We audited Wells Fargo Mortgage (Wells Fargo) as part of our annual audit plan objective of improving the integrity of single family insurance programs. Our objective was to determine whether Wells Fargo complied with U. S. Department of Housing and Urban Development (HUD) origination requirements for the Home Equity Conversion Mortgage program, commonly known as a reverse mortgage.
Wells Fargo generally complied with HUD's reverse mortgage requirements. However, 3 (6.3 percent) of the 47 loans reviewed did not meet HUD's requirements. Wells Fargo originated: one ineligible loan totaling $86,250 for a home that was not the borrower's primary residence, one loan for $148,500 for a home that the borrower no longer occupied, and one loan for which the list of required repairs was not detailed enough to determine requirements. In addition, for the loan to the borrower who no longer occupied the home, the borrower did not complete repairs in an acceptable manner.
We recommend that the Assistant Secretary for Housing-Federal Housing Commissioner cancel the mortgage insurance on one loan, require Wells Fargo to complete foreclosure proceedings for one loan, and ensure that inspectors list repairs in sufficient detail to determine what repairs were required and ensure that the repairs are satisfactorily completed.