HUD gives free housing to 200K unqualified tenants, report

The United States Department of Housing and Urban Development provided free housing for 201,000 people that did not meet the department’s scant community-service requirements to qualify for housing benefits.

A new audit report conducted by HUD’s Office of Inspector General found that the department spent more than $37 million in monthly taxpayer subsidies, extending or renewing leases for nearly 106,000 houses with unqualified tenants.

Auditors estimate that if HUD does not strengthen its controls, the department will waste $448 million on housing for noncompliant tenants over the next year.

According to HUD’s own data, there are over 610,000 homeless people currently living in the United States, and 65 percent of those people are living in emergency shelters. But the latest audit report reveals a culture of entitlement gone wrong, where unqualified adults take advantage of government benefits that could be otherwise given to needier tenants.

“It’s outrageous that the government is spending half a billion dollars in taxpayer funds to give free rent to 100,000 households that can pay their own way,” said Ryan Ellis, tax policy director of Americans for Tax Reform. “There’s a hand up, and there’s a slap in the face. This is the latter.”

Critics say it’s not only taxpayers who should be outraged by the latest HUD audit, which covers operations from July 2012 through June 2014, but so too should low-income families in need of housing assistance.

“Almost every city has a waiting list for public housing. Given that you’ve got a limited supply of assisted housing, there are people who are eligible who aren’t receiving benefits because people who aren’t eligible are getting those benefits,” said Mark Calabria, a former HUD official who then spent seven years overseeing the agency as a Senate staff member working with the Banking Committee.

The audit follows a slew of reports on fraud within entitlement programs.

An audit of the SNAP food stamp program found that recipients were selling food stamps online for art and housing. IRS commissioner John Koskinen announced last week that illegal immigrants who have never paid taxes can claim back-refunds once they are handed Social Security numbers under President Obama’s executive actions.

The Congressional Budget Office estimates that entitlement spending will reach $2.3 trillion this year.

Officials at HUD defended the program, saying that the watchdog’s report was misleading because auditors used two different categories — units and tenants — to describe the problem.

“While it may be true that there are families residing in 106,000 units that have a noncompliant family member, and there may be a total of 201,000 tenants whose [community service] is improperly reported, the numbers can be read to overstate the number of families that are noncompliant due to families that are counted in both categories,” HUD administrators wrote in their response to the report.

According to the audit report, there are about 1.2 million families living in public housing units, managed by roughly 3,300 public housing authorities across the country. Within those communities, adult tenants are required to participate in community service programs in order to improve their economic and social well-being.

Residents are expected to complete at least eight hours of community service each month or participate in an economic self-sufficiency program unless they meet one of several exemptions. Residents who are 62 years of age or older, blind or disabled, members of a family receiving welfare benefits or engaged in eligible work are exempt from the community service requirement.

But hundreds of thousands of tenants have been improperly marked by the housing authorities as exempt, and the department continues to renew and extend their leases.

In one example, HUD subsidized a housing for tenants that were improperly exempt from the community service requirements after the housing authority improperly exempted the household because one tenant was receiving food stamps.

In addition, HUD did not apply sanctions against housing authorities that did not enforce the community service requirements.

While some housing authorities wanted to take action such as eviction against households that did not meet the community service requirements, HUD continued to renew leases.

HUD has come under fire for the issue in the past, but despite previous audit reports laying out recommendations to improve an abused housing system, the problem has only gotten worse.

In a March 2008 audit report, investigators found that HUD could not ensure that housing authorities were enforcing the community service requirements for tenants. Auditors estimated in 2008 that housing authorities improperly renewed or extended leases for at least 85,000 ineligible households, costing an estimated $21.5 million in monthly operating subsidies.

Auditors wrote in the 2008 report that HUD could save $275 million annually by strengthening controls.

The problem continues to occur because HUD does not have set monitoring controls and coding policies in place between all housing authorities to ensure that tenant exemptions are properly reported.

HUD did not have any set written monitoring policies for the housing authority to ensure that tenants were actually completing community service work. Out of 56 housing authorities surveyed, only 11 were reviewed by HUD for their community service-monitoring practices.

In the report, investigators recommended that HUD and the housing authorities create and implement new policies to ensure that tenants are efficiently categorized and monitored for compliance with the service requirements. Auditors also insisted that the housing authority apply penalties for noncompliant households.

Officials at HUD agreed with all recommendations, and wrote in their response that new monitoring and reporting policies would be in place by June 30, 2015, and new training and policies for carrying out penalties for noncompliant tenants would go into effect on October 1, 2015.