We audited the U.S. Department of Housing and Urban Development (HUD), Office of Multifamily Housing Programs’ efforts to address multifamily mortgage application processing delays.  When applications for these loans are delayed, it slows the production and availability of affordable multifamily housing units.  During the COVID-19 pandemic, HUD took action to eliminate a backlog of over 500 applications waiting to be assigned to…

We audited the Federal Housing Administration (FHA), Office of Asset Sales’ U.S. Department of Housing and Urban Development (HUD)-Held Vacant Loan Sales (HVLS) program.  The audit objective was to assess the extent to which HUD achieved its mission objectives for a 2022 vacant loan sale.  We noted deficiencies in 52 of 53 HUD-approved applications within the reviewed vacant loan sale.  These deficiencies occurred in transactions…

We audited the U.S. Department of Housing and Urban Development (HUD), Office of Single Family Housing’s Federal Housing Administration (FHA) Resource Center’s handling of housing discrimination inquiries.  We initiated the audit to assist HUD with ensuring that the FHA Resource Center (1) provided accurate and complete information on potential housing discrimination to its customers and (2) ensured that instances of potential housing…

Develop a control to detect loans that did not maintain the required flood insurance to put $1.5 billion to better use by avoiding potential future costs to the FHA insurance fund from inadequately insured properties. Corrective Action Taken In November 2022, FHA published the Acceptance of Private Flood Insurance for FHA-Insured Mortgages final rule (Docket No. FR-6084-F-02) in the Federal Register and issued Mortgagee Letter 2022-18,…

In June 2020, we received letters from members of Congress, including the chairpersons of the House Committee on Financial Services and Oversight and Investigation Subcommittee, expressing concern that the U.S. Department of Housing and Urban Development (HUD) imposed a new, nonpublic, and legally erroneous policy that prohibited issuing Federal Housing Administration (FHA)-insured loans to Deferred Action for Childhood Arrivals (DACA)…

The West Calumet Housing Complex (WCHC), located in East Chicago, IN, was a public housing development that opened in 1972 on top of a former lead smelting plant.  HUD and other agencies missed multiple opportunities to identify site contamination at WCHC.  As a result, WCHC residents continued living in unsafe conditions for decades, and inadequate oversight led to the lead poisoning of children in WCHC.  Between 2005 and 2015, a…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), assisted HUD’s Office of Program Enforcement in a civil investigation of Pacific Horizon Bancorp, Inc., and two former loan officers at Pacific Horizon.  Pacific Horizon has its principal place of business in La Crescenta, CA. Based on OIG’s civil investigation, on April 2, 2019, HUD notified Pacific Horizon and the two loan officers that it…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General, assisted the U.S. Department of Justice Washington D.C., and the U.S. Attorney’s Offices of the Northern District of Georgia and Northern District of California, in the civil investigation of Prospect Mortgage, LLC. Based in part on our review, the Federal Government alleged that Prospect violated the False Claims Act when it originated and underwrote…

We audited Cypress Meadows Assisted Living based on a U.S. Department of Housing and Urban Development (HUD), Departmental Enforcement Center, referral.  The referral asserted that the owner took distributions from Cypress Meadows for expenses other than the operation and maintenance of the project.  Our objective was to determine whether Cypress Meadows was managed in accordance with its regulatory and operating agreements and HUD…

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…

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 Office of Program Enforcement in the investigation of Land Home Financial Services, Inc. to determine whether it violated HUD requirements when underwriting loans insured by the Federal Housing Administration (FHA).  Land Home is an FHA mortgage lender, located in Concord, CA.    Based in part on OIG’s review, HUD…

We reviewed Sun West Mortgage Company’s loan underwriting activities, including quality controls, based on a citizen complaint alleging that the mortgage company was deficient in underwriting its loans.  The complaint further alleged that the mortgage company used unauthorized staff in another country and shared user identification numbers to “pre-underwrite” Federal Housing Administration (FHA)-insured loans.  Our objective was to…

We audited the Dolores Frances Affordable Housing project, based on a citizen complaint and a suggestion from the U.S. Department of Housing and Urban Development’s (HUD) Departmental Enforcement Center.  The complaint alleged nonpayment of HUD utility allowances and security deposits, mismanagement of the maintenance department, related parties hired in supervisory positions, and conflict-of-interest vendor contracts by the related party…

We audited the Dolores Frances Affordable Housing project, based on a citizen complaint and a suggestion from the U.S. Department of Housing and Urban Development’s (HUD) Departmental Enforcement Center.  The complaint alleged nonpayment of HUD utility allowances and security deposits, mismanagement of the maintenance department, related parties hired in supervisory positions, and conflict-of-interest vendor contracts by the related party…

We audited loanDepot, LLC, based on a referral from the U.S. Department of Housing and Urban Development’s (HUD) Quality Assurance Division detailing a separate lender that originated Federal Housing Administration (FHA)-insured loans containing ineligible downpayment assistance gifts.  The focus on loans with Golden State Finance Authority (Golden State) gifts was a result of a separate audit (2015-LA-1009) on loanDepot’s use of…

We audited loanDepot based on a referral from the U.S. Department of Housing and Urban Development’s (HUD) Quality Assurance Division detailing a separate lender that originated Federal Housing Administration (FHA)-insured loans containing ineligible downpayment assistance gifts.  We selected loanDepot due to its high volume of loans with downpayment assistance funds.  Our objective was to determine whether loanDepot originated FHA…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), conducted an investigation of Mason-McDuffie Mortgage Corporation to determine whether it violated HUD requirements when underwriting loans insured by the Federal Housing Administration (FHA).  Mason-McDuffie was approved on September 1, 2005, as an FHA mortgage lender, and its principal place of business is located in San Ramon, CA.  FHA is…

We audited Sutton Irvine Residence, Inc.’s Section 202-funded project based on concerns expressed by the U.S. Department of Housing and Urban Development’s (HUD) Office of General Counsel, Departmental Enforcement Center, regarding the management of the project.  The concern was that Sutton Irvine had defaulted on its mortgage payments to HUD and may have diverted project funds for nonproject expenses.  Our audit objective was to…

We assisted the U.S. Attorney’s Office of the Northern District of California in the civil investigation of Reunion Mortgage, Inc. (Reunion).  Reunion is a former Federal Housing Administration (FHA)-approved mortgage lender, with its principal place of business located in Milpitas, CA.  Based in large part on our review of loans underwritten by Reunion between December 2007 through October 2009, the U.S. Attorney’s Office filed a…