Federal Reports

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.

The National Credit Union Administration (NCUA) Office of Inspector General (OIG) conducted this self-initiated audit to assess the Central Liquidity Facility (CLF). The objectives of our audit were to determine: (1) whether the NCUA operates the CLF in accordance with relevant laws, regulations, policies, and procedures; and (2) the utilization of the CLF by credit unions covered by the temporary authority granted by the CARES Act.

Results of our audit determined the NCUA operated the CLF in accordance with applicable laws and substantially complied with regulations and its own policies and procedures. We determined the annual stock adjustment done by the CLF was not entirely done in accordance with regulations as the CLF did not receive payments for adjustments to member capital stock subscriptions no later than March 31. However, we determined the financial impact of these payments not being received by March 31 was de minimis. We also determined the CLF was being utilized as evidenced by its growth in members. While we are making no recommendations in our report to management, we are suggesting management determine whether they want to pursue any action to extend the due date beyond March 31st for the annual stock adjustment payments to the CLF.

To learn how communities across the nation responded to the pandemic, we initiated a multi-part review of six communities—two cities, two rural counties, and two Tribal reservations. This report is the fourth community-specific report and focuses on our work in White Earth Nation Reservation in Minnesota, where we previously identified that recipients, including city government, small businesses, and individuals, received almost $278 million from 56 pandemic relief programs and subprograms. This report provides a closer look at ten pandemic programs and subprograms provided to White Earth Nation Reservation by seven federal departments.