Michigan HFA Employees Indicted for Bribery Connected with Homeless Assistance.

Detroit News story is HERE: 

The indictment alleges that the defendants devised and carried out a scheme to place people on the HUD Homeless Assistance Recovery Program (HARP) list who were not homeless in exchange for cash payments.

Originally created and posted on the Oregon Housing Blog.

Los Angeles Housing Authority Under Fire for Spending, Including Section 8 Contract Admin Funds from Non Profit.

LA Times story is HERE and says that HUD is participating in new audit.  From the story:

HACLA's former interim executive director, Ken Simmons, said the funds for questionable expenditures came not from federal funds, but from two nonprofit entities overseen by HACLA.The two enterprises generate more than $15 million a year, Simmons wrote in a Dec. 13 letter to the City Council. In his letter, he detailed the nonprofits' work, explaining how the group acts as an administrator processing HUD contracts. Funds from the nonprofits "enable the Authority to carry out its mission," Simmons wrote. "HACLA receives no city resources and its inadequate funding from the federal government severely limits what this agency can do for its residents." Greuel's next audit, expected by next spring, will analyze funds and spending by the two nonprofits, Greuel said.

Earlier KCET story is HERE.  

LA Controller PR and performance audit is HERE. 

Not clear whether any of audits will impact ability of non profit [LOMOD] to respond to NOFA of Section 8 contract administration that is expected to occur after start of new year. 

Originally created and posted on the Oregon Housing Blog.

FBI: Mortgage Fraud Resources.

Website is HERE.

Originally created and posted on the Oregon Housing Blog.

Improper Payments Comparisons FY 2010; HUD Improper Rental Assistance Payments and Rates Were Far Less than for Key Medical/Food Programs.

The administration has a reduction of improper payments initiative underway that includes a data set of improper payments by agency and program that can be found HERE.

I went in and dug out some data for FY 2010 for some select programs including HUD Public Housing and Rental Assistance programs . This includes public housing, project based, and voucher based rental assistance outlays of $30.015 Billion. 

I prepared two graphs HERE that show the improper payment percentage and dollars for these select programs. 

Some observations:

The improper payment percentage for HUD was 3.1%, or $925 million spent improperly (of $30.015 billion in outlays). HUD's percentage and $$ improperly spent was substantially lower than other well known programs:

• The combined improper payment rate for 3 medical programs [ Medicare Advantage, Medicare fee for service, and Medicaid] was 10.6%, with $70.4 billion spent improperly.
• The combined improper payments rate for 3 food programs [SNAP/"Food Stamps", School Breakfast, and School Lunch] was 6.9%, with $4.278 billion spent improperly in FY 2010.
• The improper payment rate for 3 medical programs was 345% of the HUD rate [245% higher], and the improper payment rate for 3 food programs was 225% of the HUD rate [125% higher].
• The amount of improper payments for 3 medical programs was 76.15 times the amount of HUD improper payments and for 3 food programs the improper amount was 4.63 times the HUD amount.

Note: HUD's 3.1% improper spending rate included 1% that was under spent [payments were lower than they should have been] so FY 2010 net overspending was 2.1% or $630.2 million instead of $925 million; breakouts of under and overspending was not available for all programs so comparisons on net overspending between programs was not possible.

Originally created and posted on the Oregon Housing Blog.

Tax Deadbeats Get Recovery Funds, Congress Could Fix but Won't.

In a post 3 1/2 years ago HERE I pointed out that contractors with unpaid tax obligations had received millions in Medicaid reimbursements because Congress had not authorized the witholding of those payments. 

Yesterday HERE the GAO reported that Recovery Act contractors also had millions in unpaid federal tax obligations, and I am sure that some in Congress will report that they are "shocked" by this news.  

If they actually read the report response from the Recovery Board they should not be shocked:

The issue of federal money being awarded to federal tax delinquents is longstanding and has been examined by GAO for more than a decade. As a result, the Recovery Board encourages GAO to make recommendations on ways Congress or the administration could prevent those with delinquent federal tax debt from obtaining federal awards through contracts, grants or other assistance. As GAO states, federal law does not prohibit a contractor with unpaid federal taxes from receiving contracts from the government. Similarly, federal regulations do not require contracting officers to specifically consider tax delinquencies when determining whether an entity is responsible to do business with the government unless it was specifically suspended or debarred for certain actions, such as tax evasion. Additionally, there are no laws or government wide policies that prohibit the award of grants or other federal assistance to applicants with unpaid federal taxes.

Shouldn't any form of tax reform require that after a phase in period ALL government contractors and recipients of [non means tested] federal assistance MUST be current on any unpaid federal tax obligations? Put more plainly, the policy could be stated as "If you Owe, No Federal Dough".

Originally created and posted on the Oregon Housing Blog.

Washington State House Considering Bill Requiring Mediation (if Consumer Wants) in Foreclosure Cases.

Washington state House committee held preliminary hearing last week, with another scheduled this week, on a  "Foreclosure Fairness Act" bill (HB 1362) .  

Page to track bill progress is HERE, text of bill is HERE.  Bill requires lenders to  conduct a good faith review:

 A good faith review of the borrower's financial situation means the beneficiary or authorized agent:
 (a) Evaluates the borrower's eligibility for all loan modification programs established by the federal government or mortgage industry;
 and
 (b) Participates in the foreclosure mediation program established under this section, if the borrower elects mediation.
 (3) Failure of the beneficiary or authorized agent to conduct a good faith review of the borrower's financial situation constitutes a defense to foreclosure.

Costs May be an Issue? 

Fiscal note HERE indicates some General Fund costs, and with likely industry opposition, it is not clear what prospects of passage are for this bill. 

Appears to me from reading portion of bill that new $30 charge at time of recording notice of owner occupied trustee sale will pay for some program costs. Costs for mediator will be split 50/50 between lender and borrower, with cap of $400 total for mediation session of 3 hours or less; higher fees for longer session to be approved by state agency.

Originally created and posted on the Oregon Housing Blog.

Departed Philly PHA Chief Got a Brand New Bag(s) @ $800 a Pop.

Philly Daily News story HERE. 

What was this guy thinking (or smokin')?

Originally created and posted on the Oregon Housing Blog.

Updated: Lender May Still be FHA Approved--HOPE for Homeowners: Lender Thrown Out of Program with 47% of Loans Agrees to Pay Civil Money Penalty of $150,000.

Update: 
I did some additional checking and HUD HERE continues to show 1st Alliance LLC of Houston as an approved FHA lender. This MAY mean that the civil penalty referenced below was in lieu of throwing them out of FHA lending program, but I did not change text below). 
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In my prior post HERE I reported that one FHA lender, 1st Alliance Lending LLC of Houston, had accounted for 47% of the endorsed HOPE for Homeowner loans in the public database of loans endorsed from April-November of 2010. 

In the Dec 27 Federal Register HERE HUD has published a list of recent actions taken by the Mortgagee Review Board and it turns out (pg 2) that this lender in April agreed to make a civil money penalty payment of $150,000; this is apparently in addition to being thrown out of the FHA lending program. 

To date none of the HUD published sanctions data for 1st Alliance indicates that any of the HUD actions were based on HOPE for Homeowner loans.  

Irregardless (and unless HUD has obtained indemnifications) HUD is on the hook for 71 H4H loans from this lender, with a combined insured value of $14.6 million, ALL at a high 7.25% interest rate. IF the $150,000 civil money penalty relates to these loans it seems pitifully low compared to the potential cost to the insurance fund.

Originally created and posted on the Oregon Housing Blog.

FHA HOPE for Homeowner Loans: 5 Lenders Made ALL Loans, 1 Now Barred Lender Has 47% of All H4H Loans.

Correction: It was 5 not 4 lenders, I corrected headline and text below
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It gets curiouser and curiouser.....

Table HERE I prepared shows the 5 lenders that originated ALL 150 HOPE for Homeowner loans in the FHA databases, and includes the average interest rate for each lender. 

Lender with 47% of H4H Loans Thrown Out of FHA Lending, But Endorsements Continue.

I noticed that the 1st Alliance LLC made ALL of their loans at a 7.25% interest rate, much higher than the average rate for other FHA lenders. I did some additional checking and found that this lender had been thrown out of the FHA lending program back in April (Housing Wire story HERE). 

Appears to me that sanctions against this lender only applied to loan applications taken after a specific date, because 49 (69%) of endorsements for this lender occurred in May or later of 2010 and 100% of loans appear in database as endorsed in April or later.

Originally created and posted on the Oregon Housing Blog.

New HUD Study: Quality Control for Rental Assistance Subsidies Determinations Final Report for FY 2009.

Extensive report with LOTS of detail is HERE.

Report includes breakout of subsidy errors by program administrator and type of error.  Executive summary [recommended read] says that NET overpayment of rent subsidy would total $173 million extrapolated to all rent assisted households; 19% rate of subsidy overpayment is only marginally higher than 18% rate of subsidy underpayment. (This means that 63% of households received the correct amount of subsidy/paid the correct amount of rent).

Table showing $$ of extrapolated rent subsidy overpayment and underpayment by Administrator is on PDF page 14, Exhibit ES-3 and is also pasted below:
 

Administration Type	Subsidy Overpayments	Subsidy Underpayments	Net Erroneous Payments	Gross ErroneousPayments
Public Housing	$85,040	$45,227	$39,813	$130,268
PHA-Administered Section 8	$268,791	$171,497	$97,294	$440,288
Total PHA-Administered	$353,832	$216,725	$137,107	$570,556
Owner-Administered	$122,667	$86,788	$35,880	$209,455
Total	$476,499	$303,512	$172,987	$780,011
95% Confidence Interval	±$113,911	±$76,928	±$107,263	±$162,116

Perspective:
IF Total Rent subsidy paid was $30 Billion annually, net rent subsidy OVERPAYMENT of $173 million would amount to .6% . (For a certain demographic, that is almost as pure as Ivory soap):


To further keep HUD rent subsidy errors in perspective, visit the government wide Payment Accuracy website HERE for details about payment errors in other programs. 

Originally created and posted on the Oregon Housing Blog.
 

Maryland County Official Indicted for HUD HOME Related Bribes, Wife Stuffs $80 K in Bills in Bra, and Flushes $100K Developer Check as Agents Raid Home.

CNN has story HERE. From FBI agent statement:

Developer A is a developer in Prince George's County, who sought and obtained HOME funds from the County for his/her development projects in the County.Your affiant knows through investigation, including court-authorized wiretaps, cooperating sources, and other infonnation, that beginning at least as early as 2007, JACK JOHNSON, obtained, under color of official right, the property of Developer A, in the form of United States currency and checks, including one check for $100,000, from Developer A and not otherwise due to JACK JOHNSON and his office, in return for JACK JOHNSON, in his capacity as County Executive, helping to secure HOME funds for Developer A's projects in the County, and other official assistance from JACK JOHNSON in his capacity as County Executive.

On or about November 5, 2010, during an audio and video recorded meeting in the County, Developer A provided JACK JOHNSON $5,000 in United States Currency in return for JACK JOHNSON using his official influence and authority for the benefit of Developer A and his companies....

On or about November 12, 2010, during an audio and video recorded meeting in the County, Developer A provided JACK JOHNSON $15,000 in United States Currency in return for JACK JOHNSON using his official influence and authority for the benefit of Developer A and his companies.

Originally created and posted on the Oregon Housing Blog.

That Ain't Right: Detroit Contractor Indicted for Bid Rigging and Fraud at My Former, and Now HOPE VI, Project.

From Crain's Detroit Business story HERE: 

Federal officials allege Ferguson and co-defendants Michael Woodhouse, president of Ferguson-owned XCEL Construction Services Inc., and Calvin Hall, vice president of XCEL, collaborated in preparing and submitting a proposal for XCEL to obtain an $11.7 million contract to act as construction manager for the infrastructure installation phase of Garden View Estates.

After securing the contract in 2007, Ferguson allegedly steered the primary contract to award more than $9 million of demolition, earthwork and utilities work to Ferguson’s Enterprises. He is also accused of recruiting and directing two other Michigan business owners to submit false, inflated bids to ensure that Ferguson’s Enterprises’ bid was lowest for that subcontract.

Co-defendant Shakib Deria, 42, of Troy is charged along with Ferguson with conspiracy to violate the Bank Secrecy Act, by making 19 sequential withdrawals of $9,500 each in order to obtain $171,000 in cash from the bank account of another Ferguson company, A&F Environmental/Johnson Construction Services. Deria is a Ferguson's employee and the vice president of the joint-venture company.

Ferguson, a friend and ally of former Detroit Mayor Kwame Kilpatrick, and Ferguson’s Enterprises are also accused of illegally dumping truckloads of excavated soil, construction debris and other materials from other construction projects at Garden View Estates. Federal officials also allegedly found two pistols in Ferguson’s office during a January 2009 search of his company.

Ferguson has a 2005 criminal conviction for assault with intent to do great bodily harm for pistol-whipping Kennedy Thomas, a former Ferguson’s Enterprises employee.

Project (Google map view) is where I lived for 9 years in 1950's-60's, and was funded as HOPE VI all the way back in 1996, 14 years ago. 

Wikipedia says project originally had 2,144 units, and HOPE VI plan was/is for 833 units.

Originally created and posted on the Oregon Housing Blog.

Wow2: Philly PHA in Melt Down Mode.

I previously posted HERE that Philly PHA Director was facing foreclosure on his personal residence, but looks like that may have been only the first shoe to drop.

New AP story HERE says PHA Director now placed on admin leave after news broke about prior payments of $900k to settle sexual harassment charges. Story indicates that PHA Board was not aware of prior payments and that PHA Director has checked into out of state medical facility until mid September.

Originally created and posted on the Oregon Housing Blog.

One FHA Lender Caused $3 Billion FHA Loan Loss.

Fortune has story HERE about arrest of Lee Farkas, the head of the non defunct FHA lender Taylor Bean. Story says:

Officials said the FHA and Ginnie Mae, another government mortgage lender, lost some $3 billion in the Taylor Bean fraud. It is the FHA program's biggest-ever loss, they said.

Originally created and posted on the Oregon Housing Blog

Office of Thrift Supervsion Regulatory Bulletin on Mortgage Fraud and Insider Abuse.

Housing Wire story is HERE.

According to the OTS, equity stripping and property flipping are among the more common fraudulent activities. Additionally, 80% of all mortgage fraud involves collaboration or collusion by industry insiders, according to the report.

OTS Regulatory Bulletin is HERE. While targeted as a guide for Bank Examiners, the materials related to warning signs of fraud and how to deal with insider obstruction would also be useful for many single family fraud prevention efforts, INCLUDING fraud prevention in the Hardest Hit program.

Originally created and posted on the Oregon Housing Blog.

Improper Payments Dashboard Coming in A Couple of Weeks.

President's Excecutive Order requires this dashboard to be up by May 19, 2010. (Don't have URL yet).

My prior post on this subject is HERE. Short presentation HERE highlights XO requirements.

Originally created and posted on the Oregon Housing Blog.

HUD Publishes Final Rule on Use of Enterprise Income Verification System for Assisted and Public Housing.

After several prior starts and stops, HUD today issued in the Federal Register the long delayed final rule HERE on the use of the Enterprise Income Verification System for use in HUD Assisted Housing and Public Housing programs.

Exerpt from final rule clarifies that use of EIS occurs AFTER admission:

With respect to initial admission, EIV cannot be used by processing entities to verify an applicant’s income, since form HUD–50058 or HUD–5009 is not transmitted to HUD until after the family is admitted to the program. HUD will issue administrative guidance with respect to the timeframe for consulting the EIV system once the form HUD–50058 or HUD–50059 has been transmitted.

Originally created and posted on the Oregon Housing Blog.

Correction: Improper Government Payment/Error Rate Transparency Heating Up; HUD Should Welcome.

Correction: I corrected text below to read that NET over payment errors were 1.6%, after underpayments were subtracted from over payments.
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In late November the President issued a new Executive Order that will require Internet publication of improper payment data by federal agencies by May 2009. The Executive Order is HERE.

A Government Executive news story HERE includes a PDF table HERE showing error rates for select agencies and programs.

You will see that HUD's 3.5% error rate (total gross errors/total dollars spent) compares very favorably to error rates for other federal programs. (Gross Error rates include both over and underpayment, if underpayments were subtracted from overpayments, HUD rental assistance NET overpayments would be only 1.6%--$453 Million out of $29 Billion in payments).

In contrast to the low error rates for HUD and many other programs check out HIGH program error rates for:

Program	Error Rate	Total Errors
Medicaid	9.6%	$18,075
Unemployment	10.3%	$12,283
Earned Income Tax Credit	25.5%	$12,250
Medicare Advantage	15.4%	$12,010
SSI.	12.1%	$5,437
School Lunches	16.4%	$1,551
HUD Rental Assistance	3.5%	$1,022
VA pensions	11.2%	$425
Homeland Security Grants	18.8%	$261
Disaster Assistance Loans	20.9%	$169

(Why improper payments for Defense contracting do not appear at all on the list is a mystery to me).

Detailed HUD data on improper payments is found within the FY 2009 PAR that I recently posted about; discussion about HUD improper payments start on page 343. Note that HUD income reporting errors are on the rise and will likely receive increased attention in the future.

All in all I think this is a VERY good tool that should improve transparency and allow easier comparison between error rates in different programs.

Originally created and posted on the Oregon Housing Blog.

Updated: HUD/FHA Proposes Triple Whammy to Improve Lending.

Update: Actual Federal Register publication is HERE.
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This will be in tomorrow's Federal Register, but advance copy is available HERE today. (Will take many months to implement as it is a proposed rule). Rule introduction list the three changes:

First, FHA proposes to no longer approve loan correspondents as approved participants in FHA programs. Mortgagees would be required to ensure that their loan correspondents meet applicable requirements. The FHA-approved mortgagee will, in turn, act as sponsor as it has in the past. However, in using a sponsor/correspondent relationship, the sponsoring mortgagee must agree to assume responsibility for any loan correspondent that works with the mortgagee in the FHA insured loan, and assume liability for the FHA-insured loan underwritten and closed in the name of the FHA-approved mortgagee.

Second, this proposed rule would update the FHA regulations to incorporate criteria specified in the Helping Families Save Their Homes Act of 2009 that precludes certain lending entities from originating an FHA-insured loan, and are designed to ensure that only entities of integrity are involved in the origination of FHA-insured transactions.

Third, and consistent with the objective to work with and rely upon responsible mortgagees, FHA proposes to increase the net worth requirement for FHA-approved mortgagees for the purpose of ensuring that approved mortgagees are sufficiently capitalized.

HUD IG: HUD/PHA's Did Not (Fully) See Dead People.

IG audit is HERE.

Originally created and posted on the Oregon Housing Blog.