HARRISBURG, PA — Pennsylvania’s affordable housing oversight system is under scrutiny after Auditor General Timothy L. DeFoor released a performance audit this week identifying record-keeping inconsistencies within the Pennsylvania Housing Finance Agency’s PennHOMES program and issuing 24 recommendations for improvement.
The audit, which examined activity from July 1, 2022, through September 30, 2024, found no issues with PHFA’s application review process for developers seeking PennHOMES funding. However, auditors reported that the agency failed to consistently retain key decision-making documents and maintained uneven records when monitoring properties financed through the program.
“This audit is another example of why efficient and effective recordkeeping is essential when spending public funds,” DeFoor said. “We found that while there weren’t issues with PHFA’s application process for PennHOMES, the agency didn’t keep important decision-making documents. We also found that PHFA was inconsistent when it came to keeping records for monitoring PennHOMES-funded properties.”
The audit had two primary objectives: to determine whether PHFA’s process for reviewing developers’ applications and awarding funds complied with laws, regulations, contracts, policies, and procedures; and to assess whether the agency properly monitored PennHOMES-funded housing for compliance with rent restrictions and income eligibility requirements.
Auditors identified two formal findings and outlined 24 recommendations aimed at strengthening internal controls, documentation practices, and monitoring procedures. PHFA officials indicated they are in the process of implementing a new data system, a move DeFoor said he hopes will address the shortcomings identified in the report.
“This is a system that can be improved,” DeFoor said. “Our auditors had two findings and made 24 recommendations for improvement and PHFA has indicated it is in the process of implementing a new data system. We look forward to seeing these recommendations implemented and the improvements in action when we revisit this audit in the future.”
PennHOMES provides 0% interest, deferred-payment loans to developers constructing rental housing for lower-income residents. Funding for the program comes from PHFA’s unrestricted reserves and federal HOME Investment Partnerships Program funds.
The audit reviewed the 2022 and 2024 application cycles; there was no application cycle in 2023.
PHFA, a state-affiliated agency, plays a central role in financing housing for low- and moderate-income families, older adults, and individuals with special housing needs. It also administers homeownership and multifamily rental development programs across the Commonwealth.
A full list of findings and recommendations is available at https://www.paauditor.gov/audits/.
The Department of the Auditor General also maintains a “Be Audit Smart” section at www.PaAuditor.gov, where residents can review recent audits, sign up for notifications, and track how public funds are being examined across Pennsylvania.
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