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Report File
Date Issued
Submitting OIG
Department of Housing and Urban Development OIG
Agencies Reviewed/Investigated
Department of Housing and Urban Development
Components
Federal Housing Administration (FHA)
Report Number
2025-NY-1002
Report Description

We audited loanDepot.com to evaluate its quality control (QC) program for originating and underwriting Single Family Federal Housing Administration (FHA)-insured loans.  We selected loanDepot for review based on its loan volume and delinquency rate and because its rate of self-reporting loans to HUD when it identified fraud, material misrepresentations, and other material findings that it could not mitigate was below average for more than a 5-year period.

 We found that loanDepot’s QC program for originating and underwriting FHA-insured loans was not sufficient.  Specifically, loanDepot (1) did not select the proper number of loans for review and maintain complete and accurate data to document its loan selection process; (2) missed material deficiencies; and (3) did not adequately assess, mitigate, and report loan review findings, which included self-reporting loans to HUD when required.  These issues occurred because loanDepot had insufficient controls over its QC program.  As a result, HUD did not have assurance that loanDepot’s QC program fully achieved its intended purposes, which include, among other things, protecting the FHA insurance fund and lender from unacceptable risk, guarding against fraud, and ensuring timely and appropriate corrective action. 

 We recommended that HUD require loanDepot to (1) update its QC plan and related procedures to align with HUD requirements; (2) provide training to its staff and management on HUD requirements for lender QC programs; (3) review the loans that it had not selected and take appropriate actions when applicable; and (4) evaluate its QC files for the loans in which it identified material findings to confirm whether it self-reported to HUD all findings of fraud or material misrepresentation, along with any other material findings that it did not acceptably mitigate.

Report Type
Audit
Agency Wide
Yes
Number of Recommendations
7
Questioned Costs
$0
Funds for Better Use
$1,136,089
Report updated under NDAA 5274
No

Open Recommendations

This report has 7 open recommendations.
Recommendation Number Significant Recommendation Recommended Questioned Costs Recommended Funds for Better Use Additional Details
2025-NY-1002-001-A No $0 $0

Update its QC plan and related processes and procedures to align with requirements for loan selection, including maintaining data and documentation showing how sample sizes and loan selections were determined.

2025-NY-1002-001-B No $0 $0

Update its QC plan and related processes and procedures to align with requirements for (1) loan file reviews, (2) assessment of findings, (3) mitigation of findings, and (4) reporting findings to HUD when required.

2025-NY-1002-001-C No $0 $0

Provide annual training to its staff and management on HUD requirements for lender QC programs and provide proof of training to HUD.

2025-NY-1002-001-D No $0 $0

Conduct up to 1,190 additional post-closing QC reviews to meet sample size and composition requirements and submit the results to HUD, including all findings of fraud or material misrepresentation, along with any other material findings that it is unable to mitigate. If required, loanDepot should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

2025-NY-1002-001-E No $0 $0

Review the 32 EPD loans not previously selected for review and submit the results to HUD, including all findings of fraud or material misrepresentation, along with any other material findings that it is unable to mitigate. If required, loanDepot should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

2025-NY-1002-001-F No $0 $0

Evaluate its QC files for the 1,579 loans in which it identified material findings to confirm whether it self-reported to HUD all findings of fraud or material misrepresentation, along with any other material findings that its records did not show have been acceptably mitigated. If required, loanDepot should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

2025-NY-1002-001-G No $0 $1,136,089

Provide indemnification agreements or documentation to support the 14 loans in which it identified material findings that it did not acceptably mitigate or self-report to HUD. Implementation of this recommendation will protect the FHA insurance fund from an estimated loss of $1,136,089.

Department of Housing and Urban Development OIG

United States