Rural Housing Service Criticized On Rental Assistance Payments

Posted by Orb Staff on July 05, 2012 No Comments
Categories : Residential Mortgage

11926_141219737 Rural Housing Service Criticized On Rental Assistance Payments A new report by the Government Accountability Office (GAO) has faulted the U.S. Department of Agriculture's Rural Housing Service (RHS) with significant problems relating to its rental assistance payments process. The RHS paid property owners approximately $1 billion in fiscal year 2011 to help more than 270,000 low-income rural tenants afford rental housing, although a number of mistakes have occurred in its rental subsidy payments.

‘The RHS has identified improper rental assistance payments caused by certain sources of errors, but its reported error rate (total amount improperly paid divided by program outlays) may understate the magnitude of the problem,’ the GAO wrote. ‘RHS has identified improper payments resulting from inaccurate calculations of tenant subsidies and incomplete supporting documents. From fiscal years 2007 through 2010, RHS reduced its reported error rate from 3.95 percent (representing $35 million in errors) to 1.48 percent (representing $15 million in errors). However, these figures may be understated because RHS has not estimated improper payments due to unreported tenant income, and it lacks the authority to match tenant data to federal income data for this purpose.’

The GAO also warned that the RHS ‘has not recently estimated payment processing errors and has not strictly adhered to procedures for classifying payments as improper.’ The report noted that the RHS never informed the Office of Management and Budget (OMB) of its 2008 policy change to exclude improper payments of less than $100 from its estimated error rates.

‘Further, RHS has yet to institute a recovery audit program in accordance with the Improper Payments Elimination and Recovery Act of 2010, although it plans to do so sometime in 2012,’ the GAO stated. ‘These shortcomings negatively affect the integrity of RHS' subsidy payments.’

To correct these errors, the GAO recommended that Congress consider authorizing RHS access to the New Hires database run by the U.S. Department of Health and Human Services while the RHS develops legislation that would provide it with access to Social Security Administration benefits data. The GAO also suggested that the RHS' method for estimating improper payments be submitted to the OMB for proper review.

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