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 (OIG), assisted the U.S. Department of Justice (DOJ) and the U.S. Attorney’s Office for the Northern District of New York in a civil investigation of Gateway Funding Diversified Mortgage Services, LP, now known as Finance of America Mortgage, LLC (FAM).  Gateway was a Federal Housing Administration (FHA)-approved mortgage lender.  On May 31, 2015,…

We audited Diamond Park because of concerns raised by the U.S. Department of Housing and Urban Development’s (HUD) Departmental Enforcement Center regarding the management of the project and we had never audited it.  Our audit objective was to determine whether the owner managed the project in accordance with its regulatory agreement and HUD requirements.  We focused the audit on reviewing (1) participant eligibility and their…

We audited Schwenckfeld Manor because it was a high-risk multifamily project on our multifamily risk assessment for projects within our region and we had never audited it.  Our audit objectives were to determine whether the project owner (1) disbursed project funds for costs that were reasonable, necessary, and supported for the operation and maintenance of the project; and (2) properly disclosed identity-of-interest relationships. The…

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…

We audited Laurentian Hall Apartments (project) because of its failure to submit financial statements in a timely manner and because we had never audited the project before.  Our audit objective was to determine whether the project’s owner managed the project in accordance with its U.S. Department of Housing and Urban Development (HUD)-held mortgage and other HUD requirements. The owner of Laurentian Hall Apartments did not always manage…

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), 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 the Pennsylvania Housing Finance Agency’s implementation 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 conducted the audit because the Agency had the largest active portfolio and the largest number of delinquent loans for servicers located in Pennsylvania as of October 2014.  Our objectives were to determine whether…

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…