A former inspector general at the Department of Housing and Urban Development on Wednesday detailed chronic lapses in oversight of the nation’s housing-construction fund for the poor and urged strong measures to root out waste and fraud.
At a joint housing and oversight hearing of the House Financial Services Committee, the former HUD inspector general and the acting deputy inspector general described long-standing breakdowns within HUD’s HOME Investment Partnerships Program, which awards grants to state and local governments to develop affordable housing.
The program does not aggressively monitor or track thousands of local construction projects, putting federal money at risk and opening the door to fraud, the officials testified.
Kenneth Donohue, who spent nine years as HUD’s inspector general, said he has voiced concerns about “compliance, controls and information systems related to the HOME program.”
“Both the current and previous administrations privately expressed to me their concerns over fund recipients’ compliance,” he said in his written testimony. “There were countless examples of audits and investigations that support my concerns of lack of aggressive oversight.”
Since 2008, HUD’s inspector general has opened 51 investigations relating to the HOME fraud.
“Some of those who have been caught perpetrating HOME fraud have confessed that they were well aware of . . . minimal monitoring and oversight and have indicated that due to this, they were able to take advantage of the program for personal enrichment,” Acting Deputy Inspector General John McCarty said in his written testimony for the hearing.
Members of the committee proposed a series of measures, including unannounced inspections at construction sites. Donohue suggested legislation to expand HUD’s role in monitoring local construction projects.
A Washington Post investigation in May found that HUD has routinely failed to track the status of its projects and that hundreds of deals nationwide show signs of significant delay.
The House Financial Services Committee held its first oversight hearing on the program in June. The hearing on Wednesday focused on fraud and criminal activity. The panel heard from two people convicted of fraudulent activities involving organizations that received HOME funding.
HUD has defended the program, saying that most projects are completed and that local housing agencies are expected to police their own projects.
On Wednesday, James Beaudette, deputy director of HUD’s Departmental Enforcement Center, said that the department “strongly condemns” fraudulent activity.
“There has been relatively little fraud by private individuals or more rarely by state or local officials,” he said. “It is incorrect to single out HOME as being particularly susceptible to fraud. To the contrary . . . HUD continues to take important steps to improve monitoring, oversight and enforcement.”
Committee Democrats on Wednesday also defended the program, saying that stronger monitoring may be warranted but that it is working overall.
Republican members, however, were critical of HUD, producing pictures of questionable housing projects that they said had received HOME funding.
“There is no excuse for a lack of monitoring and reporting on these HOME projects,” said Rep. Michael G. Fitzpatrick (Pa.). “We should be able to track the actual progress of HOME projects and not simply the money that’s being spent.”