Document and implement policies and procedures to ensure that data observations for key assumptions that are inconsistent with FHA’s understanding of program operations are researched and further analyzed and that all results are concurrently documented and included in the model documentation.

Ensure that the HECM cash flow model assumptions capture all valid assignments or provide an analysis showing that the model results are not biased due to the exclusion of valid HECM assignments.

Implement an automated subsidiary ledger system with the capability of obtaining loan-level transaction data from FHA, Treasury, and FFB source systems.

Document the rationale and policy for the crosswalks used to prepare the financial statement note line items.

Restate the fiscal year 2017 financial statements to correct the impact of using the improper discounting methodology in the HECM ROA model in fiscal year 2017.

Restate the fiscal year 2016 financial statement notes to correct the inaccurate loan guarantee amounts reported by FHA.

Establish and implement an effective quality control process to prevent or detect model processing errors cited in our report and prevent other similar model processing errors in the future.

Strengthen existing internal control to ensure that amounts reported on the financial statements agree with the appropriate supporting documentation.

Correct the impact of all the modeling errors that we identified in this report.

Establish and implement policies and procedures for assessing and monitoring the reliability of the work performed by FHA’s modeling contractors.

Ensure that $399.1 million identified as invalid obligations in fiscal year 2018 is deobligated as appropriate.

Reassess the HECM assumption that mortgages with an unpaid principal balance greater than the maximum claim amount will not be assigned to HUD and perform the following: (1) compare this assumption to historical experience, (2) document the basis for selecting the assumption as opposed to Read More

Ensure that the $270.7 million identified as invalid obligations in fiscal year 2017 is deobligated as appropriate.

Identify the cause for the accrued interest differences and determine the correct accounting treatment.

Establish audit trails to ensure that supporting documentation can be easily traced and verified to the recorded transactions in the general ledger.

Develop and implement controls that ensure the updating of model documentation when model changes are made.

Develop and implement policies and procedures to ensure compliance with model risk management guidance regarding adequate and well-documented model assumptions.

Document all model assumptions that are undocumented, providing the basis for any assumptions or decisions made when developing each model assumption.

Improve model documentation by addressing the model documentation deficiencies cited in this report and narrowing or consolidating them into fewer pieces of documentation, as appropriate.

Document the economic rationale behind unintuitive model coefficients to support that the unintuitive relationships are appropriate.