Finding 26156 (2022-004)

Finding 2022-004 Home Loan Compliance Monitoring (Uniform Guidance Compliance) Criteria: The City's Homebuyer Assistance Program Guidelines along with the loan agreements specify conditions of default with the loan provisions which should be monitored on a regular basis. Condition: During our test of six Home loan recipients, we noted for four recipients the City was not monitoring compliance with the loan provisions to ensure the loans were not in default. Cause: The City contracted with Yolo County Housing to perform monitoring on multi-family loans, however loans for single family residences are not included in the monitoring agreement. Effect: The City has not monitored compliance with the loan provisions for single family residence loans issued and has no documentation indicating the loan recipients are in compliance with the loan provisions. Recommendation: We recommend the City implement a process to monitor compliance with the loan provisions for recipients of Home loans to ensure proper steps are taken if conditions of default exist. Views of Responsible Officials: Staff turnover and retirement both in Finance and Community Development/Housing, led the city to outsource the housing loan and grant management to Yolo County Housing (YCH). No past monitoring compliance procedures or documents were located for past first-time homebuyer program participants. YCH was coordinating with the State Housing and Urban Development Department in compliance and monitoring for all new Home and CDBG grants. City staff shall adhere to the requirements and implement a process to comply with the loan monitoring guidelines along with the loan agreements specified conditions to ensure proper steps are taken.