Specifically, these programs insure mortgage loans for the construction, purchase, substantial rehabilitation, and refinancing of multifamily apartments and health care facilities. Processes and Procedures for Reviewing and Monitoring MAP Lenders’ Underwriting of Loans Were Not Always Effectively Implemented

HUD did not always comply with or effectively implement processes and procedures for reviewing and monitoring MAP lenders’ underwriting of loans. HUD’s procedures require field staff to conduct and document reviews of lenders’ mortgage insurance applications to ensure lenders’ compliance with HUD’s underwriting requirements before the loans are insured. However, at the field offices we visited, we found that the staff did not always properly document their reviews. HUD Has Held Some Lenders Accountable for Specific Violations, but Has Had a Limited Basis for Identifying Lenders with Patterns of Noncompliance

To hold MAP lenders accountable for specific violations of program requirements or for exhibiting patterns of noncompliance, HUD’s Office of Multifamily Housing can suspend or terminate their ability to participate in the MAP program. Conclusions

FHA insures several billion dollars in mortgages for multifamily housing properties each year. At that time, we will send copies to the Secretary of Housing and Urban Development.
Why GAO Did This Study

Each year, the Federal Housing Administration (FHA) insures billions of dollars in multifamily housing mortgage loans to help construct, rehabilitate, purchase, and refinance apartments and health care facilities. However, the Department of Housing and Urban Development (HUD) lacks assurances that the lenders approved for the Multifamily Accelerated Processing (MAP) program always meet all of HUD's qualifications. HUD's guidance requires prospective lenders to submit documents showing that they are financially sound, have a satisfactory lending record, and have qualified underwriters.

What GAO Found

GAO found that HUD did not always comply with, or effectively implement, controls and procedures for reviewing and monitoring MAP lenders' underwriting of loans. Before issuing a loan, field staff are required to conduct and document reviews of lenders' mortgage insurance applications and associated loan exhibits to ensure compliance with HUD underwriting requirements. However, staff did not always properly document their reviews. HUD has held some lenders accountable for specific violations of program requirements but is unable to systematically identify lenders that exhibit patterns of noncompliance. To hold lenders accountable for specific violations or for patterns of noncompliance, HUD's Office of Multifamily Housing can suspend or terminate their ability to participate in the MAP program.