Looking in the Mirror: HUD Finds Its Own Faults

A recent internal HUD audit found the department failed to follow its own required clearance procedures when making changes to Federal Housing Administration (FHA) programs.

The report issued by HUD’s Office of Inspector General (HUD-OIG) found that HUD’s Office of Single Family Housing didn’t always pursue the required developmental clearance before posting draft documents or directives in final form. OIG claims that by posting documents without departmental clearance, the public can’t be assured of their accuracy or that draft directives would actually be pursued.

“When departmental clearance was pursued, HUD did not always ensure that key officials reviewed the documents before issuance,” HUD-OIG said. “This condition occurred because HUD did not have adequate controls over the directives process.  Specifically, HUD did not implement clearly understood and updated guidance for directives and did not adequately monitor its clearance tracking system.”

The OIG said significant policy information was distributed without proper review and clearance, which as a result undermined the intent and integrity of the process.

The documents HUD posted without clearance were intended to solicit public comment: Loan Quality Assessment Methodology, the Addendum to Uniform Residential Loan Application, and the Single-Family Housing Policy Handbook.

The audit found an additional 10 more documents and policies were posted for public review without proper departmental clearance.

“HUD did not implement clearly understood and updated guidance for directives and did not adequately monitor its clearance tracking system,” OIG said. “As a result, significant policy information was distributed without proper review and clearance, which undermined the intent and integrity of the process.  This action effectively bypassed the required review by other HUD offices, including OIG, which had questioned or opposed document policies in some cases.”

The Office of Inspector General recommended HUD to go back and obtain clearance for the 13 total documents and policies released and recall those that can’t be cleared, as well as updating its clearance tracking system and implement controls and appropriate policies to ensure a similar breakdown doesn’t occur in the future.