Finding Text
2022-010) Program Income Questioned Costs: Undetermined Department of Housing and Urban Development 14.239 Home Investment Partnerships Program (HOME) Grant No(s): M-16-MC-22-0204, M-17-MC-22-0204, M-18-MC-22-0204, M-19-MC-22-0204, M-20-MC-22-0204, M-21-MC-22-0204 Criteria: Program income includes payments received from principal and interest on loans made with HOME funds. Such program income should be accounted for, serviced for collection (if not forgiven), and recycled back into the HOME program. The City-Parish utilizes an outsourced loan servicing company to assist with the accounting, tracking and collection of program income. Condition: One of the City-Parish?s primary HOME program activities is the lending of HOME funds for development of low-moderate income housing. Loans are to be repaid in varying amounts and times depending on the development?s viability and borrowers? ability to repay. The City-Parish has not included loans issued for recent housing development projects (since 2018) within the accounting and loan collection system with the outsourced company. Universe/ Population: Of approximately ten projects tested over past audit cycles and five new projects in 2022 that received HOME assistance in the form of loans, none of their balances appeared on the loan accounting ledger of the City-Parish. Effect: While some of these loans may not yet be to the point of payment, the City-Parish is nonetheless at risk for not collecting all program income if its loans are not added to the loan accounting ledger and accounted for properly, monitored, and serviced. Additionally, the City-Parish could be deficient in its ability to hold borrowers/developers accountable for on-going compliance. Cause: The administration of the City-Parish?s HOME Program was in transition during 2022. Recommendation: The City-Parish should contact its outsourced loan servicing company and include its recently issued HOME Multi-Family loans in its loan accounting, collection and reporting processes. View of Responsible Officials: The Office of Community Development (OCD) provides funding to affordable housing developers using Federal funds. Since 2021, the OCD has worked alongside dozens of developers, the State, and private investors to add over 800 units of affordable housing to our housing market. These affordable housing funds are often provided to nonprofits and local developers by means of a forgivable loan. This loan is intended to generate no income, but instead allows the City-Parish to place a lien on the property to enforce the long-term affordability requirements required by the Federal government.The outsourced loan servicing agency provides administrative support for the HOME mortgage program and interest generating activities; however, the affordable housing support is not a part of that scope. Instead, the City-Parish Parish Attorney?s Office works alongside the Office of Community Development and the Clerk of Courts to record the forgivable loans as liens on the property. The lien ensures that developers are unable to sell the home for market rate activities or otherwise dispense of the property or manage the property in a way that is incompliant with the Code of Federal Regulations.