The OIG has determined that the contents of this recommendation would not be appropriate for public disclosure and has therefore limited its distribution to selected officials.

The OIG has determined that the contents of this recommendation would not be appropriate for public disclosure and has therefore limited its distribution to selected officials.

Perform data analysis of FHA’s portfolio to identify borrowers who are delinquent and did not fully benefit from the COVID-19 forbearance, including those in bankruptcy;

Develop a standardized brochure or informational pamphlet that would inform delinquent borrowers of their right to a forbearance under the CARES Act; and

Ensure that this information is distributed to delinquent borrowers so it can benefit the greatest number of borrowers to put $5.43 billion to better use by avoiding potential future losses on 112,160 loans.

Review the 21 loans with improperly administered forbearance to ensure that the borrowers were remedied by the servicers, if possible, and ensure that these servicers updated their forbearance procedures to prevent future noncompliance.

Ensure that the issues found during our audit are incorporated into QAD’s servicing monitoring reviews.

Provide additional guidance to the servicers so they will limit their communication and collection efforts for the borrowers in forbearance.

Take corrective action against lenders for 43 improper partial claims totaling $2.3 million that did not reinstate the delinquent loans, to include repayment of the partial claims where appropriate. This amount excludes $336,699 for four partial claims that have already been repaid (see appendix D Read More

Design controls to protect the insurance fund from improper partial claims that did not reinstate the loans to put $27.1 million to better use.

Update the FHA-HAMP guidance, clarifying that upon application of the partial claim funds, the mortgage must be fully reinstated with no unpaid amounts.

Develop a method for using the Do Not Pay portal during the underwriting process to identify delinquent child support and delinquent Federal debt to prevent future FHA loans to ineligible borrowers to put $1.9 billion to better use. Status The Office of Housing has approved prioritization Read More

Revise the single-family handbook to comply with regulations that prevent loans to borrowers with delinquent child support subject to Federal offset.

Schedule the timely renewal of data-sharing agreements to prevent data loss in CAIVRS or discontinue use of the system if implementation of 1A makes CAIVRS unnecessary.

Require lenders to provide evidence of sufficient flood insurance or execute indemnification agreements for the 43 loans in our statistical sample that did not have sufficient flood insurance at the time of our audit to put nearly $5.2 million to better use.

Add to FHA databases the information necessary to ensure that the required flood insurance is in place at loan origination, including flood zone, flood insurance type, flood insurance amount, and site value of the property, and include system checks that prevent endorsement of loans without the Read More

Require lenders to obtain the borrowers’ consent to verify the existence of delinquent Federal taxes with the IRS during loan origination and deny any applicant with delinquent Federal tax debt and no payment plan or a noncompliant payment plan or an applicant refusing to provide consent from Read More

Revise HUD handbooks for forward and reverse mortgages to reflect that tax liens and judgments are no longer reported on credit reports.

Revise HUD handbooks for forward and reverse mortgages for uniformity in the treatment of delinquent tax debt and the existence of payment plans as only the forward mortgage handbook requires 3 months of payments.

Issue a change to regulations at 24 CFR Part 203, which would avoid unnecessary costs to the FHA insurance fund, allowing an estimated $2.23 billion to be put to better use. These changes include (1) a maximum period for filing insurance claims and (2) disallowance of expenses incurred beyond Read More