We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of its Home Equity Conversion Mortgage (HECM) program and found that 33 borrowers had more than 1 loan under the program.  Having multiple loans violated program requirements because HUD requires borrowers to reside in the mortgaged residence as their principal residence and borrowers may not have more than one principal residence at a time.  We referred…

This report was reissued on February 24, 2017, to correct Appendix A. This reissued report now correctly shows the monetary benefit associated with each recommendation. This report supplements our independent auditor’s report on the results of our audit of HUD’s principal financial statements for the fiscal years ending September 30, 2016 and 2015 (Restated) related to HUD’s internal controls and compliance with applicable laws, regulations,…

The Federal Information Security Modernization Act of 2014 (FISMA) directs Inspectors General to conduct an annual evaluation of the agency information security program.  FISMA, Department of Homeland Security (DHS), Office of Management and Budget (OMB) and National Institute of Standards and Technology (NIST) establish information technology (IT) security guidance and standards for Federal agencies. We conducted this evaluation to assess…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited HUD to determine whether it paid servicers’ claims for properties that did not foreclose or convey on time.  We initiated this audit due to concerns that HUD overpaid servicers’ claims for FHA insurance benefits. HUD paid claims for an estimated 239,000 properties that servicers did not foreclose upon or convey on time.  HUD paid an…

We audited the Kentucky Housing Corporation’s administration of the U.S. Department of Housing and Urban Development’s (HUD) Loss Mitigation program for loans insured by the Federal Housing Administration (FHA).  We selected the Corporation based on our analysis of risk factors of single-family loan servicers in Region 4’s jurisdiction.  Our audit objective was to determine whether the Corporation accurately reported the default…

We audited Mortgage Services III, LLC, a Federal Housing Administration (FHA)-approved direct endorsement lender, as part of the activities in our fiscal year 2016 annual audit plan.  We selected Mortgage Services for review based on an analysis of data in the U.S. Department of Housing and Urban Development’s (HUD) Single Family Data Warehouse system  for single-family lenders with home offices in Region 5’s jurisdiction. …

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General (OIG) assisted the U.S. Attorney’s Office of the Northern District of Alabama in the civil investigation of Guardian Pest Services, Inc., doing business as Knox Pest Control and J.J.S.K. Solutions, Inc.  Knox Pest Control has its principal place of business in Columbus, GA.  A HUD home is a one-to-four unit residential property acquired by HUD as…

The Office of Inspector General (OIG) assisted the U.S. Attorney’s Office for the District of New Jersey in the investigation of Finance of America Mortgage LLC.  The investigation began due to a qui tam filing in the U.S. District Court for the District of New Jersey.  The relator alleged that Finance of America, through its acquisition of Gateway Funding Diversified Mortgage Services LLP, knowingly participated in a mortgage fraud…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted the U.S. Department of Justice, Washington, DC, and the U.S. Attorney’s Office for the Middle District of Florida in a civil investigation of Regions Bank.  Regions Bank has its principal place of business in Birmingham, AL, and became a Federal Housing Administration (FHA)-approved direct endorsement lender in 1985.  As a direct…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), conducted a civil fraud review of an alleged loan origination fraud scheme involving borrowers purchasing a home in which the loan was insured under HUD’s Federal Housing Administration (FHA) program.  The alleged scheme involved the submission of a false loan application to obtain an FHA-insured loan on a home in San Diego, CA.  FHA…

We audited P.K. Management Group, Inc. (PKMG), a contracted field service manager in HUD’s real estate-owned Management and Marketing III program, as part of the activities included in our 2016 annual audit plan and because it was the sole contractor performing property preservation and protection services for U.S. Department of Housing and Urban Development (HUD)-acquired properties located in Illinois in Region’s 5 jurisdiction.  Our…

We audited HUD’s compliance with the fiscal year 2015 travel and purchase card programs based on our required fiscal year 2014 risk assessment, which determined the U.S. Department of Housing and Urban Development’s (HUD) agencywide charge card program to be at medium risk for fraud. Offices of inspector general are required to (1) conduct periodic assessments of the agency charge card programs, (2) perform analyses or audits as necessary, and…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), referred alleged violations to HUD’s Office of Program Enforcement for action under the Program Fraud Civil Remedies Act based on two audits of DHI Mortgage Company Ltd.  (DHIM) that found it did not follow HUD requirements when it underwrote Federal Housing Administration (FHA)-insured loans with prohibited restrictive addenda to the purchase…

The Office of Hospital Facilities (OHF) provides mortgage insurance for acute care hospitals.  The insurance it provides reduces risk to lenders and lowers borrowing costs for hospitals.  As of May 2016, the unpaid principal balance for its 105 insured mortgages was approximately $7 billion. OHF collects and generates many records to support its mission.  These records include application materials, internal reports, and…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), OIG referred alleged violations to HUD’s Office of Program Enforcement for action under the Program Fraud Civil Remedies Act based on an audit of Shea Mortgage that found it did not follow HUD requirements when it underwrote loans that had executed and recorded agreements containing prohibited restrictive covenants.  HUD’s Office of Program…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted the U.S. Department of Justice and the U.S. Attorney’s Office, Southern District of New York and Northern District of California, in conducting an investigation of Wells Fargo Bank, N.A.’s origination and underwriting of mortgage loans insured by the Federal Housing Administration (FHA). Based in part on our review, the United States alleged…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted HUD’s Office of Program Enforcement in the civil investigation of American Midwest Mortgage Corporation.  American’s principal place of business is located in Cleveland, OH.  American became an FHA-approved direct endorsement lender on August 28, 1983.  The direct endorsement lender program authorizes private-sector mortgage…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), reviewed preforeclosure sales under the Federal Housing Administration (FHA) program in the St. Louis, MO, area.  We found that the realtor for the preforeclosure sale entered into a consulting agreement with the purchaser of the property.  The agreement required that when the purchaser later sold the property, he would pay half of the net…

We audited the functionality of the U.S. Department of Housing and Urban Development’s (HUD) New Core Interface Solution (NCIS) for phase 1, release 3, as part of the internal control assessments required for the fiscal year 2016 financial statement audit under the Chief Financial Officer’s Act of 1990.  Our objective was to determine whether adequate internal controls were in place for the phase 1, release 3, functionality of NCIS and the…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted the U.S. Department of Justice, Washington, DC, and the U.S. Attorney’s Office, District of New Jersey, in the civil investigation of Freedom Mortgage Corporation.  Freedom has its principal place of business in Mount Laurel, NJ, and became an FHA-approved direct endorsement lender in 1993.  As a direct endorsement lender, Freedom…