The U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) worked with HUD’s Office of Lender Activities and Program Compliance, Office of Single Family Housing, to resolve outstanding matters related to two September 2015 agreements with Fifth Third Bank (FTB) and its principal subsidiary, Fifth Third Bancorp, an Ohio-based bank holding company. HUD failed to properly record required indemnifications in its FHA Connection system; therefore, it did not hold FTB accountable to the terms of the settlement agreements.
We recommended that the Deputy Assistant Secretary for Single Family Housing require FTB to reimburse HUD $311,699 for 2 loans for which HUD incurred losses when it sold the properties and 15 loans for which FHA insurance had been terminated and HUD had paid loss mitigation claims to FTB. We also recommended that HUD record in FHA Connection the remaining indemnified loans, avoiding $47,433,895 in estimated losses, and that HUD develop and implement controls to ensure that indemnification agreements that result from U.S. Department of Justice settlements have been properly recorded in FHA Connection. Finally, we recommended that HUD take appropriate administrative action against FTB for violations of the settlement agreement.
Recommendations
Housing
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Status2018-CF-0802-001-AOpenClosed$311,699.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Junio 09, 2020Require FTB to reimburse HUD $311,699 for 2 loans for which HUD incurred losses when it sold the properties and 15 loans for which FHA insurance had been terminated and HUD had paid loss mitigation claims to FTB.
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Status2018-CF-0802-001-BOpenClosed$47,433,895.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Closed on Junio 09, 2020Record in FHA Connection the remaining indemnified loans, avoiding $47,433,895 in estimated losses. The estimated loss is based on the loss severity rate of 46 percent of the total unpaid principal balance of $103,117,164.
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Status2018-CF-0802-001-COpenClosedClosed on Marzo 11, 2020
Develop and implement controls to ensure that indemnification agreements that result from U.S. Department of Justice settlements have been properly recorded in FHA Connection.
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Status2018-CF-0802-001-DOpenClosedClosed on Junio 01, 2020
Take appropriate administrative action against FTB for violations of the settlement agreement.