The Department's management and the OIG have worked in a close, collaborative manner during the past year, recognizing the challenges facing the Department and the country. Management’s comments and updates on the department’s progress in addressing each challenge are set forth below.
Human Capital Management
Office of the Chief Human Capital Officer
HUD agrees with the OIG’s assessment of a critical need for the Department to correct shortcomings in Human Capital Management at HUD. The Department followed recommendations from the National Academy of Public Administration (NAPA), the Office of Personnel Management’s (OPM), and the U.S. Government Accountability Office (GAO) in framing a set of actions designed to transform human capital programs at HUD. Since a number of these actions did not appear in OIG’s report, several of the more important actions, are listed here as supplemental information.
Office of Multifamily Housing
With reference to the transformation initiative introduced in the Office of Multifamily Housing, the OIG noted a challenge for Multifamily Housing to ensure that this new style of functioning will continue to maintain adequate monitoring of properties and access to clients. In fact, the transformation is designed to enhance monitoring and make local engagement more consistent and efficient across our programs and throughout our geographic footprint.
Financial Management Governance of HUD
HUD agrees with the observations and conclusions in the OIG report concerning Financial Management Governance at HUD, noting that the Office of the CFO has limited resources and authority with which to structure and execute the financial management controls needed for effective financial management governance.
Financial Management Systems
Office of the Chief Financial Officer
HUD management concurs with the OIG report in the need to implement a new core financial system for HUD. Management offers a few clarifications on matters discussed in the report.
The New Core program’s scope is not a good comparison to the HUD Integrated Financial Management Improvement Project (HIFMIP). New Core has a five-year phased implementation approach that will modernize HUD’s core financials and other systems, but utilizes a production ready application with the Administrative Resource Center (ARC) of the Bureau of the Fiscal Service (BFS).
HUD agrees with the OIG’s assessment and aims to implement corrective actions.
Single Family Programs
Office of Single Family Housing
Over the past five years, FHA has executed the most sweeping changes to its programs and practices in the agency’s nearly eighty year history. Through substantial changes to borrower credit and underwriting requirements and significant increases in mortgage insurance premiums, FHA has ensured that loans being endorsed today are both high quality and priced adequately for the risk they present to FHA’s insurance fund. In fact, books of business insured since FY 2010 have been increasingly more profitable each year. In addition, FHA has significantly improved its counterparty risk management efforts through increased capital requirements for FHA-approved lenders, improved and risk-based reviews of lenders and loan files, and the removal of large numbers of non-compliant lenders. Finally, faced with large numbers of defaulted loans as a result of the recession, FHA has made vast changes to its loss mitigation and asset disposition policies and processes to reduce losses to the insurance fund from non-performing loans, and to increase recoveries associated with loans that cannot be made to re-perform. In total, the changes FHA has made in the past five years have improved the value of FHA’s MMI Fund by more than $30 billion.
Ginnie Mae agrees with the Inspector General regarding the need to enhance MBS portfolio monitoring. Ginnie Mae has already taken steps by increasing staff who manage issuer relations and issuer performance. Additionally, Ginnie Mae has developed tools to track and monitor counterparty default risk in its Office of Enterprise Risk Management.
The Department issued the HOME rule which will mitigate the systemic deficiencies identified in HUD OIG audit reports. The Department has also taken steps to improve HOME program management and will be revising the HOME Monitoring Exhibits in the CPD Monitoring Handbook to add questions that will direct CPD monitors to compare project data entered in IDIS with information in the participating jurisdiction’s files.
Public and Assisted Housing Program Administration
With reference to remarks made in describing HUD’s challenge in monitoring the Housing Choice Voucher program, the OIG mentioned a belief by management of the Office of Public and Indian Housing (PIH) that it will address the limitations cited using the Portfolio Management Tool (PMT) and the Next Generation Management System (NGMS). In this discussion, PIH management has the following points of clarification. While the PMT has recently been implemented, the effectiveness of the NGMS, which is currently under development, is dependent upon the availability of funding to bring the NGMS project to completion. Furthermore, although these tools will assist in the oversight of the program, PIH management notes that HUD will continue to face challenges in monitoring this program unless adequate resources are available to provide data verification via remote and onsite reviews.
Administering Programs Directed Toward Victims of Natural Disasters
HUD implemented several internal controls to ensure that disaster recovery funds are accurately disbursed in a timely manner. Specifically, HUD placed additional controls on the LOCCS system, including restricting all unbudgeted balances, providing for line-item budgets instead of an undifferentiated grant, and including warning flags for draws over $5 million and over $25 million. The flags can only be removed, allowing drawdown completion, after a CPD manager reviews and accepts accompanying documentation. Additionally, HUD’s Disaster Recovery Grant Reporting (DRGR) system was integrated with LOCCS on January 5, 2009.
|FY 2013 Agency Financial Report|
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