HUD Inspector General Releases Second Report on Housing Agency Down Payment Assistance Programs
Late yesterday, HUD’s Office of the Inspector General (OIG) released a second Audit Report finding that a lender violated Federal Housing Administration (FHA) policy by originating FHA-insured loans that included down payment assistance grants from a government entity that the OIG says utilized “premium pricing” to pay for the grants. The report focuses on loans originated by loanDepot, LLC, a California-based mortgage lender, which included down payment assistance from a program administered by the Golden State Finance Authority (Golden State).
In the new report, the OIG continues to assert the position it took in its July report on NOVA Financial & Investment Corporation. The new report argues that loanDepot originated 62 loans that were ineligible for FHA insurance because borrowers receiving down payment assistance paid a higher interest rate on their first mortgage loans than those who did not receive such assistance. The report extrapolates this finding to conclude that loanDepot “likely” originated 178 additional loans with ineligible down payment assistance.
This inquiry was initiated by OIG’s Los Angeles regional office, the same regional office that investigated NOVA. As with the NOVA report, the OIG suggests that HUD require loanDepot to indemnify it for the bulk of the loans originated through the Golden State program.
Please send Greg Zagorski any questions or comments you have about the report.