We completed an audit of Mortgage Access Corporation, doing business as Weichert Financial Services, a nonsupervised lender located in Morris Plains, New Jersey. The audit objectives were to determine whether Mortgage Access Corporation (1) approved insured loans in accordance with U.S. Department of Housing and Urban Development (HUD)/Federal Housing Administration (FHA) requirements, and (2) developed and implemented a quality control plan that complied with HUD/FHA requirements.

Mortgage Access Corporation did not always comply with HUD regulations.Seven loans exhibited significant underwriting deficiencies such as inadequate credit analysis, inadequate verification of funds to close, minimum cash investment not met, and inadequate verification of income/employment. As a result, loans were approved for potentially ineligible borrowers, which caused HUD/FHA to incur an unnecessary insurance risk. In addition, one of these seven loans was approved for a property that was not eligible for FHA insurance. These deficiencies occurred because Mortgage Access Corporation lacked adequate controls to ensure that loans were processed in accordance with HUD requirements. Mortgage Access Corporation also failed to ensure that its quality control plan was implemented in accordance with HUD's requirements. Consequently, the effectiveness of its quality control plan, which was designed to ensure accuracy, validity, and completeness in its loan underwriting process, was lessened.

We recommended that the Assistant Secretary for Housing - Federal Housing Commissioner require Mortgage Access Corporation to reimburse HUD for one ineligible loan, indemnify HUD against future losses on six loans with significant underwriting deficiencies, and implement procedures to ensure compliance with HUD's and its own quality control requirements.