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 Program Enforcement for action.

In December 2007, one borrower obtained a HECM loan on a property that she owned in Capitol Heights, MD, and certified in writing that the home was her principal residence.  However, in April 2008, she obtained a second HECM loan on a property that she owned in Laurel, MD, and certified in writing that it was her principal residence.  Her actions violated HUD’s principal residency requirements because she owned both properties at the same time.  In March 2014, HUD’s Office of Program Enforcement notified the borrower of its intent to file an action under the Program Fraud Civil Remedies Act.  After negotiations with HUD, the borrower agreed to pay $2,500 to settle the matter.  The agreement did not constitute an admission of liability or fault by any party.  The borrower made the settlement payment in July 2015.