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We recommend that the Deputy Assistant Secretary for Single Family Housing require MB Financial to provide training to its underwriters on HUD’s underwriting requirements for approving and rejecting loans.
We recommend that the Deputy Assistant Secretary for Single Family Housing require MB Financial to indemnify HUD against potential losses of $178,811 for the four loans that did not comply with underwriting requirements (appendix C). HUD provided us copies of the four executed indemnification agreements in August and September 2017. Therefore, upon issuance of this report, we will enter a management decision into HUD’s Audit Resolution and Corrective Action Tracking System, along with copies of the indemnification agreements, and close this recommendation.
Provide training to its employees regarding HUD’s requirements related to prohibited restrictions on conveyance.
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 $5,482 for partial claims paid on two FHA loans 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 $418,277 for the eight loans.
Require that the servicers with significant and other deficiencies revise and update their policies and procedures, as necessary, to ensure that they comply with HUD requirements and guidance on loss mitigation evaluation.
Reinforce existing guidance (such as mortgagee letters, notifications to servicers, and training) to servicers to ensure that they engage in required loss mitigation.
Require indemnification for the 26 loans that had significant servicing deficiencies. In these cases, the loss to HUD was $1,673,117 (appendixes A and D).
Update and revise policies and procedures, including reinforcement of guidance (for example, mortgagee letters, notifications to servicers, or training) to ensure that servicers accurately report the status of delinquent loans to HUD.
