Finding Text
Condition: Audit control and compliance testing of a statistical sample of 40 cases processed during the year ended June 30, 2024, revealed the following:
Applicant income was calculated incorrectly for four cases sampled, that resulted in these applicants receiving more months of Future Payment Assistance than allowed by DSHA’s policy, resulting in overpayments totaling $21,062.
Applicant income was calculated incorrectly for 11 cases sampled, which did not result in these applicants receiving more assistance than allowed by DSHA’s policy. One of these applicants received fewer months of Future Payment Assistance than allowed by DSHA’s policy.
Compliance testing performed on a separate sample of 33 cases revealed applicant income was calculated incorrectly for two cases sampled. These two applicants received more months of Future Payment Assistance than allowed by DSHA’s policy resulting in overpayments totaling $9,397.
Analysis of assistance for the period of July 1, 2023, through June 30, 2024, identified two homeowners that received in excess of $50,000 of mortgage assistance resulting in overpayments of assistance totaling $863.
A similar finding was noted during the audit of the year ended June 30, 2023. Refer to finding 2023-008.
Context: BLS applied DSHA’s written policies and reviewed forms used in application processing. The homeowner income verification process supports the following program functions:
Determination of allowable homeowner eligibility for assistance.
Determination of allowable Future Payment Assistance (starting in November 2022).
Required reporting of assistance by income level.
Compliance with the HAF Program Earmarking requirements.
Criteria:
Eligibility Criteria - DSHA submitted a HAF Grantee Plan to U.S. Department of the Treasury on May 31, 2022. DSHA’s HAF Grantee Plan specifies the following process for the determination of homeowner income:
DSHA intends to accept written attestations from DE-HAF applicants to ascertain eligibility for the programs (100% of AMI or 150% of AMI depending on the program). DSHA does not anticipate allowing the use of geographic area or other criteria not linked directly to the homeowner’s individual determinants. In addition, while eligibility will be determined with a pass/fail income threshold, later in the application review process a more specific income verification process will be required to establish the amount of monthly mortgage obligation that will be affordable to the homeowner. This income verification process will need to rely on substantiated documentation.
This process is consistent with United States Department of the Treasury Homeowner Assistance Fund Guidance issued on June 12, 2023.
DSHA’s HAF program began to provide Future Payment Assistance on November 13, 2022, as follows:
Applicants between 31.01% - 50% HDTI can be eligible for ‘Reinstatement’ plus up to 3 months of mortgage payments.
Applicants with ‘No Income’ or a HDTI 50.01% and above can be eligible for ‘Reinstatement’ plus up to 6 months of mortgage payments. *
*If in addition to the assistance, applicants will be referred to a HUD-approved Housing Counseling Agency to assist with an action plan beyond the assistance.
Earmarking Criteria - The United States Department of the Treasury Homeowner Assistance Fund Guidance issued on June 12, 2023, requires that at least 60% of amounts, made available to each HAF participant, be used for qualified expenses that assist homeowners having incomes equal to, or less than, 100% of the area median income, or equal to or less than 100% of the median income for the United States, whichever is greater. Any amount not made available to homeowners that meet this income-targeting requirement must be prioritized for assistance to socially disadvantaged individuals, with funds remaining after such prioritization being made available for other eligible homeowners.
Reporting Criteria - Homeowner Assistance Fund quarterly reporting requires the submission of Application Data disaggregated by Area Median Income.
Maximum Allowed Assistance - DSHA’s program design limited assistance to $50,000 during the year end June 30, 2024.
Questioned Costs: $31,322 of overpayments.
Effect: Federal program assistance was overpaid. Applicant income determined by assistance calculation process was used for compliance with earmarking requirements and to support required reporting by applicant income level resulting in potential errors in program reports submitted to the U.S. Treasury.
Cause: Homeowner assistance application processing did not correctly determine verified homeowner income.
Recommendation: We recommend DSHA enhance its policies and procedures for processing HAF assistance applications to ensure accurate calculation of verified homeowner income.