We completed a corrective action verification of a recommendation made to the U.S. Department of Housing and Urban Development’s (HUD) Office of Single Family Program Department pertaining to our underwriting review of 15 Federal Housing Administration (FHA) lenders in Audit Memorandum 2011-CF-1801, issued March 2, 2011.  The purpose of the corrective action verification was to determine whether the Office of Housing appropriately implemented corrective actions to close recommendation 1A.

Our corrective action verification found that HUD’s Office of Housing did not adequately implement corrective action to close recommendation 1A of Audit Memorandum 2011-CF-1801.  Specifically, (1) HUD’s claim case selection tool did not select all claims for review, (2) HUD did not have adequate systems in place for tracking the status of the claim file review and indemnification requests, and (3) HUD did not review loans in a timely manner.

We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing reopen Audit Memorandum 2011-CF-1801 recommendation 1A in HUD’s Audit Resolution Corrective Action Tracking System (ARCATS) and that it remain open until fully implemented.