HUD Did Not Pursue Repayment for Improper Payments on Claims Without Conveyance of Title

We audited the U.S. Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA) Claims Without Conveyance of Title (CWCOT) program.  We selected this review to assist HUD in recovering improper payments and to reduce the risk of losses to the FHA insurance fund. The objective of our audit was to assess whether HUD is appropriately demanding and collecting improper payments identified for CWCOT loans by its Mortgagee Compliance Manager (MCM).  

We found that HUD has not been making demands for or collecting repayment of improper payments identified by the MCM contractor during its CWCOT reviews.  As a result, HUD paid improper claims and failed to recapture more than $10.5 million determined to be owed.  CWCOT’s review is critical for HUD to receive reimbursement from lenders for its improper payments, in turn preserving and protecting the FHA insurance fund.