We audited loans originated by Bankers Mortgage Group, Woodland Hills, CA, in response to a referral from the Office of Inspector General’s (OIG) Office of Investigation alleging that Bankers Mortgage Group originated loans with false documentation. Our objective was to determine whether the lender originated FHA-insured loans using sufficient, reliable, and valid documentation. Bankers Mortgage Group did not originate loans using sufficient...

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), conducted a review to determine whether Indymac Bank followed Federal Housing Administration (FHA) policies and procedures when it originated FHA-insured loans. We identified a set of questionable loans originated by Indymac that had been generated by Beechwood Incorporated, a company that conducted various real estate services. Based on our review...

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), conducted a review to determine whether Indymac Bank followed Federal Housing Administration (FHA) policies and procedures when it originated FHA-insured loans. We identified a set of questionable loans originated by Indymac that had been generated by Beechwood Incorporated, a company that conducted various real estate services. Based on our review...

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), conducted a review to determine whether Indymac Bank followed Federal Housing Administration (FHA) policies and procedures when it originated FHA-insured loans. We identified a set of questionable loans originated by Indymac that had been generated by Beechwood Incorporated, a company that conducted various real estate services. Based on our review...

We reviewed the books and records of Amar Plaza (project), a U.S. Department of Housing Department (HUD)-insured (Section 236) multifamily cooperative housing project with project-based Section 8 assistance located in La Puente, CA. We initiated the review in response to a request from the Departmental Enforcement Center due to its concerns about Amar Plaza’s serious compliance issues, including but not limited to overdue 2009 and 2010...

We reviewed alleged violations of U.S. Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) loan origination requirements by the subject. We concluded that the subject placed fraudulent information and documents in mortgage loan applications for Government-insured home loans. The Department of Justice filed a complaint under the Financial Institutions Reform, Recovery, and Enforcement Act; and in March 2012...

We reviewed alleged violations of U.S. Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) loan origination requirements by the subject. We concluded that the subject created and altered documents used in mortgage loan applications for Government-insured home loans. The Department of Justice filed a complaint under the Financial Institutions Reform, Recovery, and Enforcement Act; and in December 2011 reached...

We reviewed alleged violations of U.S. Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) loan origination requirements by the subject. We concluded that the subject placed fraudulent information and documents in mortgage loan applications for Government-insured home loans. The Department of Justice filed a complaint under the Financial Institutions Reform, Recovery, and Enforcement Act; and in December 2011...

The U.S. Department of Housing and Urban Development, Office of Inspector General audited Countrywide Bank, FSB (Countrywide),* a Federal Housing Administration (FHA) supervised lender** approved to originate, underwrite, and submit mortgages for insurance under the U.S. Department of Housing and Urban Development’s (HUD) direct endorsement program. We selected Countrywide based on its average default-to-claim rate of 6.76 percent for the FHA-...

We conducted a review to determine whether IndyMac Bank followed Federal Housing Administration (FHA) policies and procedures when it originated FHA-insured loans. We focused on loans secured by California properties and that were in claim or default status as of February 12, 2009. Within this group, we identified a set of questionable loans originated by IndyMac that had been generated by Beechwood Incorporated. Beechwood is a company...

We reviewed alleged violations of U.S. Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) loan origination requirements by the subject. We concluded that the subject falsely certified to the truthfulness and accuracy of documents and information in mortgage loan applications on FHA-insured loans. The Department of Justice filed a complaint under the Financial Institutions Reform, Recovery, and Enforcement...

We reviewed alleged violations of U.S. Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) loan origination requirements by the subject. We concluded that the subject made false statements on a mortgage loan application for one property, and falsely acted as the seller of a second property on behalf of another person. The Department of Justice filed a complaint under the Financial Institutions Reform,...

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...

We reviewed the books and records of Saint Timothy’s Tower (project), a 114-unit U.S. Department of Housing and Urban Development (HUD)-insured (Section 236) Section 8 multifamily project consisting of 1 high-rise elevator building located in Compton, CA. We initiated the review in response to a request from the Departmental Enforcement Center due to its concerns about the owner’s use of project funds. Our objective was to determine whether...

We audited the Naomi Gardens housing project (project) in response to a congressional request from Representative David Dreier of the 26th District of California. The request to review the project was based on a constituent’s complaint that alleged the possible misuse of U.S. Department of Housing and Urban Development (HUD) funds, including the award of work to the family members of project employees without seeking proposals from other...

While performing an internal audit of the U. S. Department of Housing and Urban Development’s (HUD) Home Equity Conversion Mortgage (HECM) program, we noted one HECM loan underwritten by Financial Freedom Senior Funding Corporation, (Financial Freedom) of Irvine, CA, that was improperly insured as the property had several years of deferred property taxes, which is a violation of the HECM regulations. Neither Financial Freedom’s loan...

We performed a review of the Lutheran Gardens Corporation (Corporation) trust fund account in response to a HUD request, dated March 30, 2009. HUD believed that as much as $2.72 million was withdrawn from a trust account in violation of a trust agreement (agreement) with HUD, dated April 22, 2005, and questioned certain disbursements. Our objective was to determine whether the Corporation withdrew and expended trust funds in accordance with...

We performed a review of the San Diego Square (Square) project in response to a hotline complaint. The complainant stated that San Diego Kind Corporation (Corporation) misappropriated a lease prepayment of $480,060 and HUD failed to enforce program rules and regulations after detecting the misappropriation. Our objective was to determine whether the complaint was valid. We were unable to determine whether the allegations were valid. The...

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...

Based on a hotline complaint, we reviewed whether the Phoenix Apartments multifamily project located in Concord, California, used its project funds in accordance with HUD rules and regulations. We found that the project did not use project funds in accordance with the requirements of its regulatory agreement and applicable HUD rules and regulations. Specifically, during fiscal years 2004, 2005, and 2006, the project used $89,751 of its funds...