FHA Short-Sale Program may have Cost HUD $1 Billion in False Claims

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Posted To: MND NewsWire

Misuse of the FHA Preforeclosure Sale Program may have cost the Department of Housing and Urban Development (HUD) over a billion dollars for claims that did not meet program according to an audit released this week by the HUD's Region 7 Office of Inspector General (OIG). OIG initiated the audit after noticing significant deficiencies in borrower qualifications during an audit of program claims at one large lender. The Preforeclosure Sale Program allows borrowers in default due to an adverse an unavoidable financial situation to sell their home at fair market value and use the proceeds to pay off an FHA-guaranteed mortgage loan even if the debt exceeds the proceeds of the sale, i.e. a short sale. Lenders must maintain supporting documentation to demonstrate that the borrowers would financially...(read more)

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Source: www.mortgagenewsdaily.com

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