Staff cuts and early resignations stemming from the Trump administration’s efforts to reduce government spending could leave the Department of Housing and Urban Development vulnerable to fraud, according to a Bloomberg report.
A confidential internal memo seen by Bloomberg CityLab suggested that the departure of hundreds of managers and lawyers from the agency may put mortgage insurance claims, apartment building sales and other functions at risk due to insufficient staffing to perform core functions. The agency is at heightened risk of litigation as well as fraud, waste and abuse across housing programs, said the report.
Senate democrats, led by Sen. Elizabeth Warren, have requested an audit of HUD to determine if the agency can enforce fair housing law in the wake of spending cuts. According to Bloomberg, HUD surveyed its departments in advance of the audit, revealing a variety of concerns, including the potential delay and disruption of regional and field office operations such as loan underwriting, mortgage insurance claims processing and building sales closings.
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A response from the agency’s Departmental Enforcement Center outlines the potential fallout from the loss of forensic accountants, financial analysts and data scientists on HUD staff. A bullet list of potential risks associated with diminished personnel, capacity and subject-matter expertise includes “corruption,” “inefficiency,” “foreclosures,” “rampant fraud” and “predatory practices,” according to the Bloomberg report.
HUD did not comment on the memo, although it indicated all staff departures have been voluntary and described its restructuring as routine. The agency is also working to streamline more than 40 internal management systems and 60 grant management systems to achieve greater efficiency, Bloomberg said.
“With about 2,300 employees voluntarily taking the opportunity to find a new path, it only makes sense the department would have a plan in place to ensure that mission-critical functions and the highest quality service to rural, tribal and urban communities remain uninterrupted,” a spokesperson for HUD told the news outlet.
The internal report said 39% of HUD’s Office of General Counsel has left since January and by the end of September, the majority of legal managers at its field offices will have departed, including including half of the managing attorneys in its Chicago, San Francisco and Seattle offices; 75% of its managers in Boston; and all of its managers in Denver, according to Bloomberg.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
