United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Resources, Community, and Economic Development Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2000-04-28 monographic deposited born digital 49 p. GA 1.13:RCED-00-112 https://www.govinfo.gov/app/details/GAOREPORTS-RCED-00-112 P0b002ee18037d4c3 f:rc00112 DGPO 2010-08-12 2011-03-24 GAOREPORTS-RCED-00-112 machine generated eng fdlp REPORT GAOREPORTS-RCED-00-112 RCED-00-112 Mortgage programs Mortgage protection insurance Risk management Internal controls Loan defaults Noncompliance Mortgage loans Contract oversight Lending institutions HUD Credit Watch Program Atlanta (GA) Denver (CO) Philadelphia (PA) Santa Ana (CA) District of Columbia Puerto Rico HUD Computerized Home Underwriting Management System Mutual Mortgage Insurance Fund HUD 2020 Management Reform Plan Letter Report RCED Pursuant to a congressional request, GAO provided information on the Department of Housing and Urban Development's (HUD) oversight of lenders participating in its Federal Housing Administration's (FHA) mortgage insurance programs for single-family homes, focusing on: (1) how HUD ensures that lenders granted direct endorsement authority by FHA are qualified to receive such authority; (2) the extent to which HUD focuses on high-risk lenders in monitoring the lenders participating in FHA's mortgage insurance programs; and (3) the extent to which HUD holding lenders are accountable for poor performance.<p/>GAO noted that: (1) HUD's process for granting FHA-approved lenders direct endorsement authority provides limited assurance that lenders receiving this authority are qualified; (2) according to HUD's guidance, FHA-approved lenders seeking direct endorsement authority must demonstrate acceptable performance in underwriting at least 15 mortgage loans, which undergo evaluations, known as preclosing reviews, by HUD's homeownership centers; (3) however, the guidance does not define what would constitute overall acceptable performance on the 15 loans; (4) in the 6 months prior to GAO's 1999 visits, the centers granted direct endorsement authority to a total of 36 lenders; (5) overall, 12 of the 36 lenders had received 4 or more poor ratings from the centers for their last 15 preclosing reviews; (6) contrary to HUD's guidance, the homeownership centers' monitoring of lenders does not adequately focus on the lenders and loans that pose the greatest insurance risks to HUD; (7) on-site evaluations of lenders' operations--known as lender reviews--are one of HUD's primary tools for assessing the quality of lenders' mortgage-lending practices; (8) HUD's guidance states that 85 percent of the lender reviews should be targeted at high-risk lenders; (9) however, the homeownership centers have often not reviewed the lenders that they consider to be the highest risk; (10) HUD has not taken sufficient steps to hold lenders accountable for poor performance and program violations; (11) although HUD's guidance allows the homeownership centers to suspend the direct endorsement authority of lenders that fail to comply with FHA's underwriting requirements, the centers have made limited use of this ability; (12) on the basis of GAO's analysis, if HUD had reviewed all of the lenders' fiscal year (FY) 1999 loans, the percentage of poor ratings could have been expected to exceed 30 percent; (13) of these lenders, 131 made 10 or more FHA-insured loans in FY 1999; (14) as of October 1, 1999, HUD's homeownership centers had not suspended the direct endorsement authority of any of the 131 lenders GAO identified; (15) in May 1999, HUD's headquarters implemented its Credit Watch program to terminate the loan origination authority of lenders with excessive defaults and insurance claims on FHA-insured mortgages; (16) however, because the program's regulations pertain only to the lenders that originated the troubled loans, HUD does not always hold accountable lenders that underwrote and approved the loans; and (17) according to HUD, the program's regulations did not permit HUD to take enforcement actions against these lenders. https://www.govinfo.gov/content/pkg/GAOREPORTS-RCED-00-112/html/GAOREPORTS-RCED-00-112.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-RCED-00-112/pdf/GAOREPORTS-RCED-00-112.pdf GAO/RCED-00-112 https://www.govinfo.gov/app/details/GAOREPORTS-RCED-00-112 Letter Report GAO/RCED-00-112; Single-Family Housing: Stronger Oversight of FHA Lenders; Mortgage programs Mortgage protection insurance Risk management Internal controls Loan defaults Noncompliance Mortgage loans Contract oversight Lending institutions HUD Credit Watch Program Atlanta (GA) Denver (CO) Philadelphia (PA) Santa Ana (CA) District of Columbia Puerto Rico HUD Computerized Home Underwriting Management System Mutual Mortgage Insurance Fund HUD 2020 Management Reform Plan