We reviewed Seneca Mortgage’s servicing of Federal Housing Administration (FHA)-insured mortgages and its implementation of the U.S. Department of Housing and Urban Development’s (HUD) Loss Mitigation program. We selected Seneca Mortgage based on the results of our single-family risk assessment. The objective of the audit was to determine whether Seneca Mortgage complied with HUD’s Loss Mitigation program requirements and implemented an effective quality control program.
Seneca Mortgage generally complied with HUD’s Loss Mitigation program requirements for servicing its portfolio of FHA-insured mortgages. However, it did not always ensure that its servicing data were accurately reported in HUD’s systems and did not ensure that properties were conveyed to HUD within 30 days of securing the property. Seneca Mortgage implemented an effective quality control program for mortgages that it serviced but did not have procedures for reviewing loans included in a subservicing agreement with another FHA-approved lender.
We recommend that HUD instruct Seneca Mortgage to (1) repay $19,136 in ineligible holding costs to the FHA insurance fund; (2) ensure that reimbursement is not requested for holding costs incurred beyond the conveyance deadline related to FHA loan number 281-3493258; (3) instruct the investors and holders for FHA loan numbers 501-7067695, 501-6877136, 061-0982338, and 501-5885504 to transfer these loans to FHA-approved servicers; (4) implement procedures to ensure that FHA loans are transferred only to FHA-approved servicers regardless of investor input; (5) strengthen conveyance procedures to ensure that properties are transferred to HUD within 30 days of securing the property; (6) strengthen program controls and procedures to ensure that servicing efforts are accurately reported in HUD systems; and (7) develop program controls and procedures for FHA-insured loans that are a part of the subservicing agreement with another lender.
Recommendations
Housing
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Status2017-NY-1007-001-AOpenClosed$19,136.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on June 20, 2018We recommend that the Acting Deputy Assistant Secretary for Single Family Housing instruct Seneca Mortgage to repay the $19,136 in ineligible holding costs to the FHA insurance fund.
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Status2017-NY-1007-001-BOpenClosedClosed on June 20, 2018
We recommend that the Acting Deputy Assistant Secretary for Single Family Housing instruct Seneca Mortgage to ensure that reimbursement is not requested for holding costs incurred beyond the conveyance deadline related to FHA loan number 281-3493258.
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Status2017-NY-1007-001-COpenClosedClosed on August 02, 2018
We recommend that the Acting Deputy Assistant Secretary for Single Family Housing instruct Seneca Mortgage to instruct the investors or holders for FHA loan numbers 501-7067695, 501-6877136, 061-0982338, and 501-5885504 to transfer these loans to FHA-approved servicers.
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Status2017-NY-1007-001-DOpenClosedClosed on June 27, 2018
We recommend that the Acting Deputy Assistant Secretary for Single Family Housing instruct Seneca Mortgage to implement procedures to ensure that FHA loans are transferred only to FHA-approved servicers regardless of investor input.
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Status2017-NY-1007-001-EOpenClosedClosed on June 20, 2018
We recommend that the Acting Deputy Assistant Secretary for Single Family Housing instruct Seneca Mortgage to strengthen conveyance procedures to ensure that properties are transferred to HUD within 30 days of securing the property, thereby ensuring that ineligible costs are not paid by HUD on future loans submitted for claim.
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Status2017-NY-1007-001-FOpenClosedClosed on June 27, 2018
We recommend that the Acting Deputy Assistant Secretary for Single Family Housing instruct Seneca Mortgage to strengthen program controls and procedures to ensure that servicing efforts are accurately reported in HUD systems, thereby complying with HUD’s loss mitigation requirements.
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Status2017-NY-1007-001-GOpenClosed$9,022.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on June 20, 2018We recommend that the Acting Deputy Assistant Secretary for Single Family Housing review the part B claim paid for FHA loan number 501-7612832, determine the amount of holding costs paid after the conveyance deadline, and require the relevant servicer to repay the ineligible holding costs to the FHA insurance fund.
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Status2017-NY-1007-002-AOpenClosedClosed on June 20, 2018
We recommend that the Acting Deputy Assistant Secretary for Single Family Housing instruct Seneca Mortgage officials to develop and implement program controls and procedures for FHA-insured loans being subserviced by another lender, including procedures for conducting quality control reviews of the subservicer’s actions.