Rural Housing Service: Opportunities Exist to Strengthen Farm Labor Housing Program Management and Oversight

This recommendation has been implemented. In May 2011, the Rural Housing Service (RHS) developed and began to utilize a monthly report that identifies problems (open findings) in Farm Labor Housing projects listed in the Multifamily Information System (MFIS) that remain unresolved at the month's end. Open findings in the following categories are reviewed by the national office: civil rights compliance, financial, management, ownership and physical condition. In 2012, RHS also began evaluating the Missing Data Elements report, which is designed to detect data that should be in MFIS, as part of its oversight each State Director's Multifamily Housing servicing goals. According to the Rural Development Multifamily Handbook (HB)-2-3560, state and servicing offices are required to input the current status of all servicing actions into MFIS. The state office must monitor the MFIS activities of servicing offices to ensure that data are accurate, consistent, timely, and complete. According to the RHS national office, the Missing Data Elements report is used to ensure that such actions by the state and servicing offices are completed.

This recommendation has been implemented. In response to our recommendation, USDA published a proposed rule on Civil Monetary Penalties in January 2013 and the final rule in August 2016. The final rule established the implementation of its civil monetary penalty provision with the goal of enabling RHS to target the non-monetary default issues and elicit compliance by the borrower without such drastic steps as foreclosure. In February 2019, RHS updated its handbook with guidance on implementing the final rule. By taking steps to implement a range of enforcement mechanisms, RHS loan servicers can begin to tailor borrower noncompliance issues by severity.

Although legislation has not yet passed, this recommendation to seek legislation has been implemented. The Secretary of the Department of Agriculture (USDA) proposed legislation in May 2012, which would allow the agency access to the National Directory of New Hires (NDNH) administered by the Department of Health and Human Services. The Office of Management and Budget did not move this proposal forward in the President's Budget for fiscal year 2012. USDA subsequently submitted legislative proposals with the Budget for USDA in fiscal years 2013-2015, seeking Congressional authority for access to NDNH.

This recommendation has been implemented. In its standard operating procedures for Rural Development (RD) Budget Office staff, the Department of Agriculture has included steps to investigate key assumptions in its annual credit subsidy model, including review of unusual changes or fluctuations; comparison of assumptions to actual program performance; and obtaining the review and approval of Farm Labor Housing program officials. RD Budget Office staff have developed a process to annually review each assumption in its credit subsidy model to determine the extent to which the assumption has changed from the previous year. RD Budget Office staff also conduct trend analysis to investigate assumptions in the credit subsidy model for programs that have year-over-year changes of more than 5 percent in the budget formulation subsidy rate.

This recommendation has been implemented. On December 7, 2011, the Rural Housing Service (RHS) provided guidance to Rural Development State Directors for reviewing, obligating, and deobligating Farm Labor Housing (FLH) program obligations in the form of an unnumbered letter. The unnumbered letter provides timelines for insuring obligation of FLH program funds in a timely manner:on-farm loans must be fully liquidated not more than two years from the date the loan was obligated; and off-farm FLH loans and grants must be fully liquidated not more than three years from the date the loan was obligated. On July 20, 2014, RHS issued an unnumbered letter providing further guidance to Rural Development State Directors in response to this recommendation, which instructs every state office to evaluate every unliquidated obligation semi-annually and certify, to the national office, the continuing need of unliquidated obligations. Both unnumbered letters extend these policies to Section 515, Section 514, and Section 516 unliquidated loan and grant obligations.