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Document

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited Federal Housing Administration (FHA)-insured loans from calendar year 2016.  Our audit objective was to determine whether FHA insured loans to borrowers with delinquent Federal debt or who were subject to Federal administrative offset for delinquent child support.

FHA insured an estimated 9,507 loans worth $1.9 billion, which were not eligible for insurance because they were made to borrowers with delinquent Federal debt or who were subject to Federal administrative offset for delinquent child support. 

We recommend that FHA put $1.9 billion to better use by developing a method for using the Do Not Pay portal to identify delinquent child support and delinquent Federal debt to prevent future FHA loans to ineligible borrowers.  We also recommend that FHA revise the single-family handbook to comply with the regulation that prevents loans to borrowers with delinquent child support subject to Federal offset and schedule the timely renewal of data-sharing agreements to prevent data loss in the Credit Alert Interactive Voice Response System (CAIVRS) or discontinue use of CAIVRS if the information duplicates the information available in the Do Not Pay portal.

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Recommendations

Housing

  •   2018-KC-0001-001-A
    $1,905,340,944.00
    Priority

    Develop a method for using the Do Not Pay portal during the underwriting process to identify delinquent child support and delinquent Federal debt to prevent future FHA loans to ineligible borrowers to put $1.9 billion to better use.


    Status

    The Office of Housing has approved prioritization of funding for Integration between Do Not Pay portal and CHUMS. Funding was allocated to the CHUMS IT contractor effective January 26, 2024, to integrate Treasury’s Do Not Pay system with CHUMS, and the IT development project was kicked off the week of February 5, 2024. As of March 2024, the Office of Single Family Housing indicated that its staff are working closely with OCIO and Treasury on the business needs for the project, and estimated that the project would be complete by September 30, 2024. The final action target date is May 22, 2024. We anticipate that HUD will submit a request to revise this date, which will then go through the Office of Audit's review process.


    Analysis

    To fully address this recommendation, HUD must provide evidence that it has implemented applicant screening against the Do Not Pay portal to identify delinquent child support and delinquent Federal debt to prevent future FHA loans going to ineligible borrowers. Implementation of this rule should result in HUD putting $1.9 billion to better use.

  •   2018-KC-0001-001-B

    Revise the single-family handbook to comply with regulations that prevent loans to borrowers with delinquent child support subject to Federal offset.

  •   2018-KC-0001-001-C

    Closed on July 18, 2018

    Schedule the timely renewal of data-sharing agreements to prevent data loss in CAIVRS or discontinue use of the system if implementation of 1A makes CAIVRS unnecessary.