HUD OIG Report Highlights Management Challenges at HUD
By: Richa Goel, Policy and Legislative Affairs Data Analyst
On October 17th, the HUD Office of Inspector General (OIG) released its fiscal year (FY) 2025 Top Management Challenges, an annual report which highlights “the most serious management and performance challenges facing the Department and progress made since last year.” HUD OIG has identified eight top management challenges for FY 2025.
1. Promoting Health and Safety in HUD-Assisted Housing
HUD is responsible for overseeing its assisted housing to ensure that properties are “decent, safe, sanitary, and in good repair and that its programs and projects comply with environmental regulations.”
OIG has identified two areas in which HUD faces difficulties: the risk of lead hazard in HUD-assisted housing and identification and remediation of health and safety deficiencies through its inspection processes. HUD OIG audits of large PHAs found that PHA’s lacked proper procedures to manage lead-based paint and in some instances, misinterpreted HUD’s requirements. With respect to inspection processes, two OIG audits found that PHAs lacked adequate oversight of Housing Choice Voucher (HCV) unit inspections and faced difficulties addressing unit deficiencies. Furthermore, a HUD OIG audit found inadequacies in HUD’s Real Estate Assessment Center (REAC)’s inspection process.
2. Increasing Access to Affordable Housing
Amid an ongoing shortage of affordable housing, HUD must continue to work with PHAs to expand access to affordable housing. HUD has faced challenges in maximizing and overseeing the HCV program. The national success rate for new voucher recipients has decreased from 65 percent in 2018 to 55 percent in 2022, underscoring the need to find new ways to increase landlord participation and leasing potential. Furthermore, the report finds that HUD needs to enhance its oversight of PHA voucher programs and ensure that funds are being used to help the maximum number of families.
3. Mitigating Counterparty Risks
HUD OIG has identified multiple counterparty risks that HUD must mitigate including liquidity risks posed by Ginnie Mae’s nonbank counterparties, risks presented by reverse mortgages, and Ginnie Mae’s limited capacity. HUD must also work to improve FHA oversight of servicers that provide loss mitigation and address risks posed by lengthy foreclosure and conveyance processes.
4. Grants Management
Each year, through a diverse range of grant programs, HUD provides billions of dollars to States, cities, and other entities to advance HUD’s mission. However, HUD continues to face difficulties in “developing and implementing adequate policies, procedures, and other controls to oversee grantees’ and subrecipients’ compliance, performance, and effectiveness.” The report contends that HUD needs more reliable and complete financial and performance information and systems, enhanced subrecipients monitoring, and timeliness in grant fund spending and grant program execution.
5. Enhancing Oversight of Disaster Recovery
Each year, HUD administers and oversees billions of dollars in disaster recovery and mitigation grants. HUD OIG has recommended that HUD continue to seek permanent authorization of CDBG-DR programs, address data limitations, and improve oversight of grantees and grantee oversight of subrecipients.
6. Managing Fraud Risk and Improper Payments
Fraud against HUD diminishes HUD’s ability to meet the critical housing needs of its communities. HUD OIG has determined that HUD is “missing opportunities to mitigate fraud risks and detect improper and unknown payments”. HUD’s Chief Risk Officer must work to mature HUD’s fraud risk management program. Furthermore, HUD must address challenges in guaranteeing that whistleblowers are protected from retaliation.
7. Improving IT Modernization and Cybersecurity
HUD’s information technology (IT) and cybersecurity systems are crucial to their operation. The report highlights challenges HUD faces in closing IT project management gaps which hamper technology modernization efforts, increasing cyber compliance and elevating the cyber portfolio, and improving data protection and privacy
8. Increasing Effectiveness in Procurement
HUD is responsible for meeting the procurement needs of its program offices. Although HUD has made progress, the report outlines acquisition and contract management challenges that remain.
The full report can be read here.