We audited Prysma Lending Group, LLC, a nonsupervised lender, located in Danbury, CT, in support of the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) goal of improving the integrity of the single-family insurance program. We selected Prysma for audit because its 3.28 percent default rate for Federal Housing Administration (FHA)-insured single-family loans with beginning amortization dates between December 1, 2009, and November 30, 2011, was higher than the overall national average of 1.91 percent for the same period and its default rate was generally higher than the average of the States in which the lender originated the majority of its loans. Our audit objectives were to determine whether Prysma acted in a prudent manner and complied with HUD regulations, procedures, and instructions in the origination of the FHA-insured single-family loans selected for review and implemented a quality control plan in accordance with HUD’s requirements.
Our review determined that Prysma complied with HUD regulations, procedures, and instructions for the origination of the FHA-insured single-family loans selected for review. From January 1, 2009, through December 31, 2011, Prysma originated 512 FHA-insured loans with a combined mortgage value exceeding $109 million. We did not identify any material issues that would exclude the loans from being eligible for insurance according to HUD requirements. Additionally, we determined that Prysma established and implemented a quality control plan that complied with HUD-FHA requirements.