Develop and implement procedures and controls to board all manually paid partial claims and record all lender payments received via claim remittances.
Publication Report
2018-LA-0005 | September 21, 2018
HUD Did Not Have Adequate Controls To Ensure That Partial Claim Notes for FHA Loans Were Properly Tracked for Future Collection
We audited the U.S. Department of Housing and Urban Development’s (HUD) tracking of partial claim notes. The audit was initiated in response to an Office of Inspector General preaudit analysis of HUD’s Single Family Data Warehouse (SFDW) data,… moreRelated Recommendations
Housing
- Status2018-LA-0005-001-AOpenClosedClosed on July 07, 2021$716,061.00Funds 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.
Board 47 partial claim notes that were not boarded into SMART, resulting in funds to be put to better use in the amount of $716,061.
- Status2018-LA-0005-001-BOpenClosed$2,297,706.00Funds 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.
Coordinate with the Deputy Assistant Secretary for Finance and Budget to board 350 manually paid partial claims that were not boarded into SMART, resulting in funds to be put to better use in the amount of $2,297,706.
- Status2018-LA-0005-001-COpenClosedClosed on November 12, 2019$697,354.00Funds 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.
Remove 24 duplicate partial claim note entries from SMART, resulting in funds to be put to better use in the amount of $697,354.
- Status2018-LA-0005-001-DOpenClosed$644,767.00Questioned 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.
Obtain the missing mortgage documents for 33 loans and the missing note documents for 40 loans, totaling $644,767 in partial claim notes, and require any unrecorded mortgage documents to be recorded at the appropriate county’s office to ensure that HUD’s interests are protected. For any missing documents that cannot be obtained, the Deputy Assistant Secretary should require the lender to reimburse HUD for the partial claim note.
Review 249 loans labeled with “DNV” in appendix D to identify any missing note or mortgage documents for the partial claims. For loans identified with missing documents, the Deputy Assistant Secretary should obtain the documents or require the lender to reimburse HUD for the partial claim note. For loans identified with unrecorded mortgage documents, the Deputy Assistant Secretary should require them to be recorded at the county’s office to ensure that HUD’s interests are protected.
- Status2018-LA-0005-001-FOpenClosed$1,055,113.00Funds 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.
Coordinate with the Deputy Assistant Secretary for Finance and Budget to record lender payments to update the balances for 139 loans in SMART, resulting in funds to be put to better use in the amount of $1,055,113.
- Status2018-LA-0005-001-GOpenClosedClosed on September 30, 2021$451,000.00Funds 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.
Rerecord the mortgage documents at the respective counties’ offices for 18 loans for which the partial claim mortgages were inappropriately released, resulting in funds to be put to better use in the amount of $451,000.
- Status2018-LA-0005-001-HOpenClosedClosed on January 27, 2020$93,409.00Funds 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.
Review four loans with partial claim notes already recorded in SMART and remove those loans in which HUD has not paid a partial claim, resulting in funds to be put to better use in the amount of $93,409.
- Status2018-LA-0005-001-IOpenClosedClosed on January 27, 2020$63,591.00Funds 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.
Reverse the transaction for one loan for which the transaction removing a partial claim note was made in error, resulting in funds to be put to better use in the amount of $63,591.
- Status2018-LA-0005-001-JOpenClosedClosed on January 28, 2020$1,905.00Funds 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.
Collect on one partial claim note for which the loan had matured, resulting in funds to be put to better use in the amount of $1,905.
- Status2018-LA-0005-001-KOpenClosedClosed on January 28, 2020$622.00Funds 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.
Review two loans in which the partial claim note amount entered was different from the note or mortgage amount to ensure that the appropriate partial claim note amount is entered into SMART, resulting in funds to be put to better use in the amount of $622.
Update its procedures to allow automatic boarding for all partial claims paid to eliminate errors caused by manual boarding, including partial claim notes not boarded, and partial claim notes boarded but not yet paid by HUD.
Develop and implement additional controls to ensure that it accepts only note and mortgage documents with correct amounts that could be matched to the amount recorded in SMART and that the note and mortgage documents marked as received are entered into SMART.
Develop and implement additional controls to ensure that it releases mortgages only when they have been satisfied.