We performed an audit of Carrington Mortgage’s compliance with Federal Housing Administration (FHA) requirements for foreclosures that started in 2022. Pursuant to the Coronavirus Aid, Relief and Economic Security Act (CARES Act), as extended by the Secretary, from March 18, 2020, through July 31, 2021, there was a pause on new and ongoing foreclosures for FHA single‐family mortgages for homes that remained occupied. We selected Carrington because it was among the first servicers to resume initiating foreclosures after the moratorium ended with a foreclosure rate above 1 percent. Our audit objective was to determine whether Carrington complied with FHA’s requirements for loss mitigation before initiating and continuing foreclosure.

Carrington did not follow FHA’s requirements for more than 18 percent of its foreclosures in 2022. Based on a statistically valid sample drawn from a universe of 7,998 FHA‐insured loans totaling more than $907 million, Carrington did not complete the required loss mitigation activities before initiating or continuing foreclosure for an estimated 1,451 loans.