Take appropriate administrative action against the lenders or appraisers for any cases in which it finds that they did not take appropriate steps to ensure that properties had a safe and potable water source.
Publication Report
2017-PH-0003 | September 29, 2017
HUD Did Not Provide Sufficient Guidance and Oversight To Ensure That FHA-Insured Properties Nationwide Had Safe Water
We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of safe water requirements for Federal Housing Administration (FHA)-insured loans nationwide. We conducted the audit based on news reports that identified lead… moreRelated Recommendations
Housing
Direct the applicable lenders to provide evidence that the properties for the 1,383 FHA-insured loans not included in our sample had a safe and potable water source, or that the appraisers had not notified the lender of the water quality issue on their appraisals. If the lenders cannot provide this evidence, HUD should direct them to perform water testing and any necessary remediation to ensure that the properties have a safe and potable water source, or indemnify HUD against future loss.
Develop and implement additional guidance to advise lenders and appraisers when water testing is required for properties serviced by a public water system which has issued a public notice of water contamination.
- Status2017-PH-0003-001-DOpenClosedClosed on August 05, 2019$238,090,214.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Develop and implement policies and procedures to ensure that appraisers comply with guidance implemented to resolve recommendation 1C, including penalties for failure to comply, thereby ensuring that at least $238,090,214 million is put to better use.
Consider requiring water testing for all FHA-insured properties.