Housing and Urban Development IG lays out its new 4-year strategy

To ride herd on a federal department, you need a plan. In the case of HUD's Office of Inspector General, a five-year strategic plan.

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To ride herd on a federal department, you need a plan. In the case of [the Department of] Housing and Urban Development’s Office of Inspector General, a four-year strategic plan. And not surprisingly, it emphasizes concentrating oversight on the high risk and mission critical areas. For a more in depth look, the IG Rae Oliver Davis spoke to the  Federal Drive with Tom Temin.

Interview transcript:

Tom Temin: Ms. Davis, good to have you back.

Rae Oliver Davis: Thanks so much, Tom.

Tom Temin: There’s a new 2022 through 2026/2027 plan for the OIG office. What is new here?

Rae Oliver Davis: Well, yeah, it’s our strategic plan and it is the first one that I’ve had the privilege of leading our organization through. What’s new here? So really, it’s an opportunity to build on the good work we’ve already done. But it’s really about being influential, committing to influential oversight, committing to positive outcomes within the department. Are we doing audits and investigations that are compelling? Are we timely? Are we relevant? The question that I ask all the time is, are we doing the right work at the right time, and this plan has set us up to do just that. First and foremost, it’s about making decisions. We have limited resources, we need to be good stewards of those resources. So it’s about choosing the right work. This plan gave us an opportunity to look historically at our oversight. And frankly, we saw some areas that we had not keyed in on in the last 10 years, things that are very important to HUD’s mission, things we wanted to touch upon.

An example is fair housing. Fair housing and equal opportunity is something that is of critical importance to this administration. You and I have talked about this a little bit, I think the last time that I was on the show. This is a mammoth mission for HUD and if people just look and glance at this mission, they probably think this is just dealing with discrimination in HUD-assisted housing. It does not. HUD takes in complaints that relate to discrimination in housing, even between private individuals dealing with private property. So it’s a huge undertaking. So how can we as HUD OIG touch that mission? Something HUD does is they work with state and local housing enforcement agencies. So something that we’re going to do, a work start that we have underway, is looking at their oversight of those agencies. How are they measuring their performance? How are they ensuring that they’re doing the best job possible to combat discrimination in housing?

Another area that we’re looking at is Ginnie Mae [the Government National Mortgage Association]. Tom, when I last looked Ginnie Mae had over a $2 trillion portfolio of mortgage backed securities. So we have been through the financial crisis, we’re in the midst of this pandemic, we’re looking at how crisis ready is Ginnie Mae. We’re going to look at how they prepared before the pandemic, how they fared during the pandemic, and what measures they have in place to ensure that they can weather another storm should it come their way. So that’s some of the work that we’re doing in new areas.

Tom Temin: And I just wanted to ask you, too, in developing a plan like this, it must take a certain amount of prioritization because IG’s sometimes can get, I’ve seen reports where some contingency comes up. Someone traveled improperly, or had improper costs and travel. And it gets to be a public relations disaster, or something. And then the IG gets called in and a big investigation done, and not that that is not something that should be condoned, but the juice is pretty small compared to the squeeze, because of the IG resources that it took. Is that part of the planning process also?

Rae Oliver Davis: It is, and look, you’re talking about misconduct, we always prioritize misconduct allegations, certainly. But we are really hoping with this plan to hone in on the high risk areas. And that’s something that we’re doing with our staff that’s come out of this plan is anyone in our agency, any auditor can put together a work proposal for consideration. And we have risk criteria that we ask them to consider, what’s the impact to HUD? Is this one of HUD’s strategic goals? What’s the impact of the beneficiaries? Is this something our congressional stakeholders have said they’re interested in? A whole host of criteria. And then at that point, those proposals go before engagement board of our senior staff and we murder board these things. We look at the methodology, we talk about essentially, is it the right work at the right time, and that’s how we get there.

Tom Temin: We’re speaking with Rae Oliver Davis, she is inspector general of Housing and Urban Development. And you mentioned there’s some things that haven’t been looked at deeply in 10 years, I guess, almost maybe since the housing crisis of the 2008-2009/2010 era. And fair housing, what do you need to look at that needs some attention? And you might find things are great, but then you might not.

Rae Oliver Davis: So these are some areas we’ve honed in on historically. There’s some new ones. I think if you look at HUD’s mission, there are some things that really jump out at us, mission-critical areas. We look at health and safety implications. You know, we’re always looking at lead in public housing, Tom, that’s something that I feel every administration when they come on board is trying to get their arms around and trying to find a solution to. Unfortunately most of the time we find out we’ve got a problem with lead when we have a child who has lead poisoning. So this is the kind of thing you’re going to see us always coming back to the table on. We’ve just had a work start we’re entertaining in this area through our office of evaluation. They’re going to be looking at tools that HUD either is using or could use to identify public housing that has a high risk for lead poisoning in individuals. And then we’re hoping if we can actually identify some of those public housing agencies, we can have our auditors come in and audit those entities and see if in fact, there is lead poisoning there.

Tom Temin: And there might be a chance to continue with the lead poisoning example, that HUD could narrow down its activity. Because if something was built in the last 50 years, there’s been no such thing as lead paint, you can’t buy it. So don’t concentrate on things that are new, and waste time there but go to where the lead paint actually might have been.

Rae Oliver Davis: Absolutely, we have an aging public housing stock and that’s contributing to the problem, certainly.

Tom Temin: And the fair housing, tell us what some of the issues there are, here in 2022.

Rae Oliver Davis: Well, as I said, Tom, that’s just a really large area, in terms of ensuring there’s not discrimination in housing. One area is appraisals. You’ll see that in the news quite a bit, discrepancy in appraisals, depending on the community, and the individual whose property is being appraised. That’s a pretty robust discussion right now. And that we’re looking at ways that we can come to the table and do some oversight in that area as well.

Tom Temin: And by the way, now that we’re in the – we hope – post-pandemic era, although day by day, it’s hard to tell, how has that affected HUD and how has that affected what you need to oversee? And how’s it affected the ability to oversee it, and investigate it?

Rae Oliver Davis: Tom, the pandemic, it’s certainly like nothing we’ve ever seen before. It affected us internally at HUD OIG, in terms of our oversight, also in terms of our operations. I think I’ve told you this strategic plan for me is all about being influential. To be influential, we have to adapt, right? The pandemic, people being out of work, people being sick, the Hill working so hard to get money out the door quickly and HUD working to administer that money. There was no time for our typical oversight cycle. A typical audit didn’t really provide insight to the stakeholders that we hoped. So we ended up with this whole new lane of oversight that you hear my colleagues talk about, agile oversight. How can we bring topics to the table faster? How can we help effectuate change quicker? And one thing that we did during this time is we did a lot of fraud bulletins. We look back on work that we’ve done in the past. And so we tried to prevent fraudsters from taking advantage of people who were facing eviction or facing foreclosure. We told them to beware of people who would call and offer assistance, but wanted upfront payments. Be aware of someone who calls and says they’re affiliated with your landlord, something very simple as that could be very impactful. We also looked at what were the loan servicers telling our borrowers during this time of the foreclosure moratorium, what information was on their websites? It’s as simple as that. Was it accurate, was it complete, was it helpful? And we were able to notify HUD that in many instances, that was not the case.

So that was tremendously helpful, we believe, then we used surveys, and you’ve seen my colleagues: HHS OIG did a really interesting survey of hospitals during the pandemic. We took that model, and we used it with public housing authorities, how were they doing, administering these funds? How did that work out? And we made some recommendations to the department, we made a recommendation that they look out for PHAs [public housing agencies] who were what we call slow spenders. There was a deadline on these funds. So in order to keep those funds from just being lost, or not put to good use, we said, “HUD you should pay attention to those individuals, those entities.” Another thing that I think has been really impactful in terms of our work during the pandemic is we’ve taken a different tact towards fraud. So often, especially in disaster relief, and that’s very much the lane that we were swimming in when it came to the pandemic, we have to wait til the money’s out the door, and we start to wait for the schemes to happen. We’re always chasing these schemes. So we looked for ways to be proactive.

My colleague, Michael Horowitz, the chair of PRAC [Pandemic Response Accountability Committee], just testified about this in the Senate in front of HSGAC. We did some joint work with the PRAC, I, of course, serve on the PRAC. But we tried to figure out how can we make an impact on these funds before they even leave the agency. The design of this audit was really genius, we were able to look at the Office of Planning and Development in a large portion of the CARES Act funding went there in HUD. About $9 billion of the $12 billion went to that office in the form of grants. And we looked at what was the department doing in terms of assessing their own risk for fraud in those dollars. And we applied GAO’s fraud risk framework. And we said “what’s HUD doing? What’s the department doing?” That fraud risk framework looks much like you would expect and we recognize this as a best practice. And you’ve heard our Comptroller General. He’s been testifying about this as well. There’s an initial assessment that’s done. You say what are the risks that we’re facing with this amount of money during a pandemic? You then develop your own internal strategy for mitigating those risks. You go forward, you analyze data, and then you really commit to this anti fraud culture. What we found, the Office of Planning and Development had not even began the initial stages of this, they had not done their own fraud risk assessment. So they hadn’t got to the maturity of the model all the way to committing to this anti-fraud culture. So we put together our own risk assessment, we’ve encouraged them to adopt that. We made fraud risk management a top management challenge for HUD going into 2022 because of this work, and we’ve continued this work with the PRAC and by the end of the second review, we will have covered all the CARES Act money, as well as the money that has come out through the American Rescue Plan. So it’s pretty impactful.

Tom Temin: And that ties into your objective of, when you said effective oversight, making sure that the agency has criminal, civil administrative remedies that they can successfully pursue and not just say, “Oops, too bad.”

Rae Oliver Davis: Yes, this plan has three goals and I think it speaks to each one of them. It’s certainly speaks to our first goal of influencing positive outcomes for the department. Our second goal really focuses on our success in combating fraud. I mean, there’s no better way to combat fraud than to start with the department and risk assess for fraud itself. And then third, we talk about maximizing the HUD OIG value. I think if we can inform HUD’s policymakers in the best way to combat fraud, that’s certainly our expertise. That’s our lane. So that speaks to our third goal as well.

Tom Temin: All right, and just finally, how well is your own office equipped to do all of this? Do you have the talent you need and the the warm bodies you need and so on?

Rae Oliver Davis: We do. We are well equipped. We hired 120 people during the pandemic, I’m excited to offer that because that was a real challenge, recruiting and hiring. But we are, we’re well poised to do this. And we’ve made some changes that I’m excited about as well. We have reorganized our audit division. We used to be very focused regionally. We had auditors focused on local PHAs and what was happening in their region, but we’ve really wanted to broaden our subject matter expertise to cover HUD’s entire portfolio. So now our auditors are reorganized by priority oversight area, we have auditors devoted to disaster relief, we have auditors devoted to, again, fair housing. Auditors devoted to Ginnie Mae, single-family housing. We are revamping the way that we do grant oversight work. If you look at HUD’s budget in FY 2021, they obligated about $14.4 billion in grants. That’s roughly 25% of their budget. So we feel like we really need to come to the table with some innovative work in that area. So we’re bringing all of our subject matter experts together. And we are honing in on focus areas to guide our work in the coming years with respect to oversight.

Tom Temin: All right, sounds like you’re well equipped. And just I think I asked you this the last time you were on, do you find that the cooperation with respect to documentation and data and just availability of people from the agency is where you need it to be to do your oversight work?

Rae Oliver Davis: I do. I am experiencing definite collaboration and cooperation, certainly in that respect. And in fact, Secretary [Marcia] Fudge and I just issued a joint cooperation statement to our staff. It informs HUD staff about the role of the Inspector General and informs them about their duty to cooperate with us and informs them about their right to be free of reprisal. Should they cooperate with us. It’s a really impactful joint leadership statement that I’m very pleased with. So yes, we’re in good shape.

Tom Temin: Rae Oliver Davis is Inspector General at the Housing and Urban Development Department. As always, thanks so much for joining me.

Rae Oliver Davis: Thanks for having me, Tom, I so appreciate it.

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