Peggy E. (Peg) Gustafson was sworn in as the Inspector General of the U.S. Small Business Administration on October 2, 2009. Ms. Gustafson previously served as General Counsel to Senator Claire...
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Advisory Report 5-09: Management Advisory Report Pre-Demand and Demand Letters for Delinquent 9/11 Disaster Loans
On January 11, 2005, the OIG issued Advisory Report 5-09, Management Advisory Report Pre-Demand and Demand Letters for Delinquent 9/11 Disaster Loans. The OIG identified an issue during an on-going review of delinquent disaster loans made in response to 9/11 attacks on the World Trade Center and the Pentagon, as well as expanded economic injury loans made nationwide. The objective of the on-going review is to determine if these loans were approved, disbursed, and serviced appropriately and/or contained indicators of fraud.
The OIG determined that program officials were not always sending pre-demand and demand letters to delinquent borrowers. Specifically, for 37 delinquent 9/11 disaster loans the OIG reviewed, pre-demand or demand letters should have been sent to borrowers of 17 loans. The SBA, however, did not send letters to 13 borrowers. The loans had been delinquent for an average of 279 days. Demand letters were not needed for the remaining 20 loans because of bankruptcy, offer-In-compromise, legal actions, or because they were less than 90 days delinquent. The OIG made two recommendations.