Wyoming Audit Reports

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Date Issued: September 24, 2008
Audit Report No.: 2008-DE-1004
File Size: 93.12KB

Title: First National Bank, Gillette, Wyoming, Did Not Follow HUD Requirements in Originating and Underwriting Insured Loans and Did Not Have a Quality Control Plan

The U.S. Department of Housing and Urban Development's Office of Inspector General audited First National Bank of Gillette, Wyoming, a Federal Housing Administration (FHA)-approved direct endorsement lender, to determine whether it properly processed insured loans and to determine whether its quality control plan met the U.S. Department of Housing and Urban Development's (HUD) requirements. First National Bank did not follow HUD regulations when originating and underwriting 18 FHA loans. In addition, First National Bank did not have a written quality control plan, and its third-party contractor, who performed the quality control reviews, did not perform all reviews in accordance with HUD requirements.

We recommend that the Assistant Secretary for Housing - Federal Housing Commissioner require First National Bank to bring its procedures for the origination and underwriting of insured loans into full compliance with HUD regulations and to develop and implement a written quality control plan.

Date Issued: March 5, 2007
Audit Report No.: 2007-DE-1004
File Size: 76.40KB

Title: The Cheyenne Housing Authority in Cheyenne, Wyoming, Improperly Awarded Its Administration and Management Contract

HUD-OIG reviewed the Cheyenne Housing Authority's (Authority) administration and management contract with Housing Operations and Management, Incorporated (contractor), to determine whether the Authority awarded the contract in accordance with federal procurement requirements.

The Authority did not follow federal procurement requirements and its own procurement policy when it awarded its administration and management contract to the contractor. Members of the Authority's board of commissioners (board) did not fully understand their duties and responsibilities related to the procurement process for the award of this contract. Without following federal procurement requirements, the Authority has no assurance that it received the best price for the services provided under the terms of the contract.

We recommend that HUD ensure that the board takes all actions necessary to provide its members with a full understanding of their duties and responsibilities related to the federal procurement process and require the Authority to amend its existing administration and management contract to include all required contract provisions.

Date Issued: February 27, 2007
Audit Report No.: 2007-DE-1003
File Size: 75KB

Title: The Buffalo Housing Authority in Buffalo, Wyoming, Improperly Awarded Its Administration and Management Contract

HUD-OIG reviewed the Buffalo Housing Authority's (Authority) administration and management contract with Housing Operations and Management, Incorporated (contractor), to determine whether the Authority awarded the contract in accordance with federal procurement requirements. We performed the audit because we discovered that the contractor's owner/president was also the executive director of the Authority.

The Authority did not follow federal procurement requirements or its own procurement policy when it awarded its administration and management contract to the contractor. Members of the Authority's board of commissioners (board) did not fully understand their duties and responsibilities related to the procurement process for the award of this contract. Without following federal procurement requirements, the Authority has no assurance that it received the best price for the services provided under the terms of the contract.

We recommend that HUD ensure that the board takes all actions necessary to provide its members with a full understanding of their duties and responsibilities related to the federal procurement process and require the Authority to amend its existing administration and management contract to include all required contract provisions.

Date Issued: February 27, 2007
Audit Report No.: 2007-DE-1002
File Size: 76.12KB

Title: The Lusk Housing Authority in Lusk, Wyoming, Improperly Awarded Its Administration and Management Contract

HUD-OIG reviewed the Lusk Housing Authority's (Authority) administration and management contract with Housing Operations and Management, Incorporated (contractor), to determine whether the Authority awarded the contract in accordance with federal procurement requirements. We performed the audit because we discovered that the contractor's owner/president was also the executive director of the Authority.

The Authority did not follow federal procurement requirements or its own procurement policy when it awarded its administration and management contract to the contractor. Members of the Authority's board of commissioners (board) did not fully understand their duties and responsibilities related to the procurement process for the award of this contract. Without following federal procurement requirements, the Authority has no assurance that it received the best price for the services provided under the terms of the contract.

We recommend that HUD ensure that the board takes all actions necessary to provide its members with a full understanding of their duties and responsibilities related to the federal procurement process and require the Authority to amend its existing administration and management contract to include all required contract provisions.

Date Issued: January 20, 2006
Audit Report No.: 2006-KC-1004
File Size: 142.08KB

Title: Major Mortgage, Cheyenne, Wymoing, Improperly Submitted Late Requests for Endorsement of Federal Housing Administration Loans

HUD-OIG reviewed 1,814 loans Major Mortgage submitted as late requests for insurance endorsement between November 2002 and October 2004. Of these loans, Major Mortgage submitted 51 that did not comply with HUD requirements for late requests. As a result, these loans increased the risk to the Federal Housing Administration insurance fund $5.6 million and caused HUD to incur related claims and losses.

We recommended that the assistant secretary for housing - federal housing commissioner take appropriate administrative action against Major Mortgage for not following HUD requirements and placing the insurance fund at unnecessary risk. At a minimum, the actions taken should include requiring Major Mortgage to indemnify improperly submitted loans currently insured and reimburse HUD for losses already incurred and future losses on foreclosed properties HUD has not yet sold.

Date Issued: January 26, 2001
Audit Report No. 2001-DE-1001
File Size: 199KB

Title: City of Cheyenne, Wyoming Office of Housing and Community Development Homeowner Rehabilitation and First-time Homebuyer Assistance Programs

We performed an audit of the City of Cheyenne Office of Housing and Community Development HUD funded housing rehabilitation and first-time homebuyer down payment assistance programs. On April 25, 2000, HUD staff advised us of concerns related to the prior Administrator’s oversight of these programs. Due to the Rocky Mountain Field Office of Community Planning and Development, and the Wyoming Community Development Authority’s monitoring reviews, we limited our review to the City’s rehabilitation of single-family homes (HAND Program) and first-time homebuyer down-payment assistance (CHOP Program).

Our audit determined that the City of Cheyenne’s Office of Housing and Community Development Administrator and staff made unapproved program disbursements; did not adequately document or justify the assistance to be and/or actually provided, did not record and collect all program loans; and inappropriately provided assistance to persons with a conflict of interest. As a result, the City provided $952,080 in unauthorized funding and failed to collect on over $279,891 in loans, and could not justify the need for assistance provided. Therefore, these limited funds were not available to assist other needy families. This occurred because, the City failed to provide adequate management controls and oversight of the Office of Housing and Community Development Administrator, staff, and its operations. Community Development Block Grant program is authorized under Title I of the Housing and Community Development Act of 1974.

Community Development Block Grant provides eligible metropolitan cities and urban counties (called "entitlement communities") with annual direct grants. The grantees can use these funds to revitalize neighborhoods, expand affordable housing and economic opportunities, and/or improve community facilities and services, principally to benefit low to moderate-income persons.

The City of Cheyenne, Wyoming, as an entitlement community, received about $2,360,000 in HUD Community Development Block Grants funds over the last four years. The City used a portion of these funds to assist low to moderate-income families perform needed home repairs and in assisting first time homebuyers purchase a home.

In addition to these funds, the City received about $650,000 in HUD HOME grants funds through the Wyoming Community Development Authority. Again, the City used these funds to assist low to moderate-income families perform needed home repairs and in assisting first time homebuyers purchase a home. In addition, the City provided additional financial support from its general fund. The additional financial support represented the required Federal match to the HOME funds plus additional funds to further these programs.

Our audit objective was to determine if the City of Cheyenne provided grants and/or loans for housing rehabilitation and first-time homebuyer down payment assistance consistent with the City and HUD requirements.

The HUD Rocky Mountain Field Office of Community Planning and Development and the Wyoming Community Development Authority also performed reviews of the City of Cheyenne Office of Housing and Community Development. To avoid overlapping reviews, we elected to limit our review to the City’s rehabilitation of single-family homes and down payment assistance to first-time homebuyers.

Our audit determined that the City of Cheyenne failed to provide adequate management controls and oversight of the Office of Housing and Community Development prior Administrator, staff, and its operations. The City of Cheyenne needs to improve its oversight and monitoring of its Office of Housing and Community Development to ensure that program operates as intended and within the City and HUD’s guidelines. The Administrator and/or staff for the City of Cheyenne’s Office of Housing and Community Development Office did not ensure that programs operated according to the City or HUD’s requirements. Specifically, the prior Administrator and/or staff,

1. Allowed the HAND and CHOP programs to expend about $952,080 in excess of the amounts approved by the City’s Mayor,

2. Did not actively seek collection on $279,891 owed by the participants to the City,

3. Authorized amendments to City loan agreements without proper approval,

4. Did not maintain a record keeping system to allow reconciliation with the City’s and HUD’s accounting records, and

5. Allowed persons with a conflict of interest to participate in the program.

The City provided little, if any, oversight over the Administrator and staff activities and its operations. As such, the City did not identify the lack of management controls in the Office of Housing and Community Development.

During the first few days of the audit, it became clear that the City provided little oversight of the Housing and Community Development Office or the staffs activity. Based on HUD’s and our preliminary reviews, we briefed the City Attorney. The City Attorney took immediate actions. First, the City canceled all open purchase orders for participants. Secondly, the City Attorney must approve all disbursements of funds. In addition, the City limited assistance under the HAND and CHOP program to emergency assistance.

The City also hired a new Administrator. The new Administrator’s first task necessitated completion of the City Consolidated Plan to ensure Community Development Block Grant funds for the next year. In addition, the new Administrator began reviewing the most recent participant folders to obtain a better understanding of the problems. The new Administrator plans to use this knowledge in developing new program guidelines and internal management controls over these programs.

The Auditee concurred with the finding. In addition, the Auditee provided substantial documentation related to actual and proposed changes to the programs refereed to in this report. We believe if these changes are fully implemented the concerns raised in this report should be corrected. The City’s written response to our draft finding is shown in Appendix A.

The City also requested that we provide them with a listing of loans identified during the audit, to facilitate in expediting the servicing and collecting the program loans. We are providing the list under a separate cover.