Pennsylvania’s housing oversight system faces critical evaluation following a performance audit by Auditor General Timothy L. DeFoor. Released this week, the audit highlights record-keeping deficiencies within the Pennsylvania Housing Finance Agency (PHFA) and provides 24 recommendations aimed at enhancing internal operations.
The audit scrutinized activities from July 1, 2022, to September 30, 2024, and, notably, found no significant problems in PHFA’s application review process for developers seeking funding through the PennHOMES program. However, it did uncover issues related to the retention of important decision-making documents and inconsistent monitoring records for properties financed through the initiative.
“This audit is another example of why efficient and effective recordkeeping is essential when spending public funds,” DeFoor stated. He emphasized that while the application process for PennHOMES was sound, the lack of documentation raised concerns about transparency and accountability.
The audit’s main objectives were twofold: first, to assess whether PHFA’s review process for developers complied with applicable laws and regulations; and second, to evaluate how well the agency monitored compliance with rent restrictions and income eligibility for PennHOMES-funded housing.
Despite the absence of major flaws in application procedures, auditors identified two formal findings and proposed extensive improvements. These recommendations focus on strengthening internal controls, enhancing documentation practices, and refining monitoring procedures.
In response to the audit, PHFA officials announced that they are in the process of implementing a new data system, which DeFoor expressed optimism about. “This is a system that can be improved,” he noted. “We look forward to seeing these recommendations implemented and the improvements in action when we revisit this audit in the future.”
The PennHOMES program is designed to assist developers constructing rental housing for lower-income residents by providing 0% interest, deferred-payment loans. Funding originates from PHFA’s unrestricted reserves as well as federal HOME Investment Partnerships Program resources. The audit assessed the application cycles for 2022 and 2024, noting that no applications were processed in 2023.
As a key state-affiliated agency, PHFA plays a vital role in financing housing for low- and moderate-income families, older adults, and individuals with special housing needs. It also manages homeownership and multifamily rental development programs throughout the Commonwealth.
For those interested in reviewing the audit’s findings and recommendations, a complete report is available on the Pennsylvania Auditor General’s website at https://www.paauditor.gov/audits/. Additionally, the Department of the Auditor General provides a “Be Audit Smart” section at www.PaAuditor.gov, where residents can access recent audits, sign up for notifications, and monitor the evaluation of public funds across Pennsylvania.
