Require lenders to obtain the borrowers’ consent to verify the existence of delinquent Federal taxes with the IRS during loan origination and deny any applicant with delinquent Federal tax debt and no payment plan or a noncompliant payment plan or an applicant refusing to provide consent from receiving FHA insurance to put at least $6.1 billion to better use by avoiding potential future costs to the FHA insurance fund.
Status
As of October 2023, the Office of Single Family Housing reported it will need additional tax information from the Internal Revenue Service to complete the planned action, and that the Office of the Chief Financial Officer will assist the Office of Single Family Housing. As of June 2024, no new update has been reported.
The final action target date was May 23, 2024, but was updated in June 2024 to May 23, 2025.
Analysis
To fully address this recommendation, HUD will need to provide evidence that it established a method of borrower consent to verify the existence of delinquent federal taxes.
Implementation of this rule should result in HUD putting $6.1 billion to better use.
Publication Report
2019-KC-0003 | Septiembre 30, 2019
FHA Insured at Least $13 Billion in Loans to Ineligible Borrowers With Delinquent Federal Tax Debt
The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited Federal Housing Administration (FHA)-insured loans from fiscal year 2018. Our audit objective was to determine whether FHA provided insurance on loans... másRelated Recommendations
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Revise HUD handbooks for forward and reverse mortgages to reflect that tax liens and judgments are no longer reported on credit reports.
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Revise HUD handbooks for forward and reverse mortgages for uniformity in the treatment of delinquent tax debt and the existence of payment plans as only the forward mortgage handbook requires 3 months of payments.