In accordance with the Government Corporation Control Act as amended (31 U.S.C. 9105), the Office of Inspector General engaged the independent certified public accounting firm of Clifton Gunderson LLP (CG) to audit the fiscal years 2011 and 2010 financial statements of the Federal Housing Administration (FHA). The contract required that the audit be performed according to Generally Accepted Government Auditing Standards (GAGAS). CG is...

We audited the Office of Sustainable Housing and Communities’ implementation of the U.S. Department of Housing and Urban Development’s (HUD) partnership with the U.S. Department of Energy (DOE) to coordinate Federal weatherization efforts nationwide. This audit was part of our fiscal year 2010 audit plan. Our objective was to determine whether HUD multifamily properties were eligible to receive American Recovery and Reinvestment Act funding...

The U.S. Department of Housing and Urban Development – Office of Inspector General audited the Federal Housing Administration because we noted during previous audit work that FHA might not have a system in place to track lenders who voluntarily left the FHA program with outstanding indemnification agreements. Our objective was to determine whether FHA prevented corporate officers from participating in FHA programs after those officers left...

HUD OIG conducted an evaluation of Home Equity Conversion Mortgage (HECM) Loan Payments Made After Death of Borrower. A HUD OIG query of the HUD Single Family Data Warehouse (SFDW) disclosed that servicers of home equity conversion mortgages  were making payments to borrowers after the borrowers’ date of death.  Therefore, the Inspections and Evaluations Division conducted a review to validate the HECM data and to determine whether...

The U. S. Department of Housing and Urban - Office of Inspector General audited the Federal Housing Administration’s (FHA) Title II single-family lender renewal process. Our objective was to determine whether FHA’s Lender Approval and Recertification Division’s (Division) controls were adequate for determining whether lenders met FHA annual renewal requirements. The Division had taken significant steps to strengthen its controls over the...

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited HUD's multifamily housing subsidy payment review process based upon a HUD employee’s complaint. The complaint alleged that HUD lacked controls over its multifamily housing subsidy payment review process and voucher specialists were understaffed and underpaid. Our audit objective was to determine whether HUD had adequate controls over its...

We audited the U. S. Department of Housing and Urban Development’s (HUD) Section 232 program as part of the Office of Inspector General’s (OIG) goal of contributing to the improvement of HUD’s execution and accountability of fiscal responsibilities. Our objective was to determine whether HUD had implemented adequate controls to properly monitor Section 232-insured mortgages. We found that HUD’s Office of Healthcare Programs had taken steps to...

We audited the U.S. Department of Housing and Urban Development’s (HUD) preclosing and postclosing loan review of new Federal Housing Administration (FHA) direct endorsement lenders to determine whether HUD followed its guidance when (1) reviewing the initial loans underwritten by new FHA direct endorsement lenders and (2) performing the postendorsement technical review of all of the initial loans endorsed by newly approved direct endorsement...

We audited the U. S. Department of Housing and Urban Development’s (HUD’s) National Servicing Center’s (NSC) Federal Housing Administration (FHA)-Home Affordable Modification Program (HAMP) as a part of our annual audit plan. Our objective was to determine whether the NSC implemented and operated FHA-HAMP in accordance with rules and regulations. Overall, the NSC implemented and operated FHA-HAMP in accordance with the necessary rules and...

In January 2010, the U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General (OIG) began Operation Watchdog, an initiative to review the underwriting of 15 Federal Housing Administration (FHA) direct endorsement lenders having default and claim rates indicating lender performance problems. The FHA Commissioner had expressed concern regarding the increasing default and claim rates against the FHA insurance fund...

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited HUD’s Office of Lender Activities and Program Compliance, Quality Assurance Division. We did this review because during a prior audit, we saw instances in which indemnification agreements were not obtained from lenders under certain circumstances. Our objective was to determine whether the U.S. Department of Housing and Urban Development (HUD...

We completed an audit of U.S. Department of Housing and Urban Development (HUD) Single Family Program Development Office’s automated underwriting process. We assessed whether HUD had in place appropriate and effective management controls over its automated underwriting process. The audit was performed as part of the HUD Office of Inspector General’s (OIG) fiscal year 2010 annual audit plan and supported the audit plan objective to contribute...

We performed an internal audit of the U. S. Department of Housing and Urban Development’s (HUD) Home Equity Conversion Mortgage (HECM) program because we found that an increasing number of borrowers had not paid taxes or homeowners insurance premiums as required, thus placing the loan in default. Also, we noted that HUD had granted foreclosure deferrals routinely on defaulted loans, but it had no formal procedures. Our audit objective was to...

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the Federal Housing Administration’s (FHA) Title II single-family lender renewal process. The objective of the audit was to determine whether FHA ensured that lenders submitted recertification requirements in a timely manner. We found that FHA did not ensure that lenders submitted recertification forms, annual fees, and/or audited financial...

We conducted the audit of the Retreat at Santa Rita Springs (community), a Federal Housing Administration-insured multifamily property under the Section 231 of the National Housing Act, in response to a congressional request from Representative Gabrielle Giffords of the 8th Congressional District of Arizona. In November 2009, the owners of the community defaulted on its $29.9 million U.S. Department of Housing and Urban Development (HUD)-...

In accordance with our annual audit plan and due to concerns regarding the U.S. Department of Housing and Urban Development’s (HUD) capacity to handle the increasing demand for loans insured by the Federal Housing Administration (FHA), we initiated an audit of HUD’s Philadelphia, PA, Homeownership Center (Center). This is the first of two audit reports that we plan to issue on the Center’s capacity to process current demand for FHA loans. The...

We performed this review at the request of the U.S. Department of Housing and Urban Development's (HUD) Multifamily Program Center, Richmond field office, due to concerns regarding the appropriateness of HUD's current regulatory agreement with the Yorkville Cooperative (Cooperative). Our objective was to determine if HUD entered into the appropriate regulatory agreement with the Cooperative for its Section 221(d)(3) program. HUD and...

We audited the U.S. Department of Housing and Urban Development’s (HUD) annual contributions contracts (contract) for performance-based Section 8 contract administration (PBCA). We audited this contract because our prior audit of HUD payments to the PBCAs for certain performance standards indicated that HUD was not getting the best value for the dollars spent on the PBCA’s services. Our audit objective was to determine whether the performance-...

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...

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...