We recommend that HUD’s Deputy Assistant Secretary for Multifamily Housing instruct the PBCAs to include the completion of the addendum B checklist as part of the MORs performed by the PBCAs.

We recommend that HUD’s Deputy Assistant Secretary for Multifamily Housing direct HUD staff to perform all required monitoring of civil rights compliance as part of the MORs conducted.

We recommend that HUD’s Deputy Assistant Secretary for Multifamily Housing implement training at the regional level to provide instruction on and stress the importance of monitoring civil rights compliance as part of the MORs.

Provide indemnification agreements or documentation to support the 14 loans in which it identified material findings that it did not acceptably mitigate or self-report to HUD. Implementation of this recommendation will protect the FHA insurance fund from an estimated loss of $1,136,089.

Evaluate its QC files for the 1,579 loans in which it identified material findings to confirm whether it self-reported to HUD all findings of fraud or material misrepresentation, along with any other material findings that its records did not show have been acceptably mitigated. If required, loanDepot should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

Review the 32 EPD loans not previously selected for review and submit the results to HUD, including all findings of fraud or material misrepresentation, along with any other material findings that it is unable to mitigate. If required, loanDepot should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

Conduct up to 1,190 additional post-closing QC reviews to meet sample size and composition requirements and submit the results to HUD, including all findings of fraud or material misrepresentation, along with any other material findings that it is unable to mitigate. If required, loanDepot should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

Provide annual training to its staff and management on HUD requirements for lender QC programs and provide proof of training to HUD.

Update its QC plan and related processes and procedures to align with requirements for (1) loan file reviews, (2) assessment of findings, (3) mitigation of findings, and (4) reporting findings to HUD when required.

Update its QC plan and related processes and procedures to align with requirements for loan selection, including maintaining data and documentation showing how sample sizes and loan selections were determined.