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Línea Directa

REPORTAR FRAUDE, DESPERDICIO O ABUSO
Julio 08, 2011
  • Housing
2011-AT-1011
ig1141011.pdf

We audited Federal Housing Administration (FHA)-insured loans underwritten by Prospect Mortgage, LLC (Prospect), within Region IV of the U. S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG). Our objective was to determine whether Prospect complied with HUD’s requirements for (1) origination and underwriting relative to cash assets, income, and creditworthiness; (2) quality controls; and (3) branch office operations.

Prospect did not always follow HUD’s underwriting and quality control requirements for FHA-insured loans. Specifically, Prospect did not properly underwrite 25 of the 33 loans which placed the FHA insurance fund at risk for $550,257 in questioned costs and nearly $1.7 million in funds to be put to better use. Prospect also did not properly implement quality controls over its underwriting process for a specific group of defaulted loans approved by high default rate underwriters at two of its branch offices.

We recommend that the Deputy Assistant Secretary for Single Family Housing take appropriate administrative action against Prospect for the underwriting and quality control deficiencies identified by the audit. Specifically, Prospect should be required to reimburse or hold HUD harmless against any losses for the 25 improperly underwritten loans in finding 1 that involve $550,257 in questioned costs and $1,694,217 in funds to be put to better use and for the improper management of its quality control function. The quality control deficiencies have placed the FHA insurance fund at a higher risk for losses on additional defaulted loans with mortgages totaling more than $26.1 million that were underwritten by two high-default-rate branch offices. Therefore, we also recommend that HUD review Prospect’s underwriting for any of the defaulted loans included in the $26.1 million which have already gone to claim or on which a claim is filed within five years of the loan endorsement dates. If HUD determines that the claim was filed for loans that did not meet requirements, Prospect should be required to reimburse HUD for the claim, the loss on the loans, or to indemnify HUD from losses.