We performed a limited review of Wells Fargo Home Mortgage (Wells Fargo) as a result of our internal audit of the Federal Housing Administration’s (FHA) Home Affordable Modification Program (HAMP). During the audit, we visited Wells Fargo and reviewed a limited number of loans to determine whether the National Servicing Center implemented and operated FHA-HAMP in accordance with rules and regulations. Our objective for this limited review was to determine whether Wells Fargo followed U. S. Department of Housing and Urban Development (HUD) rules and regulations when processing defaulted loans for the FHA-HAMP loss mitigation option.
Our limited review of 15 loans showed Wells Fargo did not always correctly calculate gross income, include all necessary debts, put borrowers in proper trial plans, or check for borrower eligibility. Wells Fargo has changed its policy regarding gross income calculation and ensuring borrower eligibility. As a result, it approved more than $127,000 in FHA-HAMP claims than it should have.
In addition, Wells Fargo used verbal financial information to qualify 4 borrowers for the FHA-HAMP trial plan. After the borrowers completed the trial plans, Wells Fargo determined the borrowers did not qualify for the FHA-HAMP loss mitigation option. Wells Fargo has changed its policy to ensure it obtains written financial documentation before considering borrowers for FHA-HAMP trial plans.
We recommended that the Acting Director of the Office of Single Family Asset Management require Wells Fargo to (1) reimburse HUD $127,853 for the FHA-HAMP claims it should not have approved, and (2) ensure it properly reports FHA-HAMP borrowers' status in HUD's systems.