Finding 2024-002: Noncompliance with Continuing Loan Monitoring Requirements
Evaluation of Finding: Significant Deficiency and Noncompliance
Federal Program: HOME Investment Partnerships program
Assistance Listing Number: 14.239
Federal Grantor: Department of Housing and Urban Development
Federal Aw...
Finding 2024-002: Noncompliance with Continuing Loan Monitoring Requirements
Evaluation of Finding: Significant Deficiency and Noncompliance
Federal Program: HOME Investment Partnerships program
Assistance Listing Number: 14.239
Federal Grantor: Department of Housing and Urban Development
Federal Award Year: 2023-2024
Criteria: The City is a subrecipient of Community Development Block Grant (CDBG) funds from the U.S. Department
of Housing and Urban Development. Per the grant agreement, the City must regularly monitor loan recipients’
compliance with the loan agreement and program guidelines.
Condition: The City is not adhering to their established policy to oversee loan compliance requirements and has not
retained adequate documentation to demonstrate ongoing adherence to these requirements.
Cause: The noncompliance is attributed to the City being unfamiliar with the continuing loan compliance requirements
specified within the CDBG grant program and grant agreement.
Effect: The failure to comply with the continuing loan compliance requirements poses significant risks, including:
• Potential mismanagement or misuse of funds by loan recipients.
• Increased likelihood of default or financial instability among borrowers.
• Inaccurate financial reporting and lack of accountability.
• Overall diminished effectiveness and credibility of the CDBG program.
Questioned Costs: No questioned identified.
Context: We tested 8 out of 42 loans that existed prior to the fiscal year ended June 30, 2024, noting the City did
not have sufficient documentation to support continuing loan compliance requirements were met. Through
discussions with the City, the City was unaware of the continuing loan compliance requirements per the grant
agreement.
Repeat Finding: No
Recommendation:
To address and rectify this noncompliance issue, it is recommended that the following actions be implemented:
• Provide comprehensive training on monitoring procedures and compliance requirements.
• Review grant policies checklists to ensure thorough and consistent treatment.
• Establish a regular schedule for loan evaluations, document inspections, and follow-up actions.
By taking these corrective measures, the City can ensure it meets the continuing loan monitoring requirements
and supports the success and integrity of the Community Block Development program.
Corrective Action Plan:
The City acknowledges the finding regarding noncompliance with the continuing loan monitoring requirements for
the Community Development Block Grant (CDBG) Home Improvement Program. We recognize the importance of
ensuring full compliance with all grant requirements to maintain the integrity and effectiveness of the program and
will implement the recommendations by September 30, 2026.
Since 1985, the City of Inglewood has approximately 281 CDBG loans issued to homeowners under the CDBG
Program for either homebuyer programs or for housing rehabilitation programs. Over the years the City has
contracted with the outside agency, Inglewood Neighborhood Housing Services (INHS) to administer these
homeowner loan programs for Inglewood residents. It has been demonstrated that the now dissolved INHS has
issued loans to homeowners and may not have recorded each transaction accurately, thus resulting in some loans
being paid off without proper noticing to the City.
In 2007, the City retrieved the loan files from INHS in an attempt to reconcile the outstanding loans issued by INHS.
The City’s CDBG Division along with the RDA has been tasked with reconciling the home loans for both HUD and
the RDA. During this period, the City suffered a gradual reduction in HUD CDBG and HOME funds which resulted
in the gradual reduction of key CDBG staff members, beginning with the separation of the Senior Grants
Coordinator, the Grants Coordinator, the CDBG Division Accountant, and the CDBG Administrative Analyst. The
remaining full-time staff and two new full-time CDBG Division staff, saw the retirement of the Grants Manager, and
a series of five subsequent managers since 2013.
Since 2019, the City stabilized its staffing to include a HUD Programs Manager who is responsible for overseeing
the CDBG Loan Program. The HUD Programs Manager will ensure the loans are properly monitored, and serviced.
The City has two Senior Program Specialists (SPS) who have a combined total of over 40 years’ experience in
HUD Programs. It is important to note, one of the two SPS has been out on leave since December 2024.
Corrective Action 1.0:
The city will provide CDBG staff with comprehensive training on monitoring procedures and compliance
requirements
Corrective Action 2.0:
CDBG staff will review grant policies checklists to ensure thorough and consistent treatment.
Corrective Action 3.0:
CDBG staff will establish a regular annual loan evaluation, document inspections, and follow-up actions.
Projected Time of Completion:
September 30, 2026
The name of the contact person responsible for the corrective action: Roberto Chavez, HUD Programs Manager
If the Cognizant or Oversight Agency for the Audit has questions regarding the corrective action plan, please contact
Luisana Gomez, Accounting Manager lgomez@cityofinglewood.org