Implement adequate procedures and controls to ensure that documentation is maintained to support that the reports were submitted to Congress.

We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing update policies and procedures regarding discrimination complaints to ensure consistency among customer service representatives in rerouting these complaints to FHEO.

We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing ensure that the FHA Resource Center updates its training program to ensure that refresher training on housing discrimination is regularly provided to staff (such as monthly, quarterly, semiannually, etc.).

Develop a plan and a timeline that ensures all due and payable partial claims are transferred to the FOC, and subsequently processed by the FOC.

Develop and implement procedures to i) monitor the transfer of due and payable partial claims from NSC to the FOC for collection, ii) determine the financial statement impact of not referring due and payable partial claims to the FOC, and iii) decide when FHA will record a reclassification entry to accounts receivable for those due and payable partial claims that are not transferred to the FOC timely.

Consider accounting implications to the gross HECM loans receivable balance for the $20 million lost in security interests.

Record an adjusting entry to remove the duplicate $44 million from the gross HECM loans receivable balance as of September 30, 2023.

Identify and remove all duplicate transactions from the accounting module and prevent future occurrences.

Develop and enhance training for servicing the HECM portfolio.

Develop corrective procedures to bring the HECM portfolio servicing current, initiate collection proceedings for due and payable loans, redeem the tax certificates for properties for which FHA lost its security interest, and implement a solution to monitor tax payments to prevent tax delinquencies and avoid FHA’s risk of loss in loan security interest.

Review the loans in our sample that did not receive appropriate loss mitigation options to ensure that the borrowers were remedied by the servicers, when possible, and take administrative actions if appropriate.

Engage with the servicers in our sample to determine reasons for noncompliance and develop a plan to mitigate it going forward.

Provide additional guidance and training to servicers to address common loss mitigation issues found during this audit.

Update HUD’s FHA FAQs to clarify current loss mitigation requirements and ensure that outdated guidance is removed.

Update the Save Your Home - Tips to Avoid Foreclosure brochure to include new loss mitigation options as they are introduced and require servicers to send this additional information to delinquent homeowners. This could be done as a redesign of the existing brochure or as addendums to the brochure for temporary programs.

Design and implement a data-driven methodology to determine the appropriate mix of origination and servicing monitoring and desk reviews.

Review the sampled loans for which borrowers did not receive appropriate loss mitigation options to ensure that the borrowers were remedied by Nationstar, if possible, and take administrative actions if appropriate.

Implement controls and provide employee training to help prevent noncompliance in loss mitigation.

Update and implement controls to the Nationstar internal system to ensure the correct application of COVID-19 partial claims.

Identify loans with COVID-19 recovery partial claims that were affected by the improper application of partial claims funds and update the accounts.