TDFP Exclusive: HUD Left $149.4 Million Sitting Idle for Up to 43 Years, Inspector General Finds
The Department of Housing and Urban Development kept $149.4 million tied up in old grants and contracts that showed no activity for as long as 43 years, according to an audit by HUD's Office of Inspector General.
The money "is tied up unnecessarily for activities that either no longer appear to have a valid purpose or that cannot be supported to demonstrate the continued need; all of which is a waste of government resources and increases the risk of fraud," the inspector general wrote in the report, numbered 2027-FO-0001 and dated Oct. 5, 2026.
In one case highlighted in the audit, three grantees did not know they still had money waiting for them. When HUD called, they "immediately drew down the funds."
What the HUD Inspector General Found
According to the report, "HUD had more than 1,000 significantly inactive obligations that have had periods of inactivity ranging from five to 43 years." The audit defines a significantly inactive obligation as one with no spending or contract activity for at least five years.
Auditors sampled 85 program obligations and 15 administrative obligations and "found that 48 program obligations and 12 administrative obligations should have been deobligated." For those, the report says, "HUD either could not provide the grant agreement or contract or could not support the fact that the purpose for which the money was obligated still existed."
The $149.4 million total "consisted of $143.6 million in program obligations and $5.8 million in administrative obligations." The largest share, about $110 million, sat in obligations of HUD's Office of Community Planning and Development, according to the report's breakdown of program obligations.
Those obligations had been marked "retain" in HUD's 2025 annual review of open obligations, "indicating that HUD's controls are not effective in identifying and deobligating inactive obligations," the inspector general wrote.
Three Grantees Didn't Know the Money Was There
The report says HUD program offices face thousands of line items in the yearly review, and "they use formulas and scripted answers instead of fully reviewing them for activity."
As an example, auditors "found three PIH obligations, totaling $126,007, that were inactive for an average of 20 years—the oldest for 30 years—and that had been marked 'retain' in the 2025 annual OOR." PIH is HUD's Office of Public and Indian Housing.
"Upon our inquiry, PIH contacted the three grantees and determined the grantees were unaware they had unexpended funds. After PIH contacted the grantees, they immediately drew down the funds that would have otherwise continued to remain inactive," the report says.
The inspector general recommended "investigating the eligibility of $126 thousand in disbursements made during our audit period for inactive obligations that the grantees indicated they did not know were available prior to our audit."
Why the Money Sat
The report says HUD has made progress closing out newer obligations but "has not gone back to clear out significantly aged inactive obligations." That is "primarily because older obligations are more difficult to deobligate since HUD's current staff has less knowledge of the obligation, the underlying agreement is sometimes missing, and the majority of the inactive obligations are funded with no-year appropriations," money that does not expire.
In numerous cases, the report says, offices reported that the original award documents "could not be located in their current files, or the documents had already been archived at off-site locations, or the offices were simply unaware of their existence."
Since the auditors completed their analysis, HUD deobligated $20.3 million and grantees drew down $6.9 million, among other changes, and "as of March 31, 2026, $114.6 million remained obligated" in the program obligations, the report says.
What HUD Said
"HUD's program offices and the OCFO generally concurred with our recommendations and have already started to deobligate the funds recommended in our report," the inspector general wrote, referring to HUD's Office of the Chief Financial Officer.
The Office of Public and Indian Housing disagreed on part of the findings. It "did not concur with our analysis related to its Office of Native American Program (ONAP) and the related recommendations," the report says, including one CARES Act grant where auditors flagged "potentially ineligible draws after several years of inactivity." PIH "responded that if a grantee can demonstrate that COVID-19 continues to impact its program, it can continue to use the funding," and said the inactive Native American program CARES Act grants identified, "totaling $1.1 million could not be deobligated unless it took enforcement actions for substantial noncompliance."
The inspector general recommended that HUD's program offices "immediately review and deobligate all remaining inactive obligations identified in our sample, totaling $149.4 million," and set up procedures to find and clear long-idle obligations.
TDFP has asked the Department of Housing and Urban Development for comment and will update this story.
Sources: U.S. Department of Housing and Urban Development Office of Inspector General, "HUD's Monitoring of Significantly Inactive Obligations Needs Improvement," Report No. 2027-FO-0001, Oct. 5, 2026: https://www.hudoig.gov/reports-publications/oae-report/huds-monitoring-significantly-inactive-obligations-needs (PDF: https://www.hudoig.gov/sites/default/files/2026-10/2027-fo-0001.pdf); Oversight.gov report page: https://www.oversight.gov/reports/audit/huds-monitoring-significantly-inactive-obligations-needs-improvement
Comments