HUD OIG projects at least $1.291 billion in yearly improper MF-PBRA payments

The HUD Office of Inspector General audited housing assistance payments (HAP) in the Multifamily Project-based Rental Assistance (MF-PBRA) program. Of 230 payments statistically selected for testing, 42 were improper. From those results, auditors project an annual estimate of at least $1.291 billion in improper payments within the program.

The report attributes the improper payments to three causes: multifamily owners' errors in HAP calculations, failure to follow program requirements, and failure to retain documentation supporting eligibility and income. It states that HUD relies heavily on owners to ensure HAP is proper.

The report also finds that monitoring by HUD's contracted Performance Based Contract Administrators (PBCA) is not always sufficient to identify issues. This prevents HUD from identifying and correcting potentially systemic errors in HAP calculations. The audit adds that HUD's guidance and systems could be improved to help owners handle complex program requirements and HAP calculations.

HUD deems the program susceptible to significant improper and unknown payments but has not produced an estimate under the Payment Integrity Information Act of 2019. The report says this is the ninth consecutive year HUD could not report compliant estimates for MF-PBRA, contributing to noncompliance with improper payment laws for 13 consecutive years.

The OIG recommends that the Deputy Assistant Secretary for Multifamily Housing work with owners to identify HAP calculation challenges and implement solutions. It also recommends a Housing Notice on quality control requirements for form HUD-50059 (family report) accuracy and support, and more oversight of PBCA monitoring beyond Management Occupancy Reviews. The fourth recommendation calls for clear procedures on retaining documentation when it is transferred to new owners or management agents.