We audited Cornerstone Home Lending, formerly known as Cornerstone Mortgage Company.  We selected Cornerstone based upon a high default rate at Cornerstone’s Branch 87 in 2007 through 2009.  Our audit objectives were to determine whether Cornerstone (1) complied with HUD and Federal Housing Administration (FHA) regulations when originating and underwriting FHA-insured mortgages and (2) implemented a quality control plan that met...

We assisted the U.S. Attorney’s Office of the Northern District of California in the civil investigation of Reunion Mortgage, Inc. (Reunion).  Reunion is a former Federal Housing Administration (FHA)-approved mortgage lender, with its principal place of business located in Milpitas, CA.  Based in large part on our review of loans underwritten by Reunion between December 2007 through October 2009, the U.S. Attorney’s Office filed a...

We conducted a civil fraud review of an alleged loan origination fraud scheme involving a loan officer that assisted a borrower to purchase a home under the U.S. Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA) program.  The alleged scheme involved submitting a false loan application and other documentation to obtain an FHA-insured loan on a home in Brentwood, CA.  Based in part on OIG’s review,...

The U.S. Department of Housing and Urban Development’s (HUD), Office of Inspector General reviewed HUD’s Federal Housing Administration (FHA) loss mitigation program.  We initiated this audit due to our concern that FHA might have incurred costs while allowing lenders to make large amounts of money by modifying defaulted FHA-insured loans.  Our audit objective was to determine the extent to which loans modified under the FHA program...

We assisted the U.S. Attorney’s Office, Southern District of New York, in conducting an investigation of JPMorgan Chase Bank, N.A., and JPMorgan Chase & Co. (Chase).  The investigation began due to a qui tam filing in the U.S. District Court for the Southern District of New York.  The False Claims Act allows private persons to file suit for violations of the False Claims Act on behalf of the Government.  A suit filed by an...

We audited the Housing Authority of the City of Meridian’s Queen City apartments at the request of the U.S. Department of Housing and Urban Development’s (HUD) Single Family Office of Asset Management.  Our objectives were to determine whether the Authority acquired, financed, and managed the purchase of the apartments in accordance with applicable regulations and determine the cause of the Queen City apartments’ Federal Housing...

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the Wyoming Housing Opportunities Association (Association) based on information obtained during a separate audit of the Wyoming Community Development Authority (State Finance Agency), which indicated that 51 Federal Housing Administration (FHA) mortgages with the same borrower had defaulted.  The purpose of our audit was to determine whether...

We reviewed an alleged loan origination fraud scheme involving a borrower purchasing a home in which the loan was insured under the U.S. Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA) program.  The alleged scheme involved submitting a false loan application to obtain an FHA-insured loan on a home in Brentwood, CA.  Based in part on our review, HUD filed a complaint against the borrower under...

We audited HUD’s controls over its Federal Housing Administration (FHA) loan indemnification recovery process based on the OIG’s analysis of HUD data that indicated indemnification losses were not always recovered for FHA single-family loans.  Our objective was to determine whether HUD had adequate controls in place to monitor indemnification agreements and recover losses on FHA single-family loans. HUD did not always bill lenders for FHA...

We reviewed the administration of the U.S. Department of Housing and Urban Development’s (HUD) Loss Mitigation Program at the Wyoming Community Development Authority, located in Casper, WY.  Our objective was to determine whether the Authority properly administered HUD’s Loss Mitigation Program for Federal Housing Administration (FHA)-insured mortgages.  We selected the Authority based on its high rate of foreclosure claims.  Its...

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...

We audited the Federal Housing Administration (FHA) Preforeclosure Sales Program claim process in accordance with our goal to contribute to improving the integrity of FHA single-family insurance programs.  Our audit objective was to determine whether the U.S. Department of Housing and Urban Development (HUD) paid ineligible preforeclosure sale claims that did not meet the net sales proceeds requirements. FHA paid preforeclosure sale claims...

We reviewed the County of Santa Barbara’s HOME Investment Partnerships program due to concerns expressed by the U.S. Department of Housing and Urban Development’s (HUD) Los Angeles Office of Community Planning and Development regarding the County’s administration of its HOME program.  Our objective was to determine whether the County performed its monitoring responsibilities and ensured that incurred HOME program expenditures were eligible...

We audited the Federal Housing Administration (FHA)-insured loan process at All Western Mortgage’s Las Vegas, NV, home office as part of our efforts to improve the integrity of the single-family insurance programs. We selected All Western Mortgage because it is one of the top 10 originators in Nevada and the U.S. Department of Housing and Urban Development’s (HUD) Quality Assurance Division had not performed a review since 2005. The...

We conducted a limited review of Federal Housing Administration (FHA) loans underwritten by Pulte Mortgage LLC. We selected the lender based on the results of an auditability survey, which determined that Pulte Mortgage allowed prohibited restrictive covenants to be filed against Federal Housing Administration (FHA)-insured properties. The objective of our review was to determine the extent to which Pulte Mortgage failed to prevent the...

We conducted a limited review of Federal Housing Administration (FHA) loans underwritten by CTX Mortgage Company LLC. We selected the lender based on the results of an auditability survey, which determined that CTX Mortgage allowed prohibited restrictive covenants to be filed against Federal Housing Administration (FHA)-insured properties. The objective of our review was to determine the extent to which CTX Mortgage failed to prevent the...

We audited Eustis Mortgage Corporation, a Federal Housing Administration (FHA) direct endorsement lender located in New Orleans, LA. We selected Eustis Mortgage as a result of our regional risk analysis and the U.S. Department of Housing and Urban Development’s (HUD), Office of Inspector General’s (OIG) annual audit plan goal to review single-family programs and lenders. Our objective was to determine whether Eustis Mortgage (1) complied with...

We reviewed 32 Federal Housing Administration (FHA) loans that New Day Financial, LLC, underwrote as a U.S. Department of Housing and Urban Development (HUD) FHA direct endorsement lender. We conducted the review as a result of a risk model assessment that identified mortgage lenders that were at high risk to cause losses to the FHA insurance fund. New Day was one of the lenders identified that made insurance claims within the first 2 years of...

We audited Ofori & Associates, PC, regarding its U.S. Department of Housing and Urban Development (HUD) real estate-owned (REO) Management and Marketing (M&M) III program. This review was part of the Office of Inspector General’s efforts to improve the integrity of the single-family insurance program. Our audit objective was to determine whether Ofori complied with case processing requirements and timeframes to obtain the highest net...

We conducted a limited review of Federal Housing Administration (FHA) loans underwritten by Standard Pacific Mortgage, Inc. We selected the lender based on the results of an auditability survey, which determined that Standard Pacific Mortgage allowed prohibited restrictive covenants to be filed against FHA-insured properties. The objective of our review was to determine the extent to which Standard Pacific Mortgage failed to prevent the...