GAO Releases Report on Housing Trust Fund
On August 8, the U.S. Government Accountability Office (GAO) released a report entitled “Affordable Housing: Improvements Needed in HUD’s Oversight of the Housing Trust Fund Program.” The report identified several deficiencies in the U.S. Department of Housing and Urban Development’s management of the Housing Trust Fund (HTF) program and included five recommendations to improve HTF oversight.
The report found that the production of completed units immediately after states began receiving HTF funds from the fourth quarter of 2017 through 2018 averaged about seven units per quarter and grew to almost 300 units per quarter in 2021, the most recent data included in the report.
GAO also found HUD had not adequately monitored grantee compliance with requirements for reporting project completion dates and had not properly clarified for grantees the requirement that they obtain cost certifications for completed HTF projects (of note, this requirement does not exist for the HOME Investment Partnerships program).
In response to its findings, GAO issued the following five recommendations for actions HUD should take to improve its oversight of the HTF program:
- Develop and implement a centralized process to monitor HTF grantees’ compliance with the requirement to enter completion information in IDIS within 120 days of the final project drawdown;
- Develop and implement a centralized process to monitor data in IDIS on the total number of units in completed projects for likely errors;
- Enhance communication of the cost certification requirement to grantees;
- Conduct a comprehensive assessment of HTF fraud risks in accordance with GAO’s Fraud Risk Framework and HUD’s fraud risk management policy; and
- Disclose that the amount of non-HTF funds may be under-reported and that HTF units are only a portion of the total units in HTF-assisted projects.
The report notes HUD has agreed to the recommendations and already has outlined planned actions to address them; GAO will update the status of the open recommendations as HUD responds.
The Housing Trust Fund was established in the wake of the 2008 financial crisis by the Housing and Economic Recovery Act, which requires the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to set aside 4.2 basis points of each dollar of unpaid principal balance of new mortgage purchases. Of this amount, 65 percent is set aside into the HTF and distributed by formula to each state and the District of Columbia. This requirement was suspended until 2015, and the GSEs began transferring funds into the HTF in 2016.
