Village Loan Program Under State Scrutiny

By Matt Hicks

Village Loan Program Under State Scrutiny

April 4, 2012 Updated Apr 5, 2012 at 5:13 AM EDT

Waverly, NY (WBNG Binghamton) A state audit finds there may be some bad business with the Village of Waverly's business and housing loan program.

Now, the village says it's taking steps to make things right.

The New York State Comptroller found a conflict of interest when it found a loan was given to a former trustee's commercial real estate business to remodel a building.

The report doesn't name the trustee, but says as of June 1, 2011, they were two years delinquent on the $40,000 loan. The state comptroller found the village lacked the appropriate checks and balances when it came to signing off on these loans, such as making sure the applications were complete, getting a credit check on applicants, requiring proof of collateral, or making sure the loans were used as intended.

The report found the village program had 24 loans with nearly $335,000 owed to the village. These loans were as many as eight years behind payment. According to the report, the village has sent out letters for collection, but has not taken any other steps to get their money back.

In a written statement to the auditors, the village says it has no comments regarding this audit.

However, we spoke with Mayor Kyle McDuffee Wednesday evening, who says the village was taught a lesson and will be making some big changes as it moves forward.

McDuffee said the village trustee in question--who he would not name--had abstained from the vote approving the loan, but the village was unaware that even an abstention wouldn't be in accordance with state standards.

In the meantime, the village has temporarily stopped the program. Officials will be forming a new committee in the coming weeks to revamp the program in accordance with the auditor's recommendations.

McDuffee said there will be better enforcement, and no trustees will be able to participate in the loan program as the village moves forward.

To see the report for yourself, visit the New York State Comptroller's website.