer eligible debts to the Treasury Offset Program (TOP) and Cross-Servicing. Based on predefined criteria and the status of that case as reflected in DCAMS data fields (not later than 180 days after the demand letter), DCAMS is consistently updated to prevent improper referral for TOP offset.

For internal offsets, over-claimed amounts (negative claims) occur when the mortgagee owes FHA. The Single-Family Claims Branch (SFCB) sends billing letters to lenders for the excess amounts claimed and tracks the receivables using the Accounts Receivables Sub-system (ARS). Receivables are established in SFCB’s ARS and identified by an FHA case number. Each FHA case number is further identified by Section of the Act (which is linked to the appropriate fund) and endorsement date. This later date identifies the cohort year. The Holder of record to which the claim funds were originally disbursed is identified in ARS as the debtor, by default. When the receivable is subsequently liquidated by funds remitted by a Mortgagee or by offset, the collected amount is posted to the previously identified FHA case number, Section of the Act, and cohort year.

If a payment is not received from a lender within 90 days, the receivable is offset against subsequent claims by the lender until the full amount of the receivable is satisfied. If a receivable is not satisfied within 120-150 days, it is referred to the FOC in Albany, NY for enforced collection actions. At that time, the FOC officially confirms acceptance of the transfer of an aged delinquent debt, and that receivables have been removed from the ARS with the notation that it has been referred to the FOC for recovery.

Another avenue by which improper payments are recaptured is through Post Claim Reviews for Title II Single Family Insurance Claims. Post Claims Reviews are not performed for HECM Claims. A statistical sample of settled claims is reviewed for compliance with FHA servicing and claim filing requirements. A report on findings, is prepared and issued to the individual mortgagee. Mortgagees can refute the findings by providing additional documents before a final report is issued. If the Mortgagee chooses to pay the monetary findings prior to HUD’s issuance of the final report, those funds are deposited to ARS, which applies them to the Mortgage Insurance (MI) fund. Upon issuance of the final report, it is referred to the FOC which establishes it as a receivable and tracks it until paid in full. If a lender is overpaid on a Multifamily claim, the Multifamily Claims Branch will demand the overage back from the lender. If the lender fails to respond to their demands, the debt is referred to the FOC for collection. Lastly, for Treasury Cross-Servicing, the collection of generic debt is governed by the Debt Collection Improvement Act and HUD policies (Title I and Other Debt Collection Guidance 4740.2). The Act requires federal agencies to refer eligible delinquent debts to Treasury (for Cross-Servicing and TOP) when the debt is 120 days delinquent.

The Treasury’s TOP allows federal agencies to report delinquent non-tax debt to the BFS. BFS performs computer matching with disbursement data and processes an offset when an appropriate match is determined. After referral, Treasury and its private collection agencies are responsible for contacting the debtor to collect the payment of the debt. The Treasury’s Cross-Servicing is a process used by BFS to refer the debt collection to a private collection agency, among other actions, to collect delinquent debts on behalf of Federal Agencies.

The FOC’s recapture process establishes receivables in DCAMS and issues a demand notice to the debtor(s). If the debt remains unpaid, DCAMS issues a “Notice of Intent” warning regarding enforced collection measures and informs the debtor regarding their due process rights. DCAMS automatically reports information to credit bureaus and CAIVRS. Penalty and administrative cost charges are also automatically assessed if warranted.

If the debt remains unpaid, it is referred to Treasury (within 180 days) for offset via the government-wide TOP and for direct collection action by Treasury and Treasury contracted private collection agencies. Treasury also initiates referral to the Department of Justice (DOJ) for civil litigation and/or initiates Administrative Wage Garnishment (AWG) action if they deem such action to be appropriate.

If Treasury’s Cross-Servicing action is not successful, Treasury “returns” the debt to the FOC. If older than two years, the receivable is written-off and the case is reclassified “currently not collectible.” The FOC keeps the case open if offset via TOP appears fruitful or if other collection measures are applicable (e.g., AWG action by HUD). Otherwise, the FOC terminates collection action, closes the case, and the system issues an IRS Form 1099C “Cancellation of Debt,” the following January if appropriate. Write-off, Termination, close-out, and 1099C issuance can also occur at any point in the above collection cycle if determined appropriate (e.g., debtor is discharged as bankrupt).

Collections from debtors to HUD go to the Treasury Lockbox Network or Pay.gov. Collections from debtors to Treasury or DOJ come to HUD via interagency transfer (i.e., Intra-Governmental Payment and Collection (IPAC)). No matter the route, all payments are posted to the receivable in DCAMS. "

Home Equity Conversion Mortgage (HECM) Notes

The Office of Housing-Federal Housing Administration’s (HSNG–FHA) recovery audit program is part of its overall program of effective internal control over payments. Internal control policies and procedures establishes a system to monitor improper payments and their causes, and includes controls and actions for detecting, preventing, and recovering improper payments. On a recurring basis, these programs generate reports that identify potentially duplicate disbursements. These disbursements are researched, and recovery actions are initiated for payments deemed improper. As part of the recapture audit plan, internal control documents and files are reviewed, and post claim reviews are performed.

Under Title I and Other Debt Collection Guidance Handbook 4740.2, the Financial Operation Center (FOC) is primarily responsible for generic debt collection and customer service activities, including responding to debtor inquiries regarding pay-off, payment plans, compromises, disputes, and appeals. The debt referral package primarily consists of copies of legal documents, mortgages, deeds of trust, judgments and other recorded lien documents, lien assignment documents, repayment agreements, credit reports, correspondence to/from debtors, and compromise agreements and supporting documents.

The Debt Collection Asset Management System (DCAMS) is the application used to support the generic debt collection process. DCAMS is designed to automatically send collection letters, report delinquent debt to credit bureaus and HUD’s Credit Alert Interactive Voice Response System (CAIVRS), assess penalties and administrative costs, and refer eligible debts to the Treasury Offset Program (TOP) and Cross-Servicing. Based on predefined criteria and the status of that case as reflected in DCAMS data fields (not later than 180 days after the demand letter), DCAMS is consistently updated to prevent improper referral for TOP offset.

For internal offsets, over-claimed amounts (negative claims) occur when the mortgagee owes FHA. The Single-Family Claims Branch (SFCB) sends billing letters to lenders for the excess amounts claimed and tracks the receivables using the Accounts Receivables Sub-system (ARS). Receivables are established in SFCB’s ARS and identified by an FHA case number. Each FHA case number is further identified by Section of the Act (which is linked to the appropriate fund) and endorsement date. This later date identifies the cohort year. The Holder of record to which the claim funds were originally disbursed is identified in ARS as the debtor, by default. When the receivable is subsequently liquidated by funds remitted by a Mortgagee or by offset, the collected amount is posted to the previously identified FHA case number, Section of the Act, and cohort year.

If a payment is not received from a lender within 90 days, the receivable is offset against subsequent claims by the lender until the full amount of the receivable is satisfied. If a receivable is not satisfied within 120-150 days, it is referred to the FOC in Albany, NY for enforced collection actions. At that time, the FOC officially confirms acceptance of the transfer of an aged delinquent debt, and that receivables have been removed from the ARS with the notation that it has been referred to the FOC for recovery.

Another avenue by which improper payments are recaptured is through Post Claim Reviews for Title II Single Family Insurance Claims. Post Claims Reviews are not performed for HECM Claims. A statistical sample of settled claims is reviewed for compliance with FHA servicing and claim filing requirements. A report on findings, is prepared and issued to the individual mortgagee. Mortgagees can refute the findings by providing additional documents before a final report is issued. If the Mortgagee chooses to pay the monetary findings prior to HUD’s issuance of the final report, those funds are deposited to ARS, which applies them to the Mortgage Insurance (MI) fund. Upon issuance of the final report, it is referred to the FOC which establishes it as a receivable and tracks it until paid in full. If a lender is overpaid on a Multifamily claim, the Multifamily Claims Branch will demand the overage back from the lender. If the lender fails to respond to their demands, the debt is referred to the FOC for collection. Lastly, for Treasury Cross-Servicing, the collection of generic debt is governed by the Debt Collection Improvement Act and HUD policies (Title I and Other Debt Collection Guidance 4740.2). The Act requires federal agencies to refer eligible delinquent debts to Treasury (for Cross-Servicing and TOP) when the debt is 120 days delinquent.

The Treasury’s TOP allows federal agencies to report delinquent non-tax debt to the BFS. BFS performs computer matching with disbursement data and processes an offset when an appropriate match is determined. After referral, Treasury and its private collection agencies are responsible for contacting the debtor to collect the payment of the debt. The Treasury’s Cross-Servicing is a process used by BFS to refer the debt collection to a private collection agency, among other actions, to collect delinquent debts on behalf of Federal Agencies.

The FOC’s recapture process establishes receivables in DCAMS and issues a demand notice to the debtor(s). If the debt remains unpaid, DCAMS issues a “Notice of Intent” warning regarding enforced collection measures and informs the debtor regarding their due process rights. DCAMS automatically reports information to credit bureaus and CAIVRS. Penalty and administrative cost charges are also automatically assessed if warranted.

If the debt remains unpaid, it is referred to Treasury (within 180 days) for offset via the government-wide TOP and for direct collection action by Treasury and Treasury contracted private collection agencies. Treasury also initiates referral to the Department of Justice (DOJ) for civil litigation and/or initiates Administrative Wage Garnishment (AWG) action if they deem such action to be appropriate.

If Treasury’s Cross-Servicing action is not successful, Treasury “returns” the debt to the FOC. If older than two years, the receivable is written-off and the case is reclassified “currently not collectible.” The FOC keeps the case open if offset via TOP appears fruitful or if other collection measures are applicable (e.g., AWG action by HUD). Otherwise, the FOC terminates collection action, closes the case, and the system issues an IRS Form 1099C “Cancellation of Debt,” the following January if appropriate. Write-off, Termination, close-out, and 1099C issuance can also occur at any point in the above collection cycle if determined appropriate (e.g., debtor is discharged as bankrupt).

Collections from debtors to HUD go to the Treasury Lockbox Network or Pay.gov. Collections from debtors to Treasury or DOJ come to HUD via interagency transfer (i.e., Intra-Governmental Payment and Collection (IPAC)). No matter the route, all payments are posted to the receivable in DCAMS. "



Multifamily Notes

The MFNSB is responsible for overseeing all fiscal loan servicing activities for MF and Healthcare mortgage notes assigned to the Secretary. MF and Healthcare notes include both the Mutual Mortgage Insurance /Cooperative Management Housing Insurance and General Insurance /Special Risk Insurance for financing and liquidating accounts. The FHA has contracted with a Servicing and Accounting Contractor and utilizes their proprietary-owned system to maintain records for all transactions relating to the assignment, servicing, and disposition of the MF notes portfolio. Each note is serviced in accordance with the mortgage and mortgage note documents. Servicing activities include billing, collections, disbursements, escrow management, and processing of terminations. Servicing activities are performed daily until termination of the note from the system.

Taxes and R4R escrows are incorporated into the note and managed by the note. Amounts collected are all pre-determined by the language within the note itself. Payment amounts (R4R costs, insurance, taxes and miscellaneous A/P) are calculated based on invoices submitted.

All disbursements are initially processed by the contractor. However, the Multifamily Notes Servicing Branch (MFNSB) staff have final approval on all disbursements. No disbursements are made by the contractor without approval from the MFNSB. Disbursements are approved by HUD.

Each payment request has an invoice and physical approval. Separation of duties is maintained for the disbursement process. Contract staff create the transmittal to allow the disbursement; a second contract staff approves the transmittal; a third contract staff creates the disbursement. None of the staff have the authority to perform any other duty in the payment process. Upon receipt of the disbursement request from the contractor, it is reviewed by MFNSB staff to ensure the requested disbursement is correct and in compliance with HUD guidelines. Employees conduct data matching analytics to verify key information for disbursements such as project name, address, FHA number, iREMS number, and dollar amount. For payment schedules the Tax ID Number, Routing Number, Deposit Account Number, and Dollar Amount are validated against supporting documentation to ensure accuracy.

Once the disbursements are reviewed and approved by MFNSB, they are sent to the Cash Management Branch (CMB) for certification and processing. Payments are disbursed directly to the vendor responsible for collecting the disbursement and applying the funds to the expense. Contract staff perform daily banking functions to ensure all checks have been cashed and ACH transactions processed.

Once the Certifying Officer in CMB certifies the schedule for payment, CMB sends the Secure Payment System (SPS) Report via email to the MFNSB. Staff compares the schedule payment package to the daily SPS Report and to the Goal Report Agency Location Codes (ALC) Payment Details to ensure the payment information is correct. In addition, all cash activities are reconciled through monthly accounting reconciliations. These payments are also post-payment checked.

On a monthly basis, the MFNSB Chief conducts random sampling of payment schedules. A sampling of 20% of paid schedules is selected and reviewed for accuracy of information and payment. There have been no inaccuracies or overpayments cited. In the event of an overpayment of taxes or hazard insurance, the contractor will work with the tax authority or insurance provider to recoup the overpayment. If the contractor is unable to recover the funds, they will escalate the issue to MFNSB, which will work with the Account Executive, the Office of General Counsel, and the appropriate program area to ensure the overpayment is recaptured. In the event of an overpayment of R4R, the contractor will work with the Management Agent to recoup the overpayment. If the Management Agent fails to return the overpayment within 30 days, MFNSB will notify the Account Executive and the appropriate program area. The overpayment will be included in the next scheduled billing statement and the Management Agent will be issued a formal notification of the action."



Multifamily Property

The Office of Housing-Federal Housing Administration’s (HSNG–FHA) recovery audit program is part of its overall program of effective internal control over payments. Internal control policies and procedures establish a system to monitor improper payments and their causes, and include controls and actions for detecting, preventing, and recovering improper payments. On a recurring basis, these programs generate reports that identify potentially duplicate disbursements. These disbursements are researched, and recovery actions are initiated for payments deemed improper.

The Servicing and Accounting Contractor perform all Multi Family (MF) Property accounting. The MF Property Accountant prepares monthly cash reconciliations to ensure that all cash activity processed at the Servicing and Accounting Contractor facility agrees with FHA’s cash activity maintained in the Cash Contracts and Funds Control (CCFC) module within FHASL and Source System Report (DT) SGL File Translation Report. Any discrepancies are researched and corrected immediately through the Cash Management Branch or the Servicing and Accounting Contractor as appropriate. The MF Property Accountant performs this reconciliation by utilizing a standard GLD Excel cash template (Cash Receipts and Cash Disbursements); to reconcile monthly cash activities posted through CCFC and the source system report mentioned above Cash Activity Report (14R) and the General Ledger (GL) cash accounts. The cash report reflects Lockbox, Fedwire, ACH, and Intra-Governmental Payment and Collection, fund splits, and transfers for both collection and disbursement transactions. The DT SGL File Translation Report reflects all accounting activities processed in source system by contractors and during regular cash reconciliation process, MF Property Accountant resolves any discrepancies between 14R (CCFC)/GL and the source system before month end closing.

The MF Property Accountant reconciles cash between the GL and the Cash Activity Report and posts the necessary Cash-in-Transit (CIT) Journal Entry (JE)s to balance the two modules within Federal Housing Administration Subsidiary Ledger (FHASL) for receipts and disbursements. The CIT journal is reviewed, approved, and posted by the Multi Family Accounting Branch (MFAB) Chief or Designee.

The CIT amounts, if any, are reflected in the monthly Excel cash reconciliation. The Preparer, Reviewer, and Approver sign the monthly Cash Reconciliation to ensure its validity. In some cases, the reviewer and approver may be the same individual. Each morning, a file is generated through the CSMS and is transferred to the HUD processing server. The file is then picked up by the Trivoli (Autosys) program that loads the daily property accounting transactions into the proper FHASL Standard General Ledger (SGL) accounts. The monthly SGL Trial Balance Source System Report, and the Detailed Transaction Report used for reconciliation, are produced through the Property module within Comprehensive Servicing and Monitoring System (CSMS). The MF Property Accountant downloads the information from the CSMS Trial Balance Report into the Excel file and saves it on the share drive. Then the GLD Systems Accountant uploads the file to the Auto-Rec database and then notifies the MF Property Accountant to run the reconciliation. The MF Property Automated Reconciliation is reviewed and signed by the Preparer, Reviewer, and Approver. In some cases, the Reviewer and the Approver may be the same individual.

Each month, the MF Property Accountant prepares a reconciliation between cash, receivables, payables, and budgetary accounts. This reconciliation provides accounting area specific information on any variances within the budgetary accounts that should be reflected when cash collections and/or payables are recorded within the GL. The MF Property Accountant runs the trial balance query in FHASL, imports the results into the standard proprietary, budgetary template and the reconciliation template is automatically updated to show any variances. The MF Property Accountant is responsible for researching any variances and makes appropriate adjustments to ensure that budgetary, cash and obligation activity is accurately reported for the month and fiscal year. The MF Property Proprietary/Budgetary Reconciliation is reviewed and signed by the Preparer, Reviewer, and Approver. In some cases, the Reviewer and the Approver may be the same individual.

At the end of every month, the MF Property Accountant is responsible for comparing Accounts Payable activity by account totals from the source system and the GL Trial Balance Report. If there are any differences between what is reported by servicing and what was sent to FHASL via the Federal Transaction Repository (FTR) process, the MF Property Accountant will research and resolve the difference. The Preparer, Reviewer, and Approver sign the Accounts Payable Reconciliation to ensure its validity. In some cases, the reviewer and the approver may be the same individual.

At the end of every month, the MF Property Accountant is responsible for comparing Accounts Receivable activity by fund from the source system and the GL Trial Balance Report. If there are any differences between what is reported by servicing and what was sent to FHASL via the FTR process, the MF Property Accountant will research and resolve the difference. The Preparer, Reviewer, and Approver sign the Accounts Receivable Reconciliation to ensure its validity. In some cases, the reviewer and the approver will be the same individual.

The quarterly Roll Forward Report is also prepared using data extracted from the Servicing and Accounting Contractor’s CSMS Property database. The monthly Inventory Report is cumulative and gives all accounting transaction totals that impact the property capitalized income and expense ending balances, to include Profit and Loss on sold properties. Additions (new acquisitions) and deletions (sales) are included in the Roll Forward Report. FHASL will reflect the same principal balances if there are no adjusting entries from HUD.

The MF Property Accountant prepares monthly JEs prior to the GL month-end close. If JEs are recorded by the Servicing and Accounting Contractor incorrectly or cross over into the next accounting period, manual entries are necessary to adjust property accounts. This is done upon receipt of source documentation (i.e. Collection Report, Disbursement check register, and CSMS Gather Balance Reports). The MF Property manual transactions relate to CIT (unconfirmed cash) entries for cash differences between CSMS and the Cash Activity Report. The MF Property Accountant manually keys the entries into FHASL by fund, cohort, and program code. All Manual JEs are reviewed, approved, and posted by the MFAB Chief or Designee.

On a quarterly basis, the Servicing and Accounting Contractor assesses the allowance for losses on the property inventory to report the property inventory at its net realizable value. The assessment is based on various reports generated from CSMS. The loss allowance calculation methodology is based on loss rates that take into consideration the acquisition cost, capitalized expenses, cost to dispose of the properties, and proceeds from property sales. The MF Accountant will prepare the Quarterly Allowance entry. The MFAB Chief or Designee reviews, approves, and posts the Property Allowance JEs."



Single Family Claims

The Office of Housing-Federal Housing Administration’s (HSNG–FHA) recovery audit program is part of its overall program of effective internal control over payments. Internal control policies and procedures establishes a system to monitor improper payments and their causes, and includes controls and actions for detecting, preventing, and recovering improper payments. On a recurring basis, these programs generate reports that identify potentially duplicate disbursements. These disbursements are researched, and recovery actions are initiated for payments deemed improper. As part of the recapture audit plan, internal control documents and files are reviewed, and post claim reviews are performed.

Under Title I and Other Debt Collection Guidance Handbook 4740.2, the Financial Operation Center (FOC) is primarily responsible for generic debt collection and customer service activities, including responding to debtor inquiries regarding pay-off, payment plans, compromises, disputes, and appeals. The debt referral package primarily consists of copies of legal documents, mortgages, deeds of trust, judgments and other recorded lien documents, lien assignment documents, repayment agreements, credit reports, correspondence to/from debtors, and compromise agreements and supporting documents.

The FOC is responsible for managing the business operations for the Title I loan program, which includes registering and endorsing loans for insurance, billing and collecting premiums, and examining claims for loss and approving them for payment. The FOC is also responsible for performing the debt collection and servicing activities for Title I Notes (defaulted Title I loans) and generic debts (other FHA debts).

The Title I program authorizes HUD to insure lenders against default on loans used to finance property improvements and to purchase manufactured homes. Lenders are required to pay premiums covering the insurance of their loans and submit applications for insurance benefits for defaulted loans. HUD is required to collect the unpaid loan balance, including eligible expenses, from the defaulted borrower.

The FOC’s Title I Insurance Processing Branch (TIIPB) is responsible for evaluating and approving lender applications for insurance benefits. The lender’s application must include loan information and any documentation necessary for the TIIPB to calculate a claim payment. There are three types of claims: initial, resubmitted, and supplemental. An initial claim is a first submission. A resubmitted claim is one that the TIIPB had previously denied. A supplemental claim is an additional claim for the same loan when the lender finds documentation for expenses not included in the initial claim. TIIPB support staff establish the claim in the Title I Insurance and Claims System (TIIS/F72). The process includes assigning a claim number, entering the date the claim was received, and assigning the claim to a TIIPB examiner. The examiner conducts a full review of the claim to determine whether the loan complies with Title I underwriting and servicing requirements and whether expenses claimed by the lender are supported by the documentation provided. If these conditions are satisfied, the examiner processes the claim calculation and authorization for payment in TIIS/F72. TIIS/F72 processes the payments authorized on the same day in a single batch file, sends the file to Treasury’s Payment Application Modernization system, and sends another file to the Cash Management Branch to authorize the Treasury disbursement. TIIS/F72 sends a file of paid claims to the Debt Collection and Management System – Title I (DCAMS-TI/F71), which converts the paid claims to notes receivable. The FOC’s Asset Recovery Division (ARD) is responsible for pursuing collection against the debtor (defaulted borrower).

The TIIPB conducts quality reviews of paid Title I claims to ensure consistent processing and examination quality. Each month, the TIIPB Branch Chief randomly selects 10% of paid claims for review. The Branch Chief either reviews the claim themselves or assigns them to examiners for a peer review. The reviewer conducts a full examination of the claim and reports whether the claim payment was conforming (compliant/no deficiencies), deficient (minor issues to address), unacceptable (serious issues to address), or mitigated (issues found but readily resolved). The outcomes of quality reviews are documented in both the Case Notes screen of TIIS/F72 and in the Title I Quality Reviews folder of the FOC’s SharePoint site.

If the review identified a deficiency that resulted in an overpaid claim, the TIIPB Branch Chief or examiner will issue a request to the lender for a full (for an unacceptable claim) or partial (for a deficient claim) repurchase of the loan. The request instructs the lender to repurchase the loan by remitting payment to a designated lockbox within 30 days or to ask for a reconsideration of the repurchase request within 10 days. If the lender fails to submit documentation that satisfactorily resolves the deficiency or to remit payment within the established timeframes, TIIPB issues a repurchase demand which gives the lender 30 days to remit the repurchase funds and informs the lender of the actions HUD will take if the funds aren’t remitted, including transferring the unpaid repurchase to the FOC’s ARD for delinquent debt collection, which includes referral to the Treasury Offset Program (TOP) for administrative offset.

Both paid and unpaid repurchase requests and demands involve coordination between the FOC’s TIIPB and ARD. The ARD ensures that the Title I Note receivable is reclassified as a full or partial repurchase. Payments for full and partial repurchases are sent to the Title I Notes lockbox which transmits a collection file to DCAMS-TI/F71 to credit the funds to the Title I Note receivable associated with the claim. The ARD notifies the TIIPB when repurchase funds are received and the TIIPB updates the claim record in TIIS/F72 (subfunction J04). For full repurchases, the ARD closes the Title I Note receivable as repurchased. Before closing out the receivable, the ARD will issue the debtor (defaulted Title I borrower) a refund for any non-repurchase collections received. The TIIPB returns the original claim binder to the lender along with an executed reassignment of the Title I promissory note and lien, if applicable.

Unpaid full or partial repurchase requests and demands are transferred to the ARD for delinquent debt collection. The ARD establishes a Title I Repurchase receivable in the Debt Collection and Asset Management System – Generic Debt (DCAMS-GD/F71A), which initiates the collection process by issuing an automated demand letter describing the debt and instructing the lender to remit payment in full within 30 days or contact the designated ARD Debt Servicing Representative (DSR) to request a plan to repay the debt in installments. If the lender does not pay the debt in full or enter a repayment plan within 30 days, DCAMS-GD/F71A issues a Notice of Intent (NOI) to Collect by Administrative Offset. The NOI notifies the lender that HUD intends to refer the debt to the TOP, describes the TOP process for administrative offset of federal payments, and provides the lender with steps to take to contest the basis of the debt or the amount demanded by filing an appeal with HUD’s Board of Appeals (BOA) within 65 days. If the lender files an appeal, DCAMS-GD/F71A suspends referral to TOP pending a decision and order from the BOA administrative law judge. (BOA adjudicates appeals by gathering and evaluating statements and documents from both parties.) If the BOA judge issues a decision and order declaring the debt unenforceable, the ARD closes the debt as unenforceable and notifies the TIIPB. The TIIPB will reverse the pending repurchase in TIIS/F72. If the decision and order results in a dismissal of the lender’s appeal, the DSR updates debt status in DCAMS-GD/F71A making the debt eligible for referral to TOP. DCAMS-GD/F71A refers eligible debts that are 121 or more days delinquent to TOP and the Treasury Cross-Servicing Program. DCAMS-GD/F71A also reports lenders to commercial credit reporting agencies (Dun & Bradstreet, Experian, and Equifax).

The TIIPB may, rather than transfer the unpaid repurchase to the ARD for delinquent debt collection, pursue internal offset of payments on subsequent claims submitted by the lender. In most cases, however, it’s more effective to transfer the debt to the ARD, since any federal payment made to the lender, including Title I claim payments, will be collected through TOP.

Collections, both voluntary and involuntary, received on a Title Repurchase debt are credited to the account. When a debt is paid in full, the ARD makes entries in DCAMS-GD/F71A to close out the debt as paid in full and to close out the Title I Note receivable as unenforceable. The TIIPB makes entries in TIIS/F72 (subfunction J04) to acknowledge satisfaction of the repurchase demand and returns the original claim binder to the lender along with an executed reassignment of the Title I Promissory Note and lien, if applicable.

If the ARD concludes that the Title I Repurchase debt is uncollectible, it takes steps to close out the debt in DCAMS-GD/F71A, which will issue an IRS Form 1099-C to the lender and report the debt accordingly to the IRS. The TIIPB will pursue secondary recovery activities on the uncollectible repurchase by internally offsetting future claims payments to the lender or blocking payments on subsequent claims submitted by the lender. The TIIPB may also refer the lender to FHA’s Mortgagee Review Board for sanctions

The Debt Collection Asset Management System (DCAMS) is the application used to support the generic debt collection process. DCAMS is designed to automatically send collection letters, report delinquent debt to credit bureaus and HUD’s Credit Alert Interactive Voice Response System (CAIVRS), assess penalties and administrative costs, and refer eligible debts to the TOP and Cross-Servicing. Based on predefined criteria and the status of that case as reflected in DCAMS data fields (not later than 180 days after the demand letter), DCAMS is consistently updated to prevent improper referral for TOP offset.

For internal offsets, over-claimed amounts (negative claims) occur when the mortgagee owes FHA. The Single-Family Claims Branch (SFCB) sends billing letters to lenders for the excess amounts claimed and tracks the receivables using the Accounts Receivables Sub-system (ARS). Receivables are established in SFCB’s ARS and identified by an FHA case number. Each FHA case number is further identified by Section of the Act (which is linked to the appropriate fund) and endorsement date. This later date identifies the cohort year. The Holder of record to which the claim funds were originally disbursed is identified in ARS as the debtor, by default. When the receivable is subsequently liquidated by funds remitted by a Mortgagee or by offset, the collected amount is posted to the previously identified FHA case number, Section of the Act, and cohort year.

If payment is not received from a lender within 90 days, the receivable is offset against subsequent claims by the lender until the full amount of the receivable is satisfied. If a receivable is not satisfied within 120-150 days, it is referred to the FOC in Albany, NY for enforced collection actions. At that time, the FOC officially confirms acceptance of the transfer of an aged delinquent debt, and that receivables have been removed from the ARS with the notation that it has been referred to the FOC for recovery.

Another avenue by which improper payments are recaptured is through Post Claim Reviews for title II Single Family Insurance Claims. A statistical sample of settled claims is reviewed for compliance with FHA servicing and claim filing requirements. A report on findings is prepared and issued to the individual mortgagee. Mortgagees can refute the findings by providing additional documents before a final report is issued. If the Mortgagee chooses to pay the monetary findings prior to HUD’s issuance of the final report, those funds are deposited to ARS, which applies them to the Mortgage Insurance (MI) fund. Upon issuance of the final report, it is referred to the FOC which establishes it as a receivable and tracks it until paid in full. If a lender is overpaid on a Multifamily claim, the Multifamily Claims Branch will demand the overage back from the lender, which is usually resolved within 30 days of final settlement. The mortgagee either returns the overpaid funds or files a supplemental claim. If the overpayment is not resolved within the 30-day or 60-day period after final settlement, the reviewer sends a follow-up letter at the end of each period advising the mortgagee of the penalties and interest assessed. If it is still not resolved after 90 days, the overpayment is electronically transferred to HUD’s FOC in Albany, New York for collection. Lastly, for Treasury Cross-Servicing, the collection of generic debt is governed by the Debt Collection Improvement Act and HUD policies (Title I and Other Debt Collection Guidance 4740.2). The Act requires federal agencies to refer eligible delinquent debts to Treasury (for Cross-Servicing and TOP) when the debt is 120 days delinquent.

The Treasury’s TOP allows federal agencies to report delinquent non-tax debt to the BFS. BFS performs computer matching with disbursement data and processes an offset when an appropriate match is determined. After referral, Treasury and its private collection agencies are responsible for contacting the debtor to collect the payment of the debt. The Treasury’s Cross-Servicing is a process used by BFS to refer the debt collection to a private collection agency, among other actions, to collect delinquent debts on behalf of Federal Agencies.

The FOC’s recapture process establishes receivables in DCAMS and issues a demand notice to the debtor(s). If the debt remains unpaid, DCAMS issues a “Notice of Intent” warning regarding enforced collection measures and informs the debtor regarding their due process rights. DCAMS automatically reports information to credit bureaus and CAIVRS. Penalty and administrative cost charges are also automatically assessed if warranted.

If the debt remains unpaid, it is referred to Treasury (within 180 days) for offset via the government-wide TOP and for direct collection action by Treasury and Treasury contracted private collection agencies. Treasury also initiates referral to the Department of Justice (DOJ) for civil litigation and/or initiates Administrative Wage Garnishment (AWG) action if they deem such action to be appropriate.

If Treasury’s Cross-Servicing action is not successful, Treasury “returns” the debt to the FOC. If older than two years, the receivable is written-off and the case is reclassified “currently not collectible.” The FOC keeps the case open if offset via TOP appears fruitful or if other collection measures are applicable (e.g., AWG action by HUD). Otherwise, the FOC terminates collection action, closes the case, and the system issues an IRS Form 1099C “Cancellation of Debt,” the following January if appropriate. Write-off, Termination, close-out, and 1099C issuance can also occur at any point in the above collection cycle if determined appropriate (e.g., debtor is discharged as bankrupt).

Collections from debtors to HUD go to the Treasury Lockbox Network or Pay.gov. Collections from debtors to Treasury or DOJ come to HUD via interagency transfer (i.e., Intra-Governmental Payment and Collection (IPAC)). No matter the route, all payments are posted to the receivable in DCAMS. "



Other Disbursements

The Office of Housing-Federal Housing Administration’s (HSNG–FHA) recovery audit program is part of its overall program of effective internal control over payments. Internal control policies and procedures establishes a system to monitor improper payments and their causes, and includes controls and actions for detecting, preventing, and recovering improper payments. On a recurring basis, these programs generate reports that identify potentially duplicate disbursements. These disbursements are researched, and recovery actions are initiated for payments deemed improper. As part of the recapture audit plan, internal control documents and files are reviewed, and post claim reviews are performed.

Under Title I and Other Debt Collection Guidance Handbook 4740.2, the Financial Operation Center (FOC) is primarily responsible for generic debt collection and customer service activities, including responding to debtor inquiries regarding pay-off, payment plans, compromises, disputes, and appeals. The debt referral package primarily consists of copies of legal documents, mortgages, deeds of trust, judgments and other recorded lien documents, lien assignment documents, repayment agreements, credit reports, correspondence to/from debtors, and compromise agreements and supporting documents.

The FOC is responsible for managing the business operations for the Title I loan program, which includes registering and endorsing loans for insurance, billing and collecting premiums, and examining claims for loss and approving them for payment. The FOC is also responsible for performing the debt collection and servicing activities for Title I Notes (defaulted Title I loans) and generic debts (other FHA debts).

The Title I program authorizes HUD to insure lenders against default on loans used to finance property improvements and to purchase manufactured homes. Lenders are required to pay premiums covering the insurance of their loans and submit applications for insurance benefits for defaulted loans. HUD is required to collect the unpaid loan balance, including eligible expenses, from the defaulted borrower.

The FOC’s Title I Insurance Processing Branch (TIIPB) is responsible for evaluating and approving lender applications for insurance benefits. The lender’s application must include loan information and any documentation necessary for the TIIPB to calculate a claim payment. There are three types of claims: initial, resubmitted, and supplemental. An initial claim is a first submission. A resubmitted claim is one that the TIIPB had previously denied. A supplemental claim is an additional claim for the same loan when the lender finds documentation for expenses not included in the initial claim. TIIPB support staff establish the claim in the Title I Insurance and Claims System (TIIS/F72). The process includes assigning a claim number, entering the date the claim was received, and assigning the claim to a TIIPB examiner. The examiner conducts a full review of the claim to determine whether the loan complies with Title I underwriting and servicing requirements and whether expenses claimed by the lender are supported by the documentation provided. If these conditions are satisfied, the examiner processes the claim calculation and authorization for payment in TIIS/F72. TIIS/F72 processes the payments authorized on the same day in a single batch file, sends the file to Treasury’s Payment Application Modernization system, and sends another file to the Cash Management Branch to authorize the Treasury disbursement. TIIS/F72 sends a file of paid claims to the Debt Collection and Management System – Title I (DCAMS-TI/F71), which converts the paid claims to notes receivable. The FOC’s Asset Recovery Division (ARD) is responsible for pursuing collection against the debtor (defaulted borrower).

The TIIPB conducts quality reviews of paid Title I claims to ensure consistent processing and examination quality. Each month, the TIIPB Branch Chief randomly selects 10% of paid claims for review. The Branch Chief either reviews the claim themselves or assigns them to examiners for a peer review. The reviewer conducts a full examination of the claim and reports whether the claim payment was conforming (compliant/no deficiencies), deficient (minor issues to address), unacceptable (serious issues to address), or mitigated (issues found but readily resolved). The outcomes of quality reviews are documented in both the Case Notes screen of TIIS/F72 and in the Title I Quality Reviews folder of the FOC’s SharePoint site.

If the review identified a deficiency that resulted in an overpaid claim, the TIIPB Branch Chief or examiner will issue a request to the lender for a full (for an unacceptable claim) or partial (for a deficient claim) repurchase of the loan. The request instructs the lender to repurchase the loan by remitting payment to a designated lockbox within 30 days or to ask for a reconsideration of the repurchase request within 10 days. If the lender fails to submit documentation that satisfactorily resolves the deficiency or to remit payment within the established timeframes, TIIPB issues a repurchase demand which gives the lender 30 days to remit the repurchase funds and informs the lender of the actions HUD will take if the funds aren’t remitted, including transferring the unpaid repurchase to the FOC’s ARD for delinquent debt collection, which includes referral to the Treasury Offset Program (TOP) for administrative offset.

Both paid and unpaid repurchase requests and demands involve coordination between the FOC’s TIIPB and ARD. The ARD ensures that the Title I Note receivable is reclassified as a full or partial repurchase. Payments for full and partial repurchases are sent to the Title I Notes lockbox which transmits a collection file to DCAMS-TI/F71 to credit the funds to the Title I Note receivable associated with the claim. The ARD notifies the TIIPB when repurchase funds are received and the TIIPB updates the claim record in TIIS/F72 (subfunction J04). For full repurchases, the ARD closes the Title I Note receivable as repurchased. Before closing out the receivable, the ARD will issue the debtor (defaulted Title I borrower) a refund for any non-repurchase collections received. The TIIPB returns the original claim binder to the lender along with an executed reassignment of the Title I promissory note and lien, if applicable.

Unpaid full or partial repurchase requests and demands are transferred to the ARD for delinquent debt collection. The ARD establishes a Title I Repurchase receivable in the Debt Collection and Asset Management System – Generic Debt (DCAMS-GD/F71A), which initiates the collection process by issuing an automated demand letter describing the debt and instructing the lender to remit payment in full within 30 days or contact the designated ARD Debt Servicing Representative (DSR) to request a plan to repay the debt in installments. If the lender does not pay the debt in full or enter a repayment plan within 30 days, DCAMS-GD/F71A issues a Notice of Intent (NOI) to Collect by Administrative Offset. The NOI notifies the lender that HUD intends to refer the debt to the TOP, describes the TOP process for administrative offset of federal payments, and provides the lender with steps to take to contest the basis of the debt or the amount demanded by filing an appeal with HUD’s Board of Appeals (BOA) within 65 days. If the lender files an appeal, DCAMS-GD/F71A suspends referral to TOP pending a decision and order from the BOA administrative law judge. (BOA adjudicates appeals by gathering and evaluating statements and documents from both parties.) If the BOA judge issues a decision and order declaring the debt unenforceable, the ARD closes the debt as unenforceable and notifies the TIIPB. The TIIPB will reverse the pending repurchase in TIIS/F72. If the decision and order results in a dismissal of the lender’s appeal, the DSR updates debt status in DCAMS-GD/F71A making the debt eligible for referral to TOP. DCAMS-GD/F71A refers eligible debts that are 121 or more days delinquent to TOP and the Treasury Cross-Servicing Program. DCAMS-GD/F71A also reports lenders to commercial credit reporting agencies (Dun & Bradstreet, Experian, and Equifax).

The TIIPB may, rather than transfer the unpaid repurchase to the ARD for delinquent debt collection, pursue internal offset of payments on subsequent claims submitted by the lender. In most cases, however, it’s more effective to transfer the debt to the ARD, since any federal payment made to the lender, including Title I claim payments, will be collected through TOP.

Collections, both voluntary and involuntary, received on a Title Repurchase debt are credited to the account. When a debt is paid in full, the ARD makes entries in DCAMS-GD/F71A to close out the debt as paid in full and to close out the Title I Note receivable as unenforceable. The TIIPB makes entries in TIIS/F72 (subfunction J04) to acknowledge satisfaction of the repurchase demand and returns the original claim binder to the lender along with an executed reassignment of the Title I Promissory Note and lien, if applicable.

If the ARD concludes that the Title I Repurchase debt is uncollectible, it takes steps to close out the debt in DCAMS-GD/F71A, which will issue an IRS Form 1099-C to the lender and report the debt accordingly to the IRS. The TIIPB will pursue secondary recovery activities on the uncollectible repurchase by internally offsetting future claims payments to the lender or blocking payments on subsequent claims submitted by the lender. The TIIPB may also refer the lender to FHA’s Mortgagee Review Board for sanctions

The Debt Collection Asset Management System (DCAMS) is the application used to support the generic debt collection process. DCAMS is designed to automatically send collection letters, report delinquent debt to credit bureaus and HUD’s Credit Alert Interactive Voice Response System (CAIVRS), assess penalties and administrative costs, and refer eligible debts to the TOP and Cross-Servicing. Based on predefined criteria and the status of that case as reflected in DCAMS data fields (not later than 180 days after the demand letter), DCAMS is consistently updated to prevent improper referral for TOP offset.

For internal offsets, over-claimed amounts (negative claims) occur when the mortgagee owes FHA. The Single-Family Claims Branch (SFCB) sends billing letters to lenders for the excess amounts claimed and tracks the receivables using the Accounts Receivables Sub-system (ARS). Receivables are established in SFCB’s ARS and identified by an FHA case number. Each FHA case number is further identified by Section of the Act (which is linked to the appropriate fund) and endorsement date. This later date identifies the cohort year. The Holder of record to which the claim funds were originally disbursed is identified in ARS as the debtor, by default. When the receivable is subsequently liquidated by funds remitted by a Mortgagee or by offset, the collected amount is posted to the previously identified FHA case number, Section of the Act, and cohort year.

If payment is not received from a lender within 90 days, the receivable is offset against subsequent claims by the lender until the full amount of the receivable is satisfied. If a receivable is not satisfied within 120-150 days, it is referred to the FOC in Albany, NY for enforced collection actions. At that time, the FOC officially confirms acceptance of the transfer of an aged delinquent debt, and that receivables have been removed from the ARS with the notation that it has been referred to the FOC for recovery.

Another avenue by which improper payments are recaptured is through Post Claim Reviews for title II Single Family Insurance Claims. A statistical sample of settled claims is reviewed for compliance with FHA servicing and claim filing requirements. A report on findings is prepared and issued to the individual mortgagee. Mortgagees can refute the findings by providing additional documents before a final report is issued. If the Mortgagee chooses to pay the monetary findings prior to HUD’s issuance of the final report, those funds are deposited to ARS, which applies them to the Mortgage Insurance (MI) fund. Upon issuance of the final report, it is referred to the FOC which establishes it as a receivable and tracks it until paid in full. If a lender is overpaid on a Multifamily claim, the Multifamily Claims Branch will demand the overage back from the lender, which is usually resolved within 30 days of final settlement. The mortgagee either returns the overpaid funds or files a supplemental claim. If the overpayment is not resolved within the 30-day or 60-day period after final settlement, the reviewer sends a follow-up letter at the end of each period advising the mortgagee of the penalties and interest assessed. If it is still not resolved after 90 days, the overpayment is electronically transferred to HUD’s FOC in Albany, New York for collection. Lastly, for Treasury Cross-Servicing, the collection of generic debt is governed by the Debt Collection Improvement Act and HUD policies (Title I and Other Debt Collection Guidance 4740.2). The Act requires federal agencies to refer eligible delinquent debts to Treasury (for Cross-Servicing and TOP) when the debt is 120 days delinquent.

The Treasury’s TOP allows federal agencies to report delinquent non-tax debt to the BFS. BFS performs computer matching with disbursement data and processes an offset when an appropriate match is determined. After referral, Treasury and its private collection agencies are responsible for contacting the debtor to collect the payment of the debt. The Treasury’s Cross-Servicing is a process used by BFS to refer the debt collection to a private collection agency, among other actions, to collect delinquent debts on behalf of Federal Agencies.

The FOC’s recapture process establishes receivables in DCAMS and issues a demand notice to the debtor(s). If the debt remains unpaid, DCAMS issues a “Notice of Intent” warning regarding enforced collection measures and informs the debtor regarding their due process rights. DCAMS automatically reports information to credit bureaus and CAIVRS. Penalty and administrative cost charges are also automatically assessed if warranted.

If the debt remains unpaid, it is referred to Treasury (within 180 days) for offset via the government-wide TOP and for direct collection action by Treasury and Treasury contracted private collection agencies. Treasury also initiates referral to the Department of Justice (DOJ) for civil litigation and/or initiates Administrative Wage Garnishment (AWG) action if they deem such action to be appropriate.

If Treasury’s Cross-Servicing action is not successful, Treasury “returns” the debt to the FOC. If older than two years, the receivable is written-off and the case is reclassified “currently not collectible.” The FOC keeps the case open if offset via TOP appears fruitful or if other collection measures are applicable (e.g., AWG action by HUD). Otherwise, the FOC terminates collection action, closes the case, and the system issues an IRS Form 1099C “Cancellation of Debt,” the following January if appropriate. Write-off, Termination, close-out, and 1099C issuance can also occur at any point in the above collection cycle if determined appropriate (e.g., debtor is discharged as bankrupt).

Collections from debtors to HUD go to the Treasury Lockbox Network or Pay.gov. Collections from debtors to Treasury or DOJ come to HUD via interagency transfer (i.e., Intra-Governmental Payment and Collection (IPAC)). No matter the route, all payments are posted to the receivable in DCAMS. "

Multifamily Insurance Claims

The Office of Housing-Federal Housing Administration’s (HSNG–FHA) recovery audit program is part of its overall program of effective internal control over payments. Internal control policies and procedures establishes a system to monitor improper payments and their causes, and includes controls and actions for detecting, preventing, and recovering improper payments. On a recurring basis, these programs generate reports that identify potentially duplicate disbursements. These disbursements are researched, and recovery actions are initiated for payments deemed improper. As part of the recapture audit plan, internal control documents and files are reviewed, and post claim reviews are performed.

Under Title I and Other Debt Collection Guidance Handbook 4740.2, the Financial Operation Center (FOC) is primarily responsible for generic debt collection and customer service activities, including responding to debtor inquiries regarding pay-off, payment plans, compromises, disputes, and appeals. The debt referral package primarily consists of copies of legal documents, mortgages, deeds of trust, judgments and other recorded lien documents, lien assignment documents, repayment agreements, credit reports, correspondence to/from debtors, and compromise agreements and supporting documents.

The Debt Collection Asset Management System (DCAMS) is the application used to support the generic debt collection process. DCAMS is designed to automatically send collection letters, report delinquent debt to credit bureaus and HUD’s Credit Alert Interactive Voice Response System (CAIVRS), assess penalties and administrative costs, and refer eligible debts to the Treasury Offset Program (TOP) and Cross-Servicing. Based on predefined criteria and the status of that case as reflected in DCAMS data fields (not later than 180 days after the demand letter), DCAMS is consistently updated to prevent improper referral for TOP offset.

For internal offsets, over-claimed amounts (negative claims) occur when the mortgagee owes FHA. The Single-Family Claims Branch (SFCB) sends billing letters to lenders for the excess amounts claimed and tracks the receivables using the Accounts Receivables Sub-system (ARS). Receivables are established in SFCB’s ARS and identified by an FHA case number. Each FHA case number is further identified by Section of the Act (which is linked to the appropriate fund) and endorsement date. This later date identifies the cohort year. The Holder of record to which the claim funds were originally disbursed is identified in ARS as the debtor, by default. When the receivable is subsequently liquidated by funds remitted by a Mortgagee or by offset, the collected amount is posted to the previously identified FHA case number, Section of the Act, and cohort year.

If a payment is not received from a lender within 90 days, the receivable is offset against subsequent claims by the lender until the full amount of the receivable is satisfied. If a receivable is not satisfied within 120-150 days, it is referred to the FOC in Albany, NY for enforced collection actions. At that time, the FOC officially confirms acceptance of the transfer of an aged delinquent debt, and that receivables have been removed from the ARS with the notation that it has been referred to the FOC for recovery.

Another avenue by which improper payments are recaptured is through Post Claim Reviews for title II Single Family Insurance Claims. A statistical sample of settled claims is reviewed for compliance with FHA servicing and claim filing requirements. A report on findings, is prepared and issued to the individual mortgagee. Mortgagees can refute the findings by providing additional documents before a final report is issued. If the Mortgagee chooses to pay the monetary findings prior to HUD’s issuance of the final report, those funds are deposited to ARS, which applies them to the Mortgage Insurance (MI) fund. Upon issuance of the final report, it is referred to the FOC which establishes it as a receivable and tracks it until paid in full. If a lender is overpaid on a Multifamily claim, the Multifamily Claims Branch will demand the overage back from the lender. If the lender fails to respond to their demands, the debt is referred to the FOC for collection. Lastly, for Treasury Cross-Servicing, the collection of generic debt is governed by the Debt Collection Improvement Act and HUD policies (Title I and Other Debt Collection Guidance 4740.2). The Act requires federal agencies to refer eligible delinquent debts to Treasury (for Cross-Servicing and TOP) when the debt is 120 days delinquent.

The Treasury’s TOP allows federal agencies to report delinquent non-tax debt to the BFS. BFS performs computer matching with disbursement data and processes an offset when an appropriate match is determined. After referral, Treasury and its private collection agencies are responsible for contacting the debtor to collect the payment of the debt. The Treasury’s Cross-Servicing is a process used by BFS to refer the debt collection to a private collection agency, among other actions, to collect delinquent debts on behalf of Federal Agencies.

The FOC’s recapture process establishes receivables in DCAMS and issues a demand notice to the debtor(s). If the debt remains unpaid, DCAMS issues a “Notice of Intent” warning regarding enforced collection measures and informs the debtor regarding their due process rights. DCAMS automatically reports information to credit bureaus and CAIVRS. Penalty and administrative cost charges are also automatically assessed if warranted.

If the debt remains unpaid, it is referred to Treasury (within 180 days) for offset via the government-wide TOP and for direct collection action by Treasury and Treasury contracted private collection agencies. Treasury also initiates referral to the Department of Justice (DOJ) for civil litigation and/or initiates Administrative Wage Garnishment (AWG) action if they deem such action to be appropriate.

If Treasury’s Cross-Servicing action is not successful, Treasury “returns” the debt to the FOC. If older than two years, the receivable is written-off and the case is reclassified “currently not collectible.” The FOC keeps the case open if offset via TOP appears fruitful or if other collection measures are applicable (e.g., AWG action by HUD). Otherwise, the FOC terminates collection action, closes the case, and the system issues an IRS Form 1099C “Cancellation of Debt,” the following January if appropriate. Write-off, Termination, close-out, and 1099C issuance can also occur at any point in the above collection cycle if determined appropriate (e.g., debtor is discharged as bankrupt).

Collections from debtors to HUD go to the Treasury Lockbox Network or Pay.gov. Collections from debtors to Treasury or DOJ come to HUD via interagency transfer (i.e., Intra-Governmental Payment and Collection (IPAC)). No matter the route, all payments are posted to the receivable in DCAMS. "



Title I Claims

The Office of Housing-Federal Housing Administration’s (HSNG–FHA) recovery audit program is part of its overall program of effective internal control over payments. Internal control policies and procedures establishes a system to monitor improper payments and their causes, and includes controls and actions for detecting, preventing, and recovering improper payments. On a recurring basis, these programs generate reports that identify potentially duplicate disbursements. These disbursements are researched, and recovery actions are initiated for payments deemed improper. As part of the recapture audit plan, internal control documents and files are reviewed, and post claim reviews are performed.

Under Title I and Other Debt Collection Guidance Handbook 4740.2, the Financial Operation Center (FOC) is primarily responsible for generic debt collection and customer service activities, including responding to debtor inquiries regarding pay-off, payment plans, compromises, disputes, and appeals. The debt referral package primarily consists of copies of legal documents, mortgages, deeds of trust, judgments and other recorded lien documents, lien assignment documents, repayment agreements, credit reports, correspondence to/from debtors, and compromise agreements and supporting documents.

The FOC is responsible for managing the business operations for the Title I loan program, which includes registering and endorsing loans for insurance, billing and collecting premiums, and examining claims for loss and approving them for payment. The FOC is also responsible for performing the debt collection and servicing activities for Title I Notes (defaulted Title I loans) and generic debts (other FHA debts).

The Title I program authorizes HUD to insure lenders against default on loans used to finance property improvements and to purchase manufactured homes. Lenders are required to pay premiums covering the insurance of their loans and submit applications for insurance benefits for defaulted loans. HUD is required to collect the unpaid loan balance, including eligible expenses, from the defaulted borrower.

The FOC’s Title I Insurance Processing Branch (TIIPB) is responsible for evaluating and approving lender applications for insurance benefits. The lender’s application must include loan information and any documentation necessary for the TIIPB to calculate a claim payment. There are three types of claims: initial, resubmitted, and supplemental. An initial claim is a first submission. A resubmitted claim is one that the TIIPB had previously denied. A supplemental claim is an additional claim for the same loan when the lender finds documentation for expenses not included in the initial claim. TIIPB support staff establish the claim in the Title I Insurance and Claims System (TIIS/F72). The process includes assigning a claim number, entering the date the claim was received, and assigning the claim to a TIIPB examiner. The examiner conducts a full review of the claim to determine whether the loan complies with Title I underwriting and servicing requirements and whether expenses claimed by the lender are supported by the documentation provided. If these conditions are satisfied, the examiner processes the claim calculation and authorization for payment in TIIS/F72. TIIS/F72 processes the payments authorized on the same day in a single batch file, sends the file to Treasury’s Payment Application Modernization system, and sends another file to the Cash Management Branch to authorize the Treasury disbursement. TIIS/F72 sends a file of paid claims to the Debt Collection and Management System – Title I (DCAMS-TI/F71), which converts the paid claims to notes receivable. The FOC’s Asset Recovery Division (ARD) is responsible for pursuing collection against the debtor (defaulted borrower).

The TIIPB conducts quality reviews of paid Title I claims to ensure consistent processing and examination quality. Each month, the TIIPB Branch Chief randomly selects 10% of paid claims for review. The Branch Chief either reviews the claim themselves or assigns them to examiners for a peer review. The reviewer conducts a full examination of the claim and reports whether the claim payment was conforming (compliant/no deficiencies), deficient (minor issues to address), unacceptable (serious issues to address), or mitigated (issues found but readily resolved). The outcomes of quality reviews are documented in both the Case Notes screen of TIIS/F72 and in the Title I Quality Reviews folder of the FOC’s SharePoint site.

If the review identified a deficiency that resulted in an overpaid claim, the TIIPB Branch Chief or examiner will issue a request to the lender for a full (for an unacceptable claim) or partial (for a deficient claim) repurchase of the loan. The request instructs the lender to repurchase the loan by remitting payment to a designated lockbox within 30 days or to ask for a reconsideration of the repurchase request within 10 days. If the lender fails to submit documentation that satisfactorily resolves the deficiency or to remit payment within the established timeframes, TIIPB issues a repurchase demand which gives the lender 30 days to remit the repurchase funds and informs the lender of the actions HUD will take if the funds aren’t remitted, including transferring the unpaid repurchase to the FOC’s ARD for delinquent debt collection, which includes referral to the Treasury Offset Program (TOP) for administrative offset.

Both paid and unpaid repurchase requests and demands involve coordination between the FOC’s TIIPB and ARD. The ARD ensures that the Title I Note receivable is reclassified as a full or partial repurchase. Payments for full and partial repurchases are sent to the Title I Notes lockbox which transmits a collection file to DCAMS-TI/F71 to credit the funds to the Title I Note receivable associated with the claim. The ARD notifies the TIIPB when repurchase funds are received and the TIIPB updates the claim record in TIIS/F72 (subfunction J04). For full repurchases, the ARD closes the Title I Note receivable as repurchased. Before closing out the receivable, the ARD will issue the debtor (defaulted Title I borrower) a refund for any non-repurchase collections received. The TIIPB returns the original claim binder to the lender along with an executed reassignment of the Title I promissory note and lien, if applicable.

Unpaid full or partial repurchase requests and demands are transferred to the ARD for delinquent debt collection. The ARD establishes a Title I Repurchase receivable in the Debt Collection and Asset Management System – Generic Debt (DCAMS-GD/F71A), which initiates the collection process by issuing an automated demand letter describing the debt and instructing the lender to remit payment in full within 30 days or contact the designated ARD Debt Servicing Representative (DSR) to request a plan to repay the debt in installments. If the lender does not pay the debt in full or enter a repayment plan within 30 days, DCAMS-GD/F71A issues a Notice of Intent (NOI) to Collect by Administrative Offset. The NOI notifies the lender that HUD intends to refer the debt to the TOP, describes the TOP process for administrative offset of federal payments, and provides the lender with steps to take to contest the basis of the debt or the amount demanded by filing an appeal with HUD’s Board of Appeals (BOA) within 65 days. If the lender files an appeal, DCAMS-GD/F71A suspends referral to TOP pending a decision and order from the BOA administrative law judge. (BOA adjudicates appeals by gathering and evaluating statements and documents from both parties.) If the BOA judge issues a decision and order declaring the debt unenforceable, the ARD closes the debt as unenforceable and notifies the TIIPB. The TIIPB will reverse the pending repurchase in TIIS/F72. If the decision and order results in a dismissal of the lender’s appeal, the DSR updates debt status in DCAMS-GD/F71A making the debt eligible for referral to TOP. DCAMS-GD/F71A refers eligible debts that are 121 or more days delinquent to TOP and the Treasury Cross-Servicing Program. DCAMS-GD/F71A also reports lenders to commercial credit reporting agencies (Dun & Bradstreet, Experian, and Equifax).

The TIIPB may, rather than transfer the unpaid repurchase to the ARD for delinquent debt collection, pursue internal offset of payments on subsequent claims submitted by the lender. In most cases, however, it’s more effective to transfer the debt to the ARD, since any federal payment made to the lender, including Title I claim payments, will be collected through TOP.

Collections, both voluntary and involuntary, received on a Title Repurchase debt are credited to the account. When a debt is paid in full, the ARD makes entries in DCAMS-GD/F71A to close out the debt as paid in full and to close out the Title I Note receivable as unenforceable. The TIIPB makes entries in TIIS/F72 (subfunction J04) to acknowledge satisfaction of the repurchase demand and returns the original claim binder to the lender along with an executed reassignment of the Title I Promissory Note and lien, if applicable.

If the ARD concludes that the Title I Repurchase debt is uncollectible, it takes steps to close out the debt in DCAMS-GD/F71A, which will issue an IRS Form 1099-C to the lender and report the debt accordingly to the IRS. The TIIPB will pursue secondary recovery activities on the uncollectible repurchase by internally offsetting future claims payments to the lender or blocking payments on subsequent claims submitted by the lender. The TIIPB may also refer the lender to FHA’s Mortgagee Review Board for sanctions

The Debt Collection Asset Management System (DCAMS) is the application used to support the generic debt collection process. DCAMS is designed to automatically send collection letters, report delinquent debt to credit bureaus and HUD’s Credit Alert Interactive Voice Response System (CAIVRS), assess penalties and administrative costs, and refer eligible debts to the TOP and Cross-Servicing. Based on predefined criteria and the status of that case as reflected in DCAMS data fields (not later than 180 days after the demand letter), DCAMS is consistently updated to prevent improper referral for TOP offset.

For internal offsets, over-claimed amounts (negative claims) occur when the mortgagee owes FHA. The Single-Family Claims Branch (SFCB) sends billing letters to lenders for the excess amounts claimed and tracks the receivables using the Accounts Receivables Sub-system (ARS). Receivables are established in SFCB’s ARS and identified by an FHA case number. Each FHA case number is further identified by Section of the Act (which is linked to the appropriate fund) and endorsement date. This later date identifies the cohort year. The Holder of record to which the claim funds were originally disbursed is identified in ARS as the debtor, by default. When the receivable is subsequently liquidated by funds remitted by a Mortgagee or by offset, the collected amount is posted to the previously identified FHA case number, Section of the Act, and cohort year.

If payment is not received from a lender within 90 days, the receivable is offset against subsequent claims by the lender until the full amount of the receivable is satisfied. If a receivable is not satisfied within 120-150 days, it is referred to the FOC in Albany, NY for enforced collection actions. At that time, the FOC officially confirms acceptance of the transfer of an aged delinquent debt, and that receivables have been removed from the ARS with the notation that it has been referred to the FOC for recovery.

Another avenue by which improper payments are recaptured is through Post Claim Reviews for title II Single Family Insurance Claims. A statistical sample of settled claims is reviewed for compliance with FHA servicing and claim filing requirements. A report on findings is prepared and issued to the individual mortgagee. Mortgagees can refute the findings by providing additional documents before a final report is issued. If the Mortgagee chooses to pay the monetary findings prior to HUD’s issuance of the final report, those funds are deposited to ARS, which applies them to the Mortgage Insurance (MI) fund. Upon issuance of the final report, it is referred to the FOC which establishes it as a receivable and tracks it until paid in full. If a lender is overpaid on a Multifamily claim, the Multifamily Claims Branch will demand the overage back from the lender, which is usually resolved within 30 days of final settlement. The mortgagee either returns the overpaid funds or files a supplemental claim. If the overpayment is not resolved within the 30-day or 60-day period after final settlement, the reviewer sends a follow-up letter at the end of each period advising the mortgagee of the penalties and interest assessed. If it is still not resolved after 90 days, the overpayment is electronically transferred to HUD’s FOC in Albany, New York for collection. Lastly, for Treasury Cross-Servicing, the collection of generic debt is governed by the Debt Collection Improvement Act and HUD policies (Title I and Other Debt Collection Guidance 4740.2). The Act requires federal agencies to refer eligible delinquent debts to Treasury (for Cross-Servicing and TOP) when the debt is 120 days delinquent.

The Treasury’s TOP allows federal agencies to report delinquent non-tax debt to the BFS. BFS performs computer matching with disbursement data and processes an offset when an appropriate match is determined. After referral, Treasury and its private collection agencies are responsible for contacting the debtor to collect the payment of the debt. The Treasury’s Cross-Servicing is a process used by BFS to refer the debt collection to a private collection agency, among other actions, to collect delinquent debts on behalf of Federal Agencies.

The FOC’s recapture process establishes receivables in DCAMS and issues a demand notice to the debtor(s). If the debt remains unpaid, DCAMS issues a “Notice of Intent” warning regarding enforced collection measures and informs the debtor regarding their due process rights. DCAMS automatically reports information to credit bureaus and CAIVRS. Penalty and administrative cost charges are also automatically assessed if warranted.

If the debt remains unpaid, it is referred to Treasury (within 180 days) for offset via the government-wide TOP and for direct collection action by Treasury and Treasury contracted private collection agencies. Treasury also initiates referral to the Department of Justice (DOJ) for civil litigation and/or initiates Administrative Wage Garnishment (AWG) action if they deem such action to be appropriate.

If Treasury’s Cross-Servicing action is not successful, Treasury “returns” the debt to the FOC. If older than two years, the receivable is written-off and the case is reclassified “currently not collectible.” The FOC keeps the case open if offset via TOP appears fruitful or if other collection measures are applicable (e.g., AWG action by HUD). Otherwise, the FOC terminates collection action, closes the case, and the system issues an IRS Form 1099C “Cancellation of Debt,” the following January if appropriate. Write-off, Termination, close-out, and 1099C issuance can also occur at any point in the above collection cycle if determined appropriate (e.g., debtor is discharged as bankrupt).

Collections from debtors to HUD go to the Treasury Lockbox Network or Pay.gov. Collections from debtors to Treasury or DOJ come to HUD via interagency transfer (i.e., Intra-Governmental Payment and Collection (IPAC)). No matter the route, all payments are posted to the receivable in DCAMS."



Contracts/Grants (includes Single Family Upfront Grants)

The Office of Housing-Federal Housing Administration’s (HSNG–FHA) recovery audit program is part of its overall program of effective internal control over payments. Internal control policies and procedures establishes a system to monitor improper payments and their causes, and includes controls and actions for detecting, preventing, and recovering improper payments. On a recurring basis, these programs generate reports that identify potentially duplicate disbursements. These disbursements are researched, and recovery actions are initiated for payments deemed improper. As part of the recapture audit plan, internal control documents and files are reviewed, and post claim reviews are performed.

Under Title I and Other Debt Collection Guidance Handbook 4740.2, the Financial Operation Center (FOC) is primarily responsible for generic debt collection and customer service activities, including responding to debtor inquiries regarding pay-off, payment plans, compromises, disputes, and appeals. The debt referral package primarily consists of copies of legal documents, mortgages, deeds of trust, judgments and other recorded lien documents, lien assignment documents, repayment agreements, credit reports, correspondence to/from debtors, and compromise agreements and supporting documents.

The FOC is responsible for managing the business operations for the Title I loan program, which includes registering and endorsing loans for insurance, billing and collecting premiums, and examining claims for loss and approving them for payment. The FOC is also responsible for performing the debt collection and servicing activities for Title I Notes (defaulted Title I loans) and generic debts (other FHA debts).

The Title I program authorizes HUD to insure lenders against default on loans used to finance property improvements and to purchase manufactured homes. Lenders are required to pay premiums covering the insurance of their loans and submit applications for insurance benefits for defaulted loans. HUD is required to collect the unpaid loan balance, including eligible expenses, from the defaulted borrower.

The FOC’s Title I Insurance Processing Branch (TIIPB) is responsible for evaluating and approving lender applications for insurance benefits. The lender’s application must include loan information and any documentation necessary for the TIIPB to calculate a claim payment. There are three types of claims: initial, resubmitted, and supplemental. An initial claim is a first submission. A resubmitted claim is one that the TIIPB had previously denied. A supplemental claim is an additional claim for the same loan when the lender finds documentation for expenses not included in the initial claim. TIIPB support staff establish the claim in the Title I Insurance and Claims System (TIIS/F72). The process includes assigning a claim number, entering the date the claim was received, and assigning the claim to a TIIPB examiner. The examiner conducts a full review of the claim to determine whether the loan complies with Title I underwriting and servicing requirements and whether expenses claimed by the lender are supported by the documentation provided. If these conditions are satisfied, the examiner processes the claim calculation and authorization for payment in TIIS/F72. TIIS/F72 processes the payments authorized on the same day in a single batch file, sends the file to Treasury’s Payment Application Modernization system, and sends another file to the Cash Management Branch to authorize the Treasury disbursement. TIIS/F72 sends a file of paid claims to the Debt Collection and Management System – Title I (DCAMS-TI/F71), which converts the paid claims to notes receivable. The FOC’s Asset Recovery Division (ARD) is responsible for pursuing collection against the debtor (defaulted borrower).

The TIIPB conducts quality reviews of paid Title I claims to ensure consistent processing and examination quality. Each month, the TIIPB Branch Chief randomly selects 10% of paid claims for review. The Branch Chief either reviews the claim themselves or assigns them to examiners for a peer review. The reviewer conducts a full examination of the claim and reports whether the claim payment was conforming (compliant/no deficiencies), deficient (minor issues to address), unacceptable (serious issues to address), or mitigated (issues found but readily resolved). The outcomes of quality reviews are documented in both the Case Notes screen of TIIS/F72 and in the Title I Quality Reviews folder of the FOC’s SharePoint site.

If the review identified a deficiency that resulted in an overpaid claim, the TIIPB Branch Chief or examiner will issue a request to the lender for a full (for an unacceptable claim) or partial (for a deficient claim) repurchase of the loan. The request instructs the lender to repurchase the loan by remitting payment to a designated lockbox within 30 days or to ask for a reconsideration of the repurchase request within 10 days. If the lender fails to submit documentation that satisfactorily resolves the deficiency or to remit payment within the established timeframes, TIIPB issues a repurchase demand which gives the lender 30 days to remit the repurchase funds and informs the lender of the actions HUD will take if the funds aren’t remitted, including transferring the unpaid repurchase to the FOC’s ARD for delinquent debt collection, which includes referral to the Treasury Offset Program (TOP) for administrative offset.

Both paid and unpaid repurchase requests and demands involve coordination between the FOC’s TIIPB and ARD. The ARD ensures that the Title I Note receivable is reclassified as a full or partial repurchase. Payments for full and partial repurchases are sent to the Title I Notes lockbox which transmits a collection file to DCAMS-TI/F71 to credit the funds to the Title I Note receivable associated with the claim. The ARD notifies the TIIPB when repurchase funds are received and the TIIPB updates the claim record in TIIS/F72 (subfunction J04). For full repurchases, the ARD closes the Title I Note receivable as repurchased. Before closing out the receivable, the ARD will issue the debtor (defaulted Title I borrower) a refund for any non-repurchase collections received. The TIIPB returns the original claim binder to the lender along with an executed reassignment of the Title I promissory note and lien, if applicable.

Unpaid full or partial repurchase requests and demands are transferred to the ARD for delinquent debt collection. The ARD establishes a Title I Repurchase receivable in the Debt Collection and Asset Management System – Generic Debt (DCAMS-GD/F71A), which initiates the collection process by issuing an automated demand letter describing the debt and instructing the lender to remit payment in full within 30 days or contact the designated ARD Debt Servicing Representative (DSR) to request a plan to repay the debt in installments. If the lender does not pay the debt in full or enter a repayment plan within 30 days, DCAMS-GD/F71A issues a Notice of Intent (NOI) to Collect by Administrative Offset. The NOI notifies the lender that HUD intends to refer the debt to the TOP, describes the TOP process for administrative offset of federal payments, and provides the lender with steps to take to contest the basis of the debt or the amount demanded by filing an appeal with HUD’s Board of Appeals (BOA) within 65 days. If the lender files an appeal, DCAMS-GD/F71A suspends referral to TOP pending a decision and order from the BOA administrative law judge. (BOA adjudicates appeals by gathering and evaluating statements and documents from both parties.) If the BOA judge issues a decision and order declaring the debt unenforceable, the ARD closes the debt as unenforceable and notifies the TIIPB. The TIIPB will reverse the pending repurchase in TIIS/F72. If the decision and order results in a dismissal of the lender’s appeal, the DSR updates debt status in DCAMS-GD/F71A making the debt eligible for referral to TOP. DCAMS-GD/F71A refers eligible debts that are 121 or more days delinquent to TOP and the Treasury Cross-Servicing Program. DCAMS-GD/F71A also reports lenders to commercial credit reporting agencies (Dun & Bradstreet, Experian, and Equifax).

The TIIPB may, rather than transfer the unpaid repurchase to the ARD for delinquent debt collection, pursue internal offset of payments on subsequent claims submitted by the lender. In most cases, however, it’s more effective to transfer the debt to the ARD, since any federal payment made to the lender, including Title I claim payments, will be collected through TOP.

Collections, both voluntary and involuntary, received on a Title Repurchase debt are credited to the account. When a debt is paid in full, the ARD makes entries in DCAMS-GD/F71A to close out the debt as paid in full and to close out the Title I Note receivable as unenforceable. The TIIPB makes entries in TIIS/F72 (subfunction J04) to acknowledge satisfaction of the repurchase demand and returns the original claim binder to the lender along with an executed reassignment of the Title I Promissory Note and lien, if applicable.

If the ARD concludes that the Title I Repurchase debt is uncollectible, it takes steps to close out the debt in DCAMS-GD/F71A, which will issue an IRS Form 1099-C to the lender and report the debt accordingly to the IRS. The TIIPB will pursue secondary recovery activities on the uncollectible repurchase by internally offsetting future claims payments to the lender or blocking payments on subsequent claims submitted by the lender. The TIIPB may also refer the lender to FHA’s Mortgagee Review Board for sanctions

The Debt Collection Asset Management System (DCAMS) is the application used to support the generic debt collection process. DCAMS is designed to automatically send collection letters, report delinquent debt to credit bureaus and HUD’s Credit Alert Interactive Voice Response System (CAIVRS), assess penalties and administrative costs, and refer eligible debts to the TOP and Cross-Servicing. Based on predefined criteria and the status of that case as reflected in DCAMS data fields (not later than 180 days after the demand letter), DCAMS is consistently updated to prevent improper referral for TOP offset.

For internal offsets, over-claimed amounts (negative claims) occur when the mortgagee owes FHA. The Single-Family Claims Branch (SFCB) sends billing letters to lenders for the excess amounts claimed and tracks the receivables using the Accounts Receivables Sub-system (ARS). Receivables are established in SFCB’s ARS and identified by an FHA case number. Each FHA case number is further identified by Section of the Act (which is linked to the appropriate fund) and endorsement date. This later date identifies the cohort year. The Holder of record to which the claim funds were originally disbursed is identified in ARS as the debtor, by default. When the receivable is subsequently liquidated by funds remitted by a Mortgagee or by offset, the collected amount is posted to the previously identified FHA case number, Section of the Act, and cohort year.

If payment is not received from a lender within 90 days, the receivable is offset against subsequent claims by the lender until the full amount of the receivable is satisfied. If a receivable is not satisfied within 120-150 days, it is referred to the FOC in Albany, NY for enforced collection actions. At that time, the FOC officially confirms acceptance of the transfer of an aged delinquent debt, and that receivables have been removed from the ARS with the notation that it has been referred to the FOC for recovery.

Another avenue by which improper payments are recaptured is through Post Claim Reviews for title II Single Family Insurance Claims. A statistical sample of settled claims is reviewed for compliance with FHA servicing and claim filing requirements. A report on findings is prepared and issued to the individual mortgagee. Mortgagees can refute the findings by providing additional documents before a final report is issued. If the Mortgagee chooses to pay the monetary findings prior to HUD’s issuance of the final report, those funds are deposited to ARS, which applies them to the Mortgage Insurance (MI) fund. Upon issuance of the final report, it is referred to the FOC which establishes it as a receivable and tracks it until paid in full. If a lender is overpaid on a Multifamily claim, the Multifamily Claims Branch will demand the overage back from the lender, which is usually resolved within 30 days of final settlement. The mortgagee either returns the overpaid funds or files a supplemental claim. If the overpayment is not resolved within the 30-day or 60-day period after final settlement, the reviewer sends a follow-up letter at the end of each period advising the mortgagee of the penalties and interest assessed. If it is still not resolved after 90 days, the overpayment is electronically transferred to HUD’s FOC in Albany, New York for collection. Lastly, for Treasury Cross-Servicing, the collection of generic debt is governed by the Debt Collection Improvement Act and HUD policies (Title I and Other Debt Collection Guidance 4740.2). The Act requires federal agencies to refer eligible delinquent debts to Treasury (for Cross-Servicing and TOP) when the debt is 120 days delinquent.

The Treasury’s TOP allows federal agencies to report delinquent non-tax debt to the BFS. BFS performs computer matching with disbursement data and processes an offset when an appropriate match is determined. After referral, Treasury and its private collection agencies are responsible for contacting the debtor to collect the payment of the debt. The Treasury’s Cross-Servicing is a process used by BFS to refer the debt collection to a private collection agency, among other actions, to collect delinquent debts on behalf of Federal Agencies.

The FOC’s recapture process establishes receivables in DCAMS and issues a demand notice to the debtor(s). If the debt remains unpaid, DCAMS issues a “Notice of Intent” warning regarding enforced collection measures and informs the debtor regarding their due process rights. DCAMS automatically reports information to credit bureaus and CAIVRS. Penalty and administrative cost charges are also automatically assessed if warranted.

If the debt remains unpaid, it is referred to Treasury (within 180 days) for offset via the government-wide TOP and for direct collection action by Treasury and Treasury contracted private collection agencies. Treasury also initiates referral to the Department of Justice (DOJ) for civil litigation and/or initiates Administrative Wage Garnishment (AWG) action if they deem such action to be appropriate.

If Treasury’s Cross-Servicing action is not successful, Treasury “returns” the debt to the FOC. If older than two years, the receivable is written-off and the case is reclassified “currently not collectible.” The FOC keeps the case open if offset via TOP appears fruitful or if other collection measures are applicable (e.g., AWG action by HUD). Otherwise, the FOC terminates collection action, closes the case, and the system issues an IRS Form 1099C “Cancellation of Debt,” the following January if appropriate. Write-off, Termination, close-out, and 1099C issuance can also occur at any point in the above collection cycle if determined appropriate (e.g., debtor is discharged as bankrupt).

Collections from debtors to HUD go to the Treasury Lockbox Network or Pay.gov. Collections from debtors to Treasury or DOJ come to HUD via interagency transfer (i.e., Intra-Governmental Payment and Collection (IPAC)). No matter the route, all payments are posted to the receivable in DCAMS. "



Single Family Property (SAMS)

The Office of Housing-Federal Housing Administration’s (HSNG–FHA) recovery audit program is part of its overall program of effective internal control over payments. Internal control policies and procedures establishes a system to monitor improper payments and their causes, and includes controls and actions for detecting, preventing, and recovering improper payments. On a recurring basis, these programs generate reports that identify potentially duplicate disbursements. These disbursements are researched, and recovery actions are initiated for payments deemed improper. As part of the recapture audit plan, internal control documents and files are reviewed, and post claim reviews are performed.

Under Title I and Other Debt Collection Guidance Handbook 4740.2, the Financial Operation Center (FOC) is primarily responsible for generic debt collection and customer service activities, including responding to debtor inquiries regarding pay-off, payment plans, compromises, disputes, and appeals. The debt referral package primarily consists of copies of legal documents, mortgages, deeds of trust, judgments and other recorded lien documents, lien assignment documents, repayment agreements, credit reports, correspondence to/from debtors, and compromise agreements and supporting documents.

The FOC is responsible for managing the business operations for the Title I loan program, which includes registering and endorsing loans for insurance, billing and collecting premiums, and examining claims for loss and approving them for payment. The FOC is also responsible for performing the debt collection and servicing activities for Title I Notes (defaulted Title I loans) and generic debts (other FHA debts).

The Title I program authorizes HUD to insure lenders against default on loans used to finance property improvements and to purchase manufactured homes. Lenders are required to pay premiums covering the insurance of their loans and submit applications for insurance benefits for defaulted loans. HUD is required to collect the unpaid loan balance, including eligible expenses, from the defaulted borrower.

The FOC’s Title I Insurance Processing Branch (TIIPB) is responsible for evaluating and approving lender applications for insurance benefits. The lender’s application must include loan information and any documentation necessary for the TIIPB to calculate a claim payment. There are three types of claims: initial, resubmitted, and supplemental. An initial claim is a first submission. A resubmitted claim is one that the TIIPB had previously denied. A supplemental claim is an additional claim for the same loan when the lender finds documentation for expenses not included in the initial claim. TIIPB support staff establish the claim in the Title I Insurance and Claims System (TIIS/F72). The process includes assigning a claim number, entering the date the claim was received, and assigning the claim to a TIIPB examiner. The examiner conducts a full review of the claim to determine whether the loan complies with Title I underwriting and servicing requirements and whether expenses claimed by the lender are supported by the documentation provided. If these conditions are satisfied, the examiner processes the claim calculation and authorization for payment in TIIS/F72. TIIS/F72 processes the payments authorized on the same day in a single batch file, sends the file to Treasury’s Payment Application Modernization system, and sends another file to the Cash Management Branch to authorize the Treasury disbursement. TIIS/F72 sends a file of paid claims to the Debt Collection and Management System – Title I (DCAMS-TI/F71), which converts the paid claims to notes receivable. The FOC’s Asset Recovery Division (ARD) is responsible for pursuing collection against the debtor (defaulted borrower).

The TIIPB conducts quality reviews of paid Title I claims to ensure consistent processing and examination quality. Each month, the TIIPB Branch Chief randomly selects 10% of paid claims for review. The Branch Chief either reviews the claim themselves or assigns them to examiners for a peer review. The reviewer conducts a full examination of the claim and reports whether the claim payment was conforming (compliant/no deficiencies), deficient (minor issues to address), unacceptable (serious issues to address), or mitigated (issues found but readily resolved). The outcomes of quality reviews are documented in both the Case Notes screen of TIIS/F72 and in the Title I Quality Reviews folder of the FOC’s SharePoint site.

If the review identified a deficiency that resulted in an overpaid claim, the TIIPB Branch Chief or examiner will issue a request to the lender for a full (for an unacceptable claim) or partial (for a deficient claim) repurchase of the loan. The request instructs the lender to repurchase the loan by remitting payment to a designated lockbox within 30 days or to ask for a reconsideration of the repurchase request within 10 days. If the lender fails to submit documentation that satisfactorily resolves the deficiency or to remit payment within the established timeframes, TIIPB issues a repurchase demand which gives the lender 30 days to remit the repurchase funds and informs the lender of the actions HUD will take if the funds aren’t remitted, including transferring the unpaid repurchase to the FOC’s ARD for delinquent debt collection, which includes referral to the Treasury Offset Program (TOP) for administrative offset.

Both paid and unpaid repurchase requests and demands involve coordination between the FOC’s TIIPB and ARD. The ARD ensures that the Title I Note receivable is reclassified as a full or partial repurchase. Payments for full and partial repurchases are sent to the Title I Notes lockbox which transmits a collection file to DCAMS-TI/F71 to credit the funds to the Title I Note receivable associated with the claim. The ARD notifies the TIIPB when repurchase funds are received and the TIIPB updates the claim record in TIIS/F72 (subfunction J04). For full repurchases, the ARD closes the Title I Note receivable as repurchased. Before closing out the receivable, the ARD will issue the debtor (defaulted Title I borrower) a refund for any non-repurchase collections received. The TIIPB returns the original claim binder to the lender along with an executed reassignment of the Title I promissory note and lien, if applicable.

Unpaid full or partial repurchase requests and demands are transferred to the ARD for delinquent debt collection. The ARD establishes a Title I Repurchase receivable in the Debt Collection and Asset Management System – Generic Debt (DCAMS-GD/F71A), which initiates the collection process by issuing an automated demand letter describing the debt and instructing the lender to remit payment in full within 30 days or contact the designated ARD Debt Servicing Representative (DSR) to request a plan to repay the debt in installments. If the lender does not pay the debt in full or enter a repayment plan within 30 days, DCAMS-GD/F71A issues a Notice of Intent (NOI) to Collect by Administrative Offset. The NOI notifies the lender that HUD intends to refer the debt to the TOP, describes the TOP process for administrative offset of federal payments, and provides the lender with steps to take to contest the basis of the debt or the amount demanded by filing an appeal with HUD’s Board of Appeals (BOA) within 65 days. If the lender files an appeal, DCAMS-GD/F71A suspends referral to TOP pending a decision and order from the BOA administrative law judge. (BOA adjudicates appeals by gathering and evaluating statements and documents from both parties.) If the BOA judge issues a decision and order declaring the debt unenforceable, the ARD closes the debt as unenforceable and notifies the TIIPB. The TIIPB will reverse the pending repurchase in TIIS/F72. If the decision and order results in a dismissal of the lender’s appeal, the DSR updates debt status in DCAMS-GD/F71A making the debt eligible for referral to TOP. DCAMS-GD/F71A refers eligible debts that are 121 or more days delinquent to TOP and the Treasury Cross-Servicing Program. DCAMS-GD/F71A also reports lenders to commercial credit reporting agencies (Dun & Bradstreet, Experian, and Equifax).

The TIIPB may, rather than transfer the unpaid repurchase to the ARD for delinquent debt collection, pursue internal offset of payments on subsequent claims submitted by the lender. In most cases, however, it’s more effective to transfer the debt to the ARD, since any federal payment made to the lender, including Title I claim payments, will be collected through TOP.

Collections, both voluntary and involuntary, received on a Title Repurchase debt are credited to the account. When a debt is paid in full, the ARD makes entries in DCAMS-GD/F71A to close out the debt as paid in full and to close out the Title I Note receivable as unenforceable. The TIIPB makes entries in TIIS/F72 (subfunction J04) to acknowledge satisfaction of the repurchase demand and returns the original claim binder to the lender along with an executed reassignment of the Title I Promissory Note and lien, if applicable.

If the ARD concludes that the Title I Repurchase debt is uncollectible, it takes steps to close out the debt in DCAMS-GD/F71A, which will issue an IRS Form 1099-C to the lender and report the debt accordingly to the IRS. The TIIPB will pursue secondary recovery activities on the uncollectible repurchase by internally offsetting future claims payments to the lender or blocking payments on subsequent claims submitted by the lender. The TIIPB may also refer the lender to FHA’s Mortgagee Review Board for sanctions

The Debt Collection Asset Management System (DCAMS) is the application used to support the generic debt collection process. DCAMS is designed to automatically send collection letters, report delinquent debt to credit bureaus and HUD’s Credit Alert Interactive Voice Response System (CAIVRS), assess penalties and administrative costs, and refer eligible debts to the TOP and Cross-Servicing. Based on predefined criteria and the status of that case as reflected in DCAMS data fields (not later than 180 days after the demand letter), DCAMS is consistently updated to prevent improper referral for TOP offset.

For internal offsets, over-claimed amounts (negative claims) occur when the mortgagee owes FHA. The Single-Family Claims Branch (SFCB) sends billing letters to lenders for the excess amounts claimed and tracks the receivables using the Accounts Receivables Sub-system (ARS). Receivables are established in SFCB’s ARS and identified by an FHA case number. Each FHA case number is further identified by Section of the Act (which is linked to the appropriate fund) and endorsement date. This later date identifies the cohort year. The Holder of record to which the claim funds were originally disbursed is identified in ARS as the debtor, by default. When the receivable is subsequently liquidated by funds remitted by a Mortgagee or by offset, the collected amount is posted to the previously identified FHA case number, Section of the Act, and cohort year.

If payment is not received from a lender within 90 days, the receivable is offset against subsequent claims by the lender until the full amount of the receivable is satisfied. If a receivable is not satisfied within 120-150 days, it is referred to the FOC in Albany, NY for enforced collection actions. At that time, the FOC officially confirms acceptance of the transfer of an aged delinquent debt, and that receivables have been removed from the ARS with the notation that it has been referred to the FOC for recovery.

Another avenue by which improper payments are recaptured is through Post Claim Reviews for title II Single Family Insurance Claims. A statistical sample of settled claims is reviewed for compliance with FHA servicing and claim filing requirements. A report on findings is prepared and issued to the individual mortgagee. Mortgagees can refute the findings by providing additional documents before a final report is issued. If the Mortgagee chooses to pay the monetary findings prior to HUD’s issuance of the final report, those funds are deposited to ARS, which applies them to the Mortgage Insurance (MI) fund. Upon issuance of the final report, it is referred to the FOC which establishes it as a receivable and tracks it until paid in full. If a lender is overpaid on a Multifamily claim, the Multifamily Claims Branch will demand the overage back from the lender, which is usually resolved within 30 days of final settlement. The mortgagee either returns the overpaid funds or files a supplemental claim. If the overpayment is not resolved within the 30-day or 60-day period after final settlement, the reviewer sends a follow-up letter at the end of each period advising the mortgagee of the penalties and interest assessed. If it is still not resolved after 90 days, the overpayment is electronically transferred to HUD’s FOC in Albany, New York for collection. Lastly, for Treasury Cross-Servicing, the collection of generic debt is governed by the Debt Collection Improvement Act and HUD policies (Title I and Other Debt Collection Guidance 4740.2). The Act requires federal agencies to refer eligible delinquent debts to Treasury (for Cross-Servicing and TOP) when the debt is 120 days delinquent.

The Treasury’s TOP allows federal agencies to report delinquent non-tax debt to the BFS. BFS performs computer matching with disbursement data and processes an offset when an appropriate match is determined. After referral, Treasury and its private collection agencies are responsible for contacting the debtor to collect the payment of the debt. The Treasury’s Cross-Servicing is a process used by BFS to refer the debt collection to a private collection agency, among other actions, to collect delinquent debts on behalf of Federal Agencies.

The FOC’s recapture process establishes receivables in DCAMS and issues a demand notice to the debtor(s). If the debt remains unpaid, DCAMS issues a “Notice of Intent” warning regarding enforced collection measures and informs the debtor regarding their due process rights. DCAMS automatically reports information to credit bureaus and CAIVRS. Penalty and administrative cost charges are also automatically assessed if warranted.

If the debt remains unpaid, it is referred to Treasury (within 180 days) for offset via the government-wide TOP and for direct collection action by Treasury and Treasury contracted private collection agencies. Treasury also initiates referral to the Department of Justice (DOJ) for civil litigation and/or initiates Administrative Wage Garnishment (AWG) action if they deem such action to be appropriate.

If Treasury’s Cross-Servicing action is not successful, Treasury “returns” the debt to the FOC. If older than two years, the receivable is written-off and the case is reclassified “currently not collectible.” The FOC keeps the case open if offset via TOP appears fruitful or if other collection measures are applicable (e.g., AWG action by HUD). Otherwise, the FOC terminates collection action, closes the case, and the system issues an IRS Form 1099C “Cancellation of Debt,” the following January if appropriate. Write-off, Termination, close-out, and 1099C issuance can also occur at any point in the above collection cycle if determined appropriate (e.g., debtor is discharged as bankrupt).

Collections from debtors to HUD go to the Treasury Lockbox Network or Pay.gov. Collections from debtors to Treasury or DOJ come to HUD via interagency transfer (i.e., Intra-Governmental Payment and Collection (IPAC)). No matter the route, all payments are posted to the receivable in DCAMS."

Why recovery audits are not cost effective in certain programs

I. Lack of Empirical Evidence

- Research and Technology

- Public Housing Operating Fund

- Revitalization of Severely Distressed Public Housing (HOPE VI)

- Public Housing Capital Fund

- Choice Neighborhoods Initiative

- Family Self-Sufficiency Program



The results of HUD’s payment integrity risk assessments identified these programs as not susceptible to significant improper payments. There is no empirical evidence, either through risk assessments, A-123 internal control reviews, and other monitoring reviews, that suggests significant improper payments exist within these programs and activities, and it is not likely that HUD would realize any benefit to payment recapture audits of these programs. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered."



II. Similar Overpayment Recovery Activities for CPD Programs

- Community Development Block Grant – Disaster Recovery

- Public Laws 115-123, 115-56, and 115-72

- Self-Help Homeownership Opportunity Program (SHOP)

- Neighborhood Stabilization Program

- Project Based Section 8 - Renewal of Expiring Sec. 8 Mod Rehab SRO

Community Planning and Development (CPD) funds have a monitoring process in place to assess the quality of performance of the grantee over time and promptly resolve the findings of audits and other reviews. Monitoring provides information about program participants that is critical for making informed judgments about program effectiveness and management efficiency. It also helps in identifying instances of fraud, waste, and abuse. The process involves frequent telephone/email contacts, written communications, analysis of reports and audits, and periodic meetings. Monitoring also provides opportunities to identify program participant accomplishments as well as successful management/ implementation/evaluation techniques that might be replicated by other CPD program participants.

Parties involved include Special Need Assistance Programs (SNAP), Field Offices, Office of Policy Development and Coordination (OPDC), Office of Rural Housing and Economic Development (ORHED), Office of General Counsel (OGC), Budget and OCFO. CPD’s program exhibit 34-1a, Guide for Review of Financial Management and Audits, is designed to monitor non-federal entity’s compliance with requirements of Subparts D and F of 2 Code of Federal Regulations (CFR) part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, except for cost allowability, procurement and equipment. During the monitoring process, program expenditures are reviewed to determine if improper payments were made. If identified CPD determines whether the appropriate corrective actions took place. In most cases, CPD will recapture overpayments by offsetting future draws. Overpayments in the Neighborhood Stabilization Program are addressed through reduction of future allocations as opposed to future draws. If there are no remaining funds on the grant, HUD will typically instruct the grantee to either repay funds from non-federal funds sources to their grant’s line of credit in Line of Credit Control System (LOCCS) or to the Treasury’s account if the grant has been closed. A remittance to the line of credit of less than $2,000 may be made by sending a check to HUD-FAD Collections Ft. Worth PO Box 6200-05, whereas any remittance of more than $2,000 must be sent via wire transfer to the Department of U.S. Treasury’s Financial Communications System (TFCS). CPD programs could also withhold additional funding until the overpayment has been recovered.

In addition, the results of HUD’s payment integrity risk assessment identified these programs as not susceptible to significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered."



III. Similar Overpayment Recovery Activities for Ginnie Mae Programs

- Financing Account

- Program Account (Mandatory)

For any overpayments identified, Ginnie Mae will either request reimbursement or offset future payments to the contractor. However, if there are no future invoices to be provided, Ginnie Mae will request reimbursement for the improper payment. To recover overpayments made to the General Services Administration (GSA) for invoice payments to a vendor, Ginnie Mae will process an IPAC. As the cost of recovering improper payments is greater than the benefits, then Ginnie Mae will not pursue any further actions than mitigating strategies as outlined already."



IV. Similar Overpayment Recovery Activities for Other Rental Assistance Programs

- Project-Based Rental Assistance Section 8 Moderate Rehabilitation

The results of HUD’s payment integrity risk assessment identified these programs as not susceptible to significant improper payments. In addition, PIH has a comprehensive recovery process. The amount in the Risk Assessment matrix constitutes the offsets for the Mod Rehab program in fiscal year 2024. PIH processes a Year End Settlement at the end of each PHA’s fiscal year. The settlement determines how much money is owed to the PHA or overpayments made to the PHA. Overpayments are offset from the following year’s approved payment schedule. Any additional efforts that go beyond the recovery activities would not likely result in findings of additional overpayments. Therefore, a payment recapture audit would not be cost beneficial."



Public and Indian Housing - Rental Housing Assistance Program - Tenant Based Rental Assistance - Section 8 - Housing Certificate Fund & Tenant Based Rental Assistance

The Housing Choice Voucher Program, QAD, DCRA team are the central point of contact for PHAs, the Field Office, CFO Accounting Operations Center (AOC), Financial Management Center, Financial Management Division, Departmental Claims Collection Officer, and Treasury. We comply with and follow the Debt Collection Improvement Act of 1996, OMB requirements, and other applicable statutory and regulatory guidance in collecting debts owe to HUD and/or Treasury. These debts, along with associated supporting documentation, are tracked and monitored on our site. We utilized HUD secure systems, such as ARCATS, PIH Information Center (PIC), Financial Assessment Submission PHA (FASPHA), and Voucher Management System (VMS), operate under a formal policy and procedures manual that outlines a detailed step-by-step debt collection process, and reconciled our debts quarterly to HUD’s CFO Accounting Operations Center accounts receivable ledger. Our main purpose is to ensure that funds become available to provide rental assistance for more families as intended in the Appropriation’s Law. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered."



Fair Housing and Equal Opportunity - Fair Housing Assistance Program

A payment recapture audit could yield a negative return as disbursements to the grantee are made under grants and fixed amount cooperative agreements. Guidance is issued annually that outlines how payments will be made for the year. Funds to grantees are for reimbursements of work already performed. Each case submitted for reimbursement is reviewed. However, if an overpayment is identified, the Office of Fair Housing and Equal Opportunity (FHEO) FHAP Division instructs grantees to send a refund to the US Bank HUDFAD Collections account, which is successful at recovering overpayments. Furthermore, the results of HUD’s payment integrity risk assessment identified this program to be at low likelihood of significant improper payments. "



Fair Housing and Equal Opportunity - Fair Housing Initiatives Program

There continue to be monitoring processes in place to ensure a grantee complies with the terms and conditions of the award. The process involves frequent telephone/email contacts, written communications, analysis of program and financial reports, and periodic meetings. Some cases involve referrals to the Departmental Enforcement Center (DEC) [including one case referred in FY2024 which is still under review]. HUD reserves the right to withhold future payments if the grantee fails to comply with the terms of the grant. Any erroneous payments made by the grantee must be refunded to HUD. Funds can be returned electronically or by check. Furthermore, the results of HUD’s payment integrity risk assessment identified this program to be at low likelihood of significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



Housing - Rental Housing Assistance Program - Section 236

Following the pre-payment of a Section 236 loan, HUD can allow the Owner’s Interest Reduction Payment subsidy stream to remain in place even after the underlying Section 236 loan is prepaid as long as the project continues to operate as a Section 236 project through the remaining term of the original 236 financing, plus five years. The schedule of payment is established contractually in an Agreement between HUD and the Owner at the time of the pre-payment and is unaffected by changes in the management and occupancy of the property. Accordingly, there is very low risk of overpayment. Annual reconciliation is performed to determine if HUD needs to recapture funds for those who paid off their mortgage before maturity and did not utilize the decoupling program. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



Housing - Housing Counseling Assistance

The most recent risk assessment determined the Housing Counseling Assistance program (HCP) to be at low risk for making significant improper payments. HCP has determined that as a result of the current oversight protocols used, it is not cost effective to implement an additional payment recapture audit plan. A payment recapture audit plan would add an additional cost burden that would exceed the benefit of any improper payments recovered. HCP uses Office of Management and Budget (OMB) and HUD’s Grants Management and Financial policies as a framework to provide oversight for grant activities and payments. HCP also implements both front-end (i.e. prior to payment) and back-end (i.e. subsequent to payment) monitoring protocols and quality control measures to help identify and mitigate the risk of significant improper payments.?

The current monitoring protocols and payment policies include the following: HCP uses the reimbursement payment method for housing counseling grant activities. HCP staff review expenditures as a part of the drawdown approval process. There is a standard operating procedure that provides staff guidance on reviewing grantee expenditures submitted for reimbursement. Training is also offered periodically to provide guidance on reviewing and processing reimbursement requests. HCP uses an electronic review checklist (developed in InfoPath) that guides staff through the review and approval of grant activity reports and expenditure information submitted for payment reimbursements. Additionally, HCP has an internal customer service Inbox to which reviewers can submit inquiries for clarification, which helps ensure that the proper procedures are followed.

HCP conducts performance reviews during which staff review documentation to ensure that services billed to the HUD grant were properly conducted. If during a performance review, an improper payment is discovered, findings are documented, and grantees are required to return any improper payments identified.

As necessary, HCP staff work with contractors to identify organizations that have received overpayments. The team collects supporting documentation to validate the amount of the overpayment. Overpayments are identified with the aid of tools within Microsoft Excel and InfoPath software.

The current Quality Control Measures include HCP uses a two-tiered process to review and approve LOCCS payment forms submitted for reimbursement. HCP staff complete an initial review of LOCCS payment forms. Additionally, HCP LOCCS approvers also complete a second quality control review of LOCCS payment forms submitted by grantees.?As necessary, HCP staff also use contractors to conduct financial reviews on grantees. During these reviews, contractors sample grantee records and financial systems to ensure that grantees have proper documentation to support reimbursement requests and payments from HUD. Contractors will also review grantee financial policies and procedures to ensure that measures are in place to safeguard against misuse of funds.

The various systems used in the process include: The LOCCS Payment System, InfoPath, Microsoft Excel. Key Parties involved in the process include: HCP – Grantee Points of Contact (POC), LOCCS Voucher Approvers, HCP Management Staff, Support Contractor. "



Community Development Block Grant – DRAA-Sandy

The CPD Community Development Block Grant – DRAA-Sandy program monitors disaster recovery activities for Federally declared disaster areas affected by Hurricane Sandy. The grantee submits a quarterly performance report using the Disaster Recovery Grant Reporting (DRGR) system that is reviewed by CPD field offices or HUD headquarters. The performance reports are used to review the grant expenditures and accomplishments for all CDBG-DR funded activities. The grantee also uses the DRGR system to submit vouchers and drawdown funds. After a voucher is created and submitted by a grantee Drawdown Requester, the voucher line items must be reviewed and approved by the grantee Drawdown Approver. If a line item is approved, it is either sent to the Line of Credit Control System (LOCCS) for processing, or, if the grant drawdown threshold of $5 million has been reached, it is sent to HUD for review and approval before it can be submitted to LOCCS. CPD also monitors the grantee’s efforts to prevent the duplication of benefits and ensure programmatic compliance.

CPD’s program exhibit 34-1a, Guide for Review of Financial Management and Audits, is designed to monitor non-federal entity’s compliance with requirements Subparts D and F of 2 CFR part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, except for cost allowability, procurement, and equipment. The exhibits located in Chapter 6 of the CPD Monitoring Handbook, serve the purpose of capturing improper payments identified in the program file-level reviews during on-site or remote monitoring. If any improper payments are identified the reviewer must indicate on the monitoring exhibit the program area, amount, type of improper payment and corrective action. The grantee is notified of any improper payments identified during the monitoring review at the exit conference. If the grantee is unable to provide documentation to resolve the improper payment, a finding will be issued in the Monitoring Report which is transmitted to the grantee within 90 days of the monitoring review. In most cases, CPD recaptures overpayments by offsetting future draws. If there are no remaining funds on the grant, HUD typically instructs the grantee to either repay funds from non-federal sources to their grant’s line of credit in LOCCS, or to Treasury’s account if the grant has closed or the funding availability period has expired. Additionally, CPD may also withhold additional funding until the overpayment has been recovered.

Additionally, HUD monitors all high-risk grantees annually and, in some instances, bi-annually. Although these monitoring engagements do not exclusively include a review of improper payments, the reviewers are able to identify improper payments during the file review. If a grantee must repay HUD, CPD will coordinate with the applicable offices depending on the amount being repaid. A remittance to the line of credit of less than $2,000 may be made by sending a check to HUD-FAD Collections Ft. Worth, whereas any remittance of more than $2,000 must be sent via wire transfer to the Department of U.S. Treasury Financial Communications System (TFCS).

Prior improper payment testing showed the program's improper payment rate was under the threshold for being susceptible to significant improper payments.?In addition, the results of HUD’s payment integrity risk assessment identified this program is not susceptible to significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



Community Development Block Grants (CDBG)

-CDBG Insular Areas

-CDBG Entitlement

-CDBG Non-Entitlement

These CPD funds have a robust risk analysis and monitoring process in place to assess the quality of performance of the grantee over time and promptly resolve the findings of audits and other reviews. Monitoring provides information about program participants that is critical for making informed judgments about compliance, program effectiveness and management efficiency. It also helps in identifying instances of fraud, waste, and abuse. Monitoring also provides opportunities to identify program participant accomplishments as well as successful management/ implementation/evaluation techniques that might be replicated by other CPD program participants.

Parties involved include all those responsible for the programs covered by the CPD Monitoring Handbook HUD Handbook 6509.2), including Office of Block Grant Assistance (OBGA), SNAP, CPD Field Offices, OPDC, ORHED, OGC, Budget and OCFO. CPD’s program exhibit 34-1a, Guide for Review of Financial Management and Audits, is designed to monitor non-federal entity’s compliance with requirements of Subparts D and F of 2 CFR part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, except for cost allowability, procurement and equipment (which are covered in other exhibits). During the monitoring process, program expenditures are reviewed to determine if improper payments were made. If identified CPD determines whether the appropriate corrective actions took place. If there are no remaining funds on the grant, HUD will typically advise the grantee to either repay funds from non-federal funds sources to their grant’s line of credit in LOCCS or to the Treasury’s account if the grant has been closed. A remittance to the line of credit of less than $2,000 may be made by sending a check to HUD-FAD Collections Ft. Worth PO Box 6200-05, whereas any remittance of more than $2,000 must be sent via wire transfer to the TFCS. Provided that required due process is followed and completed, CPD programs could also withhold additional funding until the overpayment has been recovered. For CDBG, recovery actions must conform to regulatory requirements at subpart) of 24 CFR part 570.

In addition, the results of HUD’s payment integrity risk assessment identified these programs as not susceptible to significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered."



Indian Community Development Block Grants

After the Congress appropriates funds for the Indian Community Development Block Grants program, HUD publishes a Notice of Funding Opportunity (NOFO), which includes the factors and criteria used to competitively award the funding. After grant applications are submitted, the Area ONAP Grants Management Directors make award recommendations based on the NOFO criteria. Then, the Headquarters Director of Grants Management concurs or rejects the award recommendations. In addition, the program has processes in place to ensure the grant award matches the amount on the grant agreement.

If an overpayment was discovered, the program would notify the recipient and request the return of the overpayment. There have been no occurrences of an overpayment to date.

The results of HUD’s payment integrity risk assessment identified this program to be at low likelihood of significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered."



Community Planning and Development - Capacity Building

The Rural Capacity Building (RCB) program has a monitoring process in place to assess the quality of grantee performance over time and to ensure timely resolution of audit findings and other reviews. This process is essential for making informed decisions about program effectiveness and management efficiency. It also helps detect and address instances of fraud, waste, and abuse. RCB monitoring activities include regular communication through phone calls and emails, written correspondence, analysis of submitted reports and audits, and periodic meetings with grantees.

Monitoring not only helps identify areas for improvement but also highlights grantee accomplishments and effective practices in management, implementation, and evaluation that could be shared across the RCB network. The parties involved in this oversight process may include HQ Operations, the Office of Rural Housing and Economic Development (ORHED), the Office of Policy Development and Coordination (OPDC), the Office of General Counsel (OGC), and HUD’s Budget and Chief Financial Officer (OCFO) teams.

The monitoring process follows CPD’s program Exhibit 34-1a, Guide for Review of Financial Management and Audits, which evaluates grantee compliance with Subparts D and F of 2 CFR Part 200—Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (excluding cost allowability, procurement, and equipment). Program expenditures are reviewed to identify any improper payments. If overpayments are detected, corrective actions are assessed. Typically, HUD will recover these funds by offsetting future draws through LOCCS. In cases where no funds remain on the grant, the grantee may be required to return the overpayment using non-federal sources, either to the grant’s line of credit or to the U.S. Treasury if the grant has closed.

If the amount to be repaid is less than $2,000, the grantee may remit payment by check to HUD-FAD Collections in Fort Worth. Amounts over $2,000 must be sent via wire transfer through the U.S. Treasury’s Financial Communications System (TFCS). Additionally, RCB funds may be withheld until the overpayment is fully recovered.

Importantly, HUD’s payment integrity risk assessment has determined that the RCB program is not susceptible to significant improper payments. As a result, the cost of further recovery efforts would generally outweigh the benefit of any remaining improper payment recovery."



Community Planning and Development - Homeless Assistance Grants

The grants funded under the HAG programs are set amounts, meaning that when we award funds they are processed to load in LOCCS for the Continuum of Care and Youth Homelessness Demonstration Programs or IDIS for Emergency Solutions Grants based on the amount we awarded. Because these are set amounts, there is not a way for recipients to draw more funds than they were awarded. If they attempt to draw more funds, the financial systems, LOCCS or IDIS, will reject the draw request at which point the recipient would need to adjust the draw request and resubmit within the available amount indicated in the financial system.

These CPD funds also have a monitoring process in place to assess the quality of performance of the grantee over time and promptly resolve the findings of audits and other reviews. Monitoring provides information about program participants that is critical for making informed judgments about program effectiveness and management efficiency. It also helps in identifying instances of fraud, waste, and abuse. The process involves frequent telephone/email contacts, written communications, analysis of reports and audits, and periodic meetings. Monitoring also provides opportunities to identify program participant accomplishments as well as successful management/implementation/evaluation techniques that might be replicated by other CPD program grantees.

Parties involved include the Office of SNAPS, Field Offices, ORHED, OGC, Budget and OCFO. CPD’s program exhibit 34-1, Guide for Review of Financial Management and Audits, is designed to monitor non-federal entity’s compliance with requirements of Subparts D and F of 2 CFR part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, except for cost allowability, procurement and equipment. During the monitoring process, program expenditures are reviewed to determine if improper payments were made. If identified CPD determines whether the appropriate corrective actions took place. In most cases, CPD will recapture improper payments by offsetting future draws. If there are no remaining funds on the grant, HUD will typically instruct the grantee to either repay funds from non-federal funds sources to their grant’s line of credit in the electronic Line of Credit Control System (LOCCS) or to the Treasury’s account if the grant has been closed. A remittance to the line of credit of less than $2,000 may be made by sending a check to HUD-FAD Collections Ft. Worth PO Box 6200-05, whereas any remittance of more than $2,000 must be sent via wire transfer to the TFCS. CPD programs could also withhold additional funding until the overpayment has been recovered.

In addition, the results of HUD’s payment integrity risk assessment identified these programs as not susceptible to significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered."



Community Planning and Development - HOME Investment Partnerships Program

These CPD funds have a monitoring process in place to assess the quality of performance of the grantee over time and promptly resolve the findings of audits and other reviews. Monitoring provides information about program participants that is critical for making informed judgments about program effectiveness and management efficiency. It also helps in identifying instances of fraud, waste, and abuse. The process involves frequent telephone/email contacts, written communications, analysis of reports and audits, and periodic meetings. Monitoring also provides opportunities to identify program participant accomplishments as well as successful management/implementation/evaluation techniques that might be replicated by other CPD program participants.

Parties involved include Office of Affordable Housing Programs (OAHP), CPD Office of Field Management, CPD Field Offices, OGC, CPD Budget and OCFO. CPD’s program exhibit 34-1, Guide for Review of Financial Management and Audits, is designed to monitor non-federal entity’s compliance with requirements of Subparts D and F of 2 CFR part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, except for cost allowability, procurement and equipment. During the monitoring process, program expenditures are reviewed to determine if improper payments were made. If identified, CPD determines whether the appropriate corrective actions took place. By statute, a HOME participating jurisdiction must expend HOME funds for eligible costs within 15 days of disbursing funds from its HOME Investment Trust Fund Treasury account. HOME participating jurisdictions are required to repay funds used for ineligible costs or activities and are required to return funds that were drawn in excess of need. A repayment is typically made to the participating jurisdiction’s HOME Investment Trust Fund local account and is then used by the participating jurisdiction for another eligible HOME activity cost. A participating jurisdiction may also request a voluntary grant reduction in lieu of repayment, which is an offset against current or future HOME grants. Participating jurisdictions typically only repay their HOME Investment Trust Fund Treasury account if the ineligible cost was drawn for a program administration and planning activity.

In addition, the results of HUD’s payment integrity risk assessment identified these programs as not susceptible to significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



Native Hawaiian Housing Block Grants

The Native Hawaiian Housing Block Grants program has a single grantee and has not experienced any overpayment. In the event of an overpayment, the relationship with the single grantee is that the recipient would voluntarily return the funds. The cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



Housing - Section 811 Housing for Persons with Disabilities (Project Rental Assistance Contract and Capital Advance)

The results of HUD’s payment integrity risk assessments identified these programs as not susceptible to significant improper payments. All owners receiving PRAC funding are mandated by 24 CFR 5.233 to fully utilize HUD’s EIV system. EIV is a web-based application which provides owners with employment, wage, unemployment compensation and social security benefit information for tenants participating in HUD’s assisted housing programs. Tenant Rental Assistance Certification System (TRACS) is a system developed to improve the fiscal control over assisted housing programs and acts as the sole repository of all tenant certification data, assistance contract data and crucial payment data. EIV is matched against TRACS and a variance of $2,400 per year generates an error and owners are required to follow up with the tenant and resolve the error. If an overpayment is identified, tenants may pay the owner in a lump sum or by entering into a repayment agreement. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered.

The 811 Capital Advance proceeds may be disbursed to Owners following initial closing to meet bills which are due and payable including bills submitted by contractors covering work completed and/or materials delivered to and stored on or off the building site.?The owner applies for disbursements using form HUD-92403-CA, Requisition for Disbursements of Capital Advance Funds.?HUD staff review the request for disbursements in accordance with Handbooks 4470.1 REV-1, 4480.1 and Housing Notice 2014-10. With each disbursement the owner must submit bills or receipts as required and current extensions of title policy, as well as evidence of compliance with the Fair Labor Standers Act (FLSA), zoning, building and other local requirements.?HUD monitors construction progress and completes inspections during construction.?The owner is required to cost certify the end of the construction phase to reach final endorsement of the Capital Advance.?If an overpayment is identified during the construction phase of the project, the HUD staff will require reimbursement of those funds prior to final endorsement.

Prior improper payment testing showed the program's improper payment rate was under the threshold for being susceptible to significant improper payments.?In addition, the results of HUD’s payment integrity risk assessment identified this program is not susceptible to significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



Housing - Rental Housing Assistance Program - Project Based Rental Assistance - Project Based Section 8 - Rental Housing Assistance Program - Section 236 -Housing for Persons with Disability - Section 811

A payment recapture audit was deemed not to be cost-beneficial based on the nature of these programs. All owners receiving funding from these programs are mandated by 24 CFR 5.233 to fully utilize HUD’s EIV system. EIV is a web-based application which provides owners with employment, wage, unemployment compensation and social security benefit information for tenants participating in HUD’s assisted housing programs to verify tenant information and reduce administrative and subsidy payment errors in accordance with HUD administrative guidance. The program Points of Contact (POC) use EIV to monitor the owner’s compliance with access and use of the system. However, tenant files are stored locally at each Multifamily property and some RHAP activities are administered by PHAs nationwide. A recovery audit would involve substantial travel costs in addition to staff time. There are also no centralized computer database capturing documents used to support the rental subsidy determinations.

The Tenant Rental Assistance Certification System (TRACS) is a system developed to improve the fiscal control over assisted housing programs and acts as the sole repository of all tenant certification data, assistance contract data and crucial payment data. EIV is matched against TRACS and a variance of $2,400 per year generates an error and owners are required to follow up with the tenant and resolve the error. If an overpayment is identified, tenants may pay the owner in a lump sum or by entering into a repayment agreement. In addition to tenant repayment agreements, MF monitors when owners receive overpayments of assistance. In these cases, a Repayment Agreement is required, and Accounts Receivable is established on the HUD Balance Sheet, repayments are set up in LOCCS through a monthly offset of the monthly voucher payment. Collectability is a concern as tenants may no longer be receiving housing assistance when the overpayments are identified, or many may not be able to repay the subsidy with their own resources. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



OIG

HUD-OIG regularly reviews contractual awards, budget execution summaries, and any HUD-OIG regularly reviews contractual awards, budget execution summaries, and any other outgoing payments to ensure they are accurate and in line with operating plan or contractual award documents. This review is a constant ongoing process that takes place regularly during budget execution, procurement planning, or after-action review sessions. OIG budget and procurement personnel meet regularly to review all contractual obligations and outlays.

In the event of an inaccurate or improper payment the OIG would alert the necessary parties and leadership of the mistake and work with BFS or other assisted acquisition partners to reclaim any mistaken payment. "



Community Planning and Development - Housing Opportunities for Persons with AIDS

These CPD funds have a monitoring process in place to assess the quality of performance of the grantee over time and promptly resolve the findings of audits and other reviews. Monitoring provides information about program participants that is critical for making informed judgments about program effectiveness and management efficiency. It also helps in identifying instances of fraud, waste, and abuse. The process involves frequent telephone/email contacts, written communications, analysis of reports and audits, and periodic meetings. Monitoring also provides opportunities to identify program participant accomplishments as well as successful management/ implementation/evaluation techniques that might be replicated by other CPD program participants.

Parties involved include OSN, Field Offices, OPDC, ORHED, OGC, Budget and OCFO. CPD’s program exhibit 34-1, Guide for Review of Financial Management and Audits, is designed to monitor non-federal entity’s compliance with requirements of Subparts D and F of 2 CFR part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, except for cost allowability, procurement and equipment. During the monitoring process, program expenditures are reviewed to determine if improper payments were made. If identified CPD determines whether the appropriate corrective actions took place. CPD will request repayment using non-federal funds to either the local account or LOCCS or will recapture overpayments by offsetting future draws. If the grant has been closed, repayments are sent to the Treasury’s account A remittance to the line of credit of less than $2,000 may be made by sending a check to HUD-FAD Collections Ft. Worth PO Box 6200-05, whereas any remittance of more than $2,000 must be sent via wire transfer to the TFCS. CPD programs could also withhold additional funding until the overpayment has been recovered.

In addition, the results of HUD’s payment integrity risk assessment identified these programs as not susceptible to significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



Public and Indian Housing - Native American Housing Block Grants

The Native American Housing Block Grants program awards funds based on a formula that was drafted in consultation with Tribes. Eligible NAHBG recipients, which are federally recognized Indian tribes and a limited number of State-recognized tribes grandfathered from the previous programs under the 1937 Housing Act, do not – in general – change from one year to the next.

Each year, the NAHBG grantee submits an Indian Housing Plan (IHP), which includes a description of how funds will be used, and they are not able to access funds until HUD has reviewed and approved the IHP.

NAHBG overpayments are identified through manual reviews of paper documentation, the Line of Credit Control System (the IT system used for grant recipient payments), and the Grants Evaluation and Management System (the IT system used for grant recipient reporting). Once identified, the recipient is notified and requested to return the overpayment. In most cases, the recipient of the overpayment agrees to return the overpayment or permits HUD to recover the overpayment through offset of future grants over time.

The results of HUD’s payment integrity risk assessment identified this program to be at low likelihood of significant improper payments. Implementing a payment recapture audit plan would duplicate the process in place. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



Housing - Housing for Special Populations - Capital Advance portion of expenditures, Section 202

The results of HUD’s payment integrity risk assessment identified these programs as not susceptible to significant improper payments. The 202 Capital Advance proceeds may be disbursed to Owners following initial closing to meet bills which are due and payable including bills submitted by contractors covering work completed and/or materials delivered to and stored on or off the building site. The owner applies for disbursements using form HUD-92403-CA, Requisition for Disbursements of Capital Advance Funds. HUD staff review the request for disbursements in accordance with Handbooks 4470.1 REV-1, 4480.1 and Housing Notice 2014-10. With each disbursement the owner must submit bills or receipts as required and current extensions of title policy, as well of evidence of compliance with the Fair Labor Standards Act (FLSA), zoning, building and other local requirements. HUD monitors construction progress and completes inspections during construction. The owner is required to cost certify the end of the construction phase to reach final endorsement of the Capital Advance. If an overpayment is identified during the construction phase of the project, the HUD staff will require reimbursement of those funds prior to final endorsement.

Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payment recovered. "



Manufactured Housing

Overpayments are significantly rare as funds are automatically calculated based on the monthly production and shipment of manufactured homes. When overpayments are made to contractors that provide support to the MH program, the Contracting Officer's Representative (COR) contacts the Contracting Officer (CO) to recapture funds. When overpayments are made to state partners (state-administered programs), the overpayment is documented, and the adjustment or recapture of the funds is made the following month. Furthermore, the results of HUD’s payment integrity risk assessment identified this program to be at low likelihood of significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered.

Payment eligibility decisions are made within HUD. Payment decisions as it relates to the states is primarily driven by the National Manufactured Housing Construction and Safety Standards (MHCSS) Act of 1974 and HUD regulations. Payments regarding contracts are made based on the Government cost estimate for services and the CO’s evaluation of the contractor costs proposed. The CO ensures proposed costs are fair and reasonable prior to awarding contracts and making payments.

The Office of Manufactured Housing Programs (OMHP) does not use any systems to process payments as payments are processed outside our office. The Fort Worth Accounting Center (FWAC) processes payments for states and the Office of the Chief Procurement Officer (OCPO) and Housing’s Procurement Management Division (PMD) processes payments for contracts with support from FWAC. Key parties involved are the states, OMHP, COR, OCPO CO, and PMD COR. "



Community Planning and Development - Housing Trust Fund

These CPD funds have a monitoring process in place to assess the quality of performance of the grantee over time and promptly resolve the findings of audits and other reviews. Monitoring provides information about program participants that is critical for making informed judgments about program effectiveness and management efficiency. It also helps in identifying instances of fraud, waste, and abuse. The process involves frequent telephone/email contacts, written communications, analysis of reports and audits, and periodic meetings. Monitoring also provides opportunities to identify program participant accomplishments as well as successful management/ implementation/evaluation techniques that might be replicated by other CPD program participants.

Parties involved include OAHP, CPD Office of Field Management, CPD Field Offices, OGC, CPD Budget and OCFO. CPD’s program exhibit 34-1, Guide for Review of Financial Management and Audits, is designed to monitor non-federal entity’s compliance with requirements of Subparts D and F of 2 CFR part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, except for cost allowability, procurement and equipment. During the monitoring process, program expenditures are reviewed to determine if improper payments were made. If identified CPD determines whether the appropriate corrective actions took place. A Housing Trust Fund (HTF) grantee must expend HTF funds for eligible costs after disbursing funds from its HTF Treasury account. Grantees are required to repay funds used for ineligible costs or activities and are required to return funds that were drawn in excess of need. A repayment is typically made to the grantee’s HTF local account and is then used by the grantee for another eligible HTF activity cost. A grantee may also request a voluntary grant reduction in lieu of repayment, which is an offset against current or future HTF grants. Grantees typically only repay their HTF Treasury account if the ineligible cost was drawn for a program administration and planning activity.

In addition, the results of HUD’s payment integrity risk assessment identified these programs as not susceptible to significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



Salaries and Expenses

The Office of the Chief Human Capital Officer (OCHCO), Payroll, Benefits and Retirement Division (PBRD) conducts ongoing reviews of the unpaid report to ensure all HUD employees are paid based on their certified timecard for the Personnel Office Identifier (POI) 4408. Through the PBRD quality review process, overpayments are identified and validated. If erroneous payments are identified due to an error in processing personnel and benefits actions, OCHCO takes the necessary action(s) to rectify the mistake.

For example, OCHCO collaborates with the US Department of Treasury's Bureau of Fiscal Services (BFS) and the Department of Agriculture's National Finance Center (NFC) to run the necessary reports to determine where the discrepancy was made. Once the source has been identified, OCHCO corrects the issue or determines if it is feasible to correct the improper payment.

Once validated and corrected through the NFC database, the debt is established, and the employee is notified of the indebtedness. After due process, the collection process is initiated.

The Human Resources (HR) Division also performs quality reviews based on the personnel data generated from the NFC FOCUS report or NFC Reporting Center application for personnel and benefits actions.

The report data is used to determine personnel data or duty locations which will cause an overpayment for the employee. If so, the History Correction Update Processing (HCUP) system is used to correct the error, which will automatically generate a bill if it is within twenty-six (26) pay periods. Outside of the pay period timeframe, HR will manually calculate the amount owed and enter the data to be submitted to NFC via the Special Payroll Processing System (SPPS).

Employees are informed of their indebtedness and have an opportunity to setup a payment plan.

As part of the bi-weekly payroll projection process, OCFO-Budget runs reports from OBI's repository of payroll reports and flags any payroll corrections or unusual payroll activities for program budget offices.

Upon request and on an ad-hoc basis, OCFO-Budget assists in the correction of improper payroll payments by running reports from OBI's repository of payroll reports (Cost and Hours report) and providing data regarding payroll corrections to program budget offices and Treasury's ARC.

Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered. "



Salaries and Expense Purchase Card Program

On a monthly basis, OCPO monitors all transactions that are processed by the cardholders. If they identify any questionable purchases, they request supporting documentation from the Cardholder (CH) with the Approving Official (AO) copied on those requests. Once the support is reviewed, OCPO will communicate any findings or concerns with the AO for further review and validation. If the AO determines the products were not for a valid need, the cardholder would be tasked with returning the products to the vendor for a credit. Purchases deemed not to be mission related could also be recovered by offsetting the cardholder’s salary or other penalties established in the OCPO Government Purchase Card Policy: Consequences for Fraud and Misuse. The AO could also be held monetarily liable (or other adverse action) if they approved the purchase. The cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered."



Salaries and Expenses Travel Program

Overpayments for travel services are either self-identified by the traveler or by Treasury’s Bureau of Fiscal Services (BFS) Administrative Resources Center (ARC) Travel Services random audit. If an overpayment is determined, ARC Travel Services contacts HUD to verify and request concurrence to set up the Accounts Receivable (AR). The AR email/letter to the traveler with a copy to HUDTravelQuestions@hud.gov includes the Traveler’s Name, Travel Authorization/Voucher Number, Reason Overpayment was Determined, Payment Due Date, Overpayment Amount, and an Overpayment Number. The email/letter includes where to mail the check or money order and the possible consequences for failure to adhere by the 90-day due date. If no payment is received by the 90th day, the BFS Accounts Receivable Branch (ARB) will forward the overpayment due to BFS Debt Management Services for salary offset. ARC then sets up an AR in the ARB to establish the receivable in the Oracle Business Intelligence (OBI) Financial System. HUD has the ability to query OBI and determine the outstanding overpayments due.

The cost of any additional attempts to recover overpayments would exceed the benefit of improper payments recovered."



Green and Resilient Retrofit Program (GRRP)

The GRRP program is subject to HUD’s financial oversight, which includes processes to prevent overpayments for identified eligible costs or projects that fail to meet program requirements.

Payments under GRRP fall under two categories: grants and contracts. All grant payment requests are required to include documentation which is reviewed and approved prior to payment being made. GRRP grant award money is only disbursed as reimbursement after review and approval by HUD of the evidence of the work done and of eligible costs incurred. Additionally, 10% of grant funds are withheld until the Awardee submits and HUD reviews and approves a final third-party review done by an independent auditor to confirm the validity of the project expenditures and the completion of the required work.

Contract payments follow the normal HUD procurement process. FAC-COR and FAC-P/PM personnel approve payment only for valid expenditures with documented results.

As a result of these controls for grants and contracts, it is very unlikely that overpayments are made in GRRP. Accordingly, it would not be cost-beneficial to expend funds to identify and recapture overpayments which are exceedingly unlikely to occur."



PDR Managed Technical Assistance Grants

The Community Compass Technical Assistance (CCTA) is a Cooperative Agreement based program that features substantial government involvement in the day-to-day activities of the awards. This includes the initial tasking of work to the grantee, approving wage rates, reviewing and approving TA work plans, ongoing monitoring and participation in TA strategies and execution, reviewing quarterly performance reports (QPRs), and reviewing/approving high risk (over threshold) reimbursement requests. CCTA’s model is Demand-Response; meaning HUD tasks the grantee (TA Provider) with work as a result of a program need. The Technical Assistance (TA) Provider responds with a work plan the HUD program and Government Technical Representative (GTR) approve of before work begins.

HUD Government Technical Monitors (GTM) and HUD GTRs are substantially involved with CCTA work and grantee activities daily. For reimbursement requests, GTRs manually review each voucher over the grant threshold (currently 1/36th of the total grant $). For FY 2024, these manual reviews accounted for approximately 57% of the total financial outlays for CCTA. Over threshold voucher reviews are an on-going monitoring effort to provide frequent review and feedback to grantees to mitigate a future need to request repayment to HUD for an improper payment. CCTA also engages new and existing grantees on TA Site Visits that started in FY 2024 and includes TA on their internal SOPs, financial statements, reimbursements, and other grant administration topics. CCTA also manages ICR rate adjustments and adjudicates payments and repayments as needed.

CCTA formally monitors grantees based on an approved risk model. Part of the formal monitoring event is a review of a set of completed vouchers. CCTA started formal monitoring in 2021.

DRGR has system checks to ensure approved work plans, projects, and award thresholds are not exceeded for payments, which are based on a work plan. If a recapture is identified, CCTA uses Pay.gov to receive repayments. Then, grantees fill out a form with their grant number and follow the instructions for repayment. LOCCS Ft. Worth staff monitor for repayments and credit the grants and the funds shown in DRGR. Repayments are not common in our cooperative agreement, reimbursable program, due to our demand response nature and substantial government involvement in all aspects of the TA.

In summary, CCTA uses a pre-payment focused effort to ensure improper or overpayments are not made, complimented with a variety of risk-based monitoring methods for post payments and ongoing performance. The cost of any additional methods to investigate possible overpayments would exceed the benefit of improper payments recovered. Therefore, the cost would outweigh the benefit of executing a payment recapture audit."



Community Project Funding - Community Project/Congressional Funding

CPD employs a semi-annual reporting process as outlined in the individual re-agreement(s), to monitor CPF grantee performance and manage risks, in accordance with 24 CFR 75.25. Starting in FY2025, OED will employ an enterprise risk management strategy based on the framework established in 2 CFR 200.206, which more effectively balances the overall CPF portfolio risk with the available resources to manage it. Due to the politically sensitive nature of the grants the risk of slow implementation or funds recapture poses the greatest risks for the Department. To address these risks, the Office has identified four key risk categories and will assess them annually to continuously improve the process: grantee responsiveness and performance, grant oversight and slow spending, timely reimbursements, and closeout.

Grantee responsiveness and performance are critical factors in the successful distribution of funds and completion of projects. Grantees who fail to submit necessary materials or reach the grant agreement stage present significant challenges. To address the risk of grantees not initiating their projects, the Community Planning and Development (CPD) will implement several measures. These include tracking the number of grants that have not commenced, contacting grantees who have not submitted materials on a quarterly basis, reviewing a sample of semi-annual performance reports as stipulated in grant agreements, and providing technical assistance to grantees.

In terms of grant oversight and slow spending, the Community Planning Fund (CPF) mandates that funds be obligated by the Department of Administrative Services (DAS) for Economic Development within 120 days of the appropriation's publication. Grantees are allotted eight years to utilize the funds and close the grants before the Department of Treasury (USDT) can recapture the money, with the first CPF funds subject to recapture starting in September 2030. To mitigate the risk of fund recapture by the USDT, CPD will track the number of grants that have not begun drawing funds, develop benchmarks for grantee expenditures starting in year four, and continue to provide technical assistance to grantees.

Timely reimbursements are essential for the CPF portfolio's performance, which relies on grantees' prompt expenditures, project implementation, and access to timely reimbursements. To ensure compliance with Congress's intent and adherence to 2 CFR 200 and other applicable requirements regarding eligible costs, CPD will review a sample of submitted vouchers, approve vouchers exceeding $500,000 before funds are drawn, establish a procedure for addressing ineligible costs, and offer technical assistance to grantees."



Indian Housing Loan Guarantee Program - Section 184

No funds are directly disbursed to an individual; HUD only disburses funds to Section 184-approved lenders in the event of a default or claim. In the event of a default and claim, the financial lender submits an application for a loan guarantee (claim request) and supporting documentation (including payment history, collection records, evaluation of the borrower’s capacity, and loss mitigation efforts) to HUD. If the claim is approved by HUD, a disbursement is made to the financial lender.

If an overpayment is discovered, the Office of Loan Guarantee (OLG) advises the lender of the overpayment, and the lender remits overpaid funds to OLG. Lenders must be approved to participate in the program. Approved lenders are cooperative in accessing the overpayment amount and repaying any amount to which they are not entitled. Furthermore, the results of HUD’s payment integrity risk assessment identified this program to be at low likelihood of significant improper payments. Therefore, the cost of any additional attempts to recover improper payments would exceed the benefit of improper payments recovered.

Single Family Claims:

The recovered amounts were returned to the original account. The funds are returned by the servicer to the Mutual Mortgage Insurance (MMI) fund as a lump sum payment as identified through our audit that is remitted through either HUD’s Accounts Receivable System or collected from the Albany Financial Operations Center’s Debt Collection process.

Recovery audit amount identified this reporting period that remains outstanding					$6.99 M
Recovery audit amount rate outstanding					90.19 %
Recovery audit amount this reporting period that remains outstanding for 0-6 months					$6.99 M
Recovery audit amount identified this reporting period that remains outstanding for 6 months to 1 year					$0.0 M
Recovery audit amount identified in this reporting period determined not collectible during this reporting period					$0.97 M
Recovery audit rate identified in this reporting period determined not collectible during this reporting period					12.52 %

Justification for the Determination that the recovery audit amount is not collectable

Single Family Claims

For the F22-2342200 Amerinational Community Services, LLC review, Post Claims billed $45,700.97 on 9/6/24. The Albany Financial Operations Center received only $45,614.65 on 9/17/24, and wrote off the remaining debt of $86.32, as per FOC policy, amounts under $100 are written off.
For the F22-3008400 Cenlar Federal Savings Bank review, Post Claims billed $4,155,216.45 on 8/14/24. Cenlar appealed the amount with HUD, and on 6/17/25 reached a settlement agreement to reduce the billed amount to $3,184,092.88, therefore reducing the original billed amount by $971,123.57 as part of the settlement.