Reducing Improper Payments at HUD

Situation Before: The Department of Housing and Urban Development (HUD) pays $27 billion a year in rental housing assistance to provide 4.6 million low-income households with affordable housing.  The amount of rental assistance a household receives is based on the income level of the household.  The lower the household income the higher the federal assistance.  HUD had little control over the accuracy of the payments made for each household and was largely reliant on the honesty of the household’s reporting of income and the adequacy of the local program administrator’s verification and use of the reported income to correctly calculate the assistance due to the household.  In 2000, HUD estimated an annual improper rental assistance payment level of $3.22 billion, due to failure to properly report, verify or process income and benefit information.

Action Taken: A key part of HUD’s strategy for reducing that improper payment level was the implementation of a new computer matching process to provide housing program administrators with controlled access to household income information already maintained in central federal databases at other federal agencies.  The new system provides a secure central source for verifying wages, unemployment benefits and Social Security Administration benefits, as well as monthly new employment information, for HUD program beneficiaries who have authorized the release of such information as a condition of their program participation.

Results: HUD has reduced improper rental housing assistance payments by nearly $2 billion, or 60 percent from the $3.2 billion level in 2000, to less than $1.3 billion in 2005.  This level of reduction in improper payments enables HUD to provide assistance to more than 250,000 additional households for the same amount of money.