Audit finds $8.5 million in lost reimbursements in HOPE homeowner program; controller urges process fixes

City Controller Chris Hollins presented a performance audit of the Homeowner Assistance Program (HOPE) to the Budget & Fiscal Affairs Committee on July 30, reporting that the program assisted 731 homeowners after Hurricane Harvey and had a budget above $69 million funded by Community Development Block Grant (CDBG) disaster recovery dollars.

Hollins said auditors used a representative sample of 57 reimbursement requests and found pervasive problems. "Of those 57 reimbursement requests, 24 of them or 42% of the total, was submitted late," Hollins said; those late requests represented about $4 million of reimbursement value and nine of the late submissions were ultimately rejected by the state, costing the city roughly $2.5 million. He added that an additional 14 requests that were submitted on time contained errors and were rejected or withdrawn (worth approximately $6 million). "So simply between late and erroneous submissions for reimbursement in this program, the city lost $8,500,000 in reimbursement revenue," Hollins said.

The audit identified two further findings: insufficient segregation and monitoring of user access to sensitive program data, and failure to document or meet grant-required timelines for responding to complaints and appeals (written responses within 15 business days; appeals reconciliation within 30 days). Hollins said auditors found no evidence that inappropriate access had caused a data breach but noted the access practices were not consistent with best practices and therefore represented an operational risk.

Recommendations and follow-up: The controller recommended (1) documented processes to ensure timeliness of reimbursement submissions, (2) quality-control review steps to reduce errors in claims, (3) an updated user-access policy with periodic monitoring, and (4) a documented plan and tracking for complaint responses and appeals. Hollins told the committee his office will follow up on management responses and said parts of the problem could be addressed without extensive additional resources while other steps may require more auditors; he presented a staffing plan to grow the audit team from 17 to 28 over two years.

Council reaction and next steps: Vice Mayor Pro Tem Amy Peck and other members asked whether the $8.5 million loss could understate the total impact; Hollins said a less rigorous, broader analysis could estimate total losses without a full new audit and that his office would attempt to provide such an estimate. Council members also pressed housing-department staffing questions and asked that management responses and corrective plans be monitored in subsequent committee review.

Limitations: The audit focused on reimbursements and grant compliance for the concluded HOPE program (original Hurricane Harvey recovery program). Hollins said missed debt-service payments identified outside the HOPE audit and other untimely expenditures point to broader process weaknesses but were not part of the sample tested.