We completed an audit of Ark Mortgage, Incorporated (Ark Mortgage), a nonsupervised direct endorsement lender located in North Brunswick, New Jersey. The audit objectives were to determine whether Ark Mortgage officials (1) originated insured loans in accordance with U.S. Department of Housing and Urban Development/Federal Housing Administration (HUD/FHA) requirements and (2) developed and implemented a quality control plan that complied with...

This report presents the results of Urbach Kahn and Werlin LLP (UKW) audit of the fiscal year 2009 and 2008 financial statements of the Federal Housing Administration (FHA). The report on FHA’s financial statements, dated November 9, 2009 includes an unqualified opinion on FHA’s financial statements. The report contains four significant deficiencies in FHA’s internal controls and one reportable instance of noncompliance with laws and regulations...

We completed an audit of Jersey Mortgage Company (Jersey Mortgage), a nonsupervised lender located in Cranford, New Jersey. The audit objectives were to determine whether Jersey Mortgage (1) approved Federal Housing Administration (FHA)-insured loans in accordance with the requirements of the U.S. Department of Housing and Urban Development (HUD)/FHA, which include adherence to prudent lending practices, and (2) developed and implemented a...

We completed the thirteenth report in our ongoing audits of the Lower Manhattan Development Corporation’s (the auditee) administration of the $2.783 billion in Community Development Block Grant Disaster Recovery Assistance funds provided to the State of New York in the aftermath of the September 11, 2001, terrorist attacks on the World Trade Center in New York City. The auditee disbursed approximately $50.3 million of these funds during our...

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General performed an audit of Custom Closing Services, Incorporated (Custom), a contractor closing sales of HUD real estate-owned properties in the state of Michigan. The audit was conducted based on a complaint to our hotline alleging that Custom caused significant delays in the closing of HUD homes in Michigan. Our audit objective was to determine whether...

The U. S. Department of Housing and Urban Development’s Office of Inspector General (HUD OIG) audited the Housing and Urban Development (HUD) Community Development Block Grant (CDBG), Supplemental I and II Disaster Recovery program funds, administered by the Texas Department of Housing and Community Affairs (TDHCA). Specifically, we wanted to determine whether TDHCA administered the floodplain management program as required by federal, state,...

In response to a congressional request, we audited the Federal Housing Administration (FHA) Title II single-family lender approval process. We wanted to know whether the application process provided effective controls and procedures to ensure approval of only those lenders meeting program requirements. Our audit found that FHA needs to improve the lender approval process. The process did not have sufficient controls and procedures to ensure...

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited HUD’s oversight of the Federal Housing Administration (FHA)-insured home equity conversion mortgages (HECM) program. We initiated the audit as part of the activities in our 2008 annual audit plan. Our audit objective was to determine whether HUD had adequate oversight of the underwriting of HECM loans. This is the second of two audit reports...

We reviewed Federal Housing Administration (FHA)-insured home equity conversion mortgages (HECM) loans originated by First Call Mortgage Company and sponsored by James B. Nutter & Company (J.B.Nutter) during the period of January 2007 to December 2008. We reviewed these loans because in September 2008 state banking regulators from New Hampshire and Massachusetts found that First Call used deceptive business practices and did not have the...

We audited the Louisiana Land Trust (LLT), a $29 million Community Development Block Grant (CDBG) disaster recovery subrecipient of the State of Louisiana, Office of Community Development (State). We initiated the audit as part of the Office of Inspector General (OIG) Gulf Coast Region’s audit plan and examination of relief efforts provided by the federal government in the aftermath of Hurricanes Katrina and Rita. Our audit objective was to...

We audited FHA-insured loan processes at two DHI Mortgage Company, LTD (DHI Mortgage) branches in Tucson and Scottsdale, Arizona, to determine whether DHI Mortgage originated, approved, and closed FHA-insured single-family loans in accordance with HUD requirements. We chose DHI Mortgage because the Scottsdale, Arizona, branch had a default rate that was double the default rate for FHA-insured loans for the state of Arizona, and then expanded...

We completed an audit of the U.S Department of Housing and Urban Development’s (HUD) Asset Control Area (ACA) program as a follow-up to a previous OIG audit of this program, and as a part of the Office of Inspector General’s (OIG) strategic plan goals to improve HUD’s fiscal accountability. The objective of the audit was to determine whether HUD administered the ACA program in compliance with ACA program requirements and federal regulations....

We audited the State of Mississippi's (State) administration of the $5.058 billion in Community Development Block Grant (CDBG) disaster recovery funds provided to the State in the aftermath of Hurricane Katrina. The State allocated $2.2 billion to help homeowners in southern Mississippi recover from Hurricane Katrina. Our audit objective was to determine whether the State ensured that applicants were eligible to receive disbursements under...

We reviewed Bank of America's (servicer) home equity conversion mortgage (HECM) servicing division located in Seattle, Washington. Bank of America is one of the largest lenders of HECM mortgages for properties located in the five southwest states in the U. S. Department of Housing and Urban Development's (HUD) Region VI jurisdiction. Our objective was to determine whether the servicer complied with HUD regulations, specifically,...

We audited the Newark, Delaware, branch office (branch office) of J.P. Morgan Chase bank (J.P. Morgan Chase), a supervised direct endorsement lender approved to originate Federal Housing Administration (FHA) single-family mortgage loans. We selected the branch office because its default rate was above the state’s average default rate. Our objective was to determine whether J.P. Morgan Chase complied with U.S. Department of Housing and Urban...

We audited single-family loan originations at Eagle Home Mortgage (Eagle Mortgage), located in Kirkland, Washington, to determine whether it originated Federal Housing Administration (FHA)-insured loans in accordance with U.S. Department of Housing and Urban Development (HUD) requirements. Eagle Mortgage did not always originate FHA insured loans in accordance with HUD requirements. Specifically, Eagle Mortgage did not follow HUD's...

We audited Financial Freedom Senior Funding Corporation (Financial Freedom) as part of our annual audit plan objective of improving the integrity of single-family insurance programs. Our objective was to determine whether Financial Freedom complied with U. S. Department of Housing and Urban Development (HUD) origination requirements for the Home Equity Conversion Mortgage program, commonly known as a reverse mortgage. Financial Freedom generally...

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, audited Midwest Mortgage Capital (Midwest). Our audit objectives were to determine whether Midwest followed HUD requirements for underwriting loans and performing its quality control program for single-family production. We concluded that Midwest did not properly underwrite 7 of the 29 defaulted loans reviewed. These loans had material underwriting...

We audited the State of Mississippi's (State) administration of the $5.058 billion in Community Development Block Grant (CDBG) disaster recovery funds provided to the State in the aftermath of Hurricane Katrina. The State allocated $2.2 billion to help homeowners in southern Mississippi recover from Hurricane Katrina. During our audit on grant eligibility, we identified a few possible duplicate payments when reviewing the State's...

We audited the City of Reading's (City) asset control area program as part of a nationwide audit of the U.S. Department of Housing and Urban Development's (HUD) monitoring of program participants. Our objective was to determine whether the City administered its asset control area program in compliance with HUD requirements. We focused our review on whether the City complied with specific requirements in its asset control area agreement...