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, Office of Inspector General, audited the lender, Berkeley Point Capital, and the underwriting for the Second and Delaware project loan.  We initiated the review of the loan underwriting based on a previous review of the Second and Delaware project, which focused on the construction and development of the project.  The almost $46 million project is Federal Housing Administration (…

We audited the procurement process of Madison Park North Apartments, a Section 236 property, at the request of the Director of the U.S. Department of Housing and Urban Development’s (HUD) Baltimore Office of Multifamily Housing Programs. We also reviewed Madison’s Park’s use of its reserve for replacement account. Madison Park generally ensured that procurement and reserve for replacement account requirements were met. However, it did not…

We reviewed 32 Federal Housing Administration (FHA) loans that New Day Financial, LLC, underwrote as a U.S. Department of Housing and Urban Development (HUD) FHA direct endorsement lender. We conducted the review as a result of a risk model assessment that identified mortgage lenders that were at high risk to cause losses to the FHA insurance fund. New Day was one of the lenders identified that made insurance claims within the first 2 years of…

We audited NFM, Inc. (NFM), a nonsupervised lender approved to originate Federal Housing Administration (FHA) single-family mortgage loans. We selected NFM based on significant risk indicators, which included a high percentage of loans with front- and/or and back-end ratios in excess of U.S. Department of Housing and Urban Development (HUD) requirements and loans defaulting within six or fewer payments. Our objective was to determine whether…

We reviewed 20 Federal Housing Administration (FHA) loans that Dell Franklin Financial, LLC (Dell), underwrote as an FHA direct endorsement lender. Our review objective was to determine whether Dell underwrote the 20 loans in accordance with FHA requirements. This review is part of Operation Watchdog, an Office of Inspector General (OIG) initiative to review the underwriting of 15 direct endorsement lenders at the suggestion of the FHA…

We audited Residential Home Funding Corporation, a nonsupervised lender approved to originate Federal Housing Administration (FHA) single-family mortgage loans. Residential Home Funding Corporation has one office located in Gaithersburg, Maryland. We selected Residential Home Funding Corporation because its default rate was significantly higher than the average default rate for the State of Maryland. Our objective was to determine whether…