Audit of the Massachusetts Housing Finance Agency

This is a State Auditor performance audit of MassHousing covering July 1, 2018 through June 30, 2020.

“In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of the Massachusetts Housing Finance Agency (MassHousing) for the period July 1, 2018 through June 30, 2020.”

Auditors checked whether MassHousing made sure affordable housing projects set aside required units for lower-income people and whether it monitored those projects afterward.

“We also examined whether MassHousing monitored the management companies responsible for the oversight of the projects it financed to ensure that affordability restrictions were sustained in accordance with its “Asset Management Review Policy.””

MassHousing helps finance affordable and mixed-income housing without using taxpayer dollars for its own operations, so oversight matters for housing access and accountability.

“MassHousing does not use taxpayer dollars to sustain its operations, although it administers some publicly funded programs on behalf of the Commonwealth.”

For ordinary residents, the key issue is whether housing projects financed by MassHousing actually keep affordable units available for people who qualify.

“The disposition agreement, signed by the borrower and MassHousing, indicates that the borrower has ensured that at least 20% of the units will be rented to people or families whose income is no more than 80% of the area median income (AMI), at rents equal to 30% of that income limit.”

The auditors answered yes to both main questions: MassHousing checked the 20% affordable-unit requirement before financing and monitored management companies, though documentation needs improvement.

“Before financing a loan commitment for an affordable housing project, does MassHousing ensure that 20% of the units in the project are for people and families with low incomes in accordance with Section 5(g)(1) of Chapter 708 of the Acts and Resolves of 1966?”

The report recommends that MassHousing make its review policy clearer, especially for different types of properties and HUD-subsidized projects.

“MassHousing’s “Asset Management Review Policy” should clearly define the processes associated with conducting AMRs and MORs for the different types of properties in its rental property portfolio.”

This was not a report about major rule-breaking; its significance is that it found compliance but pointed to a control weakness in documentation.

“However, in the “Other Matters” section of this report, we provide some recommendations to improve internal controls over MassHousing’s asset management review process.”

An asset management review is MassHousing’s main check on whether a property is being run properly, staying financially viable, and meeting affordability rules.

“The Asset Management Review (AMR) is the primary means of monitoring property operations to determine whether management is providing decent, safe and sanitary housing, carrying out the objectives, policies and procedures of applicable federal, state and MassHousing requirements and regulations; and maintaining the financial viability of the asset.”