HUD Finally Checked Every Rental Payment. $5.8 Billion Failed.

The Payment Integrity Information Act of 2019 requires federal agencies to estimate, every year, how much of their spending in high-risk programs is improper -- paid to the wrong person, in the wrong amount, or without adequate documentation.▸ For eight consecutive years, HUD's Office of Inspector General⧉ -- HUD's own independent internal watchdog -- has found HUD unable to do that for its two largest and highest-risk programs, Tenant-Based and Project-Based Rental Assistance, together roughly $50 billion a year reaching more than four million households. In fiscal year 2025, HUD's finance office tried something different: instead of testing a small sample, it ran every FY2024 payment through automated analytics. What came back, in HUD's own year-end financial report⧉, was $5.8 billion in questionable payments -- more than one dollar in four in the larger of the two programs -- along with 30,054 dead tenants still on the rolls and thousands of potentially ineligible non-citizens the agency says it cannot yet rule out.

Tenant-Based Rental Assistance (TBRA) is the Section 8 voucher program most people picture -- a local housing authority hands a family a voucher, the family finds a private landlord, and HUD reimburses the difference between the rent and what the tenant can afford.▸ Project-Based Rental Assistance (PBRA) works the other way: HUD contracts directly with a building owner to keep specific units affordable, and pays the landlord or contract administrator on the building's behalf, not the tenant. Together the two programs made up more than $16 billion (PBRA) and over $33 billion (TBRA)⧉ of HUD's roughly $50.4 billion in FY2024 rental spending -- about two-thirds of everything the department disburses in a year. Both rely on local housing authorities, landlords, and contract administrators -- not HUD itself -- to verify that each tenant still qualifies, which is exactly the layer HUD's own checks have failed to reach for nearly a decade.

For the first time, HUD evaluated all four-plus million tenant records and the registration status of more than 21,000 recipient organizations, rather than the traditional sample of just a few hundred records HUD's finance office had relied on in prior years.▸ The review flagged eligibility issues affecting more than 200,000 tenants⧉ and $5.8 billion in questionable payments overall -- but the two programs failed at very different rates: 26.4% of PBRA payments (about $4.3 billion) versus 4.4% of TBRA payments (about $1.5 billion), a gap HUD's report does not explain but that tracks with PBRA's dependence on landlords and contract administrators, an extra layer removed from the tenant, to self-report eligibility accurately.

Separately, HUD matched its rental-assistance rolls against a Treasury death-records database for the first time and identified 30,054 tenants who were either still actively enrolled or had received a payment after they died.▸ And in its first-ever collaboration with the Department of Homeland Security, HUD ran 8.8 million tenant records through a citizenship check; 8.6 million came back confirmed as citizens or eligible non-citizens, but the agency says the remainder indicates that thousands of ineligible non-citizens are potentially still receiving assistance.

PIIA doesn't just require agencies to estimate improper payments -- it separately requires them to use the Treasury Department's Do Not Pay Initiative, a prepayment screening tool that checks a recipient against databases of the deceased, debarred contractors, and entities without an active federal registration, before money goes out the door.▸ HUD's Office of Inspector General found HUD had not been complying with that requirement either: the computer matching agreement⧉ that legally permits HUD to query Treasury's Do Not Pay databases expired in 2019 and, as of the OIG's May 2025 audit, still had not been renewed.

In a narrower live test, auditors found 11 of 24 entities flagged for expired federal registration were still unregistered as of February 2025 -- having collected about $212 million after their registrations lapsed.▸ HUD reestablished the matching agreement with Treasury on May 1, 2025, and says it is now working toward near-real-time verification through the Do Not Pay portal.

HUD's newest response is Project Voucher, a planned web portal meant to collect tenant eligibility documentation directly, trace payments to individual tenants, and automate the rent calculations local housing authorities currently do by hand.▸ A separate internal group, the OCFO Strike Force, opened reviews of 23 public housing agencies and made five law enforcement referrals during FY 2025. Neither initiative resolves the underlying audit finding.

HUD's Office of Inspector General has two priority recommendations still open -- one, from a January 2024 management alert, ordering HUD's Deputy Secretary to build a detailed plan and timeline for testing and reporting compliant improper-payment estimates in TBRA and PBRA; the other, dating to 2023, ordering the Chief Financial Officer to stand up a senior-level council to coordinate compliance across HUD's offices.▸ As of the OIG's most recent audit, HUD has not proposed an acceptable management decision on either one, so neither carries a target date. The last time HUD did produce a compliant improper-payment estimate for these two programs, in 2016, it reported about $1.7 billion in improper payments combined -- a fraction of the $5.8 billion this year's first full look turned up, on spending that has grown substantially in the years between.