U.S. flag

An official website of the United States government Here’s how you know

The .gov means it’s official.

Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.

The site is secure.

The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

2023-NY-0002-001-F
Status
Closed
Date Issued
May 15, 2023
Closed Date
January 23, 2024
Consider implementing a policy to review any of the 292 loans not reviewed as part of this audit that result in a request for claim to ensure that the loans qualified for endorsement under the temporary endorsement policy so that HUD can avoid unnecessary payments for loans that should not have been endorsed.
OIG Component Office
Audit
Program Office
Housing
Questioned Costs
$0.00
Better Funds Use
$0.00
Priority
No
Sensitive
No

Related Recommendations

Key Details
(mouse over or click items for details]
  Open
  Closed
Funds Put to Better Use
Funds Put to Better Use

Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.

Questioned Costs
Questioned Costs

Recommendations with questioned costs identify costs: (A] resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B] that are not supported by adequate documentation (also known as an unsupported cost]; or (C] that appear unnecessary or unreasonable.

Sensitive
Sensitive

Sensitive information refers to information that could have a damaging import if released to the public and, therefore, must be restricted from public disclosure.

Priority
Priority

We believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.

Housing

  • 2023-NY-0002-001-A
    $1,811,238.00

    Require lenders to execute indemnification agreements covering a period of at least 5 years for each of the 20 loans for which the lenders did not comply with the temporary endorsement policy and related instructions, including loans for which the lenders did not execute an agreement when required or that were otherwise ineligible for insurance, and properly store the agreements and record the agreement data to put up to $1,811,238 to better use by avoiding potential losses.

  • Obtain guidance from the Office of General Counsel regarding the implications of allowing lenders to retroactively apply forbearance in cases in which the borrower requests forbearance after the lender submits the loan for endorsement to ensure that it consistently handles such cases.

  • Request and analyze data from lenders for the 3,024 loans at risk of noncompliance to identify loans that should have been subject to the temporary endorsement policy or were otherwise ineligible for insurance. The data requested should include but not be limited to the dates when the borrower requested forbearance, the loan became subject to forbearance, and the loan was submitted for endorsement.

  • 2023-NY-0002-001-D
    $26,840,071.00

    For any of the 3,024 loans found to be subject to the temporary policy or otherwise ineligible for insurance, require the lenders to execute indemnification agreements covering a period of at least 5 years or reimburse HUD for any claims to put up to $26,840,071 to better use by protecting HUD against potential losses. For any indemnification agreements executed, HUD should properly store the agreements and record the agreement data.

  • Closed on August 31, 2023

    Update data in HUD’s system for the three cases in which the lender incorrectly reported the loans as in COVID-19 forbearance at the time of endorsement to ensure that accurate data are maintained.

  • 2023-NY-0002-001-G
    $3,493,636.00

    Record indemnification agreement data in its system for the 34 loans for which the lender properly executed an indemnification agreement before endorsement and HUD had not recorded the agreement in its system to put up to $3,493,636 to better use by avoiding potential losses.

  • Review and correct indemnification agreement data in HUD’s computer systems as needed for all agreements currently classified as having 2-year terms and all agreements related to 2-year agreements contained on its SharePoint site to ensure that its systems contain accurate data for monitoring and enforcement of agreements. This recommendation includes but is not limited to reviewing the agreement number, agreement term, billing lender, expiration date, refinance indicator, and source indicator.

  • Update indemnification agreements or obtain updated indemnification agreements for the 30 loans for which the indemnification agreements had incorrect or missing information or were not signed by HUD and upload them to its SharePoint site so that such agreements are properly executed and can be traced to HUD’s computer systems for future use.

  • Consider evaluating whether and how a similar policy for disasters or emergencies or a permanent version of the policy could be used to manage risk to the insurance fund while increasing lender participation. This should include further studying lenders’ use of the policy and the long-term performance of loans endorsed under it. It could also include reviewing the compliance, guidance, and process issues identified during this audit and through the resolution of the other recommendations to refine any future endorsement policies related to forbearance.