FHA Paid Claims for an Estimated 239,000 Properties That Servicers Did Not Foreclose Upon or Convey on Time
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…
October 14, 2016
Report
#2017-KC-0001
Sons of Divine Providence Did Not Ensure That the Don Orione Home, East Boston, MA, Operated in Accordance With Its Regulatory Agreement
Sons of Divine Providence did not properly oversee the HUD-insured nursing home to ensure that it operated in accordance with its regulatory agreement. By not informing HUD of the lawsuits, the changes in management agents, and the loans, Sons of Divine Providence did not provide HUD the necessary data to understand the risk to the HUD insurance fund. However, when Sons of Divine Providence sold the nursing home and paid off the HUD…
October 13, 2016
Memorandum
#2017-BO-1801
Final Civil Action - Owner and Management Agents Settled Allegations of Failing To Comply With the Regulatory Agreements for Multifamily Projects Willow Run I and Willow Run II
The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted the U.S. Attorney’s Office for the District of Minnesota in a civil investigation of Willow Run Partners L.P. and Willow Run II Partners L.P. Willow Run Partners L.P. was the owner of Willow Run I Apartments, and Willow Run II Partners L.P. was the owner of Willow Run II Apartments. Our investigation began as a result of a…
September 30, 2016
Memorandum
#2016-CF-1813
The Condominium Association and Management Agent Lacked Adequate Controls Over the Operation of West Park Place Condominium, Chicago, IL
We audited the U.S. Department of Housing and Urban Development’s (HUD) resident home-ownership program grant for West Park Place Condominium (project) based on the results of a risk assessment of multifamily housing programs in Region 5’s jurisdiction (States of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin) and the activities in our fiscal year 2016 annual audit plan. Our objective was to determine whether the West Park…
September 30, 2016
Report
#2016-CH-1009
The Owner and Former Management Agent for Baldwin Creek Apartments, Fort Wayne, IN, Did Not Always Operate the Project in Accordance With HUD’s Requirements and the Regulatory Agreement
We audited Baldwin Creek Apartments as part of the activities in our fiscal year 2016 annual audit plan. We selected the project based on our analysis of risk factors related to multifamily projects in Region 5’s jurisdiction1. Our objective was to determine whether the project’s owner and management agents operated the project in accordance with the U.S. Department of Housing and Urban Development’s (HUD) requirements and the…
September 30, 2016
Report
#2016-CH-1010
The Kentucky Housing Corporation Did Not Always Accurately Report on FHA-Insured Loans to HUD
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…
September 30, 2016
Report
#2016-AT-1015
Mortgage Services III, LLC, Bloomington, IL, Generally Complied With HUD’s Underwriting and Quality Control Requirements
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. …
September 30, 2016
Report
#2016-CH-1011
Branch Banking and Trust Company Settled Alleged Violations of Federal Housing Administration Loan Requirements
The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, assisted the Department of Justice, Civil Division, Commercial Litigation Branch and the U.S. Attorney’s Office of the Northern District of Georgia in the civil investigation of Branch Banking and Trust Company (BB&T).
Based in part on our review, the Federal Government alleged that BB&T violated the False Claims Act when it originated and…
September 30, 2016
Memorandum
#2016-AT-1802
Knox Pest Control Settled Allegations of Charging Unallowable Costs for Preservation of HUD-Owned Properties in the Federal Housing Administration Program
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…
September 29, 2016
Memorandum
#2016-CF-1810
Final Civil Action – Permanent Claim Block Placed on Borrower’s Federal Housing Administration Loan Because It Did Not Qualify for Insurance
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…
September 29, 2016
Memorandum
#2016-CF-1809
Final Civil Action – Regions Bank Settled Allegations of Failing To Comply With HUD’s Federal Housing Administration Loan Requirements
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…
September 29, 2016
Memorandum
#2016-CF-1811
Final Civil Action – Real Estate Agent and Two Borrowers Settled Allegation of Making a False Certification to HUD Regarding a Home Purchase Under the Federal Housing Administration Program
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…
September 29, 2016
Memorandum
#2016-CF-1812
P.K. Management Group, Inc., Doral, FL, Did Not Always Provide Property Preservation and Protection Services in Accordance With Its Contract With HUD and Its Own Requirements
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…
September 29, 2016
Report
#2016-CH-1008
Park View Care Center, Fort Worth, TX, Did Not Always Comply With Its Regulatory Agreement and HUD Requirements
We audited Park View Care Center’s owner based on a referral from the U.S. Department of Housing and Urban Development’s (HUD) Departmental Enforcement Center. Our objective was to determine whether the property owner complied with the owner’s regulatory agreement and HUD requirements for the Section 232 program. Park View’s owner did not comply with all the terms of its regulatory agreement and HUD requirements. Specifically…
September 29, 2016
Report
#2016-FW-1009
Folts, Inc., Herkimer, NY Did Not Administer the Folts Adult Home and Folts Home Projects in Accordance With Their Regulatory Agreements
We audited Folts, Inc.’s management of the Folts Adult Home and Folts Home projects to address our concern with U.S. Department of Housing and Urban Development (HUD)-assisted health care facilities. We selected this auditee as the result of a risk assessment of nursing homes located in New York State, which considered HUD’s risk indicators and factors such as loan default; internal control issues; and financial statements not being filed…
September 29, 2016
Report
#2016-NY-1010
DHI Mortgage Company Ltd., Settled Allegations of Making False Certifications Regarding Federal Housing Administration Loans
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…
September 29, 2016
Memorandum
#2016-LA-1802
Records Management in the Office of Hospital Facilities Needs Improvement
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…
September 29, 2016
Report
#2016-OE-0001
Final Civil Action: Shea Mortgage, Inc., Settled Allegations of Making False Certifications Regarding Federal Housing Administration Loans
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…
September 28, 2016
Memorandum
#2016-LA-1801
University Village Took Distributions Without Being in a Surplus-Cash Position or Having Prior HUD Approval
The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited the University Village, LLC in Orem Utah based on previous violations identified by the U.S. Department of Housing and Urban Development (HUD) that found ineligible withdrawals and substandard physical conditions at the property. The objective of our audit was to determine whether University Village complied with its HUD multifamily Federal…
September 28, 2016
Report
#2016-DE-1004
Final Civil Action: Wells Fargo Bank, N.A., Settled Allegations of Failing To Comply With HUD’s FHA Underwriting Requirements
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…
September 28, 2016
Memorandum
#2016-KC-1803