FEMA Has Made More than $3 Billion in Improper and Potentially Fraudulent Payments for Home Repair Assistance since 2003
The Federal Emergency Management Agency’s (FEMA) Individuals and Households Program (IHP) has a robust process for collecting and verifying information provided by underinsured disaster applicants. However, FEMA does not collect sufficient supporting documentation or verify applicants claiming to have no insurance are eligible for home repair assistance. Rather, according to FEMA, it relies on applicant self-certifications because no comprehensive repository of homeowner’s insurance data exists, and any additional verification processes would delay home repair payments. As a result, FEMA made and we are questioning, more than $3 billion in improper and potentially fraudulent payments to individuals since 2003. Additionally, FEMA did not properly assess and report improper payment risks within IHP because it disregarded significant internal control deficiencies and prior audit findings when it evaluated program risks. Therefore, IHP applicants who claimed no homeowner’s insurance received less oversight even though they posed the greatest risk for improper and fraudulent payments. Without implementing changes to its home repair assistance processes, FEMA cannot ensure it is being a prudent steward of Federal resources and adequately assessing its risks of improper payments and fraud. We made two recommendations to FEMA to improve its IHP home repair documentation, verification, and risk management processes. FEMA non-concurred with the two report recommendations, resulting in both recommendations being unresolved and open.