We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of its Home Equity Conversion Mortgage (HECM) program and found that 33 borrowers had more than 1 loan under the program. Having multiple loans violated program requirements because HUD requires borrowers to reside in the mortgaged residence as their principal residence and borrowers may not have more than one principal residence at a time. We referred the violations to HUD’s Office of Program Enforcement for action under the Program Fraud Civil Remedies Act.
In August 2006, two borrowers obtained a HECM loan on a property that they owned in Caguas, Puerto Rico, and certified in writing that the home was their principal residence. However, in September 2007, they obtained a second HECM loan on a property that they owned in Ocala, FL, and certified in writing that it was their principal residence. These actions violated HUD’s principal residency requirements because the borrowers owned both properties at the same time. On June 20, 2013, HUD’s Office of Program Enforcement notified the borrowers of its intent to file an action under the Program Fraud Civil Remedies Act. After negotiations with HUD, the borrowers agreed to pay $12,000 to settle the matter. The agreement did not constitute an admission of liability or fault by any party. The borrowers made the settlement payment on November 10, 2015.