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 receiving FHA insurance to put at least $6.1 billion to better use by avoiding potential future costs to the FHA insurance fund.

Status

As of October 2023, the Office of Single Family Housing reported it will need additional tax information from the Internal Revenue Service to complete the planned action, and that the Office of the Chief Financial Officer will assist the Office of Single Family Housing. As of June 2024, no new update has been reported.

The final action target date was May 23, 2024, but was updated in June 2024 to May 23, 2025.

Analysis

To fully address this recommendation, HUD will need to provide evidence that it established a method of borrower consent to verify the existence of delinquent federal taxes.

Implementation of this rule should result in HUD putting $6.1 billion to better use.

Implement a change to regulations at 24 CFR Part 203 to require curtailment of preforeclosure interest and other costs that are caused by lender servicing delays, resulting in $413,513,975 in funds to be put to better use. This should include updating or seeking statutory authority to update HUD’s regulations as necessary and coordinating with HUD’s Office of Finance and Budget, well before any changes go through departmental clearance, to ensure that planned curtailment requirements can be consistently enforced through the claims process.

Status

This audit recommendations cannot be closed out without the publication of the Federal Housing Administration (FHA): Maximum Claim Rule. The proposed changes have been on HUD’s regulatory agenda since Spring 2020 but, as of June 2024, the Office of Single Family Housing does not have an estimated publication date.

Analysis

To fully address this recommendation, HUD must publish the FHA Maximum Claim Rule.

Implementation of this rule should result in HUD putting $413 million to better use.

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 of funding for Integration between Do Not Pay portal and CHUMS. Funding was allocated to the CHUMS IT contractor on January 26, 2024, to integrate Treasury’s Do Not Pay system with CHUMS, and the IT development project was kicked off the week of February 5, 2024.

As of June 2024, the Office of Single Family Housing reported that it is working with OCIO and Treasury on the business needs for the project, and estimated that the project would be complete by September 30, 2024.

Analysis

To fully address this recommendation, HUD must provide evidence that it has implemented applicant screening against the Do Not Pay portal to identify delinquent child support and delinquent Federal debt to prevent future FHA loans going to ineligible borrowers.

Implementation of this rule should result in HUD putting $1.9 billion to better use.

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 established timeframes.

Status

This audit recommendations cannot be closed out without the publication of the Federal Housing Administration (FHA): Maximum Claim Rule. The proposed changes have been on HUD’s regulatory agenda since Spring 2020 but, as of June 2024, the Office of Single Family Housing does not have an estimated publication date.

Analysis

To fully address this recommendation, HUD must publish the FHA Maximum Claim Rule.

Implementation of this rule should result in HUD putting $2.23 billion to better use.