In January 2010, the U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General (OIG) began Operation Watchdog, an initiative to review the underwriting of 15 Federal Housing Administration (FHA) direct endorsement lenders having default and claim rates indicating lender performance problems. The FHA Commissioner had expressed concern regarding the increasing default and claim rates against the FHA insurance fund…

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General audited HUD’s Office of Lender Activities and Program Compliance, Quality Assurance Division. We did this review because during a prior audit, we saw instances in which indemnification agreements were not obtained from lenders under certain circumstances. Our objective was to determine whether the U.S. Department of Housing and Urban Development (HUD…

We completed an audit of U.S. Department of Housing and Urban Development (HUD) Single Family Program Development Office’s automated underwriting process. We assessed whether HUD had in place appropriate and effective management controls over its automated underwriting process. The audit was performed as part of the HUD Office of Inspector General’s (OIG) fiscal year 2010 annual audit plan and supported the audit plan objective to contribute…

We performed an internal audit of the U. S. Department of Housing and Urban Development’s (HUD) Home Equity Conversion Mortgage (HECM) program because we found that an increasing number of borrowers had not paid taxes or homeowners insurance premiums as required, thus placing the loan in default. Also, we noted that HUD had granted foreclosure deferrals routinely on defaulted loans, but it had no formal procedures. Our audit objective was to…

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited the Federal Housing Administration’s (FHA) Title II single-family lender renewal process. The objective of the audit was to determine whether FHA ensured that lenders submitted recertification requirements in a timely manner. We found that FHA did not ensure that lenders submitted recertification forms, annual fees, and/or audited financial…

We conducted the audit of the Retreat at Santa Rita Springs (community), a Federal Housing Administration-insured multifamily property under the Section 231 of the National Housing Act, in response to a congressional request from Representative Gabrielle Giffords of the 8th Congressional District of Arizona. In November 2009, the owners of the community defaulted on its $29.9 million U.S. Department of Housing and Urban Development (HUD)-…

In accordance with our annual audit plan and due to concerns regarding the U.S. Department of Housing and Urban Development’s (HUD) capacity to handle the increasing demand for loans insured by the Federal Housing Administration (FHA), we initiated an audit of HUD’s Philadelphia, PA, Homeownership Center (Center). This is the first of two audit reports that we plan to issue on the Center’s capacity to process current demand for FHA loans. The…

We performed this review at the request of the U.S. Department of Housing and Urban Development's (HUD) Multifamily Program Center, Richmond field office, due to concerns regarding the appropriateness of HUD's current regulatory agreement with the Yorkville Cooperative (Cooperative). Our objective was to determine if HUD entered into the appropriate regulatory agreement with the Cooperative for its Section 221(d)(3) program. HUD and…

We audited the U.S. Department of Housing and Urban Development’s (HUD) annual contributions contracts (contract) for performance-based Section 8 contract administration (PBCA). We audited this contract because our prior audit of HUD payments to the PBCAs for certain performance standards indicated that HUD was not getting the best value for the dollars spent on the PBCA’s services. Our audit objective was to determine whether the performance-…

This report presents the results of Urbach Kahn and Werlin LLP (UKW) audit of the fiscal year 2009 and 2008 financial statements of the Federal Housing Administration (FHA). The report on FHA’s financial statements, dated November 9, 2009 includes an unqualified opinion on FHA’s financial statements. The report contains four significant deficiencies in FHA’s internal controls and one reportable instance of noncompliance with laws and regulations…

In response to a congressional request, we audited the Federal Housing Administration (FHA) Title II single-family lender approval process. We wanted to know whether the application process provided effective controls and procedures to ensure approval of only those lenders meeting program requirements. Our audit found that FHA needs to improve the lender approval process. The process did not have sufficient controls and procedures to ensure…

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited HUD’s oversight of the Federal Housing Administration (FHA)-insured home equity conversion mortgages (HECM) program. We initiated the audit as part of the activities in our 2008 annual audit plan. Our audit objective was to determine whether HUD had adequate oversight of the underwriting of HECM loans. This is the second of two audit reports…

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General audited HUD’s process for reviewing and approving commercial rents for multifamily properties. Our objective was to determine whether HUD’s review and approval process for commercial rents ensured that multifamily properties received commercial rents that were comparable to market rate rents. HUD did not have a uniform process to ensure that commercial rent…

The U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General reviewed the front-end risk assessment (assessment) of the Green Retrofit Program (program) for Multifamily Housing for HUD. Our objective was to determine whether the assessment complied with the Office of Management and Budget’s guidance for the American Recovery and Reinvestment Act of 2009 (Recovery Act); the Recovery Act’s Updated Implementing…

We completed an audit of the U.S Department of Housing and Urban Development’s (HUD) Asset Control Area (ACA) program as a follow-up to a previous OIG audit of this program, and as a part of the Office of Inspector General’s (OIG) strategic plan goals to improve HUD’s fiscal accountability. The objective of the audit was to determine whether HUD administered the ACA program in compliance with ACA program requirements and federal regulations.…

We initiated a review of the U.S. Department of Housing and Urban Development’s (HUD) monitoring of the performance-based contract administration contract administrators (PBCA) because of our prior audits that reported that HUD paid contract administrators $27.2 million during fiscal year 2006 for work HUD had eliminated and that the Los Angeles multifamily hub did not properly monitor its contractor. Our audit objective was to determine…

We completed a corrective action verification of HUD’s actions in implementing portions of Audit Memorandum 98-AO-219-1804, issued September 24, 1998; Upfront Grant for Ridgecrest Heights Apartments, CEMI-Ridgecrest, Inc., Washington, DC. The specific objective of this corrective action verification review was to determine if HUD ensured the repayment of excess proceeds from the sale of townhomes located at Ridgecrest Heights Apartments. HUD…

We audited the U.S. Department of Housing and Urban Development's (HUD) processing of its Section 202 and Section 811 capital advances as a part of our annual audit plan. The audit objective was to determine whether HUD's program centers under the jurisdiction of its Region 3 (program centers) processed Section 202 and Section 811 capital advances in accordance with HUD requirements. Program centers did not always process Section 202…

We performed a review of HUD's recent invitation to submit applications (invitation) for performance-based contract administrator services for Southern California to be effective June 1, 2009, and its related annual contributions contract (contract) due to a complaint and concerns that this activity may have been inconsistent with agreed-upon management decisions on Audit Report 2007-SE-0001. The purpose of this review was to determine…

We audited the single-family partial claims collection process and its effectiveness in protecting the Federal Housing Administration?s (FHA) insurance fund. Our overall objective was to determine whether the single-family partial claims program operated effectively and efficiently to minimize costs to the insurance fund and collect amounts due in a timely manner. The National Service Center (NSC) and its contractors did not properly implement a…