HUD IG Auditing 27 FHA Lenders

The HUD inspector general is conducting audits of 27 Federal Housing Administration lenders with high default rates and expects to complete the audits this year."The results from two completed audits found significant origination irregularities, including document falsification and misrepresentations, and prohibited contract loan originations by mortgage loan officers that were not FHA-approved," says the IG's semiannual report to Congress. Inspector General Kenneth Donohue said the Department of Housing and Urban Development is dealing more quickly with poor-performing lenders and imposing "stronger sanctions," including civil money penalties. The HUD IG found that the FHA failed to bill lenders for $44 million in loan losses that are covered by indemnification agreements and recommended ways to automate its billing process. "We are currently expanding our review of HUD/FHA claims processing," the HUD IG said.