oversight

Cendant Mortgage Corporation Non-Supervised Direct Endorsement Lender Mt. Laurel, New Jersey

Published by the Department of Housing and Urban Development, Office of Inspector General on 2002-10-02.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

          AUDIT REPORT




     CENDANT MORTGAGE CORPORATION
NON-SUPERVISED DIRECT ENDORSEMENT LENDER
         MT. LAUREL, NEW JERSEY

               2003-KC-1001

             OCTOBER 2, 2002



           REGION 7 OFFICE OF AUDIT
               KANSAS CITY, KS
                                                                  Issue Date
                                                                          October 2, 2002
                                                                 Audit Case Number
                                                                          2003-KC-1001




TO: John C. Weicher, Assistant Secretary for Housing-Federal Housing Commissioner,
      Chairman, Mortgagee Review Board, H



FROM: Roger E. Niesen, Regional Inspector General for Audit, 7AGA

SUBJECT: Cendant Mortgage Corporation, Mount Laurel, NJ

We have completed an audit of Cendant Mortgage Corporation, a non-supervised direct
endorsement lender approved to originate Federal Housing Administration insured loans. We
selected Cendant for survey because of the high default rate experienced in St. Louis, MO and
Kansas City, KS. Our survey objective was to determine if there were indications that Cendant did
not comply with HUD regulations, procedures, and instructions in the origination of the Federal
Housing Administration-insured single-family mortgages. Our audit objective was to determine
how many of Cendant’s late requests for endorsement violated HUD’s payment requirements.

We reviewed all of Cendant’s Federal Housing Administration loans for a 2-year period to ensure
that all late endorsement requests were for loans with appropriate borrower payment patterns. We
concluded that Cendant improperly submitted 1,307 loans, totaling $110,905,714 for late
endorsement during that period. In addition, we reviewed 80 Federal Housing Administration
defaulted loans, totaling $5,255,952 that were originated by Cendant under HUD’s 203(b) or 234(c)
programs. We concluded that Cendant did not originate 73 of the 80 loans in accordance with
HUD’s requirements. Our report contains two findings with recommendations requiring action by
your office.

In accordance with HUD Handbook 2000.06 REV-3, within 60 days please provide us, for each
recommendation without management decisions, a status report on: (1) the corrective action taken;
(2) the proposed corrective action and the date to be completed, or (3) why action is considered
unnecessary. Additional status reports are required at 90 days and 120 days after report issuance for
any recommendation without a management decision. Also, please furnish us copies of any
correspondence or directives issued because of the audit.

Should you or your staff have any questions, please contact me at (913) 551-5870.


                                                                   Table of Contents
Management Memorandum




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2003-KC-1001              Page   ii
Executive Summary
We have completed an audit of Cendant Mortgage Corporation, a non-supervised direct
endorsement lender approved to originate Federal Housing Administration insured loans. We
selected Cendant for survey because of the high default rate experienced in the St. Louis, MO and
Kansas City, KS regions. Our survey objective was to determine if there were indications that
Cendant did not comply with HUD regulations, procedures, and instructions in the origination of
the Federal Housing Administration-insured single family mortgages. Our audit objective was to
determine how many of Cendant’s late requests for endorsement violated HUD’s payment
requirements.



                                     Cendant Mortgage Corporation improperly submitted 1,307
 Cendant Improperly
                                     loans totaling more than $110 million for endorsement more
 Submitted Late Requests
                                     than 60 days after closing when the borrowers had delinquent
 for Endorsement
                                     payments prior to submission. HUD subsequently endorsed all
                                     of the loans for insurance. Cendant did not have adequate
                                     procedures to ensure its employees followed HUD’s
                                     requirements regarding late submission of loans for
                                     endorsement.       These inappropriately submitted loans
                                     significantly increased the risk to the Federal Housing
                                     Administration insurance fund.

                                     Cendant Mortgage Corporation did not adhere to prudent
 Controls Over Loan                  lending practices when processing 73 of the 80 loans we
 Originations Need                   examined during our audit. Cendant’s loan files contained
 Improvement                         potential fraud indicators, inadequate ratios, undocumented
                                     gifts, conflicting W-2 forms, insufficient assets, and inconsistent
                                     and unverified income. The deficiencies occurred because
                                     Cendant did not have controls to ensure the loans were
                                     processed in accordance with HUD/Federal Housing
                                     Administration requirements. As a result, HUD lacks assurance
                                     borrowers qualified for 73 loans totaling over $4.9 million.

                                     Because HUD relied on Cendant’s loan origination process,
                                     HUD assumed abnormally high risk when it insured the
                                     1,366 loans totaling over $114,883,596 (this takes into
                                     account that fourteen loans in Finding 1 were also included
                                     in Finding 2). As of August 31, 2002, HUD paid claims on
                                     57 of the loans and has experienced a loss of $594,591 on the
                                     25 properties that have been sold.

                                     We provided our draft findings and narrative case
                                     presentation to Cendant following the audit. We held an exit
                                     conference with Cendant on September 20, 2002. Cendant
                                     provided written comments to our findings on September 27,

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Executive Summary


                    2002. We incorporated excerpts of the comments into our
                    report as appropriate. The complete text of the comments,
                    excluding voluminous appendices and attachments that are
                    not required for understanding, is contained in Appendix F.
                    We included the two appendices in which Cendant describes
                    controls it has implemented pertaining to our findings. We
                    provided a complete copy of Cendant’s response to the
                    Action Official addressed in this report.

                    We recommend that the Assistant Secretary for Housing-
  Recommendations   Federal Housing commissioner, and Chairman, Mortgage
                    Review Board take appropriate action against Cendant
                    Mortgage Corporation based on the information contained in
                    the findings. This action should, at a minimum, include
                    requiring indemnification for 1236 loans.            We also
                    recommend that the Mortgagee Review Board require
                    Cendant and the Office of Housing to take actions necessary
                    to protect the insurance fund against future losses.




2003-KC-1001            Page iv
                                                 Table of Contents
Table of Contents
Management Memorandum                                                       i



Executive Summary                                                        iii



Introduction                                                              1



Findings

1.    Cendant Improperly Submitted Late Requests for Endorsement        5


2.    Controls Over Loan Originations Need Improvement                 11




Management Controls                                                     19



Follow Up On Prior Audits                                               21



Appendices
     A.   Schedule of Questioned Costs and Funds Put to Better Use      23
     B.   Chart of Loans Examined                                       25
     C.   Improper Late Submission Details                              27
     D.   Loan Processing Deficiencies Chart                           101
     E.   Narrative Case Summaries                                     103
     F.   Auditee Comments                                             257
     G.   Report Distribution Outside of HUD                           269




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Table of Contents




Abbreviations:
COLA – Cost of Living Adjustment
FHA – Federal Housing Administration
HUD – Department of Housing and Urban Development
IRS – Internal Revenue Service
LES – Leave and Earnings Statement
LP – Loan Prospector
MCAW – Mortgage Credit Analysis Worksheet
OIG – Office of Inspector General
TAF – Temporary Assistance to Families
VOE – Verification of Employment
YTD – Year-to-date




2003-KC-1001                        Page vi
Introduction
HUD approved Cendant Mortgage Corporation as a non-supervised direct endorsement lender on
January 29, 1980. Cendant originates Federal Housing Administration insured loans, Veterans
Administration loans and conventional loans. Between October 1, 1999 and September 30, 2001,
Cendant originated 49,357 loans totaling $4,599,906,111 under Federal Housing Administration
programs. As of April 29, 2002, HUD had endorsed the insurance on all of these loans. Prior to
October 1, 1999, Cendant had originated just 40,042 Federal Housing Administration insured
mortgages since it began originating them in 1980. For the period August 1, 1999 through July 31,
2001, there were 80 mortgages originated under the jurisdiction of the St. Louis and the Kansas
City HUD Offices that defaulted within the first 2 years. For these offices, Cendant’s default rates
were more than twice HUD’s average.

Cendant Mortgage Corporation processes its mortgages through a centralized operation in its home
office in Mount Laurel, New Jersey. It has branch office identification numbers assigned to
locations throughout the country, but no processing is done at these offices. The majority of
Cendant’s business is derived from incoming toll free telephone calls to Mount Laurel from
applicants. Sales consultants, counselors, and underwriters located in Mount Laurel originate
Federal Housing Administration insured mortgages. Customers first talk to a loan consultant who
takes the customers’ information over the phone and advises them if they are pre-approved. Next,
loans are sent to a counselor, who gathers all the documentation through the mail to support the
information verbally provided in prior phone calls. Loan files are then sent to underwriters, who
review the documentation and approve the loans if they meet the minimum standards to qualify.
After closing, the Post Closing/File Completion staff gets the documentation from the title agent
and prepares the loan files for submission to HUD for endorsement.



                                      Our survey objective was to determine if there were
 Audit Objectives                     indications that Cendant did not comply with HUD
                                      regulations, procedures, and instructions in the origination of
                                      the Federal Housing Administration-insured single-family
                                      mortgages. Our audit objective was to determine how many
                                      of Cendant’s late requests for endorsement violated HUD’s
                                      payment requirements.

                                      During our audit, we performed tests for compliance with
 Audit Scope and                      HUD’s requirements for the origination of Federal Housing
 Methodology                          Administration insured loans. We reviewed all (80) St
                                      Louis and Kansas City loans that had gone into default
                                      within the first two years to determine if the files contained
                                      adequate support to justify approval of the loans. We
                                      reviewed the payment histories for all 20,122 loans that
                                      were submitted for endorsement more than 60 days after
                                      closing to ascertain if there had been delinquent payments
                                      before the loans were submitted for endorsement.

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Introduction


               We interviewed HUD’s management and staff to obtain
               background information on Federal Housing Administration
               programs, Federal Housing Administration requirements and
               Cendant Mortgage Corporation. We interviewed Cendant’s
               management and staff to determine the process for
               originating Federal Housing Administration insured loans
               and submitting them for endorsement. We reviewed
               Cendant’s loan origination procedures for an understanding
               of how the process is supposed to work. We reviewed
               HUD’s and Cendant’s Federal Housing Administration
               mortgage files to determine if proper procedures had been
               followed for loan origination. Finally, we reviewed data
               from Cendant to determine if late requests for endorsement
               were proper.

               We tested all 80 loans under the jurisdiction of the St. Louis
               and Kansas City HUD offices that were originated and went
               into default within the two-year period from August 1, 1999
               through July 30, 2001 to determine if the loans were properly
               originated. We tested all 49,357 loans nationwide for the
               two-year period October 1, 1999 through September 30,
               2001 to determine if the loans were submitted for
               endorsement late. We identified 22,108 late endorsement
               requests, which we tested to determine if the borrowers had
               late mortgage payments prior to Cendant requesting
               endorsement. Data limitations prevented us from testing
               1,986 of the 22,108 loans.

               To achieve the assignment’s objectives we relied on
               computer-processed data contained in the Alltel system used
               by Cendant and HUD’s Single Family Data Warehouse.

               Specifically, we relied on the submission dates and payment
               histories contained in Cendant’s systems. We used the
               submission dates provided, as long as the reported date did
               not occur after the endorsement date. We also relied on the
               closing dates and endorsement dates contained in HUD’s
               system. We used the mortgage amount and claims status
               from HUD’s system for information purposes only.

               We assessed the reliability of this data including assessing
               relevant general and application controls, which we found to
               be adequate. We also conducted sufficient tests of the data.
               Based on these tests and assessments we concluded the data
               are sufficiently reliable to be used in meeting the

2003-KC-1001       Page 2
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                                              Introduction


assignment’s objective.

We performed audit work from August 2001 through May
2002. The survey and audit covered the period August 1,
1999 through September 30, 2001. We extended the review,
where appropriate, to include other periods. The Audit was
conducted in accordance with generally accepted government
auditing standards.

We provided a copy of this report to the President of
Cendant.




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2003-KC-1001     Page 4
                                                                                            Finding 1


  Cendant Improperly Submitted Late Requests
               for Endorsement
Cendant Mortgage Corporation improperly submitted 1,307 loans totaling over $110 million for
endorsement more than 60 days after closing when the borrowers had delinquent payments prior to
submission. HUD subsequently endorsed all of the loans. Cendant did not have adequate procedures to
ensure its employees followed HUD’s requirements regarding late submission of loans for endorsement.
These inappropriately submitted loans significantly increased the risk to the Federal Housing
Administration insurance fund.



                                      HUD requires that loans submitted more than 60 days after
 HUD Requirements                     closing meet certain late request standards, including a standard
                                      that the borrower has made all payments up to the time of
                                      submission within the calendar month due, or at a minimum,
                                      made 6 consecutive payments within the calendar month due.

                                      HUD Handbook 4165.1 contains instructions to mortgagees
                                      for late requests for endorsement.           Late request for
                                      endorsement procedures apply if the mortgage is submitted
                                      to HUD for endorsement more than 60 days after closing.
                                      The degree of risk to the Department must be no greater than
                                      existed at the time of closing in order for the mortgage to be
                                      endorsed.

                                      For loans submitted more than 60 days after closing, the lender
                                      must include several pieces of documentation, including a
                                      payment ledger. The ledger must show the payments received,
                                      including the payment due for the month in which the case is
                                      submitted if the case is submitted after the 15th of the month.
                                      The mortgage payments must not be delinquent when submitted
                                      for endorsement. The payment ledger must cover the entire
                                      period from the first payment due date to the date of submission
                                      for endorsement. Each payment must be made in the calendar
                                      month due. If a payment is made outside the calendar month
                                      due, the lender cannot submit the case for endorsement until six
                                      consecutive payments have been made within the proper
                                      calendar month when due.

                                      Using HUD’s Neighborhood Watch and Single Family Data
 Cendant’s Loan Universe              Warehouse systems, we obtained a list of Cendant’s 49,357
                                      loans with first amortization from October 1, 1999 through

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Finding 1


                         September 30, 2001. Of these loans, 4,487 were new
                         construction loans that were not subject to the 60-day
                         submission requirement or were loans terminated without a
                         claim that did not place the insurance fund at risk. Of the
                         remaining 44,870 loans, HUD’s system showed that 24,485 had
                         been endorsed more than 60 days after closing. We
                         determined the number of loans submitted more than 60 days
                         after closing by using the submission date provided to us by
                         Cendant and the closing date maintained in HUD’s system.
                         If the submission date from Cendant was not provided or was
                         after the endorsement date, we substituted the endorsement
                         date as the submission date. This revealed that 22,108 of the
                         24,485 loans had actually been submitted for endorsement more
                         than 60 days after closing.

                         We matched these 22,108 loans with payment history data
                         maintained in Cendant’s systems. For various reasons, 1,986
                         of the loans had no payment history available to test. For the
                         remaining 20,122 loans, we tested them for the presence of
                         untimely payments prior to submission. Specifically, we
                         tested for payments made after the calendar month due, any
                         time within 6 months prior to Cendant submitting the loan
                         for endorsement. See Appendix B for a diagram illustrating
                         this process.

                         For 19,817 of the 20,122 loans we tested, we used the
 Loans Were Improperly   submission date from Cendant’s system to determine if
 Submitted               submission was timely. When we matched the payment
                         histories for these loans, we found that Cendant had
                         submitted 1,281 loans for late endorsement in spite of the
                         fact that these borrowers had delinquent payments prior to
                         submission.

                         We tested the other 305 out of 20,122 loans using HUD’s
                         endorsement date as the submission date. This was because
                         Cendant had not provided submission dates for 133 loans
                         and Cendant’s submission date was after the endorsement
                         date for 172 loans. When we compared the payments for
                         these 305 loans, we found that Cendant had submitted 30
                         loans for late endorsement even though these borrowers had
                         delinquent payments prior to submission. For 14 of those
                         improper late submissions, we used the endorsement date
                         because the submission date from Cendant was between one
                         day and three months after the endorsement. We reviewed
                         the payment histories for those 14 and determined that all of

2003-KC-1001                   Page 6
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                                                    Finding 1


 them had late payments within 6 months of both HUD’s
 endorsement date and Cendant’s submission date, so the date
 substitution did not affect our conclusion on these loans. For
 16 of the 30 loans, we used the endorsement date because
 Cendant had not provided a submission date. We reviewed
 each of these loans, and determined that 2 of them had
 endorsement dates 63 and 64 days after closing (near the 60-
 day deadline). We did not include these two loans in our
 finding in order to allow time for receipt and review by
 HUD. The other 14 loans are included in this finding
 because the endorsement date was between 86 and 578 days
 after closing, and HUD’s data shows that the case files were
 received between 75 and 575 days after closing. As a result,
 we included 28 of the loans we identified with improper
 payment patterns in this finding.

 The 1,281 improper loans plus the 28 improper loans total
 1,309 improper loans. We tested these loans to determine if
 the closing date from HUD’s system agreed with the closing
 date from Cendant’s system. We found that in 2 cases, the
 date reported by Cendant was different. If Cendant’s dates
 were accurate, these loans would not be late submissions. In
 order to be conservative, we dropped these two loans from
 this finding.

 Therefore, in total, we found that Cendant submitted 1,307
 loans for late endorsement even though the borrowers had
 delinquent payments prior to submission (see Appendix C
 for a complete list of the 1,307 loans). The mortgages on
 these improper submissions totaled $110,905,714. As of
 March 25, 2002, the delinquency status of these loans was as
 follows:

  Delinquency Status     Number of      Mortgage     Percent of
                          Loans         Amount         Total
Current                          700 $62,223,565         56.1%
Over 30 days past due            106    9,736,374         8.8%
Over 60 days past due             44    4,082,803         3.7%
Over 90 days past due            253   18,354,510        16.5%
In Bankruptcy                     49    3,878,759         3.5%
In Foreclosure process           155   12,629,703        11.4%
         Totals                1,307 $110,905,714       100.0%

 As of August 31, 2002, HUD has paid claims on 44 of these
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Finding 1


                          loans (original mortgage amount $3,140,785). Eighteen of
                          these properties have been sold, with a loss to HUD of
                          $454,770. The claims paid on the other 26 loans total
                          $1,773,061, with an indeterminate loss at this point. The
                          total loss to HUD for these loans will not be known until the
                          properties are sold. The mortgage amount on the remaining
                          1,263 loans totals $107,764,929. These loans represent an
                          increased risk to the insurance fund.

                          Also, as of August 31, 2002, the insurance has been
                          terminated without a claim on 126 of these loans with
                          original mortgage amounts totaling $13,334,209. Although
                          these loans were improperly submitted for endorsement, they
                          no longer represent a risk to the insurance fund because the
                          insurance is no longer active. The remaining number of
                          loans with active insurance is 1,137, totaling $94,430,720.

                          Some of the 80 loans with underwriting deficiencies
                          identified in Finding 2 of this report were also included in
                          this testing for late submission deficiencies. This finding
                          includes 14 loans totaling $933,330 that are also reported as
                          having underwriting deficiencies in Finding 2.

                          Cendant did not have adequate procedures to ensure its
 Cendant’s Controls Are
                          employees followed HUD’s requirements. Cendant’s File
 Not Adequate
                          Completion/Post Closing Department is responsible for
                          submitting closed loans to HUD for endorsement. This
                          Department was created in April 2000 and has nearly
                          doubled in size since then in an attempt to keep up with
                          Cendant’s increase in mortgage volume. The Manager of the
                          File Completion/Post Closing Department said that because
                          of the rapid growth, payment histories have not been a focus
                          during this period. He also told us that since June 2001,
                          Cendant has implemented new procedures in an attempt to
                          improve the quality and timeliness of submissions to HUD.

                          Cendant needs to indemnify HUD for the loans improperly
                          submitted and implement controls that provide assurance
                          employees are following HUD’s requirements when
                          submitting loans for endorsement. These indemnifications
                          should include protecting HUD against future losses from
                          the 1,137 loans that are still actively insured, and
                          reimbursing HUD for losses on the 44 loans for which
                          HUD has already paid a claim.


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                                                                        Finding 1



Auditee Comments   Excerpts from Cendant’s comments on our draft finding
                   follow. Appendix F, page 257, contains the complete text of
                   the comments.

                   As Cendant committed to the Philadelphia HOC in April,
                   2002, Cendant presently submits over 97 percent of its closed
                   FHA loans for insurance within 60 days of closing. To
                   achieve that result, Cendant tightened and streamlined all of
                   its loan submission procedures; retrained all of its specialists
                   on correct submission requirements; developed daily
                   reporting routines; and decreased the workload of its
                   specialists in this area from 41 closed loans to 23 per person
                   per month. Cendant also revised its late submission letter
                   template to explain clearly the reason for late submission and
                   to note expressly that the required payment ledger was
                   attached.

                   Under these circumstances, the late submission issues
                   highlighted in this draft finding will never occur again. We
                   discuss our submissions processes and procedures in more
                   detail in the attached Appendix #2. (see page 264)

                   Cendant reviewed the payment histories of all 1,364 loans
                   that the OIG draft audit report noted had been submitted
                   more than 60 days after closing when the borrowers had had
                   delinquent payments prior to submission. (We note that
                   20,122 loans in total were submitted for FHA insurance
                   during this same audit period.)

                   Our review of the 1,364 loans cited by the OIG revealed the
                   following.

                   53 loans had satisfactory payment histories at the time of
                   submission for insurance (“eligible loans”).

                   263 loans, in fact, had a subsequent payment history of at
                   least 6 consecutive months of on-time payments.
                   Accordingly, had Cendant waited for these six timely
                   consecutive payments to have been made, rather than
                   submitting before all six payments were made, these loans
                   would have met all applicable insurance requirements
                   (“acceptable loans”).


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Finding 1


                    108 loans have been paid in full and are no longer insured by
                    the FHA.

                    With respect to the remaining 940 loans, we propose two
                    categories of indemnification: our records indicate that 174
                    of these loans have been, or are presently, in default.
                    Cendant will indemnify HUD for any losses it may incur
                    with respect to these loans. Our records indicate that the
                    remaining 767 loans are not in default. Cendant proposes to
                    indemnify HUD for any losses it may incur with respect to
                    any of these loans that default within two years of the date of
                    endorsement, regardless of reason.


OIG Evaluation of   We commend Cendant for the great strides it has taken
Auditee Comments    towards improvement of its submission process. If the
                    controls described by Cendant are fully implemented, they
                    should prevent future occurrences of improper late
                    submissions.

                    We reviewed the documentation provided on the 53 loans
                    that Cendant identified as having acceptable pay histories at
                    the time of submission. We agreed that 48 of these loans had
                    acceptable pay histories at the time of submission. We
                    disagreed with Cendant’s assertion for 5 loans (In Appendix
                    C, OIG loan #284, 333, 737, 889, and 1343). At the time of
                    submission, the required monthly payment had not been
                    received for each of these loans. We also reviewed the pay
                    histories for 9 loans that are now paid-in-full, and found that
                    they had acceptable pay histories at the time of submission.
                    Accordingly, these 57 loans were removed from our finding.
                    Instead of 1,364 loans, our finding now reports on 1,307
                    loans.

                    We reviewed the remaining 1,307 loans and found that the
                    insurance had been terminated without a claim on 126 of
                    these loans. We left these loans in our finding, because they
                    still represented violations at the time of submission.
                    However, we adjusted our recommendation to only request
                    indemnification for the other 1,181 loans. Cendant reported
                    five additional loans as paid-in-full, but HUD did not report
                    the insurance for these loans as terminated as of August 31,
                    2002. These loans, (In Appendix C, OIG #138, 497, 520,
                    606, and 1242), are reflected in our report as requiring


2003-KC-1001              Page 10
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                                                                     Finding 1


                  indemnification. An alternative would be to ensure the
                  insurance has been terminated.
                  Cendant provided documentation to evidence that 6
                  consecutive timely payments were received for 263 loans.
                  We did not review this documentation. It is our position that
                  since the loans did not have the required payment history at
                  the time Cendant submitted them, they were improper
                  submissions that should be indemnified. The fact that at
                  some point in time each loan had 6 timely payments does not
                  negate the fact that when submitted, they did not.

                  Further, Cendant indicated that 767 of the loans are currently
                  not in default, so it would indemnify for 2 years from the
                  date of endorsement. We believe that this is not a sufficient
                  length of time for indemnification.



Recommendations   We recommend that the Assistant Secretary for Housing-
                  Federal Housing Commissioner, Chairman, Mortgagee
                  Review Board:

                  1A.    Take appropriate action against Cendant Mortgage
                         Corporation for not adhering to HUD’s requirements
                         for late endorsement requests, including requiring
                         indemnification for 1,181 loans totaling $97,571,505
                         that were improperly submitted for endorsement.

                  1B.    Verify that Cendant’s employees follow appropriate
                         late submission procedures.




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Finding 1




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2003-KC-1001    Page 12
                                                                                             Finding 2


           Controls Over Loan Origination Need
                      Improvement
Cendant Mortgage Corporation did not adhere to prudent lending practices when processing 73 of the 80
loans we examined for compliance during our audit. Cendant’s loan files contained potential fraud
indicators, conflicting W-2 forms, inadequate ratios, undocumented gifts, insufficient assets, and
inconsistent and unverified income. The deficiencies occurred because Cendant did not have controls to
ensure the loans were processed in accordance with HUD/Federal Housing Administration requirements.
As a result, HUD lacks assurance that the mortgagors qualified for the 73 Federal Housing
Administration insured loans totaling $4,911,212.




HUD Requirements                       Chapter 2-1 of HUD Handbook 4155.1 Rev-4, Chg. 1,
                                       Mortgage Credit Analysis for Mortgage Insurance on One-
                                       to-Four Family Properties requires mortgagees to determine
                                       the borrowers' ability and willingness to repay the mortgage
                                       debt, and thus, limit the probability of default or collection
                                       difficulties. Four major elements are typically evaluated in
                                       assessing a borrower's ability and willingness to repay the
                                       mortgage debt: stability and adequacy of income; funds to
                                       close; credit history; and qualifying ratios and
                                       compensating factors.

                                       Chapter 3-1 of HUD Handbook 4155.1 also says that HUD
                                       expects the application package to contain sufficient
                                       documentation, to support the lender's decision to approve
                                       the mortgage loan.

                                       Our examination of 80 loans totaling $5,255,952 originated
Loans do not adhere to                 by Cendant between August 1, 1999, and July 31, 2001,
HUD requirements                       disclosed significant origination deficiencies in 73 all 80
                                       cases. Cendant’s loan files contained potential fraud indicators,
                                       inadequate ratios, undocumented gifts, conflicting W-2 forms,
                                       insufficient assets, inconsistent and unverified income, and
                                       unsupported assets and liabilities. Following is a detailed
                                       description of the discrepancies we identified. A table
                                       summarizing these issues follows later in the finding.

                                       Cendant’s loan files contained various documents with
Fraud indicators were not              discrepancies that could be indicative of fraud. HUD
resolved.                              Handbook 4000.4, 2-4, says that mortgagees are to employ
                                       underwriters, who assume responsibility for awareness of the

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Finding 2


                             warning signs that may indicate irregularities, and an ability
                             to detect fraud, as well as the responsibility that underwriting
                             decisions are performed with due diligence in a prudent
                             manner.      Although these indicators may have had a
                             legitimate explanation, Cendant did not follow-up to
                             determine whether or not the documents were acceptable.
                             We found evidence of potential fraud in 9 of 80 files. For
                             example, Federal Housing Administration case #291-
                             2724348 has pay stubs that show the borrower is in the
                             Marine Corps. There was no verification of employment
                             done and the borrower had just moved and purchased a home
                             in an area where there is no military base. The borrower
                             indicated that he would only be at the new residence when on
                             leave. FHA guidelines recognize that a borrower’s family
                             may decide to live in a state other than a state where a base
                             is located particularly if the active military member may be
                             assigned to a remote duty station. It requires that one of the
                             borrowers’ occupy the property as a principal residence for
                             the majority of a calendar year.

                             Cendant’s loan files contained unverified W-2 information.
 W-2’s were not verified.    When documentation is not sufficient to support the lender’s
                             decision to approve a loan, the lender is required to clarify or
                             supplement the documentation submitted by the borrower.
                             Six of the 80 loan files we reviewed contained W-2 forms
                             with information that differed from that of the application or
                             did not contain the required W-2 at all. We noted W-2 forms
                             provided by the borrower that had incorrect names,
                             addresses, and employers. This does not necessarily mean
                             that the W-2s were falsified or incorrect, but it is information
                             that needs to be investigated further. The files we reviewed
                             contained no evidence that W-2 discrepancies were explored.
                             For example, Federal Housing Administration case #292-
                             3832940 contained W-2s for the borrower. However, one of
                             the W-2s had the wrong social security number on it. There
                             is no indication that Cendant attempted to resolve this
                             discrepancy.

                             Cendant’s loan files contained ratios that exceeded the
Loan ratios were too high.   allowable limits. HUD/Federal Housing Administration
                             allows a mortgage payment-to-income ratio of 29 percent
                             and a total debt-to-income ratio of 41 percent; however,
                             those loans accepted by the loan prospector system do not
                             have to meet these criteria. In 15 of the 80 loans we
                             reviewed (excluding the 37 loan prospector accept loans), we

2003-KC-1001                       Page 14
                                                             Table of Contents
                                                                                  Finding 2


                             found ratios that exceeded the allowable limits. This may be
                             acceptable if the lender can prove adequate compensating
                             factors, but in these 15 cases, there were either no
                             compensating factors or the compensating factors were not
                             adequate. For example, Federal Housing Administration
                             case #182-0630382 had a monthly mortgage payment of
                             $500, recurring expenses of $136 and welfare and social
                             security income of $1,316. This resulted in ratios of 37.99
                             percent and 48.32 percent. These numbers far exceed the
                             29/41 limits allowed by HUD/Federal Housing
                             Administration. The compensating factors noted in the file
                             were “low-income housing, good residual, and decent
                             credit.” The borrower’s cash reserves after closing (residual)
                             totaled $540 and their credit history included 5 accounts
                             turned over to agencies for collection in the past 2 years.
                             These are not acceptable compensating factors, as the
                             borrower had neither “good-residual” nor “decent credit”.
                             Low-income housing is not a compensating factor allowed
                             by HUD/Federal Housing Administration.

                             Cendant’s loan files contained inadequate gift
Gifts were not properly      documentation. HUD/Federal Housing Administration has
documented.                  specific requirements for borrowers using a gift to purchase a
                             home. The lender must document the transfer of the funds
                             from the donor to the borrower. The file must also contain
                             a gift letter specifying the dollar amount, signed by the
                             donor and the borrower, stating no repayment is required,
                             and showing the donor's name, address, telephone number,
                             and relationship to the borrower. In 22 of the 80 loans
                             reviewed, there was not adequate documentation of gifts
                             received by the borrowers. These loans either did not contain
                             a completed gift letter or did not have evidence of receipt of
                             the gift. For example, Federal Housing Administration case
                             #292-3881442 contained a note by the loan processor that the
                             “customer is waiting for gift donor to come back from
                             vacation before she receives the gift letter and transition of
                             $1,000.” The file did not contain a gift letter or evidence that
                             the money was exchanged. There is no evidence that the
                             borrower was ever given a gift.

                             Cendant’s loan files contained insufficient verification that
 Assets were not verified.   the borrower had the assets required to close the mortgage
                             loan. Borrowers must provide sufficient documentation to
                             demonstrate that they have the funds required to close the
                             loan. We found that in 39 of the 80 loans reviewed the

                                   Page 15                                     2003-KC-1001
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Finding 2


                            borrower did not demonstrate that he or she had enough
                            funds to close the loan. In many cases the lender had no
                            knowledge of how the borrower was able to obtain the
                            required funds, particularly when bank balances were very
                            low or negative.          For example, Federal Housing
                            Administration case #292-3832940 needed $3,520 to close
                            the loan. The assets documentation only verified $648 in a
                            checking account and $1,999 in a money market account.
                            This totals $2,647 and is $873 short of the amount required.

                            Cendant did not consistently obtain the required income
 Income was not verified.   information. Lenders are required to verify the income of
                            potential borrowers. The documentation required for this
                            verification includes pay stubs, verbal or written verification
                            of employment, W-2s, and tax returns (for self-employed
                            borrowers and for commission, fee, and tip income). Forty-
                            six of the 80 loans we reviewed did not have sufficient
                            evidence to support the income reported. Often the income
                            was calculated incorrectly or there were not any pay stubs or
                            verification of employment available. For example, Federal
                            Housing Administration case #291-2653366 states that the
                            income of the borrower is $3,952.92. The documentation
                            provided only supported the $3,684.42 in income. There was
                            no verification of employment done.

                                                                        # OF         % OF
                              SUMMARY OF NON-COMPLIANCE              INSTANCES      LOANS
                            Possible fraud indicators (unexplained
                            discrepancies)                                9         11.25%
                            W-2 Different name/address or missing         6          7.50%
                            Inadequate Ratios / Qualifiers               15         18.75%
                            Gift funds not documented                    22         27.50%
                            Not enough assets to close                   39         48.75%
                            Inconsistent/Unverified Income               46         57.50%

                            (See Appendix D for a chart of loan deficiencies and
                            Appendix E for the details on each loan.)

                            The problems in the above chart are not independent of one
                            another. The numbers in the above chart do not total to 73
                            because many of the files contained more than one error.
                            Seventy-three of the eighty loans reviewed had a minimum
                            of one problem.        Without further investigating the
                            discrepancies, Cendant’s underwriters have no way to


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                                                                              Finding 2


                          ensure the borrowers are able to meet their financial
                          obligations.

                          The staff of Cendant Mortgage Corporation did not adhere
Inadequate Training And   to HUD/Federal Housing Administration guidelines when
Supervision               submitting mortgage loans for endorsement. Although
                          Cendant had quality control procedures in place, such as,
                          training manuals, “Federal Housing Administration
                          situationals” on the Intranet site, and update bulletins, there
                          were no controls in place to ensure that Cendant staff
                          adhered to these written policies and procedures. This was
                          due in part to a lack of training and in part to corporate
                          culture that emphasized quantity over quality.

                          Cendant’s mortgage volume increased rapidly in recent
                          years, and Cendant was unable to hire and train staff
                          quickly enough to keep up with the workload. As a result,
                          Cendant put staff on the job before they had received
                          sufficient training. Management now plans to put these
                          employees back through training.

                          Management also did not provide subordinates appropriate
                          supervision. New underwriters had their work reviewed by
                          experienced peers, but the experienced underwriters were
                          not asked to provide feedback to the new underwriters on
                          their performance. Further, employees were not always
                          trained in the areas in which they worked.

                          Cendant had quality control procedures in place in addition
                          to the training manuals, “Federal Housing Administration
                          situationals”, and update bulletins.      Cendant’s "File
                          Completion Department" reviewed closed files and ensured
                          the files were complete before they were sent to HUD for
                          endorsement. However, these quality control procedures do
                          not ensure that the documentation was in place and accurate
                          at the time of closing because they are reviews done after
                          closing has already occurred. Therefore, there is no
                          assurance that the borrowers were eligible at the time of
                          closing. In addition, regardless of whether or not the File
                          Completion Department was able to obtain the required
                          information, the loan was submitted for endorsement
                          without proper documentation.

                          The corporate culture present at Cendant often led to the
                          belief that the loans should close, even if they did not meet

                                Page 17      Table of Contents             2003-KC-1001
Finding 2


                        the requirements.        Staff who were aware of the
                        documentation and qualification requirements often did not
                        ensure requirements were followed. Cendant Mortgage
                        Company’s mission statement is: "We promise to treat
                        customers like family while providing financing for the
                        American dream. The experience will be smooth, easy, and
                        at times, fun. We will do this with unequalled passion."
                        This mission, and the process of customers rating their sales
                        counselors, hindered the sales counselors from pressing the
                        customers to provide the required documentation. Based on
                        staff interviews and observation while reviewing the loan
                        files, we determined that Cendant focused on the quantity of
                        loans at the expense of the quality. Staff was compensated
                        based upon output and customer satisfaction, rather than on
                        the reliability and completeness of the data gathered. If an
                        underwriter failed to approve a loan, the supervisor could
                        reverse their decision, or the counselors would keep bringing
                        the loan back with different scenarios in repeated efforts to
                        get the loan approved. Oftentimes, many employees worked
                        on the same loan file. Because multiple employees worked
                        on the same loan file, it was difficult to assure that a specific
                        employee maintained responsibility for obtaining proper
                        documentation. This created confusion about whether or not
                        the file met the required standards and afforded the
                        opportunity for employees to bypass the controls in place.
                        As a result, loans were approved without proper evaluation.
                        Overall, Cendant was too focused on customer service and
                        failed to ensure that the loans met the standards required by
                        HUD/Federal Housing Administration.

                        Poor underwriting results in mortgages being insured by
Results of Improperly   HUD which do not meet the minimum requirements.
Underwritten Loans      Because Cendant processes all of it’s loans in a central
                        location, it is reasonable to expect that these same problems
                        have occurred nationwide. This increases the risk of loss to
                        the HUD mortgage insurance fund. At the time we selected
                        our sample, all 80 loans selected had been in default within
                        2 years of origination. The status of the 73 loans with
                        deficiencies, as of July 31, 2002, is reflected in the
                        following table:




                                                     Table of Contents
2003-KC-1001                  Page 18
                                                                       Finding 2


                                                       Mortgage        # of
                               Status                  Amount         Loans
                   No Longer in Default                     $1,941,374 25
                   Currently in Default                       $853,983    14
                   In Foreclosure/Foreclosed                $1,308,298    19
                   Paid a Claim                             $ 807,557     15
                   TOTALS                                   $4,911,212    73

                   This finding includes 14 loans totaling $933,330 that are also
                   reported as improper late endorsements in Finding 1. To
                   account for the overlap, our recommendations for this
                   finding only relate to the other 59 loans totaling $3,977,882.
                   In addition, four of the loans we reviewed, totaling $333,059,
                   have already been terminated without a claim as of August
                   31, 2002. These four loans are included in the above chart as
                   brought current after default. Since these four loans no
                   longer represent a risk to the insurance fund, we have
                   removed them from our recommendation. The remaining 55
                   loans total $3,644,823.

                   As of August 31, 2002, HUD has paid a claim on thirteen
                   of the remaining 55 loans. Seven of the thirteen properties
                   have been sold, with a loss to HUD of $139,821. HUD paid
                   claims on the other six loans totaling $303,384, with an
                   indeterminate loss at this point. The loss to HUD will not be
                   known until the properties are sold.

                   Cendant needs to indemnify HUD for the 55 improperly
                   originated loans and implement controls that provide
                   assurance employees are following HUD requirements when
                   originating loans. In addition, because Cendant processes its
                   loans centrally, we believe that all of Cendant’s Federal
                   Housing Administration-insured loans processed during this
                   same time period may have the same types of origination
                   deficiencies. Therefore, Cendant should not be paid for any
                   claims for loans originated during this period until the loans
                   undergo a HUD review to ensure they met HUD standards.



Auditee Comments   Excerpts from Cendant’s comments on our draft finding
                   follow. Appendix F, page 257, contains the complete text
                   of the comments.

                   As for the second draft Finding, that highlights certain loan

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Finding 2


               origination and processing issues, we note the following.

               Cendant requires extensive mandatory training of all
               Cendant employees involved in the loan registration and
               processing areas, including training on specific issues that
               are raised by Cendant’s Quality Control group and through
               other audits. Such training has focused on, among other
               subjects, gift documentation; the purpose and proper
               completion of required FHA forms; asset documentation;
               and verbal VOEs. Our training encompasses classroom
               work (and testing), power point presentations, job aids, an
               update to extensive on-line resources, underwriting
               guidelines, and policy and procedure handbooks. We
               discuss this control environment created by the interface
               between Underwriting and our processing areas in more
               detail in Appendix #7. (see page 267 of this audit report)

               Cendant also vigorously monitors the work of our loan
               registration, processing and closing personnel. Our Senior
               Vice President personally reviews and authorizes, if
               appropriate, all underwriting exceptions; weekly reviews all
               loan packages as to which there is an indication that the
               social security number of the applicant is invalid; weekly
               reviews and reports on trends involving loan quality;
               weekly reviews “Batting Average” reports on loan quality
               with affected loan processors; and monthly receives and
               reviews reports from senior managers on their progress in
               completing assigned special projects to improve loan
               quality. In addition, 50 percent of a supervisor’s incentive
               pay is now tied directly to the quality of the FHA loans
               originated.

               Moreover, Cendant has placed onto each FHA loan
               processing team underwriters who control the clearing of
               all conditions and who are directly responsible for
               preventing loans from closing prematurely. Weekly reports
               track “unallowed” condition clearing (under 2 percent
               currently), which allows Cendant to take immediately
               disciplinary action against the appropriate loan processors.
               In addition, an IT “block” has been inserted into the loan
               processing system that prevents loan processors from
               arranging for the closing of any loan without the prior
               approval of the underwriter. Specially trained Cendant
               employees also have been hired to review all HUD-1s prior
               to disbursement of funds to assure proper documentation of

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                                                     Finding 2


the minimum required 3 percent investment.

Finally, all loans with “red flag” indicators of potential
fraud or failure to adhere to all Cendant requirements are
reviewed by the Senior Vice President and investigated in
depth by our experienced Quality Control experts. Their
results are reported to our Human Relations Department for
disciplinary action and, as appropriate, findings are reported
to HUD.

With respect to the second Finding, we carefully reviewed
each of the 80 defaulted loans cited in the draft OIG draft
audit. Our review revealed the following.

Seventy-five percent of the individual audit findings with
respect to these 80 loans are explained upon a review of
loan file documentation. That results in 38 of the 80 cited
loans having no unresolved findings remaining following
this review. Additional details about these loans and
findings may be found in Appendix #7 (see page 267 of this
report). Cendant will indemnify HUD for any losses it may
incur with respect to the 42 loans with unresolved findings
remaining.

Specifically, of the 15 “fraud indicator” findings cited in
the draft OIG audit report, 12 of are fully explained and
supported by documentation in the relevant loan files.

Of the 17 findings of improper non-purchasing spouse
signatures on the mortgage or security instrument, 14
required this signature in order to establish a valid first lien
secured by the property under state law, and that practice
expressly is permitted by HUD in its relevant underwriting
requirements and Handbook. All 14 of these loans involve
property in Missouri, which is a “homestead” state.
Missouri law requires a non-purchasing spouse not on title
to the property to sign the mortgage or security instrument
in order to establish the required lien on the property. The
relevant HUD Handbook expressly recognizes and
authorizes this practice, and neither Cendant nor HUD,
under these circumstances, considers the non-purchasing
spouse to be a loan applicant or borrower. Accordingly, a
non-purchasing spouse in Missouri is not subject to FHA
underwriting requirements and is not required to sign the
loan application.

      Page 21                                     2003-KC-1001
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Finding 2



                    Of the 18 findings in the OIG draft audit report specifying
                    different or missing names or addresses on W-2 forms, 12
                    are fully explained and supported by documentation in the
                    file.

                    Of the 18 findings citing inadequate credit ratios or
                    compensating factors, 13 fully conform to all applicable
                    FHA underwriting guidelines.

                    Of the 25 findings citing inadequate gift fund
                    documentation, 12 are fully supported by documentation in
                    the file.

                    Of the 39 findings of insufficient assets to close, 21 of the
                    cited loan files contained documentation evidencing
                    sufficient assets.

                    Of the 50 findings of inconsistent or unverified incomes, 33
                    of the cited loan files included appropriate documentation
                    of the income upon which the underwriting decision was
                    based.



OIG Evaluation of   From the initiatives detailed by Cendant in its written
Auditee Comments    response, it sounds as if they are well on the way to
                    tightening their controls. Specifically, linking the incentive
                    pay of supervisors to loan quality and the IT block in the
                    system to prevent unauthorized closings are notable
                    improvements.

                    Cendant said that it disputed 75 percent of the deficiencies
                    that we cited. In our draft finding, we cited 182 deficiencies
                    in the 80 loan files. Cendant indicated on its Appendix 7 that
                    it disagreed 117 of these. This is a dispute rate of 64%. In
                    total, Cendant believed that 38 of the 80 loans had none of
                    the listed deficiencies.

                    Cendant provided documentation that was sufficient to clear
                    45 of the individual deficiencies listed on our chart; however,
                    this only removed 7 loans from the finding because most
                    loans had multiple deficiencies. We adjusted the body of this
                    finding to reflect the updated deficiency counts. See


2003-KC-1001              Page 22              Table of Contents
                                                                    Finding 2


                  Appendix D for Cendant’s detailed comments on each loan
                  and our response.



Recommendations   We recommend that the Assistant Secretary for Housing-
                  Federal Housing Commissioner, Chairman, Mortgagee
                  Review Board:

                  2A.   Take appropriate action against Cendant for not
                        complying with HUD’s requirements, including
                        requiring Cendant to indemnify HUD/Federal
                        Housing Administration for the 55 loans totaling
                        $3,644,823 (Appendix D).

                  2B.   Verify Cendant has implemented an effective quality
                        control plan that prevents files from being submitted
                        without the appropriate documentation.

                  2C.   Require the appropriate HUD Housing office to
                        perform a detailed review of any loan that had first
                        amortization between August 1, 1999 and July 31,
                        2001 that is subsequently submitted for claim and seek
                        indemnification if the loan was improperly originated.




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2003-KC-1001           Page 24
Management Controls
Management controls include the plan of organization, methods and procedures adopted by
management to ensure that its goals are met. Management controls include the processes for
planning, organizing, directing, and controlling program operations. They include the systems for
measuring, reporting, and monitoring program performance.



                                     We determined the following management controls were
 Relevant Management
                                     relevant to our audit objectives:
 Controls
                                            ·      Controls over origination of FHA loans.

                                            ·      Controls over submitting loans to HUD for
                                                   endorsement.

                                            ·      Controls over recording mortgage payments.

                                     We assessed the relevant controls identified above.

                                     It is a significant weakness if management controls do not
                                     provide reasonable assurance that the process for planning,
                                     organizing, directing, and controlling program operations
                                     will meet an organization’s objectives.

                                     Based on our review, we believe the following items are
 Significant Weaknesses              significant weaknesses:

                                        ·   Cendant does not have adequate controls to ensure it
                                            properly submits closed loans to HUD for
                                            endorsement (see Finding 1).

                                        ·   Cendant does not have adequate controls to ensure it
                                            originates its loans in accordance with HUD’s
                                            requirements (see Finding 2).




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2003-KC-1001           Page 26
Follow Up On Prior Audits
This is the first Office of Inspector General Audit of Cendant Mortgage Corporation.




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2003-KC-1001                 Page 28
                                                                                  Appendix A

Schedule of Questioned Costs
and Funds Put to Better Use
Recommendation                    Type of Questioned Cost               Funds Put to
   Number                  Ineligible 1/         Unsupported 2/          Better Use 3/

1A                                                                      $110,905,714
2A                                                                        $3,644,823


1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law, contract or Federal, State or local
     policies or regulations.

2/   Unsupported costs are costs charged to a HUD-financed or HUD-insured program or
     activity and eligibility cannot be determined at the time of audit. The costs are not
     supported by adequate documentation or there is a need for a legal or administrative
     determination on the eligibility of the costs. Unsupported costs require a future decision
     by HUD program officials. This decision, in addition to obtaining supporting
     documentation, might involve a legal interpretation or clarification of Departmental
     policies and procedures.

3/   Funds Put to Better Use are costs that will not be expended in the future if our
     recommendations are implemented. (discuss the types of Funds Put to Better Use which
     include:

     Costs not incurred, de-obligation of funds, Withdrawal of Interest, Reductions in Outlays
     Avoidance of Unnecessary Expenditures, Loans and Guarantees not Made, and Other
     Savings (see DAAMS user’s manual Appendix D-73 for definitions)




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Appendix A




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2003-KC-1001    Page 30
                                                Appendix B

Chart of Loans Examined




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2003-KC-1001    Page 32
                                                                                                            Appendix C

Improper Late Submission Details
                                                                                                                 Due
                 Cendant                          Days from                                                    Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                   Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                HOC   3/25/02 Payment

 1   011-4537854 0004593653   $72,960   4/11/00    4/13/00     214   3027500139 30275   Atlanta   Current       3/1/00

 2   011-4538604 0003471075   $85,956   7/14/00    7/20/00     289   3027500139 30275   Atlanta   > 90 days     6/1/00
                                                                                                                5/1/00
                                                                                                                2/1/00
                                                                                                                1/1/00

 3   011-4546101 0008716797   $51,873   4/19/00    4/24/00     162   3027500139 30275   Atlanta   > 30 days     3/1/00
                                                                                                                2/1/00

4^^ 011-4558218 0002479137    $20,194    9/6/00    9/11/00     240   3027500139 30275   Atlanta   F/C           8/1/00
                                                                                                                7/1/00
                                                                                                                5/1/00
                                                                                                                4/1/00
                                                                                                                3/1/00

 5   011-4572118 0010040095   $94,402   10/5/00    10/12/00    247   3027500139 30275   Atlanta   Current       7/1/00

 6   011-4573789 0010062453 $119,019    7/31/00    8/25/00     175   3027500139 30275   Atlanta   Current       7/1/00

 7   011-4582404 0010220333   $44,632   11/2/00    11/7/00     254   3027500139 30275   Atlanta   > 90 days     9/1/00
                                                                                                                8/1/00
                                                                                                                7/1/00
                                                                                                                6/1/00
                                                                                                                5/1/00

 8   011-4583337 0010249357   $50,287   7/20/00    7/26/00     141   3027500139 30275   Atlanta   Current       7/1/00
                                                                                                                6/1/00

 9   011-4583357 0010252351   $64,369   10/6/00    10/12/00    203   3027500139 30275   Atlanta   > 90 days     9/1/00

10   011-4584218 0010260792   $35,339    2/9/01    2/13/01     338   3027500139 30275   Atlanta   Current       1/1/01
                                                                                                                8/1/00

11   011-4584609 0010276228   $56,970   11/27/00   12/12/00    265   3027500696 30275   Atlanta   > 90 days     10/1/00
                                                                                                                9/1/00
                                                                                                                8/1/00
                                                                                                                7/1/00

12   011-4598708 0010450732   $38,369   6/15/00    6/23/00     76    3027500139 30275   Atlanta   > 90 days     6/1/00

13   011-4600429 0010501641   $46,345   6/30/00    7/13/00     67    3027500139 30275   Atlanta   Bankruptcy    6/1/00

14^^ 011-4609326 0010979854   $54,853   10/20/00   10/25/00    105   3027500139 30275   Atlanta   Current       10/1/00
                                                                                                                9/1/00

15   011-4615309 0010850550 $114,929    6/15/01    6/22/01     392   3027500139 30275   Atlanta   > 30 days     2/1/01

16^^ 011-4617873 0010889046   $57,970   8/10/00    8/16/00     72    3027500139 30275   Atlanta   REO           7/1/00




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                                                                      Table of Contents
Appendix C


                                                                                                                     Due
                  Cendant                          Days from                                                       Date of
OIG FHA Case       Loan   Mortgage Date     Date   Closing to Originating Holder                      Status as of Missed
No. Number        Number Amount Submitted Endorsed Submitted      ID       ID                   HOC   3/25/02 Payment

 17   011-4619999 0010919058   $45,436   1/26/01    1/31/01        224   3027500139 30275   Atlanta   > 90 days     1/1/01
                                                                                                                    12/1/00
                                                                                                                    11/1/00
                                                                                                                    10/1/00

 18   011-4629235 0012242608   $58,670   12/8/00    12/13/00       168   3027500139 30275   Atlanta   Current       11/1/00
                                                                                                                    10/1/00

19^^ 011-4630568 0012258737 $137,829     10/25/00   10/31/00       96    3027500139 30275   Atlanta   > 90 days     10/1/00

 20   011-4635247 0012288676 $108,444    2/20/01    2/23/01        207   3027500139 30275   Atlanta   Current       2/1/01
                                                                                                                    11/1/00

21^^ 011-4636078 0012293833    $59,509   10/1/00    10/27/00       74    3027500139 30275   Atlanta   Current       9/1/00

 22   011-4636610 0012316030   $69,515   5/24/01    5/24/01        289   3027500139 30275   Atlanta   Current       5/1/01
                                                                                                                    4/1/01
                                                                                                                    3/1/01
                                                                                                                    2/1/01

 23   011-4650142 0012544854   $39,891   12/15/00   12/21/00       106   3027500139 30275   Atlanta   > 90 days     12/1/00

 24   011-4660185 0013210398   $49,492    3/1/01    3/13/01        176   3027500139 30275   Atlanta   Current       2/1/01
                                                                                                                    1/1/01

25^^ 011-4666982 0013311295 $100,786     12/27/00   1/17/01        92    3027500139 30275   Atlanta   Current       12/1/00
                                                                                                                    11/1/00

 26   011-4668064 0013332580   $59,509    3/5/01     3/9/01        132   3027500139 30275   Atlanta   Current       1/1/01

 27   011-4668353 0013334172   $85,992    2/8/01    2/13/01        132   3027500139 30275   Atlanta   F/C           1/1/01

 28   011-4669388 0013328943   $50,184    3/6/01     3/8/01        130   3027500139 30275   Atlanta   Bankruptcy    1/1/01

 29   011-4674523 0013422928   $83,313    1/9/01    1/11/01        82    3027500139 30275   Atlanta   > 30 days     12/1/00

 30   011-4677752 0013482872   $46,615    6/1/01     7/7/01        214   3027501837 30275   Atlanta   Current       12/1/00

 31   011-4678872 0013492368   $64,468   4/20/01    4/30/01        171   3027501837 30275   Atlanta   Current       4/1/01

 32   011-4682168 0013521224   $50,485   1/15/01     2/2/01        76    3027501837 30275   Atlanta   Current       1/1/01

 33   011-4743215 0015064736   $87,023    3/6/02    3/15/02        313   3027500139 30275   Atlanta   Current       1/1/02
                                                                                                                    12/1/01
                                                                                                                    10/1/01
                                                                                                                    9/1/01

 34   011-4743238 0015066012   $56,453   9/27/01    10/11/01       140   3027500139 30275   Atlanta   Current       9/1/01

 35   011-4756340 0014329791   $71,872    8/6/01    8/16/01        74    3027500139 30275   Atlanta   Current       7/1/01




  2003-KC-1001                                                Page 34
                                                                                                                  Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC     3/25/02 Payment

36   011-4763001 0015367626   $69,351   10/9/01    10/27/01       116   3027500139 30275   Atlanta     Current        9/1/01
                                                                                                                      8/1/01

37   011-4772806 0015518822   $63,413   11/30/01   12/5/01        176   3027501837 30275   Atlanta     Current        11/1/01

38   011-4781808 0015583503   $73,841   10/29/01   11/1/01        115   3027500139 30275   Atlanta     > 30 days      10/1/01

39   011-4786046 0015718323   $73,206    2/1/02    2/21/02        185   3027501157 30275   Atlanta     Current        12/1/01

40   011-4787478 0015550528   $76,794   11/30/01   12/5/01        143   3027500139 30275   Atlanta     Current        11/1/01

41   011-4791857 0015793243   $90,492   11/20/01   12/11/01       137   3027500139 30275   Atlanta     > 30 days      11/1/01

42   022-1492376 0004439105   $35,339   9/11/00    9/15/00        361   3027500145 30275   Santa Ana   > 90 days      8/1/00
                                                                                                                      7/1/00
                                                                                                                      6/1/00
                                                                                                                      5/1/00
                                                                                                                      4/1/00

43   022-1508674 0009480435   $88,037   8/30/01     9/7/01        562   3027500145 30275   Santa Ana   SEE NOTE 1     7/1/01

44   022-1519115 0010651420   $74,349   10/26/00   11/20/00       167   3027500145 30275   Santa Ana   Current        8/1/00
                                                                                                                      7/1/00

45   022-1521052 0010871549   $68,336   9/21/00    9/27/00        118   3027500145 30275   Santa Ana   > 30 days      7/1/00

46   022-1535891 0010574077   $46,610    3/1/01     3/8/01        182   3027500145 30275   Santa Ana   SEE NOTE 1     11/1/00
                                                                                                                      10/1/00

47   022-1580963 0015627813 $101,097    12/20/01   12/28/01       155   3027500145 30275   Santa Ana   Current        12/1/01
                                                                                                                      11/1/01

48   023-0057212 0003648235   $45,131   8/21/00    8/24/00        356   3027500145 30275   Santa Ana   > 90 days      8/1/00

49   023-0132806 0009193566   $66,897   8/14/00    8/19/00        251   3027500145 30275   Santa Ana   SEE NOTE 1     5/1/00

50   023-0199793 0010121374 $130,777    9/14/00    9/21/00        209   3027500145 30275   Santa Ana   Current        4/1/00

51   023-0199808 0010097699   $92,025   9/19/00    9/22/00        217   3027500145 30275   Santa Ana   Current        6/1/00
                                                                                                                      5/1/00
                                                                                                                      4/1/00

52   023-0290708 0010635241   $94,590   7/31/00     8/4/00        89    3027501026 30275   Santa Ana   > 90 days      7/1/00

53   023-0314879 0012234365 $114,059    8/30/00     9/7/00        62    3027500145 30275   Santa Ana   SEE NOTE 1     8/1/00

54   023-0355605 0012511572 $142,326    12/5/00    12/8/00        113   3027500145 30275   Santa Ana   SEE NOTE 1     11/1/00

55   023-0382097 0013219621   $86,201   2/16/01    2/28/01        168   3027501026 30275   Santa Ana   > 60 day       2/1/01
                                                                                                                      1/1/01

56   023-0397584 0013339858 $108,832    2/20/01    2/27/01        144   3027501026 30275   Santa Ana   Current        2/1/01
                                                                                                                      1/1/01




                                                             Page 35                                         2003-KC-1001
Appendix C


                                                                                                                       Due
                  Cendant                          Days from                                                         Date of
OIG FHA Case       Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number        Number Amount Submitted Endorsed Submitted      ID       ID                   HOC     3/25/02 Payment

 57   023-0440204 0013640024 $122,711    1/31/01     2/6/01        84    3027501026 30275   Santa Ana   Current       1/1/01

 58   023-0501904 0014028849 $133,980     3/7/02    3/13/02        372   3027502296 30275   Santa Ana   Current       1/1/02
                                                                                                                      12/1/01
                                                                                                                      11/1/01
                                                                                                                      10/1/01
                                                                                                                      9/1/01

 59   023-0518793 0014118590 $127,991    4/30/01     5/7/01        66    3027501026 30275   Santa Ana   > 30 days     4/1/01

 60   023-0573305 0014427090   $69,261   6/28/01     7/5/01        79    3027502296 30275   Santa Ana   Current       6/1/01

 61   023-0612631 0015140429 $110,711    6/15/01    6/21/01        70    3027502296 30275   Santa Ana   Current       6/1/01

 62   031-2681200 0003529021   $35,254   1/24/00    1/27/00        131   3027500261 30275   Santa Ana   Current       1/1/00

 63   031-2683486 0004627063   $67,217   10/6/00    10/11/00       379   3027500261 30275   Santa Ana   Current       7/1/00
                                                                                                                      6/1/00

 64   031-2684049 0005043435   $47,607   12/14/99   12/17/99       82    3027500261 30275   Santa Ana   Current       11/1/99

 65   031-2684344 0005046941   $34,936   7/21/00    7/27/00        283   3027500261 30275   Santa Ana   Current       5/1/00

 66   031-2690849 0009004938 $109,100     3/2/00     3/7/00        118   3027500261 30275   Santa Ana   Current       2/1/00

 67   031-2710076 0011039898   $97,450   5/16/00    5/19/00        98    3027500261 30275   Santa Ana   Current       5/1/00

 68   031-2711512 0010195162   $80,958   8/17/00    8/22/00        177   3027500261 30275   Santa Ana   Current       8/1/00
                                                                                                                      7/1/00
                                                                                                                      6/1/00

 69   031-2716670 0010335057   $46,447   8/14/00    8/22/00        95    3027500261 30275   Santa Ana   Claims        7/1/00

 70   031-2717725 0010356772   $64,466   8/28/00     9/7/00        150   3027500261 30275   Santa Ana   SEE NOTE 1    8/1/00
                                                                                                                      7/1/00
                                                                                                                      6/1/00
                                                                                                                      5/1/00

 71   031-2718897 0010380244   $52,972   11/17/00   11/17/00       212   3027500261 30275   Santa Ana   Bankruptcy    11/1/00
                                                                                                                      10/1/00
                                                                                                                      9/1/00
                                                                                                                      8/1/00

 72   031-2730948 0010632107   $39,834    8/8/00    8/14/00        88    3027500261 30275   Santa Ana   > 90 days     7/1/00

73^^ 031-2731500 0010651057    $76,960   11/10/00   11/24/00       155   3027500261 30275   Santa Ana   > 90 days     9/1/00
                                                                                                                      8/1/00

 74   031-2731710 0010649549   $54,054   10/25/00   11/6/00        173   3027500261 30275   Santa Ana   REO           10/1/00




  2003-KC-1001                                                Page 36
                                                                                                                   Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC     3/25/02 Payment

75   031-2737004 0010909901   $84,856    10/19/00   11/27/00       139    3027500261 30275   Santa Ana   > 90 days     8/1/00
                                                                                                                       7/1/00

76^^ 031-2739629 0010924892   $65,780    10/25/00   11/6/00        140    3027500261 30275   Santa Ana   > 90 days     10/1/00
                                                                                                                       9/1/00

77   031-2740163 0010978997   $84,356    1/19/01     2/1/01        200    3027501003 30275   Santa Ana   Current       1/1/01

78^^ 031-2742923 0010980571   $82,457    9/26/00    10/3/00        74     3027501003 30275   Santa Ana   Bankruptcy    9/1/00

79   031-2743147 0012242335   Adequate Documentation has been provided.

80   031-2751006 0013295563 $124,025     2/13/01    3/20/01        111    3027500261 30275   Santa Ana   Current       12/1/00

81   031-2753217 0012467874   $71,575    11/7/00    11/15/00       99     3027500261 30275   Santa Ana   > 30 days     10/1/00

82   031-2756061 0012570073   $73,462    12/26/00    1/3/01        117    3027500261 30275   Santa Ana   > 90 days     12/1/00

83   031-2758896 0012635579   $82,460    11/20/01   11/27/01       449    3027501003 39276   Santa Ana   > 90 days     11/1/01

84   031-2762508 0013227699 $123,978     4/20/01    4/26/01        232    3027500261 30275   Santa Ana   Current       4/1/01
                                                                                                                       3/1/01
                                                                                                                       2/1/01
                                                                                                                       12/1/00

85   031-2762701 0013223268   $51,873    2/12/01    2/21/01        157    3027500261 30275   Santa Ana   > 90 days     1/1/01

86   031-2766039 0015757750   $83,636    1/30/02     2/7/02        215    3027501003 30275   Santa Ana   Current       10/1/01

87   031-2768943 0013370598   $94,951     5/9/01    5/15/01        175    3027501859 30275   Santa Ana   REO           1/1/01

88   031-2773677 0013472881   $82,087    3/22/01    3/27/01        121    3027501003 30275   Santa Ana   Bankruptcy    3/1/01

89   031-2777373 0013623509   $57,029    11/12/01   12/13/01       343    3027500261 30275   Santa Ana   F/C           5/1/01

90   031-2779692 0013674957   $42,912    4/19/01    4/26/01        121    3027501003 30275   Santa Ana   Current       3/1/01

91   031-2786918 0013851951   $94,516     7/9/01    7/16/01        164    3027500261 30275   Santa Ana   SEE NOTE 1    6/1/01
                                                                                                                       4/1/01
                                                                                                                       3/1/01

92   031-2794829 0014071294   $94,024     5/7/01    5/11/01        69     3027501003 30275   Santa Ana   Bankruptcy    4/1/01

93   031-2795217 0014078877   $27,563    10/1/01    10/17/01       217    3027500261 30275   Santa Ana   Current       9/1/01
                                                                                                                       8/1/01
                                                                                                                       7/1/01

94   031-2797037 0014123749   Adequate Documentation has been provided.

95   031-2809453 0014426605   $73,915    8/16/01    8/23/01        125    3027501003 30275   Santa Ana   REO           8/1/01

96   031-2815929 0015114101   $53,474    8/16/01    8/22/01        100    3027500261 30275   Santa Ana   Bankruptcy    8/1/01
                                                                                                                       7/1/01

97   031-2817069 0015145048   $67,063    8/27/01    9/14/01        122    3027501003 30275   Santa Ana   F/C           8/1/01




                                                              Page 37                                          2003-KC-1001
Appendix C


                                                                                                                           Due
                  Cendant                          Days from                                                             Date of
OIG FHA Case       Loan   Mortgage Date     Date   Closing to Originating Holder                            Status as of Missed
No. Number        Number Amount Submitted Endorsed Submitted      ID       ID                       HOC     3/25/02 Payment

 98   031-2828084 0015154040   $71,237     7/30/01    8/16/01        67      3027501003 30275   Santa Ana   F/C           7/1/01

 99   042-7653646 0013267083 $170,360      12/7/00   12/13/00        91      3027501049 30275   Santa Ana   SEE NOTE 1    11/1/00

100 042-7659002 0013405386 $182,005        6/14/01    6/20/01        227     3027500089 30275   Santa Ana   Current       5/1/01
                                                                                                                          4/1/01
                                                                                                                          3/1/01
                                                                                                                          2/1/01
                                                                                                                          1/1/01
                                                                                                                          12/1/00

101 042-7702986 0014498810 $184,000        1/2/02     1/17/02        257     3027501049 30275   Santa Ana   Current       11/1/01
                                                                                                                          10/1/01

102 043-6448754 0009100447     $64,900     7/24/00    7/27/00        266     3027500089 30275   Santa Ana   Current       7/1/00
                                                                                                                          6/1/00
                                                                                                                          5/1/00
                                                                                                                          4/1/00
                                                                                                                          3/1/00
                                                                                                                          2/1/00

103 043-6487706 0010052710 $109,831        9/15/00    9/21/00        204     3027500089 30275   Santa Ana   > 90 days     9/1/00
                                                                                                                          8/1/00

104 043-6522548 0010406452 $138,037        6/8/00     6/23/00        73      3027501049 30275   Santa Ana   Claims        5/1/00

105 043-6590055 0012446753 $114,059       11/14/00   11/28/00        106     3027500089 30275   Santa Ana   Current       10/1/00

106 043-6669001 0013782735 $181,647        4/11/01    4/17/01        117     3027500089 30275   Santa Ana   Current       3/1/01

107 043-6673671 0013916119 $152,840        7/19/01    7/25/01        146     3027500089 30275   Santa Ana   SEE NOTE 1    7/1/01
                                                                                                                          6/1/01

108 043-6739160 0015117963 $117,334        7/26/01    7/31/01        87      3027501049 30275   Santa Ana   Current       7/1/01

109 043-6753293 0015282296 $175,151        1/9/02     1/11/02        195     3027500089 30275   Santa Ana   SEE NOTE 1    9/1/01

110 043-6767995 0015454119 $185,873       10/24/01    11/7/01        146     3027500089 30275   Santa Ana   Current       8/1/01

111 044-3824659 0006864615 $124,808        3/14/00    3/17/00        71      3027500116 30275   Santa Ana   SEE NOTE 1    2/1/00

112 044-3826183 0003635745 $167,500        4/27/00    5/3/00         142     3027500116 30275   Santa Ana   Current       3/1/00

113 044-4015735 0015978075 $228,009       10/19/01   10/25/01        81      3027500116 30275   Santa Ana   SEE NOTE 1    10/1/01

114 045-5450105 0010668796     $90,111     8/11/00    8/23/00        95      3027500089 30275   Santa Ana   SEE NOTE 1    7/1/00

115 045-5494952 0012369393 $125,163       12/20/00   12/27/00        134     3027500089 30275   Santa Ana   Current       12/1/00
                                                                                                                          11/1/00

116 045-5512461 0012659926     $94,673   Adequate Documentation has been provided.




  2003-KC-1001                                                  Page 38
                                                                                                                   Appendix C


                                                                                                                        Due
                  Cendant                          Days from                                                          Date of
OIG FHA Case       Loan   Mortgage Date     Date   Closing to Originating Holder                         Status as of Missed
No. Number        Number Amount Submitted Endorsed Submitted      ID       ID                    HOC     3/25/02 Payment

117 045-5576864 0013864467    Adequate Documentation has been provided.

118 048-1990029 0009106030 $109,831      5/17/00    5/23/00        205    3027500116 30275   Santa Ana   Current       1/1/00

119 048-2059657 0001445832    $73,448     2/9/01    3/13/02        396    3027500116 30275   Santa Ana   Current       1/1/01
                                                                                                                       12/1/00
                                                                                                                       11/1/00
                                                                                                                       10/1/00
                                                                                                                       9/1/00
                                                                                                                       8/1/00

120 048-2247326 0010871390 $102,157      12/20/00   12/27/00       209    3027500116 30275   Santa Ana   Current       12/1/00
                                                                                                                       11/1/00

121 048-2313381 0011315546 $145,798      9/13/00    9/18/00        70     3027500116 30275   Santa Ana   SEE NOTE 1    8/1/00

122^^048-2360851 0012585782 $165,645     12/21/00   12/28/00       112    3027500116 30275   Santa Ana   Current       12/1/00
                                                                                                                       11/1/00

123 048-2588194 0014080998 $124,245      6/25/01    6/29/01        130    3027500116 30275   Santa Ana   Current       6/1/01

124 048-2858143 0015559792 $159,497      11/16/01   11/21/01       144    3027500116 30275   Santa Ana   Current       11/1/01
                                                                                                                       10/1/01
                                                                                                                       9/1/01

125 048-2909540 0015799307 Adequate Documentation has been provided.

126 052-0853148 0004673257 $198,969       1/4/00     1/7/00        109    3027500122 30275   Denver      SEE NOTE 1    12/1/99
                                                                                                                       11/1/99

127 052-0867051 0005047006 $163,606       8/1/00     8/7/00        280    3027500122 30275   Denver      SEE NOTE 1    2/1/00

128 052-0911870 0009376898 $178,937      12/1/00    12/11/00       399    3027500122 30275   Denver      Current       10/1/00
                                                                                                                       7/1/00

129 052-0914696 0009332859    $87,435     3/7/00     3/7/00        98     3027500122 5366    Denver      > 90 days     1/1/00

130 052-0935513 0003635000    Adequate Documentation has been provided.

131 052-0961276 0005126107    $90,695    7/10/00    7/10/00        194    3027500122 5366    Denver      SEE NOTE 1    6/1/00
                                                                                                                       5/1/00
                                                                                                                       4/1/00

132 052-0971460 0010049328 $124,745      2/13/01    2/20/01        379    3027500644 30275   Denver      Current       8/1/00




                                                              Page 39                                          2003-KC-1001
Appendix C


                                                                                                                           Due
                 Cendant                          Days from                                                              Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                             Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC        3/25/02 Payment

133 052-0980643 0010120129 $113,861      6/21/00    6/26/00        127    3027500122 30275   Denver         > 30 days     6/1/00

134 052-1050895 0010507762    $76,687    12/20/00    1/2/01        236    3027500122 30275   Denver         Current       12/1/00
                                                                                                                          11/1/00
                                                                                                                          8/1/00

135 052-1074810 0010634301    $89,604    6/29/01     7/9/01        333    3027500122 30275   Denver         > 30 days     6/1/01

136 052-1119401 0011999232 $134,970      11/30/00   12/22/00       178    3027500122 30275   Denver         Current       9/1/00
                                                                                                                          8/1/00

137 052-1177672 0012508800 $186,254      12/12/00   12/20/00       134    3027500122 30275   Denver         SEE NOTE 1    11/1/00

138 052-1232099 0012689683 $124,474       9/6/01    9/20/01        246    3027500122 30275   Denver         > 60 day*     8/1/01
                                                                                                                          7/1/01
                                                                                                                          6/1/01

139 052-1232937 0013318290 $141,684      10/17/01   10/29/01       336    3027500122 30275   Denver         F/C           7/1/01
                                                                                                                          6/1/01
                                                                                                                          5/1/01

140 052-1276859 0013518196 $163,344      5/23/01     6/4/01        205    3027500122 30275   Denver         Current       5/1/01
                                                                                                                          4/1/01

141 052-1278387 0013522719 $129,929      3/20/01     4/5/01        112    3027500122 30275   Denver         Current       2/1/01
                                                                                                                          1/1/01

142 052-1542893 0015229727    $54,512    8/31/01     9/6/01        123    3027501814 30275   Denver         Bankruptcy    8/1/01

143 061-2044006 0004055539    $57,230    12/16/99   12/20/99       83     3027500043 30275   Philadelphia   Current       12/1/99

144 061-2046630 0004179057    Adequate Documentation has been provided.

145 061-2062837 0007597172 $143,150       3/6/01    3/12/01        487    3027500043 30275   Philadelphia   Current       1/1/01
                                                                                                                          12/1/00

146 061-2074806 0009266040    $60,625    7/27/00    7/31/00        212    3027500043 30275   Philadelphia   SEE NOTE 1    7/1/00
                                                                                                                          6/1/00

147 061-2109231 0010195709    Adequate Documentation has been provided.

148 061-2273723 0015087927 $183,549      12/10/01   12/14/01       161    3027501525 30275   Philadelphia   F/C           11/1/01

149^^071-0841552 0012406104   $67,465    10/19/00   10/23/00       80     3027509990 30275   Philadelphia   REO           10/1/00




  2003-KC-1001                                                Page 40
                                                                                                                    Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC        3/25/02 Payment

150 071-0844267 0012365060   $78,757   5/18/01    5/22/01        263   3027509990 30275   Philadelphia   F/C            5/1/01
                                                                                                                        4/1/01
                                                                                                                        3/1/01
                                                                                                                        2/1/01
                                                                                                                        1/1/01
                                                                                                                        12/1/00

151 071-0849398 0013316781   $48,960   8/13/01    8/15/01        280   3027509990 30275   Philadelphia   SEE NOTE 1     2/1/01

152 081-0643788 0008965907 $119,939    2/25/00    2/29/00        126   3027500014 30275   Philadelphia   > 90 days      2/1/00

153 091-3240281 0006694350   $51,125   8/14/00    8/22/00        279   3027500486 30275   Atlanta        Current        7/1/00

154 091-3240462 0008609844   $50,485   5/16/00    5/23/00        217   3027500486 30275   Atlanta        > 90 days      4/1/00

155 091-3249484 0009455445   $79,959   5/23/00    6/12/00        175   3027500486 30275   Atlanta        > 60 day       5/1/00
                                                                                                                        3/1/00

156 091-3262757 0010025120   $61,968   9/20/00    9/25/00        258   3027500486 30275   Atlanta        Current        9/1/00

157 091-3272199 0010226553   $54,294    9/7/00    9/14/00        183   3027500486 30275   Atlanta        > 90 days      8/1/00
                                                                                                                        7/1/00
                                                                                                                        6/1/00

158 091-3272719 0010240810   $49,980   2/22/01    2/26/01        335   3027500486 30275   Atlanta        > 90 days      2/1/01
                                                                                                                        1/1/01
                                                                                                                        12/1/00

159 091-3285922 0010466449   $42,912   10/4/00    10/28/00       159   3027501111 30275   Atlanta        > 90 days      9/1/00
                                                                                                                        8/1/00
                                                                                                                        7/1/00

160 091-3299422 0005610993   $52,822   8/28/00     9/7/00        81    3027500486 30275   Atlanta        Current        8/1/00

161 091-3304210 0010880979 $101,848    8/29/00     9/6/00        95    3027500486 30275   Atlanta        > 30 days      8/1/00

162 091-3324976 0012435731   $69,328   12/19/00    1/5/01        141   3027500486 30275   Atlanta        Current        12/1/00
                                                                                                                        11/1/00
                                                                                                                        10/1/00
                                                                                                                        9/1/00

163 091-3330177 0012239422   $82,457   12/26/00    1/5/01        131   3027500486 30275   Atlanta        F/C            12/1/00

164 091-3333774 0012465811   $53,664   11/1/00    11/8/00        82    3027500486 30275   Atlanta        > 90 days      10/1/00

165 091-3334422 0012622064   $72,962   3/19/01    3/23/01        209   3027500486 30275   Atlanta        > 90 days      3/1/01

166 091-3335910 0012654786   $70,419    4/2/01     4/9/01        199   3027500486 30275   Atlanta        SEE NOTE 1     3/1/01

167 091-3340559 0013260385   $95,166   12/8/00    12/14/00       91    3027500486 30275   Atlanta        Current        11/1/00




                                                            Page 41                                            2003-KC-1001
Appendix C


                                                                                                                     Due
                 Cendant                          Days from                                                        Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                       Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC   3/25/02 Payment

168 091-3345454 0013360532   $48,500     2/7/01    2/11/01        124    3027501111 30275   Atlanta   > 90 days     1/1/01
                                                                                                                    12/1/00

169 091-3347744 0013401740   $47,607    2/14/01     3/9/01        131    3027501951 30275   Atlanta   > 90 days     1/1/01
                                                                                                                    12/1/00
                                                                                                                    11/1/00

170 091-3349360 0013425962 $120,246     3/15/01    3/23/01        143    3027500486 30275   Atlanta   Current       2/1/01
                                                                                                                    1/1/01
                                                                                                                    12/1/00

171 091-3359590 0013633110 $124,025     4/17/01    4/27/01        152    3027501111 30275   Atlanta   > 90 days     2/1/01
                                                                                                                    1/1/01

172 091-3372668 0013862107   $53,165     7/2/01     7/9/01        178    3027501111 30275   Atlanta   Current       3/1/01

173 091-3383729 0014122998   $69,451     8/1/01    8/10/01        154    3027501939 30275   Atlanta   REO           7/1/01
                                                                                                                    6/1/01
                                                                                                                    5/1/01

174 091-3401159 0014134480   $80,860    6/25/01    7/20/01        110    3027500474 30275   Atlanta   Current       6/1/01
                                                                                                                    5/1/01

175 091-3404184 0013894514   $76,198    10/1/01    10/29/01       95     3027500474 30275   Atlanta   Current       9/1/01
                                                                                                                    8/1/01

176 091-3417005 0015253339 $110,353     8/27/01    9/10/01        111    3027501134 30275   Atlanta   Current       8/1/01

177 091-3447479 0015674252   $98,074    10/15/01    4/3/02        108    3027500474 30275   Atlanta   SEE NOTE 1    9/1/01
                                                                                                                    8/1/01

178 092-8012686 0003926565   $72,462    1/20/00    1/25/00        119    3027500474 30275   Atlanta   Current       1/1/00
                                                                                                                    12/1/99

179 092-8065564 0008670945   $75,461    1/28/00     2/1/00        79     3027500474 30275   Atlanta   > 90 days     1/1/00

180 092-8076413 0004429486   Adequate Documentation has been provided.

181 092-8124315 0005466644 $118,939     6/28/00     7/5/00        191    3027500474 30275   Atlanta   Current       6/1/00

182 092-8159711 0010140994   $65,847    2/12/01    2/26/01        360    3027500474 30275   Atlanta   > 90 days     1/1/01
                                                                                                                    12/1/00

183 092-8177376 0010271567 $124,025     8/29/00     9/7/00        182    3027500474 30275   Atlanta   SEE NOTE 1    5/1/00

184 092-8188175 0010298149   $86,452    11/27/00   12/1/00        255    3027500687 30275   Atlanta   > 90 days     8/1/00
                                                                                                                    7/1/00

185 092-8226381 0010528941 $118,439     7/18/00    7/21/00        81     3027500474 30275   Atlanta   Current       6/1/00




  2003-KC-1001                                               Page 42
                                                                                                                 Appendix C


                                                                                                                     Due
                 Cendant                          Days from                                                        Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                       Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC   3/25/02 Payment

186 092-8276126 0010934545 $101,227     8/22/00    8/29/00        83     3027500474 30275   Atlanta   Bankruptcy     8/1/00

187 092-8332864 0010085777 $117,940      5/7/01    5/12/01        269    3027500474 30275   Atlanta   > 90 days      1/1/01

188 092-8334763 0012444618   $63,867    2/12/01    2/14/01        199    3027501134 30275   Atlanta   Bankruptcy     1/1/01

189 092-8338634 0012467940   $92,735     7/3/01    7/12/01        337    3027500474 30275   Atlanta   Current        1/1/01

190 092-8348943 0012522876 $107,117     2/21/01    2/26/01        149    3027500474 30275   Atlanta   Current        2/1/01

191 092-8353937 0012577599 $113,942      7/3/01    7/11/01        307    3027500474 30275   Atlanta   Current        6/1/01
                                                                                                                     5/1/01

192 092-8422398 0013510599   $52,785    7/20/01    8/15/01        262    3027500474 30275   Atlanta   > 90 days      3/1/01
                                                                                                                     2/1/01

193 092-8444630 0013727714   $91,453     2/6/01    2/22/01        63     3027500474 30275   Atlanta   Current        1/1/01

194 092-8494354 0013919584   $90,809     9/6/01    9/20/01        231    3027500474 30275   Atlanta   Current        3/1/01

195 092-8500262 0014061204   $78,876     6/5/01    6/14/01        98     3027501939 30275   Atlanta   Current        5/1/01

196 092-8622456 0015256209   $83,230    10/19/01   10/30/01       108    3027501134 30275   Atlanta   Current        10/1/01
                                                                                                                     9/1/01

197 092-8646271 0015326143 $105,245     8/24/01     9/6/01        98     3027500474 30275   Atlanta   Current        8/1/01

198 092-8658132 0015415052 $113,390     10/26/01   3/18/02        135    3027501945 30275   Atlanta   Current        9/1/01
                                                                                                                     8/1/01

199 092-8668044 0015501927   $73,841     2/4/02    2/11/02        213    3027501134 30275   Atlanta   Current        1/1/02

200 093-4616794 0004303020   $83,457    12/23/99    1/3/00        84     3027500474 74649   Atlanta   > 90 days      11/1/99

201 093-4617638 0004340212   $65,956    1/26/00    1/31/00        135    3027500457 30275   Atlanta   Claims         1/1/00

202 093-4625931 0004673067   $66,865     2/4/00     2/9/00        133    3027500457 30275   Atlanta   Current        11/1/99

203 093-4628632 0005103809   Adequate Documentation has been provided.

204 093-4629507 0005934070   $81,800    12/16/99   12/21/99       77     3027500457 30275   Atlanta   > 90 days      12/1/99

205 093-4636572 0008619348   $75,961    3/21/00    3/24/00        144    3027500457 30275   Atlanta   Current        3/1/00
                                                                                                                     2/1/00

206 093-4653984 0004494092   $43,922    2/21/00    2/23/00        117    3027500457 30275   Atlanta   > 90 days      2/1/00
                                                                                                                     1/1/00
                                                                                                                     12/1/99

207 093-4656084 0009642448   Adequate Documentation has been provided.

208 093-4703908 0010291755   $56,237     8/3/00    8/10/00        156    3027500486 30275   Atlanta   > 90 days      7/1/00
                                                                                                                     6/1/00

209 093-4715804 0010397099 $103,947     6/30/00    7/13/00        70     3027500474 30275   Atlanta   > 60 day       6/1/00




                                                             Page 43                                        2003-KC-1001
Appendix C


                                                                                                                      Due
                  Cendant                          Days from                                                        Date of
OIG FHA Case       Loan   Mortgage Date     Date   Closing to Originating Holder                       Status as of Missed
No. Number        Number Amount Submitted Endorsed Submitted      ID       ID                    HOC   3/25/02 Payment

210 093-4720796 0010445179    $50,485    8/18/00    8/29/00        141    3027500486 30275   Atlanta   Current       8/1/00
                                                                                                                     7/1/00

211 093-4724864 0010619260    $95,851    7/17/00    7/26/00        91     3027500486 30275   Atlanta   Current       7/1/00

212 093-4731258 0010509131    $50,485    8/23/00    8/29/00        119    3027500486 30275   Atlanta   > 90 days     8/1/00

213 093-4734730 0010567519    $71,863    9/22/00    9/28/00        128    3027500486 30275   Atlanta   > 90 days     8/1/00

214 093-4736255 0010576734 $124,025       5/2/01    5/15/01        257    3027500486 30275   Atlanta   Current       4/1/01
                                                                                                                     3/1/01

215 093-4739087 0010599447    Adequate Documentation has been provided.

216 093-4740590 0010618809    $84,456    2/26/01     3/1/01        280    3027500486 30275   Atlanta   Current       11/1/00

217 093-4742670 0009730524    $81,244    4/20/00    4/20/00        143    3027500486 30275   Atlanta   SEE NOTE 1    2/1/00

218 093-4747054 0010675098    $77,362    8/23/00    9/21/00        100    3027500486 30275   Atlanta   SEE NOTE 1    8/1/00

219 093-4756300 0010902864    $78,968    12/12/00   12/18/00       195    3027500486 30275   Atlanta   F/C           11/1/00
                                                                                                                     10/1/00

220 093-4770195 0012234878    $97,198    1/26/01    1/31/01        182    3027500486 30275   Atlanta   Current       1/1/01

221 093-4785653 0012375283 $111,943      12/12/00   12/21/00       151    3027500486 30275   Atlanta   > 30 days     11/1/00
                                                                                                                     9/1/00

222 093-4792257 0012279998    $50,384    11/15/00   11/20/00       93     3027500486 30275   Atlanta   > 90 days     11/1/00
                                                                                                                     10/1/00

223 093-4798237 0012551230 $110,725      11/7/00    11/15/00       82     3027500486 30275   Atlanta   > 90 days     10/1/00

224 093-4808429 0012663134    $69,427    12/5/00     1/8/01        95     3027501111 30275   Atlanta   Bankruptcy    11/1/00
                                                                                                                     10/1/00

225 093-4819734 0012655569    $59,509    1/19/01    1/23/01        91     3027500486 30275   Atlanta   > 90 days     1/1/01
                                                                                                                     12/1/00

226 093-4826968 0010892495    $92,952    10/20/00   10/28/00       133    3027500486 30275   Atlanta   > 90 days     10/1/00

227 093-4849010 0013663158    $45,335    4/19/01    5/16/01        149    3027501951 30275   Atlanta   > 90 days     4/1/01

228 093-4870109 0013840004 Adequate Documentation has been provided.

229 093-4875998 0013903687 $108,202      5/17/01    5/25/01        118    3027500486 30275   Atlanta   Current       5/1/01
                                                                                                                     4/1/01
                                                                                                                     3/1/01

230 093-4911587 0014232805    $51,590    7/20/01    8/17/01        112    3027500474 30275   Atlanta   REO           7/1/01




  2003-KC-1001                                                Page 44
                                                                                                                 Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

231 093-4921990 0014303762    $78,764    6/15/01    6/25/01        84     3027501134 30275   Atlanta   Current       6/1/01
                                                                                                                     5/1/01

232 093-4955755 0015158033    $67,954    8/22/01     9/6/01        117    3027500474 30275   Atlanta   > 30 days     7/1/01

233 093-4966423 0014343925 $104,672      10/25/01   11/3/01        148    3027501945 30275   Atlanta   > 30 days     10/1/01

234 093-4999001 0015522329    $82,249    10/19/01   10/29/01       133    3027500474 30275   Atlanta   > 90 days     10/1/01
                                                                                                                     9/1/01
                                                                                                                     8/1/01

235 094-4059792 0006048011    Adequate Documentation has been provided.

236 094-4064824 0008973836    $82,222     5/4/00    5/12/00        176    3027500486 30275   Atlanta   REO           4/1/00

237 094-4093680 0001157601 $117,729      4/10/00    4/12/00        104    3027500486 30275   Atlanta   Bankruptcy    3/1/00

238 094-4100411 0010021863 $101,119      12/12/00   12/27/00       323    3027500486 30275   Atlanta   Current       11/1/00

239 094-4118992 0010216174    $65,866    8/17/00    8/24/00        170    3027500486 30275   Atlanta   F/C           8/1/00
                                                                                                                     7/1/00

240 094-4120836 0010246601    $56,970    10/24/00   11/6/00        180    3027500486 30275   Atlanta   Current       7/1/00
                                                                                                                     6/1/00

241 094-4152431 0010582906 $124,025      9/21/01    9/28/01        469    3027500486 30275   Atlanta   SEE NOTE 1    9/1/01
                                                                                                                     5/1/01
                                                                                                                     4/1/01

242 094-4170441 0013262225    $76,460    4/26/01    5/21/01        220    3027500486 30275   Atlanta   Current       4/1/01

243 094-4253053 0013665690    $74,961    4/17/01    4/26/01        155    3027500486 30275   Atlanta   Current       4/1/01

244 094-4257627 0013712112 $121,677      8/24/01     9/8/01        245    3027500486 30275   Atlanta   Current       8/1/01
                                                                                                                     7/1/01
                                                                                                                     6/1/01
                                                                                                                     5/1/01
                                                                                                                     4/1/01

245 094-4259952 0013750682    $68,964    8/13/01    8/27/01        235    3027501968 30275   Atlanta   Current       2/1/01

246 094-4365148 0015446826 $109,137      7/27/01     8/8/01        63     3027501134 30275   Atlanta   Current       7/1/01

247 094-4377362 0015378037    $84,333    12/10/01   12/13/01       165    3027501945 30275   Atlanta   Current       9/1/01
                                                                                                                     8/1/01

248 098-0080097 0010998060    $49,374    10/25/00   11/1/00        125    3027500486 30275   Atlanta   F/C           10/1/00
                                                                                                                     9/1/00

249^^101-8872342 0008417669   $74,734    5/30/00     6/6/00        190    3027500139 30275   Atlanta   Current       5/1/00

250 101-8960305 0003949120    $87,855    3/23/00    3/31/00        206    3027500139 30275   Atlanta   SEE NOTE 1    1/1/00




                                                              Page 45                                        2003-KC-1001
Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

251^^101-8989378 0004584223 $161,964      3/8/00    3/15/00        139    3027500139 30275   Atlanta   Current       2/1/00
                                                                                                                     1/1/00

252 101-8993711 0004654661 $106,125      12/2/99    12/7/99        65     3027500139 30275   Atlanta   Bankruptcy    11/1/99

253 101-9001881 0005115233    $77,263    3/27/00     4/6/00        180    3027500139 30275   Atlanta   Bankruptcy    3/1/00
                                                                                                                     2/1/00
                                                                                                                     1/1/00

254^^101-9013728 0006645097 $115,944      1/5/00    1/28/00        96     3027500139 30275   Atlanta   > 60 day      12/1/99

255 101-9052773 0009204488    $66,948    1/20/00    1/25/00        84     3027500139 30275   Atlanta   SEE NOTE 1    12/1/99

256 101-9093840 0002847531    $94,223     8/8/00    8/11/00        245    3027500139 30275   Atlanta   > 30 days     3/1/00

257 101-9104972 0006848816 $115,200      4/25/00    4/27/00        109    3027500139 30275   Atlanta   > 60 day      4/1/00
                                                                                                                     3/1/00

258 101-9108656 0008068025    $57,477    3/21/00    4/11/00        90     3027500139 30275   Atlanta   SEE NOTE 1    2/1/00

259 101-9109310 0001156298    $86,508    7/19/00    7/26/00        204    3027500139 30275   Atlanta   SEE NOTE 1    7/1/00
                                                                                                                     5/1/00
                                                                                                                     4/1/00
                                                                                                                     3/1/00
                                                                                                                     2/1/00

260 101-9111002 0006874226    $88,768     3/6/00    3/14/00        82     3027500139 30275   Atlanta   Current       2/1/00

261 101-9115266 0004747523    $93,231    4/20/00    4/25/00        113    3027500139 30275   Atlanta   Claims        4/1/00

262 101-9126325 0010021004    $52,872    6/12/00    6/16/00        144    3027500139 30275   Atlanta   Current       5/1/00

263 101-9129242 0010026144    Adequate Documentation has been provided.

264 101-9168281 0010195758    $84,956    8/17/00    8/22/00        184    3027500139 30275   Atlanta   SEE NOTE 1    4/1/00

265 101-9172995 0010182772 $169,990      9/18/00    9/21/00        234    3027500139 30275   Atlanta   F/C           9/1/00

266 101-9176049 0011052446 $155,573       3/2/01     3/7/01        367    3027500139 30275   Atlanta   Current       2/1/01
                                                                                                                     1/1/01
                                                                                                                     9/1/00

267 101-9178952 0010252849    $98,984     8/2/00     8/7/00        159    3027500139 30275   Atlanta   Current       7/1/00

268^^101-9203745 0010357036   $42,382    8/25/00    8/30/00        119    3027500139 30275   Atlanta   Claims        8/1/00
                                                                                                                     7/1/00

269^^101-9207260 0010370450   $69,258    10/6/00    10/12/00       197    3027500139 30275   Atlanta   > 90 days     9/1/00
                                                                                                                     7/1/00
                                                                                                                     6/1/00

270 101-9226542 0010447464    $79,959     2/1/01     2/6/01        276    3027500139 30275   Atlanta   Current       1/1/01




  2003-KC-1001                                                Page 46
                                                                                                              Appendix C


                                                                                                                   Due
                 Cendant                          Days from                                                      Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                     Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC   3/25/02 Payment

271 101-9299375 0010878353   $84,833   8/16/00    8/21/00        78    3027500139 30275   Atlanta   Current       8/1/00

272 101-9324985 0010982742   $76,600   2/12/01    2/15/01        115   3027500139 30275   Atlanta   > 90 days     1/1/01
                                                                                                                  12/1/00

273^^101-9345463 0012249256 $138,855    1/2/01    1/24/01        167   3027501157 30275   Atlanta   SEE NOTE 1    12/1/00
                                                                                                                  11/1/00
                                                                                                                  9/1/00

274 101-9363240 0012282570 $113,942    6/21/01    6/28/01        349   3027501157 30275   Atlanta   Current       2/1/01

275 101-9368464 0012304739   $68,721   10/11/00   10/16/00       90    3027500139 30275   Atlanta   Current       9/1/00

276 101-9392089 0012423893   $76,960   11/9/00    11/15/00       100   3027501157 30275   Atlanta   Current       10/1/00

277 101-9413382 0012429114 $122,819    5/11/01    5/22/01        310   3027500139 30275   Atlanta   Current       1/1/01
                                                                                                                  12/1/00
                                                                                                                  11/1/00

278 101-9443877 0012654869   $78,959   11/15/00   11/22/00       75    3027500139 30275   Atlanta   Bankruptcy    11/1/00

279 101-9483449 0013362074 $148,160     5/1/01     6/2/01        200   3027500139 30275   Atlanta   Current       12/1/00

280 101-9484996 0013371521   $85,966   12/21/00   12/27/00       83    3027500139 30275   Atlanta   Current       12/1/00
                                                                                                                  11/1/00

281 101-9513587 0013499074   $86,955   3/27/01    3/29/01        144   3027500139 30275   Atlanta   F/C           3/1/01

282 101-9514314 0013373691 $159,820    2/19/01    2/22/01        112   3027500139 30275   Atlanta   Current       1/1/01

283 101-9532419 0013642954 $113,960    2/14/01     5/7/01        79    3027500139 30275   Atlanta   Current       1/1/01

284 101-9555138 0013745492   $73,962   3/26/01     4/3/01        101   3027500139 30275   Atlanta   > 90 days     3/1/01

285 101-9612395 0013923636   $75,516    7/9/01    7/17/01        171   3027500139 30275   Atlanta   Current       6/1/01
                                                                                                                  5/1/01

286 101-9627558 0014026678 $132,914    6/25/01     7/3/01        140   3027500139 30275   Atlanta   Bankruptcy    4/1/01

287 101-9648427 0014020861 $124,014    12/3/01    12/7/01        291   3027500139 30275   Atlanta   Current       8/1/01

288 101-9733895 0014472492   $78,860   5/30/01     6/9/01        70    3027501843 30275   Atlanta   F/C           5/1/01

289 101-9818246 0015268303   $84,829   7/19/01    7/27/01        71    3027500139 30275   Atlanta   Current       7/1/01

290 101-9853493 0015371784   $89,195   11/2/01    11/8/01        122   3027501843 30275   Atlanta   Current       8/1/01

291 101-9857204 0015370075 $101,968     8/6/01    8/15/01        80    3027501843 30275   Atlanta   F/C           7/1/01

292 101-9899131 0015529241 $138,051    9/20/01    10/23/01       105   3027500139 30275   Atlanta   Current       9/1/01
                                                                                                                  8/1/01

293 101-9914222 0015579618 $119,019    9/10/01    9/24/01        73    3027500139 30275   Atlanta   Current       8/1/01

294 101-9915286 0015573603   $63,897   10/23/01   11/6/01        102   3027501843 30275   Atlanta   > 30 days     9/1/01




                                                            Page 47                                       2003-KC-1001
Appendix C


                                                                                                                     Due
                 Cendant                          Days from                                                        Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                       Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC     3/25/02 Payment

295 101-9921094 0015568090   $73,350   11/21/01   11/29/01       169   3027501157 30275   Atlanta     Current       10/1/01

296 101-9925080 0015611593 $114,959    10/2/01    10/12/01       85    3027500139 30275   Atlanta     Current       9/1/01

297 121-1766536 0003880945   $99,321   4/10/00    4/17/00        179   3027500299 30275   Santa Ana   SEE NOTE 1    3/1/00

298 121-1774170 0008497752 $109,230    3/24/00    3/31/00        176   3027500299 30275   Santa Ana   Claims        3/1/00
                                                                                                                    2/1/00

299 121-1788367 0001481605   $79,877   2/22/01    2/26/01        394   3027500299 30275   Santa Ana   Current       2/1/01

300 121-1839055 0012589578   $74,213   4/20/01    4/26/01        217   3027500299 30275   Santa Ana   Current       3/1/01
                                                                                                                    2/1/01

301 121-1862926 0014108021 $105,477    1/30/02    2/20/02        337   3027500717 30275   Santa Ana   Current       12/1/01
                                                                                                                    9/1/01
                                                                                                                    8/1/01

302 121-1878236 0014349575   $87,633   6/14/01    6/14/01        76    3027500299 30275   Santa Ana   Current       5/1/01

303 132-1368173 0004335675   $57,669   12/7/99    12/10/99       89    3027500197 30275   Atlanta     > 90 days     11/1/99

304 132-1377508 0009181140   $63,902   3/27/00    3/31/00        133   3027500197 30275   Atlanta     > 90 days     2/1/00

305 132-1378727 0009459157   $83,871   1/21/00    1/27/00        84    3027500197 30275   Atlanta     F/C           12/1/99

306 132-1379203 0009643131   $57,911   8/10/00    8/15/00        224   3027500197 30275   Atlanta     Current       7/1/00

307 132-1385918 0010062446   $43,254    9/8/00    9/14/00        227   3027500197 30275   Atlanta     > 90 days     8/1/00

308 132-1388240 0010205938   $40,388   1/17/01     2/5/01        285   3027500197 30275   Atlanta     Current       1/1/01
                                                                                                                    12/1/00

309 132-1390419 0010294106   $44,990   11/28/00   12/5/00        263   3027500066 30275   Atlanta     Bankruptcy    11/1/00
                                                                                                                    10/1/00
                                                                                                                    9/1/00

310 132-1392455 0011092269   $52,918   6/17/01    6/25/01        474   3027500066 30275   Atlanta     > 90 days     2/1/01
                                                                                                                    1/1/01
                                                                                                                    12/1/00

311 132-1392613 0010374429   $54,915   2/12/01    2/16/01        314   3027500066 30275   Atlanta     F/C           12/1/00
                                                                                                                    11/1/00
                                                                                                                    10/1/00

312 132-1393132 0010393759   $42,907   1/10/01    1/16/01        246   3027500066 30275   Atlanta     Current       12/1/00
                                                                                                                    11/1/00
                                                                                                                    10/1/00

313 132-1404497 0010898435   $47,111   8/22/00    8/25/00        83    3027500066 30275   Atlanta     > 90 days     8/1/00




  2003-KC-1001                                              Page 48
                                                                                                                Appendix C


                                                                                                                    Due
                 Cendant                          Days from                                                       Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                      Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC   3/25/02 Payment

314 132-1411577 0012224895   $36,349    5/18/01    5/30/01        330   3027500066 30275   Atlanta   Current        4/1/01
                                                                                                                    12/1/00

315 132-1412890 0012293346   $52,918    4/11/01    4/19/01        252   3027500066 30275   Atlanta   Current        2/1/01
                                                                                                                    1/1/01

316 132-1424217 0012620928   $48,884    2/16/01    2/21/01        141   3027500066 30275   Atlanta   > 90 days      12/1/00

317 132-1431781 0013468475   $53,558     2/9/01    2/14/01        91    3027500066 30275   Atlanta   > 90 days      1/1/01

318 132-1431802 0011534369   $49,342     2/1/01     2/6/01        107   3027500066 30275   Atlanta   Current        1/1/01
                                                                                                                    12/1/00

319 132-1436369 0013475355 $115,944      9/7/01    9/21/01        295   3027501997 30275   Atlanta   > 30 days      7/1/01

320 132-1439532 0013779657   $90,709    6/13/01   10/29/01        164   3027500066 30275   Atlanta   SEE NOTE 1     2/1/01

321 132-1442778 0013748751   $34,459     7/9/01     8/6/01        103   3027500066 30275   Atlanta   Current        6/1/01

322 132-1449015 0014121925   $56,535     9/6/01    9/19/01        177   3027500066 30275   Atlanta   SEE NOTE 1     8/1/01

323 132-1454146 0014260814   $55,380     2/8/02    2/16/02        220   3027500066 30275   Atlanta   Current        1/1/02
                                                                                                                    12/1/01
                                                                                                                    11/1/01
                                                                                                                    10/1/01

324 132-1460663 0014509277   $52,530     7/6/01    7/23/01        60    3027500066 30275   Atlanta   Current        6/1/01

325 132-1461375 0014542997   $29,627    3/13/02    4/10/02        271   3027501997 30275   Atlanta   Current        1/1/02

326 132-1475356 0015443658   $79,170     8/7/01    9/13/01        62    3027502009 30275   Atlanta   Current        7/1/01

327 137-0059876 0008481582 $168,870     2/22/00     3/2/00        151   3027500066 30275   Atlanta   > 60 day       2/1/00

328 137-0139105 0004397477 $136,089     2/22/00     3/2/00        151   3027500066 30275   Atlanta   Current        2/1/00
                                                                                                                    1/1/00
                                                                                                                    12/1/99

329 137-0182972 0007402381   $99,847    1/13/00    1/19/00        80    3027500066 74649   Atlanta   > 90 days      12/1/99

330 137-0197688 0008953671 $138,076     1/24/00     2/1/00        95    3027500066 30275   Atlanta   SEE NOTE 1     1/1/00

331 137-0283457 0005523741   Adequate Documentation has been provided

332 137-0308877 0010082246 $151,983    10/12/00   10/27/00        230   3027500066 30275   Atlanta   Current        9/1/00

333 137-0313463 0010092377   $71,119    1/24/01    1/31/01        317   3027500066 30275   Atlanta   Current        1/1/01

334 137-0314242 0010101459 $127,070     7/27/00     8/1/00        162   3027500066 30275   Atlanta   SEE NOTE 1     7/1/00
                                                                                                                    6/1/00
                                                                                                                    5/1/00
                                                                                                                    4/1/00




                                                             Page 49                                       2003-KC-1001
Appendix C


                                                                                                                     Due
                 Cendant                          Days from                                                        Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                       Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC   3/25/02 Payment

335 137-0350712 0010319572   $96,505    10/12/00   10/17/00       216    3027500066 30275   Atlanta   Current       9/1/00

336 137-0368024 0010385581   $84,663    9/13/00    9/18/00        145    3027500066 30275   Atlanta   SEE NOTE 1    8/1/00
                                                                                                                    7/1/00

337 137-0443892 0010633394 $143,814     8/29/00     9/1/00        98     3027500066 30275   Atlanta   Current       8/1/00

338 137-0474326 0010882801   $67,896    9/20/00    10/4/00        113    3027500066 30275   Atlanta   Bankruptcy    9/1/00

339 137-0483698 0010597078 $221,865     4/20/01    6/30/01        235    3027500066 30275   Atlanta   SEE NOTE 1    1/1/01
                                                                                                                    12/1/00
                                                                                                                    11/1/00

340 137-0545206 0012425534 $119,716     1/29/01     2/1/01        153    3027500066 30275   Atlanta   F/C           1/1/01
                                                                                                                    12/1/00

341 137-0568548 0012568614 $168,870      1/5/01    1/10/01        137    3027500066 30275   Atlanta   SEE NOTE 1    11/1/00
                                                                                                                    10/1/00

342 137-0609172 0013235924   Adequate Documentation has been provided.

343 137-0613929 0013672480   $82,772    6/15/01    6/22/01        168    3027500066 30275   Atlanta   > 60 day      6/1/01

344 137-0617025 0012642005 $114,059     1/26/01    2/12/01        108    3027500066 30275   Atlanta   SEE NOTE 1    1/1/01

345 137-0687945 0013620794 $148,006     6/29/01    7/12/01        219    3027500066 30275   Atlanta   > 90 days     6/1/01

346 137-0700638 0013548508   Adequate Documentation has been provided.

347 137-0729415 0013818661 $157,465      6/5/01    6/13/01        182    3027500066 30275   Atlanta   Current       5/1/01
                                                                                                                    4/1/01
                                                                                                                    3/1/01

348 137-0740427 0013854344   $46,921     7/5/01    7/10/01        160    3027501997 30275   Atlanta   > 90 days     4/1/01
                                                                                                                    3/1/01

349 137-0784860 0014010599   $84,147    4/10/01     5/3/01        70     3027500066 30275   Atlanta   Current       3/1/01

350 137-0941158 0014539209 $162,298     8/21/01    8/21/01        133    3027501213 30275   Atlanta   SEE NOTE 1    6/1/01

351 137-0943999 0015053457   $66,949    12/15/01   12/20/01       191    3027500066 30275   Atlanta   Current       8/1/01

352 137-1020308 0015153950   $81,500    10/24/01   10/30/01       177    3027501213 30275   Atlanta   Current       10/1/01
                                                                                                                    9/1/01

353 137-1034388 0015293533   Adequate Documentation has been provided.

354 137-1199321 0015811029 $175,421     11/15/01   12/12/01       121    3027501213 30275   Atlanta   Current       11/1/01
                                                                                                                    10/1/01

355 151-5794425 0007504251   $74,224    10/3/00    10/6/00        445    3027500355 30275   Atlanta   Current       9/1/00

356 151-5866273 0006063689   $91,922    1/18/00    1/21/00        82     3027500355 30275   Atlanta   Current       1/1/00




  2003-KC-1001                                               Page 50
                                                                                                             Appendix C


                                                                                                                  Due
                 Cendant                          Days from                                                     Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                    Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                 HOC   3/25/02 Payment

357 151-5887612 0009179821 $119,316    3/28/00   4/6/00         147   3027500355 30275   Atlanta   > 90 days     3/1/00
                                                                                                                 2/1/00

358 151-5890259 0009240003   $81,595   5/3/00    5/3/00         152   3027500355 30275   Atlanta   > 90 days     4/1/00

359 151-5892708 0009268442   $47,607   4/14/00   4/19/00        147   3027500355 30275   Atlanta   Claims        3/1/00
                                                                                                                 2/1/00

360 151-5897792 0009501172   $89,862   5/4/00    5/15/00        181   3027500355 30275   Atlanta   Current       4/1/00

361 151-5933253 0010043941   $64,900   9/13/00   9/18/00        231   3027500355 30275   Atlanta   Current       8/1/00
                                                                                                                 7/1/00
                                                                                                                 4/1/00

362 151-5934627 0010058279   $43,144   12/5/00   12/5/00        307   3027500883 30275   Atlanta   > 90 days     9/1/00
                                                                                                                 8/1/00

363 151-5936368 0010069300   $46,850   9/7/00    10/3/00        223   3027500355 30275   Atlanta   Current       8/1/00
                                                                                                                 7/1/00
                                                                                                                 6/1/00

364 151-5942000 0010111219   $40,286   2/14/01   2/16/01        366   3027500355 30275   Atlanta   Current       10/1/00
                                                                                                                 9/1/00
                                                                                                                 8/1/00

365 151-5948235 0010197895   $30,217   7/20/01   7/25/01        511   3027500883 30275   Atlanta   F/C           7/1/01

366 151-5954332 0010259703   $94,854   8/23/00   8/28/00        85    3027500355 30275   Atlanta   Current       7/1/00

367 151-5975014 0011134871   $94,568   6/19/00   6/22/00        83    3027500355 30275   Atlanta   > 90 days     6/1/00

368 151-5976770 0010424521 $122,597    1/8/01    3/12/01        290   3027500355 30275   Atlanta   Current       10/1/00
                                                                                                                 9/1/00
                                                                                                                 8/1/00

369 151-5980151 0011143831   $93,334   9/25/00   10/3/00        178   3027500355 30275   Atlanta   > 90 days     9/1/00
                                                                                                                 8/1/00
                                                                                                                 7/1/00

370 151-5980723 0010458891   $64,401   9/1/00    9/25/00        116   3027500355 30275   Atlanta   Current       8/1/00
                                                                                                                 7/1/00

371 151-5983590 0010427219 $104,141    1/4/01    1/9/01         279   3027500355 30275   Atlanta   > 90 days     12/1/00
                                                                                                                 11/1/00

372 151-6010737 0010668713   $79,246   7/18/00   7/21/00        64    3027500355 30275   Atlanta   Current       7/1/00

373 151-6020938 0011249166 $104,687    9/19/00   9/26/00        118   3027500355 30275   Atlanta   Current       9/1/00

374 151-6061824 0012299103   $74,930   4/19/01   4/26/01        252   3027500355 30275   Atlanta   SEE NOTE 1    1/1/01




                                                           Page 51                                       2003-KC-1001
Appendix C


                                                                                                                   Due
                 Cendant                          Days from                                                      Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                     Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC   3/25/02 Payment

375 151-6107348 0013204805   $60,005   1/30/01     2/2/01        98    3027500355 30275   Atlanta   F/C           1/1/01

376 151-6120945 0013335732   $86,963   2/15/01    2/21/01        140   3027500355 30275   Atlanta   Current       2/1/01

377 151-6142015 0013486832   $40,580   4/17/01    4/23/01        172   3027500355 30275   Atlanta   Current       4/1/01

378 151-6150330 0011547270   $99,182   2/12/01    2/15/01        108   3027500355 30275   Atlanta   Current       1/1/01
                                                                                                                  12/1/00

379 151-6168366 0013759782   $56,413    5/7/01     6/9/01        157   3027502327 30275   Atlanta   Current       4/1/01
                                                                                                                  3/1/01

380 151-6184362 0013845987   $49,492   6/14/01    6/21/01        168   3027502327 30275   Atlanta   > 90 days     2/1/01

381 151-6189301 0014293146   $77,804    8/2/01    8/11/01        119   3027500355 30275   Atlanta   F/C           5/1/01

382 151-6190401 0013887229   $67,444   4/19/01    4/24/01        111   3027500355 30275   Atlanta   Current       4/1/01
                                                                                                                  3/1/01

383 151-6216118 0014048896   $31,505   8/23/01     9/4/01        146   3027501706 30275   Atlanta   F/C           6/1/01

384 151-6230067 0014183107   $34,541   7/27/01     8/1/01        93    3027500355 30275   Atlanta   F/C           7/1/01
                                                                                                                  6/1/01

385 151-6230581 0014186639   $49,455   7/31/01     8/8/01        118   3027500355 30275   Atlanta   F/C           7/1/01

386 151-6250114 0014301824   $86,229   10/15/01   10/23/01       213   3027501706 30275   Atlanta   Current       10/1/01
                                                                                                                  9/1/01

387 151-6268491 0014487037   $89,203   7/24/01    7/30/01        116   3027500355 30275   Atlanta   Current       7/1/01
                                                                                                                  6/1/01

388 151-6278923 0015058050   $92,547   7/23/01    7/30/01        88    3027500355 30275   Atlanta   > 90 days     7/1/01
                                                                                                                  6/1/01

389 151-6386704 0015677636   $92,671   12/4/01    12/12/01       158   3027502327 30275   Atlanta   Current       9/1/01

390 161-1810345 0004044764   $92,453   6/13/00    6/16/00        239   3027500253 30275   Denver    Current       5/1/00
                                                                                                                  3/1/00

391 161-1813913 0004544649   $71,411   5/25/00     6/1/00        238   3027500253 30275   Denver    Current       12/1/99

392 161-1815581 0005100946   $72,290   3/28/00    3/31/00        148   3027500253 30275   Denver    SEE NOTE 1    3/1/00
                                                                                                                  2/1/00

393 161-1820598 0009064957   $43,922    2/1/00     2/4/00        89    3027500253 30275   Denver    > 90 days     1/1/00

394 161-1833789 0010422319   $59,969    2/6/01    2/20/01        272   3027500253 30275   Denver    Current       1/1/01
                                                                                                                  12/1/00

395 161-1838422 0010603405   $50,384   10/24/00   11/29/00       179   3027500253 30275   Denver    > 90 days     8/1/00
                                                                                                                  7/1/00
                                                                                                                  6/1/00




  2003-KC-1001                                              Page 52
                                                                                                               Appendix C


                                                                                                                   Due
                 Cendant                          Days from                                                      Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                     Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC   3/25/02 Payment

396 161-1846616 0012231676   $31,738   10/18/00   10/25/00       100   3027500253 30275   Denver    Current        10/1/00
                                                                                                                   9/1/00

397 161-1847010 0012250106   $89,264   12/7/00    12/18/00       111   3027500253 30275   Denver    > 90 days      11/1/00

398 161-1850900 0012366944   $73,620   2/15/01     3/1/01        169   3027500253 30275   Denver    > 60 day       2/1/01
                                                                                                                   1/1/01
                                                                                                                   12/1/00
                                                                                                                   11/1/00
                                                                                                                   10/1/00

399 161-1858541 0013175815 $102,947    12/19/00    1/3/01        102   3027501172 30275   Denver    > 90 days      12/1/00

400 161-1859439 0013220579   $82,457   7/13/01    7/16/01        235   3027500253 30275   Denver    > 90 days      6/1/01

401 161-1861376 0013661475   $76,960   1/30/01     3/8/01        81    3027500253 30275   Denver    REO            1/1/01

402 161-1872470 0013705777   $36,551    3/5/01     3/8/01        94    3027500253 30275   Denver    Current        2/1/01

403 161-1875714 0013749015   $56,187   4/16/01    4/30/01        77    3027500253 30275   Denver    > 60 day       4/1/01

404 161-1876125 0013703004   $62,968    4/6/01    4/18/01        105   3027500253 30275   Denver    Current        3/1/01

405 161-1886180 0014319974   $63,995   10/22/01   10/30/01       213   3027500253 30275   Denver    Current        9/1/01

406 161-1888878 0014467039   $87,624   7/30/01     8/7/01        67    3027501741 30275   Denver    SEE NOTE 1     7/1/01

407 161-1908307 0015323256   $44,101   11/6/01    11/13/01       113   3027500253 30275   Denver    Current        10/1/01
                                                                                                                   9/1/01

408 161-1908517 0015659550   $86,012   10/8/01    10/29/01       104   3027501172 30275   Denver    Current        9/1/01
                                                                                                                   8/1/01

409 161-1912012 0015692221   $48,611    2/4/02     2/7/02        194   3027500253 30275   Denver    Current        1/1/02

410 181-1775272 0004205662   $38,369    2/1/00     2/4/00        144   3027500037 30275   Denver    Current        12/1/99

411 181-1779396 0005023122   $75,378    4/7/00    4/12/00        196   3027500037 30275   Denver    Current        1/1/00
                                                                                                                   12/1/99

412 181-1785799 0009443409   $69,939   6/20/00    6/23/00        189   3027500037 30275   Denver    Current        6/1/00
                                                                                                                   4/1/00
                                                                                                                   3/1/00

413 181-1796161 0010257087   $53,914    2/8/01    2/13/01        342   3027500962 30275   Denver    > 30 days      1/1/01

414 181-1796870 0010311199   $51,574   11/22/00   12/6/00        247   3027500962 30275   Denver    REO            11/1/00
                                                                                                                   10/1/00
                                                                                                                   9/1/00
                                                                                                                   7/1/00




                                                            Page 53                                       2003-KC-1001
Appendix C


                                                                                                                     Due
                 Cendant                          Days from                                                        Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                       Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC   3/25/02 Payment

415 181-1797109 0010317246   $61,452    2/13/01    2/20/01        330    3027500962 30275   Denver    F/C           1/1/01
                                                                                                                    12/1/00

416 181-1799492 0010431740   $44,549    6/27/00    6/29/00        89     3027500962 30275   Denver    Bankruptcy    6/1/00

417 181-1799571 0010427292   $70,915    4/25/01    8/27/01        372    3027500962 30275   Denver    Current       1/1/01

418 181-1801567 0010486728   $37,193    8/31/00     9/8/00        114    3027500962 30275   Denver    F/C           8/1/00

419 181-1805746 0007205719   $41,452     7/5/01    7/16/01        388    3027500962 30275   Denver    > 60 day      6/1/01
                                                                                                                    5/1/01
                                                                                                                    4/1/01
                                                                                                                    3/1/01
                                                                                                                    2/1/01
                                                                                                                    1/1/01

420 181-1815406 0012326427   $34,330     2/5/01     2/9/01        196    3027500962 30275   Denver    Current       1/1/01
                                                                                                                    12/1/00

421 181-1815963 0012339842   $30,291    2/14/01    2/21/01        177    3027500962 30275   Denver    Current       1/1/01
                                                                                                                    12/1/00

422 181-1820067 0012546750   $62,385     4/2/02     4/2/02        578    3027500962 30275   Denver    Current       2/1/02
                                                                                                                    1/1/02
                                                                                                                    12/1/01
                                                                                                                    11/1/01
                                                                                                                    10/1/01

423 181-1820100 0012561114 $104,325     2/14/01    2/21/01        181    3027501481 30275   Denver    Current       11/1/00

424 181-1822633 0012651014   $33,722    7/18/01    7/26/01        239    3027500962 30275   Denver    Current       2/1/01
                                                                                                                    1/1/01

425 181-1823947 0013219456   $87,715    12/15/00    1/2/01        106    3027500962 30275   Denver    Current       12/1/00
                                                                                                                    11/1/00
                                                                                                                    10/1/00

426 181-1831053 0013754544 $104,908      3/6/01    3/12/01        97     3027501758 30275   Denver    Current       2/1/01
                                                                                                                    1/1/01

427 181-1832917 0013664305   $45,623    2/13/01    2/21/01        88     3027500962 30275   Denver    F/C           1/1/01

428 181-1839477 0013951918   Adequate Documentation has been provided.

429 181-1848643 0014304166   $90,211    5/15/01     6/4/01        67     3027501481 30275   Denver    > 60 day      5/1/01

430 181-1860492 0015370661 $116,975     10/29/01   11/2/01        153    3027500962 30275   Denver    > 60 day      9/1/01

431 182-0623868 0005935911   $99,694     2/1/00     2/4/00        110    3027500037 30275   Denver    > 30 days     1/1/00

432 182-0629798 0008070419 $133,932     9/26/00    10/4/00        263    3027500037 30275   Denver    Current       6/1/00




  2003-KC-1001                                               Page 54
                                                                                                                Appendix C


                                                                                                                     Due
                 Cendant                          Days from                                                        Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                       Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC     3/25/02 Payment

433 182-0635061 0010499010   $87,255   6/27/00    6/29/00        61    3027501481 30275   Denver      Current       6/1/00
                                                                                                                    5/1/00

434 182-0637788 0010820975   $89,760   8/16/00    8/25/00        84    3027500962 30275   Denver      Current       8/1/00

435 182-0669456 0015479520 $101,500    8/31/01     9/7/01        92    3027501481 30275   Denver      Current       7/1/01

436 197-1363019 0005076351 $128,937    12/1/99    12/3/99        82    3027500116 30275   Santa Ana   > 90 days     11/1/99

437 197-1560139 0010140242 $143,814    8/17/00    8/23/00        127   3027500116 30275   Santa Ana   > 30 days     8/1/00
                                                                                                                    6/1/00
                                                                                                                    5/1/00
                                                                                                                    4/1/00

438 197-1749821 0012303616   $71,575   2/19/01    2/22/01        200   3027500116 30275   Santa Ana   Current       2/1/01

439 197-1791774 0012474995   $97,650   12/7/00    12/12/00       121   3027500116 30275   Santa Ana   SEE NOTE 1    11/1/00
                                                                                                                    10/1/00

440 197-1844979 0013324355 $215,821    3/12/01     4/3/01        153   3027500116 30275   Santa Ana   F/C           2/1/01

441 197-1854880 0013355243 $118,750    5/11/01    5/23/01        226   3027500116 30275   Santa Ana   F/C           4/1/01
                                                                                                                    2/1/01
                                                                                                                    1/1/01

442 197-1862539 0013392634 $138,756    1/18/01    1/24/01        111   3027500116 30275   Santa Ana   > 30 days     12/1/00

443 197-1878602 0011477965   $90,182   6/25/01     7/2/01        237   3027500116 30275   Santa Ana   Current       6/1/01

444 197-2309798 0015706302 $156,785    9/19/01    9/24/01        71    3027500116 30275   Santa Ana   Current       9/1/01

445 197-2351647 0015905102 $212,005    10/17/01   10/23/01       75    3027501032 30275   Santa Ana   Current       9/1/01

446 201-2793521 0003727146   $61,454    2/4/00     2/9/00        140   3027500361 30275   Denver      > 90 days     1/1/00
                                                                                                                    12/1/99

447 201-2801611 0006107759 $105,146    3/13/00    3/21/00        167   3027500361 30275   Denver      Claims        2/1/00
                                                                                                                    1/1/00

448 201-2802016 0004311957   $66,963    4/6/00    4/12/00        211   3027500361 30275   Denver      Current       1/1/00
                                                                                                                    12/1/99
                                                                                                                    11/1/99

449 201-2810627 0003449485   $49,492   12/9/99    12/14/99       70    3027500361 30275   Denver      Current       11/1/99
                                                                                                                    10/1/99

450 201-2814201 0008701377   $60,469   2/22/00    2/29/00        120   3027500361 30275   Denver      > 30 days     2/1/00

451 201-2817765 0009275215   $79,000   6/30/00    7/12/00        238   3027500361 30275   Denver      Current       3/1/00
                                                                                                                    2/1/00
                                                                                                                    1/1/00




                                                            Page 55                                         2003-KC-1001
Appendix C


                                                                                                                   Due
                 Cendant                          Days from                                                      Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                     Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC   3/25/02 Payment

452 201-2818912 0009360694   $57,870   7/21/00    7/27/00        245   3027500361 30275   Denver    Current       6/1/00
                                                                                                                  5/1/00
                                                                                                                  4/1/00

453 201-2822170 0004359337   $51,574   3/21/00    3/24/00        113   3027500361 30275   Denver    Claims        2/1/00

454 201-2824658 0002792323   $43,541   7/19/00    7/25/00        222   3027500361 30275   Denver    REO           3/1/00
                                                                                                                  2/1/00

455 201-2829185 0005496955   $87,955    8/3/00     8/9/00        217   3027500361 30275   Denver    Current       6/1/00
                                                                                                                  5/1/00
                                                                                                                  4/1/00
                                                                                                                  3/1/00

456 201-2842130 0010271161   $78,459   11/27/00   11/29/00       255   3027500877 30275   Denver    SEE NOTE 1    9/1/00

457 201-2844051 0010332344   $84,956    5/2/01    5/15/01        412   3027500361 30275   Denver    > 90 days     4/1/01
                                                                                                                  3/1/01
                                                                                                                  2/1/01

458 201-2845092 0010352961   $80,828   10/10/00   11/14/00       195   3027500361 30275   Denver    Current       9/1/00

459 201-2845188 0010356715   $55,930    2/6/01     3/7/01        328   3027500877 30275   Denver    > 90 days     1/1/01
                                                                                                                  12/1/00

460 201-2847461 0010115145   $76,982    8/3/00     8/7/00        125   3027500361 30275   Denver    > 90 days     5/1/00

461 201-2852399 0010354462   $95,551   12/4/00    12/7/00        255   3027500361 30275   Denver    F/C           6/1/00

462 201-2857837 0010587236   $61,656   8/22/00    8/28/00        119   3027500877 30275   Denver    REO           8/1/00
                                                                                                                  7/1/00

463 201-2862974 0010827277   $48,466   12/4/00    3/30/01        214   3027500361 30275   Denver    Claims        9/1/00
                                                                                                                  8/1/00
                                                                                                                  7/1/00

464 201-2863231 0010526671 $108,896    9/12/00    9/21/00        111   3027500361 74649   Denver    > 90 days     8/1/00

465 201-2865879 0010879849   $72,462   2/20/01    2/22/01        245   3027500361 30275   Denver    F/C           2/1/01
                                                                                                                  1/1/01
                                                                                                                  12/1/00
                                                                                                                  11/1/00

466 201-2878691 0010997344   $59,969    2/7/01    2/12/01        153   3027500361 30275   Denver    > 90 days     12/1/00

467 201-2881395 0012346805   $70,963   12/7/00    12/11/00       153   3027500361 30275   Denver    F/C           11/1/00

468 201-2882326 0013234323 $114,059    1/10/02     3/7/02        490   3027500361 30275   Denver    Current       12/1/01
                                                                                                                  11/1/01

469 201-2882798 0012372090 $124,025    10/20/00   10/25/00       81    3027501236 30275   Denver    > 30 days     10/1/00




  2003-KC-1001                                              Page 56
                                                                                                              Appendix C


                                                                                                                   Due
                 Cendant                          Days from                                                      Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                     Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC   3/25/02 Payment

470 201-2887267 0012662409 $119,939     6/5/01    9/24/01        294   3027500361 30275   Denver    Current       5/1/01
                                                                                                                  12/1/00

471 201-2893965 0012568093   $92,239   12/19/00   1/29/01        130   3027500361 30275   Denver    Current       12/1/00
                                                                                                                  11/1/00
                                                                                                                  10/1/00

472 201-2914566 0013653092   $63,476   9/18/01    9/27/01        274   3027500361 30275   Denver    F/C           8/1/01
                                                                                                                  7/1/01

473 201-2934481 0014101430 $127,988    10/5/01    10/19/01       231   3027501531 30275   Denver    > 30 days     9/1/01
                                                                                                                  4/1/01

474 201-2952751 0014514061   $87,310   6/19/01    7/16/01        81    3027501531 30275   Denver    > 30 days     6/1/01
                                                                                                                  5/1/01

475 201-2958284 0015132657   $71,435    1/2/02     1/8/02        259   3027502412 30275   Denver    Current       9/1/01

476 201-2959930 0015176464   $98,223   7/17/01    7/23/01        81    3027500390 30275   Denver    Current       7/1/01

477 201-2962590 0015351968   $69,020   11/20/01   11/28/01       186   3027502412 30275   Denver    > 30 days     11/1/01
                                                                                                                  9/1/01

478 201-2964693 0015274590   $91,248   12/10/01   12/17/01       217   3027502406 30275   Denver    > 90 days     11/1/01

479 201-2982826 0015610355   $80,365   10/18/01   10/26/01       117   3027500390 30275   Denver    Current       10/1/01
                                                                                                                  9/1/01

480 201-2983526 0015624166   $86,317   11/29/01   12/5/01        135   3027500390 30275   Denver    F/C           11/1/01

481 201-2984580 0015644255   $67,962   12/12/01   12/18/01       168   3027502412 30275   Denver    Current       11/1/01

482 202-0171339 0010002822   $99,362   11/2/00    11/7/00        282   3027500355 30275   Denver    Current       10/1/00
                                                                                                                  9/1/00
                                                                                                                  8/1/00

483 221-3054916 0009075177   $59,669   3/17/00    3/22/00        109   3027500168 30275   Denver    > 30 days     3/1/00
                                                                                                                  2/1/00

484 221-3084918 0004435319 $117,531    8/10/00    8/16/00        325   3027500168 30275   Denver    SEE NOTE 1    2/1/00

485 221-3087532 0004566188   $50,485   12/20/99   12/28/99       81    3027500168 30275   Denver    SEE NOTE 1    11/1/99

486 221-3088955 0004596185   $82,321   2/23/00    2/29/00        161   3027500168 30275   Denver    Current       2/1/00
                                                                                                                  1/1/00

487 221-3090154 0005125133   $60,968    3/3/00     3/8/00        154   3027500168 30275   Denver    Current       1/1/00




                                                            Page 57                                       2003-KC-1001
Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

488^^221-3091324 0004715769   $40,388    4/17/00    4/20/00        157    3027500168 30275   Denver    > 60 day      4/1/00
                                                                                                                     3/1/00
                                                                                                                     2/1/00
                                                                                                                     1/1/00

489^^221-3092450 0006019707 $118,940      5/5/00    5/10/00        196    3027500168 30275   Denver    Claims        4/1/00
                                                                                                                     3/1/00
                                                                                                                     2/1/00
                                                                                                                     1/1/00

490 221-3113124 0006862098    $78,850    3/24/00    3/29/00        95     3027500168 30275   Denver    Claims        3/1/00
                                                                                                                     2/1/00

491 221-3123360 0010050193    $48,112     5/9/00    5/12/00        95     3027500168 30275   Denver    Claims        4/1/00

492 221-3128499 0010180115    $89,954    8/17/00    8/22/00        170    3027500168 30275   Denver    Current       6/1/00

493 221-3129970 0010224020    $67,096    11/9/00    11/24/00       238    3027500735 30275   Denver    > 30 days     10/1/00
                                                                                                                     9/1/00

494 221-3136329 0010343804    $80,458    1/26/01    1/26/01        303    3027500735 30275   Denver    Current       12/1/00

495 221-3137041 0010355758 $109,100      10/30/00   11/2/00        217    3027500168 30275   Denver    Current       10/1/00

496 221-3141312 0010438166 $130,305      1/31/01    2/10/01        307    3027500168 30275   Denver    SEE NOTE 1    12/1/00
                                                                                                                     11/1/00

497 221-3144529 0012344933    $74,961    3/16/01    3/27/01        239    3027500168 30275   Denver    Current*      3/1/01

498 221-3148009 0010276079    $58,225     7/3/01    7/13/01        397    3027500168 30275   Denver    > 30 days     6/1/01
                                                                                                                     5/1/01
                                                                                                                     4/1/01
                                                                                                                     3/1/01
                                                                                                                     2/1/01
                                                                                                                     1/1/01

499 221-3150127 0010602233    $62,467     6/7/01    6/19/01        378    3027500168 30275   Denver    > 60 day      1/1/01

500 221-3156317 0010857167    $69,964    10/30/00   11/14/00       147    3027500168 30275   Denver    > 90 days     10/1/00
                                                                                                                     9/1/00
                                                                                                                     8/1/00

501 221-3170007 0010937720    Adequate Documentation has been provided.

502 221-3178454 0012391579 $115,941       2/8/01    2/16/01        209    3027500168 30275   Denver    Current       1/1/01
                                                                                                                     12/1/00
                                                                                                                     11/1/00
                                                                                                                     10/1/00




  2003-KC-1001                                                Page 58
                                                                                                                     Appendix C


                                                                                                                          Due
                 Cendant                          Days from                                                             Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                            Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC        3/25/02 Payment

503 221-3188904 0012631933   $50,226    12/1/00    12/8/00        93     3027500168 30275   Denver         > 90 days     11/1/00
                                                                                                                         10/1/00

504 221-3208102 0013507736   $87,355    4/16/01    4/20/01        164    3027500168 30275   Denver         Current       3/1/01

505 221-3221899 0013814322   $46,517    3/15/01    3/20/01        65     3027500168 30275   Denver         > 30 days     3/1/01

506 221-3233494 0014033823 $100,936     8/20/01    8/28/01        171    3027502038 30275   Denver         Current       8/1/01
                                                                                                                         7/1/01
                                                                                                                         6/1/01

507 221-3237121 0013978523   $64,452    6/21/01     7/2/01        122    3027500168 30275   Denver         Current       6/1/01
                                                                                                                         5/1/01

508 222-1500221 0004343190   $62,467     7/7/00    7/12/00        296    3027500168 30275   Denver         Current       4/1/00
                                                                                                                         2/1/00

509 222-1505110 0009397050   $65,966    2/15/00    2/22/00        88     3027500168 30275   Denver         Claims        2/1/00

510 222-1511315 0010244408   $36,697    7/12/00    7/19/00        132    3027500168 30275   Denver         REO           6/1/00

511 222-1512610 0010346047   $49,068    9/20/00    9/30/00        187    3027500168 30275   Denver         Current       9/1/00
                                                                                                                         7/1/00

512 222-1518738 0012383329   $74,961    1/22/01     2/5/01        175    3027500168 30275   Denver         > 90 days     10/1/00

513 222-1521369 0012272498   Adequate Documentation has been provided.

514 222-1522069 0012282265   $52,972    10/19/00   10/30/00       99     3027500168 30275   Denver         > 90 days     10/1/00

515 222-1531258 0013449921   $26,029    1/17/01    1/26/01        61     3027500168 30275   Denver         SEE NOTE 1    12/1/00

516 222-1531938 0013506894   Adequate Documentation has been provided.

517 222-1532122 0013514815 $111,708      5/3/01    5/11/01        154    3027500168 30275   Denver         > 30 days     4/1/01

518 222-1540091 0014233118   $52,082     7/5/01    7/13/01        119    3027502038 30275   Denver         Current       6/1/01

519 222-1551252 0015549017   $63,995    1/23/02    1/30/02        209    3027500168 30275   Denver         Current       1/1/02
                                                                                                                         12/1/01
                                                                                                                         11/1/01
                                                                                                                         10/1/01
                                                                                                                         9/1/01

520 231-0680213 0009111634   $39,673    10/11/01   10/23/01       703    3027500218 30275   Philadelphia   > 30 days*    9/1/01
                                                                                                                         4/1/01

521 231-0692024 0010441830   $89,954     8/1/00     8/3/00        95     3027500218 30275   Philadelphia   F/C           6/1/00

522 231-0695299 0010508265   $45,436    1/18/01    1/22/01        220    3027500218 30275   Philadelphia   > 90 days     12/1/00




                                                             Page 59                                             2003-KC-1001
Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC        3/25/02 Payment

523 231-0704174 0012458469   $76,961   6/14/01    6/18/01        289   3027500218 30275   Philadelphia   Current       5/1/01
                                                                                                                       4/1/01
                                                                                                                       3/1/01
                                                                                                                       2/1/01

524 231-0732458 0015553431 $108,000    10/5/01    10/16/01       84    3027500218 30275   Philadelphia   SEE NOTE 1    9/1/01

525 241-5662962 0008958068   $22,392    2/2/00     2/4/00        104   3027500014 30275   Philadelphia   Bankruptcy    1/1/00
                                                                                                                       12/1/99

526 241-5664511 0008997330   $84,869   1/19/00    1/21/00        85    3027500014 30275   Philadelphia   > 90 days     12/1/99

527 241-5681932 0008970337 $168,610     3/8/01    3/14/01        325   3027500014 30275   Philadelphia   > 30 days     2/1/01
                                                                                                                       1/1/01

528 241-5696391 0004946935   $99,449   5/31/00     6/2/00        153   3027500014 30275   Philadelphia   > 90 days     4/1/00
                                                                                                                       3/1/00

529 241-5736977 0010135739   $67,965   9/20/00    9/27/00        216   3027500014 30275   Philadelphia   > 90 days     9/1/00
                                                                                                                       8/1/00

530 241-5805804 0010486827   $98,978   12/6/00    12/7/00        196   3027500985 30275   Philadelphia   > 30 days     10/1/00

531 241-5811720 0010267383 $145,655    4/16/01    4/18/01        325   3027500985 30275   Philadelphia   Current       4/1/01
                                                                                                                       3/1/01
                                                                                                                       2/1/01
                                                                                                                       1/1/01
                                                                                                                       12/1/00

532 241-5835099 0010980886 $164,915    1/31/01     2/2/01        187   3027500985 30275   Philadelphia   F/C           1/1/01

533 241-5871412 0012438495   $68,464   12/7/00    12/27/00       111   3027500985 30275   Philadelphia   Current       11/1/00

534 241-5882473 0012546933 $138,725    11/20/00   11/30/00       91    3027500985 30275   Philadelphia   Current       11/1/00
                                                                                                                       10/1/00

535 241-5885384 0012551180 $127,135    11/8/01    11/13/01       434   3027500985 30275   Philadelphia   Current       9/1/01
                                                                                                                       7/1/01
                                                                                                                       5/1/01

536 241-5899109 0013182605 $119,939    4/25/01     5/2/01        208   3027500985 30275   Philadelphia   > 90 days     2/1/01
                                                                                                                       1/1/01
                                                                                                                       12/1/00

537 241-5921481 0013730593   $72,367    3/8/01    4/12/01        84    3027500985 30275   Philadelphia   Current       2/1/01

538 241-5934144 0013424650   $94,951   6/27/01    6/27/01        222   3027500985 30275   Philadelphia   > 60 day      6/1/01
                                                                                                                       5/1/01




  2003-KC-1001                                              Page 60
                                                                                                                     Appendix C


                                                                                                                          Due
                 Cendant                          Days from                                                             Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                            Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC        3/25/02 Payment

539 241-5938718 0013462643 $134,428     2/21/01    2/26/01        124    3027500985 30275   Philadelphia   Current       1/1/01
                                                                                                                         12/1/00

540 241-6118519 0014464267 $113,012      9/5/01     9/7/01        160    3027501922 30275   Philadelphia   Bankruptcy    7/1/01
                                                                                                                         6/1/01

541 249-3881254 0008042749 $136,819     8/16/00    8/21/00        293    3027500014 30275   Philadelphia   Current       8/1/00
                                                                                                                         7/1/00
                                                                                                                         6/1/00

542 249-4238103 0015681190   $30,278    9/19/01    10/2/01        82     3027500985 30275   Philadelphia   Current       8/1/01

543 251-2388042 0009453234 $175,852     3/28/00    3/29/00        148    3027500218 30275   Philadelphia   F/C           2/1/00
                                                                                                                         1/1/00

544 251-2401514 0001141928   $74,642     5/8/00    5/10/00        111    3027500218 30275   Philadelphia   Current       4/1/00

545 251-2432158 0010319044 $209,893     10/24/00   10/26/00       182    3027500218 30275   Philadelphia   SEE NOTE 1    10/1/00
                                                                                                                         9/1/00
                                                                                                                         8/1/00
                                                                                                                         7/1/00
                                                                                                                         6/1/00

546 251-2480082 0012406914   $48,599    11/24/00   12/7/00        77     3027500218 30275   Philadelphia   > 90 days     11/1/00

547 251-2484633 0012501433 $127,914      2/8/01    2/12/01        161    3027500218 30275   Philadelphia   SEE NOTE 1    12/1/00

548 251-2540706 0013871975 $196,448      3/5/01     3/8/01        63     3027500218 30275   Philadelphia   SEE NOTE 1    2/1/01

549 251-2558056 0014054621 $220,260     9/19/01    9/21/01        216    3027500218 30275   Philadelphia   > 30 days     9/1/01

550 251-2631950 0015530082 $137,810     10/22/01   10/25/01       129    3027501627 30275   Philadelphia   > 90 days     9/1/01

551 261-7204601 0004290540   $56,434     2/1/00     2/3/00        95     3027500507 30275   Philadelphia   F/C           12/1/99

552 261-7243772 0007715444   $22,159    11/16/01   12/3/01        805    3027500440 30275   Philadelphia   Current       10/1/01
                                                                                                                         9/1/01
                                                                                                                         8/1/01
                                                                                                                         7/1/01

553 261-7299648 0003968724   $54,550     3/1/00     3/2/00        176    3027500507 30275   Philadelphia   Current       1/1/00

554 261-7335094 0006692594 $104,908     1/11/00    1/11/00        97     3027500507 30275   Philadelphia   SEE NOTE 1    12/1/99

555 261-7339680 0004473815   $53,170    5/24/00    5/30/00        153    3027500507 30275   Philadelphia   > 90 days     5/1/00

556 261-7347606 0009006941   $42,408    4/13/00    4/17/00        114    3027500507 30275   Philadelphia   REO           3/1/00

557 261-7411746 0010141877   Adequate Documentation has been provided.

558 261-7412564 0010179786 $139,785     9/22/00    9/26/00        218    3027500507 30275   Philadelphia   Current       7/1/00
                                                                                                                         6/1/00




                                                             Page 61                                             2003-KC-1001
Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC        3/25/02 Payment

559 261-7428121 0010318004   $55,336    2/9/01    2/13/01        326   3027500507 30275   Philadelphia   Bankruptcy    1/1/01
                                                                                                                       12/1/00
                                                                                                                       11/1/00
                                                                                                                       10/1/00
                                                                                                                       9/1/00
                                                                                                                       8/1/00

560 261-7441049 0011058419   $88,355    2/7/01     2/9/01        329   3027500507 30275   Philadelphia   > 90 days     12/1/00
                                                                                                                       10/1/00

561 261-7456609 0011094232 $122,646    12/22/00   1/16/01        240   3027500507 30275   Philadelphia   Current       12/1/00
                                                                                                                       11/1/00
                                                                                                                       10/1/00
                                                                                                                       9/1/00

562 261-7488262 0010915551   $64,598    5/7/01    5/22/01        334   3027500507 30275   Philadelphia   Current       3/1/01

563 261-7524563 0012382420   $84,956   4/24/01     5/7/01        207   3027500507 30275   Philadelphia   F/C           4/1/01
                                                                                                                       3/1/01
                                                                                                                       2/1/01
                                                                                                                       1/1/01

564 261-7546677 0011399029   $66,965   1/22/01    1/24/01        160   3027500507 30275   Philadelphia   > 90 days     1/1/01
                                                                                                                       12/1/00
                                                                                                                       11/1/00

565 261-7554565 0013196795   $59,073   7/24/01    7/26/01        161   3027500507 30275   Philadelphia   > 90 days     7/1/01
                                                                                                                       6/1/01
                                                                                                                       5/1/01
                                                                                                                       4/1/01

566 261-7564075 0013267513 $135,931    5/11/01    5/14/01        235   3027500507 30275   Philadelphia   Current       3/1/01

567 261-7576432 0013371711 $144,707    2/14/01    2/16/01        138   3027500507 30275   Philadelphia   Current       11/1/00

568 261-7601070 0013635800 $154,812    1/29/01    1/31/01        70    3027500507 30275   Philadelphia   REO           1/1/01

569 261-7606706 0013692934   $96,977    3/8/01    3/12/01        69    3027500507 30275   Philadelphia   Current       2/1/01

570 261-7611951 0013724265   $79,153   12/26/01   12/31/01       166   3027500507 30275   Philadelphia   Current       10/1/01

571 261-7613258 0013713763   $98,455   4/16/01    4/18/01        90    3027500507 30275   Philadelphia   > 60 day      4/1/01

572 261-7613499 0013733860   $96,317   2/19/01    2/21/01        68    3027500507 30275   Philadelphia   Current       2/1/01

573 261-7742473 0013961263 $103,677    10/9/01    10/15/01       183   3027500507 30275   Philadelphia   > 60 day      9/1/01
                                                                                                                       8/1/01

574 261-7840995 0015602063   $81,450   11/1/01    11/5/01        113   3027500507 30275   Philadelphia   > 30 days     10/1/01




  2003-KC-1001                                              Page 62
                                                                                                                   Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC        3/25/02 Payment

575 261-7853874 0015836471 $149,611     2/8/02    2/22/02        211   3027502441 30275   Philadelphia   > 30 days     1/1/02
                                                                                                                       12/1/01

576 261-7862666 0015759632   $52,584   9/29/01    10/3/01        60    3027500507 30275   Philadelphia   Current       9/1/01

577 261-7867549 0015983026 $146,670    10/23/01   10/26/01       81    3027502429 30275   Philadelphia   Current       10/1/01

578 262-1271134 0002562130   $82,957   3/21/00    3/23/00        113   3027500507 30275   Philadelphia   Current       3/1/00

579 262-1272668 0002855278   $82,957   7/14/00    7/20/00        212   3027500507 30275   Philadelphia   Current       6/1/00
                                                                                                                       5/1/00

580 262-1288347 0010637379   $41,700   7/17/00    7/20/00        60    3027500507 30275   Philadelphia   Bankruptcy    7/1/00

581 262-1297227 0010935088 $123,978    5/29/01    6/12/01        292   3027500507 30275   Philadelphia   Current       5/1/01
                                                                                                                       3/1/01
                                                                                                                       2/1/01

582 262-1299745 0012426938 $110,985     1/4/01     1/8/01        157   3027500507 30275   Philadelphia   Current       12/1/00

583 263-3060600 0009264482   $89,454   3/16/00    3/20/00        107   3027500507 30275   Philadelphia   Current       3/1/00

584 263-3064190 0004609913   $82,822   9/19/01    9/21/01        666   3027500507 30275   Philadelphia   SEE NOTE 1    9/1/01
                                                                                                                       6/1/01

585 263-3068012 0006999411   $50,485   5/17/00    5/19/00        155   3027500507 30275   Philadelphia   Current       3/1/00

586 263-3070666 0005458823   $73,812   9/14/00    9/14/00        262   3027500507 30275   Philadelphia   Bankruptcy    8/1/00
                                                                                                                       7/1/00
                                                                                                                       6/1/00
                                                                                                                       5/1/00
                                                                                                                       4/1/00

587 263-3079268 0010105922 $117,035    3/29/01     4/2/01        413   3027500507 30275   Philadelphia   F/C           12/1/00
                                                                                                                       11/1/00

588 263-3084120 0010251486   $79,346   9/25/00    9/28/00        214   3027500507 30275   Philadelphia   REO           7/1/00

589 263-3085342 0010278307   $54,397   12/5/00    12/5/00        265   3027500746 30275   Philadelphia   Current       9/1/00
                                                                                                                       8/1/00

590 263-3087308 0010317980   $65,951   4/11/01    4/13/01        383   3027500507 30275   Philadelphia   Bankruptcy    1/1/01

591 263-3103090 0010571651   $69,864   10/3/00    10/6/00        139   3027500507 30275   Philadelphia   Current       9/1/00

592 263-3109694 0010676666   $53,972   10/17/00   10/31/00       153   3027500507 30275   Philadelphia   > 90 days     10/1/00
                                                                                                                       7/1/00

593 263-3130701 0012330189 $111,926    3/21/01    3/23/01        205   3027500507 30275   Philadelphia   SEE NOTE 1    11/1/00
                                                                                                                       10/1/00




                                                            Page 63                                            2003-KC-1001
Appendix C


                                                                                                                           Due
                 Cendant                          Days from                                                              Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                             Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC        3/25/02 Payment

594 263-3135622 0012436960    $85,838     4/5/01    4/10/01        237    3027500507 30275   Philadelphia   REO           3/1/01
                                                                                                                          2/1/01
                                                                                                                          1/1/01
                                                                                                                          12/1/00
                                                                                                                          11/1/00

595 263-3141190 0012566402    $67,965    2/20/01    2/22/01        186    3027500507 30275   Philadelphia   Current       1/1/01
                                                                                                                          12/1/00
                                                                                                                          11/1/00

596 263-3167668 0013554084    $61,393    2/19/01    2/21/01        89     3027500507 30275   Philadelphia   Current       2/1/01

597 263-3174935 0013736095    $67,379    5/11/01    5/21/01        72     3027500507 30275   Philadelphia   Current       4/1/01

598 263-3215179 0014317002    $40,092    9/26/01    9/28/01        86     3027500507 30275   Philadelphia   Current       9/1/01

599 271-8157177 0008095796 $147,393      1/24/00    1/28/00        136    3027500492 30275   Denver         Current       1/1/00
                                                                                                                          12/1/99
                                                                                                                          11/1/99

600 271-8223332 0003564143    $76,943     6/7/00    6/12/00        194    3027500492 30275   Denver         Current       1/1/00

601 271-8223910 0009538158 $117,792      8/14/00    8/17/00        276    3027500405 30275   Denver         Current       7/1/00
                                                                                                                          6/1/00
                                                                                                                          5/1/00
                                                                                                                          4/1/00
                                                                                                                          3/1/00
                                                                                                                          2/1/00

602 271-8232284 0004973749    $72,300    3/23/00    3/28/00        111    3027500492 30275   Denver         Current       3/1/00
                                                                                                                          1/1/00

603 271-8233641 0004898193    Adequate Documentation has been provided.

604 271-8234726 0006777072 $141,947       6/2/00     6/9/00        175    3027500405 30275   Denver         Current       5/1/00
                                                                                                                          4/1/00

605 271-8246514 0010049336 $110,588       9/7/00    9/20/00        202    3027500405 30275   Denver         Current       8/1/00
                                                                                                                          5/1/00

606 271-8253147 0011049434 $138,855      12/5/00     1/2/01        319    3027500405 30275   Denver         F/C*          11/1/00

607 271-8264560 0011078771 $116,974      10/3/00     1/3/01        221    3027500492 30275   Denver         Current       8/1/00

608^^271-8272572 0010420271   $30,291     8/9/00    8/15/00        79     3027500405 30275   Denver         REO           7/1/00




  2003-KC-1001                                                Page 64
                                                                                                                 Appendix C


                                                                                                                     Due
                 Cendant                          Days from                                                        Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                       Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC   3/25/02 Payment

609 271-8273663 0011126182   $89,928    2/15/01    2/23/01        325    3027500492 30275   Denver    SEE NOTE 1     1/1/01
                                                                                                                     12/1/00
                                                                                                                     11/1/00

610 271-8294079 0012004180   $65,440    8/15/01    8/22/01        455    3027500405 30275   Denver    Current        2/1/01

611 271-8303129 0010881902   $79,172    12/6/00    12/13/00       166    3027501265 30275   Denver    Current        11/1/00
                                                                                                                     10/1/00

612 271-8312301 0004994307 $131,902     8/15/00    8/18/00        77     3027500492 30275   Denver    > 60 day       8/1/00

613 271-8313438 0011275575 $148,262     8/15/00    8/21/00        76     3027500492 74649   Denver    > 90 days      8/1/00

614 271-8315603 0011260635 $134,917      3/7/01    3/15/01        285    3027500492 30275   Denver    > 90 days      2/1/01

615 271-8327971 0011114618 $125,920      1/3/01     1/3/01        194    3027500492 30275   Denver    > 90 days      12/1/00
                                                                                                                     11/1/00

616 271-8330471 0011330347 $115,231      1/3/01     1/3/01        141    3027500492 30275   Denver    SEE NOTE 1     12/1/00
                                                                                                                     11/1/00

617 271-8334234 0011186111 $147,188     12/5/00    12/14/00       158    3027500492 30275   Denver    SEE NOTE 1     10/1/00
                                                                                                                     9/1/00

618 271-8342218 0011208527 $110,736     11/8/00    11/21/00       117    3027500492 30275   Denver    > 60 day       10/1/00

619 271-8344855 0011339249 $107,924     1/17/01    1/30/01        170    3027500492 30275   Denver    Current        12/1/00
                                                                                                                     11/1/00

620 271-8345692 0011273737 $133,241     12/14/00   1/18/01        150    3027500492 30275   Denver    SEE NOTE 1     11/1/00

621 271-8347011 0012541702   $99,449    11/9/00    12/1/00        70     3027501265 30275   Denver    Current        10/1/00

622 271-8414201 0011618618   Adequate Documentation has been provided.

623 271-8450822 0011820073 $119,500     8/23/01    8/28/01        160    3027500492 30275   Denver    Current        7/1/01

624 271-8476270 0015147341 $159,101     9/14/01    9/20/01        144    3027500405 30275   Denver    Current        6/1/01

625 271-8487789 0015271919   $48,327    10/16/01   10/19/01       169    3027502117 30275   Denver    SEE NOTE 1     6/1/01

626 271-8529321 0014797906   Adequate Documentation has been provided.

627 271-8545960 0014771984 $172,702     12/10/01   12/13/01       131    3027500492 30275   Denver    Current        9/1/01

628 271-8554831 0014924666 $155,751     10/10/01   11/5/01        71     3027500492 30275   Denver    Current        9/1/01

629 281-2676284 0007691710   $64,967     2/3/00     2/8/00        153    3027500261 30275   Atlanta   Current        1/1/00
                                                                                                                     12/1/99
                                                                                                                     11/1/99




                                                             Page 65                                        2003-KC-1001
Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

630 281-2690099 0004161949    $76,605    9/12/00    9/15/00        350    3027500261 30275   Atlanta   Current       8/1/00
                                                                                                                     7/1/00
                                                                                                                     6/1/00
                                                                                                                     5/1/00
                                                                                                                     3/1/00

631 281-2690937 0004293478    $64,281    12/10/99   12/16/99       94     3027500261 30275   Atlanta   > 90 days     11/1/99

632 281-2701763 0009198326 $114,941      1/31/00     2/3/00        87     3027500261 30275   Atlanta   REO           1/1/00

633 281-2705815 0009461153    $62,967    2/21/01     3/2/01        448    3027500261 30275   Atlanta   Current       1/1/01
                                                                                                                     12/1/00
                                                                                                                     11/1/00

634^^281-2711623 0010018885   $59,969    8/23/00    10/3/00        182    3027500261 30275   Atlanta   Current       8/1/00
                                                                                                                     7/1/00
                                                                                                                     6/1/00
                                                                                                                     5/1/00
                                                                                                                     4/1/00

635 281-2715421 0010114486    $51,973    9/19/00    9/22/00        172    3027500261 30275   Atlanta   F/C           7/1/00

636 281-2715631 0010119832 $109,944      8/23/00    8/28/00        208    3027500261 30275   Atlanta   SEE NOTE 1    8/1/00

637 281-2718991 0010267359    $54,971    9/26/00    9/29/00        223    3027500261 30275   Atlanta   > 90 days     9/1/00
                                                                                                                     8/1/00
                                                                                                                     7/1/00

638 281-2719221 0010277333    $69,964    12/19/00   12/22/00       278    3027500609 30275   Atlanta   > 90 days     12/1/00
                                                                                                                     8/1/00

639 281-2720099 0010291128    $45,695    1/24/01    1/29/01        330    3027500261 30275   Atlanta   > 90 days     1/1/01

640 281-2723507 0010405546    $59,509    3/20/01    3/23/01        334    3027500261 30275   Atlanta   > 90 days     3/1/01
                                                                                                                     1/1/01
                                                                                                                     12/1/00
                                                                                                                     11/1/00
                                                                                                                     10/1/00

641 281-2727573 0010522332    Adequate Documentation has been provided.

642 281-2732538 0007203599 $101,948      8/21/00    8/24/00        87     3027500261 30275   Atlanta   SEE NOTE 1    8/1/00

643 281-2734335 0010863132    $69,964    3/20/01    3/23/01        242    3027500261 30275   Atlanta   > 30 days     3/1/01




  2003-KC-1001                                                Page 66
                                                                                                               Appendix C


                                                                                                                    Due
                 Cendant                          Days from                                                       Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                      Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC   3/25/02 Payment

644^^281-2735297 0010886950   $75,961   11/30/00   12/5/00        183   3027500261 30275   Atlanta   Bankruptcy    11/1/00
                                                                                                                   10/1/00
                                                                                                                   9/1/00
                                                                                                                   8/1/00

645 281-2740995 0012237269    $76,772   12/12/00   12/15/00       176   3027500261 30275   Atlanta   Current       9/1/00
                                                                                                                   8/1/00

646 281-2744014 0012318184 $122,986     9/28/00    10/3/00        73    3027500261 30275   Atlanta   F/C           9/1/00

647 281-2745344 0012372967    $34,253    1/5/01    1/10/01        161   3027500261 30275   Atlanta   > 90 days     12/1/00

648 281-2751764 0012606042    $45,436    1/3/01     1/8/01        64    3027500261 30275   Atlanta   > 30 days     12/1/00

649 281-2754346 0013198478 $122,937      8/6/01    8/15/01        220   3027500261 30275   Atlanta   Current       7/1/01
                                                                                                                   6/1/01
                                                                                                                   5/1/01

650 281-2772572 0013686407    $50,485   2/15/01    2/21/01        72    3027500261 30275   Atlanta   Current       1/1/01

651 281-2774097 0013802707    $78,732   1/18/02    1/25/02        365   3027500261 30275   Atlanta   Current       8/1/01

652 281-2789339 0014274567    $73,693   8/23/01     9/6/01        146   3027501003 30275   Atlanta   F/C           8/1/01

653 281-2794208 0014458657    $58,537   1/21/02    1/28/02        252   3027501859 30275   Atlanta   Current       1/1/02
                                                                                                                   12/1/01
                                                                                                                   11/1/01
                                                                                                                   10/1/01
                                                                                                                   9/1/01
                                                                                                                   8/1/01

654 281-2797046 0014496343    $50,599   10/5/01    10/17/01       156   3027501859 30275   Atlanta   Current       8/1/01
                                                                                                                   7/1/01

655 281-2797811 0014545933    $26,731   11/15/01   11/26/01       161   3027500261 39276   Atlanta   Current       11/1/01

656 281-2801922 0014419295    $46,337   11/6/01    11/9/01        175   3027500261 30275   Atlanta   Current       10/1/01
                                                                                                                   8/1/01

657 281-2804600 0014257273    $63,917   10/8/01    10/19/01       164   3027501859 30275   Atlanta   Current       9/1/01

658 281-2812461 0014011043    $44,315   11/9/01    11/19/01       147   3027500261 39276   Atlanta   Current       10/1/01
                                                                                                                   9/1/01

659 281-2823283 0015657810    $71,379   1/17/02    1/25/02        191   3027501859 30275   Atlanta   Current       1/1/02

660 291-2674439 0010224491    $86,452   6/26/00    6/29/00        122   3027500962 30275   Denver    F/C           5/1/00




                                                             Page 67                                       2003-KC-1001
Appendix C


                                                                                                                     Due
                 Cendant                          Days from                                                        Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                       Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC   3/25/02 Payment

661 291-2676939 0010243129   $50,037    8/10/00    8/15/00        163    3027500962 30275   Denver    > 90 days     7/1/00
                                                                                                                    6/1/00
                                                                                                                    5/1/00
                                                                                                                    4/1/00

662 291-2684232 0010428597 $119,019     8/22/00     9/5/00        116    3027500962 30275   Denver    > 60 day      8/1/00

663 291-2704127 0010820355   $76,370    8/29/00     9/7/00        61     3027500962 30275   Denver    F/C           8/1/00

664 291-2710247 0012244190 $109,894     5/15/01    5/24/01        293    3027500962 30275   Denver    > 30 days     5/1/01

665 291-2726197 0012592192   $17,669     6/5/01    6/12/01        292    3027500962 30275   Denver    > 90 days     4/1/01
                                                                                                                    3/1/01
                                                                                                                    2/1/01
                                                                                                                    1/1/01
                                                                                                                    12/1/00

666 291-2727895 0012632501   $81,587    4/10/01    4/16/01        201    3027500962 30275   Denver    Bankruptcy    3/1/01
                                                                                                                    2/1/01
                                                                                                                    1/1/01
                                                                                                                    12/1/00
                                                                                                                    11/1/00

667 291-2729707 0012662250   Adequate Documentation has been provided.

668 291-2732968 0012537783   $88,922     2/9/01    2/14/01        164    3027500962 30275   Denver    Current       1/1/01
                                                                                                                    12/1/00
                                                                                                                    11/1/00

669 291-2745491 0013537337   $65,966    6/29/01    8/22/01        203    3027501758 30275   Denver    > 90 days     6/1/01
                                                                                                                    5/1/01

670 291-2754616 0013760749   $30,746    5/30/01     6/5/01        166    3027500962 30275   Denver    Current       5/1/01

671 291-2792109 0014483788   $96,232    11/8/01    11/14/01       210    3027500962 30275   Denver    Current       9/1/01

672 291-2824247 0015495641 $132,421     8/16/01    8/24/01        83     3027500962 30275   Denver    Current       8/1/01

673 291-2825128 0015523285 $118,983     10/10/01   11/5/01        103    3027501481 30275   Denver    Current       9/1/01

674 292-3803474 0005129978   $52,461    5/16/00    5/19/00        230    3027500037 30275   Denver    SEE NOTE 1    5/1/00
                                                                                                                    4/1/00
                                                                                                                    3/1/00

675 292-3805712 0006033963   $44,782    5/25/00     6/1/00        206    3027500037 30275   Denver    Current       5/1/00
                                                                                                                    4/1/00

676 292-3807675 0008092686   $32,508    12/22/99   12/28/99       76     3027500037 30275   Denver    REO           12/1/99




  2003-KC-1001                                               Page 68
                                                                                                              Appendix C


                                                                                                                  Due
                 Cendant                          Days from                                                     Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                    Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                 HOC   3/25/02 Payment

677 292-3811595 0009003971   $32,815   9/14/00   9/26/00        223   3027500037 30275   Denver    > 90 days      8/1/00
                                                                                                                  7/1/00

678 292-3812187 0009068503   $82,957   2/23/00    3/2/00        117   3027500037 30275   Denver    Current        1/1/00

679 292-3828549 0001619840   $39,639   1/22/01   1/29/01        381   3027500037 30275   Denver    SEE NOTE 1     1/1/01

680 292-3832940 0010036341   $58,969   9/7/00    9/15/00        227   3027500037 30275   Denver    F/C            8/1/00

681 292-3838575 0010129807   $89,954   3/14/01   3/26/01        286   3027500037 30275   Denver    Current        1/1/01
                                                                                                                  11/1/00
                                                                                                                  10/1/00

682 292-3842540 0010261915   $40,565   6/9/00    6/13/00        101   3027500962 30275   Denver    > 90 days      5/1/00
                                                                                                                  4/1/00

683 292-3849584 0010039071 $217,597    9/10/01   9/20/01        270   3027500962 30275   Denver    Current        3/1/01

684 292-3853181 0010449379   $66,739   8/17/00   8/30/00        111   3027500962 30275   Denver    > 90 days      8/1/00
                                                                                                                  7/1/00

685 292-3857227 0010502441   $28,663   7/20/00   7/29/00        81    3027500962 30275   Denver    Claims         7/1/00
                                                                                                                  6/1/00

686 292-3867979 0010674810   $78,487   8/4/00    8/10/00        81    3027500962 30275   Denver    > 60 day       7/1/00

687 292-3869730 0010837060   $98,190   12/5/00   12/12/00       200   3027500962 30275   Denver    Claims         8/1/00

688 292-3887836 0012294385   $53,955   3/21/01   6/27/01        252   3027500962 30275   Denver    SEE NOTE 1     1/1/01
                                                                                                                  11/1/00
                                                                                                                  10/1/00

689 292-3907011 0013176995   $14,381   1/26/01   1/31/01        140   3027500962 30275   Denver    > 90 days      1/1/01
                                                                                                                  12/1/00
                                                                                                                  11/1/00

690 292-3908262 0013204540   $81,697   6/4/01     6/8/01        278   3027500962 30275   Denver    SEE NOTE 1     5/1/01
                                                                                                                  4/1/01
                                                                                                                  3/1/01

691 292-3910345 0013242540 $102,947    1/17/01   1/30/01        110   3027500962 30275   Denver    SEE NOTE 1     12/1/00

692 292-3920473 0013444609   $64,468   2/21/01    3/1/01        113   3027500962 30275   Denver    > 30 days      2/1/01
                                                                                                                  12/1/00

693 292-3924288 0013521182   $59,410   6/1/01     6/6/01        204   3027500962 30275   Denver    > 90 days      5/1/01
                                                                                                                  4/1/01

694 292-3926237 0013545553   $85,856   4/23/01   4/26/01        160   3027501758 30275   Denver    > 30 days      4/1/01

695 292-3933127 0013679725   $83,538   9/5/01    9/13/01        250   3027500962 30275   Denver    > 30 days      6/1/01




                                                           Page 69                                       2003-KC-1001
Appendix C


                                                                                                                   Due
                 Cendant                          Days from                                                      Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                     Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC   3/25/02 Payment

696 292-3942348 0013866769 $101,200     4/6/01    4/18/01        88    3027500962 30275   Denver    > 30 days     3/1/01

697 292-3961449 0014135727   $40,092   10/19/01   10/24/01       231   3027501758 30275   Denver    Current       7/1/01
                                                                                                                  6/1/01

698 292-3979739 0014421408   $89,117   10/16/01   10/23/01       190   3027500962 30275   Denver    Current       9/1/01

699 292-3986122 0014457626   $72,923   8/30/01     9/5/01        153   3027501758 30275   Denver    F/C           8/1/01
                                                                                                                  7/1/01
                                                                                                                  6/1/01
                                                                                                                  5/1/01

700 292-3988441 0014510267   $93,644   7/25/01     8/6/01        124   3027501481 30275   Denver    > 30 days     7/1/01

701 292-3998919 0015210792   $35,080   10/1/01    10/24/01       154   3027501764 30275   Denver    Current       9/1/01
                                                                                                                  8/1/01
                                                                                                                  7/1/01
                                                                                                                  6/1/01

702 292-4005229 0015299266 $138,406    7/30/01     8/8/01        66    3027501481 30275   Denver    Current       7/1/01

703 292-4014584 0015390727 $118,066    9/15/01    9/20/01        113   3027501481 30275   Denver    Current       8/1/01

704 292-4017923 0015475767   $81,357   10/26/01   11/1/01        140   3027501758 30275   Denver    Current       10/1/01

705 292-4031229 0015660434   $95,993   10/18/01   10/24/01       97    3027501758 30275   Denver    > 90 days     10/1/01
                                                                                                                  9/1/01

706 311-1646610 0013875869 $121,800    8/27/01     9/7/01        235   3027501980 30275   Denver    Current       8/1/01
                                                                                                                  7/1/01

707 321-2021035 0004433314 $139,929     1/4/00    1/19/00        117   3027500180 30275   Denver    SEE NOTE 1    12/1/99

708 321-2037796 0010026763   $74,961   3/15/00    3/20/00        62    3027500180 30275   Denver    Current       3/1/00

709 321-2055226 0010458727   $94,951    8/8/00    8/14/00        103   3027500180 30275   Denver    F/C           7/1/00
                                                                                                                  6/1/00

710 321-2058382 0010071314 $113,068    2/22/01     3/1/01        240   3027500180 30275   Denver    F/C           2/1/01
                                                                                                                  1/1/01
                                                                                                                  12/1/00
                                                                                                                  11/1/00
                                                                                                                  10/1/00

711 321-2059893 0013263793   $22,009   5/20/01    5/23/01        184   3027501309 30275   Denver    Current       5/1/01
                                                                                                                  4/1/01
                                                                                                                  3/1/01

712 321-2063948 0012230090   $94,785    2/6/01    2/13/01        221   3027500180 30275   Denver    Current       1/1/01
                                                                                                                  12/1/00




  2003-KC-1001                                              Page 70
                                                                                                                      Appendix C


                                                                                                                           Due
                 Cendant                          Days from                                                              Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                             Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC        3/25/02 Payment

713 321-2068656 0012376950    $50,861    2/28/01     3/6/01        229    3027500180 30275   Denver         Current       2/1/01
                                                                                                                          1/1/01
                                                                                                                          12/1/00
                                                                                                                          11/1/00
                                                                                                                          9/1/00

714 321-2073560 0012541611 $119,939      4/17/01    4/23/01        239    3027500180 30275   Denver         Current       3/1/01

715 321-2075975 0012530770 $104,946       2/1/01    2/21/01        167    3027500180 30275   Denver         F/C           12/1/00
                                                                                                                          10/1/00

716 321-2076702 0012638268 $114,941      12/15/00   1/18/01        78     3027500180 30275   Denver         F/C           12/1/00

717 321-2078676 0012621074    Adequate Documentation has been provided.

718 321-2080555 0013264536 $109,944      4/10/01    5/17/01        202    3027500180 30275   Denver         Current       1/1/01

719 321-2081182 0012656773    $83,957     3/5/01    3/22/01        172    3027500180 30275   Denver         SEE NOTE 1    12/1/00

720 321-2089423 0013642418    $95,120    1/24/02     2/1/02        185    3027500180 30275   Denver         Current       12/1/01
                                                                                                                          11/1/01

721 321-2106442 0014304679    $50,115    7/30/01     8/3/01        123    3027501741 30275   Denver         Current       7/1/01
                                                                                                                          6/1/01

722 321-2120727 0015380967 $112,931      11/7/01    11/13/01       169    3027500253 30275   Denver         Current       10/1/01
                                                                                                                          9/1/01

723^^332-3364439 0004104030   $99,602    11/29/99   12/1/99        68     3027500116 30275   Santa Ana      Bankruptcy    11/1/99

724 332-3379768 0009060898    $78,107    1/11/00    1/14/00        81     3027500116 30275   Santa Ana      Current       12/1/99

725 332-3387163 0009278524 $132,925       6/6/00     6/8/00        197    3027500116 30275   Santa Ana      Current       5/1/00

726 332-3400434 0009503004    $67,587     3/9/00    3/14/00        70     3027500116 30275   Santa Ana      Current       2/1/00

727 332-3622901 0013981170    $97,470    9/27/01    10/4/01        176    3027500116 30275   Santa Ana      > 30 days     9/1/01
                                                                                                                          8/1/01

728 341-0676681 0010579449 $132,932      12/1/00    12/5/00        63     3027500218 30275   Philadelphia   Current       11/1/00

729 341-0682579 0010938124 $178,429      2/21/01    2/23/01        236    3027500218 30275   Philadelphia   Bankruptcy    2/1/01

730 341-0687127 0012280384    $41,954     2/9/01    2/13/01        193    3027500218 30275   Philadelphia   Bankruptcy    1/1/01

731 341-0691319 0012317517    $52,408    6/14/01    6/18/01        308    3027500218 30275   Philadelphia   Bankruptcy    5/1/01
                                                                                                                          4/1/01
                                                                                                                          3/1/01
                                                                                                                          2/1/01




                                                              Page 71                                             2003-KC-1001
Appendix C


                                                                                                                         Due
                 Cendant                          Days from                                                            Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                           Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC        3/25/02 Payment

732 341-0691325 0012474896    $72,454   4/12/01    4/17/01        245   3027500218 30275   Philadelphia   REO           2/1/01
                                                                                                                        1/1/01
                                                                                                                        12/1/00
                                                                                                                        11/1/00
                                                                                                                        10/1/00

733 341-0703400 0013671045    $89,954   7/18/01    7/20/01        230   3027502067 30275   Philadelphia   Claims        3/1/01

734 341-0730406 0015053523 $114,098     12/20/01   12/28/01       170   3027502050 30275   Philadelphia   Current       12/1/01

735 351-3716290 0006096721 $107,445      5/4/00     5/8/00        146   3027509990 30275   Philadelphia   Current       4/1/00

736 351-3718227 0007628670    $87,300   12/23/99   12/28/99       76    3027509990 30275   Philadelphia   Current       12/1/99

737 351-3724586 0007466675 $135,931     8/15/00    8/17/00        306   3027509990 30275   Philadelphia   Current       8/1/00

738 351-3724767 0009017674    $77,960    8/4/00     8/8/00        287   3027509990 30275   Philadelphia   Current       7/1/00

739 351-3740225 0002562163    $90,400   7/27/00    7/31/00        183   3027509990 30275   Philadelphia   > 30 days     5/1/00

740 351-3748083 0007605017    $64,966   6/20/00    6/22/00        138   3027509990 30275   Philadelphia   Claims        6/1/00

741 351-3753337 0004761433 $142,127     12/11/00   12/11/00       314   3027509990 30275   Philadelphia   Current       9/1/00
                                                                                                                        8/1/00

742 351-3779804 0010369114    $92,239    1/8/01    1/10/01        284   3027509990 30275   Philadelphia   Current       12/1/00

743 351-3795813 0010546372    $96,207   8/22/00     9/8/00        110   3027509990 30275   Philadelphia   Current       8/1/00
                                                                                                                        7/1/00

744 351-3814363 0010908630    $84,305   3/20/01    3/22/01        263   3027509990 30275   Philadelphia   F/C           10/1/00

745 351-3816551 0010940484    $94,449   9/17/01    9/21/01        444   3027509990 30275   Philadelphia   Current       9/1/01
                                                                                                                        8/1/01
                                                                                                                        7/1/01
                                                                                                                        6/1/01
                                                                                                                        5/1/01
                                                                                                                        4/1/01

746^^351-3826769 0012251252   $99,182   10/19/00   10/23/00       97    3027509990 30275   Philadelphia   > 30 days     10/1/00
                                                                                                                        9/1/00

747^^351-3832186 0012205332   $59,969    2/6/01     2/9/01        225   3027509990 30275   Philadelphia   Bankruptcy    12/1/00
                                                                                                                        11/1/00
                                                                                                                        10/1/00

748 351-3846422 0012518536    $63,972   12/26/00    1/4/01        130   3027509990 30275   Philadelphia   > 30 days     12/1/00
                                                                                                                        11/1/00

749 351-3850115 0012570909 $153,375     12/8/00    12/12/00       100   3027509990 30275   Philadelphia   Current       11/1/00




  2003-KC-1001                                               Page 72
                                                                                                                   Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC        3/25/02 Payment

750 351-3851821 0012601118 $141,105    2/13/01    2/15/01        167   3027500956 30275   Philadelphia   SEE NOTE 1    12/1/00

751 351-3860499 0013217799 $172,917     5/1/01     5/2/01        105   3027509990 30275   Philadelphia   Current       3/1/01

752 351-3860720 0013224662   $84,956   4/11/01    4/13/01        212   3027509990 30275   Philadelphia   Current       3/1/01
                                                                                                                       2/1/01

753 351-3861970 0013239728   $59,969   5/21/01    5/29/01        237   3027509990 30275   Philadelphia   > 30 days     5/1/01

754 351-3864750 0013279518 $136,125     1/9/01    1/11/01        109   3027509990 30275   Philadelphia   SEE NOTE 1    12/1/00

755 351-3865914 0012633855   $65,966    1/3/02     1/8/02        482   3027509990 30275   Philadelphia   Current       12/1/01
                                                                                                                       11/1/01

756 351-3867077 0012424826 $108,944     4/6/01    4/17/01        203   3027509990 30275   Philadelphia   Bankruptcy    2/1/01
                                                                                                                       1/1/01

757 351-3967889 0015082936 $111,594    8/23/01    8/27/01        115   3027509990 30275   Philadelphia   Current       8/1/01

758 351-4018262 0015634108   $41,765   11/19/01   11/21/01       130   3027502277 39276   Philadelphia   Current       11/1/01

759 351-4029186 0015687502 $108,838    11/3/01    11/8/01        106   3027509990 30275   Philadelphia   Current       10/1/01

760 351-4029475 0015712888 $110,589    11/22/01   11/27/01       114   3027509990 30275   Philadelphia   Current       11/1/01

761 351-4040379 0015874571 $103,184    10/19/01   10/23/01       84    3027501895 30275   Philadelphia   Current       10/1/01

762 352-3874989 0004293692 $137,863     3/2/00     3/6/00        154   3027509990 30275   Philadelphia   Current       2/1/00
                                                                                                                       1/1/00

763 352-3938477 0002769578 $146,925     6/9/00    6/13/00        163   3027509990 30275   Philadelphia   Current       3/1/00

764 352-3949667 0005486881 $161,917    6/22/00    6/26/00        176   3027509990 30275   Philadelphia   Current       6/1/00
                                                                                                                       5/1/00
                                                                                                                       4/1/00

765 352-3952780 0005526967   $77,503   10/18/00   10/25/00       285   3027509990 30275   Philadelphia   Current       7/1/00

766 352-3995314 0010388346 $119,632    2/19/01    2/22/01        284   3027509990 30275   Philadelphia   Current       12/1/00

767 352-4010845 0010522852 $179,908    1/22/01    1/24/01        241   3027509990 30275   Philadelphia   Current       1/1/01

768 352-4026076 0010640746 $207,787    8/25/00    8/30/00        85    3027509990 30275   Philadelphia   Current       7/1/00

769 352-4056657 0012223962   $84,956    6/7/01    6/14/01        328   3027509990 30275   Philadelphia   > 90 days     12/1/00

770 352-4128252 0013359716 $114,059    4/17/01    4/19/01        165   3027509990 30275   Philadelphia   > 90 days     4/1/01
                                                                                                                       3/1/01
                                                                                                                       2/1/01
                                                                                                                       1/1/01

771 352-4136338 0013430780   $94,857   2/21/01    2/23/01        76    3027509990 30275   Philadelphia   SEE NOTE 1    1/1/01

772 352-4162814 0013679634 $226,902     8/7/01    8/17/01        250   3027509990 30275   Philadelphia   SEE NOTE 1    6/1/01




                                                            Page 73                                            2003-KC-1001
Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC        3/25/02 Payment

773 352-4255288 0014319966 $182,700    7/25/01    7/27/01        61    3027502277 30275   Philadelphia   > 30 days     7/1/01

774 352-4260706 0014200737 $131,950    11/9/01    11/19/01       212   3027502277 30275   Philadelphia   SEE NOTE 1    7/1/01
                                                                                                                       6/1/01

775 352-4385087 0015799885 $217,283    10/25/01   10/30/01       86    3027509990 30275   Philadelphia   Current       10/1/01
                                                                                                                       9/1/01

776 361-2410116 0010076446   $64,358    9/6/00    9/13/00        197   3027500378 30275   Denver         SEE NOTE 1    6/1/00
                                                                                                                       4/1/00

777 361-2449842 0012426847 $128,142    3/13/01    3/20/01        225   3027500378 30275   Denver         Current       2/1/01
                                                                                                                       1/1/01

778 361-2474200 0013729801   $77,380    4/4/01     4/9/01        125   3027500378 30275   Denver         Current       3/1/01
                                                                                                                       2/1/01

779 371-2761147 0003442308   $96,951   11/26/99   11/30/99       80    3027500463 30275   Philadelphia   REO           11/1/99

780 371-2765943 0003879574   $36,753   1/24/00     2/4/00        129   3027500463 30275   Philadelphia   > 90 days     1/1/00
                                                                                                                       12/1/99
                                                                                                                       11/1/99

781 371-2769265 0004031019   $64,468   2/14/00    2/16/00        152   3027500463 30275   Philadelphia   > 30 days     1/1/00

782 371-2790738 0008978991   $54,971   2/17/00    2/22/00        93    3027500463 30275   Philadelphia   Current       2/1/00

783 371-2797027 0009453374   $63,567   8/10/00    8/14/00        237   3027500463 30275   Philadelphia   Current       7/1/00

784 371-2799720 0009541178   $83,457    3/2/00     3/6/00        79    3027500463 30275   Philadelphia   SEE NOTE 1    2/1/00

785 371-2815694 0010106698   $54,971   12/19/00   12/22/00       270   3027500463 30275   Philadelphia   Current       12/1/00

786 371-2817882 0010191013   $64,000   10/10/00   11/14/00       204   3027500463 30275   Philadelphia   Current       8/1/00

787 371-2818603 0010205961   $52,972   3/27/01    3/29/01        377   3027500463 30275   Philadelphia   Current       10/1/00

788 371-2820029 0010252948   $44,632    8/2/00     8/7/00        153   3027500463 30275   Philadelphia   > 90 days     4/1/00

789 371-2820166 0010118693   $83,313   7/21/00    7/25/00        109   3027500463 74649   Philadelphia   > 90 days     7/1/00
                                                                                                                       6/1/00

790 371-2828357 0010371540   $46,421   9/12/00    9/14/00        137   3027500463 30275   Philadelphia   > 30 days     8/1/00
                                                                                                                       7/1/00

791 371-2834527 0010533917   $83,957    8/2/00     8/4/00        82    3027500463 30275   Philadelphia   Current       7/1/00

792 371-2844950 0010845444   $36,102   4/10/01    4/16/01        264   3027500463 30275   Philadelphia   Current       10/1/00

793 371-2860804 0012408159   $48,466    2/8/01    2/12/01        189   3027500463 30275   Philadelphia   Current       11/1/00

794 371-2867207 0012371514 $130,933    5/22/01     6/7/01        293   3027500463 30275   Philadelphia   Current       5/1/01
                                                                                                                       12/1/00

795 371-2867808 0012383691 $159,187    1/16/01    1/18/01        155   3027500463 30275   Philadelphia   SEE NOTE 1    10/1/00




  2003-KC-1001                                              Page 74
                                                                                                                   Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC        3/25/02 Payment

796 371-2887303 0013263918   $65,440   5/18/01    5/23/01        231   3027501446 30275   Philadelphia   Current       5/1/01
                                                                                                                       4/1/01
                                                                                                                       3/1/01
                                                                                                                       2/1/01
                                                                                                                       1/1/01
                                                                                                                       12/1/00
                                                                                                                       11/1/00

797 371-2887313 0013264726   $35,242   6/11/01    6/12/01        242   3027501446 30275   Philadelphia   > 90 days     5/1/01
                                                                                                                       4/1/01
                                                                                                                       3/1/01
                                                                                                                       2/1/01

798 371-2905471 0013558697   $60,124   6/15/01    6/18/01        162   3027502131 30275   Philadelphia   Current       2/1/01

799 372-2855922 0003818630   $67,737   3/20/00    3/29/00        164   3027500463 30275   Philadelphia   Current       1/1/00
                                                                                                                       12/1/99

800 372-2940862 0003221462   $42,053    2/1/00    2/17/00        64    3027500463 30275   Philadelphia   F/C           1/1/00

801 372-2952361 0004042685   $28,272   5/17/00    5/19/00        180   3027500463 30275   Philadelphia   Current       5/1/00
                                                                                                                       4/1/00
                                                                                                                       3/1/00
                                                                                                                       2/1/00

802 372-2957591 0008660680   $42,811   5/30/00     6/1/00        173   3027500463 30275   Philadelphia   REO           5/1/00
                                                                                                                       4/1/00

803 372-2958886 0008950552   $63,467    6/8/00    6/12/00        192   3027500463 30275   Philadelphia   Current       5/1/00
                                                                                                                       4/1/00

804 372-2969583 0004679932 $130,164    9/28/00    10/2/00        183   3027500463 30275   Philadelphia   Current       8/1/00
                                                                                                                       7/1/00

805 372-2973384 0005469747   $35,000   11/9/00    11/15/00       317   3027500463 30275   Philadelphia   Current       7/1/00

806 372-3025443 0012459111   $32,311   12/11/00   12/18/00       112   3027501446 30275   Philadelphia   > 90 days     11/1/00
                                                                                                                       10/1/00

807 372-3035349 0013195789   $79,459    2/1/01    2/16/01        125   3027500463 30275   Philadelphia   Current       1/1/01
                                                                                                                       12/1/00

808 372-3044760 0013401492   $68,000   2/20/01    2/22/01        116   3027500463 30275   Philadelphia   Current       2/1/01

809 372-3079849 0014258875   $47,609   10/22/01   10/27/01       157   3027501446 39276   Philadelphia   > 30 days     9/1/01

810 372-3085266 0014427009 $100,383    8/23/01    9/24/01        76    3027501446 30275   Philadelphia   Current       8/1/01

811 372-3109799 0015464282   $59,033   10/1/01    10/3/01        94    3027501446 30275   Philadelphia   Current       9/1/01




                                                            Page 75                                            2003-KC-1001
Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC        3/25/02 Payment

812 372-3169865 0014241467   $69,351   11/15/01   11/21/01       228   3027502131 30275   Philadelphia   Current       9/1/01

813 374-3132986 0007852395 $113,068    9/15/00    9/19/00        351   3027500043 30275   Philadelphia   > 90 days     9/1/00
                                                                                                                       8/1/00
                                                                                                                       7/1/00
                                                                                                                       5/1/00
                                                                                                                       4/1/00

814 374-3178647 0003740875   $56,534   1/20/00     2/7/00        132   3027500043 30275   Philadelphia   Current       1/1/00

815 374-3197051 0004263190 $229,883    5/17/00    5/22/00        191   3027500043 30275   Philadelphia   SEE NOTE 1    4/1/00
                                                                                                                       3/1/00

816 374-3226821 0006043095 $117,004     1/5/00    1/10/00        84    3027500043 30275   Philadelphia   F/C           12/1/99

817 374-3253039 0009350307 $197,853     3/9/00    3/13/00        120   3027500043 30275   Philadelphia   REO           2/1/00

818 374-3288963 0005528963 $164,520    10/30/00   10/31/00       262   3027500463 30275   Philadelphia   Current       9/1/00

819 374-3325442 0010261733 $162,900    10/30/00   10/31/00       222   3027500043 30275   Philadelphia   Current       10/1/00
                                                                                                                       5/1/00

820 374-3330941 0011096310 $123,300    1/24/01    1/26/01        317   3027500463 30275   Philadelphia   > 90 days     1/1/01
                                                                                                                       11/1/00
                                                                                                                       9/1/00

821 374-3358956 0010519262 $127,935     1/8/01     1/9/01        209   3027501525 30275   Philadelphia   Current       12/1/00
                                                                                                                       11/1/00
                                                                                                                       10/1/00
                                                                                                                       9/1/00
                                                                                                                       8/1/00

822 374-3404877 0012206108 $247,956    3/16/01    3/21/01        261   3027500463 30275   Philadelphia   F/C           2/1/01
                                                                                                                       1/1/01
                                                                                                                       12/1/00
                                                                                                                       11/1/00
                                                                                                                       10/1/00

823 374-3417713 0012440152 $192,624    12/22/00   12/27/00       98    3027501525 30275   Philadelphia   Current       11/1/00

824 374-3459578 0013175914 $222,792     5/8/01    5/11/01        109   3027501525 30275   Philadelphia   Current       4/1/01
                                                                                                                       3/1/01

825 374-3462003 0013199823 $249,873    1/31/01    2/21/01        118   3027501525 30275   Philadelphia   > 30 days     1/1/01

826 374-3570994 0012662235 $173,542    2/23/01    2/27/01        106   3027501525 30275   Philadelphia   SEE NOTE 1    2/1/01




  2003-KC-1001                                              Page 76
                                                                                                               Appendix C


                                                                                                                   Due
                 Cendant                          Days from                                                      Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                     Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC   3/25/02 Payment

827 381-5701406 0003793866   $88,704   9/29/00    10/11/00       331   3027500319 30275   Atlanta   Current        8/1/00
                                                                                                                   7/1/00
                                                                                                                   6/1/00
                                                                                                                   5/1/00

828 381-5731857 0007652456   $50,485    3/8/00    3/13/00        132   3027500319 30275   Atlanta   Current        2/1/00

829 381-5740530 0006083588   $76,461    8/4/00    8/10/00        270   3027500319 30275   Atlanta   > 60 day       7/1/00
                                                                                                                   6/1/00
                                                                                                                   3/1/00
                                                                                                                   2/1/00

830 381-5765975 0009481094   $94,844   4/21/00    4/28/00        161   3027500319 30275   Atlanta   Current        4/1/00

831 381-5787226 0006854202   $45,623   3/30/00     4/4/00        89    3027500319 30275   Atlanta   F/C            3/1/00

832 381-5791164 0001986322   $99,949   3/20/00    3/27/00        90    3027500319 30275   Atlanta   Current        3/1/00
                                                                                                                   2/1/00

833 381-5795195 0005564612   $89,264   5/23/00    5/31/00        165   3027500319 30275   Atlanta   Current        4/1/00

834 381-5796286 0006018485 $109,100    12/23/99   12/29/99       93    3027500319 30275   Atlanta   Current        12/1/99
                                                                                                                   11/1/99

835 381-5803676 0010051936   $50,269    7/7/00    7/14/00        148   3027500319 30275   Atlanta   > 30 days      6/1/00

836 381-5807576 0010083459   $79,246   10/17/00   10/24/00       260   3027500319 30275   Atlanta   F/C            9/1/00
                                                                                                                   8/1/00

837 381-5828025 0010089894   $59,767   11/3/00    12/5/00        248   3027500775 30275   Atlanta   Current        9/1/00

838 381-5833613 0010338010 $161,667    6/27/00    6/30/00        63    3027500319 30275   Atlanta   Current        6/1/00

839 381-5837453 0010371912   $53,409    8/2/00    8/15/00        104   3027500319 30275   Atlanta   > 90 days      7/1/00

840 381-5839743 0010392363   $61,968   10/3/00    10/13/00       148   3027500319 30275   Atlanta   Current        9/1/00
                                                                                                                   7/1/00

841 381-5863056 0010559078   $36,147   11/1/00    11/7/00        159   3027501288 30275   Atlanta   > 90 days      10/1/00
                                                                                                                   8/1/00
                                                                                                                   7/1/00

842 381-5891011 0010895274 $139,929    2/28/01     3/5/01        278   3027500319 30275   Atlanta   Current        1/1/01
                                                                                                                   12/1/00
                                                                                                                   11/1/00
                                                                                                                   10/1/00

843 381-5891982 0010904266   $73,338   10/24/00   11/4/00        146   3027501288 30275   Atlanta   > 30 days      10/1/00
                                                                                                                   9/1/00

844 381-5901601 0010984607   $89,725   2/27/01     3/2/01        242   3027500319 30275   Atlanta   Current        11/1/00




                                                            Page 77                                       2003-KC-1001
Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC        3/25/02 Payment

845 381-5903114 0010862308 $129,578     7/9/01    7/16/01        409   3027500319 30275   Atlanta        Current       2/1/01
                                                                                                                       1/1/01

846 381-5932910 0013305032   $78,354   2/19/01    2/21/01        143   3027500319 30275   Atlanta        SEE NOTE 1    1/1/01

847 381-5936428 0012417440   $84,956   1/19/01    1/26/01        175   3027500319 30275   Atlanta        SEE NOTE 1    1/1/01

848 381-5954481 0012518858   $86,968   1/29/02    2/11/02        468   3027500319 39276   Atlanta        > 30 days     1/1/02
                                                                                                                       12/1/01
                                                                                                                       11/1/01
                                                                                                                       9/1/01
                                                                                                                       8/1/01

849 381-5956611 0012614756   $82,957   4/19/01    4/24/01        168   3027500319 30275   Atlanta        > 30 days     4/1/01
                                                                                                                       3/1/01

850 381-5957958 0012619706 $120,010    12/19/00   12/28/00       118   3027500319 30275   Atlanta        > 90 days     11/1/00

851 381-5959732 0012639837   $88,768   3/12/01    3/14/01        178   3027500319 30275   Atlanta        > 60 day      2/1/01

852 381-5965767 0013195656   $89,954    1/9/01    1/13/01        113   3027501288 30275   Atlanta        Current       11/1/00

853 381-5967007 0013205091   $56,100   3/19/01    3/21/01        164   3027500319 30275   Atlanta        Current       3/1/01
                                                                                                                       2/1/01

854 381-5992132 0013402706   $52,972    3/7/01     3/9/01        135   3027502096 30275   Atlanta        > 90 days     1/1/01

855 381-6101471 0014256135 $127,893    9/17/01    10/10/01       199   3027500319 30275   Atlanta        F/C           8/1/01
                                                                                                                       7/1/01
                                                                                                                       6/1/01

856 381-6113224 0014331797   $34,459   7/23/01    7/30/01        104   3027501288 30275   Atlanta        Current       7/1/01

857 381-6179526 0015345267 $120,172    7/31/01    8/14/01        68    3027501288 30275   Atlanta        SEE NOTE 1    7/1/01

858 401-0940988 0010188654 $103,847    1/16/01    1/19/01        307   3027500405 30275   Denver         Current       1/1/01

859 401-0941925 0010314193   $59,305   3/22/01    3/28/01        365   3027500405 30275   Denver         Current       3/1/01

860 401-0952957 0012650677   $53,972    2/5/01     2/9/01        157   3027500405 30275   Denver         > 90 days     1/1/01
                                                                                                                       12/1/00

861 401-0956505 0013462767   $36,266   2/16/01    2/23/01        91    3027502117 30275   Denver         Current       1/1/01

862 401-0967519 0015264914   $73,841   8/16/01    8/22/01        104   3027502117 30275   Denver         Current       8/1/01

863 411-3035092 0006902811 $127,924    2/16/00    2/18/00        124   3027500355 30275   Philadelphia   > 60 day      2/1/00

864 411-3100990 0005469358   $80,624   10/13/00   10/17/00       297   3027500355 30275   Philadelphia   SEE NOTE 1    4/1/00

865 411-3119939 0010385144 $101,948     6/1/00     6/5/00        63    3027500355 30275   Philadelphia   SEE NOTE 1    5/1/00

866 411-3143938 0010896900   $42,408    2/8/01    2/12/01        154   3027500355 30275   Philadelphia   > 90 days     12/1/00




  2003-KC-1001                                              Page 78
                                                                                                                  Appendix C


                                                                                                                       Due
                 Cendant                          Days from                                                          Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                         Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                 HOC        3/25/02 Payment

867 411-3147322 0010955540   $63,599   4/10/01   4/25/01        223   3027500355 30275   Philadelphia   Current       2/1/01
                                                                                                                      1/1/01
                                                                                                                      12/1/00
                                                                                                                      11/1/00
                                                                                                                      10/1/00

868 411-3173809 0012631479 $123,482    11/7/00   11/13/00       75    3027500355 30275   Philadelphia   Current       10/1/00

869 411-3181210 0013277850   $99,182   3/5/01    3/12/01        157   3027500355 30275   Philadelphia   SEE NOTE 1    2/1/01

870 411-3184491 0013336250   $94,223   1/2/01     1/4/01        71    3027500355 30275   Philadelphia   F/C           12/1/00

871 411-3208286 0013817812   $76,597   7/10/01   7/13/01        165   3027500355 30275   Philadelphia   Current       6/1/01
                                                                                                                      5/1/01

872 411-3251929 0015056344   $75,404   8/20/01   8/22/01        115   3027501321 30275   Philadelphia   Current       8/1/01
                                                                                                                      7/1/01

873 412-4333523 0003883246   $60,469   3/15/00   3/17/00        106   3027500355 30275   Philadelphia   SEE NOTE 1    11/1/99
                                                                                                                      10/1/99

874 412-4345509 0004424297   $64,867   4/27/00    5/1/00        233   3027500355 30275   Philadelphia   > 90 days     2/1/00
                                                                                                                      1/1/00

875 412-4349677 0010055564   $97,342   8/15/00   8/17/00        197   3027500355 30275   Philadelphia   Current       5/1/00

876 412-4351188 0004664397 $141,780    12/7/99   12/9/99        68    3027500355 30275   Philadelphia   > 30 days     11/1/99

877 412-4365736 0009045774   $79,959   2/17/00   3/22/00        122   3027500355 30275   Philadelphia   Current       2/1/00

878 412-4377938 0002500502   $87,955   4/11/00   4/13/00        120   3027500355 30275   Philadelphia   Current       3/1/00

879 412-4379916 0004608295   $63,967   9/4/00     9/6/00        279   3027500355 30275   Philadelphia   Current       6/1/00

880 412-4392585 0010027951 $111,912    9/12/00   9/14/00        232   3027500355 30275   Philadelphia   F/C           8/1/00
                                                                                                                      7/1/00
                                                                                                                      6/1/00
                                                                                                                      5/1/00
                                                                                                                      4/1/00

881 412-4396625 0010072213   $87,181   7/4/00     7/6/00        130   3027500355 30275   Philadelphia   Current       6/1/00
                                                                                                                      5/1/00

882 412-4417311 0010410561   $78,458   2/8/01    2/12/01        321   3027500355 30275   Philadelphia   F/C           1/1/01

883 412-4417783 0010376978   $39,673   10/5/00   10/10/00       192   3027500355 30275   Philadelphia   Current       7/1/00




                                                           Page 79                                            2003-KC-1001
Appendix C


                                                                                                                          Due
                 Cendant                          Days from                                                             Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                            Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC        3/25/02 Payment

884 412-4423142 0010482628   $87,955    3/12/01    3/15/01        285    3027500355 30275   Philadelphia   F/C           1/1/01
                                                                                                                         12/1/00
                                                                                                                         11/1/00
                                                                                                                         10/1/00
                                                                                                                         9/1/00

885 412-4426727 0010525400   $86,503    6/15/00    6/20/00        62     3027500355 30275   Philadelphia   > 60 day      6/1/00

886 412-4438987 0010651974 $133,497     2/15/01    2/21/01        275    3027500355 30275   Philadelphia   SEE NOTE 1    1/1/01
                                                                                                                         12/1/00
                                                                                                                         11/1/00
                                                                                                                         10/1/00
                                                                                                                         9/1/00
                                                                                                                         8/1/00

887 412-4444549 0010857266   $42,648    11/17/00   11/21/00       156    3027500355 30275   Philadelphia   Current       11/1/00
                                                                                                                         10/1/00

888 412-4463141 0012354015   $45,330    11/7/00    11/8/00        88     3027500355 30275   Philadelphia   > 90 days     10/1/00

889 412-4465369 0012281440 $150,523     9/15/00    9/19/00        63     3027500355 30275   Philadelphia   > 90 days     9/1/00

890 412-4469302 0012335634   Adequate Documentation has been provided.

891 412-4499260 0013303953   $82,457     3/2/01     3/8/01        156    3027500355 30275   Philadelphia   > 30 days     1/1/01
                                                                                                                         12/1/00
                                                                                                                         11/1/00

892 412-4510792 0013462031   $72,428    6/12/01    6/22/01        162    3027500355 30275   Philadelphia   SEE NOTE 1    5/1/01

893 412-4537352 0013855119   $18,249    10/8/01    10/18/01       284    3027502327 30275   Philadelphia   Current       9/1/01

894 412-4590790 0015136682   $42,097    8/29/01    8/31/01        110    3027502327 30275   Philadelphia   Current       7/1/01

895 412-4592691 0015165012   $85,655    7/19/01    7/23/01        80     3027501321 30275   Philadelphia   Current       6/1/01

896 412-4595609 0013634761 $113,781     1/22/02    1/29/02        270    3027501321 30275   Philadelphia   SEE NOTE 1    8/1/01

897 412-4615936 0015158876   $83,341    10/29/01   11/1/01        152    3027502327 30275   Philadelphia   F/C           10/1/01
                                                                                                                         9/1/01

898 412-4637931 0015511025   $92,449    9/17/01    9/19/01        76     3027500355 30275   Philadelphia   Current       9/1/01

899 412-4645649 0015562622   $84,333    10/3/01    10/10/01       76     3027501706 30275   Philadelphia   Current       9/1/01

900 412-4645705 0015366123 $108,300     10/25/01   10/30/01       106    3027502327 30275   Philadelphia   Current       10/1/01

901 413-3448487 0005999909   $46,615    3/27/01    3/29/01        540    3027500326 30275   Philadelphia   Current       12/1/00

902 413-3504849 0010321404   $75,211    1/31/01     2/2/01        322    3027500355 30275   Philadelphia   Current       8/1/00




  2003-KC-1001                                               Page 80
                                                                                                                     Appendix C


                                                                                                                          Due
                 Cendant                          Days from                                                             Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                            Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC        3/25/02 Payment

903 413-3507924 0010353266 $142,326     4/16/01    4/18/01        388    3027500326 30275   Philadelphia   SEE NOTE 1    3/1/01
                                                                                                                         2/1/01
                                                                                                                         1/1/01
                                                                                                                         12/1/00

904 413-3511987 0010429306 $104,295     10/24/00   10/27/00       130    3027500326 30275   Philadelphia   > 90 days     10/1/00
                                                                                                                         9/1/00

905 413-3579167 0013246327   $74,000     2/9/01    2/13/01        149    3027500326 30275   Philadelphia   Current       1/1/01
                                                                                                                         12/1/00

906 413-3585241 0013337274   $72,403    1/18/01    1/22/01        85     3027501321 30275   Philadelphia   > 30 days     1/1/01
                                                                                                                         12/1/00

907 413-3611148 0013743166   $60,862    2/21/01    3/16/01        84     3027501321 30275   Philadelphia   > 90 days     2/1/01

908 421-3574797 0003796059   $68,059    2/25/00     3/2/00        140    3027500106 30275   Denver         Current       1/1/00

909 421-3590407 0009327461   $83,809    8/21/00    8/30/00        285    3027500106 30275   Denver         Current       7/1/00
                                                                                                                         6/1/00

910 421-3592784 0009516303   $59,969     2/1/00     2/4/00        74     3027500106 30275   Denver         > 90 days     1/1/00

911 421-3597384 0002869261   $60,997    3/30/00     4/5/00        111    3027500095 30275   Denver         Current       3/1/00

912 421-3600369 0006855191 $117,030     10/11/00   10/24/00       301    3027500106 30275   Denver         Current       7/1/00

913 421-3607691 0010126241   $72,393     5/3/00     5/8/00        92     3027500106 30275   Denver         > 90 days     3/1/00

914 421-3609237 0010072551   $92,239    9/25/00    10/4/00        189    3027500106 30275   Denver         Current       6/1/00

915 421-3643507 0012246799   $34,713     5/8/01    5/17/01        258    3027500106 30275   Denver         > 90 days     1/1/01

916 421-3656351 0012523791   $52,583    4/19/01    5/25/01        98     3027500106 30275   Denver         > 90 days     4/1/01
                                                                                                                         3/1/01

917 421-3664551 0013236419   Adequate Documentation has been provided.

918 421-3668083 0013348644   $77,860    3/29/01     4/5/01        181    3027500106 30275   Denver         > 30 days     3/1/01
                                                                                                                         2/1/01
                                                                                                                         1/1/01
                                                                                                                         12/1/00
                                                                                                                         11/1/00

919 421-3673626 0013489455   $86,955    1/26/01     2/8/01        93     3027500106 30275   Denver         Current       1/1/01
                                                                                                                         12/1/00

920 421-3698482 0014284327   $28,551     7/2/01    7/11/01        105    3027502175 30275   Denver         > 30 days     6/1/01

921 421-3699488 0014194146   $63,995    8/15/01    8/21/01        147    3027500106 30275   Denver         Current       7/1/01

922 421-3712499 0012276630   $59,969    7/10/01    7/23/01        284    3027500106 30275   Denver         > 90 days     5/1/01




                                                             Page 81                                             2003-KC-1001
Appendix C


                                                                                                                       Due
                 Cendant                          Days from                                                          Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                         Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                    HOC     3/25/02 Payment

923 422-2369173 0005192414   $45,941    12/15/99   12/21/99       62     3027500095 30275   Denver      > 90 days     12/1/99

924 422-2374882 0009207457   Adequate Documentation has been provided.

925 422-2398519 0010540755   $68,931    12/14/00   12/27/00       227    3027500106 30275   Denver      SEE NOTE 1    11/1/00

926 422-2402586 0010821775   $87,250    12/19/00    1/4/01        221    3027500106 30275   Denver      Current       12/1/00

927 422-2412026 0012339537   $61,468     3/2/01    3/14/01        220    3027501344 30275   Denver      > 90 days     10/1/00

928 422-2412820 0012373494   Adequate Documentation has been provided.

929 422-2415675 0012537866   $28,762    2/23/01     3/3/01        154    3027500106 30275   Denver      > 90 days     2/1/01
                                                                                                                      1/1/01

930 422-2416171 0012560678 $122,688      2/5/01    2/20/01        180    3027500106 30275   Denver      Current       1/1/01

931 422-2416664 0012586053   $71,963    11/27/00   12/8/00        88     3027500106 30275   Denver      > 60 day      11/1/00

932 422-2431031 0013808258   $69,964     3/5/02    3/12/02        441    3027502175 30275   Denver      Current       12/1/01

933 422-2438408 0014267793   $72,856    6/28/01    7/10/01        90     3027500106 30275   Denver      F/C           6/1/01
                                                                                                                      5/1/01

934 422-2444738 0015142961 $123,931     8/17/01    8/24/01        112    3027500106 30275   Denver      Current       7/1/01

935 422-2453609 0015532641   $92,072    11/19/01   11/29/01       112    3027500106 30275   Denver      Current       10/1/01
                                                                                                                      9/1/01
                                                                                                                      8/1/01

936 431-3427584 0010457240 $124,808     10/20/00   10/26/00       163    3027500151 30275   Santa Ana   F/C           9/1/00
                                                                                                                      8/1/00
                                                                                                                      7/1/00

937 431-3430100 0010498772   Adequate Documentation has been provided.

938 431-3455183 0011262359 $116,871      4/5/01    4/10/01        280    3027500151 30275   Santa Ana   Current       12/1/00

939 431-3457228 0012279253 $133,896     2/12/01    2/14/01        216    3027500151 30275   Santa Ana   SEE NOTE 1    11/1/00
                                                                                                                      10/1/00

940 431-3462858 0012404695 $135,895     8/17/01    8/22/01        392    3027500151 30275   Santa Ana   SEE NOTE 1    4/1/01
                                                                                                                      3/1/01

941 431-3468401 0012498507 $119,019     1/30/01     2/7/01        158    3027500151 30275   Santa Ana   SEE NOTE 1    12/1/00

942 431-3482087 0013310701 $123,184     12/3/01    12/6/01        444    3027500151 30275   Santa Ana   > 30 days     11/1/01
                                                                                                                      10/1/01
                                                                                                                      8/1/01
                                                                                                                      6/1/01




  2003-KC-1001                                               Page 82
                                                                                                                    Appendix C


                                                                                                                        Due
                 Cendant                          Days from                                                           Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                          Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                  HOC        3/25/02 Payment

943 431-3514984 0013979232   $45,373    8/2/01     8/8/01        125   3027502254 30275   Santa Ana      > 30 days      7/1/01
                                                                                                                        6/1/01
                                                                                                                        5/1/01

944 431-3578996 0015421985 $152,980    10/29/01   2/15/02        164   3027502260 30275   Santa Ana      Current        10/1/01
                                                                                                                        9/1/01

945 441-6096351 0003966777   $35,327   1/14/00    1/19/00        116   3027509990 30275   Philadelphia   > 60 day       12/1/99

946 441-6099227 0004036687   $94,952   1/12/00    1/14/00        113   3027509990 30275   Philadelphia   > 90 days      12/1/99
                                                                                                                        11/1/99

947 441-6100978 0004092771   $40,892   9/25/00    9/28/00        389   3027509990 30275   Philadelphia   > 90 days      9/1/00
                                                                                                                        8/1/00
                                                                                                                        7/1/00
                                                                                                                        6/1/00
                                                                                                                        5/1/00
                                                                                                                        4/1/00

948 441-6110725 0004365854   $72,863   3/21/00    3/23/00        174   3027509990 30275   Philadelphia   Current        1/1/00

949 441-6121331 0005063599   $94,223   12/16/99   12/17/99       78    3027509990 30275   Philadelphia   Current        12/1/99
                                                                                                                        11/1/99

950 441-6125595 0005981097   $54,632   3/30/00     4/3/00        147   3027509990 30275   Philadelphia   Bankruptcy     3/1/00
                                                                                                                        2/1/00

951 441-6134886 0008628125   $29,754   3/17/00    3/22/00        140   3027509990 30275   Philadelphia   Current        3/1/00

952 441-6140041 0008976821   $45,128    6/8/00    6/12/00        211   3027509990 30275   Philadelphia   SEE NOTE 1     5/1/00

953 441-6143091 0009071564   $75,378   6/22/00    6/26/00        188   3027509990 30275   Philadelphia   Current        6/1/00

954 441-6151799 0006065908   $59,869    5/3/00     5/5/00        187   3027509990 30275   Philadelphia   > 90 days      2/1/00
                                                                                                                        1/1/00
                                                                                                                        12/1/99

955 441-6153550 0009328741   $58,970    4/7/00    4/10/00        162   3027509990 30275   Philadelphia   > 90 days      2/1/00
                                                                                                                        12/1/99

956 441-6157047 0009335068   $38,369   9/28/00    10/2/00        314   3027509990 30275   Philadelphia   > 90 days      9/1/00

957 441-6162710 0009337965 $119,939    3/20/00    3/22/00        122   3027509990 30275   Philadelphia   Current        2/1/00

958 441-6162733 0009503103   $89,954    1/2/01     1/5/01        363   3027509990 30275   Philadelphia   Current        12/1/00

959 441-6178126 0008068546   $88,768   3/28/00    3/29/00        105   3027509990 30275   Philadelphia   SEE NOTE 1     3/1/00

960 441-6181522 0005466735   $17,990    8/2/00     8/4/00        93    3027509990 30275   Philadelphia   > 90 days      7/1/00
                                                                                                                        6/1/00




                                                            Page 83                                            2003-KC-1001
Appendix C


                                                                                                                           Due
                 Cendant                          Days from                                                              Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                             Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC        3/25/02 Payment

961 441-6185416 0002807550    $70,961    11/10/00   11/14/00       318    3027509990 30275   Philadelphia   Current       7/1/00
                                                                                                                          6/1/00

962 441-6185734 0005599584 $116,565      9/21/00    9/25/00        211    3027509990 30275   Philadelphia   Current       8/1/00
                                                                                                                          6/1/00

963 441-6190792 0005530894    $56,493     2/1/01    3/13/01        378    3027509990 30275   Philadelphia   > 90 days     10/1/00

964 441-6201729 0010111334    $72,962     2/9/01    2/14/01        337    3027509990 30275   Philadelphia   Current       9/1/00

965 441-6209801 0010226207    $49,760    6/20/00    6/23/00        112    3027509990 30275   Philadelphia   > 90 days     5/1/00
                                                                                                                          4/1/00

966 441-6213263 0010092955    $70,963    8/18/00    8/31/00        144    3027509990 30275   Philadelphia   > 90 days     8/1/00
                                                                                                                          7/1/00
                                                                                                                          6/1/00

967 441-6219345 0010288306    $77,460    5/15/01    5/17/01        410    3027509990 30275   Philadelphia   Current       12/1/00
                                                                                                                          11/1/00

968 441-6222192 0010321123    $59,508     9/1/00    9/13/00        126    3027509990 30275   Philadelphia   SEE NOTE 1    8/1/00

969 441-6240217 0010491678    $49,392    12/19/00   12/21/00       218    3027509990 30275   Philadelphia   Current       11/1/00

970^^441-6245322 0010532695   $34,969    10/16/00   10/19/00       146    3027509990 30275   Philadelphia   > 90 days     10/1/00
                                                                                                                          9/1/00
                                                                                                                          8/1/00

971 441-6246725 0010540136    $59,410    9/22/00    10/4/00        115    3027509990 30275   Philadelphia   > 90 days     9/1/00
                                                                                                                          8/1/00
                                                                                                                          7/1/00

972 441-6253942 0010591006 $103,050      8/14/00    8/16/00        108    3027509990 30275   Philadelphia   > 90 days     7/1/00

973^^441-6254353 0010596294   $57,525    8/29/00     9/1/00        102    3027509990 74649   Philadelphia   > 90 days     8/1/00

974 441-6263848 0010663441    Adequate Documentation has been provided.

975 441-6267550 0010826949    Adequate Documentation has been provided.

976 441-6267675 0010521276    $50,485    11/3/00    11/20/00       128    3027509990 30275   Philadelphia   Current       10/1/00
                                                                                                                          9/1/00
                                                                                                                          8/1/00

977 441-6269197 0010834299    $54,550    1/24/01    1/26/01        113    3027509990 30275   Philadelphia   Current       1/1/01

978 441-6270198 0010833853    $83,313    12/6/00    12/11/00       159    3027509990 30275   Philadelphia   SEE NOTE 1    11/1/00

979 441-6274148 0010877579    $33,722     3/6/01     3/8/01        202    3027509990 30275   Philadelphia   SEE NOTE 1    11/1/00
                                                                                                                          10/1/00
                                                                                                                          9/1/00




  2003-KC-1001                                                Page 84
                                                                                                                     Appendix C


                                                                                                                         Due
                 Cendant                          Days from                                                            Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                           Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC        3/25/02 Payment

980^^441-6276184 0010657005   $55,871   9/18/00    10/5/00        108   3027509990 30275   Philadelphia   F/C            9/1/00
                                                                                                                         8/1/00

981 441-6284910 0010577831    $89,854   1/23/01     2/5/01        211   3027509990 30275   Philadelphia   Current        9/1/00

982 441-6288804 0010981900 $107,525     1/10/01    1/12/01        174   3027509990 30275   Philadelphia   Current        11/1/00

983 441-6293509 0013314968    $32,088   1/19/01    1/23/01        119   3027509990 30275   Philadelphia   Current        12/1/00

984 441-6294086 0012219374    $97,850   3/27/01     4/2/01        151   3027509990 30275   Philadelphia   > 30 days      3/1/01
                                                                                                                         2/1/01
                                                                                                                         1/1/01

985 441-6295125 0010335511 $124,233     3/13/01    3/15/01        258   3027509990 30275   Philadelphia   SEE NOTE 1     2/1/01
                                                                                                                         1/1/01

986 441-6300487 0012264602    $35,889   3/14/01    3/21/01        222   3027509990 30275   Philadelphia   Current        2/1/01
                                                                                                                         1/1/01
                                                                                                                         12/1/00

987 441-6301884 0012273108    $48,970   3/30/01     4/2/01        242   3027509990 30275   Philadelphia   F/C            3/1/01
                                                                                                                         1/1/01
                                                                                                                         12/1/00

988 441-6302748 0010641280    $33,100   2/15/01     3/8/01        202   3027509990 30275   Philadelphia   > 90 days      12/1/00
                                                                                                                         11/1/00
                                                                                                                         10/1/00
                                                                                                                         9/1/00

989 441-6308060 0012282919    $67,940   2/23/01    2/27/01        214   3027509990 30275   Philadelphia   Current        1/1/01

990 441-6308938 0012284857    $26,756   12/14/00   12/18/00       136   3027509990 30275   Philadelphia   Current        10/1/00
                                                                                                                         9/1/00

991 441-6310245 0012458980    $28,057   6/15/01    6/19/01        302   3027509990 30275   Philadelphia   > 90 days      5/1/01
                                                                                                                         12/1/00

992 441-6315452 0012225223 $112,572     1/31/01     2/2/01        184   3027509990 30275   Philadelphia   > 60 day       1/1/01
                                                                                                                         12/1/00

993 441-6326671 0012455754    $60,608   3/19/01    3/21/01        203   3027509990 30275   Philadelphia   Current        11/1/00

994 441-6328319 0013290804    $60,992   7/24/01     9/6/01        326   3027509990 30275   Philadelphia   F/C            6/1/01
                                                                                                                         5/1/01
                                                                                                                         4/1/01
                                                                                                                         3/1/01
                                                                                                                         2/1/01

995 441-6329400 0012503546 $149,823     5/22/01    5/29/01        187   3027509990 30275   Philadelphia   Current        5/1/01




                                                             Page 85                                            2003-KC-1001
Appendix C


                                                                                                                         Due
                 Cendant                          Days from                                                            Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                           Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC        3/25/02 Payment

996^^441-6344442 0012311742   $53,558    2/1/01     2/5/01        143   3027509990 30275   Philadelphia   > 90 days     1/1/01

997^^441-6345687 0012402301   $58,517   12/7/00    12/11/00       97    3027509990 30275   Philadelphia   Bankruptcy    11/1/00
                                                                                                                        10/1/00

998 441-6345953 0012652954    $59,431   12/1/00    12/5/00        77    3027509990 30275   Philadelphia   > 90 days     11/1/00

999 441-6369762 0013360995    $89,928   2/12/01    2/14/01        138   3027509990 30275   Philadelphia   Current       1/1/01

1000 441-6370045 0013369806   $48,599   1/19/01    1/23/01        98    3027509990 30275   Philadelphia   > 90 days     1/1/01
                                                                                                                        12/1/00

1001 441-6372177 0013387642   $56,963    3/7/01     3/9/01        117   3027509990 30275   Philadelphia   > 90 days     1/1/01

1002 441-6379340 0013291174   $69,964   3/15/01    3/19/01        101   3027509990 30275   Philadelphia   Current       3/1/01
                                                                                                                        2/1/01
                                                                                                                        1/1/01

1003 441-6379639 0013435847   $58,969   1/26/01    1/30/01        84    3027509990 30275   Philadelphia   Current       1/1/01

1004 441-6395047 0013623947   $44,427   3/20/01    3/21/01        81    3027501895 30275   Philadelphia   Current       3/1/01
                                                                                                                        2/1/01

1005 441-6398621 0013648324   $35,339    5/8/01    5/11/01        158   3027501895 30275   Philadelphia   Current       4/1/01

1006 441-6416544 0013779566   $89,954   3/29/01     4/4/01        100   3027509990 30275   Philadelphia   > 30 days     3/1/01
                                                                                                                        2/1/01

1007 441-6423805 0013838511 $144,926    4/27/01     5/2/01        129   3027509990 30275   Philadelphia   > 30 days     4/1/01
                                                                                                                        3/1/01
                                                                                                                        2/1/01

1008 441-6423886 0013829452 $113,903    4/24/01    4/27/01        75    3027509990 30275   Philadelphia   F/C           4/1/01

1009 441-6424528 0013833884   $40,091    3/7/01     3/9/01        75    3027509990 30275   Philadelphia   > 90 days     2/1/01

1010 441-6428752 0013677166 $122,618    5/16/01    5/18/01        149   3027509990 30275   Philadelphia   Current       5/1/01
                                                                                                                        4/1/01
                                                                                                                        3/1/01
                                                                                                                        2/1/01

1011 441-6433883 0013907480   $45,003   9/25/01    9/28/01        263   3027509990 30275   Philadelphia   Current       9/1/01

1012 441-6447506 0014060057 $161,029    4/18/01    4/24/01        77    3027509990 30275   Philadelphia   > 30 days     3/1/01

1013 441-6452150 0014073472   $91,810   12/18/01    1/4/02        202   3027509990 30275   Philadelphia   > 60 day      10/1/01

1014 441-6454775 0014089452   $47,005   6/19/01    6/25/01        118   3027509990 30275   Philadelphia   Current       4/1/01

1015 441-6470102 0014213946   $35,080    7/5/01    7/11/01        72    3027509990 30275   Philadelphia   Current       6/1/01

1016 441-6511481 0014538409   $50,115   10/22/01   10/25/01       145   3027501895 39276   Philadelphia   > 90 days     9/1/01
                                                                                                                        8/1/01




  2003-KC-1001                                               Page 86
                                                                                                                      Appendix C


                                                                                                                           Due
                 Cendant                          Days from                                                              Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                             Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC        3/25/02 Payment

1017 441-6512514 0014542666   $93,532    9/29/01    10/4/01        152    3027509990 30275   Philadelphia   Current       9/1/01
                                                                                                                          8/1/01
                                                                                                                          7/1/01

1018 441-6527446 0015171796   $41,729    8/20/01     9/7/01        87     3027502277 30275   Philadelphia   Current       8/1/01
                                                                                                                          7/1/01

1019 441-6531043 0014317135   $56,453    10/15/01   10/18/01       168    3027509990 39276   Philadelphia   Current       10/1/01
                                                                                                                          9/1/01

1020 441-6532525 0015200017   $61,394    9/17/01    9/20/01        139    3027509990 30275   Philadelphia   Current       9/1/01

1021 441-6557999 0015371560   Adequate Documentation has been provided.

1022 441-6570552 0015462906   $65,482    11/5/01    11/8/01        144    3027501895 30275   Philadelphia   Current       10/1/01

1023 441-6573405 0015482342   $68,101    9/18/01    9/20/01        95     3027509990 30275   Philadelphia   F/C           9/1/01

1024 441-6579699 0015424583   $49,492    10/1/01    10/3/01        108    3027509990 30275   Philadelphia   > 30 days     9/1/01

1025 441-6580572 0015167109 $106,331     10/25/01   10/29/01       161    3027501895 30275   Philadelphia   Current       10/1/01

1026 441-6584256 0015502966   $39,284    9/27/01    10/3/01        104    3027509990 30275   Philadelphia   Current       9/1/01

1027 441-6587876 0015589625   $63,398    9/21/01    9/29/01        84     3027509990 30275   Philadelphia   Current       9/1/01
                                                                                                                          8/1/01

1028 441-6621394 0015821986   $54,568    12/21/01   12/26/01       143    3027509990 30275   Philadelphia   Current       12/1/01

1029 441-6633436 0015970858   $74,450    10/12/01   10/18/01       77     3027509990 30275   Philadelphia   Current       9/1/01

1030 442-2073114 0004039053   $76,000    3/13/00    3/16/00        194    3027500326 30275   Philadelphia   SEE NOTE 1    2/1/00
                                                                                                                          1/1/00
                                                                                                                          12/1/99

1031 442-2075485 0004281135   $70,961    6/13/00    6/16/00        258    3027500326 30275   Philadelphia   Current       12/1/99

1032 442-2076229 0004386298   $43,316     3/3/00     3/6/00        155    3027500326 30275   Philadelphia   > 90 days     2/1/00
                                                                                                                          1/1/00
                                                                                                                          12/1/99

1033 442-2080360 0004456349   $70,964    12/13/99   12/15/99       74     3027500326 30275   Philadelphia   Current       11/1/99

1034 442-2081996 0005161609   $49,475    12/23/99   12/27/99       90     3027500326 30275   Philadelphia   > 90 days     12/1/99

1035 442-2085062 0008684037   $37,747    3/24/00    3/28/00        147    3027500326 30275   Philadelphia   SEE NOTE 1    1/1/00
                                                                                                                          12/1/99

1036 442-2088285 0009142761   $55,581     6/7/00    6/28/00        169    3027500326 30275   Philadelphia   F/C           5/1/00

1037 442-2093452 0009732579   $98,949    1/24/01    1/26/01        377    3027500326 30275   Philadelphia   Current       10/1/00

1038 442-2097185 0006024772   $29,652    8/14/00    8/17/00        108    3027500326 30275   Philadelphia   Current       6/1/00

1039 442-2098201 0000210575   $41,758    9/29/00    10/2/00        256    3027500326 30275   Philadelphia   F/C           9/1/00




                                                              Page 87                                             2003-KC-1001
Appendix C


                                                                                                                           Due
                 Cendant                          Days from                                                              Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                             Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC        3/25/02 Payment

1040 442-2103012 0007667686   Adequate Documentation has been provided.

1041 442-2105801 0010194561   $34,217    1/24/01    1/26/01        315    3027500326 30275   Philadelphia   F/C           1/1/01
                                                                                                                          12/1/00

1042 442-2107571 0010244614   $54,908    6/26/00    6/28/00        119    3027500326 30275   Philadelphia   Current       6/1/00

1043 442-2108049 0010257293   $84,305    1/26/01    2/15/01        332    3027500326 30275   Philadelphia   Current       9/1/00

1044 442-2108633 0010282242   $75,874    11/3/00    11/7/00        214    3027500326 30275   Philadelphia   > 60 day      8/1/00

1045 442-2114391 0010431534   $53,558    7/18/00    7/20/00        105    3027500326 30275   Philadelphia   Current       7/1/00
                                                                                                                          6/1/00

1046 442-2115141 0005105309   $65,966    8/30/00     9/1/00        125    3027500326 30275   Philadelphia   Current       8/1/00
                                                                                                                          7/1/00

1047 442-2116538 0010480465   $74,961    8/25/00    8/29/00        140    3027500326 30275   Philadelphia   > 90 days     8/1/00

1048 442-2117874 0010517787   $35,238    7/24/00    7/26/00        61     3027500326 30275   Philadelphia   F/C           7/1/00

1049 442-2118647 0010536720   $63,967    12/6/00    12/13/00       198    3027500326 30275   Philadelphia   Current       11/1/00
                                                                                                                          10/1/00
                                                                                                                          9/1/00

1050 442-2120112 0010572170   $96,626    9/27/00    9/29/00        96     3027500326 30275   Philadelphia   Current       9/1/00
                                                                                                                          8/1/00

1051 442-2123472 0010495596   $95,941    6/19/01    6/22/01        406    3027500326 30275   Philadelphia   SEE NOTE 1    3/1/01
                                                                                                                          2/1/01
                                                                                                                          1/1/01

1052 442-2124166 0010661544   $69,964    9/14/00    9/18/00        139    3027500326 30275   Philadelphia   REO           8/1/00
                                                                                                                          7/1/00

1053 442-2125779 0010542066   $46,951    12/7/00    12/12/00       174    3027500326 30275   Philadelphia   > 90 days     11/1/00
                                                                                                                          10/1/00

1054 442-2126115 0010854271   $42,912    9/26/00    9/28/00        99     3027500326 30275   Philadelphia   > 90 days     9/1/00

1055 442-2127144 0010874196   $64,369    6/13/01    7/10/01        348    3027500326 30275   Philadelphia   Current       5/1/01
                                                                                                                          4/1/01
                                                                                                                          3/1/01
                                                                                                                          2/1/01
                                                                                                                          1/1/01
                                                                                                                          12/1/00

1056 442-2127439 0010878783   $75,961    8/22/00    8/25/00        63     3027500326 30275   Philadelphia   SEE NOTE 1    8/1/00

1057 442-2148711 0012621777   $23,166    12/18/00   12/20/00       109    3027500326 30275   Philadelphia   Current       12/1/00




  2003-KC-1001                                                Page 88
                                                                                                                     Appendix C


                                                                                                                         Due
                 Cendant                          Days from                                                            Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                           Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC        3/25/02 Payment

1058 442-2153356 0013256227   $22,440   3/12/01    3/15/01        133   3027500326 30275   Philadelphia   Current        12/1/00

1059 442-2164579 0013539945   $54,971   2/28/01     3/6/01        98    3027501475 30275   Philadelphia   Current        2/1/01

1060 442-2166035 0013499942   $35,339    6/4/01     6/7/01        216   3027502198 30275   Philadelphia   F/C            5/1/01
                                                                                                                         4/1/01

1061 442-2169757 0013727219   $28,064   10/2/01    10/9/01        229   3027501475 39276   Philadelphia   Current        8/1/01

1062 442-2173200 0010969442   $31,070   4/19/01    4/23/01        104   3027501475 30275   Philadelphia   > 60 day       4/1/01
                                                                                                                         3/1/01

1063 442-2173319 0013819990   $47,159    5/9/01    5/11/01        103   3027500326 30275   Philadelphia   > 30 days      3/1/01

1064 442-2174599 0013848080   $24,956   9/24/01    9/26/01        208   3027502198 30275   Philadelphia   > 90 days      9/1/01

1065 442-2175043 0013808498   $85,956    5/1/01     5/4/01        123   3027500326 30275   Philadelphia   F/C            4/1/01
                                                                                                                         3/1/01

1066 442-2186942 0014268643   $29,067   10/18/01   10/23/01       203   3027502198 30275   Philadelphia   Current        10/1/01
                                                                                                                         9/1/01
                                                                                                                         8/1/01
                                                                                                                         7/1/01

1067 442-2199686 0015184450   $24,613   9/21/01    9/26/01        147   3027502198 30275   Philadelphia   Current        8/1/01

1068 442-2202082 0015256589 $104,176     8/6/01    8/10/01        75    3027501475 30275   Philadelphia   Current        7/1/01

1069 442-2202149 0015254055   $50,242   10/11/01   10/22/01       147   3027501475 30275   Philadelphia   Current        8/1/01

1070 442-2206908 0013952437   $79,373   11/1/01    1/25/02        164   3027500326 30275   Philadelphia   Current        9/1/01

1071 442-2220142 0015703325   $97,000   12/10/01   12/12/01       133   3027501475 30275   Philadelphia   Current        11/1/01

1072 442-2222280 0015753668 $119,059    9/10/01    9/13/01        74    3027501475 30275   Philadelphia   Current        8/1/01

1073 442-2224331 0015804701 $114,098    11/2/01    11/6/01        98    3027502198 30275   Philadelphia   Current        10/1/01

1074 461-3457786 0003963766   $69,939    9/6/00    9/14/00        376   3027500332 30275   Atlanta        Bankruptcy     7/1/00
                                                                                                                         6/1/00
                                                                                                                         5/1/00

1075 461-3462728 0004362828 $122,761     9/6/00    9/14/00        357   3027500332 30275   Atlanta        Current        8/1/00

1076 461-3474098 0005933783 $123,364     2/1/00    2/22/00        96    3027500332 30275   Atlanta        Bankruptcy     1/1/00
                                                                                                                         12/1/99

1077 461-3474907 0009275421   $53,672   11/28/00   12/6/00        364   3027500332 30275   Atlanta        > 90 days      11/1/00

1078 461-3476496 0009233222 $100,082     8/7/00    8/15/00        280   3027500332 30275   Atlanta        REO            4/1/00
                                                                                                                         3/1/00
                                                                                                                         2/1/00

1079 461-3479197 0008669285 $100,348    5/24/00     6/1/00        183   3027500332 30275   Atlanta        > 90 days      5/1/00




                                                             Page 89                                            2003-KC-1001
Appendix C


                                                                                                                    Due
                 Cendant                          Days from                                                       Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                      Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC   3/25/02 Payment

1080 461-3488160 0010063725   $59,112   10/26/00   11/2/00        272   3027500332 30275   Atlanta   Current       8/1/00

1081 461-3491152 0010189942   $97,850   7/21/00    7/27/00        157   3027500332 30275   Atlanta   Current       5/1/00
                                                                                                                   4/1/00

1082 461-3493022 0010241578   $96,603   2/13/01    2/15/01        368   3027500332 30275   Atlanta   SEE NOTE 1    8/1/00

1083 461-3495125 0010288801   $57,970   10/4/00    10/16/00       208   3027500332 30275   Atlanta   > 90 days     9/1/00

1084 461-3497409 0010348175 $108,282    11/15/00   11/20/00       201   3027500332 30275   Atlanta   > 30 days     11/1/00
                                                                                                                   7/1/00
                                                                                                                   6/1/00

1085 461-3502879 0010463875   $75,205   10/5/00    10/16/00       175   3027500332 30275   Atlanta   Claims        9/1/00
                                                                                                                   8/1/00

1086 461-3508655 0010576601   $48,466   12/8/00     1/8/01        217   3027500332 30275   Atlanta   REO           11/1/00
                                                                                                                   10/1/00

1087 461-3509609 0010591964   $40,388    8/8/00    8/15/00        88    3027500332 30275   Atlanta   > 30 days     7/1/00

1088 461-3511532 0010436947   $60,674   6/23/00    6/29/00        70    3027500332 30275   Atlanta   Current       6/1/00

1089 461-3515916 0010532414   $64,581   8/21/00    8/25/00        122   3027500332 30275   Atlanta   > 30 days     8/1/00
                                                                                                                   7/1/00

1090 461-3517401 0010882140   $48,465   9/26/00    11/16/00       119   3027500332 30275   Atlanta   Current       9/1/00

1091 461-3518804 0010906915   $81,858    1/4/01    1/10/01        218   3027500332 30275   Atlanta   > 30 days     12/1/00
                                                                                                                   11/1/00
                                                                                                                   10/1/00

1092 461-3520207 0010938637   $84,611    2/9/01    2/14/01        224   3027500332 30275   Atlanta   F/C           1/1/01

1093 461-3520288 0010943223   $53,558   12/15/00   12/29/00       183   3027500332 30275   Atlanta   > 90 days     10/1/00
                                                                                                                   9/1/00
                                                                                                                   8/1/00

1094 461-3521537 0010971638   $93,231   12/6/00    12/12/00       173   3027501385 30275   Atlanta   > 90 days     11/1/00
                                                                                                                   10/1/00

1095 461-3524737 0012238374   $71,907   10/13/00   10/21/00       105   3027500332 30275   Atlanta   Current       9/1/00

1096 461-3528383 0012245692 $100,025    8/23/00    9/18/00        61    3027500332 30275   Atlanta   SEE NOTE 1    8/1/00

1097 461-3530364 0012247227   $58,969   2/15/01    2/20/01        197   3027500332 30275   Atlanta   Current       1/1/01

1098 461-3531817 0012346821   $75,961    1/3/01     1/9/01        155   3027500332 30275   Atlanta   Current       12/1/00

1099 461-3532631 0013740923   $81,408    2/7/01    2/12/01        68    3027501385 30275   Atlanta   Current       1/1/01

1100 461-3538062 0012590667   $89,854   2/22/01    2/23/01        191   3027501385 30275   Atlanta   Current       2/1/01




  2003-KC-1001                                               Page 90
                                                                                                                  Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

1101 461-3538187 0012602173   $36,503    2/22/01    3/14/01        175    3027500332 30275   Atlanta   > 30 days      1/1/01
                                                                                                                      12/1/00
                                                                                                                      11/1/00

1102 461-3539363 0012630141   $72,463     3/8/01    3/13/01        192    3027501385 30275   Atlanta   > 90 days      1/1/01

1103 461-3542277 0012657557   $53,835     1/5/01    1/10/01        116    3027501385 30275   Atlanta   Current        12/1/00

1104 461-3543981 0013236856 $104,141      2/5/01     2/7/01        143    3027501385 30275   Atlanta   Current        12/1/00

1105 461-3546329 0013325824   $66,165     2/8/01    2/13/01        132    3027501385 30275   Atlanta   F/C            1/1/01
                                                                                                                      12/1/00
                                                                                                                      11/1/00

1106 461-3548756 0013383674   $61,965    1/17/01    1/23/01        103    3027501385 30275   Atlanta   Current        1/1/01

1107 461-3551160 0013448113   $65,460    1/12/01    1/17/01        74     3027500332 30275   Atlanta   F/C            12/1/00

1108 461-3551341 0013460423   $67,965    2/27/01     3/2/01        130    3027502219 30275   Atlanta   Bankruptcy     2/1/01
                                                                                                                      1/1/01
                                                                                                                      12/1/00

1109 461-3572886 0014109144   $75,776    11/1/01    12/4/01        247    3027500319 30275   Atlanta   > 30 days      8/1/01
                                                                                                                      7/1/01
                                                                                                                      5/1/01

1110 461-3576416 0014200877   $79,273    6/15/01    6/23/01        81     3027501288 30275   Atlanta   Current        6/1/01

1111 461-3579100 0014267686   $83,686    6/25/01    6/28/01        108    3027500319 30275   Atlanta   > 60 day       6/1/01
                                                                                                                      5/1/01

1112 461-3588913 0014352637 $117,161     7/16/01    8/14/01        109    3027501288 30275   Atlanta   Current        7/1/01
                                                                                                                      6/1/01

1113 461-3589403 0015069875   Adequate Documentation has been provided.

1114 461-3600681 0015938350   $71,872    11/29/01   12/6/01        119    3027502096 30275   Atlanta   Current        11/1/01

1115 461-3621392 0015833692   $94,395    12/18/01   12/26/01       140    3027501288 30275   Atlanta   Current        9/1/01

1116 471-0919712 0010064780   $45,436    12/15/00   12/15/00       315    3027500700 30275   Denver    SEE NOTE 1     12/1/00

1117 471-0922060 0010368710   $82,817    6/18/01    7/16/01        420    3027500253 30275   Denver    F/C            6/1/01

1118 471-0922156 0010375384   $30,291    8/22/00    8/28/00        118    3027500253 30275   Denver    Current        8/1/00
                                                                                                                      7/1/00
                                                                                                                      6/1/00

1119 471-0935626 0013303029 $105,428     9/28/01    9/28/01        274    3027500253 30275   Denver    > 90 days      5/1/01

1120 471-0941126 0013846639 $111,943     4/16/01    8/17/01        115    3027500253 30275   Denver    > 90 days      4/1/01




                                                              Page 91                                        2003-KC-1001
Appendix C


                                                                                                                    Due
                 Cendant                          Days from                                                       Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                      Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC   3/25/02 Payment

1121 471-0943241 0014105456 $133,980     7/2/01    7/13/01        108   3027500253 30275   Denver    Current       6/1/01
                                                                                                                   5/1/01

1122 481-2139716 0003722733   $56,434   12/15/99   12/21/99       96    3027500319 30275   Atlanta   Current       12/1/99
                                                                                                                   11/1/99

1123 481-2195803 0012421525   $58,825   10/19/00   10/27/00       70    3027500319 30275   Atlanta   > 90 days     9/1/00

1124 481-2197176 0012504981   $89,254   6/15/01    6/23/01        263   3027500319 30275   Atlanta   Current       6/1/01
                                                                                                                   3/1/01

1125 481-2197623 0012522033   $76,960   4/25/01     5/9/01        271   3027501288 30275   Atlanta   Current       4/1/01
                                                                                                                   3/1/01
                                                                                                                   2/1/01
                                                                                                                   1/1/01
                                                                                                                   12/1/00

1126 481-2204730 0013298385   $75,930    2/9/01    2/13/01        147   3027500319 30275   Atlanta   F/C           12/1/00
                                                                                                                   11/1/00

1127 481-2225362 0014136477   $78,764   5/23/01     6/6/01        84    3027501288 30275   Atlanta   > 30 days     5/1/01

1128 481-2225680 0013855184   $61,514   9/19/01    10/12/01       194   3027500319 30275   Atlanta   REO           9/1/01
                                                                                                                   8/1/01
                                                                                                                   7/1/01
                                                                                                                   6/1/01

1129 481-2228930 0014250807   $38,512   10/1/01    10/12/01       196   3027501288 30275   Atlanta   Current       9/1/01

1130 481-2233510 0014443733   $90,081   1/31/02     2/8/02        307   3027502096 30275   Atlanta   Current       1/1/02

1131 481-2241415 0015264773   $54,072   10/23/01   10/31/01       173   3027500319 30275   Atlanta   Current       10/1/01

1132 481-2242824 0015119464   $91,787   2/22/02     4/1/02        308   3027502096 30275   Atlanta   Current       9/1/01

1133 482-3336404 0012336137   $65,866   12/20/00    1/2/01        156   3027500261 30275   Atlanta   Current       11/1/00

1134 482-3359052 0013449590   $71,463    5/2/01    5/14/01        189   3027500261 30275   Atlanta   Current       3/1/01

1135 482-3379308 0014035893 $133,800    8/23/01    8/23/01        106   3027501859 30275   Atlanta   SEE NOTE 1    8/1/01
                                                                                                                   7/1/01

1136 482-3401890 0015189319   $53,165    7/2/01    7/11/01        73    3027501003 30275   Atlanta   Bankruptcy    6/1/01

1137 482-3409241 0015365901   $97,231   11/2/01    11/15/01       168   3027500261 30275   Atlanta   Current       10/1/01
                                                                                                                   9/1/01

1138 482-3415122 0015513872   $47,108   11/9/01    11/15/01       154   3027500261 30275   Atlanta   Current       10/1/01
                                                                                                                   9/1/01

1139 483-2744175 0004716254   $95,736   1/17/00    1/21/00        77    3027500390 30275   Atlanta   > 90 days     1/1/00




  2003-KC-1001                                               Page 92
                                                                                                                 Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

1140 483-2768194 0008067423   $62,967    8/30/00     9/7/00        222    3027500390 30275   Atlanta   F/C           8/1/00
                                                                                                                     5/1/00

1141 483-2777196 0010102713   $79,959    4/23/01     5/3/01        397    3027500390 30275   Atlanta   Current       4/1/01
                                                                                                                     1/1/01
                                                                                                                     12/1/00
                                                                                                                     11/1/00

1142 483-2836837 0012559167   $60,005    12/20/00    1/2/01        121    3027500390 30275   Atlanta   > 90 days     12/1/00
                                                                                                                     11/1/00
                                                                                                                     10/1/00

1143 483-2870051 0013715123   $99,853    3/19/01    3/22/01        112    3027501531 30275   Atlanta   Current       1/1/01

1144 483-2924222 0015235914   $67,943    7/26/01     8/6/01        85     3027500390 30275   Atlanta   Current       6/1/01

1145 483-2927099 0015265838   $90,086    7/27/01     8/6/01        84     3027502406 30275   Atlanta   Current       7/1/01

1146 483-2930791 0015311491 $109,633     11/30/01   12/7/01        183    3027500390 30275   Atlanta   Current       10/1/01

1147 491-6827208 0009169616   $48,599     5/8/00    5/11/00        192    3027500522 30275   Denver    Current       4/1/00

1148 491-6835959 0003942539   $98,686     3/9/00    3/14/00        101    3027500522 30275   Denver    Bankruptcy    2/1/00

1149 491-6848243 0007607591 $104,293     11/9/00    11/14/00       335    3027500522 30275   Denver    Current       9/1/00

1150 491-6848889 0008024101   $92,853     3/2/00    3/10/00        83     3027500522 30275   Denver    Current       2/1/00

1151 491-6863313 0009549536   Adequate Documentation has been provided.

1152 491-6865836 0010075307   $71,963    7/11/00    7/14/00        134    3027500522 30275   Denver    > 30 days     6/1/00

1153 491-6866571 0010084093   Adequate Documentation has been provided.

1154 491-6881816 0010262152   $37,193    6/29/00    6/29/00        125    3027500522 30275   Denver    > 90 days     6/1/00

1155 491-6891179 0010298305 $160,276     3/12/01    3/16/01        361    3027500522 30275   Denver    Bankruptcy    2/1/01

1156 491-6892521 0010329514   $95,215    10/26/00   11/6/00        225    3027500522 30275   Denver    Current       6/1/00
                                                                                                                     5/1/00

1157 491-6893288 0010355923 $100,948     8/30/00     9/6/00        149    3027500522 30275   Denver    Current       7/1/00
                                                                                                                     6/1/00
                                                                                                                     5/1/00

1158 491-6899239 0010406379   $81,825    9/19/00    9/29/00        172    3027500522 30275   Denver    Current       9/1/00
                                                                                                                     8/1/00
                                                                                                                     7/1/00

1159 491-6904062 0010437804   $47,456    7/12/00    7/24/00        92     3027500522 30275   Denver    > 90 days     6/1/00

1160 491-6911215 0010495125   $52,972    8/18/00    8/30/00        113    3027500522 30275   Denver    Bankruptcy    8/1/00
                                                                                                                     6/1/00




                                                              Page 93                                        2003-KC-1001
Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

1161 491-6921110 0010584282 $112,291     11/2/00    11/14/00       189    3027500522 30275   Denver    Current       10/1/00
                                                                                                                     9/1/00
                                                                                                                     8/1/00
                                                                                                                     7/1/00
                                                                                                                     6/1/00

1162 491-6922802 0010520401   $42,609     2/6/01    2/16/01        292    3027500522 30275   Denver    Current       11/1/00

1163 491-6954247 0010979409 $121,838      9/1/00     9/8/00        65     3027500522 30275   Denver    Current       8/1/00

1164 491-6978818 0012336194   $80,058    1/31/01    2/10/01        198    3027500522 30275   Denver    Current       1/1/01

1165 491-6987310 0012421293   $72,357     4/1/01    4/23/01        110    3027500522 30275   Denver    F/C           2/1/01

1166 491-7000341 0013706312 $122,634     4/18/01    4/24/01        133    3027500522 30275   Denver    > 30 days     4/1/01
                                                                                                                     3/1/01

1167 491-7005276 0012598496   $63,967     3/7/01    3/12/01        187    3027500522 30275   Denver    > 90 days     1/1/01
                                                                                                                     11/1/00

1168 491-7017216 0013209200 $116,539     6/18/01     7/2/01        284    3027500522 30275   Denver    Current       2/1/01
                                                                                                                     1/1/01

1169 491-7043954 0013442645   $61,989    4/13/01    4/19/01        169    3027500522 30275   Denver    Current       3/1/01
                                                                                                                     2/1/01
                                                                                                                     1/1/01
                                                                                                                     12/1/00

1170 491-7046235 0013462130   $46,861    3/27/01     4/3/01        127    3027500522 30275   Denver    > 90 days     2/1/01
                                                                                                                     1/1/01

1171 491-7048735 0013487095 $154,934     2/26/01     3/5/01        101    3027500522 30275   Denver    Current       2/1/01

1172 491-7072763 0013750955   $73,620    6/12/01    6/21/01        188    3027500522 30275   Denver    > 30 days     5/1/01
                                                                                                                     4/1/01
                                                                                                                     3/1/01
                                                                                                                     2/1/01

1173 491-7078880 0013793047   $31,242     4/2/01    4/12/01        101    3027500522 30275   Denver    Current       3/1/01
                                                                                                                     2/1/01

1174 491-7081401 0013817564   Adequate Documentation has been provided.

1175 491-7162511 0015056146 $127,890     7/12/01    7/23/01        97     3027500513 30275   Denver    Current       6/1/01

1176 491-7197816 0015347537   $69,326    7/17/01    7/25/01        62     3027501656 30275   Denver    Current       7/1/01

1177 491-7241281 0015258379   $77,779    11/8/01    11/14/01       113    3027502464 30275   Denver    Current       10/1/01
                                                                                                                     9/1/01




  2003-KC-1001                                                Page 94
                                                                                                                 Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

1178 491-7243361 0015688872   $69,202    10/19/01   10/24/01       98     3027501656 30275   Denver    Current       10/1/01
                                                                                                                     9/1/01

1179 492-5671139 0003317195   $32,720    11/7/00    11/16/00       363    3027500522 30275   Denver    REO           10/1/00

1180 492-5711375 0004963492   Adequate Documentation has been provided.

1181 492-5749755 0002551554   $64,468    4/13/01    4/19/01        511    3027500522 30275   Denver    Current       3/1/01
                                                                                                                     1/1/01
                                                                                                                     12/1/00
                                                                                                                     11/1/00
                                                                                                                     10/1/00

1182 492-5765656 0005595939   $37,561    9/28/00    10/5/00        266    3027500522 30275   Denver    > 90 days     4/1/00

1183 492-5777762 0010118644 $113,057     4/17/01    4/23/01        442    3027500522 30275   Denver    Current       2/1/01

1184 492-5778830 0010124717   $77,860    9/21/00    10/2/00        237    3027500522 30275   Denver    F/C           9/1/00
                                                                                                                     5/1/00
                                                                                                                     4/1/00

1185 492-5779617 0010100154   $50,384    12/19/00   12/29/00       336    3027500522 30275   Denver    Current       11/1/00

1186 492-5786787 0009441635 $103,836      2/2/01    2/23/01        323    3027500522 30275   Denver    SEE NOTE 1    1/1/01
                                                                                                                     12/1/00
                                                                                                                     11/1/00
                                                                                                                     10/1/00
                                                                                                                     8/1/00

1187 492-5789249 0010289056 $137,829     12/19/00   12/29/00       291    3027500522 30275   Denver    SEE NOTE 1    12/1/00

1188 492-5795296 0010347011   $45,436    2/26/01     3/5/01        318    3027500522 30275   Denver    > 90 days     2/1/01
                                                                                                                     1/1/01
                                                                                                                     12/1/00
                                                                                                                     11/1/00
                                                                                                                     10/1/00

1189 492-5808410 0010225365 $100,920     12/6/00    12/6/00        254    3027500522 30275   Denver    > 30 days     9/1/00

1190 492-5822146 0010598779 $155,716     9/14/00    9/27/00        134    3027500522 30275   Denver    Current       8/1/00

1191 492-5828421 0010651438 $130,368     3/19/01    3/22/01        291    3027500522 30275   Denver    Current       2/1/01

1192 492-5829608 0010847929   $87,832     5/3/01    5/10/01        366    3027500522 30275   Denver    SEE NOTE 1    2/1/01
                                                                                                                     1/1/01
                                                                                                                     12/1/00




                                                              Page 95                                        2003-KC-1001
Appendix C


                                                                                                                    Due
                 Cendant                          Days from                                                       Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                      Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC   3/25/02 Payment

1193 492-5835054 0010862100   $79,401   10/20/00   10/30/00       147   3027500522 30275   Denver    Current       10/1/00
                                                                                                                   9/1/00
                                                                                                                   8/1/00

1194 492-5841201 0010552107   $84,305    9/8/00    9/20/00        99    3027500522 30275   Denver    Bankruptcy    8/1/00

1195 492-5848268 0010975803   $74,861   5/18/01    5/30/01        336   3027500522 30275   Denver    > 90 days     4/1/01

1196 492-5853330 0012219895   $68,464   1/15/01     2/2/01        199   3027500522 30275   Denver    Current       12/1/00
                                                                                                                   11/1/00

1197 492-5870742 0012354031   $72,862   6/15/01    6/25/01        322   3027500522 30275   Denver    SEE NOTE 1    12/1/00

1198 492-5872005 0010614212   $73,824    2/8/01    2/26/01        213   3027500522 30275   Denver    SEE NOTE 1    12/1/00
                                                                                                                   11/1/00

1199 492-5880762 0012466520   $96,207   11/20/00   11/28/00       118   3027500522 30275   Denver    Current       9/1/00

1200 492-5882842 0012511770   $28,272   3/23/01     4/5/01        217   3027500522 30275   Denver    Current       11/1/00

1201 492-5888924 0012574927   $94,223    1/4/01    1/17/01        139   3027500522 30275   Denver    SEE NOTE 1    12/1/00
                                                                                                                   11/1/00

1202 492-5898206 0012688594 $129,934    5/16/01    5/29/01        258   3027500522 30275   Denver    Current       5/1/01
                                                                                                                   4/1/01
                                                                                                                   3/1/01
                                                                                                                   2/1/01

1203 492-5904120 0012606257 $130,602     2/7/01    2/14/01        160   3027500522 30275   Denver    SEE NOTE 1    11/1/00

1204 492-5909259 0012691739   $83,957   1/21/02    1/28/02        497   3027500522 30275   Denver    Current       1/1/02

1205 492-5919069 0013390919   $68,435   3/23/01     4/4/01        161   3027500522 30275   Denver    Current       2/1/01
                                                                                                                   1/1/01
                                                                                                                   12/1/00

1206 492-5921316 0013414065   $99,849   2/16/01    3/22/01        112   3027500522 30275   Denver    Current       2/1/01
                                                                                                                   1/1/01

1207 492-5922420 0013423017 $131,135    6/21/01    6/30/01        234   3027500522 30275   Denver    > 30 days     6/1/01
                                                                                                                   2/1/01

1208 492-5924393 0013445861   $54,702   2/28/01     3/7/01        128   3027500522 30275   Denver    Current       12/1/00

1209 492-5925414 0013455472   $74,460   3/22/01    3/28/01        127   3027501685 30275   Denver    Current       3/1/01

1210 492-5928894 0013490495   $81,958    5/8/01    5/11/01        189   3027500522 30275   Denver    Current       12/1/00

1211 492-5929043 0013496112   $81,329    5/7/01    5/18/01        194   3027500522 30275   Denver    Current       2/1/01

1212 492-5971994 0013966544   $29,066   6/25/01     7/5/01        136   3027501656 30275   Denver    > 90 days     6/1/01
                                                                                                                   5/1/01




  2003-KC-1001                                               Page 96
                                                                                                                  Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

1213 492-5974173 0013998380 $152,137     9/21/01    10/1/01        127    3027500513 30275   Denver    Current        9/1/01

1214 492-6044905 0015288343   $65,964    8/20/01    9/20/01        94     3027501656 30275   Denver    Current        7/1/01

1215 492-6046339 0015187982   $77,388    10/24/01   11/6/01        134    3027501656 30275   Denver    > 60 day       9/1/01

1216 492-6079655 0015583727 $116,082     10/19/01   10/30/01       98     3027500513 30275   Denver    > 30 days      10/1/01

1217 492-6081251 0015601990 $147,436     1/10/02    1/28/02        164    3027500513 30275   Denver    Current        10/1/01

1218 492-6088692 0015641517   $66,374    9/27/01    10/5/01        63     3027500513 30275   Denver    Current        9/1/01

1219 493-6530399 0003985694   $21,204    12/15/99   12/21/99       93     3027500513 30275   Denver    REO            12/1/99
                                                                                                                      11/1/99

1220 493-6557420 0008606527   Adequate Documentation has been provided.

1221 493-6573358 0009365446   $42,987    8/24/00    8/31/00        203    3027500522 30275   Denver    Current        4/1/00

1222 493-6578130 0009683079   $63,967    8/21/00    8/28/00        276    3027500522 30275   Denver    Current        8/1/00
                                                                                                                      7/1/00
                                                                                                                      4/1/00
                                                                                                                      3/1/00

1223 493-6580741 0002635829   $84,957    3/17/00    3/22/00        123    3027500522 30275   Denver    Current        3/1/00

1224 493-6608164 0010111474   $65,466    8/21/00    8/29/00        200    3027500522 30275   Denver    > 90 days      8/1/00

1225 493-6613101 0010205284   $69,328    9/15/00    9/28/00        210    3027500522 30275   Denver    > 90 days      8/1/00
                                                                                                                      7/1/00

1226 493-6618302 0010273571   $80,995    11/20/00   11/28/00       265    3027500522 30275   Denver    > 90 days      10/1/00

1227 493-6621767 0010315117   $79,459     6/4/01     6/8/01        446    3027500522 30275   Denver    > 90 days      5/1/01
                                                                                                                      4/1/01
                                                                                                                      3/1/01

1228 493-6632514 0010343002   Adequate Documentation has been provided.

1229 493-6635851 0010402550 $108,009      2/9/01    2/13/01        322    3027500522 30275   Denver    Current        1/1/01
                                                                                                                      12/1/00
                                                                                                                      11/1/00
                                                                                                                      10/1/00
                                                                                                                      8/1/00

1230 493-6639882 0010336055   $72,051    8/25/00     9/6/00        119    3027500522 30275   Denver    > 30 days      8/1/00
                                                                                                                      7/1/00
                                                                                                                      6/1/00

1231 493-6642172 0010515666   $59,381    9/22/00    10/2/00        74     3027500522 30275   Denver    > 90 days      9/1/00




                                                              Page 97                                        2003-KC-1001
Appendix C


                                                                                                                    Due
                 Cendant                          Days from                                                       Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                      Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC   3/25/02 Payment

1232 493-6643444 0008367435   $61,350   10/23/00   11/3/00        151   3027500522 30275   Denver    > 90 days     10/1/00
                                                                                                                   9/1/00
                                                                                                                   7/1/00

1233 493-6660328 0010850097   $50,613   10/19/00   10/30/00       132   3027500522 30275   Denver    Claims        10/1/00
                                                                                                                   9/1/00
                                                                                                                   8/1/00

1234 493-6664957 0010911378   $85,956   10/13/00   10/23/00       123   3027500522 30275   Denver    SEE NOTE 1    9/1/00
                                                                                                                   8/1/00

1235 493-6669219 0010954147 $111,232    1/15/01    1/30/01        234   3027500522 30275   Denver    SEE NOTE 1    10/1/00
                                                                                                                   9/1/00
                                                                                                                   8/1/00

1236 493-6674435 0011998499   $48,599   9/14/00    9/28/00        77    3027500522 30275   Denver    Current       8/1/00

1237 493-6708279 0012524575 $111,147     4/4/01    4/10/01        233   3027500522 30275   Denver    SEE NOTE 1    3/1/01
                                                                                                                   2/1/01

1238 493-6724032 0012653069   $88,954   3/21/01    3/30/01        205   3027500522 30275   Denver    SEE NOTE 1    11/1/00
                                                                                                                   10/1/00

1239 493-6726430 0013238753   $75,961   4/19/01    4/25/01        216   3027501685 30275   Denver    Current       4/1/01
                                                                                                                   12/1/00

1240 493-6727617 0013217898   $53,972   7/16/01    7/25/01        290   3027500522 30275   Denver    > 90 days     7/1/01
                                                                                                                   6/1/01
                                                                                                                   5/1/01

1241 493-6736517 0013516224   $56,283   6/25/01     7/3/01        151   3027500522 30275   Denver    Current       6/1/01
                                                                                                                   5/1/01
                                                                                                                   4/1/01
                                                                                                                   3/1/01

1242 493-6737196 0013362926   $95,116   12/26/00    1/3/01        88    3027500522 30275   Denver    Current*      12/1/00

1243 493-6739673 0013387840   $93,727    1/3/01    1/12/01        90    3027500522 30275   Denver    SEE NOTE 1    11/1/00

1244 493-6767855 0013735956   $72,112    3/6/01    3/12/01        96    3027500522 30275   Denver    Bankruptcy    2/1/01

1245 493-6770434 0013762612   $26,034   7/19/01    7/25/01        181   3027500522 30275   Denver    Current       7/1/01
                                                                                                                   6/1/01
                                                                                                                   5/1/01
                                                                                                                   4/1/01
                                                                                                                   3/1/01

1246 493-6839169 0015079445   $79,373   7/23/01    8/13/01        84    3027500513 30275   Denver    > 30 days     7/1/01




  2003-KC-1001                                               Page 98
                                                                                                                  Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

1247 493-6843134 0015089121   $54,137    1/24/02    1/30/02        273    3027500513 30275   Denver    Current        9/1/01
                                                                                                                      8/1/01

1248 493-6882377 0015453608   Adequate Documentation has been provided.

1249 494-2590729 0004677381   $71,907     4/7/00    4/12/00        128    3027500378 30275   Denver    Bankruptcy     3/1/00
                                                                                                                      2/1/00

1250 494-2593912 0008071862   $96,950    3/28/00    3/31/00        102    3027500378 30275   Denver    Current        2/1/00

1251 494-2595761 0005575287   Adequate Documentation has been provided.

1252 494-2606952 0010298800   $32,311    10/6/00    10/18/00       203    3027500378 30275   Denver    > 90 days      9/1/00
                                                                                                                      8/1/00

1253 494-2614197 0010459659   $84,255    9/19/00    10/12/00       158    3027500378 30275   Denver    > 90 days      8/1/00
                                                                                                                      7/1/00

1254 494-2622640 0010656338   $22,717    8/18/00    8/30/00        84     3027500378 30275   Denver    Current        8/1/00

1255 494-2627696 0010932440   $50,473     1/8/01    1/18/01        222    3027500378 30275   Denver    Current        12/1/00
                                                                                                                      11/1/00
                                                                                                                      10/1/00

1256 494-2640303 0012380788   $39,832    11/15/00   11/22/00       124    3027500378 30275   Denver    Current        11/1/00

1257 494-2652426 0013235569   $63,067    7/26/01    7/31/01        289    3027500378 30275   Denver    > 90 days      7/1/01
                                                                                                                      6/1/01

1258 494-2654196 0013284914 $124,025     4/27/01     5/4/01        121    3027500378 30275   Denver    > 60 day       4/1/01
                                                                                                                      3/1/01

1259 494-2655678 0013321658   $84,305    5/11/01    5/18/01        228    3027500378 30275   Denver    Current        11/1/00

1260 494-2682384 0014118731   $88,301    4/10/01    4/16/01        67     3027501469 30275   Denver    Current        3/1/01

1261 494-2685091 0014171581   $63,995    5/25/01     6/4/01        86     3027500378 30275   Denver    Current        4/1/01

1262 494-2696593 0015075054   $50,599    7/20/01    7/27/01        93     3027500378 30275   Denver    Current        6/1/01

1263 494-2726319 0015791692   $77,388    12/5/01    12/11/01       146    3027501469 30275   Denver    Current        10/1/01
                                                                                                                      9/1/01

1264 495-5419210 0003878717   $29,258    2/23/00     3/1/00        162    3027500513 30275   Denver    > 90 days      2/1/00
                                                                                                                      1/1/00
                                                                                                                      12/1/99
                                                                                                                      11/1/99

1265 495-5443596 0004430963   $78,460     2/2/00     2/7/00        139    3027500513 30275   Denver    SEE NOTE 1     1/1/00
                                                                                                                      12/1/99




                                                              Page 99                                        2003-KC-1001
Appendix C


                                                                                                                      Due
                 Cendant                          Days from                                                         Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                        Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC   3/25/02 Payment

1266 495-5462015 0008701922   $68,435    1/27/00     2/1/00         90    3027500513 30275   Denver    > 90 days     1/1/00
                                                                                                                     12/1/99

1267 495-5465504 0008991911   $84,957    3/21/00    3/24/00        154    3027500513 30275   Denver    Claims        3/1/00

1268 495-5485334 0009482241 $122,937      6/2/00     6/9/00        196    3027500513 30275   Denver    Current       5/1/00
                                                                                                                     4/1/00

1269 495-5498951 0007606817   $42,145    5/23/00    5/31/00        154    3027500513 30275   Denver    Current       5/1/00
                                                                                                                     4/1/00

1270 495-5546462 0010319879   $33,926    7/27/00     8/3/00         85    3027500513 30275   Denver    Current       5/1/00

1271 495-5563737 0010496206   $64,966    2/23/01    3/23/01        282    3027500513 30275   Denver    F/C           2/1/01
                                                                                                                     1/1/01
                                                                                                                     12/1/00
                                                                                                                     11/1/00
                                                                                                                     10/1/00

1272 495-5595559 0010838704   $88,768     5/7/01    5/11/01        318    3027500513 30275   Denver    REO           4/1/01
                                                                                                                     3/1/01

1273 495-5595700 0010910784   $53,350    2/13/01    2/28/01        259    3027500513 30275   Denver    > 90 days     1/1/01
                                                                                                                     12/1/00
                                                                                                                     11/1/00

1274 495-5607043 0010996403   Adequate Documentation has been provided.

1275 495-5611441 0012230736   $60,140    2/22/01     3/1/01        160    3027500513 30275   Denver    Current       1/1/01
                                                                                                                     12/1/00

1276 495-5640743 0012464913   $54,694    11/21/00   11/28/00        89    3027500513 30275   Denver    Claims        11/1/00

1277 495-5642709 0012475661   $78,732    4/23/01    4/25/01        194    3027500513 30275   Denver    Current       4/1/01

1278 495-5661540 0012663514   $59,601     2/6/01    2/15/01        148    3027501656 30275   Denver    REO           1/1/01
                                                                                                                     12/1/00

1279 495-5668685 0013245485   $51,073    4/12/01    4/18/01        206    3027500513 30275   Denver    > 90 days     3/1/01

1280 495-5672848 0013288824   $49,591    10/19/01   10/29/01       406    3027500513 30275   Denver    Current       5/1/01

1281 495-5676118 0013310032   $59,509     6/4/01    6/13/01        241    3027500513 30275   Denver    REO           5/1/01
                                                                                                                     4/1/01
                                                                                                                     3/1/01
                                                                                                                     1/1/01
                                                                                                                     12/1/00




  2003-KC-1001                                                Page 100
                                                                                                                    Appendix C


                                                                                                                         Due
                 Cendant                          Days from                                                            Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                           Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC        3/25/02 Payment

1282 495-5682419 0012692059 $117,178    9/10/01    9/22/01        350   3027500513 30275   Denver         > 90 days     8/1/01
                                                                                                                        7/1/01

1283 495-5869312 0015638356   $69,793   8/31/01    9/10/01         77   3027500513 30275   Denver         Current       8/1/01

1284 495-5883258 0013977087   $64,490   7/17/01    7/25/01        152   3027500513 30275   Denver         Current       7/1/01
                                                                                                                        6/1/01

1285 521-4640615 0012449922 $117,819    3/12/01    3/21/01        187   3027500174 30275   Denver         > 30 days     12/1/00

1286 531-0187310 0012572327   $73,398   12/12/00   12/14/00       118   3027500218 30275   Philadelphia   > 30 days     11/1/00
                                                                                                                        10/1/00

1287 531-0187600 0012636098 $114,594    5/18/01    5/23/01        252   3027500218 30275   Philadelphia   > 30 days     5/1/01
                                                                                                                        4/1/01
                                                                                                                        3/1/01
                                                                                                                        2/1/01
                                                                                                                        1/1/01

1288 531-0191090 0013978861 $146,239     6/1/01     6/5/01         79   3027500218 30275   Philadelphia   Current       5/1/01

1289 531-0191922 0014222285   $34,459    8/6/01    8/10/01        159   3027500218 30275   Philadelphia   > 90 days     7/1/01

1290 531-0191968 0014236293   $99,216   9/26/01    10/2/01        204   3027502050 30275   Philadelphia   Current       9/1/01

1291 531-0194290 0015244437 $156,618    10/12/01   10/16/01       140   3027501627 30275   Philadelphia   > 90 days     9/1/01

1292 541-5612023 0005161492   $86,456   1/11/00    1/20/00        102   3027500326 30275   Philadelphia   Current       12/1/99

1293 541-5634846 0009197591 $108,735    12/11/00    2/8/01        383   3027500326 30275   Philadelphia   Current       7/1/00

1294 541-5678535 0007606593 $103,910    11/30/00   11/30/00       304   3027500860 30275   Philadelphia   SEE NOTE 1    7/1/00

1295 541-5686367 0010132496   $70,463   12/5/00    12/5/00        266   3027500860 30275   Philadelphia   Claims        11/1/00

1296 541-5703760 0010326270   $63,514   10/10/00   10/13/00       126   3027500326 30275   Philadelphia   Current       9/1/00

1297 541-5714127 0010411569   $83,214   7/25/00    7/27/00        113   3027500326 30275   Philadelphia   Current       7/1/00

1298 541-5717566 0010434645   $95,450    5/4/01     5/8/01        372   3027500326 30275   Philadelphia   > 90 days     4/1/01
                                                                                                                        3/1/01
                                                                                                                        2/1/01
                                                                                                                        1/1/01
                                                                                                                        12/1/00
                                                                                                                        11/1/00

1299 541-5790934 0012304978   $78,409   1/25/01    1/29/01        195   3027500326 30275   Philadelphia   > 90 days     1/1/01




                                                             Page 101                                           2003-KC-1001
Appendix C


                                                                                                                           Due
                 Cendant                          Days from                                                              Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                             Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC        3/25/02 Payment

1300 541-5793188 0012323374 $107,209     1/24/02    2/12/02        518    3027500326 30275   Philadelphia   Current       1/1/02
                                                                                                                          12/1/01
                                                                                                                          11/1/01
                                                                                                                          10/1/01
                                                                                                                          9/1/01

1301 541-5793708 0012413019   $57,525    1/29/01    1/31/01        182    3027500326 30275   Philadelphia   REO           12/1/00

1302 541-5823504 0012608287   $94,325     2/1/01     2/6/01        125    3027500326 30275   Philadelphia   Bankruptcy    1/1/01
                                                                                                                          12/1/00

1303 541-5839005 0012646386   Adequate Documentation has been provided.

1304 541-5840265 0013286083 $154,448     2/12/01    2/14/01        143    3027500326 30275   Philadelphia   Current       1/1/01

1305 541-5860877 0012545828   $58,401     6/1/01     6/8/01        274    3027500326 30275   Philadelphia   > 90 days     5/1/01
                                                                                                                          4/1/01
                                                                                                                          3/1/01
                                                                                                                          2/1/01
                                                                                                                          1/1/01

1306 541-5878508 0013647755 $123,814     4/25/01    4/27/01        133    3027500326 30275   Philadelphia   Current       3/1/01

1307 541-5963693 0013711353   $64,401    10/17/01   10/26/01       110    3027500326 30275   Philadelphia   > 30 days     10/1/01

1308 541-5976096 0014470611   $71,435    7/31/01     8/2/01         77    3027500326 30275   Philadelphia   Current       7/1/01

1309 541-5996843 0015103054   $40,898     8/9/01    8/16/01        101    3027500326 30275   Philadelphia   Current       7/1/01

1310 541-6007359 0015204167 $163,415     10/17/01   10/22/01       145    3027501475 30275   Philadelphia   F/C           10/1/01
                                                                                                                          8/1/01

1311 541-6048239 0015236748   $84,671    9/20/01    9/25/01         87    3027500326 30275   Philadelphia   Current       8/1/01

1312 548-3650787 0013293477   Adequate Documentation has been provided.

1313 548-3658847 0013177266 $124,940     2/23/01    2/27/01         86    3027500985 30275   Philadelphia   Current       2/1/01

1314 561-6956775 0003352820 $153,937     12/9/99    12/13/99        98    3027500349 30275   Santa Ana      F/C           11/1/99

1315 561-6959380 0003894441   $54,916    4/28/00     5/3/00        240    3027500349 30275   Santa Ana      > 30 days     3/1/00

1316 561-6966034 0004212155   Adequate Documentation has been provided.

1317 561-6991290 0007040066 $155,195      2/3/00     2/3/00        104    3027500349 30275   Santa Ana      > 90 days     1/1/00
                                                                                                                          12/1/99

1318 561-6996479 0003752003   $85,448    2/23/00    2/23/00         89    3027500349 30275   Santa Ana      > 90 days     2/1/00
                                                                                                                          1/1/00

1319 561-6997705 0009251505 $124,149      2/3/00     2/3/00         86    3027500349 30275   Santa Ana      > 90 days     1/1/00

1320 561-7007483 0003795879 $100,000     2/11/00    2/14/00         73    3027500349 30275   Santa Ana      Current       1/1/00




  2003-KC-1001                                                Page 102
                                                                                                                      Appendix C


                                                                                                                           Due
                 Cendant                          Days from                                                              Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                             Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                     HOC        3/25/02 Payment

1321 561-7044650 0010351435 $129,269     7/19/00    7/25/00         75    3027500349 30275   Santa Ana      > 90 days     7/1/00

1322 561-7072639 0010737641   $70,325    7/27/00     8/1/00         90    3027500349 30275   Santa Ana      Current       7/1/00
                                                                                                                          6/1/00

1323 561-7082432 0010927572   Adequate Documentation has been provided.

1324 561-7150549 0013500590   $94,605    1/23/01     2/5/01         76    3027500349 30275   Santa Ana      Current       12/1/00

1325 561-7226659 0014411045 $167,779     7/13/01    7/18/01        102    3027500349 30275   Santa Ana      Current       6/1/01

1326 561-7240667 0014503734 $143,744     7/16/01    7/20/01        103    3027502260 30275   Santa Ana      Current       6/1/01

1327 561-7255728 0015188022   Adequate Documentation has been provided.

1328 561-7268688 0015065881   Adequate Documentation has been provided.

1329 561-7278837 0015306483 $152,556     8/22/01    9/20/01         93    3027500349 30275   Santa Ana      Current       8/1/01

1330 561-7290794 0015506173 $201,351     10/24/01   11/9/01        140    3027500349 30275   Santa Ana      Current       10/1/01
                                                                                                                          9/1/01
                                                                                                                          8/1/01

1331 561-7328746 0015871130 $195,271     11/9/01    11/15/01       107    3027500349 30275   Santa Ana      Current       10/1/01
                                                                                                                          9/1/01

1332 562-1714366 0009325382   Adequate Documentation has been provided.

1333 562-1751635 0013764469   $87,765     9/6/01    9/12/01        252    3027500349 30275   Santa Ana      Current       3/1/01

1334 562-1756938 0014041073   $60,473    11/30/01   2/15/02        260    3027502254 30275   Santa Ana      > 30 days     11/1/01

1335 569-0464570 0010050243   $99,796    8/31/00     9/7/00        212    3027500151 30275   Santa Ana      > 90 days     8/1/00
                                                                                                                          7/1/00
                                                                                                                          6/1/00

1336 569-0481839 0013416169 $113,068     4/18/01    4/25/01        184    3027500151 30275   Santa Ana      Bankruptcy    2/1/01

1337 571-0597079 0005513098   $69,400    10/19/00   10/23/00       269    3027500326 30275   Philadelphia   REO           7/1/00

1338 571-0598022 0010250413   $57,129    1/17/01    1/19/01        247    3027500326 30275   Philadelphia   Current       9/1/00

1339 571-0598101 0010258630   $42,812    12/5/00    12/5/00        257    3027500860 30275   Philadelphia   > 90 days     10/1/00

1340 571-0608816 0012549747   $84,556    4/11/01    4/13/01        212    3027500326 30275   Philadelphia   F/C           3/1/01
                                                                                                                          12/1/00

1341 571-0610934 0013245923   $78,459    3/21/01    3/29/01        145    3027501475 30275   Philadelphia   F/C           3/1/01
                                                                                                                          2/1/01
                                                                                                                          1/1/01




                                                              Page 103                                            2003-KC-1001
Appendix C


                                                                                                                         Due
                 Cendant                          Days from                                                            Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                           Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                   HOC        3/25/02 Payment

1342 571-0613750 0013493143 $122,700    2/26/01    2/28/01        102   3027502202 30275   Philadelphia   Bankruptcy    2/1/01
                                                                                                                        1/1/01

1343 571-0622398 0014353387   $59,529   10/23/01   10/27/01       196   3027502202 30275   Philadelphia   Current       10/1/01

1344 571-0622830 0014442198   $45,675   9/27/01    10/1/01        161   3027502198 30275   Philadelphia   Current       9/1/01
                                                                                                                        8/1/01
                                                                                                                        7/1/01
                                                                                                                        6/1/01

1345 571-0625945 0015123417   $64,490   7/21/01     8/9/01         73   3027502198 30275   Philadelphia   Current       7/1/01

1346 581-2163105 0004452447   $67,397    3/2/00     3/7/00        168   3027500066 30275   Denver         F/C           12/1/99

1347 581-2163344 0004530283   $99,746   9/28/00    10/6/00        321   3027500066 30275   Denver         Current       9/1/00
                                                                                                                        8/1/00
                                                                                                                        7/1/00
                                                                                                                        6/1/00
                                                                                                                        5/1/00
                                                                                                                        4/1/00

1348 581-2173148 0009309287   $53,917   2/23/00    2/29/00         96   3027500066 30275   Denver         > 90 days     2/1/00

1349 581-2179633 0001421601 $117,792    8/29/00     9/5/00        221   3027500066 30275   Denver         > 30 days     8/1/00
                                                                                                                        7/1/00
                                                                                                                        6/1/00
                                                                                                                        5/1/00
                                                                                                                        4/1/00

1350 581-2184592 0010140457   $70,552   8/10/00    8/16/00        178   3027500066 30275   Denver         Current       4/1/00

1351 581-2194761 0010535078   $56,634   12/19/00   12/29/00       228   3027500066 30275   Denver         > 90 days     12/1/00
                                                                                                                        11/1/00

1352 581-2208361 0010980738   $86,367   4/26/01     5/3/01        295   3027500066 30275   Denver         Current       4/1/01
                                                                                                                        3/1/01
                                                                                                                        2/1/01
                                                                                                                        1/1/01
                                                                                                                        12/1/00
                                                                                                                        11/1/00

1353 581-2216220 0012418992   $74,884   1/29/01     2/2/01        192   3027500066 30275   Denver         Current       1/1/01
                                                                                                                        12/1/00

1354 581-2231552 0013398011   $48,415   1/29/01     2/6/01         98   3027501213 30275   Denver         > 90 days     1/1/01
                                                                                                                        12/1/00




  2003-KC-1001                                               Page 104
                                                                                                                      Appendix C


                                                                                                                           Due
                 Cendant                          Days from                                                              Date of
OIG FHA Case      Loan   Mortgage Date     Date   Closing to Originating Holder                             Status as of Missed
No. Number       Number Amount Submitted Endorsed Submitted      ID       ID                      HOC       3/25/02 Payment

1355 581-2232899 0013468673   $84,869    7/30/01     8/9/01        213    3027500066 30275    Denver        SEE NOTE 1    4/1/01

1356 581-2234802 0013534664 $107,117      6/7/01    6/14/01        189    3027501997 30275    Denver        > 30 days     5/1/01
                                                                                                                          4/1/01

1357 581-2241225 0013779574 $143,763     12/3/01    12/10/01       339    3027501997 30275    Denver        Current       11/1/01

1358 581-2241458 0013782644 $107,336     5/18/01    5/30/01         74    3027500066 30275    Denver        Current       5/1/01
                                                                                                                          4/1/01

1359 581-2245863 0013796339   $84,500    5/31/01     6/5/01        139    3027501213 30275    Denver        F/C           5/1/01

1360 581-2249350 0014013445   $52,034    9/25/01    10/1/01        200    3027501997 30275    Denver        > 30 days     8/1/01

1361 581-2264147 0014349096   $65,939    8/20/01    8/28/01         90    3027500066 30275    Denver        Current       8/1/01
                                                                                                                          7/1/01

1362 581-2269847 0014313167   Adequate Documentation has been provided.

1363 581-2270664 0014491435   $78,201    7/23/01    7/31/01         94    3027501997 30275    Denver        Current       7/1/01

1364 591-0891211 0014545529   $79,250     7/3/01    7/10/01         67    3027500122 30275    Denver        Current       6/1/01

                                                        LEGEND FOR STATUS:
                                                        Current--loan payments are current
                                                        Bankruptcy--borrower is in bankruptcy
                                                        >30 days--loan payments are between 30 and 59 days past due
                                                        >60 days--loan payments are between 60 and 89 days past due
                                                        >90 days--loan payments are more than 90 days past due
                                                        F/C--loan is in the foreclosure process, prior to REO (real estate owned)
                                                        REO--loan is Real Estate Owned, property's title has been transferred
                                                        Claim--loan has gone from REO to claim

                                                         NOTE 1: Cendant responded to our draft finding by noting that 108 of
                                                         the 1,364 loans have now been paid in full. We queried HUD’s Single
                                                         Family Data Warehouse, and found that as of August 31, 2002, the
                                                         insurance has been terminated on 101 of these loans plus 34 additional
                                                         loans. Cendant also provided documentation proving that 9 of these
                                                         terminated loans were acceptable at the time of submission. Each of the
                                                         126 remaining terminated loans is marked “SEE NOTE 1”. The mortgage
                                                         amount on the 126 loans totals $13,334,209. These loans are included in
                                                         the 1,307 loans reported in the finding as having been improperly
                                                         submitted for insurance, but they are omitted from the 1,181 loans for
                                                         which we are seeking indemnification. There is no need for us to seek
                                                         indemnification for these loans. Five other loans that Cendant indicated
                                                         as paid-in-full still show an insurance status of active as of August 31,
                                                         2002. These are noted by an asterisk. Our recommendation for these
                                                         loans is to terminate the insurance or obtain indemnification. ^^These
                                                         30 loans were also reported as improper late submissions by the
                                                         Homeownership Center Quality Assurance Division during their
                                                         review issued in 2002. One of the 30 is now paid in full.




                                                              Page 105         Table of Contents                  2003-KC-1001
Appendix B




               THIS PAGE LEFT
                   BLANK
               INTENTIONALLY




2003-KC-1001       Page 106
                                                                                    Appendix D

Loan Processing Deficiencies Chart
                                                                           Indications
             Inconsistent/ Not enough Gift funds Inadequate W-2 different       of
               Unverified   assets to     not      Ratios / name/address Possible
 FHA Loan #     Income        close   documented Qualifiers or not provided Fraud TOTALS
182-0620769        X                                                                   1
182-0630382        X                       X         X                                 3
*182-0635061                    X                                               X      2
182-0639136        X            X          X                                           3
182-0644789        X            X          X                        X                  4
291-2608685        X            X          X                                           3
291-2618046        X                                  X                                2
291-2620345        X                                                                   1
291-2629032        X            X          X                                           3
291-2637386                                                                            0
291-2638982        X            X                                                      2
291-2648497        X            X                                                      2
291-2653366        X                                 X                                 2
291-2658702                                X                                           1
291-2658731        X            X                                                      2
291-2663101        X                                                                   1
291-2664113        X                                                                   1
291-2664641                     X                     X                                2
291-2666621                                X                        X                  2
*291-2676939                    X                                                      1
291-2679600                                                                            0
*291-2684232                    X          X         X                                 3
291-2685079                     X                                                      1
291-2688660        X            X                                                      2
291-2698855                                                                            0
291-2709675                     X                    X                                 2
291-2720918        X                                                                   1
291-2724348        X            X                                               X      3
*291-2727895       X            X                    X                                 3
291-2732764        X                       X                       X                   3
292-3778958        X            X                                                      2
292-3779720                     X          X                                           2
292-3781555        X                                                                   1
292-3782380        X                                                                   1
292-3782397        X            X                                                      2
292-3788541        X                                                                   1
292-3792257        X            X                                                      2
292-3792806                                                                     X      1
292-3792972        X            X                                                      2
292-3796469        X                                                                   1
292-3800041                     X                    X                                 2
*292-3803474       X            X          X                                           3
*292-3807675                                                                    X      1


                                           Page 107                                        2003-KC-1001
                                                           Table of Contents
Appendix D


                                                                               Indications
                 Inconsistent/ Not enough Gift funds Inadequate W-2 different       of
                   Unverified   assets to     not      Ratios / name/address Possible
   FHA Loan #       Income        close   documented Qualifiers or not provided Fraud TOTALS
  *292-3811595                                 X                                    X      2
  292-3813386          X                                                                   1
  292-3813392                       X                                                      1
  292-3815703          X            X                                                      2
  292-3817467          X                       X                                           2
  292-3818319          X            X                     X                         X      4
  292-3822365                                                                              0
  *292-3832940                      X                                   X                  2
  292-3835425          X                                                                   1
  *292-3842540         X            X          X         X                          X      5
  292-3848073          X                                                                   1
  292-3848333          X                                                                   1
  292-3848551                       X          X                                           2
  *292-3857227                                                                             0
  292-3864552          X            X          X                                           3
  *292-3867979                      X          X         X                                 3
  *292-3869730         X                                               X                   2
  292-3870377                       X                                               X      2
  292-3871133          X                                 X                                 2
  292-3873350                       X          X                                           2
  292-3874878                       X                                                      1
  292-3875640          X                                                                   1
  292-3876022                       X          X                                           2
  292-3879607                                                                              0
  292-3881442          X                       X                                           2
  292-3888313                       X                                                      1
  292-3892293                                                                              0
  292-3896129          X                                                                   1
  292-3899329          X                                                                   1
  292-3902848          X                                 X                                 2
  *292-3907011                                           X                                 1
  292-3910628                       X          X                                           2
  292-3917372                       X                                                      1
  292-3918303          X                                                            X      2
  292-3922626                                  X                       X                   2
  *292-3926237         X                                  X                                2
  *292-3942348                      X                                                      1
    TOTALS           46           39         22          15        6          9       137
   * Indicates loan included in Finding 1.




  2003-KC-1001                                    Page 108      Table of Contents
                                                                             Appendix E

Narrative Case Presentations
FHA Case Number: 182-0620769

Insured Amount: $99,949

Section of Housing Act: 203(b)

Date of Loan Closing: 09/09/99

Current Status: Reinstated by mortgagor who retains ownership; Prior: Default status
after 10 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s
   income. Cendant did not obtain a verification of employment. The borrower had
   been on this job for less than four months; therefore income stability was
   questionable.
   o Auditee Comments: The borrower’s income was properly verified as required by
       FHA guidelines. It is Cendant’s policy to obtain a verification of employment
       prior to closing but the documentation for the verbal verification could not be
       located in the file. The income documentation supports the borrower’s
       employment. The borrower’s recent pay stub included her start date and 2-yr. tax
       returns and w-2s were retained in the file
       § OIG Evaluation of Auditee Comments: Cendant responded that it is their
           policy to obtain a verification of employment (VOE) prior to closing but the
           documentation for the verbal VOE could not be located in the file. A
           verification of employment is required by FHA guidelines. Therefore, the
           borrower’s income was not properly documented.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
               Family Properties, Chapter 2, requires that the lender establish the
               borrower’s capacity to repay the mortgage debt. Income from a source
               that cannot be verified, is not stable, or will not continue should not be
               used when calculating the borrower’s income ratios. Part 2-6 states, “the
               lender must verify the borrower's employment for the most recent two full
               years.” According to Chapter 3, income verification must be done through
               a written VOE and the most recent pay stub, or 1 month’s pay stubs, 2
               years’ W-2(s), a verbal VOE, and Internal Revenue Service form 8821.
               According to Loan Prospector documentation requirements, acceptable
               loans must have a verbal VOE, most recent year to date pay stub
               documenting one full month’s earnings, and most recent 2 years’ W-2(s).
               A VOE confirming 2-year employment history, only base pay used to
               qualify, and Internal Revenue Service form 8821 can be substituted for the
               W-2(s). This loan did not contain the necessary income verification
               documentation.


                                          Page 109                          2003-KC-1001
                                                     Table of Contents
Appendix E


FHA Case Number: 182-0630382

Insured Amount: $48,970

Section of Housing Act: 203(b)

Date of Loan Closing: 02/29/00

Current Status: Servicing transferred or sold to another mortgagee, Prior: Default status after 12
payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $1,316 per month. The pay stubs
   provided verified that the borrower’s income was only $1,144 per month in Social Security
   benefits and Aid to Families with Dependent Children. A portion of these benefits was for an
   18-year-old dependent. The lender does not address how long this dependent will be eligible.
   Furthermore, one of the statements received from the Social Security Administration states
   that the payment is “disallowed or denied”. The lender failed to address this issue also.
   o Auditee Comments: The income was properly verified as required by FHA guidelines.
       The income that is disclosed on the Mortgage Credit Analysis Worksheet is accurate.
       The Social Security benefits used as income were “grossed up” as permitted by FHA
       guidelines so that it is comparable to taxable income. The income is grossed up by 125
       percent of the non-taxable income. The IG commented that “ on one of the statements the
       benefits were disallowed or denied”. The Social Security statements contain an
       explanation of the payment status codes. One of the payment status codes “N” means that
       “benefits disallowed or denied”. All of the borrower’s statements show a status code of
       “C01- Pay E Disabled”. The “ CO1” code is a valid code that the lender would not need
       to question. The income appears to be for the borrower’s disability and food stamp
       income and not tied to the number of dependents so the lender would not need to
       determine how long the dependent would be eligible for benefits. Please see attached
       Social Security Statements.
       § OIG Evaluation of Auditee Comments: According to HUD Handbook 4155.1,
           Chapter 2-7, Section P, income can be “grossed up” by a percentage not to exceed
           that income’s tax bracket. In this instance, the income can be grossed-up 15 percent
           to equal $1,316. This income is based upon both disability benefits and TAF
           (Temporary Assistance to Families). According to the borrower, she can only claim
           TAF benefits if her seven children are under 18 and still in school. Therefore, as her
           children (ages 18, 15, 12, 11, 2, 1, and 10 months) turn 18 and complete high school,
           the borrowers benefits will be reduced. In addition, the history shows two payment
           status codes, N-Benefits Disallowed or Denied and C01-Pay E. It does appear that the
           current benefit of $512 monthly is allowed.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to

2003-KC-1001                               Page 110
                                                                                        Appendix E


                repay the mortgage debt. Income from a source that cannot be verified, is not
                stable, or will not continue should not be used when calculating the borrower’s
                income ratios. 2-7 L of this handbook says that income from government
                assistance programs is acceptable subject to documentation from the paying
                agency provided the income is expected to continue at least three years. If not
                expected to last at least three years, such income may be considered as a
                compensating factor. This loan did not contain the necessary income verification
                documentation.

 Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
    were too high and insufficient compensating factors. The ratios on the Mortgage Credit
    Analysis Worksheet after using the correct income amount were 38 percent and 48 percent.
    The compensating factors provided were 1) Low income housing (this is not considered a
    compensating factor), 2) Good residual (after closing, the borrower will only have $540), and
    3) Decent Credit (there were five accounts turned over to collections in the last five years).
    o Auditee Comments: The ratios for this loan are permitted under FHA guidelines and
        appropriate compensating factors are provided. The auditor noted that there were “
        insufficient compensating factors”. FHA guidelines do not require a minimum number of
        compensating factors and the following factors were used to approve this loan:
        *Customer has the potential for increased earnings since the borrower is eligible for cost
        of living increases for the social security income.
        *Decent credit –Borrower has 3 good accounts with no derogatory payments. All
        collection activity was more than 2 years old. All but one of the collection accounts was
        related to medical bills. Two collection accounts were paid including the non-medical
        which was under $50 and considered minor. Please see attached credit report.
        § OIG Evaluation of Auditee Comments: The Mortgage Credit Analysis Worksheet
             (MCAW) did not list “potential for increased earnings” as a compensating factor.
             Cendant’s assertion that cost of living adjustments from social security is not
             consistent with HUD Handbook 4155.1, 2-13-I, which states that allowable
             compensating factors include “The borrower has potential for increased earnings, as
             indicated by job training or education in the borrower's profession.” A cost of living
             adjustment is designed merely to adjust for inflation. This cannot be considered
             additional disposable income. In addition, Cendant asserted that the borrower had
             “Decent Credit” consisting of “3 good accounts with no derogatory payments.” While
             this is true, the borrower also had 5 accounts turned over to collections. Cendant
             stated that they were all over 2 years old. The accounts were 03/1998 through
             02/1999 and the loan closed 02/2000. Therefore, they were all less than 2 years old at
             the time of closing. Furthermore, Cendant stated that all but one of the accounts was
             medical, that the non-medical was less than $50 and considered minor, and that two
             of those turned over to collections (including the non-medical) were subsequently
             paid. According to the credit report, none of those turned over to collections was less
             than $50 and there is only proof that one of those (a medical account) was paid in full
             just prior to closing the loan. Also, there is no stipulation in HUD regulations stating


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Appendix E


           that it is acceptable for a borrower to maintain past due accounts of medical bills but
           not other types of accounts.
           Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
               REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
               Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
               (1). Mortgage payment expense to effective income. If the total mortgage
               payment does not exceed 29 percent of gross effective income, the relationship of
               the mortgage payment to income is considered acceptable. A ratio exceeding 29
               percent may be acceptable if significant compensating factors are presented.” and
               “(2). Total fixed payment to effective income. If the total mortgage payment and
               all recurring charges do not exceed 41 percent of gross effective income, the
               relationship of total obligations to income is considered acceptable. A ratio
               exceeding 41 percent may be acceptable if significant compensating factors are
               presented.” This file contained ratios that were above the acceptable limit without
               providing adequate compensating factors.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated she would receive a gift of $2,500, but only submitted an
    unsigned gift letter and the donor’s bank statement as documentation, but did not submit the
    required proof of transfer.
    o Auditee Comments: No gift documentation was required to be verified because the
        source of funds was not a gift. The source of funds was from an account on which the
        borrower was a co-signer with no limitation on the access to the funds. See attached bank
        statements.
        § OIG Evaluation of Auditee Comments: The funds documented on the bank statement
            that the borrower is using to close the loan include a deposit labeled “gift”. The
            source of this gift was not verified. The application states that the gift was from a
            man but the gift letter states that the gift is from a woman who co-owned the bank
            account that the funds were deposited into. Therefore, it is unclear whom the gift is
            actually from and the donor did not provide all the required documentation.
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                of the funds from the donor to the borrower. Acceptable procedures include
                obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                borrower's deposit slip or bank statement showing the deposit. If the funds are not
                deposited to the borrower's account prior to closing, the lender must obtain
                verification the closing agent received funds from the donor for the amount of the
                gift. The file must also contain a gift letter specifying the dollar amount, signed
                by the donor and the borrower, stating no repayment is required, and showing the
                donor's name, address, telephone number, and relationship to the borrower.” This
                file did not contain all the necessary documentation required when a borrower is
                using gift funds.


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                                                                                        Appendix E


FHA Case Number: 182-0635061

Insured Amount: $87,255

Section of Housing Act: 203(b)

Date of Loan Closing: 04/27/00

Current Status: Reinstated by mortgagor who retains ownership, Prior: Default status after 1
payment.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $4,382.16, but the borrower did not provide any evidence of available funds.
   o Auditee Comments: Sufficient funds to close the loan were verified as required by FHA
      guidelines. The borrower needed $354.79 to close as indicated on the HUD-1 Statement.
      In error, the Mortgage Credit Analysis Worksheet was not updated prior to closing. The
      bank statement included in the file provides evidence of a balance of $1,782.66. Please
      see attached revised MCAW, final HUD-1, and the bank statement.
      § OIG Evaluation of Auditee Comments: Cendant provided a revised MCAW and a
           bank statement that was not included in the HUD case binder to verify that the
           borrower had the proper funds needed per the HUD-1 to close the loan. The bank
           statement is dated 09/17/1999, 7 months prior to the loan closing. Therefore, the
           lender did not know if the borrower had the funds to close near the time of closing.
           Further, the insurance application results indicate that assets available of $4,382 were
           entered into Loan Prospector. The only Loan Prospector feedback certificate in the
           file indicates borrower reserves of $4,370.80. In either case, Cendant did not
           document the assets used when the loan was approved.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
                property must be verified.” The lender must insure that the borrower has
                sufficient funds available to close the loan. This file did not contain adequate
                evidence of the funds needed to close.

W-2 Different Name/Address or Not Provided:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information provided
   on the W-2s submitted by the borrower was correct. The W-2s are the employer’s copy and
   the employer has a different state employer identification number from 1998 to 1999.
  o Auditee Comments: The information on the W-2s was consistent with other information
      in the file and would not have triggered additional investigation. The auditor noted that
      the W-2s were the employer copy and that the employer’s state identification numbers did
      not match. There were no other inconsistencies with the income that would have caused
      the lender to question the validity of the W-2s. The federal employer number on the 1998

                                            Page 113                                   2003-KC-1001
Appendix E


       and 1999 W-2s are the same. The employer number could be different because the
       employer number changed due to a change in corporate ownership or a change in the
       employer numbering system for the state. See attached copies of the W-2s.
       § OIG Evaluation of Auditee Comments: Cendant asserted that there were no other
          inconsistencies with the W-2s that would have prompted the lender to review them
          more thoroughly. We concur with this assertion.
          Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. In addition
    to the suspicious W-2s provided, the lender pulled two different credit reports that were
    substantially different. The first, dated March 14, 2000, showed $575 in monthly payments,
    while the second, dated March 17, 2000, showed $1,059 in monthly payments. The March
    17th credit report is under a different first name than the borrower.
    o Auditee Comments: The documentation in the file resolves any indicators of possible
        fraud. The W-2 information is explained above. The credit reports provide consistent
        information about the borrower. Credit reports were provided by two different credit
        reporting vendors for the same borrower. The “in-file” credit report from CBC
        Companies dated 3/14/00 was obtained in the name of Terry Miller. The “Full Factual”
        credit report from First American Credco revised 3/30/00 was obtained in the name of
        Tracey Miller but a footnote on the 3rd page of the report discloses that the “credit
        checked under borrower’s AKA of Terence”. It is common that an in-file credit report
        would be obtained and if more information was needed that a full factual credit report
        would be obtained. The full factual provided information that the credit was checked
        under the name of Terence which is a full name for Terry. The full factual often reveals
        that there are additional accounts listed under the borrower’s name since it obtains
        information from three credit repositories. Please note that Terry appeared to have joint
        accounts with another person as well as individual accounts. Please see attached credit
        reports.
        § OIG Evaluation of Auditee Comments: Cendant stated that there were two credit
            reports pulled, an in-file report and a full factual report, explaining that a full factual
            report would be used if more information were needed. However, the lender
            submitted the figures from the in file report to Loan Prospector, which failed to
            include the entire scope of debt provided by the full factual report. The lender also
            did not verify the name discrepancy (i.e.: if the full factual report indicated that the
            borrower’s full name is Terence, why were the loan documents not changed to reflect
            the proper name).
            Ø Violation: Indications of possible fraud were not resolved. HUD Handbook
                 4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
                 to-Four-Family Properties, Chapter 3-1 states that “we expect the application
                 package to contain sufficient documentation, to support the lender's decision to
                 approve the mortgage loan. When standard documentation does not provide
                 enough information to support this decision, the lender must provide additional
                 explanatory statements, consistent with other information in the application, to
                 clarify or supplement the documentation submitted by the borrower.” HUD

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                                                                       Appendix E


Handbook 4000.4, Chapter 2 says it is the underwriter’s responsibility to be aware
of the warning signs that may indicate irregularities and to detect fraud. In other
words, the lender should ensure that any indications of possible fraud are
evaluated and that the appropriate steps are taken and adequate documentation is
provided to resolve any discrepancies. This file did not contain adequate
documentation that the lender attempted to resolve any discrepancies noted.




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Appendix E


FHA Case Number: 182-0639136

Insured Amount: $64,468

Section of Housing Act: 203(b)

Date of Loan Closing: 07/06/00

Current Status: Property Conveyed to Insurer, HUD incurred a loss of $25,770. Prior: Default
status after 0 payments.

Not enough assets to close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $1,978.46 and the borrower’s bank statement had a negative balance.
   o Auditee Comments: Sufficient funds to close were verified as required by FHA
       guidelines. Evidence of $2,063.73 for closing was provided in the file. As indicated on
       the HUD-1 Settlement Statement, the borrower needed an additional $959.73 for closing.
       The $959.73 was paid out of a certified check for $1,063.73 provided to the closing agent
       by the borrower at closing. The HUD-1 settlement statement disclosed that the real estate
       agent had received funds totaling $1,000 in earnest money from the check dated 6/13/00
       paid to the real estate broker for $500 and the check dated 5/20 for $500 paid to the real
       estate agent. The total funds delivered by the borrower were $2,063.73. In error, the
       Mortgage Credit Analysis Worksheet was not updated. Please see attached HUD-1,
       certified check, copies of checks and a revised MCAW.
       § OIG Evaluation of Auditee Comments: Cendant provided documentation that the
           borrower remitted $1,000 in escrow to the real estate agent. This leaves the amount
           due at closing of $959.73. Cendant provided a copy of a Cashier’s Check in the
           amount of $1,063.73 to cover those costs but provided no indication of the source of
           these funds. The borrowers bank account balance had a negative amount in it at
           closing which indicates that the funds for closing did not originate with the borrower.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $5,557.72 per month ($1,291.72 for
   the borrower and $4,266 for the co-borrower). According to the verbal verification of
   employment, the co-borrower earned $1,040 per month. Total monthly income was therefore
   $2,331.72. Cendant did not obtain a verbal or written verification of employment for the
   borrower.

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                                                                                      Appendix E


   o Auditee Comments: The income was verified as required by FHA guidelines. The
     MCAW was not updated after the income information was received. It is Cendant’s
     policy to obtain a verification of employment prior to closing but the documentation for
     the verbal verification could not be located in the file. The income for the co-borrower
     was lower at the new job and the MCAW was not corrected. The ratios for revised
     income are within FHA guidelines. See attached income documentation and revised
     MCAW.
     § OIG Evaluation of Auditee Comments: Cendant agreed with our calculation of the
         correct income and the missing verification of employment.
         Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
             Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
             Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
             repay the mortgage debt. Income from a source that cannot be verified, is not
             stable, or will not continue should not be used when calculating the borrower’s
             income ratios. Part 2-6 says “the lender must verify the borrower's employment
             for the most recent two full years.” According to Chapter 3, income verification
             must be done through a written Verification of Employment and the most recent
             pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
             Employment, and Internal Revenue Service form 8821. This loan did not contain
             the necessary income verification documentation.

Gift funds not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated he would receive two gifts; one for $81.77 and one for
    $250. The borrower submitted two gift letters as documentation, but did not submit the
    required proof of transfer or proof of the donor’s ability to pay.
    o Auditee Comments: NONE
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 Part C states that “the lender must document the transfer
               of the funds from the donor to the borrower. Acceptable procedures include
               obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
               borrower's deposit slip or bank statement showing the deposit. If the funds are not
               deposited to the borrower's account prior to closing, the lender must obtain
               verification the closing agent received funds from the donor for the amount of the
               gift. The file must also contain a gift letter specifying the dollar amount, signed
               by the donor and the borrower, stating no repayment is required, and showing the
               donor's name, address, telephone number, and relationship to the borrower.” This
               file did not contain all the necessary documentation required when a borrower is
               using gift funds.




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Appendix E


FHA Case Number: 182-0644789

Insured Amount: $63,467

Section of Housing Act: 203(b)

Date of Loan Closing: 09/01/00

Current Status: Foreclosure Completed, there is no loss information available at this time. Prior:
Default status after 0 payments.

Not enough Assets To Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $1,922.12. The borrower did not provide evidence she had the funds or gifts necessary
   to close the loan.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $4,834.16 per month. According to
   the written verification of employment, the borrower earns $1,209 per month.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
               Employment confirming 2-year employment history, only base pay used to

2003-KC-1001                               Page 118
                                                                                      Appendix E


               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.

W-2 Different Name/Address or Not Provided:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information provided on
  the W-2s submitted by the borrower was correct. The borrower’s application lists a prior
  address that does not reconcile with that on the applicable W-2s. There is no indication that
  the lender attempted to resolve this discrepancy.
  o Auditee Comments: None
      § OIG Evaluation of Auditee Comments: N/A
          Ø Violation: W-2 information was not provided or was incorrect. HUD Handbook
              4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
              to-Four-Family Properties, Chapter 3-1 Part E. states that “as an alternative to
              obtaining a Verification of Employment, the lender may choose to obtain from the
              borrower original pay stub(s) covering the most recent thirty-day period, along
              with original copies of the previous two years' Internal Revenue Service W-2
              forms.” This file did not contain a Verification of Employment, and therefore,
              should have contained two years’ Internal Revenue Service W-2 forms. HUD
              Handbook 4000.4 Rev-1, Single Family Direct Endorsement Program, Chapter 2-
              1 states that “A Direct Endorsement mortgagee must conduct its business
              operations in accordance with accepted sound mortgage lending practices, ethics
              and standards.” These forms should have been scanned for accuracy.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated she would receive two gifts; one for $800 and one for
    $955. The borrower submitted two gift letters as documentation, and a copy of $800 in
    money orders purchased by one donor, but did not submit the required proof of transfer or
    proof of the donor’s ability to pay for the other gift.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                of the funds from the donor to the borrower. Acceptable procedures include
                obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                borrower's deposit slip or bank statement showing the deposit. If the funds are not
                deposited to the borrower's account prior to closing, the lender must obtain
                verification the closing agent received funds from the donor for the amount of the
                gift. The file must also contain a gift letter specifying the dollar amount, signed
                by the donor and the borrower, stating no repayment is required, and showing the
                donor's name, address, telephone number, and relationship to the borrower.” This
                file did not contain all the necessary documentation required when a borrower is
                using gift funds.


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Appendix E


FHA Case Number: 291-2608685

Insured Amount: $38,369

Section of Housing Act: 203(b)

Date of Loan Closing: 07/15/99

Current Status: Property Conveyed to Insurer; HUD paid a claim of $38,773, there is no loss
information available at this time. Prior: Default status after 3 payments.

Not Enough Assets To Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $1,786.32, but the borrower only provided evidence of $737.78 in assets.
   o Auditee Comments: Sufficient funds to close were verified as required by FHA
      guidelines. The borrower only needed $781.81 to close the loan as indicated on the
      HUD-1 Settlement Statement. Although the application indicated that the borrower was
      to receive a gift, it was not necessary. No gift funds were noted on the MCAW. In error,
      the Mortgage Credit Analysis Worksheet was not updated prior to closing. The auditors
      indicated that the file contained evidence of $737.78 in assets. The difference of $ 44.03
      between verified funds and funds needed for closing could have been easily available
      from borrower’s paycheck. Please see attached the HUD-1.
      § OIG Evaluation of Auditee Comments: Cendant stated that the borrower only needed
           $781.81 to close per the HUD-1. This reduced figure is due, in part, to an earnest
           money deposit of $1,350. The earnest money deposit exceeded 2 percent of the sales
           price and was not properly verified. The underwriter approved this loan with the
           information available to him or her at that time, which stated that the borrower needed
           $1,786.32 to close and could only provide evidence of $737.78 in assets.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. If the amount of the earnest money
               deposit exceeds 2 percent of the sales price, the lender must verify the deposit
               amount and the source of funds. Satisfactory documentation includes a copy of the
               borrower's cancelled check. This file did not contain adequate evidence of the
               funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $1,721.55 per month. The pay stubs
   provided verified $1,300 per month. Cendant did not obtain a verbal or written verification
   of employment. Cendant did not obtain the required explanation from the borrower for the
   gap in employment from October 1998 until January 1999.

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                                                                                       Appendix E


   o Auditee Comments: Documentation in the file supported the income used. The borrower
     was qualified on $1300 per month which is supported by two years W-2s and current
     paystubs. The resulting ratios should be 25.60 and 25.60 respectively which is within
     FHA guidelines. It is Cendant’s policy to obtain a verbal verification prior to closing.
     Documentation of this verification could not be located in the file. In error, the Mortgage
     Credit Analysis Worksheet was not updated prior to closing. Please see attached W-2s,
     current paystubs and updated MCAW.
     § OIG Evaluation of Auditee Comments: Cendant agreed that they could support
         borrower income of $1,300. Furthermore, they state that the borrower qualified for
         this loan based on the $1,300 income figure. However, the Insurance Application
         Results worksheet, which should mirror the information used to obtain approval for
         the mortgage loan, states that the income used to qualify the borrower is $1,722.
         Cendant also did not evidence the verification of employment or obtain an
         explanation for the recent gap in employment. Therefore, the lender did not properly
         verify the borrower’s income.
         Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
             Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
             Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
             repay the mortgage debt. Income from a source that cannot be verified, is not
             stable, or will not continue should not be used when calculating the borrower’s
             income ratios. Part 2-6 states, “the lender must verify the borrower's employment
             for the most recent two full years.” According to Chapter 3, income verification
             must be done through a written Verification of Employment and the most recent
             pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
             Employment, and Internal Revenue Service form 8821. This loan did not contain
             the necessary income verification documentation.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated he would receive a gift of $1,500, but the only
    documentation in the file was a blank gift letter.
    o Auditee Comments: No gift documentation was required to be verified because the
        source of funds was not a gift.
        § OIG Evaluation of Auditee Comments: The borrower did not have sufficient funds to
            close the loan. The only assets documented were $737.78 in a checking account.
            There is also an unverified earnest money deposit of $1,350. There is incomplete gift
            letter documentation for a gift of $1,500 in the file and the only bank statement in the
            file does not show enough assets to close.
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                 Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                 Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                 of the funds from the donor to the borrower. Acceptable procedures include
                 obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                 borrower's deposit slip or bank statement showing the deposit. If the funds are not
                 deposited to the borrower's account prior to closing, the lender must obtain

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Appendix E


               verification the closing agent received funds from the donor for the amount of the
               gift. The file must also contain a gift letter specifying the dollar amount, signed
               by the donor and the borrower, stating no repayment is required, and showing the
               donor's name, address, telephone number, and relationship to the borrower.” This
               file did not contain all the necessary documentation required when a borrower is
               using gift funds.




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                                                                                       Appendix E


FHA Case Number: 291-2618046

Insured Amount: $98,569

Section of Housing Act: 203(b)

Date of Loan Closing: 07/19/99

Current Status: Repayment; Prior: Default status after 0 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the application and on the Mortgage Credit Analysis Worksheet was $3,305.84
   per month. The pay stubs available verified $2,932.80 per month.
   o Auditee Comments: The income was properly verified as required by FHA guidelines.
       The income verified was $3,505.57 per month. The borrower’s income was calculated
       from the YTD earnings of $21,033.42 including overtime, and a paycheck dated 7/9/99.
       The borrower has a history of receiving overtime as evidenced by his previous year 1040
       earnings. The income was verified but the Mortgage Credit Analysis Worksheet was not
       updated in error. Please see attached MCAW, paystubs, verbal VOE and 1040.
       § OIG Evaluation of Auditee Comments: Cendant provided additional information not
           previously contained in the case binder that they state justifies using a higher monthly
           income based on overtime. However, to use overtime income, the lender must gather
           two years worth of supporting documentation to determine an average amount of
           overtime earned in a year. In this case, using the additional documentation provided,
           the base salary of $16.92 equates to a monthly base salary of $2,933. The pay stub
           also showed year to date overtime. To be able to include overtime income, the lender
           must adhere to the regulations regarding overtime found in HUD Handbook 4155.1,
           Chapter 2-7, Section A (see below). Cendant did not verify 2 full years overtime
           income nor did the underwriter document the reason for using the overtime over a
           shorter period of time.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 says “the lender must verify the borrower's employment
               for the most recent two full years.” Part 2-7 A states that overtime and bonus
               income may be used if “the borrower has received such income for approximately
               the past two years and there are reasonable prospects of its continuance. The
               lender must develop an average of bonus or overtime income for the past two
               years and the employment verification must not state categorically that such
               income is not likely to continue. Periods of less than two years may be acceptable
               provided the underwriter adequately justifies and documents his or her reason for


                                           Page 123                                   2003-KC-1001
Appendix E


               using the income for qualifying purposes.” This loan did not contain the
               necessary income verification documentation.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet were 25.99 percent and 39.17 percent. Had they used the correct income
   figure the ratios would have been 29 percent and 44 percent. There were no compensating
   factors listed because their ratio calculations were inaccurate.
   o Auditee Comments: The ratios are consistent with FHA guidelines and no compensating
       factors are required. Using the revised income of $3505.57 per month, the ratios are
       24.52 and 36.93 respectively which are well within the guidelines. Please see attached
       updated MCAW.
       § OIG Evaluation of Auditee Comments: This is dependant upon the income used.
           Cendant’s ratios are adequate using the income including overtime. Our ratios are
           correct using income not including overtime. Since overtime was not adequately
           documented, it should not be included in the ratio calculations.
           Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
                REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
                Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
                (1) Mortgage payment expense to effective income. If the total mortgage payment
                does not exceed 29 percent of gross effective income, the relationship of the
                mortgage payment to income is considered acceptable. A ratio exceeding 29
                percent may be acceptable if significant compensating factors are presented.” and
                “(2) Total fixed payment to effective income. If the total mortgage payment and
                all recurring charges do not exceed 41 percent of gross effective income, the
                relationship of total obligations to income is considered acceptable. A ratio
                exceeding 41 percent may be acceptable if significant compensating factors are
                presented.” This file contained ratios that were above the acceptable limit without
                providing adequate compensating factors.




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                                                                                      Appendix E


FHA Case Number: 291-2620345

Insured Amount: $51,380

Section of Housing Act: 203(b)

Date of Loan Closing: 07/15/99

Current Status: Servicing Transferred or Sold; Prior: Default status after 0 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $3,332.34 per month. The pay stubs
   available verified $2,955.71 per month. There was no verification of employment.
   o Auditee Comments: The income was properly verified as required by FHA guidelines.
       The income disclosed is accurate. The borrower’s base pay as disclosed on both
       paychecks is $769 per week. This amount multiplied by 52 and divided by 12 =
       $3,332.33 per month. In addition, W-2s for 1997 and 1998 were in the file. It is
       Cendant’s policy to obtain a verbal verification prior to closing as required when
       alternative documentation is used however documentation of this verification was not
       located in the file. Please see attached W-2s and paystubs.
       § OIG Evaluation of Auditee Comments: When we divided the year to date income by
           5 and one half months, we determined that during the current year the average income
           was $2,955.71. We compared this to the monthly income indicated by the two prior
           years’ W-2s. These indicated a monthly income of $2,000.19 for 1998 and $1,907.54
           for 1997. These are considerably lower monthly incomes that the 1999 figure.
           Therefore, to be conservative, we used $2,955.71 rather than $3,333.34. We will not,
           however, take issue with the lenders method of calculating income for this borrower.
           The lender did concede that the file did not contain the required verification of
           employment.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). This loan did not contain
               the necessary income verification documentation.


                                           Page 125                                   2003-KC-1001
Appendix E


FHA Case Number: 291-2629032

Insured Amount: $42,152

Section of Housing Act: 203(b)

Date of Loan Closing: 08/10/99

Current Status: Property conveyed to insurer; HUD incurred a loss of $18,911. Prior: Default
status after 9 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,374.75 and the borrower provided evidence of available funds of only $16.18.
   o Auditee Comments: None
      § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $1,602 per month. The Social
   Security statement provided verified $1,182.20 per month. Further, the statement provided
   was for 1998, and this loan closed in August 1999. Cendant did not do any further
   verification of this income.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of

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                                                                                      Appendix E


               Employment confirming 2-year employment history, only base pay used to
               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower provided a gift letter for $2,800, but did not include proof of
    transfer or proof of the gift donor’s ability to pay.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                of the funds from the donor to the borrower. Acceptable procedures include
                obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                borrower's deposit slip or bank statement showing the deposit. If the funds are not
                deposited to the borrower's account prior to closing, the lender must obtain
                verification the closing agent received funds from the donor for the amount of the
                gift. The file must also contain a gift letter specifying the dollar amount, signed
                by the donor and the borrower, stating no repayment is required, and showing the
                donor's name, address, telephone number, and relationship to the borrower.” This
                file did not contain all the necessary documentation required when a borrower is
                using gift funds.




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Appendix E


FHA Case Number: 291-2637386

Insured Amount: $80,459

Section of Housing Act: 203(b)

Date of Loan Closing: 09/03/99

Current Status: Foreclosure completed; there is no loss information available at this time. Prior:
Default status after 12 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain 2 years verification of
   employment. Cendant obtained retirement and Social Security benefits letters from the
   borrowers. Cendant should have obtained verification directly from the source, or through
   federal tax returns, rather than having the documentation pass through the borrowers.
   o Auditee Comments: The income was properly verified as required by FHA guidelines.
       Retirement and Social Security income requires verification from the source. The
       borrower income was derived from a retirement fund and Social Security. The retirement
       fund income was documented by means of a fax directly from the retirement fund to
       Cendant. That amount is an automatic deposit into the bank account as indicated on the
       bank statement which confirms its receipt. The Social Security print out from the Social
       Security Administration is verification from the source. Its receipt is documented with
       the bank statement showing that the Social Security payment is also received by
       automatic deposit. Please see attached fax from Retirement Fund, banks statement
       showing the automatic deposits and print our for the Social Security office.
       § OIG Evaluation of Auditee Comments: Cendant stated that by verifying direct
           deposits into the borrowers bank account, that they have sufficiently documented the
           source of the funds. We agree with this assertion.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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                                                                                       Appendix E


FHA Case Number: 291-2638982

Insured Amount: $45,271

Section of Housing Act: 203(b)

Date of Loan Closing: 10/12/99

Current Status: Reinstated by mortgagor who retains ownership, Prior: Default status after 6
payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the application and on the Mortgage Credit Analysis Worksheet was $2,238.07
   per month. The pay stubs available verified less than $1,900 per month.
   o Auditee Comments: The income was properly verified as required by FHA guidelines.
       The documentation in the file supports income of $1,837.05 per month. The income was
       calculated at the conservative figure of $1837.05 per month not including the additional
       pay for weekends (since there was no indication of what the borrower’s schedule
       included). Using this income, it would provide ratios at 22.89 and 38.73 respectively,
       which complies with FHA guidelines. In error, the Mortgage Credit Analysis Worksheet
       was not updated to reflect this income. See attached updated MCAW and income
       information.
       § OIG Evaluation of Auditee Comments: Cendant modified the Mortgage Credit
           Analysis Worksheet (MCAW) to reflect the income in our finding. This loan was
           submitted to Loan Prospector (LP) with the higher income figure. The third and final
           LP feedback sheet in the file, dated 8/10/99, used an income of $2,666.67 and the
           Insurance Application Results, dated 08/24/99, showed income of $2,238. Neither of
           these income amounts is supported.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 says “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
               Employment confirming 2-year employment history, only base pay used to
               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.

                                           Page 129                                   2003-KC-1001
Appendix E



Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability. Furthermore, the non-purchasing spouse’s name is on the
   retirement statement. These are co-owned assets that were used to close the loan. The lender
   has no way of knowing what portion of those assets the borrower has available to him nor
   what other debts of the non-purchasing spouse are to be paid out of those assets.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
        waive their homestead interest in the property and create a valid first lien as permitted and
        required by FHA guidelines. The HUD Handbook 4155.1, Rev—4, chg.1 Chapter 2-2,
        Part D states: “Nonpurchasing spouses: If required by state law in order to perfect a valid
        and enforceable first lien, the nonpurchasing spouse may be required to either sign the
        security instrument or documentation evidencing that he or she is relinquishing all rights
        to the property. If the nonpurchasing spouse executes the security instrument for such
        reasons, he or she is not considered a borrower for our purposes and need not sign the
        loan application. In all other cases, the nonpurchasing spouse is not to appear on the
        security instrument or otherwise take title to the property at loan settlement.” The spouse
        was not on the title to the property but signed the Deed of Trust to create a valid first lien.
        It was proper that the name did not appear on the loan application or the note. Assets to
        close which were co-owned by the non-purchasing spouse were verified as required by
        FHA guidelines. There are no additional FHA requirements to verify co-owned assets.
        Co-owners have equal access to 100 percent of the funds in the account.
        § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
            non-purchasing spouse should sign the Deed of Trust to create a valid first lien. We
            still take issue with the fact that the some of the assets are owned by the non-
            purchasing spouse. The borrower’s name does not appear on the retirement account.
            The Loan Prospector feedback sheet in the file shows that the loan was approved with
            $3,000 in retirement accounts. Therefore, we are changing this violation in the
            Finding and on Appendix D to reflect not enough assets to close.
            Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
                 Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                 Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
                 property must be verified.” The lender must insure that the borrower has
                 sufficient funds available to close the loan. This file did not contain adequate
                 evidence of the funds needed to close.




2003-KC-1001                                 Page 130
                                                                                       Appendix E


FHA Case Number: 291-2648497

Insured Amount: $48,345

Section of Housing Act: 203(b)

Date of Loan Closing: 11/19/99

Current Status: Delinquent 90 days or more; Prior: Default status after 10 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,046.45 and the file did not have any asset information.
   o Auditee Comments: None
      § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the application and on the Mortgage Credit Analysis Worksheet was $1,900 per
   month. There were no pay stubs available to verify this income. The W-2 provided for 1998
   had a yearly income of $21,508.50 or $1,792.37 per month. There was also no verification of
   current or previous employment.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violations: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
               Employment confirming 2-year employment history, only base pay used to

                                           Page 131                                   2003-KC-1001
Appendix E


               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.

W-2 Different Name/Address or Not Provided:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information provided on
  the W-2s submitted by the borrower was correct. The application stated that the borrowers
  previous addresses were at two locations that did not agree with the address where his W-2s
  were mailed.
  o Auditee Comments: The W-2s were correct and consistent with other documentation in
      the file. The address on the W-2s matched the previous address disclosed on the credit
      report. This address was omitted from the application in error. Please see attached credit
      report and W-2s.
      § OIG Evaluation of Auditee Comments: Cendant provided documentation that showed
          the address on the W-2s was the same as the address listed on the credit report. We
          will drop this issue from our finding.
          Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant did not verify the gift information provided by the borrower.
    The application listed $3,000 as a gift from the borrower’s brother. There was no
    documentation of this gift in the file.
    o Auditee Comments: No gift documentation was required to be verified because the
       source of funds was not a gift. No gift funds were documented because the borrower
       indicated that they were not going to use gift funds, they had the cash at home. In error,
       the Mortgage Credit Analysis Worksheet was not updated. Please see attached notes.
       § OIG Evaluation of Auditee Comments: We concur that the borrower stated that they
           were not going to use the gift but were instead using money saved from earnings. We
           removed this item from our list of deficiencies.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




2003-KC-1001                               Page 132
                                                                                     Appendix E


FHA Case Number: 291-2653366

Insured Amount: $44,632

Section of Housing Act: 203(b)

Date of Loan Closing: 11/05/99

Current Status: Property conveyed to insurer; HUD incurred a loss of $26,965. Prior: Default
status after 3 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $3,952.92 per month. The pay stubs
   provided verified $3,684.42 per month (borrower’s income of $2,953.42 and co-borrower’s
   income of $731 per month). Cendant did not obtain a verbal or written verification of
   employment.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
              Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
              Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
              repay the mortgage debt. Income from a source that cannot be verified, is not
              stable, or will not continue should not be used when calculating the borrower’s
              income ratios. Part 2-6 states, “the lender must verify the borrower's employment
              for the most recent two full years.” According to Chapter 3, income verification
              must be done through a written Verification of Employment and the most recent
              pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
              Employment, and Internal Revenue Service form 8821. This loan did not contain
              the necessary income verification documentation.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet after using the correct income calculations and the correct amount of
   monthly liabilities were 11 percent and 42 percent. There were no compensating factors
   because the original ratios calculated on the worksheet were within the guidelines.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
              REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
              Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
              (1) Mortgage payment expense to effective income. If the total mortgage payment
              does not exceed 29 percent of gross effective income, the relationship of the
              mortgage payment to income is considered acceptable. A ratio exceeding 29

                                           Page 133                                  2003-KC-1001
Appendix E


               percent may be acceptable if significant compensating factors are presented.” and
               “(2) Total fixed payment to effective income. If the total mortgage payment and
               all recurring charges do not exceed 41 percent of gross effective income, the
               relationship of total obligations to income is considered acceptable. A ratio
               exceeding 41 percent may be acceptable if significant compensating factors are
               presented.” This file contained ratios that were above the acceptable limit without
               providing adequate compensating factors.




2003-KC-1001                               Page 134
                                                                                      Appendix E


FHA Case Number: 291-2658702

Insured Amount: $92,105

Section of Housing Act: 203(b)

Date of Loan Closing: 11/23/99

Current Status: Partial reinstatement; Prior: Default status after 0 payments.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower provided a gift letter for $6,500 and proof of transfer, but did not
    include proof of the gift donor’s ability to pay.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 Part C states that “the lender must document the transfer
               of the funds from the donor to the borrower. Acceptable procedures include
               obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
               borrower's deposit slip or bank statement showing the deposit. If the funds are not
               deposited to the borrower's account prior to closing, the lender must obtain
               verification the closing agent received funds from the donor for the amount of the
               gift. The file must also contain a gift letter specifying the dollar amount, signed
               by the donor and the borrower, stating no repayment is required, and showing the
               donor's name, address, telephone number, and relationship to the borrower.” This
               file did not contain all the necessary documentation required when a borrower is
               using gift funds.




                                           Page 135                                   2003-KC-1001
Appendix E


FHA Case Number: 291-2658731

Insured Amount: $79,959

Section of Housing Act: 203(b)

Date of Loan Closing: 12/09/99

Current Status: First Legal Action to Foreclose; Prior: Default status after 14 payments.

Not Enough Assets To Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $3,965.36 and the documentation provided supported $2,671.12 in assets available to
   close the loan.
   o Auditee Comments: Sufficient funds to close were verified as required by FHA
       guidelines. Sufficient funds to close the loan are documented in the file. The auditors
       confirmed that $2,671.12 was supported by documentation in the file. The HUD-1
       Statement disclosed that the borrower needed $2,003.38 to close. In error, the Mortgage
       Credit Analysis Worksheet was not updated prior to closing. Please see attached HUD-1.
       § OIG Evaluation of Auditee Comments: Cendant provided evidence that the borrower
           had $2,671.12 to close the loan and per the HUD-1 Settlement Statement, only needed
           $2,003.38 to close. However, the loan was approved based on the figures provided on
           the Mortgage Credit Analysis Worksheet (MCAW). The MCAW indicated that the
           borrower needed $3,965.36 to close. Additionally, the Loan Prospector feedback
           sheet shows the loan was approved with $2,271.50 in reserves available after the
           payment of the downpayment and closing costs. Cendant did not verify the assets
           used on either of these documents.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   There was no written or verbal verification of employment from the employer.
   o Auditee Comments: Income was verified as required by FHA guidelines. Alternative
       documentation in lieu of a Verification of Employment form includes a recent computer
       generated pay stub, with year-to-date earnings specified and 2 years' W2s which are in the
       file. It is Cendant’s policy to obtain a verbal verification of employment prior to closing
       but the documentation of it could not be located in the file. Please see attached W-2s and
       paystubs.


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                                                                               Appendix E


§   OIG Evaluation of Auditee Comments: Cendant did not dispute that there was no
    verification of employment located in the file.
§   Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
    Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family Properties,
    Chapter 2, requires that the lender establish the borrower’s capacity to repay the
    mortgage debt. Income from a source that cannot be verified, is not stable, or will not
    continue should not be used when calculating the borrower’s income ratios. Part 2-6
    states “the lender must verify the borrower's employment for the most recent two full
    years.” According to Chapter 3, income verification must be done through a written
    Verification of Employment and the most recent pay stub, or 1 month’s pay stubs, 2
    years’ W-2(s), a verbal Verification of Employment, and Internal Revenue Service
    form 8821. According to Loan Prospector documentation requirements, acceptable
    loans must have a verbal Verification of Employment, most recent year to date pay
    stub documenting one full month’s earnings, and most recent 2 years’ W-2(s). A
    Verification of Employment confirming 2-year employment history, only base pay
    used to qualify, and Internal Revenue Service form 8821 can be substituted for the W-
    2(s). This loan did not contain the necessary income verification documentation.




                                    Page 137                                  2003-KC-1001
Appendix E


FHA Case Number: 291-2663101

Insured Amount: $64,866

Section of Housing Act: 203(b)

Date of Loan Closing: 01/12/00

Current Status: Foreclosure completed; there is no loss information available at this time. Prior:
Default status after 8 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $2,726.88 per month. The year to
   date information on the pay stubs supports a total income of $2,400 per month. They
   included the borrower’s overtime in calculating income, however the 2 previous years W-2s
   indicate the borrower’s monthly income including overtime was only $2,231.42.
   o Auditee Comments: Income was verified as required by FHA guidelines. The auditors
       verified that $2400 of documented income was retained in the file. Based on this income,
       the ratios are 23.11 percent and 49.11 percent respectively. The following compensating
       factors supported these ratios: 1. There is only a minimal increase in customer’s housing
       expense. 2. The customer has substantial cash reserves after closing. 3. The customer
       has potential for increased earnings not using the rental or dividend incomes.
       Additionally, the auditor’s conclusion that the borrower’s W-2 income for previous year
       including overtime is less than the current year did not make a significant difference in
       the calculation of the income. The difference from one year to another is $168.50, which
       at his current rate of pay accounts for 13.67 hours or 1.5 day’s labor. Please see updated
       MCAW and earnings statements.
       § OIG Evaluation of Auditee Comments: Cendant agreed that the pay stubs reflect an
           income of $2,400 and the ratios at that income level are 23 percent and 49 percent.
           The compensating factors that were given on the Mortgage Credit Analysis
           Worksheet (MCAW) are 1) Reserves Available, 2) High Credit Scores, and 3) Low
           Ratios. Cendant’s response that the compensating factors are 1) Minimal Increase in
           Housing Expense (from $237 to $554), 2) Substantial Cash Reserves ($3,000 in cash
           hid from his wife during their divorce), and 3) Potential for Increase Earnings.
           Regardless of any compensating factors, the fact remains that the loan was approved
           using an unsupported income amount. The most recent Loan Prospector Submission
           (#6) in the file used an income of $3,326. The MCAW and the Insurance Application
           Results sheet, which should mirror those figures input into Loan Prospector, show an
           income of $2,726. Neither of these income amounts is supported.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s

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                                                                                   Appendix E


              income ratios. Part 2-6 says “the lender must verify the borrower's employment
              for the most recent two full years.” According to Chapter 3, income verification
              must be done through a written Verification of Employment and the most recent
              pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
              Employment, and Internal Revenue Service form 8821. According to Loan
              Prospector documentation requirements, acceptable loans must have a verbal
              Verification of Employment, most recent year to date pay stub documenting one
              full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
              Employment confirming 2-year employment history, only base pay used to
              qualify, and Internal Revenue Service form 8821 can be substituted for the W-
              2(s). This loan did not contain the necessary income verification documentation.

W-2 Problem:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information provided on
  the W-2s submitted by the borrower was correct. The application stated that the borrower’s
  previous address was at one location while the W-2s were mailed to a different address.
  o Auditee Comments: The W-2s were consistent with other documentation in the file. The
      borrower’s address on the W-2s is “21413 Foliage Road” which was the borrower’s
      former address as indicated on the Circuit Court order regarding the dissolution of
      marriage. The borrower’s 10/29 paycheck is addressed to 21413 Foliage Rd. The
      paycheck dated 11/26 is addressed to 1826 Empire which is the address reflected as the
      previous address on the application. Included in the 11/26 paycheck is a section titled
      Important Notes which states: EFFECTIVE THIS PAY PERIOD YOUR ADDRESS
      HAS BEEN CHANGED. The borrower had been through a divorce and the W-2s
      reflected the address of his previous marital residence. The borrower also had a rental
      property (216 S. Byers) that was also a former address listed on the application. See
      attached W-2s, court order and paystubs.
      § OIG Evaluation of Auditee Comments: Cendant adequately explained the apparent
          address discrepancy. Therefore, we will remove this issue from the finding.
          Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




                                         Page 139                                  2003-KC-1001
Appendix E


FHA Case Number: 291-2664113

Insured Amount: $53,972

Section of Housing Act: 203(b)

Date of Loan Closing: 12/28/99

Current Status: Property conveyed to insurer, Prior: Default status after 9 payments, HUD paid
a claim of $58,349.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $2,704.80 per month. The year to
   date information on the pay stubs supports a total income of $2,657.21 per month. There was
   no verification of employment from the employer or copies of W-2s.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
               Employment confirming 2-year employment history, only base pay used to
               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.




2003-KC-1001                               Page 140
                                                                                       Appendix E


FHA Case Number: 291-2664641

Insured Amount: $61,493

Section of Housing Act: 203(b)

Date of Loan Closing: 02/05/00

Current Status: Paid in full, Prior: Default status after 11 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $5,522.48 and the borrower’s bank statement only showed cash available of $1,895.78.
   Although the title company confirmed $3,600 in escrow, because it exceeded 2% of the sales
   price ($1240), Cendant was required to verify the source of the funds, but did not.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

W-2 Problem:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information provided on
  the W-2s submitted by the borrower was correct. The application stated that the borrower’s
  previous address was a location that did not agree with the W-2s.
  o Auditee Comments: W-2s are supported by documentation in the file. The auditors
      commented that the application stated that the borrower’s previous address was a location
      that did not agree with the W-2s. The previous address on the application matches the
      address on the W-2s (1731 Missouri). In addition, the landlord reference provides
      information about this address as well as other addresses that may have been used
      including a Minnesota address. Please see attached W-2s, application and landlord letter.
      § OIG Evaluation of Auditee Comments: Cendant adequately explained the apparent
          address discrepancy. Therefore, we will remove this issue from the finding.
          Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet were 31.66 percent and 41.58 percent. There were no compensating
   factors.
   o Auditee Comments: None

                                           Page 141                                   2003-KC-1001
Appendix E


       §   OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
              REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
              Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
              (1) Mortgage payment expense to effective income. If the total mortgage payment
              does not exceed 29 percent of gross effective income, the relationship of the
              mortgage payment to income is considered acceptable. A ratio exceeding 29
              percent may be acceptable if significant compensating factors are presented.” and
              “(2) Total fixed payment to effective income. If the total mortgage payment and
              all recurring charges do not exceed 41 percent of gross effective income, the
              relationship of total obligations to income is considered acceptable. A ratio
              exceeding 41 percent may be acceptable if significant compensating factors are
              presented.” This file contained ratios that were above the acceptable limit without
              providing adequate compensating factors.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability. Furthermore, the non-purchasing spouse’s name is on the bank
   statement. These are co-owned assets that were used to close the loan. The lender has no
   way of knowing what portion of those assets the borrower has available to him nor what
   other debts of the non-purchasing spouse are to be paid out of those assets.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           non-purchasing spouse is required to sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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                                                                                      Appendix E


FHA Case Number: 291-2666621

Insured Amount: $58,914

Section of Housing Act: 203(b)

Date of Loan Closing: 01/20/00

Current Status: Partial claim submitted; Prior: Default status after 10 payments.

W-2 Problem:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain the required W-2s from the
  borrower. Cendant obtained a written verification of employment from his current employer
  covering one year. Cendant needed to document 2 full years employment.
  o Auditee Comments: None
      § OIG Evaluation of Auditee Comments: N/A
          Ø Violation: W-2 information was not provided or was incorrect. HUD Handbook
              4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
              to-Four-Family Properties, Chapter 3-1 Part E. states that “as an alternative to
              obtaining a Verification of Employment, the lender may choose to obtain from the
              borrower original pay stub(s) covering the most recent thirty-day period, along
              with original copies of the previous two years' Internal Revenue Service W-2
              forms.” This file did not contain a written Verification of Employment covering
              two years, and therefore, should have contained two years’ Internal Revenue
              Service W-2 forms.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated he would receive a gift of $300, but only submitted a
    partially completed gift letter as documentation.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                of the funds from the donor to the borrower. Acceptable procedures include
                obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                borrower's deposit slip or bank statement showing the deposit. If the funds are not
                deposited to the borrower's account prior to closing, the lender must obtain
                verification the closing agent received funds from the donor for the amount of the
                gift. The file must also contain a gift letter specifying the dollar amount, signed
                by the donor and the borrower, stating no repayment is required, and showing the
                donor's name, address, telephone number, and relationship to the borrower.” This
                file did not contain all the necessary documentation required when a borrower is
                using gift funds.

                                           Page 143                                   2003-KC-1001
Appendix E


FHA Case Number: 291-2676939

Insured Amount: $50,037

Section of Housing Act: 203(b)

Date of Loan Closing: 02/29/00

Current Status: Delinquent 90 days or more; Prior: Default status after 3 payments.

Not Enough Assets To Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not insure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $1,514.06, but the borrower could only provide evidence of $1,182.54.
   o Auditee Comments: Sufficient funds to close were verified as required by FHA
      guidelines. The auditors noted that $1,514.06 was required at closing. As indicated on
      the Mortgage Credit Analysis Worksheet, this was the amount required without including
      the escrow deposit made by the borrower. The auditors noted that evidence of assets of
      $1,182.54 was retained in the file. In addition, the borrower also paid an escrow deposit
      of $400 as disclosed on the sales contract. The verified assets and the escrow deposit
      equal $1,582.00 which is more than the funds required to close the loan. Please see
      attached MCAW and sales contract.
      § OIG Evaluation of Auditee Comments: Cendant concurred with the auditor
           calculation that the assets verified equal $1,182.54. Cendant further stated that the
           borrower provided evidence of an additional $400 in escrow. However, this amount
           was included in the auditor’s calculation of the $1,182.54.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Indicators of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. The
    processor recorded a verbal verification of employment. The party that verified this
    employment was also in our sample as having a defaulted loan. There is no evidence that the
    lender attempted to verify the verification of employment through other means.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. It would not be possible for us to know in advance that anyone contacted to
        verify employment was going to default on their loan with us.
        § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that this
            is not an issue that the lender would have pursued.
            Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.


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                                                                                       Appendix E


FHA Case Number: 291-2679600

Insured Amount: $51,943

Section of Housing Act: 203(b)

Date of Loan Closing: 03/02/00

Current Status: Delinquent 90 days or more; Prior: Default status after 5 payments

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on discrepancies. The borrower’s address on
    the W-2 and pay stubs was different from the address given on the Residential Loan
    Application.
    o Auditee Comments: The W-2s are consistent with other documentation in the file. The
        address on the loan application was 208 North Roney St. The address on the 401K
        account statements is also 208 North Roney St. This address was verified independently
        on the credit report which indicates it was reported as his address as of January 1999.
        The address on the W-2s is 2830 East 11th Street. This address was verified
        independently on the credit report as of June 1998. Please see attached 401K statement
        and credit report.
        § OIG Evaluation of Auditee Comments: Cendant adequately explained the apparent
            address discrepancy. Therefore, we will remove this issue from the finding.
            Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           non-purchasing spouse should sign the Deed of Trust to create a valid first lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




                                            Page 145                                   2003-KC-1001
Appendix E


FHA Case Number: 291-2684232

Insured Amount: $119,019

Section of Housing Act: 203(b)

Date of Loan Closing: 04/28/00

Current Status: Reinstated by mortgagor; Prior: Default status after 6 payments

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The Mortgage Credit Analysis Worksheet stated that the total due at
   closing was $5,340.51, but the borrower’s file does not provide proof of transfer for the
   $6,000 gift listed on the Residential Loan Application.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet calculations were 16.02 percent and 42.34 percent; after recalculation,
   the ratios were 16.02 percent and 44.62 percent. Acceptable ratios are 29 percent and below,
   and 41 percent and below. The MCAW did not have adequate compensating factors. Good
   income and the gift of $6000 were listed as the compensating factors; neither of these are
   listed as acceptable compensating factors in HUD Handbook 4155.1, Section 5 “Borrower
   Qualifying”, Subsection 2-13 “Compensating Factors”.
   o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
               REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
               Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
               (1) Mortgage payment expense to effective income. If the total mortgage payment
               does not exceed 29 percent of gross effective income, the relationship of the
               mortgage payment to income is considered acceptable. A ratio exceeding 29
               percent may be acceptable if significant compensating factors are presented.” and
               “(2) Total fixed payment to effective income. If the total mortgage payment and
               all recurring charges do not exceed 41 percent of gross effective income, the
               relationship of total obligations to income is considered acceptable. A ratio

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                                                                                      Appendix E


               exceeding 41 percent may be acceptable if significant compensating factors are
               presented.” This file contained ratios that were above the acceptable limit without
               providing adequate compensating factors.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. Cendant did obtain a gift letter for $6,000 and verify the deposit of the gift
    funds to the borrower’s account, but did not verify that the donor was the one who provided
    the funds.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                of the funds from the donor to the borrower. Acceptable procedures include
                obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                borrower's deposit slip or bank statement showing the deposit. If the funds are not
                deposited to the borrower's account prior to closing, the lender must obtain
                verification the closing agent received funds from the donor for the amount of the
                gift. The file must also contain a gift letter specifying the dollar amount, signed
                by the donor and the borrower, stating no repayment is required, and showing the
                donor's name, address, telephone number, and relationship to the borrower.” This
                file did not contain all the necessary documentation required when a borrower is
                using gift funds.




                                           Page 147                                   2003-KC-1001
Appendix E


FHA Case Number: 291-2685079

Insured Amount: $57,617

Section of Housing Act: 203(b)

Date of Loan Closing: 04/28/00

Current Status: Property conveyed to insurer; HUD paid a claim of $59,179; there is no loss
information available at this time. Prior: Default status after 10 payments.

Not Enough Assets To Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing was $1,828.31, but the borrower could only
   provide evidence of $1,765.96. In addition, the bank statements provided were only for a
   partial month.
   o Auditee Comments: Sufficient funds to close the loan were verified as required by FHA
       guidelines. The source of funds for closing was from her 1999 1040 return showing a
       refund in the amount of $5211.00 more than what would be required by the original or a
       revised Mortgage Credit Analysis Worksheet. The auditors confirmed that the borrower
       provided evidence of $1,765.96 in the file. In error, the MCAW was not updated to
       reflect a change in the funds required for closing. The attached HUD-1 disclosed that at
       closing the borrow needed to provide $1,102.07 in addition to funds she had previously
       paid - $300 deposit of escrow money, $375 paid outside of closing to Cendant for the
       appraisal. These funds total $1,779.07. Please see attached HUD-1,1999 1040 return and
       Agreement of Sale evidencing $300 in escrow money received.
       § OIG Evaluation of Auditee Comments: According to the documentation in the file,
           the borrower had $1,765.96 in a checking and a savings account and needed
           $1,828.31 to close the loan. Cendant provided additional documentation stating that
           the borrower did have enough funds to close. Cendant provided an IRS form faxed
           on 02/26/2002 from “US Tax Inc” which showed that the borrower received a tax
           refund of $5,211. There is no indication on what date those funds were received by
           the borrower, so we do not know if the funds were reflected on the bank statements
           provided (i.e.: were they received and spent before the bank statement was printed).
           Cendant stated that they had erroneously neglected to update the Mortgage Credit
           Analysis Worksheet (MCAW) to reflect lower closing costs. The closing costs
           required by the revised MCAW total $1,779.07. This amount is still greater than the
           amount verified in the borrowers checking and saving accounts. Cendant states that
           the borrower previously paid $300 in an earnest money deposit and $375 for a credit
           report. There is no indication when these funds were paid to determine if the bank
           statement balances are before or after these payments. Furthermore, the lender did
           not obtain bank statements indicating the balances for the current and previous
           months. One account covered a period of two days and the other account covered a
           period of 12 days. Therefore, the assets required to close are not verified properly.


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                                                                          Appendix E


Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
  Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
  Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
  property must be verified.” The lender must insure that the borrower has
  sufficient funds available to close the loan. This file did not contain adequate
  evidence of the funds needed to close.




                                Page 149                                  2003-KC-1001
Appendix E


FHA Case Number: 291-2688660

Insured Amount: $33,320

Section of Housing Act: 203(b)

Date of Loan Closing: 04/17/00

Current Status: Property conveyed to insurer; HUD incurred a loss of $11,775. Prior: Default
status after 8 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $2,505.29 per month. The pay stubs
   available verified $2,338.53. A verification of employment was not obtained.
   o Auditee Comments: Income was verified as required by FHA guidelines. The income
       disclosed on the Mortgage Credit Analysis Worksheet was supported by the borrower’s
       salary and bonus income. It is Cendant’s policy to obtain a VOE or alternative
       documentation of employment. It appeared that a copy of the VOE obtained prior to
       closing could not be located in the file. In a post closing audit of the file, a VOE was
       obtained which verified employment since 1996. Please see attached VOE, W-2s and
       paystubs.
       § OIG Evaluation of Auditee Comments: Cendant stated that the income figure was
           based on bonus income as well as regular income. To use bonus or overtime income,
           the lender must establish a trend analysis based on income received over the last two
           years. In this case, the borrower earned $25,167.34 in 1998, $28,978.22 in 1999, and
           $6,136.26 year to date in 2000. The average of this income for 26.5 months is only
           $2,274.79 per month. The lender also acknowledged that a verification of
           employment could not be located in the file. While the lender has provided one after
           the date of closing, there should have been one available for the underwriter to review
           prior to closing the loan.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. Chapter 2-7 A states that
               overtime or bonus income may be used to qualify if the borrower has received
               such income for approximately the past two years and there are reasonable
               prospects of its continuance. The lender must develop an average of bonus
               income and the employment verification must not state categorically that such

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                                                                                      Appendix E


               income is not likely to continue. An earnings trend must also be established for
               either source of income. This loan did not contain the necessary income
               verification documentation.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability. Furthermore, the non-purchasing spouse is the only name on
   the bank statement. These are assets in the name of the borrower’s spouse that were used to
   close the loan. The lender has no way of knowing what portion of those assets the borrower
   has available to him nor what other debts of the non-purchasing spouse are to be paid out of
   those assets.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: Cendant did not dispute this issue, however,
           we concur with Cendant’s earlier assertion that the non-purchasing spouse is required
           to sign the Deed of Trust to create a valid lien. Therefore, we will re-categorize this
           issue as an asset problem and eliminate the non-purchasing spouse issue from the
           finding.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.




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Appendix E


FHA Case Number: 291-2698855

Insured Amount: $49,445

Section of Housing Act: 203(b)

Date of Loan Closing: 05/23/00

Current Status: Repayment; Prior: Default status after 0 payments.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           non-purchasing spouse should sign the Deed of Trust to create a valid first lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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                                                                                       Appendix E


FHA Case Number: 291-2709675

Insured Amount: $34,330

Section of Housing Act: 203(b)

Date of Loan Closing: 08/11/00

Current Status: Reinstated by mortgagor; Prior: Default status after 5 payments

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $1,240.05 and the borrower’s bank statement only showed cash available of $1,081.52.
   o Auditee Comments: Sufficient funds to close the loan were verified as required by FHA
      guidelines. Sufficient funds of $1,240.05 were documented in the file. The borrower’s
      bank statement showed cash available of $1,081.52. The borrower had already paid $500
      in earnest money. The bank statement balance and the earnest money deposit totaled
      $1,581.52. Please see attached HUD-1, reprinted MCAW and bank statements.
      § OIG Evaluation of Auditee Comments: Cendant stated that the bank balance in
           addition to the earnest money is sufficient to close the loan. The bank statement
           showing $1,081.52 was dated 5/25/00. The sales contract addendum, says that
           buyer’s $500 in earnest money will be placed in an account within 24 hours of the
           seller’s acceptance of the agreement. The seller signed the document on 6/6/00. A
           subsequent bank document shows the balance forward of $1,081.52 from which a
           $500 check posted on 6/9/00, leaving a balance of $581.52. The bank statement and
           earnest money combined to $1,081.52, which was less than the loan was approved
           with. Additionally, the one-month bank statement provided did not indicate that any
           deposits of income were made. The only deposit was of the $1,000 gift.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet were 24.58 percent and 48.36 percent. The compensating factors were:
   1) Housing debt going down (The previous housing expense incorrectly included $175 in
   other housing expenses. With this amount removed, the borrowers payment actually
   increased by $62.34) 2) Solid work history for a 22 year old (The lender only verified 18
   months of employment) 3) Not using spouses income (There is no indication that the spouse
   has any income).

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   o Auditee Comments: None
     § OIG Evaluation of Auditee Comments: N/A
        Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
            REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
            Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
            (1) Mortgage payment expense to effective income. If the total mortgage payment
            does not exceed 29 percent of gross effective income, the relationship of the
            mortgage payment to income is considered acceptable. A ratio exceeding 29
            percent may be acceptable if significant compensating factors are presented.” and
            “(2) Total fixed payment to effective income. If the total mortgage payment and
            all recurring charges do not exceed 41 percent of gross effective income, the
            relationship of total obligations to income is considered acceptable. A ratio
            exceeding 41 percent may be acceptable if significant compensating factors are
            presented.” This file contained ratios that were above the acceptable limit without
            providing adequate compensating factors.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability. Furthermore, the non-purchasing spouse’s name is on the bank
   statement. These are co-owned assets that were used to close the loan. The lender has no
   way of knowing what portion of those assets the borrower has available to him nor what
   other debts of the non-purchasing spouse are to be paid out of those assets. In addition, the
   one-month’s bank statement provided did not indicate that any deposits of income were
   made. The only deposit made was for the $1,000 gift.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           non-purchasing spouse is required to sign the Deed of Trust to create a valid lien.
           Therefore, we will only consider this issue as an asset problem and eliminate the non-
           purchasing spouse issue from the finding.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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                                                                                     Appendix E


FHA Case Number: 291-2720918

Insured Amount: $60,734

Section of Housing Act: 203(b)

Date of Loan Closing: 07/31/00

Current Status: Repayment; Prior: Default status after 2 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $2,790.70 per month. The pay stubs
   provided verified that the borrower’s and co-borrower’s income as only $2,387.95 per month.
   Cendant did not obtain a verbal or written verification of employment.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
              Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
              Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
              repay the mortgage debt. Income from a source that cannot be verified, is not
              stable, or will not continue should not be used when calculating the borrower’s
              income ratios. Part 2-6 says “the lender must verify the borrower's employment
              for the most recent two full years.” According to Chapter 3, income verification
              must be done through a written Verification of Employment and the most recent
              pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
              Employment, and Internal Revenue Service form 8821. This loan did not contain
              the necessary income verification documentation.




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Appendix E


FHA Case Number: 291-2724348

Insured Amount: $50,473

Section of Housing Act: 203(b)

Date of Loan Closing: 08/29/00

Current Status: Property conveyed to insurer; HUD paid a claim of $56,639; there is no loss
information available at this time. Prior: Default status after 1 payment.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,854.67 and the only asset documentation contained in file was a money order for
   $2,350 from the seller to the borrower’s wife.
   o Auditee Comments: Sufficient funds to close the loan were verified as required by FHA
       guidelines. The asset documentation in the file included a letter of explanation from the
       borrower that explained that cash on hand of $2,350 was given to the title company. The
       reason it was “cash on hand”, was that the Borrower’s spouse had preceded her husband
       to Missouri where they wanted their permanent residence to be located. The letter from
       the borrower explains that they had not yet opened their bank accounts and had provided
       the money to the title company in cash. In addition, the HUD-1 discloses that the $2,350
       was provided by the buyer and there is a copy of the check from the title company in the
       file. Please see attached borrower’s letter of explanation, money order, HUD-1, and
       system notes regarding borrower’s source of funds.
       § OIG Evaluation of Auditee Comments: We concur with Cendant that the borrower
            provided evidence of $2,350 in escrow. That was not enough, however, to cover the
            $2,854.67 needed for closing per the MCAW.
            Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
                property must be verified.” The lender must insure that the borrower has
                sufficient funds available to close the loan. This file did not contain adequate
                evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $1,587 per month. The pay stubs
   available verified $1,874.70. This amount includes a $60 COLA that is subject to change
   dependent upon locale. A verification of employment was not obtained.
   o Auditee Comments: Income was verified as required by FHA guidelines. The file
       contained two years of W-2s and a recent paystub supporting income of $1,587 per
       month. It is Cendant’s policy to obtain a verbal verification of employment prior to
       closing but the documentation could not be located in the file. The Borrower was

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                                                                                       Appendix E


       qualified with a more conservative income figure of $1,587.00 excluding the COLA
       because we did not have information about the extra pay to which he would be entitled to
       when he was re-assigned after training. The ratios with this income were 19.80 percent
       and 21.16 percent which meet FHA guidelines. Please see attached W-2s, and paystub.
       § OIG Evaluation of Auditee Comments: We agree with Cendant that the borrower
          qualified with a more conservative income figure. Cendant did not dispute that they
          failed to obtain a verification of employment.
          Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 says “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. This loan did not contain
               the necessary income verification documentation.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. The
    borrower submitted a pay stub as evidence of employment issued by the United States Marine
    Corps. The borrower was previously stationed in Pennsylvania. There is no evidence that his
    employment with the Marines will continue after he moves to Missouri. In addition, the
    funds given by the seller to the borrower’s wife were not explained.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. The borrower was assigned in Pennsylvania for a short time to complete his
        training. The borrowers had made a decision to make their permanent residence in
        Missouri. FHA guidelines recognize that a borrower’s family may decide to live in a
        state other than a state where a base is located particularly if the active military member
        may be assigned to a remote duty station. It requires that one of the borrowers’ occupy
        the property as a principal residence for the majority of a calendar year. See FHA
        Handbook 4155.1,Rev-4,CHG-1, Section 1.2. The auditor commented that that “ the
        funds given by the seller to the borrower’s wife were not explained”. The agreement of
        sale confirms that the borrower paid the seller $100 in cash for the deposit of earnest
        money. It appears the borrower provided the funds to the seller in cash as well who
        remitted it to the title company in the form of a cashier’s check. Please see the attached
        HUD-1 which indicates that the funds were provided by the buyer.
        § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
            family of an active duty military member may choose to live in a different state than
            the member him/herself. As Cendant stated, one of the borrower’s must occupy the
            property as a principal residence for the majority of a calendar year. However, the
            documentation provided by Cendant states that the borrower would not be occupying
            the home for the majority of the year. He is the sole borrower on this loan; his wife is
            not a co-borrower. The lender did not provide evidence that the $100 in escrow came

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Appendix E


          from the borrower. The receipt states that the seller paid it for the borrower, but not
          where the money came from. The exception that we noted above pertains to the
          money order for $2,350 from the seller to the buyer.
          Ø Violation: Indications of possible fraud were not resolved. HUD Handbook
             4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
             to-Four-Family Properties, Chapter 3-1 states that “we expect the application
             package to contain sufficient documentation, to support the lender's decision to
             approve the mortgage loan. When standard documentation does not provide
             enough information to support this decision, the lender must provide additional
             explanatory statements, consistent with other information in the application, to
             clarify or supplement the documentation submitted by the borrower.” HUD
             Handbook 4000.4, Chapter 2 states that it is the underwriter’s responsibility to be
             aware of the warning signs that may indicate irregularities and to detect fraud. In
             other words, the lender should ensure that any indications of possible fraud are
             evaluated and that the appropriate steps are taken and adequate documentation is
             provided to resolve any discrepancies. This file did not contain adequate
             documentation that the lender attempted to resolve any discrepancies noted.




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                                                                                           Appendix E


FHA Case Number: 291-2727895

Insured Amount: $81,587

Section of Housing Act: 203(b)

Date of Loan Closing: 09/21/00

Current Status: First legal action to foreclose; Prior: Default status after 4 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,453.32 and the documentation provided supported $1,879.57 in assets available to
   close the loan. Cendant did not obtain the required bank statements.
   o Auditee Comments: Sufficient funds to close were verified as required by FHA
       guidelines. The auditor states that the Mortgage Credit Analysis Worksheet required
       $2,453.32 to close the loan. Documentation of assets in the file totaled $29,470.42. The
       borrower received a gift for $1200 which is documented by a gift letter and a check. The
       borrower’s leave and earnings statement indicates that the balance in her Retirement fund
       as of 7/15/2000 is $26,390.85. In addition, the bank deposit slip shows a balance of
       $1,879.57. See attached gift letter, check, LES statement and bank deposit.
       § OIG Evaluation of Auditee Comments: Cendant stated that the borrower documented
           a $1,200 gift, $1,879.57 in a deposit account, and $26,390.85 in a retirement account.
           The borrower did not provide adequate bank statements and all we know is that as of
           09/15/2000 she had a balance of $1,879.57. Presumably, this includes the gift that
           was given to her on 08/31/2000. The retirement fund cannot be used because the
           borrower did not show the required evidence of redemption.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. Part K says that for IRAs and Keough
               accounts, evidence of redemption is required. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $2,885.11 per month. The pay stubs
   available verified $2,754.27 per month. There was no verification of employment.
   o Auditee Comments: Income was verified as required by FHA guidelines. Two years of
       W-2s are in the file along with the most recent paystubs. It is Cendant’s policy to
       verbally verify employment prior to closing but the documentation could not be found in
       the file. The verified income was slightly lower that the income listed on the MCAW
       which was not updated. The ratios with the lower income would have been slightly

                                            Page 159                                   2003-KC-1001
Appendix E


       higher and still permitted with compensating factors. The LES disclosed that the
       borrower had been employed with the Social Security Administrations since 1978. See
       attached W-2s, paystubs and LES.
       § OIG Evaluation of Auditee Comments: Cendant concurs that the actual income is
           less than the income shown on the Mortgage Credit Analysis Worksheet (MCAW) as
           approved by the underwriter. Cendant did not dispute that the file did not contain a
           verification of employment.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 says “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. This loan did not contain
               the necessary income verification documentation.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet were 26.82 percent and 51.88 percent. There were no compensating
   factors provided.
   o Auditee Comments: The ratios are consistent with FHA guidelines using permissible
       compensating factors are required. The following compensating factors were considered
       in making this loan. Documentation regarding these factors could not be located in the
       file. Borrower has job stability. Working for Social Security as per date on her LES
       since 1978. Ability to save as evidenced in her Retirement balance. Substantial cash
       reserves after closing as evidenced in her retirement balance.
       § OIG Evaluation of Auditee Comments: Cendant agrees that documentation
            concerning compensating factors could not be found in the file. After reviewing the
            factors Cendant now states that they used, we found that while the borrower does
            have a stable work history, this is not one of the allowable compensating factors. We
            don’t believe an involuntary retirement deduction evidences a person’s ability to save.
            Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
                REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
                Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
                (1) Mortgage payment expense to effective income. If the total mortgage payment
                does not exceed 29 percent of gross effective income, the relationship of the
                mortgage payment to income is considered acceptable. A ratio exceeding 29
                percent may be acceptable if significant compensating factors are presented.” and
                “(2) Total fixed payment to effective income. If the total mortgage payment and
                all recurring charges do not exceed 41 percent of gross effective income, the
                relationship of total obligations to income is considered acceptable. A ratio

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                                                                       Appendix E


exceeding 41 percent may be acceptable if significant compensating factors are
presented.” This file contained ratios that were above the acceptable limit without
providing adequate compensating factors.




                            Page 161                                  2003-KC-1001
Appendix E


FHA Case Number: 291-2732764

Insured Amount: $44,632

Section of Housing Act: 203(b)

Date of Loan Closing: 09/28/00

Current Status: Foreclosure completed; HUD paid a claim of $48,621.46; there is no loss
information available at this time. Prior: Default status after 1 payment.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant did not properly calculate the borrower’s monthly income. The
   borrower’s gross monthly income listed on the Mortgage Credit Analysis Worksheet was
   $4,363.77 ($2,344.44 for the borrower and $2,019.33 for the co-borrower). The borrower’s
   income was verified by Cendant to be $1,218.44, therefore, monthly income was overstated
   by $1,126.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
              Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
              Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
              repay the mortgage debt. Income from a source that cannot be verified, is not
              stable, or will not continue should not be used when calculating the borrower’s
              income ratios. Part 2-6 states, “the lender must verify the borrower's employment
              for the most recent two full years.” According to Chapter 3, income verification
              must be done through a written Verification of Employment and the most recent
              pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
              Employment, and Internal Revenue Service form 8821. This loan did not contain
              the necessary income verification documentation.

W-2 Problem:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain all of the required
  documentation to verify the employment of the borrowers and did not follow up on
  discrepancies on the W-2s. The Federal Housing Administration requires written verification
  of employment and a W-2 for two years for loans that score refer. This loan scored refer, but
  a verbal verification of employment was obtained for the co-borrower. Cendant did not
  obtain the 1998 W-2 for the co-borrower. In addition, the borrower’s address and last name
  on the W-2, was different from the address and last name given on the Residential Loan
  Application.
  o Auditee Comments: None
      § OIG Evaluation of Auditee Comments: N/A
          Ø Violation: W-2 information was not provided or was incorrect. HUD Handbook
              4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
              to-Four-Family Properties, Chapter 3-1 Part E. states that “as an alternative to

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                                                                                      Appendix E


               obtaining a Verification of Employment, the lender may choose to obtain from the
               borrower original pay stub(s) covering the most recent thirty-day period, along
               with original copies of the previous two years' Internal Revenue Service W-2
               forms.” This file did not contain a written Verification of Employment, therefore,
               it should have contained two years’ Internal Revenue Service W-2 forms. HUD
               Handbook 4000.4 Rev-1, Single Family Direct Endorsement Program, Chapter 2-
               1 states that “A Direct Endorsement mortgagee must conduct its business
               operations in accordance with accepted sound mortgage lending practices, ethics
               and standards.” These forms should have been scanned for accuracy.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. Cendant did not obtain a gift letter for the $800 gift listed on the Residential
    Loan Application.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
              Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
              Properties, Chapter 2-10 Part C states that “the lender must document the transfer
              of the funds from the donor to the borrower. Acceptable procedures include
              obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
              borrower's deposit slip or bank statement showing the deposit. If the funds are not
              deposited to the borrower's account prior to closing, the lender must obtain
              verification the closing agent received funds from the donor for the amount of the
              gift. The file must also contain a gift letter specifying the dollar amount, signed
              by the donor and the borrower, stating no repayment is required, and showing the
              donor's name, address, telephone number, and relationship to the borrower.” This
              file did not contain all the necessary documentation required when a borrower is
              using gift funds.




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Appendix E


FHA Case Number: 292-3778958

Insured Amount: $49,095

Section of Housing Act: 203(b)

Date of Loan Closing: 08/20/99

Current Status: Foreclosure completed; there is no loss information available at this time. Prior:
Default status after 13 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,919.71, but the borrower only provided evidence of $5.08 in assets.
   o Auditee Comments: None
      § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Cendant did not obtain a verbal or written verification of employment.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
              Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
              Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
              repay the mortgage debt. Income from a source that cannot be verified, is not
              stable, or will not continue should not be used when calculating the borrower’s
              income ratios. Part 2-6 says “the lender must verify the borrower's employment
              for the most recent two full years.” According to Chapter 3, income verification
              must be done through a written Verification of Employment and the most recent
              pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
              Employment, and Internal Revenue Service form 8821. According to Loan
              Prospector documentation requirements, acceptable loans must have a verbal
              Verification of Employment, most recent year to date pay stub documenting one
              full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
              Employment confirming 2-year employment history, only base pay used to
              qualify, and Internal Revenue Service form 8821 can be substituted for the W-
              2(s). This loan did not contain the necessary income verification documentation.

2003-KC-1001                               Page 164
                                                                                       Appendix E


FHA Case Number: 292-3779720

Insured Amount: $118,027

Section of Housing Act: 203(b)

Date of Loan Closing: 07/27/99

Current Status: Reinstated by mortgagor; Prior: Default status after 13 payments

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The Mortgage Credit Analysis Worksheet stated that the total due at
   closing was $5,943.00, but the borrower’s bank document listed an available balance of
   $4,776.12. Cendant did not obtain complete bank statements.
   o Auditee Comments: Sufficient funds to close the loan were verified as required by FHA
       guidelines. The bank statement in the file verified a balance of $4,776.02 prior to
       closing. The HUD-1 settlement statement indicated that the borrower only needed
       $4429.93 to close. In error, the Mortgage Credit Analysis Worksheet was not updated to
       reflect the revised figures. See attached bank statement and updated MCAW.
       § OIG Evaluation of Auditee Comments: While the borrower did have the necessary
           funds to close the loan, the underwriter did not know that when they approved the
           loan. The information on the Mortgage Credit Analysis Worksheet (MCAW) requires
           $5,943 to close and the borrower could only provide evidence of $4,776.12. The
           lender approved this loan using Loan Prospector. There was no Loan Prospector
           feedback sheet in the file, but the Insurance Application Results sheet shows that the
           loan was approved with $5,976 in assets.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
                property must be verified.” The lender must insure that the borrower has
                sufficient funds available to close the loan. This file did not contain adequate
                evidence of the funds needed to close.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. A gift of $1,200 was included in the “Assets” section of the Residential Loan
    Application, but a gift letter was not provided.
    o Auditee Comments: No gift information was required to be verified because the source
        of funds was not a gift. As indicated above, the borrower had sufficient funds in their
        bank account so gift funds were not needed.
        § OIG Evaluation of Auditee Comments: As stated above, the lender approved this
            loan using Loan Prospector, by inputting that the borrower had $5,976 in assets. This
            is the equivalent of the $4,776.12 in the deposit account plus the $1,200 gift that was
            not supported.

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Appendix E


           Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
             Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
             Properties, Chapter 2-10 Part C states that “the lender must document the transfer
             of the funds from the donor to the borrower. Acceptable procedures include
             obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
             borrower's deposit slip or bank statement showing the deposit. If the funds are not
             deposited to the borrower's account prior to closing, the lender must obtain
             verification the closing agent received funds from the donor for the amount of the
             gift. The file must also contain a gift letter specifying the dollar amount, signed
             by the donor and the borrower, stating no repayment is required, and showing the
             donor's name, address, telephone number, and relationship to the borrower.” This
             file did not contain all the necessary documentation required when a borrower is
             using gift funds.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not document in the file any explanation for an unusual
    item in the appraisal. The appraisal disclosed a prior sale of the subject property on July 9,
    1999 for $119,000 per the lender/client.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. The appraisal was ordered by us on 6/28. The date of the appraiser’s
        “inspection and valuation” was 7/9/99 is noted on page 2 of the appraisal. Next to the
        date are the letter “AV” which appear to disclose the date the appraisal valuation was
        completed. The appraisal valuation form discloses that it was completed on 7/9/99 and is
        attached to the appraisal. There is no other indication on the appraisal of a sale date of
        7/9/99 and appears to be a misunderstanding of the information provided by the appraiser.
        Please see attached appraisal.
        § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
            sale date listed by the appraiser is actually the appraisal date.
            Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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                                                                                    Appendix E


FHA Case Number: 292-3781555

Insured Amount: $52,914

Section of Housing Act: 203(b)

Date of Loan Closing: 08/06/99

Current Status: Property conveyed to insurer; HUD incurred a loss of $23,161.00. Prior: Default
status after 9 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain all of the required
   documentation to verify the employment of the borrower and co-borrower. There was no
   verification of employment for either borrower. Cendant did not obtain W-2s or verification
   of prior student status for the co-borrower.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: W-2 information was not provided or was incorrect. HUD Handbook
               4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
               to-Four-Family Properties, Chapter 3-1 Part E. states that “as an alternative to
               obtaining a VOE, the lender may choose to obtain from the borrower original pay
               stub(s) covering the most recent thirty-day period, along with original copies of
               the previous two years' IRS W-2 forms.” This file did not contain a Verification
               of Employment, and therefore, should have contained two years’ Internal Revenue
               Service W-2 forms.




                                          Page 167                                 2003-KC-1001
Appendix E


FHA Case Number: 292-3782380

Insured Amount: $95,451

Section of Housing Act: 203(b)

Date of Loan Closing: 07/30/99

Current Status: Delinquent 90 days or more; Prior: Default status after 4 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $5,306.66 per month. The pay stubs
   provided verified $5,588.17 per month. It is not clear, however, if the borrower works two
   40 hour per week jobs. No verifications of employment were obtained. Cendant did not
   obtain the co-borrower’s W-2s.
   o Auditee Comments: Income was verified as required by FHA guidelines. W-2s and
       1040s were provided as documentation in the file. The borrower’s income was
       recalculated. B1= $4299.44 (State $3619.13 and Deaconess $ 680.31). The income
       documentation supported that the borrower had a history of income from two jobs which
       is permitted under FHA guidelines. The 2nd job year to date indicates that it is part time.
       Borrower 2 $1035.57 for Delmar Gardens. Total income for both borrowers is $5335.01.
       In error, the MCAW was not updated. There was a positive change in the monthly
       income from $5,306.66 disclosed on the MCAW ($5,306.66) $5335.01. It is Cendant’s
       policy to obtain a verbal verification of employment prior to closing. Documentation of
       this verification could not be located in the file. Please see attached W-2s, tax returns and
       paystubs.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s income
           calculations, however, the lender was not able to provide the required verification of
           employment or the co-borrower’s W-2s.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 says “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
               Employment confirming 2-year employment history, only base pay used to


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                                                                                     Appendix E


               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. The
    borrower provided pay stubs indicating that she worked two jobs, both at approximately 40
    hours per week. There is no indication that the lender attempted to clarify this situation.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. The borrower is a nurse and working two jobs - one full time job and one part
        time job as evidenced by the YTD earnings on paystubs. She earned little more than
        $5,000 in 6 months at her second job, which is not out of the ordinary for someone in the
        nursing profession. Please see attached paystubs.
        § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
            borrower had income from a part time job.
            Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




                                           Page 169                                  2003-KC-1001
Appendix E


FHA Case Number: 292-3782397

Insured Amount: $96,451

Section of Housing Act: 203(b)

Date of Loan Closing: 07/30/99

Current Status: Delinquent 90 days or more; Prior: Default status after 9 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Analysis Worksheet was
   $1,411.20 and the file did not have any asset information.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the application and on the Mortgage Credit Analysis Worksheet was $4,378.40
   per month. The pay stubs available verified $3,613.16. There was no verification of
   employment (VOE) or copies of W-2s.
   o Auditee Comments: Income was verified as required by FHA guidelines. The verified
       monthly base pay was $3,613.16 as verified by the auditor. This income is supported by
       documentation in the file that includes paystubs and W-2s. It is Cendant’s policy to
       obtain a verbal verification of employment prior to closing but documentation was not
       located in the file. The borrower also received child support income of $ 747.50 per
       month. This income is derived from child support payments documented by court
       printouts of $650 per month. Since child support is non-taxable income, $650 is
       increased by 115 percent to treat it in an equivalent manner to taxable income. The
       documented monthly income in the file totals $4,360.66. The ratios based on this income
       are 19.89 percent and 32.02 percent. These ratios fall within FHA guidelines. Please see
       attached revised MCAW, paystubs, W-2s and court order.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           borrower received child support income of $650 per month ($748 grossed up) and
           that her total income was $4,360.66 per month. Cendant provided the missing W-2s.
           Cendant did not dispute that the VOE was missing from the file. .
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family

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                                                                        Appendix E


Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
repay the mortgage debt. Income from a source that cannot be verified, is not
stable, or will not continue should not be used when calculating the borrower’s
income ratios. Part 2-6 states, “the lender must verify the borrower's employment
for the most recent two full years.” According to Chapter 3, income verification
must be done through a written Verification of Employment and the most recent
pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
Employment, and Internal Revenue Service form 8821. This loan did not contain
the necessary income verification documentation.




                            Page 171                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3788541

Insured Amount: $45,512

Section of Housing Act: 203(b)

Date of Loan Closing: 08/26/99

Current Status: First legal action to foreclose; Prior: Default status after 11 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $3,269.77 per month. The pay stubs
   provided verified $2,354.68 ($222.12 for the borrower and $2,094.68 for the co-borrower)
   per month.
   o Auditee Comments: Income was verified as required by FHA Guidelines. Using the
       borrower’s paystub, her income was calculated using a conservative figure of 15 hours
       per week instead of 20. Using 20 hours, her income is $446.00 per month. The auditor
       confirmed that paystubs in the file supported the co-borrower’s income of $2094.68. The
       monthly combined income is $2540.68. In addition, the co-borrower submitted proof of a
       second income from his employer (lawn maintenance) with proof of 2-yr. history. Using
       an average of the 2-yr history, monthly income from that job is $713.12. The total of all
       income is $3253.80. Please see attached copies of income documentation.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           proper documentation was provided to support the co-borrower’s income of
           $2,094.68 and an additional income from a second job (at the same company) of
           $713.12. The lender calculated the borrowers income as $446 (based upon 20 hours
           per week). The lender relied on the 20 hour per week figure provided by a telephone
           interview with the borrowers employer. The written verification of employment,
           however, expressly states that the borrower averages 11 hours per week. In addition,
           the borrower’s pay stub contains year to date information that indicates that for the
           last six months, the borrower earned $1,332.75, or the equivalent of $222.12 per
           month. We agree that the lender provided documentation to support the second
           income of the co-borrower; however the lender calculated the borrower’s income
           erroneously.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 says “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan

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                                                                     Appendix E


Prospector documentation requirements, acceptable loans must have a verbal
Verification of Employment, most recent year to date pay stub documenting one
full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
Employment confirming 2-year employment history, only base pay used to
qualify, and Internal Revenue Service form 8821 can be substituted for the W-
2(s). This loan did not contain the necessary income verification documentation.




                           Page 173                                  2003-KC-1001
Appendix E


FHA Case Number: 292-3792257

Insured Amount: $119,939

Section of Housing Act: 203(b)

Date of Loan Closing: 08/27/99

Current Status: Reinstated by mortgagor who retains ownership, Prior: Default status after 8
payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing according to information on the Mortgage
   Credit Analysis Worksheet was $3,073.67, but the borrower only provided evidence of
   $1,124.17 in his checking account.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Not enough evidence of sufficient funds to close the loan. HUD
               Handbook 4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage
               Insurance on One-to-Four-Family Properties, Chapter 2-10 states that “all funds
               for the borrower's investment in the property must be verified.” The lender must
               insure that the borrower has sufficient funds available to close the loan. This file
               did not contain adequate evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $4,285.72 per month. The pay stubs
   provided verified this amount, equivalent to approximately $52,000 per year. However, the
   year before the borrower only made approximately $20,000 per year. There was no
   verification of employment obtained.
   o Auditee Comments: Income was verified as required by FHA guidelines.
       Documentation in the file supports the income disclosed on the MCAW. The borrower’s
       income as per paystubs and the MCAW are from Year 1999 for approximately $52,000
       per year. The previous year’s income (1998) appears to be approximately $20,000 per
       year but the Income Tax Summary Worksheet in the file show that the borrower earned
       $42,069 in 1998 and $19,508 in 1997. The borrower submitted three years of tax returns
       and W-2s with income from several sources. Some of these sources were not reflected on
       the application however the w-2’s and tax returns are equal. It is Cendant’s policy to
       obtain a verbal verification of employment but the documentation could not be located in
       the file. Please see attached MCAW, W-2s, tax returns and paystubs.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           borrower received income from many sources and the W-2’s and tax statements
           provide documentation of the income used. Cendant agreed that they did not
           document a Verification of Employment.

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                                                                                    Appendix E


          Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
            Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
            Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
            repay the mortgage debt. Income from a source that cannot be verified, is not
            stable, or will not continue should not be used when calculating the borrower’s
            income ratios. Part 2-6 states, “the lender must verify the borrower's employment
            for the most recent two full years.” According to Chapter 3, income verification
            must be done through a written Verification of Employment and the most recent
            pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
            Employment, and Internal Revenue Service form 8821. According to Loan
            Prospector documentation requirements, acceptable loans must have a verbal
            Verification of Employment, most recent year to date pay stub documenting one
            full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
            Employment confirming 2-year employment history, only base pay used to
            qualify, and Internal Revenue Service form 8821 can be substituted for the W-
            2(s). This loan did not contain the necessary income verification documentation.

W-2 Problem:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information provided on
  the W-2s submitted by the borrower was correct. The wages on the W-2’s do not equal the
  amount of wages reported on the tax returns.
  o Auditee Comments: W-2 information was consistent with other documentation in the
      file. Please see the explanation provided above regarding the W-2s.
      § OIG Evaluation of Auditee Comments: Cendant provided additional W-2s to validate
           the amount recorded on the tax returns.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




                                         Page 175                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3792806

Insured Amount: $39,379

Section of Housing Act: 203(b)

Date of Loan Closing: 10/04/99

Current Status: Foreclosure completed; there is no claim or loss information available at this
time. Prior: Default status after 9 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain all of the required
   documentation to verify the employment of the borrower. The verification of employment
   only confirmed 11 months employment, and there was no W-2 obtained for the borrower.
   o Auditee Comments: Income was verified as required by FHA guidelines. Proper
       documentation to support income was provided. The borrower provided two years W-2s
       with a recent paystub in addition to the VOE for current job which was for 11 months.
       Please see attached W-2s, VOE and paystub signed by employer.
       § OIG Evaluation of Auditee Comments: Cendant provided additional documentation
           to verify income.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to adjusted to reflect
               change.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to adjusted to reflect
               change.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not document in the file resolution of possible fraud
    indicators. The bank statements showed the borrower’s new address prior to the closing date.
    Also, the borrower received a gift of $1200 from his brother-in-law, although the sales
    contract called for that same amount to come from the seller.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. The bank statement is the same as the address on the application on Karen
        Drive. The property address is on Alice. The gift was received and per the HUD 1

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                                                                               Appendix E


settlement statement, the seller paid $1019.64 in the borrower’s closing costs as required
by the contract. Please see attached bank statement, application, gift documentation and
HUD-1.
§ OIG Evaluation of Auditee Comments: Cendant provided a copy of a bank statement
    with the same address as the borrower’s previous address. However, the bank
    statement for the account that was opened 09/13/99 was the same address as the
    subject property on the application. This was almost a month prior to closing.
    Ø Violation: Indications of possible fraud were not resolved. HUD Handbook
        4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
        to-Four-Family Properties, Chapter 3-1 states that “we expect the application
        package to contain sufficient documentation, to support the lender's decision to
        approve the mortgage loan. When standard documentation does not provide
        enough information to support this decision, the lender must provide additional
        explanatory statements, consistent with other information in the application, to
        clarify or supplement the documentation submitted by the borrower.” HUD
        Handbook 4000.4, Chapter 2 states that it is the underwriter’s responsibility to be
        aware of the warning signs that may indicate irregularities and to detect fraud. In
        other words, the lender should ensure that any indications of possible fraud are
        evaluated and that the appropriate steps are taken and adequate documentation is
        provided to resolve any discrepancies. This file did not contain adequate
        documentation that the lender attempted to resolve any discrepancies noted.




                                    Page 177                                  2003-KC-1001
Appendix E


FHA Case Number: 292-3792972

Insured Amount: $119,839

Section of Housing Act: 203(b)

Date of Loan Closing: 08/27/99

Current Status: Delinquent 90 days or more; Prior: Default status after 11 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $5,465.20, but the borrower did not provide evidence of any assets.
   o Auditee Comments: None
      § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Not enough evidence of sufficient funds to close the loan. HUD
               Handbook 4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage
               Insurance on One-to-Four-Family Properties, Chapter 2-10 states that “all funds
               for the borrower's investment in the property must be verified.” The lender must
               insure that the borrower has sufficient funds available to close the loan. This file
               did not contain adequate evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $3,850 per month. There were no
   pay stubs provided. The borrower provided his offer of employment, which showed the
   amount listed on the MCAW was overstated. The income will actually be $3,083.33,
   because they cannot count the car allowance as income except in certain circumstances.
   Cendant failed to establish income stability, as they are using income from a job that had not
   yet begun. Cendant did not obtain a “Verification of Employment” directly from the
   employer or prior employer.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
              Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
              Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
              repay the mortgage debt. Income from a source that cannot be verified, is not
              stable, or will not continue should not be used when calculating the borrower’s
              income ratios. Part 2-6 says that “the lender must verify the borrower's
              employment for the most recent two full years.” According to Chapter 3, income
              verification must be done through a written Verification of Employment and the
              most recent pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal
              Verification of Employment, and Internal Revenue Service form 8821. According
              to Loan Prospector documentation requirements, acceptable loans must have a

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                                                                      Appendix E


verbal Verification of Employment, most recent year to date pay stub
documenting one full month’s earnings, and most recent 2 years’ W-2(s). A
Verification of Employment confirming 2-year employment history, only base pay
used to qualify, and Internal Revenue Service form 8821 can be substituted for the
W-2(s). This loan did not contain the necessary income verification
documentation.




                           Page 179                                  2003-KC-1001
Appendix E


FHA Case Number: 292-3796469

Insured Amount: $59,969

Section of Housing Act: 203(b)

Date of Loan Closing: 09/07/99

Current Status: Servicing transferred or sold to another mortgagee, Prior: Default status after 17
payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $1,547 per month. The pay stubs
   provided verified $1,426 per month. Cendant did not obtain a verification of employment.
   o Auditee Comments: Income was verified as required by FHA guidelines. The Mortgage
       Credit Analysis Worksheet disclosed accurate monthly income of $1,547. This income is
       supported by documentation in the file. The regular wages were calculated from $714 per
       pay multiplied by 26 pay periods and divided by 12 months. The monthly figure is
       $1,547. It is Cendant’s policy to obtain a verbal verification of employment prior to
       closing but documentation was not located in the files. The file contained the most recent
       paystubs and last three years W-2’s. Please see attached paystubs and W’2s.
       § OIG Evaluation of Auditee Comments: Cendant justified the income amount used,
           however, Cendant did not provide evidence of a verification of employment.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
              Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
              Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
              repay the mortgage debt. Income from a source that cannot be verified, is not
              stable, or will not continue should not be used when calculating the borrower’s
              income ratios. Part 2-6 states “the lender must verify the borrower's employment
              for the most recent two full years.” According to Chapter 3, income verification
              must be done through a written Verification of Employment and the most recent
              pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
              Employment, and Internal Revenue Service form 8821. This loan did not contain
              the necessary income verification documentation.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet using the correct income calculations were 39 percent and 39 percent.
   There were no compensating factors.
   o Auditee Comments: The ratios are consistent with FHA guidelines. The ratios with the
       monthly income of $1,547 are 36.5 percent and 36.5 percent. These ratios are permitted
       by FHA guidelines if there are limited recurring expenses. The Mortgage Credit Analysis
       worksheet discloses that there are “0” recurring expenses. Additionally, as a

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                                                                            Appendix E


compensating factor, the borrower had in excess of $5,400 in his bank account but needed
only $2,548 to close the loan leaving the borrower with substantial residual. Please see
attached MCAW and bank statement.
§ OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
    ratios and compensating factors are adequate.
    Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect the change.




                                  Page 181                                 2003-KC-1001
Appendix E


FHA Case Number: 292-3800041

Insured Amount: $79,859

Section of Housing Act: 203(b)

Date of Loan Closing: 09/15/99

Current Status: Repayment; Prior: Default status after 13 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $4,549, but the borrower only provided evidence of $4,043.81 in assets.
   o Auditee Comments: Sufficient assets were verified as required by FHA guidelines. The
      auditor confirmed that $4,043.81 of assets was documented in the file. In error the
      MCAW was not updated prior to closing to disclose that the borrower only needed
      $3,750.04 in assets to close the loan based on changes at the closing table as evidenced by
      the HUD-1. Assets of $4,043.81 were verified sufficient to cover the assets required.
      Please see attached revised MCAW and HUD-1.
      § OIG Evaluation of Auditee Comments: Cendant approved this loan based on
           estimated closing costs of $4,549. At the time the loan was approved, the lender did
           not have evidence that the borrower would have the funds available for closing.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet were 34.70 percent and 57.29 percent. The compensating factors were
   1) overall good credit (borrower used credit counseling and still had many late pays), 2) good
   earnings potential (there is no evidence that the borrower will substantially increase income
   in the future), 3) no dependants (not an acceptable compensating factor), and 4) assets OK
   (did not verify assets).
   o Auditee Comments: The ratios are consistent with FHA guidelines using permissible
       compensating factors. The ratios were supported by the following compensating factors:
       Credit score is 635 – acceptable. CCCS was in 94-95 with no evidence that there is
       serious recent derogatory credit. A lender reviews the most recent 2-year history to
       evaluate credit. The compensating factor that relates to earnings is justified by the fact
       that the borrower is in a new job that is earning her a substantially higher salary.


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                                                                                Appendix E


Borrower had $1207.68 in reserves. In error, the MCAW was not updated to reflect these
factors. Please see attached MCAW and copy of the credit report.
§ OIG Evaluation of Auditee Comments: Cendant stated that as a compensating factor,
    the borrower’s credit is acceptable. Cendant’s Junior Underwriting Training Program
    Part 1 (p.57) states that a credit report score that is between 659 and 620 is considered
    high risk. While the credit problems may have been over two years old, the credit
    score is not high enough to be considered a compensating factor. In addition, the
    lender maintains that the “good earnings potential” is justified because the borrower
    just got a new job with higher earnings. This does not necessarily indicate higher
    future earnings. These higher earnings were reflected in the income calculations used
    to approve the loan. Finally, the lender stated that the borrower had $1,207.68 in
    reserves. According to Cendant’s calculations, after closing, the borrower will only
    have $293.77 in reserves.
    Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
        REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
        Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
        (1) Mortgage payment expense to effective income. If the total mortgage payment
        does not exceed 29 percent of gross effective income, the relationship of the
        mortgage payment to income is considered acceptable. A ratio exceeding 29
        percent may be acceptable if significant compensating factors are presented.” and
        “(2) Total fixed payment to effective income. If the total mortgage payment and
        all recurring charges do not exceed 41 percent of gross effective income, the
        relationship of total obligations to income is considered acceptable. A ratio
        exceeding 41 percent may be acceptable if significant compensating factors are
        presented.” This file contained ratios that were above the acceptable limit without
        providing adequate compensating factors.




                                    Page 183                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3803474

Insured Amount: $52,461

Section of Housing Act: 203(b)

Date of Loan Closing: 09/29/99

Current Status: Terminated-Paid in full; Prior: Default status after 16 payments

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The Mortgage Credit Analysis Worksheet stated that the total due at
   closing was $1,587.41, but the borrower’s file provides no support for the $2,000 in savings
   listed on the Residential Loan Application. In addition, the Mortgage Credit Analysis
   Worksheet stated that $3,269 had been paid in earnest money, but because this exceeded 2
   percent of the sales price ($1,058), Cendant should have verified these funds.
   o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain all of the required
   documentation to verify the employment of the borrower. There was no W-2 obtained for the
   co-borrower. Cendant did not document any verification of employment.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
              Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
              Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
              repay the mortgage debt. Income from a source that cannot be verified, is not
              stable, or will not continue should not be used when calculating the borrower’s
              income ratios. Part 2-6 states, “the lender must verify the borrower's employment
              for the most recent two full years.” According to Chapter 3, income verification
              must be done through a written Verification of Employment and the most recent
              pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
              Employment, and Internal Revenue Service form 8821. According to Loan
              Prospector documentation requirements, acceptable loans must have a verbal
              Verification of Employment, most recent year to date pay stub documenting one
              full month’s earnings, and most recent 2 years’ W-2(s). A Verification of

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                                                                                      Appendix E


               Employment confirming 2-year employment history, only base pay used to
               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on discrepancies. The borrower’s address
    and last name on the 1997 W-2 was different from the address and last name given on the
    Residential Loan Application and 1998 W-2.
    o Auditee Comments: W-2 information was consistent with other documentation in the
        file. One of the names used is her maiden name. This information is consistent with the
        1040s that were submitted. 1040s and W-2s were submitted under the same social
        security number for this borrower. Please see attached 1040s and W-2s.
        § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
             borrower’s previous W-2s were from her unmarried name.
             Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Gift Funds Not Documented:
· OIG Initial Finding: The Loan Prospector approval certification in the file shows that the
    loan was submitted with $5,000 in gift funds. The file contains no gift letter or evidence of
    transfer.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 Part C states that “the lender must document the transfer
               of the funds from the donor to the borrower. Acceptable procedures include
               obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
               borrower's deposit slip or bank statement showing the deposit. If the funds are not
               deposited to the borrower's account prior to closing, the lender must obtain
               verification the closing agent received funds from the donor for the amount of the
               gift. The file must also contain a gift letter specifying the dollar amount, signed
               by the donor and the borrower, stating no repayment is required, and showing the
               donor's name, address, telephone number, and relationship to the borrower.” This
               file did not contain all the necessary documentation required when a borrower is
               using gift funds.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s earlier assertion
           that the non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

                                           Page 185                                  2003-KC-1001
Appendix E


FHA Case Number: 292-3807675

Insured Amount: $32,508

Section of Housing Act: 234(c)

Date of Loan Closing: 10/07/99

Current Status: Property conveyed to insurer; HUD paid a claim of $32,278.37; there is no loss
information available at this time. Prior: Default status after 6 payments.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. The
    borrower submitted W-2’s that appeared to have an altered social security number. The
    borrower claims no dependents but the employer’s verification of employment mentioned a
    previous maternity leave a year before. In 1998 the borrower had 3 very low paying jobs and
    now claims to be a lawyer with a salary of almost $40,000 per year. There is no evidence that
    the lender attempted to resolve these issues.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. The social security number appears to be typed in on the Budget W-2. All
        social security numbers are the same on application, paystubs, w-2’s and the credit report.
        Credit report also confirms that she was employed with Budget. There was no need to
        ask additional information about the borrower’s dependent. Even though the borrower
        may have been on maternity leave, it would not be proper for the lender to ask if her
        pregnancy went full term. In addition, questions of this nature could be interpreted as
        violating the federal Equal Credit Opportunity Act. The borrower stated that her job was
        with the United Lawyers Association as a Field Counselor. Her letter regarding her
        change in employment explains the change in jobs. She indicated that she had taken a job
        more suited to her educational background. In an effort to authenticate the letter in file,
        the counselor called and spoke to someone who verified the borrower’s employment.
        Please see attached credit report, W-2s, verification letters and paystubs.
        § OIG Evaluation of Auditee Comments: The borrower’s Social Security number
            appears to have been altered on the W-2 document from Budget. The lender stated
            that it is acceptable because this number is the same as the Social Security number on
            the application, pay stubs, the prior W-2s, and the credit report. We agree with this
            assertion, but maintain that the altered Social Security number on the W-2 indicates
            that the W-2 potentially does not belong to the borrower and that the borrower might
            have altered it to add her social security number. The credit report states that the
            borrower worked at Budget, but it does not verify that the W-2 provided is legitimate
            and reflective of the borrower’s actual earnings. We do agree, however with the
            assertion that it would not have been proper for the lender to inquire about the status
            of the borrower’s dependents. Additionally, we agree that the lender verbally verified
            employment with the current employer.
            Ø Violation: Indications of possible fraud were not resolved. HUD Handbook
                4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-

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                                                                       Appendix E


to-Four-Family Properties, Chapter 3-1 states that “we expect the application
package to contain sufficient documentation, to support the lender's decision to
approve the mortgage loan. When standard documentation does not provide
enough information to support this decision, the lender must provide additional
explanatory statements, consistent with other information in the application, to
clarify or supplement the documentation submitted by the borrower.” HUD
Handbook 4000.4, Chapter 2 states that it is the underwriter’s responsibility to be
aware of the warning signs that may indicate irregularities and to detect fraud. In
other words, the lender should ensure that any indications of possible fraud are
evaluated and that the appropriate steps are taken and adequate documentation is
provided to resolve any discrepancies. This file did not contain adequate
documentation that the lender attempted to resolve any discrepancies noted.




                            Page 187                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3811595

Insured Amount: $32,815

Section of Housing Act: 203(b)

Date of Loan Closing: 02/04/00

Current Status: Delinquent 90 days or more; Prior: Default status after 6 payments

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. Cendant did obtain a gift letter for $1,000, but the name on the gift letter was
    not the same name listed on the Residential Loan Application as the gift provider, the second
    page of the gift letter with the signatures was not in the file, and proof the donor provided the
    funds was not obtained.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 Part C states that “the lender must document the transfer
               of the funds from the donor to the borrower. Acceptable procedures include
               obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
               borrower's deposit slip or bank statement showing the deposit. If the funds are not
               deposited to the borrower's account prior to closing, the lender must obtain
               verification the closing agent received funds from the donor for the amount of the
               gift. The file must also contain a gift letter specifying the dollar amount, signed
               by the donor and the borrower, stating no repayment is required, and showing the
               donor's name, address, telephone number, and relationship to the borrower.” This
               file did not contain all the necessary documentation required when a borrower is
               using gift funds.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant Mortgage Corp. did not resolve all discrepancies in the file.
    The co-borrower’s social security number was corrected on the application, but then the
    correct social security number was not used on any other documents. The credit report was
    obtained using the incorrect social security number. Using the correct social security number
    is essential for obtaining the co-borrower’s credit history and determining all debts to use for
    calculating ratios.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Indications of possible fraud were not resolved. HUD Handbook
                 4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
                 to-Four-Family Properties, Chapter 3-1 states that “we expect the application
                 package to contain sufficient documentation, to support the lender's decision to

2003-KC-1001                                Page 188
                                                                       Appendix E


approve the mortgage loan. When standard documentation does not provide
enough information to support this decision, the lender must provide additional
explanatory statements, consistent with other information in the application, to
clarify or supplement the documentation submitted by the borrower.” HUD
Handbook 4000.4, Chapter 2 states that it is the underwriter’s responsibility to be
aware of the warning signs that may indicate irregularities and to detect fraud. In
other words, the lender should ensure that any indications of possible fraud are
evaluated and that the appropriate steps are taken and adequate documentation is
provided to resolve any discrepancies. This file did not contain adequate
documentation that the lender attempted to resolve any discrepancies noted.




                            Page 189                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3813386

Insured Amount: $47,844

Section of Housing Act: 203(b)

Date of Loan Closing: 11/16/99

Current Status: Reinstated by mortgagor; Prior: Default status after 13 payments

W-2 Problem:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information provided on
  the W-2s submitted by the borrower was correct. His W-2s had an address that differed from
  the address stated on the application. In addition, Cendant did not obtain written or verbal
  verification of employment.
  o Auditee Comments: The W-2 information was consistent with other documentation in
      the file. The auditor noted that the W-2 address differed from the address stated on the
      application. The address on the 1997 W-2 was Rt.11 Box 664 . All other addresses in
      the file including the filed tax return MP-1040 referred to Rt. 11 Box 649 which is
      consistent with the address on the application. It is Cendant’s policy to obtain a verbal
      verification of employment prior to closing but documentation could not be located in the
      file. Please see attached W-2s, paystubs and 1040.
      § OIG Evaluation of Auditee Comments: We concur that the address issue on the W-2s
           is most likely an error. However, Cendant was not able to provide a verification of
           employment. We reclassified this as a deficiency in income verification.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
               Employment confirming 2-year employment history, only base pay used to
               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.




2003-KC-1001                               Page 190
                                                                                      Appendix E


FHA Case Number: 292-3813392

Insured Amount: $50,484

Section of Housing Act: 203(b)

Date of Loan Closing: 11/08/99

Current Status: Foreclosure completed; there is no loss information available at this time. Prior:
Default status after 9 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,289.41, but the borrower only provided evidence of $1,782.65 in a checking account
   which the borrower co-owns with another party.
   o Auditee Comments: Sufficient funds were verified as required by FHA guidelines. The
      borrower needed $1,834.15 for closing as evidenced by the final HUD-1 Settlement
      Statement. In error, the MCAW was not updated prior to closing. The auditor confirmed
      that $ 1,782.65 of assets were verified in the file. The additional $51.50 could have easily
      been paid from the borrower’s payroll check at the time of closing. Since the bank
      account in which the funds were verified was a joint account, either owner of the account
      may use any and all funds. Please see attached HUD-1.
      § OIG Evaluation of Auditee Comments: The lender approved this loan based on the
           borrower having $1,782.65 available to close a loan with closing costs of $2,289.41.
           The lender states that the borrower actually only needed $1,834.15 to close, but the
           loan was inappropriately approved using the higher amount. In either case, the
           borrower did not evidence having all the funds required to close.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.




                                           Page 191                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3815703

Insured Amount: $97,198

Section of Housing Act: 203(b)

Date of Loan Closing: 10/29/99

Current Status: Foreclosure started; Prior: Default status after 10 payments

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The Mortgage Credit Analysis Worksheet stated that the total due at
   closing was $5,826.85, but the borrower’s bank document listed an available balance of
   $1,437.68. The borrower received gift funds of $2,000 after the statement closing date, still
   leaving him with insufficient funds to close the loan.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain all of the required
   documentation to verify the employment of the borrower and co-borrower. Cendant did not
   obtain W-2s for the borrower. According to the Loan Prospector documentation guidelines,
   the absence of W-2s is only acceptable if the employer verifies employment greater than 2
   years, the borrower is not self-employed or commissioned, qualifying monthly income
   calculated using current base pay only, and borrower signs Internal Revenue Service Form
   8821 for previous two years. Cendant calculated the monthly income by using overtime
   income. The bankruptcy filing had indicated “husband works according to weather”.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of

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                                                                                   Appendix E


              Employment, and Internal Revenue Service form 8821. According to Loan
              Prospector documentation requirements, acceptable loans must have a verbal
              Verification of Employment, most recent year to date pay stub documenting one
              full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
              Employment confirming 2-year employment history, only base pay used to
              qualify, and Internal Revenue Service form 8821 can be substituted for the W-
              2(s). This loan did not contain the necessary income verification documentation.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s earlier assertion
           that the non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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FHA Case Number: 292-3817467

Insured Amount: $71,963

Section of Housing Act: 203(b)

Date of Loan Closing: 12/15/99

Current Status: Terminated-Paid in full; Prior: Default status after 8 payments

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain all of the required
   documentation to verify the employment of the borrower. Cendant accepted the employment
   offer letter as verification of employment. Cendant did not obtain a written or verbal
   verification of employment directly from the employer.
   o Auditee Comments: Income was verified as required by FHA guidelines. The borrower
       was qualified with job offer letter as permitted by FHA guidelines and was required to
       submit her first paystub to confirm she started the job as documented in the file. The
       borrower was working at the location for a temp agency when she was offered the job.
       Please see attached letter and paystub.
       § OIG Evaluation of Auditee Comments: Cendant provided appropriate documentation
           to confirm the amount of income used to qualify the borrower, however, they failed to
           provide a verification of employment. The job offer letter did not come directly from
           the employer to Cendant; the borrower provided it.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
                Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
                repay the mortgage debt. Income from a source that cannot be verified, is not
                stable, or will not continue should not be used when calculating the borrower’s
                income ratios. Part 2-6 says “the lender must verify the borrower's employment
                for the most recent two full years.” According to Chapter 3, income verification
                must be done through a written Verification of Employment and the most recent
                pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
                Employment, and Internal Revenue Service form 8821. According to Loan
                Prospector documentation requirements, acceptable loans must have a verbal
                Verification of Employment, most recent year to date pay stub documenting one
                full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
                Employment confirming 2-year employment history, only base pay used to
                qualify, and Internal Revenue Service form 8821 can be substituted for the W-
                2(s). This loan did not contain the necessary income verification documentation.

W-2 Problem:
· OIG Initial Finding: Cendant did not follow-up on discrepancies. The borrower’s address
  varied on the W-2s and was different from the current and prior addresses given on the
  Residential Loan Application.

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                                                                                        Appendix E


   o Auditee Comments: W-2 information was consistent with other documentation in the
     file. The only address that does not appear on the application but appears on a w-2 is 20
     Mintert Manor Dr., which also appears on her Firstar Trust Co. IRA account statement.
     This does not appear to be fraudulent. Please see attached IRA Statement.
     § OIG Evaluation of Auditee Comments: We concur that the W-2 information appears
          to be supported by other documentation.
          Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. Cendant did obtain a gift letter for $2,500, but did not verify the transfer of the
    gift funds.
    o Auditee Comments: No gift documentation was required to be verified because the
        source of funds was not a gift. Gift funds were not needed to close. The borrower had
        sufficient assets without a gift. The auditor confirmed that the MCAW required assets of
        $3,300.13. The IRA statement indicated that the borrower had $3,967.53 of assets. See
        attached IRA account statement.
        § OIG Evaluation of Auditee Comments: The lender did not obtain the required
            evidence of redemption to validate the amount of funds in the IRA. Therefore, the
            gift documentation is still required but could not be provided by the lender.
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                of the funds from the donor to the borrower. Acceptable procedures include
                obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                borrower's deposit slip or bank statement showing the deposit. If the funds are not
                deposited to the borrower's account prior to closing, the lender must obtain
                verification the closing agent received funds from the donor for the amount of the
                gift. The file must also contain a gift letter specifying the dollar amount, signed
                by the donor and the borrower, stating no repayment is required, and showing the
                donor's name, address, telephone number, and relationship to the borrower.” This
                file did not contain all the necessary documentation required when a borrower is
                using gift funds.




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Appendix E


FHA Case Number: 292-3818319

Insured Amount: $109,936

Section of Housing Act: 203(b)

Date of Loan Closing: 11/19/99

Current Status: Partial reinstatement; Prior: Default status after 8 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $3,300.13 and the borrower provided evidence of available funds of only $2,981.59 in a
   retirement account. It is unclear how much of that total is the vested amount available to the
   borrower.
   o Auditee Comments: Sufficient funds were verified as required by FHA guidelines.
        Although the borrower indicated that the source of funds was from the sale of a previous
        home, they also provide documentation of retirement funds. Typically 75 percent or more
        of the account is available for withdrawal which means that $2,236.19 was available from
        that account. As indicated on the HUD-1 Statement, the borrower only needed $2,137.57
        to close. We conditioned for the HUD-1 from that sale as a “do not disburse” condition
        to the closing agent. But the documentation could not be located in the file. In addition
        the seller contribution was $1,900. And a lender’s contribution of $134.06 was also
        documented at closing. See attached HUD-1 and account information.
        § OIG Evaluation of Auditee Comments: The underwriter approved the loan based on
            closing costs of $3,300.13 and available assets of $9,104. There is only support for
            $2,981.59 in assets. The closing costs per the HUD-1 were lower than the available
            assets, but the lender still inappropriately approved the loan based on unsupported
            numbers.
            Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
                property must be verified.” The lender must insure that the borrower has
                sufficient funds available to close the loan. This file did not contain adequate
                evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $5,139.72 per month. The one pay
   stub for the borrower provided verified $480.17 per month. There were no pay stubs
   available for the co-borrower. There was no verification of employment for either borrower.
   o Auditee Comments: Income was verified as required by FHA guidelines. A paystub in
       the file for the co-borrower disclosed that the YTD income was $47,253.37 and monthly
       his income is $ 4974.63. Two years W-2s for each borrower were available in the file. It

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                                                                                       Appendix E


       is Cendant’s policy to obtain verbal verification of employment prior to closing but
       documentation could not be located in the file. See attached income documentation.
       § OIG Evaluation of Auditee Comments: Cendant provided additional documentation
           to verify the income amount for the borrower and the co-borrower. However, the
           lender did not provide a verification of employment.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 says “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. This loan did not contain
               the necessary income verification documentation.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet were 22 percent and 59.87 percent. There were no compensating
   factors.
   o Auditee Comments: The ratios are consistent with FHA guidelines using permissible
       compensating factors are required. The compensating factor is that the borrower has the
       potential for increased earnings as indicated by job training or education in the borrower’s
       profession. In error, the MCAW was not updated with this information.
       § OIG Evaluation of Auditee Comments: There is nothing in the file to even indicate
            what the borrower’s profession is, nor what the potential is for increased earnings.
            Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
               REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
               Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
               (1) Mortgage payment expense to effective income. If the total mortgage payment
               does not exceed 29 percent of gross effective income, the relationship of the
               mortgage payment to income is considered acceptable. A ratio exceeding 29
               percent may be acceptable if significant compensating factors are presented.” and
               “(2) Total fixed payment to effective income. If the total mortgage payment and
               all recurring charges do not exceed 41 percent of gross effective income, the
               relationship of total obligations to income is considered acceptable. A ratio
               exceeding 41 percent may be acceptable if significant compensating factors are
               presented.” This file contained ratios that were above the acceptable limit without
               providing adequate compensating factors.



Indications of Possible Fraud:

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Appendix E


·   OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. The
    borrower submitted two W-2s for the same employer but they had two different state
    identification numbers.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. The issue of different state employer ID #’s would not seem to be an area in
        which a document might be altered. There would be no benefit to the borrower to alter
        this number. The IRS ID number is the same on both w-2s. See attached.
        § OIG Evaluation of Auditee Comments: Our issue with the two W-2s having different
            employer identification numbers was not a concern that the borrower might have
            altered the ID number, but a concern that inconsistent documentation was not
            followed up on. It potentially indicates that the borrower altered someone else’s W-2
            to attempt to disguise it as his own. Therefore, the lender did not review this issue in
            enough detail to determine that it was not a fraudulent document.
            Ø Violation: Indications of possible fraud were not resolved. HUD Handbook
                4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
                to-Four-Family Properties, Chapter 3-1 states that “we expect the application
                package to contain sufficient documentation, to support the lender's decision to
                approve the mortgage loan. When standard documentation does not provide
                enough information to support this decision, the lender must provide additional
                explanatory statements, consistent with other information in the application, to
                clarify or supplement the documentation submitted by the borrower.” HUD
                Handbook 4000.4, Chapter 2 states that it is the underwriter’s responsibility to be
                aware of the warning signs that may indicate irregularities and to detect fraud. In
                other words, the lender should ensure that any indications of possible fraud are
                evaluated and that the appropriate steps are taken and adequate documentation is
                provided to resolve any discrepancies. This file did not contain adequate
                documentation that the lender attempted to resolve any discrepancies noted.




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                                                                                       Appendix E


FHA Case Number: 292-3822365

Insured Amount: $25,787

Section of Housing Act: 203(b)

Date of Loan Closing: 12/22/99

Current Status: Reinstated by mortgagor; Prior: Default status after 8 payments

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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Appendix E


FHA Case Number: 292-3832940

Insured Amount: $58,969

Section of Housing Act: 203(b)

Date of Loan Closing: 01/24/00

Current Status: Foreclosure started, Prior: Default status after 6 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $3,519.88, but the borrower only provided evidence of $2,646.74. Of that amount, the
   borrower co-owns $648.06 of those assets with another party.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

W-2 Problem:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information provided on
  the W-2s submitted by the borrower was correct. One of the W-2s had the wrong social
  security number on it. There is no indication that the lender attempted to resolve this
  discrepancy.
  o Auditee Comments: None
      § OIG Evaluation of Auditeee Comments: N/A
          Ø Violation: W-2 information was not provided or was incorrect. HUD Handbook
              4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
              to-Four-Family Properties, Chapter 3-1 Part E. states that “as an alternative to
              obtaining a Verification of Employment, the lender may choose to obtain from the
              borrower original pay stub(s) covering the most recent thirty-day period, along
              with original copies of the previous two years' Internal Revenue Service W-2
              forms.” This file did not contain a Verification of Employment, and therefore,
              should have contained two years’ Internal Revenue Service W-2 forms. HUD
              Handbook 4000.4 Rev-1, Single Family Direct Endorsement Program, Chapter 2-
              1 states that “A Direct Endorsement mortgagee must conduct its business
              operations in accordance with accepted sound mortgage lending practices, ethics
              and standards.” These forms should have been scanned for accuracy.



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                                                                                      Appendix E


FHA Case Number: 292-3835425

Insured Amount: $69,964

Section of Housing Act: 203(b)

Date of Loan Closing: 02/03/00

Current Status: Repayment; Prior: Default status after 11 payments

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain all of the required
   documentation to verify the employment of the borrower. Copies of the borrower’s 1997 and
   1998 tax returns were obtained, but neither were signed copies. Cendant did not obtain the
   borrower’s W-2 forms. Cendant qualified the borrower by using overtime income, even
   though the borrower had only been on the job since April 22, 1999. Income at this job is
   significantly greater than his previous employment.
   o Auditee Comments: Income was verified as required by FHA guidelines. The
       borrower’s current and previous income/employment was verified via Processor’s
       certification in the file. A recent paystub with YTD earning was also provided. The
       borrower also provided an explanation for the increased salary. He went from a HVAC
       technician to a Commercial Refrigeration Technician. Overtime income was properly
       used because the borrower has a history of receiving it as verified by the previous
       employer. Please see attached processor’s certifications and paystubs.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           documentation provided is adequate to verify the borrower’s overtime income and
           increased earnings. However, the borrower qualified for this loan based on an income
           of $2,728 and the documentation only supports $2,518 in monthly income (year to
           date $16,369.10 divided by 6-1/2 months on the current job). The Loan Prospector
           feedback sheet in the file shows the loan scored “accept” using income of $2,728.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
               Employment confirming 2-year employment history, only base pay used to


                                           Page 201                                   2003-KC-1001
Appendix E


               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.




2003-KC-1001                              Page 202
                                                                                        Appendix E


FHA Case Number: 292-3842540

Insured Amount: $40,565

Section of Housing Act: 203(b)

Date of Loan Closing: 02/29/00

Current Status: Partial reinstatement; Prior: Default status after 0 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $1,227.64. The borrower submitted a gift letter for that amount, but did not provide
   evidence that he ever obtained those funds.
   o Auditee Comments: Sufficient funds were verified as required by FHA guidelines. The
       amount needed by the borrower was reduced at closing to $688.64 as indicated on the
       HUD-1 Settlement Sheet. In error, the Mortgage Credit Analysis Worksheet was not
       updated prior to closing to reflect the seller contribution. In addition to the $688.64 due
       at closing, the borrower paid $500 in earnest money deposit as well as $375 to the lender
       prior to closing. The seller contributed $845.31. The auditor noted that a gift letter was
       retained in the file for $1,227.64. Please see attached HUD-1.
       § OIG Evaluation of Auditee Comments: The lender approved this loan based on the
           borrower needing $1,227.64 to close the loan. There was not sufficient evidence of
           the required assets to cover this amount available in the file. The lender states that the
           borrower actually only needed $688.64 to close, but the borrower did not provide
           evidence for funds in that amount.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $1,161.34 per month. The pay stubs
   provided supported $984.49 per month. The income used by Cendant was based on 40 hours
   per week, but the two pay stubs provided show the borrower averaged 31.8 hours per week.
   o Auditee Comments: Income was verified as required by FHA guidelines. The
       Borrower’s YTD income as per the paystub for period ending 1/28 is $1,439.50 which
       reflects his monthly income. In error, the Mortgage Credit Analysis Worksheet was not
       updated to reflect this income. The pay for that period included 74.61 hour while the
       previous pay ending date 1/14 is for 71.33 hours. The processor’s certification confirms
       the borrower’s start date, status of his future employment, which is “good”, and the fact

                                            Page 203                                   2003-KC-1001
Appendix E


     that he averages 40 hours per week. One of these two paystubs shows an average of
     35.66 hours. It also shows the borrower was out sick 24 hours, which would account for
     the shorter hours worked. Therefore, a conservative figure was used to calculate this
     income since the income was calculated on fewer than 40 hours per week. Please see
     attached
   o paystubs, processors certification and MCAW.
     § OIG Evaluation of Auditee Comments: The $1,439.50 income figure is based on 3
         two-week pay periods. Using this method, the accurate income figure would be
         $1,439.50 divided by six weeks, multiplied by 52 weeks, and divided by 12 months to
         arrive at an average monthly income of $1,039.64.
         Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
             Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
             Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
             repay the mortgage debt. Income from a source that cannot be verified, is not
             stable, or will not continue should not be used when calculating the borrower’s
             income ratios. Part 2-6 says “the lender must verify the borrower's employment
             for the most recent two full years.” According to Chapter 3, income verification
             must be done through a written Verification of Employment and the most recent
             pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
             Employment, and Internal Revenue Service form 8821. This loan did not contain
             the necessary income verification documentation.

Inadequate Ratios/Qualifiers
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet after using the correct income amount were 38 percent and 44 percent.
   The compensating factors provided were 1) Ratios in line (this is not a compensating factor
   because if the ratios were in line, there would be no need for compensating factors) and 2)
   Good work history (the processor called borrower’s employer and included a note that stated
   “confirmed start date, future employment is good, and always works at least 40 hours per
   week.” This does not address the issue of previous work history).
   o Auditee Comments: The ratios were consistent with FHA guidelines and no
       compensating factors are required. With the corrected income of $1439.50 and corrected
       expense the ratios are now 26.08 percent and 27.15 percent respectively which are well
       within guidelines. In error, the Mortgage Credit Analysis Worksheet was not updated.
       Please see attached MCAW.
       § OIG Evaluation of Auditee Comments: Using the corrected income from above, the
           ratios are 36.11 percent and 42.37 percent. There are no compensating factors
           available.
           Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
               REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
               Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
               (1) Mortgage payment expense to effective income. If the total mortgage payment
               does not exceed 29 percent of gross effective income, the relationship of the
               mortgage payment to income is considered acceptable. A ratio exceeding 29

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                                                                                       Appendix E


               percent may be acceptable if significant compensating factors are presented.” and
               “(2) Total fixed payment to effective income. If the total mortgage payment and
               all recurring charges do not exceed 41 percent of gross effective income, the
               relationship of total obligations to income is considered acceptable. A ratio
               exceeding 41 percent may be acceptable if significant compensating factors are
               presented.” This file contained ratios that were above the acceptable limit without
               providing adequate compensating factors.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated he would receive a gift of $1,227, but only submitted a
    gift letter as documentation and did not submit the required proof of transfer or proof of the
    donor’s ability to pay.
    o Auditee Comments: No gift documentation was required to be verified because the
        source of funds was not a gift. A gift letter is in the file, however these funds were not
        required for closing so additional documentation was not required.
        § OIG Evaluation of Auditee Comments: The lender approved this loan based on a gift
             in the amount of the required closing costs of $1,227.64. The documentation for this
             gift was not in the file.
             Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                 Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                 Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                 of the funds from the donor to the borrower. Acceptable procedures include
                 obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                 borrower's deposit slip or bank statement showing the deposit. If the funds are not
                 deposited to the borrower's account prior to closing, the lender must obtain
                 verification the closing agent received funds from the donor for the amount of the
                 gift. The file must also contain a gift letter specifying the dollar amount, signed
                 by the donor and the borrower, stating no repayment is required, and showing the
                 donor's name, address, telephone number, and relationship to the borrower.” This
                 file did not contain all the necessary documentation required when a borrower is
                 using gift funds.


Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. The
    borrower stated on the application that he lived in the subject property for over a year before
    he purchased the property. There is no indication that the lender attempted to clarify this
    situation.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. The borrower disclosed that his previous and current address was the same
        address as the subject property. No proceeds from the rental transaction were used in the
        purchase transaction so there was no need to question the fact the he may have been
        living in the residence. It is evident that the borrower received mail at the address as


                                            Page 205                                   2003-KC-1001
Appendix E


       indicated in the attached notes that show the application package was delivered to that
       address. Please see attached notes.
       § OIG Evaluation of Auditee Comments: The borrower indicated on his application
           that he owned the residence for which he or she was applying for a mortgage to
           purchase. The lender did not verify that the information on the application was
           correct.
           Ø Violation: Indications of possible fraud were not resolved. HUD Handbook
               4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
               to-Four-Family Properties, Chapter 3-1 states that “we expect the application
               package to contain sufficient documentation, to support the lender's decision to
               approve the mortgage loan. When standard documentation does not provide
               enough information to support this decision, the lender must provide additional
               explanatory statements, consistent with other information in the application, to
               clarify or supplement the documentation submitted by the borrower.” HUD
               Handbook 4000.4, Chapter 2 states that it is the underwriter’s responsibility to be
               aware of the warning signs that may indicate irregularities and to detect fraud. In
               other words, the lender should ensure that any indications of possible fraud are
               evaluated and that the appropriate steps are taken and adequate documentation is
               provided to resolve any discrepancies. This file did not contain adequate
               documentation that the lender attempted to resolve any discrepancies noted.




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                                                                                      Appendix E


FHA Case Number: 292-3848073

Insured Amount: $64,966

Section of Housing Act: 203(b)

Date of Loan Closing: 04/11/00

Current Status: Servicing transferred or sold to another mortgagee, Prior: Default status after 10
payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $7,325.42 for the borrower and
   $36,627.10 for the co-borrower. It is assumed that these are yearly amounts. That is the
   equivalent of $3,662.71 per month. Cendant obtained pay stubs for one borrower, which
   indicates that borrower earns $2,258.50 per month.
   o Auditee Comments: Income was verified as required by FHA guidelines. The borrower
       submitted three paystubs covering the period 1/16/00 through 2/12/00. The income
       averaged using median hours @ 36.5 would be $3,490 per month. There is no co-
       borrower on this loan. In error, the Mortgage Credit Analysis Worksheet was not updated
       to reflect this change. See attached paystub and MCAW.
       § OIG Evaluation of Auditee Comments: The borrower actually submitted 4 pay stubs
           which, using that method, indicate average weekly hours worked of 32. Therefore,
           his monthly income is $3,072 and the lender approved this loan based on inflated
           income figures.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
               Employment confirming 2-year employment history, only base pay used to
               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.




                                           Page 207                                   2003-KC-1001
Appendix E


W-2 Problem
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information on the W-2s
  submitted by the borrower was correct. The borrower’s application lists a prior address in a
  city in MO that is different from the city on the W-2’s.
  o Auditee Comments: W-2 information was consistent with other documentation in the
      file.. The address on the 1999 w-2 matches the address on the borrower’s driver’s
      license. It was also independently verified as a previous address on the credit report. It
      does not match the application, however, borrower was living in a rental property and it
      appears that he was having his mail sent to his previous address. See attached W-2s,
      driver’s license and credit report.
      § OIG Evaluation of Auditee Comments: Cendant provided documentation to explain
           the situation concerning the borrower’s address.
           Ø Violation: Removed from Finding 2: Appendix D adjusted to reflect change.

·   OIG Initial Finding: Cendant Mortgage Corp. did not obtain the required documentation on
    the non-purchasing spouse. Income for the non-purchasing spouse is included on the
    Mortgage Credit Analysis Worksheet and the borrower’s application states that he is married.
    However, there is no information provided on the spouse at all. The lender cannot use a non-
    purchasing spouse’s income to qualify the borrower for a mortgage loan.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: We concur with Cendant’s previous assertion
           that the non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2: Appendix D adjusted to reflect change.




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                                                                                  Appendix E


FHA Case Number: 292-3848333

Insured Amount: $44,427

Section of Housing Act: 203(b)

Date of Loan Closing: 03/31/00

Current Status: Repayment; Prior: Default status after 4 payments

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain all of the required
   documentation to verify the employment of the borrowers. There was no 1998 W-2s
   obtained for the co-borrower. There was no evidence of verification of employment for the
   co-borrower.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: W-2 information was not provided or was incorrect. HUD Handbook
              4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
              to-Four-Family Properties, Chapter 3-1 Part E. states that “as an alternative to
              obtaining a Verification of Employment, the lender may choose to obtain from the
              borrower original pay stub(s) covering the most recent thirty-day period, along
              with original copies of the previous two years' Internal Revenue Service W-2
              forms.” This file did not contain a Verification of Employment, and therefore,
              should have contained two years’ Internal Revenue Service W-2 forms. HUD
              Handbook 4000.4 Rev-1, Single Family Direct Endorsement Program, Chapter 2-
              1 states that “A Direct Endorsement mortgagee must conduct its business
              operations in accordance with accepted sound mortgage lending practices, ethics
              and standards.” These forms should have been scanned for accuracy.




                                          Page 209                                2003-KC-1001
Appendix E


FHA Case Number: 292-3848551

Insured Amount: $71,963

Section of Housing Act: 203(b)

Date of Loan Closing: 03/10/00

Current Status: Property conveyed to insurer, HUD incurred a loss of $16,304; Prior: Default
status after 4 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,475.52, but the borrower did not provide any bank statements or support for the
   $1,500 gift.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated he would receive a gift of $1,500, but only submitted a
    gift letter as documentation and did not submit the required proof of transfer or proof of the
    donor’s ability to pay. There is a receipt of deposit, but no verification that the money was
    deposited into the borrower’s account.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
             Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                 Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                 Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                 of the funds from the donor to the borrower. Acceptable procedures include
                 obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                 borrower's deposit slip or bank statement showing the deposit. If the funds are not
                 deposited to the borrower's account prior to closing, the lender must obtain
                 verification the closing agent received funds from the donor for the amount of the
                 gift. The file must also contain a gift letter specifying the dollar amount, signed
                 by the donor and the borrower, stating no repayment is required, and showing the
                 donor's name, address, telephone number, and relationship to the borrower.” This


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                                                                      Appendix E


file did not contain all the necessary documentation required when a borrower is
using gift funds.




                           Page 211                                  2003-KC-1001
Appendix E


FHA Case Number: 292-3857227

Insured Amount: $28,663

Section of Housing Act: 203(b)

Date of Loan Closing: 04/30/00

Current Status: Property conveyed to insurer; HUD paid a claim of $29,583.91, the amount of
the loss is not known at this time. Prior: Default status after 1 payment.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $2,946 per month. The pay stubs
   provided verified that the borrower’s income is only $1,430 per month.
   o Auditee Comments: Income was verified as required by FHA guidelines. The income
       used to qualify the borrowers was $1,430. The ratios reflected on the MCAW were
       accurate at 19.45 percent and 19.45 percent. A systems error caused another income
       figure to drop on the form. In error, the Mortgage Credit Analysis Worksheet was not
       updated when the systems error was corrected. Please see attached MCAW, paystubs and
       W-2s.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           loan was approved based on the borrower’s income of $1,430.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated he would receive a gift of $1,400, but only submitted a
    gift letter as documentation and did not submit the required proof of transfer or proof of the
    donor’s ability to pay.
    o Auditee Comments: Gift information was obtained as required by FHA guidelines. A
        complete gift letter disclosed that a gift of $1,400 was given to the borrower. There is
        also a letter from the Realtor confirming receipt of those funds. The HUD-1 discloses
        that $1,400 was received in earnest money. FHA guidelines state “ If the [gift] funds are
        not deposited to the borrower’s account prior to closing, the lender must obtain
        verification the closing agent received the funds from the donor for the amount of the
        gift.” Additionally there is a processor’s certification that he spoke to the title company
        who said that they had the certified funds in their account. Please see attached letter,
        HUD-1, gift letter, realtor letter and processor’s certification.
        § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
             gift was adequately documented.
             Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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                                                                                      Appendix E


FHA Case Number: 292-3864552

Insured Amount: $62,467

Section of Housing Act: 203(b)

Date of Loan Closing: 04/28/00

Current Status: Servicing transferred or sold to another mortgagee, Prior: Default status after 1
payment.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,792.30, but the borrower only provided evidence of $29.10 in savings and $655.70 in
   checking.
   o Auditee Comments: Sufficient funds were verified as required by FHA guidelines. The
      assets to close came primarily from borrower’s 1999 tax refund of $1,957.00. Her bank
      account balance prior to receipt of the tax refund was $339.42 in checking and was
      automatically deposited into her account as indicated on the tax return. The balance
      request showed the same amount of the deposit and the account balance on 4/18/2000 as
      $2225.39. Please see attached tax returns, bank account statement and balance request.
      § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           borrower provided evidence of $2,225.39 to apply towards closing costs of $2,792.30.
           However, the borrower still did not have sufficient funds to close the loan, as
           indicated on the MCAW.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $3,666.67 per month. The pay stubs
   provided verified $2,000 per month. Cendant did not obtain a written or verbal verification
   of employment.
   o Auditee Comments: Income was verified as required by FHA guidelines. The borrower
       has a ten-year-old child and has provided the documentation that she receives $724 per
       month child support. The borrower’s effective monthly income is $2724. In error, the
       Mortgage Credit Analysis Worksheet was not updated. The borrower submitted two years
       1040’s and W-2s along with recent paystub with YTD earnings in lieu of the VOE. The
       ratios are 20.83 percent and 30.55 percent respectively which are well within guidelines.
       See attached income and court documentation.

                                           Page 213                                   2003-KC-1001
Appendix E


       §   OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           loan was approved based on the appropriate income amount. However, the lender
           failed to obtain a verification of employment.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 says “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. This loan did not contain
               the necessary income verification documentation.

W-2 Problem:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information provided on
  the W-2s submitted by the borrower was correct. The W-2s were sent to a name different
  from that on the loan application; however, there is no indication that the lender attempted to
  determine if this is the borrower.
  o Auditee Comments: W-2 information was consistent with documentation in the file. The
      employment documentation and divorce decree reflected the same social security number.
      The borrower’s name is one that it is easy to see that could be misspelled but all other
      documentation was consistent with the information provided on the application. See
      attached documents.
      § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
          W-2 misspelling was an error.
          Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower provided a gift letter for $2,000, but did not include proof of
    transfer or proof of the gift donor’s ability to pay.
    o Auditee Comments: Gift documentation was not required. No gift funds were needed to
        close as the borrower used her tax return to complete the transaction.
        § OIG Evaluation of Auditee Comments: According to the Mortgage Credit Analysis
            Worksheet (MCAW), the borrower needed $2,792.30 to close the loan. Even with the
            asset information provided by Cendant of $2,225.39, the borrower did not provide
            evidence of enough funds to close the loan absent the gift.
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                of the funds from the donor to the borrower. Acceptable procedures include
                obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                borrower's deposit slip or bank statement showing the deposit. If the funds are not

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                                                                                     Appendix E


              deposited to the borrower's account prior to closing, the lender must obtain
              verification the closing agent received funds from the donor for the amount of the
              gift. The file must also contain a gift letter specifying the dollar amount, signed
              by the donor and the borrower, stating no repayment is required, and showing the
              donor's name, address, telephone number, and relationship to the borrower.” This
              file did not contain all the necessary documentation required when a borrower is
              using gift funds.

Indications of Potential Fraud:
· OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. The bank
    statements provided had the same first name as the borrower, while the W-2s were in the
    name of someone with the same last name. There is no indication that these were the
    borrower’s documents or that the lender attempted to resolve this discrepancy.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. Please refer to response above under W-2 discussion. The other name
        appears to be her maiden name as evidenced on the credit report. See attached credit
        report.
        § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that
           name discrepancies can be explained by misspellings and / or the borrower’s maiden
           name.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




                                          Page 215                                  2003-KC-1001
Appendix E


FHA Case Number: 292-3867979

Insured Amount: $78,487

Section of Housing Act: 203(b)

Date of Loan Closing: 05/15/00

Current Status: Foreclosure Started, Prior: Default status after 3 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,551.01, but the borrower could only provide evidence of $1,067.13.
   o Auditee Comments: None
      § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet were 42.22 percent and 43.42 percent. The compensating factors
   provided were 1) Low monthly debt (If the debt were low, her ratios would also be low), 2)
   Stable income (The borrower has been on the job less than two years. There is not enough
   information to make that determination), and 3) Potential for increased income, overtime
   available (There is no support for this statement in the file).
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
               REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
               Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
               (1) Mortgage payment expense to effective income. If the total mortgage payment
               does not exceed 29 percent of gross effective income, the relationship of the
               mortgage payment to income is considered acceptable. A ratio exceeding 29
               percent may be acceptable if significant compensating factors are presented.” and
               “(2) Total fixed payment to effective income. If the total mortgage payment and
               all recurring charges do not exceed 41 percent of gross effective income, the
               relationship of total obligations to income is considered acceptable. A ratio
               exceeding 41 percent may be acceptable if significant compensating factors are


2003-KC-1001                               Page 216
                                                                                       Appendix E


               presented.” This file contained ratios that were above the acceptable limit without
               providing adequate compensating factors.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated he would receive a gift of $1,800, but only submitted a
    gift letter as documentation and did not submit the required proof of transfer or proof of the
    donor’s ability to pay.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
             Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                 Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                 Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                 of the funds from the donor to the borrower. Acceptable procedures include
                 obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                 borrower's deposit slip or bank statement showing the deposit. If the funds are not
                 deposited to the borrower's account prior to closing, the lender must obtain
                 verification the closing agent received funds from the donor for the amount of the
                 gift. The file must also contain a gift letter specifying the dollar amount, signed
                 by the donor and the borrower, stating no repayment is required, and showing the
                 donor's name, address, telephone number, and relationship to the borrower.” This
                 file did not contain all the necessary documentation required when a borrower is
                 using gift funds.




                                            Page 217                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3869730

Insured Amount: $98,190

Section of Housing Act: 203(b)

Date of Loan Closing: 05/19/00

Current Status: Property conveyed to insurer; HUD incurred as loss of $27,666.00. Prior:
Default status after 4 payments

Inconsistent/Unverified Income/W-2 Problem:
· OIG Initial Finding: Cendant Mortgage Corp. did not obtain all of the required
   documentation to verify the employment of the borrower. Cendant did not obtain a verbal or
   written verification of employment, W-2s, or tax returns.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. This loan did not contain
               the necessary income verification documentation. W-2 information was not
               provided or was incorrect. HUD Handbook 4155.1 REV-4, Chg.1, Mortgage
               Credit Analysis for Mortgage Insurance on One-to-Four-Family Properties,
               Chapter 3-1 Part E. states that “as an alternative to obtaining a Verification of
               Employment, the lender may choose to obtain from the borrower original pay
               stub(s) covering the most recent thirty-day period, along with original copies of
               the previous two years' Internal Revenue Service W-2 forms.” This file did not
               contain a written Verification of Employment, and therefore, should have
               contained two years’ Internal Revenue Service W-2 forms.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability. Furthermore, the non-purchasing spouse’s name is on the bank
   statement. These are co-owned assets that were used to close the loan. The lender has no
   way of knowing what portion of those assets the borrower has available to him nor what
   other debts of the non-purchasing spouse are to be paid out of those assets.

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                                                                                  Appendix E


o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
  waive their homestead interest in the property and create a valid first lien as permitted and
  required by FHA guidelines.
  § OIG Evaluation of Auditee Comments: We agree with Cendant’s assertion that the
     non-purchasing spouse must sign the Deed of Trust to create a valid lien.
     Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




                                       Page 219                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3870377

Insured Amount: $35,606

Section of Housing Act: 203(b)

Date of Loan Closing: 06/14/00

Current Status: Modification; Prior: Default status after 8 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $1,077.52 and the borrower provided evidence of available funds of only $588.70, which
   is co-owned with another person.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $1,470 per month. The Social
   Security statements provided verified $1,132 per month. Cendant obtained the Social
   Security benefits letter from the borrowers through their realtor. Cendant should have
   obtained verification directly from the source, or through federal tax returns, rather than
   having the documentation pass through the borrowers.
   o Auditee Comments: Income was verified as required by FHA guidelines. The income
       disclosed on the Mortgage Credit Analysis Worksheet is accurate. Income was
       documented in the file. The borrower has social security income and social services
       income that is documented with the aware letter and bank statements the verify proof of
       deliver. The co-borrower has a social security award letter documenting income and a
       bank statement verifying the proof of deliver. Please note that non-taxable income is
       grossed up by 15 percent so that is treated comparably to taxable income. Please see
       attached income documentation.
       § OIG Evaluation of Auditee Comments: With the additional documentation provided
           by Cendant, we concur with their assertion that the borrower’s income is verified at
           the higher amount.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.



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                                                                                      Appendix E


Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet using the correct income calculations were 31percent and 34 percent.
   The only compensating factor listed on the worksheet was conservative use of credit. HUD
   Handbook 4155.1 states an acceptable compensating factor is if the borrower has
   demonstrated a conservative attitude toward use of credit and an ability to accumulate
   savings. The borrower did not demonstrate savings, and the borrower’s credit report shows
   monthly payments of $787 and 1 outstanding judgment.
   o Auditee Comments: The ratios are consistent with FHA guidelines and no compensating
       factors are required. Based on the income discussion above, the ratios on the MCAW are
       24.01 percent and 26.73 percent respectively well within guidelines. See attached
       MCAW.
       § OIG Evaluation of Auditee Comments: With the additional documentation provided
           by Cendant, we concur with their assertion that the borrower’s income is verified at
           the higher amount. Therefore, the ratios are within acceptable guidelines.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. The
    borrower submitted a signed explanation for lack of credit, but it was written and signed by
    someone other than the borrower. The bank statement is in the name of someone other than
    the borrowers.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Indications of possible fraud were not resolved. HUD Handbook
               4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
               to-Four-Family Properties, Chapter 3-1 states that “we expect the application
               package to contain sufficient documentation, to support the lender's decision to
               approve the mortgage loan. When standard documentation does not provide
               enough information to support this decision, the lender must provide additional
               explanatory statements, consistent with other information in the application, to
               clarify or supplement the documentation submitted by the borrower.” HUD
               Handbook 4000.4, Chapter 2 states that it is the underwriter’s responsibility to be
               aware of the warning signs that may indicate irregularities and to detect fraud. In
               other words, the lender should ensure that any indications of possible fraud are
               evaluated and that the appropriate steps are taken and adequate documentation is
               provided to resolve any discrepancies. This file did not contain adequate
               documentation that the lender attempted to resolve any discrepancies noted.




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Appendix E


FHA Case Number: 292-3871133

Insured Amount: $68,964

Section of Housing Act: 203(b)

Date of Loan Closing: 06/22/00

Current Status: Servicing transferred or sold; Prior: Default status after 5 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Only one pay stub was provided.
   o Auditee Comments: Income was verified as required by FHA guidelines. The file
       contained income documentation including the borrower’s two year W-2s in addition to
       the paystub. The bank statement also provides evidence of two automatic deposits from
       her employer’s payroll system for $700. Please see attached income documentation.
       § OIG Evaluation of Auditee Comments: The documentation required by FHA for
           income includes the most recent year-to-date pay stub documenting 1 full month’s
           earnings. Cendant could only provide one pay stub covering a two week-period.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. This loan did not contain
               the necessary income verification documentation.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios, when recalculated using the
   information on the Mortgage Credit Analysis Worksheet, were 37.22 percent and 53.7
   percent. There were no compensating factors listed.
   o Auditee Comments: The ratios are consistent with FHA guidelines and no compensating
       factors are required. The borrower had additional income from child support and
       maintenance. The court order is in the file. The total amount is paid the court and is
       $700 per month. Using the additional income, the ratios are 25.58 percent and 36.95
       percent respectively which is within guidelines. In error, the Mortgage Credit Analysis
       Worksheet was not updated.
       § OIG Evaluation of Auditee Comments: The borrower included documentation of
           child support and alimony to be included in income. However, to use these figures,

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                                                                          Appendix E


the borrower must demonstrate receipt of those funds for one full year. Because the
lender did not document 12 months of receipt of funds, they cannot use the child
support or alimony income to qualify the borrower. Therefore, the ratios are still too
high.
Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
    REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
    Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
    (1) Mortgage payment expense to effective income. If the total mortgage payment
    does not exceed 29 percent of gross effective income, the relationship of the
    mortgage payment to income is considered acceptable. A ratio exceeding 29
    percent may be acceptable if significant compensating factors are presented.” and
    “(2) Total fixed payment to effective income. If the total mortgage payment and
    all recurring charges do not exceed 41 percent of gross effective income, the
    relationship of total obligations to income is considered acceptable. A ratio
    exceeding 41 percent may be acceptable if significant compensating factors are
    presented.” This file contained ratios that were above the acceptable limit without
    providing adequate compensating factors.




                                Page 223                                  2003-KC-1001
Appendix E


FHA Case Number: 292-3873350

Insured Amount: $62,286

Section of Housing Act: 203(b)

Date of Loan Closing: 05/31/00

Current Status: Foreclosure completed; there is no loss information available at this time. Prior:
Default status after 5 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing was $1,884.61, but the borrower could only
   provide evidence of $1,223.57 in two checking accounts.
   o Auditee Comments: Sufficient assets were verified as required by FHA guidelines. The
      auditor verified that assets of $1,223.57 were documented in the file. In addition, the
      borrower paid $500 in earnest money not included in the bank statement. The HUD-1
      discloses proof of receipt of the deposit. In addition, there were seller paid closing costs.
      The borrower did not need gift funds. In error, the Mortgage Credit Analysis Worksheet
      was not updated prior to closing. Please see attached HUD-1 and MCAW.
      § OIG Evaluation of Auditee Comments: The borrower did not evidence the required
           amount of $1,884.61.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated he would receive a gift of $2,000, but only submitted a
    gift letter as documentation and did not submit the required proof of transfer or proof of the
    donor’s ability to pay.
    o Auditee Comments: Gift documentation was not required because the source of funds
        was not a gift. Based on the information regarding sufficient funds to close provided
        above, a gift was not required.
        § OIG Evaluation of Auditee Comments: When the loan was approved, it was based
             upon the information that the borrower had funds in the form of a gift and those funds
             were not verified.
             Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                 Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                 Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                 of the funds from the donor to the borrower. Acceptable procedures include

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                                                                                       Appendix E


               obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
               borrower's deposit slip or bank statement showing the deposit. If the funds are not
               deposited to the borrower's account prior to closing, the lender must obtain
               verification the closing agent received funds from the donor for the amount of the
               gift. The file must also contain a gift letter specifying the dollar amount, signed
               by the donor and the borrower, stating no repayment is required, and showing the
               donor's name, address, telephone number, and relationship to the borrower.” This
               file did not contain all the necessary documentation required when a borrower is
               using gift funds.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. The
    borrower submitted several forms with different signatures. Furthermore, on many of these,
    his name was misspelled. There is no evidence that the lender attempted to resolve this
    discrepancy.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. The auditor stated “ The borrower submitted several forms with different
        signatures.” A review of all of the documents in the file shows that the signatures for the
        borrower are virtually identical. We were unable to identify the issue noted by the
        examiner.
        § OIG Evaluation of Auditee Comments: We concur with Cendant that the signatures
            are similar on the documents provided.
            Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




                                            Page 225                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3874878

Insured Amount: $64,964

Section of Housing Act: 203(b)

Date of Loan Closing: 06/09/00

Current Status: Partial claim submitted; Prior: Default status after 6 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $3,826.19. The borrower did not provide any evidence of assets other that an unverified
   letter from his employer indicating a bonus of $2,300.
   o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.




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                                                                                      Appendix E


FHA Case Number: 292-3875640

Insured Amount: $39,770

Section of Housing Act: 234(c)

Date of Loan Closing: 05/26/00

Current Status: Property conveyed to insurer; HUD paid a claim of $41,822, there is no loss
information available at this time. Prior: Default status after 8 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $2,079.78 per month. The pay stubs
   available verified $2,416.83 per month. This higher amount was the average of his first 5
   weeks pay on this new job. Cendant did not obtain verification of employment.
   o Auditee Comments: Income was verified as required by FHA guidelines. The
       verification of employment was in the file but did not appear to be in the submission
       package. In reading the calculation tape used to complete the MCAW, it appears that the
       error was made by averaging the paystubs and dividing by 6 weeks instead of 5 and then
       completing the calculation, thus giving the lower monthly income. The borrower actually
       made more per month. The file also contains alternative documentation in lieu of a
       Verification of Employment form includes a recent computer generated pay stub, with
       year-to-date earnings specified and 2 years W-2s. See attached income documentation.
       § OIG Evaluation of Auditee Comments: We do not take issue with the income
           calculation. The lender did provide a verification of employment, however it was
           provided after the closing and could not have been considered in the approval
           decision.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. This loan did not contain
               the necessary income verification documentation.

W-2 Problem:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify that the information provided on
  the W-2s submitted by the borrower was correct. The borrower provided W-2s for three
  employers each year for two years, but the application only had one of those employers listed.


                                           Page 227                                   2003-KC-1001
Appendix E


   o Auditee Comments: W-2 information was consistent with documentation in the file. The
     borrower’s previous primary employer was Banta & Stude. It appears that he had a part
     time job as well working for Bryan Foundations. The only other W-2 is from the
     Construction Worker’s Welfare fund, which appears to be a benefit provided by his
     union. He was employed full time with Banta & Stude for the previous two years. Even
     if he worked part time hours in his primary job, the W-2s provide proof that he was
     employed for at least 2 years with them. See attached w-2s.
     § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that they
         verified 2 years employment.
         Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on indications of possible fraud. The
    borrower’s application stated that he is single, but he received a gift from his mother-in-law.
    The bank statement provided also showed what appears to be a spouse as having access to the
    account.
    o Auditee Comments: There were no fraud indicators in the file at the time the loan was
        processed. The application was not updated to reflect that the borrower is married. A
        marital waiver was located in the file as well as borrower’s filing status on W-2s married.
        However, there is also a note in the file that Borrower and wife have filed for divorce, but
        that it would it will not be final until after closing. See attached.
        § OIG Evaluation of Auditee Comments: We concur that the lender verified the
            borrower’s marital status.
            Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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                                                                                       Appendix E


FHA Case Number: 292-3876022

Insured Amount: $69,328

Section of Housing Act: 203(b)

Date of Loan Closing: 07/05/00

Current Status: Foreclosure started; Prior: Default status after 3 payments

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,894.91. The borrower did not provide any evidence of assets other than a letter from
   the borrower’s wife stating they do not have any bank accounts.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. A gift of $3,000 was included in the “Assets” section of the Residential Loan
    Application, but a gift letter was not provided.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
            Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 Part C states that “the lender must document the transfer
               of the funds from the donor to the borrower. Acceptable procedures include
               obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
               borrower's deposit slip or bank statement showing the deposit. If the funds are not
               deposited to the borrower's account prior to closing, the lender must obtain
               verification the closing agent received funds from the donor for the amount of the
               gift. The file must also contain a gift letter specifying the dollar amount, signed
               by the donor and the borrower, stating no repayment is required, and showing the
               donor's name, address, telephone number, and relationship to the borrower.” This
               file did not contain all the necessary documentation required when a borrower is
               using gift funds.



                                           Page 229                                   2003-KC-1001
Appendix E


Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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                                                                                     Appendix E


FHA Case Number: 292-3879607

Insured Amount: $54,471

Section of Housing Act: 203(b)

Date of Loan Closing: 07/05/00

Current Status: Reinstated by mortgagor; Prior: Default status after 2 payments.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability. Furthermore, the non-purchasing spouse’s name is on the bank
   statement. These are co-owned assets that were used to close the loan. The lender has no
   way of knowing what portion of those assets the borrower has available to him nor what
   other debts of the non-purchasing spouse are to be paid out of those assets.
   o Auditee Comments: None.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s previous assertion
           that the non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change




                                          Page 231                                  2003-KC-1001
Appendix E


FHA Case Number: 292-3881442

Insured Amount: $28,564

Section of Housing Act: 703(b)

Date of Loan Closing: 08/07/00

Current Status: Partial reinstatement; Prior: Default status after 4 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $1,172 per month. According to the
   written verification of employment, the borrower earns $522.66 per month.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
               Employment confirming 2-year employment history, only base pay used to
               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated he would receive a gift of $1,000, but did not submit a gift
    letter, proof of transfer, or proof of the donor’s ability to pay. There was a note in the file that
    stated that the gift donor was on vacation and would provide the information upon his return.
    The lender failed to obtain the required information from the borrower after the donor
    returned from vacation.
    o Auditee Comments: None
         § OIG Evaluation of Auditee Comments: N/A
             Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                 Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                 Properties, Chapter 2-10 Part C states that “the lender must document the transfer

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                                                                                       Appendix E


               of the funds from the donor to the borrower. Acceptable procedures include
               obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
               borrower's deposit slip or bank statement showing the deposit. If the funds are not
               deposited to the borrower's account prior to closing, the lender must obtain
               verification the closing agent received funds from the donor for the amount of the
               gift. The file must also contain a gift letter specifying the dollar amount, signed
               by the donor and the borrower, stating no repayment is required, and showing the
               donor's name, address, telephone number, and relationship to the borrower.” This
               file did not contain all the necessary documentation required when a borrower is
               using gift funds.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s previous assertion
           that the non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change




                                            Page 233                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3888313

Insured Amount: $65,956

Section of Housing Act: 203(b)

Date of Loan Closing: 07/20/00

Current Status: First legal action to foreclose, Prior: Default status after 4 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $1,995.36, but the borrower could only provide evidence of 1,811.86 in available assets,
   including a bank print-out showing $1,611.86. This was not, however, a bank statement nor
   was there a valid explanation for a deposit of $1,484.71 made the day before the statement
   was printed.
   o Auditee Comments: Sufficient funds were verified as required by FHA guidelines. The
       HUD-1 Settlement Sheet disclosed the borrower needed $1304.28 to close. $1811.86
       was documented in the file. The bank printout was faxed directly to us from the bank and
       is an acceptable form for the bank statements as long as the bank information is included
       and it is signed or stamped by a bank employee. Also, the borrower’s explanation for the
       large deposit is in the file. Please see attached HUD-1 and borrower explanation.
       § OIG Evaluation of Auditee Comments: While the closing costs were lower, at the
           time the loan was approved, approval was based on the borrower having only
           $1,811.86 to close a loan with closing costs of $1,995.36. According to the Loan
           Prospector feedback sheet, the loan was approved with $657 in reserves after payment
           of closing costs. According to the Insurance Application Results sheet, the loan was
           approved with $4,000 in assets. The borrower’s documentation did not support either
           of those figures.
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
                Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
                property must be verified.” The lender must insure that the borrower has
                sufficient funds available to close the loan. This file did not contain adequate
                evidence of the funds needed to close.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $4,881.43 per month. The pay stubs
   provided supported $2,214.77 per month.
   o Auditee Comments: Income was verified as required by FHA guidelines. The income
       figure of $2,214.77 was verified. In error, the Mortgage Credit Analysis Worksheet was
       not updated. The ratio calculation using this income was reflected accurately on the


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                                                                       Appendix E


MCAW at 28.91 percent and 29.41 percent respectively. These are well within the
guidelines. See revised MCAW.
§ OIG Evaluation of Auditee Comments: We agree that the borrower was approved
   based on the correct income figure.
   Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




                                Page 235                               2003-KC-1001
Appendix E


FHA Case Number: 292-3892293

Insured Amount: $53,972

Section of Housing Act: 203(b)

Date of Loan Closing: 07/31/00

Current Status: Delinquent 90 days or more; Prior: Default status after 6 payments.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet after using the correct amount of monthly liabilities were 12.13 percent
   and 51.39 percent. There were no compensating factors because the original ratios calculated
   on the MCAW were within the guidelines.
   o Auditee Comments: The ratios were consistent with FHA guidelines and no
       compensating factors were required. The borrower was required to bring proof of
       payment on the First Credit account with the $88 payment. The loan closed and the proof
       was not sent to us. However adding this amount into the monthly debt, the figure would
       be $1,065 per month and the ratios would then be 11.99 percent and 38.26 percent
       respectively. This would be well within the guidelines and no need for compensating
       factors would exist. Please see attached revised MCAW.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           additional monthly payment would not increase the ratios substantially.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust but not
   on the Note. Therefore, the non-purchasing spouse has a right to the asset but no
   responsibility for the liability.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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                                                                                       Appendix E


FHA Case Number: 292-3896129

Insured Amount: $ 97,950

Section of Housing Act: 203(b)

Date of Loan Closing: 9/5/00

Current Status: Partial reinstatement; Prior: Default status after 2 payments

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrowers’ income.
   Income on the Mortgage Credit Analysis Worksheet was $11,973.48 per month. Income on
   the Residential Loan Application totaled $4,723.48 per month for the two co-borrowers; this
   amount was supported by pay stubs and written verification of employment. No income
   information was provided on the worksheet or the Residential Loan Application, and no
   income documents were obtained, for the primary borrower. Cendant used income of a co-
   borrower, but did not obtain a credit report for that borrower. The co-borrower’s liabilities
   and credit history are to be considered in the determination of creditworthiness.
   o Auditee Comments: The income was verified as required by FHA guidelines. The
       income figure used to calculate the Mortgage Credit Analysis Worksheet was consistent
       with the income of $4,723.48 confirmed by the auditor. Due to a systems error, the
       original stated income printed on the MCAW even after the income had been updated in
       the system although the ratios calculated based on the income of $4,723.48. In error, the
       MCAW was not updated after the systems issue was corrected. The co-borrower’s credit
       report was in the file but not in the submission package. See attached MCAW and credit
       report.
       § OIG Evaluation of Auditee Comments: We disagree with Cendant’s use of the co-
           borrower’s income. Her monthly debts of $562 were not included in the liabilities
           considered in approving the loan; therefore, it was inappropriate to include her
           income.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 says “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. According to Loan
               Prospector documentation requirements, acceptable loans must have a verbal
               Verification of Employment, most recent year to date pay stub documenting one
               full month’s earnings, and most recent 2 years’ W-2(s). A Verification of
               Employment confirming 2-year employment history, only base pay used to

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               qualify, and Internal Revenue Service form 8821 can be substituted for the W-
               2(s). This loan did not contain the necessary income verification documentation.




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                                                                                        Appendix E


FHA Case Number: 292-3899329

Insured Amount: $129,934

Section of Housing Act: 203(b)

Date of Loan Closing: 08/11/00

Current Status: Servicing transferred or sold; Prior: Default status after 4 payments

Inconsistent Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   The borrower changed jobs 3 weeks before closing. Cendant obtained a verbal verification
   from the borrower’s new employer. This verification did not include the start date or the pay
   amount. The loan was based on monthly income from his prior job.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
              Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
              Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
              repay the mortgage debt. Income from a source that cannot be verified, is not
              stable, or will not continue should not be used when calculating the borrower’s
              income ratios. Part 2-6 says “the lender must verify the borrower's employment
              for the most recent two full years.” According to Chapter 3, income verification
              must be done through a written Verification of Employment and the most recent
              pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
              Employment, and Internal Revenue Service form 8821. This loan did not contain
              the necessary income verification documentation.

Poor Credit:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan despite the high level of
   credit risk, based on the co-borrower’s credit report scores. The co-borrower’s credit report
   scores were 596, 536 and 507.
   o Auditee Comments: The credit score for the co-borrower was consistent with FHA
       guidelines and did not represent a high level of risk. The median credit score for the co-
       borrower was 673 not 536 as indicated by the auditors. In addition, he had assets in his
       retirement account with a balance of $18,454.54. Please see attached credit report.
       § OIG Evaluation of Auditee Comments: Cendant stated that the co-borrower’s credit
            scores were higher than we reported. We inadvertently labeled the person with the
            credit problems as the co-borrower instead of the borrower.
            Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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FHA Case Number: 292-3902848

Insured Amount: $81,697

Section of Housing Act: 203(b)

Date of Loan Closing: 09/25/00

Current Status: Property conveyed to insurer; HUD incurred a loss of $16,935. Prior: Default
status after 5 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $12,600.08, but the borrower could only provide evidence of $1,323.89 in a checking
   account. These assets were co-owned with another party. The lender has no way of knowing
   what portion of those assets the borrower has available to him nor what other debts of the
   non-purchasing spouse are to be paid out of those assets.
   o Auditee Comments: Sufficient funds were verified as required by FHA guidelines. The
      assets to close were from the sale of the borrower’s previous home. The loan was
      conditioned for the HUD 1 settlement statement from that sale which took place on the
      same day with total proceeds of $19,879.74. As per the separation agreement, the
      borrower retained 60 percent which is $11,927.90. In addition, the auditor confirmed
      there were $1,323.89 in checking account assets. The MCAW required assets of
      $12,600.08 and $13,251.79 is documented in the file. Please see attached HUD-1 and
      separation agreement.
      § OIG Evaluation of Auditee Comments: Cendant provided adequate documentation to
           support the funds needed to close.
           Ø Violation: Removed from Finding 2; Appendix D updated to reflect change.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $10,878.24 per month. According
   to the written verification of employment, the borrower earns $49,999 per year, or $4,166.58
   per month.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 says “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent

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                                                                                     Appendix E


               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. This loan did not contain
               the necessary income verification documentation.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet were 18 percent and 57 percent. These ratios excluded the mortgage
   payment on the borrower’s current home; had it been included, the second ratio would have
   been 81%. The compensating factors provided were 1) Reducing housing expense (Housing
   expense went from $966 to $740. However, the borrower was only required to make half of
   that house payment, her ex-husband was making the other half. Therefore, her housing
   expense actually increased from $498 to $740 per month), 2) Excellent reserves (There is no
   support for the funds it will take to close the loan, not to mention any reserves that will be
   available after the loan closes), 3) Not max financing (Regardless of the percentage amount
   of financing, her ratios indicate that she will not have the funds available to make her
   mortgage payment), and 4) Present property being sold (There is no support provided that the
   house had been sold).
   o Auditee Comments: The ratios were consistent with FHA guidelines with compensating
       factors. The following compensating factors supported the ratios: 1) Reserves used were
       from bank account and the sale of the previous home. 2)The borrower’s housing expense
       was reduced. Since the borrower’s former husband was on the previous home loan, the
       assumption was made that our borrower was only responsible for half of the housing
       expense. As per the terms of the separation agreement in the file, the borrower was
       responsible for all of the expenses relating to the marital (previous) home. That housing
       expense was higher than our loan. 3)The present property was sold as evidenced by the
       HUD 1 is in the file. 4) The borrower made a large down payment toward the purchase of
       the property. The loan to value at closing was 88.88 percent which is lower that the loan
       to value on most FHA loans.
       § OIG Evaluation of Auditee Comments: We disagree with Cendant’s assertion that the
           compensating factors are adequate. 1) Reducing Housing Expense – per the divorce
           decree, the borrower paid $502.50 toward the monthly mortgage payment of the
           previous residence. The new monthly payment is $750.96. Therefore, it is not
           reduced. The lender stated that the borrower is responsible for the full expenses of
           the house, but those relate to utilities and such, not the mortgage payment. 2)
           Excellent Reserves – after closing the borrower only had $651.71 in reserves
           ($13,251.79 supported assets less $12,600.08 needed to close). 3) Not Max Financing
           – we concur that the borrower did not finance the maximum amount, but feel that this
           is not an adequate compensating factor. 4) Present Property Being Sold – the lender
           did provide evidence that the property was sold, but this only brings the total debt to
           income ratio down from 81 percent to 57 percent, when 41 percent is the maximum
           acceptable.
           Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
               REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
               Family Properties, Chapter 2-12 states that “The lender must compute two ratios:

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Appendix E


               (1) Mortgage payment expense to effective income. If the total mortgage payment
               does not exceed 29 percent of gross effective income, the relationship of the
               mortgage payment to income is considered acceptable. A ratio exceeding 29
               percent may be acceptable if significant compensating factors are presented.” and
               “(2) Total fixed payment to effective income. If the total mortgage payment and
               all recurring charges do not exceed 41 percent of gross effective income, the
               relationship of total obligations to income is considered acceptable. A ratio
               exceeding 41 percent may be acceptable if significant compensating factors are
               presented.” This file contained ratios that were above the acceptable limit without
               providing adequate compensating factors.




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                                                                                         Appendix E


FHA Case Number: 292-3907011

Insured Amount: $14,381

Section of Housing Act: 203(b)

Date of Loan Closing: 09/08/00

Current Status: Delinquent 90 days or more; Prior: Default status after 1 payment

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet were 21.15 percent and 33.40 percent. Cendant excluded from its debt
   to income calculation a monthly payment of $70 on an account balance of $490, on the basis
   of there being less than 10 months remaining. However, HUD requires debts lasting less than
   ten months to be counted if the amount of the debt affects the borrower's ability to make the
   mortgage payment during the months immediately after loan closing; this is especially true if
   the borrower will have limited or no cash assets after loan closing. This borrower had no
   cash after closing and monthly Social Security disability benefits of $532 per month, so this
   debt did affect the borrower’s finances. The re-calculated ratios, when the additional $70
   monthly debt was included, were 21.15 percent and 44.84 percent. The compensating factors
   provided were 1) ratios in line (if ratios were in line, compensating factors would not be
   needed); 2) conservative use of debt (HUD allows a compensating factor of “The borrower
   has demonstrated a conservative attitude toward the use of credit and an ability to accumulate
   savings”. This borrower has not accumulated any savings.); and social security grossed up
   115 percent (Disability payments have already been “grossed up” for the income figure used
   to calculate the ratios. This is not a compensating factor to justify when the ratios are still too
   high).
   o Auditee Comments: The ratios are consistent with FHA guidelines and no compensating
       factors are required. The borrower’s ratios are consistent with FHA guidelines. It is not
       uncommon for an underwriter to add compensating factors as a matter of habit, however
       the concern that the $70 payment was omitted with a balance of $490 is not significant.
       The “high balance” on that account, as per the credit report was $490. The “Current
       balance” as of the date of the credit report was $350. There were only 5 payments left on
       that account. Since the borrower’s first payment was two months away from the closing
       date, she would have only had 3 payments. It was reasonable to assume that if the
       borrower current housing expense was $175 and her housing obligation was decreasing to
       $129 per month, that she would have continued to make her payments on a grossed up
       income of $611.80 per month. See attached credit report.
       § OIG Evaluation of Auditee Comments: We agree with Cendant’s assertion that the
           borrower had a balance remaining on the questionable account of $350 (or 5 months
           of payments) and that the borrower would only make 3 payments after closing before
           the debt is paid in full. However, that $70 payment, coupled with the borrowers
           existing debt of $75 and the new mortgage payment of $129.43, is over 44 percent of

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Appendix E


          her income. This fixed debt amount of $274.43 could be quite burdensome to a
          person that only nets $532 per month. The compensating factor used states that the
          borrower’s current housing expense is decreasing. As we discussed with Cendant
          during our audit, the $175 that Cendant uses as a standard for previous housing
          expense is not allowable. The borrower’s housing expense is actually increasing.
          Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
              REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
              Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
              (1) Mortgage payment expense to effective income. If the total mortgage payment
              does not exceed 29 percent of gross effective income, the relationship of the
              mortgage payment to income is considered acceptable. A ratio exceeding 29
              percent may be acceptable if significant compensating factors are presented.” and
              “(2) Total fixed payment to effective income. If the total mortgage payment and
              all recurring charges do not exceed 41 percent of gross effective income, the
              relationship of total obligations to income is considered acceptable. A ratio
              exceeding 41 percent may be acceptable if significant compensating factors are
              presented.” This file contained ratios that were above the acceptable limit without
              providing adequate compensating factors.




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                                                                                        Appendix E


FHA Case Number: 292-3910628

Insured Amount: $60,068

Section of Housing Act: 203(b)

Date of Loan Closing: 09/15/00

Current Status: Repayment; Prior: Default status after 4 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $2,732.62, but the borrower could only provide evidence of $1,315 in his bank account.
   The bank information was from an account inquiry, not the required complete bank
   statements. An earnest money deposit of $1,500 was listed on the worksheet and the
   application, but there was no verification of these funds. The earnest money deposit
   exceeded 2 percent of the $60,100 sales price.
   o Auditee Comments: Sufficient funds were verified as required by FHA guidelines. The
       funds required for closing were $2,732.62. The auditor confirmed that the borrower’s
       bank statements verified $1,315. The borrower received $2,000 in gift funds. Total
       available assets were $3,315.00. The borrower closed with gift funds which is documents
       by the gift letter and donor’s ability to give the gift located in the file. Part of the gift
       funds appear to be shown as Upfront MIP premium line 206 of the HUD 1 Settlement
       Statement in error. The title company should have labeled this as “gift” funds, however it
       is still a credit. Earnest money was documented in the checking account and the seller
       verified receipt of it in the Agreement of Sale. The savings account print out complies
       with FHA requirements provided that it came directly from the bank via fax, includes all
       of the bank’s information and the borrower’s name and account number is on it. If a
       balance is needed between statement dates, it is necessary to get a printout to document
       the balance. Please see attached documentation.
       § OIG Evaluation of Auditee Comments: The $1,315.81 that the borrower documented
            as of 09/13/00 includes the $2,000 gift the donor claims was transferred on 09/01/00.
            Without a full month bank statement, as required, the lender is unable to determine if
            the funds were transferred to the borrower. The funds required were $2,732.62, but
            the documentation only evidences $1,315.
            Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
                 Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                 Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
                 property must be verified.” The lender must insure that the borrower has
                 sufficient funds available to close the loan. If the amount of the earnest money
                 deposit exceeds 2 percent of the sales price, the lender must verify the deposit
                 amount and the source of funds. Satisfactory documentation includes a copy of the
                 borrower's cancelled check. This file did not contain adequate evidence of the
                 funds needed to close.

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Appendix E



Gift Funds Not Documented:
· OIG Initial Finding: A gift letter for $2,000 was included but the required proof of transfer of
    funds was not provided.
    o Auditee Comments: Gift information in the file complied with FHA requirements. See
       explanation in assets to answer.
       § OIG Evaluation of Auditee Comments: The gift letter was documented with the
           exception of the transfer of funds. Without a full month bank statement, as required,
           the lender is unable to determine if the funds were transferred to the borrower.
           Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 Part C states that “the lender must document the transfer
               of the funds from the donor to the borrower. Acceptable procedures include
               obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
               borrower's deposit slip or bank statement showing the deposit. If the funds are not
               deposited to the borrower's account prior to closing, the lender must obtain
               verification the closing agent received funds from the donor for the amount of the
               gift. The file must also contain a gift letter specifying the dollar amount, signed
               by the donor and the borrower, stating no repayment is required, and showing the
               donor's name, address, telephone number, and relationship to the borrower.” This
               file did not contain all the necessary documentation required when a borrower is
               using gift funds.

Nonpurchasing Spouse:
· OIG Initial Finding: Cendant Mortgage Corp. incorrectly had the non-purchasing spouse sign
   the security instrument. The non-purchasing spouse is included on the Deed of Trust.
   Although she also signed the Note, it is still improper because her income, liabilities, and
   credit were not considered in the underwriting of the loan. Furthermore, the non-purchasing
   spouse’s name is on the bank statement. These are co-owned assets that were used to close
   the loan. The lender has no way of knowing what portion of those assets the borrower has
   available to him nor what other debts of the non-purchasing spouse are to be paid out of those
   assets.
   o Auditee Comments: The non-purchasing spouse properly signed the Deed of Trust to
       waive their homestead interest in the property and create a valid first lien as permitted and
       required by FHA guidelines.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that the
           non-purchasing spouse must sign the Deed of Trust to create a valid lien.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




2003-KC-1001                                Page 246
                                                                                       Appendix E


FHA Case Number: 292-3917372

Insured Amount: $79,664

Section of Housing Act: 203(b)

Date of Loan Closing: 10/12/00

Current Status: Terminated-paid in full. Prior: Default status after 3 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $3,902.94, but the borrower could only provide evidence of $3,400 in escrow.
   o Auditee Comments: None
      § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. This file did not contain adequate
               evidence of the funds needed to close.




                                           Page 247                                   2003-KC-1001
Appendix E


FHA Case Number: 292-3918303

Insured Amount: $134,931

Section of Housing Act: 203(b)

Date of Loan Closing: 11/29/00

Current Status: Foreclosure Completed, no claim or loss information available at this time.
Prior: Default status after 0 payments.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Cendant did not obtain the required verbal or written verification of employment.
   o Auditee Comments: None
       § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
              Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
              Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
              repay the mortgage debt. Income from a source that cannot be verified, is not
              stable, or will not continue should not be used when calculating the borrower’s
              income ratios. Part 2-6 states, “the lender must verify the borrower's employment
              for the most recent two full years.” According to Chapter 3, income verification
              must be done through a written Verification of Employment and the most recent
              pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
              Employment, and Internal Revenue Service form 8821. This loan did not contain
              the necessary income verification documentation.

Indications of Possible Fraud:
· OIG Initial Finding: Cendant did not follow-up on discrepancies until after the loan had been
    endorsed. The W-2s were not completely filled out. The borrower’s previous address on the
    application was different from the addresses on all other documentation.
    o Auditee Comments: None
        § OIG Evaluation of Auditee Comments: N/A
           Ø Violation: Indications of possible fraud were not resolved. HUD Handbook
               4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
               to-Four-Family Properties, Chapter 3-1 states that “we expect the application
               package to contain sufficient documentation, to support the lender's decision to
               approve the mortgage loan. When standard documentation does not provide
               enough information to support this decision, the lender must provide additional
               explanatory statements, consistent with other information in the application, to
               clarify or supplement the documentation submitted by the borrower.” HUD
               Handbook 4000.4, Chapter 2 states that it is the underwriter’s responsibility to be
               aware of the warning signs that may indicate irregularities and to detect fraud. In
               other words, the lender should ensure that any indications of possible fraud are

2003-KC-1001                               Page 248
                                                                     Appendix E


evaluated and that the appropriate steps are taken and adequate documentation is
provided to resolve any discrepancies. This file did not contain adequate
documentation that the lender attempted to resolve any discrepancies noted.




                           Page 249                                  2003-KC-1001
Appendix E


FHA Case Number: 292-3922626

Insured Amount: $52,566

Section of Housing Act: 203(b)

Date of Loan Closing: 10/31/00

Current Status: Delinquent 90 days or more; Prior: Default status after 0 months

Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. Cendant did obtain a gift letter for $3,000, but did not document proof of
    transfer of the gift funds.
    o Auditee Comments: The gift was documented as required by FHA guidelines. A gift
        letter is in the file along with copies of two cashier’s checks totaling $791.66, which is
        what the borrower needed to close per the HUD 1. Please see attached documentation.
        § OIG Evaluation of Auditee Comments: Cendant provided additional documentation
             to verify the gift, however, there was no proof of receipt as would be evidenced on a
             bank statement.
             Ø Violation: Gift information was not adequate. HUD Handbook 4155.1 REV-4,
                 Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
                 Properties, Chapter 2-10 Part C states that “the lender must document the transfer
                 of the funds from the donor to the borrower. Acceptable procedures include
                 obtaining a copy of the donor's withdrawal slip or cancelled check, along with the
                 borrower's deposit slip or bank statement showing the deposit. If the funds are not
                 deposited to the borrower's account prior to closing, the lender must obtain
                 verification the closing agent received funds from the donor for the amount of the
                 gift. The file must also contain a gift letter specifying the dollar amount, signed
                 by the donor and the borrower, stating no repayment is required, and showing the
                 donor's name, address, telephone number, and relationship to the borrower.” This
                 file did not contain all the necessary documentation required when a borrower is
                 using gift funds.

W-2 Problem:
· OIG Initial Finding: Cendant did not follow-up on discrepancies. The borrower’s address on
  the W-2 and pay stubs was different from the address given through the landlord and
  employment verifications and the loan application.
  o Auditee Comments: None
      § OIG Evaluation of Auditee Comments: N/A
          Ø Violation: W-2 information was not provided or was incorrect. HUD Handbook
              4155.1 REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-
              to-Four-Family Properties, Chapter 3-1 Part E. states that “as an alternative to
              obtaining a Verification of Employment, the lender may choose to obtain from the
              borrower original pay stub(s) covering the most recent thirty-day period, along

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                                                                    Appendix E


with original copies of the previous two years' Internal Revenue Service W-2
forms.” This file did not contain a written Verification of Employment, and
therefore, should have contained two years’ Internal Revenue Service W-2 forms.
HUD Handbook 4000.4 Rev-1, Single Family Direct Endorsement Program,
Chapter 2-1 states that “A Direct Endorsement mortgagee must conduct its
business operations in accordance with accepted sound mortgage lending
practices, ethics and standards.” These forms should have been scanned for
accuracy.




                           Page 251                                2003-KC-1001
Appendix E


FHA Case Number: 292-3926237

Insured Amount: $85,856

Section of Housing Act: 203(b)

Date of Loan Closing: 11/14/00

Current Status: Forbearance; Prior: Default status after 3 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $4,536.80, but the borrower could only provide evidence of $303 in a checking account.
   o Auditee Comments: Sufficient funds to close were verified as required by FHA
      guidelines. The borrower was qualified with a gift, however at some point prior to the
      closing the donor and borrower signed a Promissory Note. Payment would not
      commence until 2002 so the payment was not included in the debt ratio. There is a bank
      generated balance query in the file. Please see attached documentation.
      § OIG Evaluation of Auditee Comments: Cendant provided additional documentation
           to support the assets stated.
           Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.

Inconsistent/Unverified Income:
· OIG Initial Finding: Cendant Mortgage Corp. did not properly verify the borrower’s income.
   Income on the Mortgage Credit Analysis Worksheet was $1,884.64 per month. The pay stubs
   provided verified that the borrower’s income was only $1,757.81 per month. Cendant did not
   obtain a verification of employment.
   o Auditee Comments: Income was verified as required by FHA guidelines. The borrower
       was qualified with overtime and bonus income. Two years W-2s are in the file. It is
       Cendant’s policy to obtain a verbal verification of employment but the documentation of
       the verification obtained at the time of closing could not be located. In a subsequent
       review of the file, a VOE was obtained and placed in the file. Please see attached
       documentation.
       § OIG Evaluation of Auditee Comments: Cendant provided the requested verification
           of employment dated July 25, 2002 to verify employment for a loan closing 11/14/00.
           According to this VOE, the employer verified monthly income to be the exact amount
           used to qualify the borrower 2 years ago. This amount includes bonus and overtime
           income. To use bonus and overtime pay, the lender must show a two-year earnings
           trend. This borrower earned $17,720.67 in 1998, $19,055.39 in 1999, and $16,961.74
           year to date as of October 1, 2000. This total of $55,737.7 averaged over 33 months
           is only $1,689.02 per month. Without a current verification of employment, the
           lender should not use bonus or overtime income.
           Ø Violation: Income was not verified. HUD Handbook 4155.1 REV-4, Chg.1,
               Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family

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               Properties, Chapter 2, requires that the lender establish the borrower’s capacity to
               repay the mortgage debt. Income from a source that cannot be verified, is not
               stable, or will not continue should not be used when calculating the borrower’s
               income ratios. Part 2-6 states, “the lender must verify the borrower's employment
               for the most recent two full years.” According to Chapter 3, income verification
               must be done through a written Verification of Employment and the most recent
               pay stub, or 1 month’s pay stubs, 2 years’ W-2(s), a verbal Verification of
               Employment, and Internal Revenue Service form 8821. This loan did not contain
               the necessary income verification documentation.

Inadequate Ratios/Qualifiers:
· OIG Initial Finding: Cendant Mortgage Corp. approved the loan for closing with ratios that
   were too high and insufficient compensating factors. The ratios on the Mortgage Credit
   Analysis Worksheet after using the correct income amount were 37 percent and 48 percent.
   The compensating factors provided were 1) Not using child support income (Even with child
   support, ratios are still 31 percent and 40 percent.), 2) Minimal consumer debt (An acceptable
   compensating factor is if the borrower has demonstrated a conservative attitude toward use of
   credit and an ability to accumulate savings. The borrower did not demonstrate savings.), and
   3) Good job stability (There was no verification of employment to determine the length of the
   borrower’s employment. Therefore, a judgment cannot be made on the borrower’s job
   stability).
   o Auditee Comments: Ratios were consistent with FHA guidelines with compensating
       factors. In error, the Mortgage Credit Analysis Worksheet was not updated to reflect the
       following compensating factors: 1) Job stability as evidenced with two years W-2’s; 2)
       Minimal consumer debt – savings as evidenced by her 401K statement; 3) Not using child
       support – With child support the ratios would be 31/40 respectively – with housing ratio
       being slightly higher than the “suggested maximum guideline”.
       § OIG Evaluation of Auditee Comments: We concur with Cendant’s assertion that two
            years W-2s verify job stability. We agree that the borrower is not using child support
            income and that, with that income, the ratios are reduced. However the ratios are still
            higher than guidelines even with the child support income.
            Ø Violation: Loans closed with ratios that were too high. HUD Handbook 4155.1
                REV-4, Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-
                Family Properties, Chapter 2-12 states that “The lender must compute two ratios:
                (1) Mortgage payment expense to effective income. If the total mortgage payment
                does not exceed 29 percent of gross effective income, the relationship of the
                mortgage payment to income is considered acceptable. A ratio exceeding 29
                percent may be acceptable if significant compensating factors are presented.” and
                “(2) Total fixed payment to effective income. If the total mortgage payment and
                all recurring charges do not exceed 41 percent of gross effective income, the
                relationship of total obligations to income is considered acceptable. A ratio
                exceeding 41 percent may be acceptable if significant compensating factors are
                presented.” This file contained ratios that were above the acceptable limit without
                providing adequate compensating factors.


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Appendix E


Gift Funds Not Documented:
· OIG Initial Finding: Cendant Mortgage Corp. did not verify the gift information provided by
    the borrower. The borrower stated he would receive a gift of $4,300, but only submitted a
    gift letter as documentation and did not submit the required proof of transfer or proof of the
    donor’s ability to pay.
    o Auditee Comments: No gift documentation was required. Borrower was qualified with a
        gift, however at some point prior to the closing the Donor and Borrower signed a
        Promissory Note. Payment would not commence until 2002 so the payment was not
        included in the debt ratio. There is a bank generated balance query in the file. Please see
        attached.
        § OIG Evaluation of Auditee Comments: Cendant provided additional documentation
             to support the assets stated.
             Ø Violation: Removed from Finding 2; Appendix D adjusted to reflect change.




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                                                                                      Appendix E


FHA Case Number: 292-3942348

Insured Amount: $101,200

Section of Housing Act: 203(b)

Date of Loan Closing: 01/08/01

Current Status: Reinstated by mortgagor; Prior: Default status after 0 payments.

Not Enough Assets to Close:
· OIG Initial Finding: Cendant Mortgage Corp. did not ensure that the borrower had sufficient
   funds to close the loan. The total due at closing per the Mortgage Credit Analysis Worksheet
   was $4,912.25. The borrower’s asset documentation showed availability of $5,475.04
   ($3,775.62 in a 401K account, $50.75 in savings, and $1,648.67 in a checking account).
   However, the checking account showed 5 large deposits totaling $4,100 in the two months of
   checking account statements, with no explanation for the source of these funds. In addition,
   in these same 2 months, the borrower had 3 returned item fees.
   o Auditee Comments: Sufficient funds were verified as required by FHA guidelines. The
       borrower’s assets to close were from a 401K account and a checking account. The
       borrower’s pay was automatically deposited into his credit union account and the deposits
       which were all less than $1,000 with one exception, were made twice a month coinciding
       with his pay cycle. His average net paycheck was $1300, so the transfer of funds in a
       similar amount is not suspicious. The returned check fees were actually overdraft fees for
       ATM withdraws over his limit. Please see attached documentation.
       § OIG Evaluation of Auditee Comments: The lender needed to verify that the borrower
           had $4,912.25. The information provided by Cendant only verified $4,221.50
           ($3,775.62 in a 401K account, $50.75 in savings, and $395.13 in checking. The
           checking account statement provided by Cendant in their comments supercedes the
           one previously provided that stated that the checking account balance was $1,648.67).
           Ø Violation: Insufficient funds to close the loan. HUD Handbook 4155.1 REV-4,
               Chg.1, Mortgage Credit Analysis for Mortgage Insurance on One-to-Four-Family
               Properties, Chapter 2-10 states that “all funds for the borrower's investment in the
               property must be verified.” The lender must insure that the borrower has
               sufficient funds available to close the loan. If there is a large increase in an
               account, or the account was opened recently, an explanation and evidence of
               source of funds must be obtained by the lender. This file did not contain adequate
               evidence of the funds needed to close.




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Auditee Comments




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                                                                                Appendix G

Distribution Outside of HUD
Chairman, Committee on Governmental Affairs, 706 Hart Senate Office Building,
  United States Senate, Washington, DC 20510
Ranking Member, Committee on Governmental Affairs, 340 Dirksen Senate Office Building,
  United States Senate, Washington, DC 20510
Chairman, Committee on Government Reform, 2185 Rayburn Building, House of
  Representatives, Washington, DC 20515
Ranking Member, Committee on Government Reform, 2204 Rayburn Building
  House of Representatives, Washington, DC 20515
Director, Housing and Telecommunications Issues, United States General Accounting
  Office, 441 G Street NW, Room 2T23, Washington, DC 20548
Senior Advisor, Subcommittee on Criminal Justice, Drug Policy & Human
  Resources, B373 Rayburn House Office Building, Washington, DC 20515
Chief, Housing Branch, Office of Management & Budget, 725 17th Street, NW, Room 9226,
  New Executive Office Building, Washington, DC 20503
House Committee on Financial Services, 2129 Rayburn H.O.B., Washington, DC 20515
Senior Counsel, Committee on Financial Services, U.S. House of Representatives, B303 Rayburn
  H.O.B., Washington, DC 20515
Department of Veterans Affairs, Office of Inspector General, 810 Vermont Ave., NW,
  Washington DC 20420
Department of Veterans Affairs, OIG Audit Operations Division, 1100 Main, Room 1330,
  Kansas City, Missouri 64105




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