The U.S. Department of Housing and Urban Development’s (HUD), Office of Inspector General reviewed the Federal Housing Administration (FHA) Preforeclosure Sale Program. Our objective was to determine whether FHA paid claims for only preforeclosure sales that met the criteria for participation in the program. We found that 61 of 80 statistically selected claims from September 1, 2010, through August 31, 2011 did not meet the criteria for participation in the Preforeclosure Sale Program.

We audited loans originated by Bankers Mortgage Group, Woodland Hills, CA, in response to a referral from the Office of Inspector General’s (OIG) Office of Investigation alleging that Bankers Mortgage Group originated loans with false documentation. Our objective was to determine whether the lender originated FHA-insured loans using sufficient, reliable, and valid documentation. Bankers Mortgage Group did not originate loans using sufficient, reliable, and valid documentation in compliance with HUD requirements.

he U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited Gruening Park Apartments, a 96-unit apartment complex in Juneau, AK, owned and operated by Alaska Housing Development Corporation, Inc., to determine whether the owner administered the project and its programs in compliance with the regulatory agreement and other HUD requirements.

We audited the U.S. Department of Housing and Urban Development (HUD) real estate-owned (REO) Management and Marketing (M&M) III program at Innotion Enterprises, Inc., to determine whether Innotion performed property preservation and protection services according to contract requirements. The review was part of our efforts to improve the integrity of the single-family insurance programs.

We audited Weststar Mortgage Corporation, a Federal Housing Administration (FHA) nonsupervised direct endorsement lender located in Albuquerque, NM. We selected Weststar for review based on a risk assessment of lenders in New Mexico. Our objective was to determine whether Weststar complied with U. S. Department of Housing and Urban Development (HUD) and FHA loan origination requirements for loans on which the borrowers defaulted and FHA paid claims between 2009 and 2011. We found that Weststar violated HUD FHA underwriting requirements for 10 loan originations reviewed.

The U.S. Department of Housing and Urban Development, Office of Inspector General audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of Federal Housing Administration (FHA)-insured loans. We initiated the audit as part of the activities in our 2011 annual audit plan and strategic plan. Our audit objective was to determine whether HUD had adequate oversight of lenders’ compliance with FHA’s underwriting requirements. HUD generally had adequate oversight of lenders’ compliance in underwriting FHA-insured loans.

Based on a request by the U.S.

We reviewed alleged violations of U.S. Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) loan origination requirements by the subject. We concluded that the subject made false statements on a mortgage loan application for one property, and falsely acted as the seller of a second property on behalf of another person. The Department of Justice filed a complaint under the Financial Institutions Reform, Recovery, and Enforcement Act; and in July 2011 reached a settlement with the subject.

We reviewed alleged violations of U.S. Department of Housing and Urban Development (HUD) Federal Housing Administration (FHA) loan origination requirements by the subject. We concluded that the subject falsely certified to the truthfulness and accuracy of documents and information in mortgage loan applications on FHA-insured loans. The Department of Justice filed a complaint under the Financial Institutions Reform, Recovery, and Enforcement Act; and in August 2011 reached a settlement with the subject.

We audited the West Village Expansion Project in Durham, NC, a U.S. Department of Housing and Urban Development (HUD) Section 220-insured property, due to a citizen’s hotline complaint. The anonymous complainant alleged that the managing member of the project’s ownership entity spent an excessive amount of project funds on legal fees, transferred more than $500,000 to another entity owned by it, and failed to keep the mortgage current.