We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of its Home Equity Conversion Mortgage (HECM) program and found that 33 borrowers had more than 1 loan under the program.  Having multiple loans violated program requirements because HUD requires borrowers to reside in the mortgaged residence as their principal residence and borrowers may not have more than one principal residence at the same time.  We referred the violations to HUD’s Office of Program Enforcement for action.

One borrower obtained HECM loans on two properties that she owned in California and Colorado.  For each loan, she certified in writing that the underlying property was her principal residence.  Her actions violated HUD’s principal residency requirements because she owned both properties at the same time.  In March 2014, HUD’s Office of Program Enforcement notified the borrower of its intent to file an action under the Program Fraud Civil Remedies Act.  After negotiations with HUD, the borrower agreed to pay $3,000 to settle the matter.  The agreement did not constitute an admission of liability or fault by any party.  The borrower made the settlement payment in April 2014.