Develop and implement policies and procedures to identify prohibited restrictions on conveyance to ensure that it does not originate FHA loans with prohibited restrictive covenants.

Repay HUD $26,472 for partial claims paid on one FHA loan that contained prohibited restrictive covenants.

Work with HUD to nullify the restrictions on conveyance that violate HUD policy or indemnify HUD. This action will protect HUD against future losses of $381,823 for the seven loans.

Implement controls to ensure existing procedures are followed to maintain the project’s security deposit funds separately from all other accounts by depositing and disbursing all security deposit funds directly into and from the security deposit account.

Perform an analysis of all security deposits and ensure that the security deposit account is fully funded.

Repay its project’s operating account for the ineligible $15,000 disbursement from non-project funds.

Complete HUD-approved training regarding owner contributions and distributions.

Develop and implement controls over owner contributions and owner distributions to ensure compliance with its regulatory agreement and HUD regulations.

We recommend that the Deputy Assistant Secretary for Single Family Housing require MB Financial to update its quality control plan to include the specific procedures to be used when reviewing rejected loan applications.

We recommend that the Deputy Assistant Secretary for Single Family Housing require MB Financial to update its policies and procedures to ensure that its staff understands underwriting requirements and the requirement that loans be manually underwritten when a refer decision is received from automated underwriting systems or when a loan is downgraded to a manual underwrite.