The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the Federal Housing Administration’s (FHA) Title II single-family lender renewal process. The objective of the audit was to determine whether FHA ensured that lenders submitted recertification requirements in a timely manner. We found that FHA did not ensure that lenders submitted recertification forms, annual fees, and/or audited financial statements in a timely manner. The Lender Approval and Recertification Division (Division) did not promptly issue notices of violation to lenders that did not submit required annual recertification documentation and/or fees when due.

We recommend that the Office of Lender Activities and Program Compliance require the Division to revise the recertification process to discontinue issuing notices of deficiency and issue notices of violation promptly for all lenders that do not submit or attempt to submit one or more of the required items by the due date.