Corrective Action Plans

Finding 2023-003 – Allowable Costs and Activities, Eligibility – Compliance Federal Award. No. 21.026 Homeowner Assistance Fund – COVID 19 Corrective Action Plan: The Commission was made aware of the sophisticated fraudulent entity through its contacts with the National Council of State Housing Agencies (NCSHA). Staff remains active in those groups, participating in weekly and monthly calls and will adopt further preventative measures that have been shown to be effective in other states. Staff has implemented a more rigorous servicer onboarding process, whereby questionable items or documentation deemed to be suspicious or potentially altered will be presented to the program director, finance staff, compliance staff, or other internal staff for further investigation. Staff does not anticipate further issues with falsified information with the enhanced onboarding procedures implemented. In addition, balances owed are verified by loan servicers, and funds are paid directly to the servicer and never to individual homeowners. Completion Date: The Commission implemented additional compliance review procedures during fiscal year 2023 and completed its investigation of the identified case. Contact Person: Steve Whitson, Director of Community Programs

Finding 2023-002 – Allowable Costs and Activities, Eligibility – Compliance and Control Finding Federal Award No. 21.023 Emergency Rental Assistance Program – COVID 19 Corrective Action Plan: The Commission administered direct assistance according to the program rules and regulations. The Commission collected the required information and documentation to review and approve applications. Applicants submitted certified applications meeting the requirements of the program. However, the Commission staff discovered through its noncompliance review and identification processes that some program applicants provided false information and fraudulent documentation that continues to be investigated and reported to the proper authorities. Internal controls have been enhanced to mitigate and help prevent further exposure to noncompliance. Past and ongoing measures implemented to ensure eligibility of all funds disbursed include: the adoption of a formal fraud, waste, and abuse policy in July 2021 as well as providing additional training to employees and third parties that were responsible for reviewing and approving applications in order to better detect invalid applicants to prevent funding these applicants. In May 2021, the Commission hired an Internal Compliance Manager and created an Internal Compliance Department who has engaged a third party law firm and a consulting group to provide consultative assistance to improve processes and to assist in investigating applications deemed to be questionable. Further, internal staffing capacity was expanded with the creation of the Community Programs Processes Department in fall 2021 and the Data and Analytics Department in early 2022. Additional investigative techniques such as “mass denial metrics” and tiered level reviews were implemented into weekly application processing. Commission staff set regular internal coordination meetings to improve communication and aid in the identification of new indicators. Internal compliance staff actively participates in national groups administering similar programs, and explores and adopts new preventative or other review measures demonstrated to be effective in other states. As program funds for direct rental and utility assistance have been expended and direct assistance applications no longer accepted, additional internal metrics and compliance review processes are being developed to apply a consistent process for examining any outstanding questioned costs and to make a final determination regarding the eligibility of disbursed funds. Completion Date: The Commission implemented additional compliance review procedures during fiscal years 2021 and 2022 and expects to conclude its investigation of the fiscal year identified cases during calendar year 2024. Contact Person: Steve Whitson, Director of Community Programs

Finding 2023-001 – Allowable Costs and Activities – Compliance and Control Finding Federal Award No. 14.231 Emergency Solutions Grant Program – COVID 19 Corrective Action Plan: The Commission administered direct assistance according to the program rules and regulations. The Commission collected the required information and documentation to review and approve applications. Applicants submitted certified applications meeting the requirements of the program. However, the Commission staff discovered through its noncompliance review and identification processes that some program applicants provided false information and fraudulent documentation that continues to be investigated and reported to the proper authorities. Internal controls have been enhanced to mitigate and identify instances of potential noncompliance. The use of program funds for direct rental assistance under this program was concluded and the final disbursements made in early May 2021. Past and ongoing measures implemented to ensure eligibility of all funds disbursed include: The Commission hiring an Internal Compliance Manager and establishing an internal compliance department in May 2021 who engaged a third party law firm and a consulting group to provide consultative assistance to improve processes and to assist in investigating applications deemed to be questionable. A formal fraud, waste and abuse policy was adopted in July 2021. During fiscal year 2022, the Commission undertook extensive efforts to detect instances of ineligible applicants and documentation irregularities, which resulted in identification of these instances of applicant noncompliance. As program funds for direct rental assistance have been expended, additional internal metrics and compliance review processes are being developed to apply a consistent process for examining any outstanding questioned costs and to make a final determination regarding the eligibility of disbursed funds. Completion Date: The Commission implemented additional compliance review procedures during fiscal years 2021 and 2022, reviewed applications to identify potentially fraudulent applications during fiscal years 2022 and 2023 and expects to conclude its investigation of identified cases during fiscal year 2024. Contact Person: Steve Whitson, Director of Community Programs

Finding 2022-002 ? Allowable Costs and Activities, Eligibility ? Compliance and Control Funding Federal Award No. 21.023 Emergency Rental Assistance Program ? COVID 19 Corrective Action Plan: The Commission management identified questionable applicants for assistance during fiscal years 2021 and 2022 and agrees with the finding regarding ALN 21.023. Internal controls have been enhanced to mitigate and help prevent further exposure to noncompliance. This includes the adoption of a formal fraud, waste, and abuse policy in July 2021 as well as providing additional training to employees and third parties that are responsible for reviewing and approving applications in order to better detect invalid applicants to prevent funding these applicants. In May 2021 the Commission hired an Internal Compliance Manager and has engaged a third party law firm and a consulting group to provide consultative assistance to improve processes and to assist in investigating applications deemed to be questionable. Further, internal staffing capacity has been expanded with the creation of the Community Programs Processes Department in fall 2021 and the Data and Analytics Department in early 2022. Additional investigative techniques such as ?mass denial metrics? and tiered level reviews have been implemented into weekly application processing. Processes will continue to be implemented in response to changes in behavior by ineligible actors and ineligible application submission attempts. Staff has set regular internal coordination meetings to improve communication and aid in the identification of new indicators. Internal compliance staff actively participates in national groups administering similar programs, and explores and adopts new preventative measures demonstrated to be effective in other states. Completion Date: The Commission implemented additional compliance review procedures during fiscal year 2021 and expects to conclude its investigation of the fiscal year identified cases during calendar year 2023. Contact Person: Steve Whitson, Director of Community Programs

Finding 2022-001 ? Allowable Costs and Activities, Eligibility ? Compliance and Control Funding Federal Award No. 14.231 Emergency Solutions Grant Program ? COVID 19 Corrective Action Plan: The Commission management identified questionable applicants for direct rental assistance during fiscal years 2021 and 2022 and agrees with the finding regarding ALN 14.231. Internal controls have been enhanced to mitigate and identify instances of potential noncompliance. The funding for the direct rental assistance under this program was concluded and the final disbursements made in early May 2021. The Commission hired an Internal Compliance Manager in May 2021 and has engaged a third party law firm and a consulting group to provide consultative assistance to improve processes and to assist in investigating applications deemed to be questionable. A formal fraud, waste and abuse policy was adopted in July 2021. During fiscal year 2022, MHDC undertook extensive efforts to detect instances of ineligible applicants and documentation irregularities, which resulted in identification of these instances of applicant noncompliance. Completion Date: The Commission implemented additional compliance review procedures during fiscal year 2021, reviewed applications to identify potentially fraudulent applications during fiscal year 2022 and expects to conclude its investigation of identified cases during fiscal year 2023. Contact Person: Steve Whitson, Director of Community Programs