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Crime, Fraud, Waste, and Abuse
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Homeownership
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HUD Did Not Pursue Repayment for Improper Payments on Claims Without Conveyance of Title

We audited the U.S. Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA) Claims Without Conveyance of Title (CWCOT) program.  We selected this review to assist HUD in recovering improper payments and to reduce the risk of losses to the FHA insurance fund. The objective of our audit was to assess whether HUD is appropriately demanding and collecting improper payments identified for CWCOT loans by its Mortgagee Compliance Manager (MCM). 

FHA Borrowers with Delinquent Federal Taxes

HUD OIG is auditing Federal Housing Administration (FHA)-Insured Single Family loans issued to FHA borrowers with delinquent federal tax debt.  This audit will include forward and reverse mortgages that received FHA insurance between January 1, 2025, and December 31, 2025.  Our audit objective is to determine whether FHA provided insurance on loans that were made to ineligible delinquent Federal tax debtors.

Ohio Lender Loan Origination and Underwriting Audit

HUD OIG is auditing an Ohio nationwide lender that originates and underwrites FHA single family loans. This review will focus on more than 3,500 loans closed totaling approximately $970 million. Our objective is to determine whether the lender followed FHA rules and regulations for assets, income, liabilities, and credit when originating and underwriting single family FHA loans.

FHA Single Family Early Payment Default Oversight

We are initiating an audit related to FHA single family early payment default underwriting. An early payment default refers to mortgages that become 60 Days delinquent within the first six payments; the immediacy of these defaults may reflect a defect in the underwriting standards. The objective of our audit is to determine whether there are gaps in HUD's controls to ensure len ders follow FHA rules for underwriting and reporting on single family FHA loans. 

 

Potential Fraud Risks and Schemes for HUD’s Single Family Housing Program

Beginning in 2021, the U.S. Department of Housing and Urban Development (HUD) Office of Inspector General (OIG) conducted several audits to assess HUD’s anti-fraud efforts and to develop inventories of fraud risks for several of its programs.  Our previous work found that HUD’s fraud risk management program was in its early stages of development and we recommended that HUD perform program-specific fraud risk assessments and incorporate these assessments into an agency-wide plan to further advance its program.

External Single-Family Origination and Underwriting

HUD OIG is auditing a nationwide lender headquartered in the State of Wisconsin that originates and underwrites FHA single family loans. This review will focus on more than 3,700 loans closed totaling approximately $1 billion. Our objective is to determine whether the lender followed FHA rules and regulations for assets, income, liabilities, and credit when originating and underwriting single family FHA loans.

 

Federal Housing Administration-Insured Single Family Loans Issued to Deceased and Incarcerated Individuals

HUD OIG is conducting an evaluation of Federal Housing Administration (FHA)-Insured Single Family (SF) loans issued to deceased and incarcerated individuals. The objective of our evaluation is to determine whether the approval process for FHA-Insured SF loans resulted in loans to deceased or incarcerated borrowers.

Neighborhood Loans, Inc. Did Not Have a Sufficient Quality Control Program for FHA-Insured Loans

We audited Neighborhood Loans, Inc., to evaluate its quality control (QC) program for originating and underwriting Single Family FHA-insured loans. Our audit covered the period October 2020 through September 2022.  We selected Neighborhood Loans for review based on its increasing loan volume and delinquency rate and because its rate of self-reporting loans to HUD when it identified fraud, material misrepresentations, and other material findings that it could not mitigate was below average for 5 of the last 6 years.

Audit of FHA Claims Without Conveyance of Title Improper Payments

HUD OIG is auditing HUD’s FHA Claims Without Conveyance of Title (CWCOT) program, which is a disposition option for foreclosed FHA loans that allows third-party sales as an alternative to conveyance of the property to HUD. During fiscal year 2024, the CWCOT program had 11,285 claims totaling more than $419 million. Our audit objective is to assess whether HUD is appropriately demanding and collecting improper payments for CWCOT loans. 

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