Interim Audit Memorandum – The HUD Single Family Insurance Operations Division Should Take Additional Action To Inform Homeowners of Changes to Its FHA Refund Process Resulting From the COVID-19 Pandemic

We audited the U.S. Department of Housing and Urban Development’s (HUD) response to COVID-19 to determine if it appropriately, effectively, and efficiently tracked, monitored, and issued Federal Housing Administration (FHA) refunds owed to homeowners with terminated loans. During our field work, the Coronavirus 2019 (COVID-19) pandemic began and as a result, we developed a second, more urgent audit objective to determine how COVID-19 has affected policies, procedures, and distribution of FHA refunds and whether HUD’s response was appropriate. We determined that COVID-19 generally did not affect the Single Family Insurance Operations Division’s (SFIOD) FHA refund policies and procedures; however, SFIOD did not fully notify homeowners of operational changes to its physical mail procedures, which potentially impacted its distribution of refunds. We issued this interim report to ensure HUD was made aware of the issues identified during our review and could act in a timely manner to address them. The audit prompted HUD to take immediate corrective action for all three recommendations, one of which will be closed concurrently with the issuance of this memorandum and two that will be completed during audit resolution.