We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of its Home Equity Conversion Mortgage (HECM) program and found that 33 borrowers had more than 1 loan under the program.  Having multiple loans violated program requirements because HUD requires borrowers to reside in the mortgaged residence as their principal residence and borrowers may not have more than one principal residence at the same time.  We referred the violations to HUD’s Office of General Counsel.  Based on our review, HUD’s Office of General Counsel initiated the subject civil action.  This action resulted in a $5,000 judgment against the subject borrower.

The subject borrower had two HECM loans, and for each loan, certified in writing that the related property was his principal residence.  His actions violated HUD’s principal residency requirements because he had both properties at the same time.  After receiving a demand letter from the Office of Program Enforcement under HUD’s Office of General Counsel, the borrower admitted that he did not reside in one of the properties at any point after applying for and receiving the loan.  On July 16, 2013, the borrower and HUD agreed to settle the violation of HUD requirements with a one-time payment of $5,000 to HUD, which the borrower has paid.