HUD OIG Issues Report on FHA Insured Loans Made to Delinquent Debtors

On March 26, 2018, HUD’s Office of Inspector General released a report on FHA insured loans made to borrowers with delinquent federal debt or who were subject to federal administrative offset for delinquent child support payments.

The report finds that, of the FHA loans closed in 2016, 9,507 loans totaling $1.9 Billion were not eligible for insurance because they were made to borrowers with delinquent federal debt or subject to federal offset for delinquent child support. The report findings were based on a statistical sampling of loans to project the number and value of ineligible loans insured by FHA.

The report recommends that FHA develop a method for using the Do Not Pay portal of the Bureau of Fiscal Service to identify delinquent borrowers; revise its single family handbook; and schedule timely renewal of data sharing agreements to prevent data loss in the Credit Alert Interactive Voice Response System, or discontinue use of this system if the information duplicates the information available in the Do Not Pay portal.

The audit report is available here.