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Acting HUD Inspector General urges IT modernization to identify improper payments, prevent fraud
Summary
Acting HUD Inspector General Steven M. Begg told the House Financial Services subcommittee that outdated information systems prevent the department from estimating improper payments in major rental-assistance programs and hamper fraud prevention, and urged program-level fraud-risk assessments and stronger data sharing.
Acting Inspector General Steven M. Begg told the House Financial Services Subcommittee on Oversight and Investigations on the panel’s hearing "Decades of Distortion: Restoring Accountability at HUD" that the Department of Housing and Urban Development cannot reliably estimate improper payments in its largest rental-assistance programs because its payment data are not captured in current systems.
Begg said HUD’s inability to produce reliable improper-payment estimates has persisted for eight consecutive years and affects programs that represented "approximately $50,000,000,000 in 2024," roughly two-thirds of HUD’s annual expenditures. "Because it cannot estimate and identify improper payments in these programs, HUD cannot develop specific action plans to reduce them," Begg told the subcommittee.
Why it matters: Without program-level payment data, Begg said HUD cannot design targeted remedies to recover or prevent billions of dollars in improper payments. He said modernized IT systems would let HUD monitor grantees, detect duplication of benefits in disaster recovery programs, and link payment data with other federal data sources such as Treasury’s Do Not Pay portal.
Begg described HUD’s portfolio as "massive," encompassing grant programs and mortgage insurance that require "a highly skilled workforce, efficient processes, and up to date technology." He testified that many HUD systems were built decades ago, lack the data fields needed for oversight and leave much monitoring to manual processes that are inefficient and hard for HUD staff to use.
On next steps, Begg recommended that HUD: assess fraud risks for each program; require program participants to establish fraud-prevention plans; improve data sharing with other federal systems; and make IT modernization a priority so improper payments can be identified and prevented rather than chased after the fact. He also told the committee the OIG stands ready to assist in those efforts.
Begg cited prior OIG and Government Accountability Office work that found data limitations and confusing reporting impede HUD staff’s ability to monitor grant execution and program performance. He also told the committee that HUD needs payment-level data at the local level to test for improper payments and to better target fraud schemes.
The hearing included questions from subcommittee members about past large fraud prosecutions — including New York City Housing Authority cases — and whether technology alone could prevent those crimes. Begg said technology would not eliminate every scheme but could "go a long way in detecting and giving a chance to prevent" fraud.
Ending: Begg closed by urging the committee to support statutory and administrative steps that would allow HUD to collect and use payment and subrecipient data more effectively. He said the OIG will continue to press HUD leadership on capacity and data improvements as the committee considers legislative and oversight options.
