The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited Federal Housing Administration (FHA)-insured loans from calendar year 2016. Our audit objective was to determine whether FHA insured loans to borrowers with delinquent Federal debt or who were subject to Federal administrative offset for delinquent child support.
FHA insured an estimated 9,507 loans worth $1.9 billion, which were not eligible for insurance because they were made to borrowers with delinquent Federal debt or who were subject to Federal administrative offset for delinquent child support.
We recommend that FHA put $1.9 billion to better use by developing a method for using the Do Not Pay portal to identify delinquent child support and delinquent Federal debt to prevent future FHA loans to ineligible borrowers. We also recommend that FHA revise the single-family handbook to comply with the regulation that prevents loans to borrowers with delinquent child support subject to Federal offset and schedule the timely renewal of data-sharing agreements to prevent data loss in the Credit Alert Interactive Voice Response System (CAIVRS) or discontinue use of CAIVRS if the information duplicates the information available in the Do Not Pay portal.
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Recommendations
Housing
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Status2018-KC-0001-001-AOpenClosed$1,905,340,944.00Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
PriorityPriorityWe believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.
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 November 2024, the Office of Single Family Housing reported that Treasury is working on drafting the Computer Matching Agreement. Single Family plans to submit an update on the system interface project or request another extension in March 2025.
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.
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Status2018-KC-0001-001-BOpenClosed
Revise the single-family handbook to comply with regulations that prevent loans to borrowers with delinquent child support subject to Federal offset.
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Status2018-KC-0001-001-COpenClosedClosed on July 18, 2018
Schedule the timely renewal of data-sharing agreements to prevent data loss in CAIVRS or discontinue use of the system if implementation of 1A makes CAIVRS unnecessary.