The U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) worked with HUD’s Office of Lender Activities and Program Compliance, Office of Single Family Housing, to resolve outstanding matters related to two September 2015 agreements with Fifth Third Bank (FTB) and its principal subsidiary, Fifth Third Bancorp, an Ohio-based bank holding company. HUD failed to properly record required indemnifications in its FHA Connection system; therefore, it did not hold FTB accountable to the terms of the settlement agreements.
We recommended that the Deputy Assistant Secretary for Single Family Housing require FTB to reimburse HUD $311,699 for 2 loans for which HUD incurred losses when it sold the properties and 15 loans for which FHA insurance had been terminated and HUD had paid loss mitigation claims to FTB. We also recommended that HUD record in FHA Connection the remaining indemnified loans, avoiding $47,433,895 in estimated losses, and that HUD develop and implement controls to ensure that indemnification agreements that result from U.S. Department of Justice settlements have been properly recorded in FHA Connection. Finally, we recommended that HUD take appropriate administrative action against FTB for violations of the settlement agreement.