Improve the tracking of recording assignments by modifying the HERMIT assignment timeline to include date fields for servicers’ (1) receipt of recorded assignments from counties and (2) mailing of recorded assignments to the loan-servicing contractor.

Work with Treasury and FFB to receive monthly loan-level transaction reports.

Establish and implement a review process for salary and administrative cost information that is received from HUD OCFO to ensure that the information is complete and accurate.

In conjunction with the loan-servicing contractor, determine what actions can be taken to ensure that recorded assignments are reviewed in a timely manner after receipt.

Require FHA and HUD OCFO to work together to determine a policy and procedure to ensure that both parties receive and provide complete information related to salaries and administrative costs.

Restate salary and administrative costs on FHA’s fiscal year 2017 statement of net cost, statement of net position, and footnote disclosures.

Develop policies and procedures to ensure that the line items in the required note disclosures are understood, properly calculated, and properly disclosed in the financial statements in accordance with OMB Circular A-136.

Restate the fiscal year 2017 financial statement notes to correct inaccurate classifications, expenses, and market value balances reported by FHA.

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

Develop alternative policies and procedures that would enable the use of the final single-family LLG cash flow model results and HECM return on notes cash flow model results in the final ROA models.

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

Revise the modeling policies and procedures to use the established HECM loan limits in the HECM LLG cash flow model.

Develop and implement a billing and sanctioning process to ensure that FHA bills servicers for the costs incurred to obtain recorded assignments from the counties’ recorder’s offices and sanctions the servicers when they do not provide the recorded assignments within 6 months of claim payment.

Reevaluate FHA’s existing model documentation for single-family, HECM, and multifamily models to determine whether their current state is acceptable, so that it provides the intended users a thorough understanding of how the model works and also allows new users to assume responsibility for the Read More

Develop and implement policies and procedures to ensure that the reasonableness and appropriateness of the quarterly supplemental claims accrual estimation methodology is periodically reviewed.

Establish policies and procedures for recording and accounting for manual transactions, including the accounting rationale for the principal and interest on the direct loans and accrued interest on the borrowings.

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.

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

Correct the error related to the allocation of the liquidating reestimates in fiscal years 2017 and 2018.

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