We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing require the lenders to support that the repairs to the properties associated with the six loans were not structural repairs or indemnify HUD for the four active loans with a total estimated loss of $222,073 and reimburse HUD for the actual loss of $83,322 incurred on the sale of two properties associated with FHA case numbers 052-4308836 and 034-8239100.
Publication Report
2015-CH-0001 | July 31, 2015
HUD Did Not Always Provide Adequate Oversight of Its Section 203(k) Rehabilitation Loan Mortgage Insurance Program
We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of its Section 203(k) Rehabilitation Loan Mortgage Insurance program as part of the activities in our fiscal year 2014 annual audit plan. Our audit objective was to… moreRelated Recommendations
Housing
- Status2015-CH-0001-001-AOpenClosed$792,837.00Questioned Costs
Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.
We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing require the lenders to support that the repairs to the properties associated with the 32 loans without evidence of permits complied with local code or reimburse HUD $792,837 for the escrow repair funds.
- Status2015-CH-0001-001-COpenClosed$83,715.00Questioned Costs
Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.
We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing require the lenders to support that the borrower for FHA case number 451-1165810 was not reimbursed for the cost of labor or indemnify the loan with an estimated loss amount of $83,715, based on the loss severity rate of 50 percent of the unpaid principal balance of $167,429 as of January 29, 2015.
- Status2015-CH-0001-001-DOpenClosed$39,367.00Questioned Costs
Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.
Support that the repair conditions and comments indicated in the direct endorsement underwriter form, form HUD-54114, were satisfied for FHA case number 501-8198149. If the repair conditions and comments were not properly addressed, the lenders should indemnify the loan with an estimated loss amount of $39,367, based on the loss severity rate of 50 percent of the unpaid principal balance of $78,733 as of January 29, 2015.
- Status2015-CH-0001-002-COpenClosed
Determine the number of 203(k) loans impacted by the incorrect loan-to-value ratio for mortgage insurance premium calculations and when applicable, reimburse borrowers or apply the overpaid premiums as credits toward borrowers’ future premium payments.