We audited Semper Home Loans, Inc. (Semper), a Federal Housing Administration (FHA) lender approved to underwrite and close mortgage loans without prior FHA review or approval. We selected Semper because its early payment default rate was higher than the default rate in the local area in which it does business. Our audit objectives were to determine (1) whether Semper acted in a prudent manner and complied with U.S. Department of Housing…

In January 2010, the U.S. Department of Housing and Urban Development's (HUD) Office of Inspector General (OIG) began Operation Watchdog, an initiative to review the underwriting of 15 Federal Housing Administration (FHA) direct endorsement lenders having default and claim rates indicating lender performance problems. The FHA Commissioner had expressed concern regarding the increasing default and claim rates against the FHA insurance fund for…

We audited the Neighborhood Assistance Corporation of America (NACA), a Department of Housing and Urban Development (HUD)-approved organization providing housing counseling services to qualified home buyers or homeowners with unaffordable mortgage payments. The audit was initiated at the direction of HUD's Inspector General. Our audit objective was to determine whether NACA properly administered its HUD grants used for housing counseling…

We have completed an audit of the U.S. Department of Housing and Urban Development’s (HUD) information security program. We evaluated whether HUD’s Office of the Chief Information Officer (OCIO) had developed security policies, implemented procedures, and continuously monitored its entitywide information system security program. We performed this audit because it is a required component of our fiscal year 2010 consolidated financial…

We reviewed Federal Housing Administration (FHA)-insured loan settlement documents from two branches of DHI Mortgage Company, LTD (DHI Mortgage), in Arizona. During a previous audit of loan origination by the same branches (audit report number 2009-LA-1018), there was information indicating that the Real Estate Settlement Procedures Act (Act) might have been violated; however, we were unable to report on the issue at the time. Our review…

We audited the U.S. Department of Housing and Urban Development’s (HUD) process for hiring employees in accordance with Office of Personnel Management (OPM) guidelines. The audit was initiated due to concerns about whether HUD addressed the staffing needs of its Homeownership Centers in a timely manner to address significant increases in single family mortgage workload. Our audit objective was to determine whether HUD effectively hired…

We performed an audit of WR Starkey Mortgage, LLP (WR Starkey), located in Plano, TX, a Federal Housing Administration (FHA) direct endorsement lender. We selected WR Starkey for audit because of its high default rate of nearly 4.5 percent as compared to the average default rate for all FHA loans in Fort Worth, TX, of 4.1 percent. Our objective was to determine whether WR Starkey complied with U. S. Department of Housing and Urban Development…

We conducted an annual limited scope review of the U.S. Department of Housing and Urban Development's (HUD) compliance with Presidential Executive Order (EO) 13520, Reducing Improper Payments. HUD was in general compliance with EO 13520 annual reporting requirements. We concluded that HUD's ongoing efforts in mitigating the risks of improper payments in the rental housing assistance programs were progressing in a positive direction. However, we…

We audited the U.S. Department of Housing and Urban Development's ability to comply with the requirements of Office of Management and Budget (OMB) Circular A-127, which was revised in January 2009 and became effective on October 1, 2009. We conducted the audit as a component of the audit of HUD's consolidated financial statements for fiscal year 2010 under the Chief Financial Officer's Act of 1990. We found that HUD did not fully comply with…

In this report, we provide additional details to supplement our Report on the U.S. Department of Housing and Urban Development's (HUD) Fiscal Years 20010 and 2009 Financial Statements, which is included in HUD's Fiscal Year 2010 Agency Financial Report. In OIG's opinion, based on our audit and the reports of other auditors, the financial statements were presented fairly, in all material respects, in conformity with accounting principles…

We audited NFM, Inc. (NFM), a nonsupervised lender approved to originate Federal Housing Administration (FHA) single-family mortgage loans. We selected NFM based on significant risk indicators, which included a high percentage of loans with front- and/or and back-end ratios in excess of U.S. Department of Housing and Urban Development (HUD) requirements and loans defaulting within six or fewer payments. Our objective was to determine whether…

This report presents the results Clifton Gunderson's (CG) audit of the fiscal year 2010 and 2009 financial statements of the Federal Housing Administration (FHA). The report on FHA's financial statements, dated November 3, 2010 includes an unqualified opinion on FHA's financial statements. The report contains two significant deficiencies in FHA's internal controls and one reportable instance of noncompliance with laws and regulations. The…

HUD OIG conducted an evaluation of HUD's Departmental Enforcement Center (DEC), specifically, the Compliance Division. We wanted to know whether DEC processed suspension and debarment referrals in a timely manner. We also wanted to identify ways to improve case management for suspensions and debarments. Between October 1, 2006, and December 9, 2009, the Compliance Division received a total of 978 suspension and/or debarment referrals (cases)…

As part of our annual audit plan objective of improving the integrity of single-family insurance programs, we reviewed the independent public accountant’s working papers and the financial statements of Allied Home Mortgage Capital Corporation (Allied) for fiscal year 2009. The objective of the review was to determine whether Allied’s fiscal year 2009 financial statements submitted to the Federal Housing Administration (FHA) accurately reported…

HUD OIG performed an audit of Nationwide Home Loans, Inc. (Nationwide), a Federal Housing Administration (FHA) approved direct endorsement lender located in Miami, Florida. The review was performed based on the lender’s high default rates. The purpose of the audit was to determine whether the lender followed the U.S. Department of Housing and Urban Development’s (HUD) requirements when (1) originating and underwriting loans and (2)…

HUD OIG performed an audit of Nationwide Home Loans, Inc. (Nationwide), a Federal Housing Administration (FHA) approved direct endorsement lender located in Miami, Florida. The review was performed based on the lender’s high default rates. The purpose of the audit was to determine whether the lender followed the U.S. Department of Housing and Urban Development’s (HUD) requirements when (1) originating and underwriting loans and (2)…

The U. S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) performed an audit of Gold Financial Services, Inc. (Gold Financial), a Federal Housing Administration (FHA) direct endorsement lender and a branch of AmericaHomeKey, Inc., in San Antonio, TX. We selected Gold Financial for audit because its default rate was almost 10 percent for the audit period while the average default rate in the San Antonio area…

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General (OIG), completed a review of loan origination practices of Anchor Mortgage Corporation (Anchor), Chicago, IL. Our objective was to identify violations of Federal Housing Administration (FHA) requirements and the related losses incurred by HUD. Based on our review, HUD sued the lender and its owner under the False Claims Act. In August 2010, the court…

We conducted a review of Federal Housing Administration (FHA) loans underwritten by Sterling National Mortgage Company, Inc. (Sterling), an FHA direct endorsement lender. The review was conducted as part of the Office of Inspector General’s (OIG) Operation Watchdog initiative to review the underwriting of 15 direct endorsement lenders at the suggestion of the FHA Commissioner. The Commissioner expressed concern regarding the increasing claim…

The U.S. Department of Housing and Urban Development’s (HUD) Office of Inspector General performed an audit of Consumer Credit Counseling Services of the Midwest (Consumer Credit), an affiliate of the National Foundation for Credit Counseling, Inc. (National Foundation). We selected Consumer Credit based on a citizen’s complaint received by our office. Our objective was to determine whether Consumer Credit complied with HUD’s requirements for…