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 March 2007, one borrower obtained a HECM loan on a property that he owned in Payson, AZ, and certified in writing that the home was his principal residence. However, in August 2008, he obtained a second HECM loan on another property that he owned in Payson, AZ, and certified in writing that it was his principal residence. These actions violated HUD’s principal residency requirements because the borrower owned both properties at the same time. On March 26, 2014, HUD’s Office of Program Enforcement notified the borrower of its intent to file an action under the Program Fraud Civil Remedies Act. After negotiations with HUD, the borrower agreed to pay $7,000 to settle the matter. The agreement did not constitute an admission of liability or fault by any party. The borrower made an initial payment of $3,000 on December 17, 2015, and agreed to a repayment plan for the remaining $4,000.