Issue Date
March 4, 2008
Audit Report Number
2008-LA-0002
TO: Brian D. Montgomery, Assistant Secretary for Housing - Federal Housing
Commissioner, H
FROM: Joan S. Hobbs, Regional Inspector General for Audit, Region IX, 9DGA
SUBJECT: HUD Did Not Have Adequate Internal Controls over Its FHA Appraiser Roster
HIGHLIGHTS
What We Audited and Why
We audited the U.S. Department of Housing and Urban Development’s (HUD) controls
over the Federal Housing Administration (FHA) appraiser roster in accordance with the
Office of Inspector General’s regional audit plan for fiscal year 2007. The audit
recommendation was generated in response to a single-family loan origination audit that
had raised concerns about FHA appraisers and appraisals.
We reviewed HUD’s FHA appraiser roster (roster) to determine whether HUD’s controls
over the roster were adequate to ensure that only qualified/eligible appraisers were placed
on the roster and whether the oversight and maintenance of the roster were sufficient to
ensure that only currently eligible appraisers remained on the roster.
What We Found
HUD had significant weaknesses in its internal controls used to maintain the roster.
These weaknesses caused the roster to contain unreliable data which included the listing
of 3,480 appraisers with expired licenses and 119 appraisers that had been state
sanctioned. Additionally, 28 of the appraisers listed with expired licenses and eight of
the sanctioned appraisers conducted appraisals.
Specifically, HUD
• Did not conduct roster quality control reviews in accordance with its written
roster quality control plan;
• Did not perform regular monitoring of the roster to ensure data reliability;
• Instructed and/or approved its contractor to use logic statements when
developing the software program that updates the roster, which were not in
accordance with HUD regulations and did not always work properly; and
• Did not retain initial application packages for all active appraisers listed on its
roster as required by HUD’s record disposition schedule.
What We Recommend
We recommend that HUD implement stronger internal controls to ensure that only
eligible appraisers are placed on its roster and that oversight and maintenance of the
roster are sufficient to ensure that only eligible appraisers remain on the roster.
Specifically, HUD should conduct quality control reviews in accordance with its
established roster quality control plan, perform regular monitoring of the data contained
on the roster, remove inappropriate logic statements from the software used to update the
roster, and retain appraiser initial application packages until the appraiser is no longer an
active participant in HUD’s single-family home mortgage insurance program.
For each recommendation without a management decision, please respond and provide
status reports in accordance with HUD Handbook 2000.06, REV-3. Please furnish us
copies of any correspondence or directives issued because of the audit.
Auditee’s Response
We provided HUD the draft report on January 4, 2008, and held an exit conference with
HUD officials January 8, 2008. HUD generally agreed with our report.
HUD provided its written comments to our draft report on February 8, 2008. The
complete text of the auditee’s response, along with our evaluation of that response, can be
found in appendix A of this report.
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TABLE OF CONTENTS
Background and Objectives 4
Results of Audit
Finding 1: HUD Did Not Have Adequate Internal Controls over Its Appraiser 5
Roster
Finding 2: HUD Did Not Retain Initial Application Packages for All Active 11
Appraisers Listed on Its FHA Appraiser Roster
Scope and Methodology 13
Internal Controls 14
Appendixes
A. Auditee Comments and OIG’s Evaluation 16
B. Summary of Deficiencies (Inconsistencies) 24
C. Summary of Sanctioned Appraisers 30
D. Summary of Ineligible Appraisals 32
E. Summary of Appraiser Application Packages Requested 36
F. Criteria 38
3
BACKGROUND AND OBJECTIVES
The U.S. Department of Housing and Urban Development (HUD) is responsible for the
oversight and maintenance of the appraiser roster. HUD’s Computerized Homes Underwriting
Management System contains the roster, which can be accessed through the FHA Connection.
The roster contains licensing information for more than 32,000 appraisers. An appraiser must be
listed on the roster to be selected by a HUD-approved lender to conduct HUD-related appraisals.
It is the responsibility of HUD to determine the eligibility of an appraiser and to monitor the
roster to ensure that listed appraisers continue to meet eligibility requirements. HUD maintains
the roster through a software program developed by a contractor. The software program updates
licensing information found on the roster using data from the National Registry database
(registry) contained on the Appraisal Subcommittee Web site.
Appraisal Subcommittee
In August 1989, Congress enacted the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989. Title XI of the Act required federally regulated financial institutions, such as
federally insured banks, thrifts, and credit unions, to use state-certified or licensed appraisers to
perform appraisals in connection with federally related transactions. Title XI also created the
Appraisal Subcommittee to oversee the activities of the states and the Appraisal Foundation.
The Appraisal Foundation is the parent organization of the Appraiser Qualifications Board,
which establishes the minimum education, experience, and examination requirements for real
property appraisers to obtain a state certification.
The Appraisal Subcommittee’s Web site contains the registry, which contains selected
information about the nation’s state-certified and licensed real estate appraisers. Only state-
certified or licensed appraisers listed in the database as having currently valid certifications or
licenses are authorized under federal law to perform appraisals in connection with federally
related transactions. The expiration dates of certificates or licenses in this database specifically
relate to the legal authority of certified or licensed appraisers to perform federal appraisals.
Objectives
Our objectives were to determine whether HUD’s controls over its roster were adequate to
ensure that only qualified (eligible) appraisers were placed on its roster and whether the
oversight and maintenance of the roster were sufficient to ensure that only eligible appraisers
remained on the roster.
4
RESULTS OF AUDIT
Finding 1: HUD Did Not Have Adequate Internal Controls over Its
Appraiser Roster
HUD did not have adequate internal controls over its appraiser roster. We attribute the
deficiency to HUD’s failure to conduct quality control reviews in accordance with its established
roster quality control plan, perform regular monitoring of the roster to ensure data reliability, and
instruct and/or approve its contractor to develop logic statements within the software program
that were in accordance with HUD regulations and always worked properly. As a result, the
roster contained unreliable data which included the listing of 3,480 appraisers with expired
licenses and 119 appraisers that had been state sanctioned. Additionally, at least 28 of the
appraisers listed with expired licenses and eight of the sanctioned appraisers conducted
appraisals.
Quality Control Reviews Not
Conducted in Accordance with
Established Plan
According to Office of Management and Budget requirements, HUD had a responsibility
to develop and implement appropriate management controls, assess the adequacy of those
controls, and take corrective action if improvements to those controls were needed.
However, since December 2006, HUD has chosen not to conduct quality control reviews
to enable its staff to process a large influx of appraiser applications for initial placement
on the roster.
According to HUD’s written quality control plan, reviews must be conducted monthly
and include reviewing applications and verifications of eligibility for all new and renewal
appraiser roster applicants. The plan states that applications for review will be selected
randomly and include five percent of all
• New applicants who were approved and placed on the roster,
• New applicants who were denied and not placed on the roster,
• Renewal applicants who were approved for continued listing on the roster, and
• Renewal applicants who were denied for continued listing on the roster.
According to the plan, the quality control reviewers would be independent valuation team
members who were not responsible for the day-to-day review of applications and/or data
entry for placement or retention of appraisers on the roster.
5
We determined through interviews with HUD staff that individuals were instructed to
disregard the quality control reviews and focus on the initial eligibility reviews of new
applications. In addition, quality control reviews conducted before December 2006 did
not follow the quality control plan. Specifically, the applications selected for review
were not random, did not represent five percent of each applicant group, and were
conducted by the same valuation team members who were responsible for day-to-day
review of applications.
Regular Monitoring Not
Performed
According to Office of Management and Budget regulations, HUD had a responsibility to
develop and maintain effective internal controls, which provided assurance that
significant weaknesses in the design or operation of internal controls would be prevented
or detected in a timely manner. Additionally, HUD had a responsibility to design those
controls to ensure that ongoing monitoring occurred in the course of normal operations.
During interviews with HUD staff, we determined that HUD did not conduct monitoring
of the
• Roster to ensure the accuracy of appraiser data contained on the roster,
• Data retrieved from the registry to ensure that the data used to update the roster
were consistent with information found in appraiser application files (records),
or
• Software program used to retrieve licensing information from the registry to
ensure that it was working properly.
We reviewed the licensing information shown for 420 (appendix B) of 957 appraisers
that were listed on the roster with expired licenses and found that 341 (81 percent) had
information that was inconsistent with that shown in the registry. We determined that the
software developed for updating the roster contained logic statements that allowed
editing of license information retrieved from the registry by removing letters, numbers,
spaces, and periods. However, we also observed roster licensing information which
showed letters and/or numbers added to that contained in the registry. Additionally, the
software program allowed ineligible appraisers to remain listed on the roster indefinitely.
As a result, the licensing information shown on the roster did not mirror that found in the
registry. The software program logic statements are detailed in the last two sections of
this finding entitled Software Logic Statements Violated Regulations and Software Logic
Statements Not Working Properly.
6
Unreliable Data
According to Office of Management and Budget requirements, HUD had a responsibility
to ensure that the data contained on the roster and the data in the registry were timely and
reliable.
HUD contracted with a software developer to create a software program that would
retrieve appraiser licensing data contained in the national registry and use the data to
update the roster. However, the software program was not working properly and caused
the data shown on the roster to be different from the data shown in the registry. For
example, the roster showed appraiser 1B4S0Q with a California state license number of
1600476, however, the registry showed a Washington state license number of 1600476
and no California license (appendix B). Additionally, the roster showed appraiser
2SC4VS with a Michigan state license number of J821805, whereas the registry showed
the license number as 1201008224 (appendix B).
HUD did not perform any monitoring or testing of the data contained on the roster or the
data in the registry to ensure that the software was updating the roster with timely and
reliable information. Based on interviews with HUD staff, we determined that HUD did
not
• Perform tests to determine whether the data contained in the registry were
timely and reliable for use in updating the roster;
• Use the appraiser “error reports,” built into the software system to update the
roster, to determine whether appraisers should be terminated from the roster;
and
• Perform tests on its software system, used to update the roster, to ensure that it
was updating the roster with timely and reliable data.
We reviewed the data for 420 appraisers (appendix B) listed on the roster with expired
licenses and found
• 203 instances in which an appraiser’s state license number(s) shown on the roster
did not match what was shown in the registry due to data being removed from
the number when license information was updated,
• 162 instances in which an appraiser’s state license number(s) shown on the roster
did not match what was shown in the registry due to data being added to the
number when license information was updated,
• 40 instances in which an appraiser’s state license number(s) shown in the registry
was not listed on the roster,
• 15 instances in which an appraiser’s name shown on the roster was different from
that shown in the registry,
• 12 instances in which an appraiser’s state license number(s) shown on the roster
was completely different from that shown in the registry, and
7
• 6 instances in which an appraiser’s state license number(s) shown on the roster
was not found in the registry.
Logic Statements
According to Office of Management and Budget requirements, HUD had a responsibility
to ensure that its software program was working properly and achieved its intended
results by updating the roster in a manner consistent with all laws and regulations.
The roster has data fields that show appraisers’ initial placement date, name and address,
license number(s) and state(s) in which they are licensed, license expiration date, and a
terminate date. The “terminate date” field allows appraisers to remain listed on the roster
indefinitely. HUD contracted with a software developer to create a program that would
retrieve appraiser licensing data from the registry and use the data to update the data
fields contained on the roster. The following inappropriate logic statements were applied
to the update program
• Appraisers in HUD’s Computerized Homes Underwriting Management System
that are terminated will not have their expiration dates updated,
• Appraisers in the Computerized Homes Underwriting Management System that
have expired licenses are allowed a one-month grace period (license expirations
are treated as being one month later than actual),
• Appraisers in the Computerized Homes Underwriting Management System that
have open disciplinary actions will have their expiration dates updated,
• Attempt to match license numbers from the registry and the Computerized
Homes Underwriting Management System exactly as they are except for the
state of New Hampshire. If an exact match is not found on license numbers
from the registry and the Computerized Homes Underwriting Management
System, then both license numbers are edited by removing
1. Embedded periods.
2. Embedded spaces.
3. Embedded commas.
4. Leading zeros.
Software Logic Statements Violated Regulations
HUD instructed and/or approved its contractor to develop logic statements in the software
program that were not in accordance with regulations. The logic statements (specifically
the first three bullets above) within the software program caused 3,480 appraisers with
expired licenses and 119 appraisers that had received a state sanction to remain listed on
8
the roster indefinitely. According to HUD requirements, appraisers that had been
terminated, received a sanction, or had an expired license were to be removed from the
roster. However, HUD did not remove the appraisers and instead used a terminate date to
identify those appraisers that should have been terminated and later removed.
Sanctioned appraisers were not terminated/removed from the roster in a timely manner
and were able to conduct appraisals due to the logic statement that allowed appraisers to
remain listed on the roster indefinitely. We determined 119 appraisers had received a
state sanction but remained listed on the roster (appendix C). Of those, 118 showed a
date in the “terminate date” field, and more than half (65) showed terminate dates that
were more than 30 days after the receipt of a state sanction. Additionally, one sanctioned
appraiser remained listed on the roster and did not have a date shown in the “terminate
date” field. In addition, eight of the appraisers had conducted a total of 27 appraisals
after the receipt of a state sanction. The ineligible appraisers were able to conduct
appraisals because they remained listed on the roster after the receipt of a state sanction.
Further, appraisers with expired licenses were able to conduct appraisals due to the logic
statement that allowed a one-month grace period for expired licenses and the logic
statement that allowed appraisers to remain listed on the roster indefinitely. We reviewed
420 of the 3,480 appraisers who had expired licenses but were still listed on the roster
and found that 28 appraisers had conducted a total of 361 appraisals after their state
license had expired. More than half (19) had conducted 345 appraisals more than 30 days
after their licenses had expired (appendix D).
Software Logic Statements Not Working Properly
HUD instructed and/or approved its contractor to develop inappropriate logic statements
in the software program that did not work properly. We found logic statements
(specifically the fourth bullet above) within the software that edited data retrieved from
the registry which were not working properly. During the editing process, the software
was adding data, numbers and/or letters to appraiser license number(s) shown in the
registry. For example, the roster showed appraiser 8547BH with a license number of
WA27017BECKERW374KB, however the registry showed the license number as
BECKERW374KB (appendix B). In addition, the software was inappropriately
removing periods from license numbers which caused at least one appraiser that had not
received a sanction to be associated with an appraiser that had received a sanction. The
roster showed appraiser S5SCIT with an Illinois state license number of 156000296 (non-
sanctioned appraiser), however, the registry showed the license number as 156.000296
(sanctioned appraiser).
During our review of sanctioned appraisers and appraisers with expired licenses listed on
the roster (appendix B), we found
9
• 162 instances in which an appraiser’s state license number(s) shown on the roster
did not match what was shown in the registry due to data being added to the number
when license information was updated and
• 12 instances in which an appraiser’s state license number(s) shown on the roster
was completely different from that shown in the registry.
Conclusion
HUD had significant weaknesses in its internal controls used to maintain its roster. HUD did not
conduct quality control reviews in accordance with its quality control plan, did not perform
regular monitoring of the roster, and instructed and/or approved its contractor to develop logic
statements in the software program that were not in accordance with HUD regulations and did
not always work properly. These weaknesses caused the roster to contain unreliable data which
included the listing of 3,480 appraisers with expired licenses and 119 appraisers that had been
state sanctioned. This allowed users of HUD’s FHA Connection to select at least 36 1 ineligible
appraisers who later conducted 388 appraisals.
Recommendations
We recommend that HUD’s Assistant Secretary for Housing – Federal Housing
Commissioner
1A. Conduct quality control reviews in accordance with its established quality control
plan for the appraiser roster eligibility verification as it was written to ensure that
only eligible appraisers are listed on the appraiser roster.
1B. Perform regular monitoring and quality control checks of the data contained within
the Computerized Homes Underwriting Management System (roster) and the data
contained in the registry to ensure that the data are reliable and accurately represent
the qualifications and eligibility of those appraisers who are used by approved
lenders.
1C. Remove inappropriate logic statements from the software used for
updating/maintaining the Computerized Homes Underwriting Management System
(roster) and replace them with appropriate and effective logic statements that are in
accordance with applicable HUD regulations and requirements. The logic
statements should also ensure that only eligible appraisers are listed on the roster
and the data for those appraisers are consistent within the roster and the registry.
1
Eight sanctioned appraisers conducted 27 appraisals and 28 appraisers with expired licenses conducted 361
appraisals.
10
Finding 2: HUD Did Not Retain Initial Application Packages for All
Active Appraisers Listed on Its FHA Appraiser Roster
HUD did not retain initial application packages for all active appraisers listed on its appraiser
roster as required by its record disposition policy. We attribute this deficiency to HUD not
following its record disposition policy. As a result, HUD destroyed a projected 24,013 active
appraiser records, which left HUD with the inability to resolve inconsistencies found between the
appraiser licensing data shown on its roster and data shown in the national registry.
Active Appraiser Records
Destroyed
According to HUD’s record disposition schedule, it had a responsibility to retain
application packages (records) for all appraisers listed on the appraiser roster until the
appraiser was no longer actively participating in HUD’s single-family home mortgage
insurance program.
The roster contains licensing information for more than 32,000 appraisers. Appraiser
records are a vital part of validating the eligibility and licensing information for all active
appraisers listed on the roster. However, HUD destroyed a projected 24,013 records for
appraisers who were actively participating in the appraisal process.
We requested records for 64 randomly selected appraisers to determine whether they
were eligible for placement on the roster. HUD provided 14 of the 64 records requested
but had destroyed the remaining files (appendix E). HUD stated that the records were
disposed of in accordance with HUD policy. However, we determined that the records
were for active participants of the appraisal process and, thus, should have been available
for review. The error rate (destruction of files) of 78 percent (50/64) was projected to the
universe of 30,737 active appraisers which resulted in an estimated 24,013 appraiser
records destroyed. Our interviews with HUD personnel disclosed that staff was unaware
of and/or misinterpreted HUD’s record disposition policy. When interviewed, HUD staff
stated that HUD policy was to retain records from three to five years but had no written
documentation to support the statement.
We reviewed the available records to determine initial roster eligibility and found all 14
appraisers initially eligible. However, we found roster data that were inconsistent with
registry data. According to the registry, five appraisers held state licenses not listed on
the roster, and three appraisers had state license numbers that did not match the numbers
shown on the roster. We were unable to validate the remaining 50 records in our sample
because the records were destroyed.
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Conclusion
HUD did not have assurance that state licensing information for appraisers on its roster
was reliable and that appraisers listed on the roster were eligible to perform appraisals.
The destruction of more than an estimated 24,000 appraiser records left HUD with the
inability to reconcile any inconsistencies between the data contained on the roster and the
data shown in the registry.
Recommendations
We recommend that HUD’s Assistant Secretary for Housing – Federal Housing
Commissioner
2A. Retain initial application files until an appraiser is no longer an active participant in
HUD’s single-family home mortgage insurance program.
12
SCOPE AND METHODOLOGY
We performed the audit work between April 24 and December 4, 2007. Our audit generally
covered the period July 1, 2005, through March 31, 2007, and was expanded or changed as
needed. We focused on whether HUD’s controls over the appraiser roster were adequate to
ensure that only eligible appraisers were placed on the roster and that the roster was maintained
in a manner to ensure that all appraisers on the roster continued to be eligible.
To accomplish our audit objectives, we
• Reviewed relevant HUD regulations, Office of Management and Budget circulars, and
other pertinent information.
• Reviewed HUD’s policies and procedures associated with oversight, maintenance, and
updating of the roster.
• Interviewed HUD personnel to obtain an understanding of roster operations and internal
controls.
• Interviewed HUD’s software contractor to obtain relevant information regarding the
software program used to update the roster.
• Reviewed HUD’s software programming documentation.
• Reviewed a random attribute sample of 64 active appraiser’s applications to determine
initial eligibility for placement on the roster and projected the error rate (destruction of
files) of 78 percent (50/64) to the universe of 30,737 active appraisers which resulted in
an estimated 24,013 appraiser records destroyed (appendix E).
• Tested all appraisers listed on the roster to determine whether any had received a sanction
and possibly conducted appraisals while under sanction (appendix C).
• Tested 420 appraisers listed on the roster to determine whether licensing information was
consistent in both the registry and roster databases (appendix B).
• Tested 420 appraisers listed on the roster with expired licenses to determine whether any
had conducted appraisals while their licenses were expired (appendix D).
We performed our review in accordance with generally accepted government auditing standards.
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INTERNAL CONTROLS
Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:
• Effectiveness and efficiency of operations,
• Reliability of financial reporting, and
• Compliance with applicable laws and regulations.
Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.
Relevant Internal Controls
We determined the following internal controls were relevant to our audit objectives:
• Policies and procedures that management had in place to ensure that roster data and
registry data were current, valid, and reliable.
• Policies and procedures that management had in place to ensure that its software
program was updating the roster in a manner that complied with applicable laws and
regulations and met program objectives.
We assessed the relevant controls identified above.
A significant weakness exists if management controls do not provide reasonable
assurance that the process for planning, organizing, directing, and controlling program
operations will meet the organization’s objectives.
Significant Weaknesses
Based on our review, we believe the following items are significant weaknesses:
• HUD did not (1) conduct quality control reviews in accordance with its established
quality control plan for the appraiser roster eligibility verification as it was written,
(2) perform regular monitoring of the roster to ensure data reliability, and (3) ensure
that appropriate logic statements were used in the development of the software
program that updates the roster (finding 1).
14
• HUD did not retain initial application packages for all active appraisers who were
listed on its appraiser roster as required by HUD’s record disposition schedule
(finding 2).
15
APPENDIXES
Appendix A
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
16
Comment 2
Comment 3
Comment 4
Comment 5
17
Comment 6
Comment 7
Comment 8
18
Comment 9
Comment 10
Comment 11
19
Comment 9
20
OIG Evaluation of Auditee Comments
Comment 1 We did state that the Quality Control Plan appeared to be satisfactory. However, we
were unable to test the plan because it was not currently being used. Therefore, we
cannot be certain that the quality control plan will be sufficient to identify roster
deficiencies. HUD should not only carry out its quality control plan, but test the plan in
accordance with Office of Management and Budget regulations as stated in
recommendation 1B. We commend HUD for taking action to correct the identified
deficiency.
Comment 2 We would like to clarify the term “removed”. HUD regulations state that an appraiser
who has been sanctioned by a state must be automatically removed from the roster.
However, HUD allows state sanctioned appraisers to remain listed on the roster, but uses
a field called "terminate date" to identify any appraiser who received a state sanction.
We assert that had eight of the state sanctioned appraisers been completely removed (not
listed) from the roster, 27 appraisals conducted by those sanctioned appraisers would not
have occurred. We assert that the reason the appraisers were selected from the roster was
because they remained listed and the "terminate date" field did not prevent their selection.
Further, we understand the concern of untimely reporting by the states, however 44 of the
65 (68 percent) sanctioned appraisers still listed on the roster showed a termination date
ranging from 61 days to eight years (see table below). Therefore, timely reporting is not
the issue.
Days (range) on Roster after receiving discipline and prior Number of Appraisers
to termination.
3000 - 3200 (8 - 9 Years) 2
1081 - 2999 (3 - 8 Years) 2
721 -1080 (2 - 3 Years) 5
361 -720 days (1 - 2 Years) 8
271 - 360 days (9 - 12 Months) 6
181 -270 days (6 - 9 Months) 5
91 - 180 days (3 - 6 Months) 11
61 - 90 days (2 - 3 Months) 5
31 - 60 days (1 - 2 Months) 21
Total 65
Comment 3 We understand why the 30 day grace period was placed into the software logic.
However, allowing a 30 day grace period violates HUD regulations and does not prevent
appraisers with expired licenses to conduct appraisals. As stated in the report 28
appraisers conducted a total of 361 appraisals after their state licenses expired, and 19 of
the 28 (68 percent) conducted a total of 345 of the 361 (96 percent) appraisals more than
30 days after their state license expired.
Comment 4 We disagree. HUD allowed all appraisers to remain listed on the roster indefinitely. The
appraisers remain listed on the roster whether they hold a valid license or not. As stated
in comment two, HUD uses a "terminate date" field to identify those appraisers that
should not be listed on the roster. Further, the finding showed that the listing of 36 state
sanctioned or unlicensed (expired) appraisers were allowed to conduct a total of 388
appraisals. We assert that it is HUD's responsibility to ensure that the appraisers listed on
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its roster are eligible to conduct appraisals. Therefore recommendation 1B should be
implemented and regular monitoring of the roster by HUD staff should be conducted to
identify any deficiencies between the National Registry database and HUD's database.
Any discrepancies should be cleared by HUD staff checking the appraiser file, which
should include a current copy of a valid license as stated in recommendation 2A.
Comment 5 We cannot comment on appraisers sanctioned by the Homeownership Centers because it
was outside the scope of our audit.
Comment 6 We disagree. HUD's contractor developed an interface (software program) to update
licensing information and the process has been automated since 2003. We reviewed the
programming documentation and found that the software program retrieves licensing
information from the National Registry and performs matching tests. If the licensing
information from the National Registry is different than that in the Computerized Homes
Underwriting Management System (roster), the program edits the license number. The
programming documentation specifies that the editing process includes the removal of
data from individual licenses. However, our finding illustrates that data was added to the
licensing information retrieved from the National Registry and updated to the roster
which made the licensing data for 162 of 420 (39 percent) reviewed appraisers
inconsistent between the two databases. Therefore the automated updating system
(program) is not working as intended.
Comment 7 We would like to clarify that we did not state that the appraiser had an invalid license.
The example that HUD referred to in its comments showed that HUD's software program
is removing decimal points (periods) as stated in HUD's software programming
documentation. The removal of decimal points is inappropriate because the state of
Illinois uses decimal points (periods) to distinguish various license numbers. The
example HUD referred to in its comments, which showed the appraiser identification
number S5SCIT involved two separate appraisers, both from Illinois. One appraiser was
listed on the roster (15600026) and the other was not a roster appraiser (156.000296).
When we conducted our analysis of sanctioned appraisers, we used a computer program
to match the roster to the National Registry database of sanctioned appraisers. The match
returned a hit on appraiser 15600026. The match was actually a false positive due to the
software program removing the decimal point. This illustrates that HUD's software
program that removes decimal points could cause two or more appraisers (roster and/or
non-roster) to be associated with one appraiser identification number shown on the roster.
Comment 8 We acknowledge the potential risk of delayed reporting by the states to the National
Registry, which can impact the accuracy of appraisal data reported in the database.
Therefore it is important that HUD implement recommendation 2A to ensure HUD will
have an accurate licensing history for its roster appraisers. In addition, recommendation
1A should be implemented to ensure that quality control checks of the roster are
conducted.
Comment 9 We commend HUD for taking action to correct the identified deficiency. However, data
entered into the FHA Connection should also be validated with documentation (copy of
current valid license) placed into the appraiser's file (record) as suggested by the
recommendation.
Comment 10 We commend HUD for taking action to create a clear and definitive record retention
policy for the FHA appraiser roster. However, the lack of a clearly defined record
22
retention policy for the roster in HUD Handbook 2225.6, Single Family Home Mortgage
Insurance Program Records, does not excuse the destruction of a projected 24,013 active
appraiser records. The Handbook requires that technical and miscellaneous reference
files, including program participant files, should not be destroyed until superseded or
obsolete. During our fieldwork we also spoke with the HUD supervisory management
analyst that assisted with drafting the policies in the Handbook. The analyst confirmed
that the Handbook intended that the applications for placement on the FHA appraiser
roster be retained until the appraiser was no longer on the roster to allow for
verification of information on the roster if needed.
Comment 11 We disagree with HUD and our position is clearly supported by evidence illustrated in
Finding 1. Finding 1 illustrated that 3,480 appraisers were listed on the roster with
expired licenses and 28 conducted appraisals. Additionally 119 appraisers that had
received a state sanction remained listed on the roster and 8 conducted appraisals.
Therefore, several appraisers currently listed on the roster are not eligible to perform
FHA appraisals. However, we agree that complying with recommendation 2B might be
an extreme burden for HUD staff therefore we have rescinded the recommendation.
23
Appendix B
SUMMARY OF DEFICIENCIES (INCONSISTENCIES)
Legend
A Appraiser Count
B Appraiser Identification Number
C Roster shows State license that was not found in Registry
D Registry shows additional State license(s) not shown on roster
E Registry shows different name then that shown on roster
F Roster State license(s) number different due to removed data
G Roster State license(s) number different due to added data
H Roster State license(s) number completely different
I Appraiser had one or more deficiencies
A B C D E F G H I A B C D E F G H I A B C D E F G H I
X E3TQ6P X X X BY2432 X X X X YMUQJN X X
X 6DTUG1 X X X CFT5KZ X X X X YQ849R
X 9NQW4V X X X CQMNQB X X X Z0JWRQ X X
X K0FZ2F X X X CU1Q4B X X X Z6FM75 X X X
X 2LLKGV X X X X CUL2SU X 0LKM9L
X 386KQU X X X D6TRYB X X X 11A3AL X X
X 6SIFVW X X X D84ZMS X X X CMQSU4 X X
X 8683I9 X X X DAKCJZ X X X F54XJM X X X X
X BELX9H X X X DGW7KF X X X FSEJ7R X X
X D43N52 X X X X E8TMXF X HK5UBG X X X
X G475YB X X X EAZGRY X L8L56J X X
X L4YACE X X X ECS7MC X X X YVY9A1
X N2MBXR X X X X EQKQJZ X X X 1JXDCG
X RH9MSJ X X X EWYFDR X X X 592CS9
X V1VLJT X X X FUU0IC X X X X 9Q7U5T X X
X WQ19JF X X X FXZUSY X X X 9QZLUW X X
X XM88TF X X X G2FZGL X A1E5Q0 X X
X CZL7KZ X X X X GR45PD X X X D63ZH3
24
A B C D E F G H I A B C D E F G H I A B C D E F G H I
X 29LMLY X X X GSKQBC X X X FZ1GYS X X
X L2KV6Y X X X X GWVJDF X X X X HIFU2N X X
X P54XYY X GZDUWN X X X X IKCZ2I X X
X CHUW7U X X X HAW8EJ X X X L3WRSK X X
X XBG96G X X X HBE0PC X MSRP24 X X
X MY4SWW X HMB4KG X X X NHI9NU X X
X XMK9KW X X X HT17JK X X X X NVN7DY X X
X 9JN0MV X X X HTUPMI X X X QS1ZMI X X X
X T0A4FC X X X IJ58JT X X X X V2KKNY X X
X 65LP45 X X X J9NMRF X X X W2LBDK X X X
X 3BHGBH X X X JQS5IK X X X Z1LNPF X X
X 6RPW2K X X X KLKTA5 X ZFUQ9L X X X
X 89Z2G6 X X X L1BST0 X X X X ZLS9E3 X X
X 2KEU69 X X X X L5JA0M X X X ZRP4PZ X X X
X 7Z90EY X X X LU1A17 X ZZGD8Q X X
X 5B8ZGA X MYIBE1 X EZTAPF
X 5H2Z97 X X X X N4L1ZK X X X JI0JFE X X X X
X CDBQUW X X X N8FRDX X XFXLLW
X UP4MYW X NKBCKB X X X ZLEC4V X X
X R7BKIT X X X P2LRBT X GWLV4J
X ZSUR8M X X X X X PA8VDS X X X MKWJ7C X X X
X 1VIVQS X X X X PFB2T6 X X X 5Y1LMH X X
X 1XW046 X PQS1PU X X X CAC2AY X X
X 21M7EA X X X PR0TVA X X X HHLUPK X X X
X 29QKV5 X X X X Q96THY X X X NW1M67 X X
X 2IHJX0 X X X X R6S1KA X X X NXVZE1 X X X X
X 2J8DPS X RGAB8U X V9PHSU X X
X 2MF9Q7 X X X RWELJT X 3WFTUL X X X
X 2QK9DF X X X S7RY2L X X X 7PHL4Q X X
X 2XW58Y X X X X SANS60 X X X X X FISTR7 X X X
X 2ZSEH2 X X X SK99M4 X X X FKBFHS X X
25
A B C D E F G H I A B C D E F G H I A B C D E F G H I
X 355RPM X X X X TDECQR X GUIYT3 X X
X 41NL56 X X X TFLTM7 X X X 1REWS6 X X
X 43LZLP X X X TQK7VA X X X 1VG2FS X X
X 4HG45X X X X U9098L X X X 2R5S13 X X
X 4LEDAA X X X UA257S X 2Z3F8M
X 4NP3JM X X X UYZG00 X X X 42KDKW X X
X 57EC4P X X X V1BUN2 X 4CXX7I X X
X 5AUYJ3 X V28AJ4 X X X 5QUFR1 X X
X 5F7BXC X X X V7JUJR X X X 5TW5K5
X 5PMS2S X X X VANVMB X 5XSQYQ X X
X 5SAV8Z X X X VQMKUI X X X 7GWCVL X X
X 6Q30SB X X X VQYCIL X X X 7Y2SN1 X X
X 7NNJCN X X X W12QJZ X 8SLUU1 X X X
X 7R0Z8N X WWHTU0 X 9Q0YYM X X
X 85VDJ2 X X X X3R2LG X ACG0GE X X X
X 8XUZ1M X X X X59S90 X X X X AXLKUY
X 9CECTT X X X X XFZ9QT X X X B671LE X X
X 9EKPM3 X XRIHWR X X X CCKDHQ
X 9KF9RW X XVGT96 X FBPXZG X X X
X AAK47S X X X XVS2W8 X GDBK2N X X X
X BID1BH X X X X X XX3UVZ X X X GK86ZA X X
X BXASWU X X X Y5IGQ1 X X X KVKSTU X X X
X 88EAWQ X X X Y5SYG9 X X X MRK6Z7 X X
X 44CLVE X X X 8AH8U4 X X X X 6SHQGF
X 466557 X X X 8DIYIM X X X 6SL0N0 X X
X 46EQUJ X X X 8EAISE X 6UXSMD
X 47194K X X X 8ELCHW X X X 6YFSX3 X X X
X 474XEE X X X X 8G5SI6 X X X 6ZQYBD X X X
X 4896CU X X X 8HISGL X 714XVD X X
X 48Y8SD X 8JCDCG X 73KBMZ X X
X 4A7G1U X X X 8KGWMV X X X 74HQD3 X X
X 4B5YXP X X X 8NXWZR X X X 74I15Z
26
A B C D E F G H I A B C D E F G H I A B C D E F G H I
X 4BULJT X X X 8VHCCB X X X X 75CN5B X X
X 4C6DID X X X 8XKZVP X X X 76X7WK
X 4F0K6C X X X 8Z43VY X X X 77EDEF X X X
X 4FCHCW X 909103 X 7B8KVJ X X
X 4IG2VP X X X 90KTQ1 X X X 7ED2IL X X
X 4JCC7G X X X 954GUU X X X 7G0SRQ X X
X 4MLIKM X X X 97ZRZM X X X 7HZ3DK X X
X 4MLQGC X 99PSEY X 7I8BWT
X 4RCM42 X 9AR82F X X X 7IMC68 X X
X 4TLTPW X X X 9BSQVP X X X X 7KT3GM X X X
X 54PS78 X X X 9CIAPV X X X 7RYD9U X X X
X 556LDN X 9DCHZU X X X 7SADP8
X 5A6S9B X X X 9FQLC9 X X X 7SREGW X X
X 5C0IX8 X X X X X 9GNURC X X X X 7UE78Z X X
X 5DNSAF X 9IK9LR X X X 7VFDEQ X X X
X 5E17DU X X X 9JNUZM X X X 7X2AFX X X
X 5GV8IW X X X 9K4L8Q X X X 80736J X X X X
X 5HFUR9 X X X X 9MAV0C X X X 8491FX X X
X 5K2KEP X X X 9N1LFP X X X 8547BH X X
X 5MUYSR X X X X 9PXX3D X X X 87FT3M X X
X 5NR7JU X X X 9QCN05 X X X 88KQUT X X
X 5QJKJ6 X 9S9TYP X X X X X 5Z3WJB X X
X 5V2F5C X X X X 9UG7NL X X X 62QREC
X 5XQXP5 X 9UHJFV X X X 9W5HTY X X
X MYGS20 X X X ARK69T X X X 20LGA4 X X
X NBUSA2 X X X ARN32U X X X 20MASU
X NMBS8B X X X X ATTJ8A X 2131JE X X
X P4P6YQ X B2JAR8 X X X 25LD5U X X
X PIY0XZ X X X X X B5AX04 X X X X 28TLZH
X TZ3V0X X X X X B77UPJ X 2D80LB X X
X VJ4ABN X X X B8G2ZC X X X 2HAURJ X X
X X7ANPH X X X B9SR2D X 2I0832 X X
27
A B C D E F G H I A B C D E F G H I A B C D E F G H I
X XY4CP7 X X X BB5YVJ X X X 2J8PYY
X ZXW4EC X X X 9W655R X 2KQN30
X 026P8Y X X X 9WACAB X X X X 2NUSSA X X
X 03YE6V X X X X 9Z3GHP X X X 2QC0LG X X X
X 08RSSU X 9ZRSCL X X X 2QL6X0
X 0913MM X X X A2UHSN X X X 2QP8FL X X
X 09LDXF X X X X A39W3M X X X 2SC4VS X X X
X 0AZ4DI X X X A3XVTU X 2ZJXKD X X X
X 0BQ4KC X X X A6G3CG X X X 3134GN X X
X 0EQP2U X X X A7LLP4 X X X 31DNLU
X 0KGDHY X X X 6AAQNF X X X 33U72A X X
X 0QJDST X X X 6ACY5Z X X X 359WXN X X
X 0QK2IS X X X 6FC3B9 X X X 3CC3B5 X X X
X 0QNUJH X X X 6FKFME X X X 3CPA0I X X
X 0QSH0M X X X 6QF6LL X X X 3EWAPZ X X
X 0S1F6K X X X 65S8QN X X X X 3JHIB5 X X X X
X 0VH4ZU X X X 661BGX X X X 3N889X X X
X 0VLG9G X X X 5Y5N4H X X X X 3SRNDW X X
X 0Y33G7 X X X X 1FWDCJ X X X 3UU5S7 X X X
X 11L6CX X X X 1IJR84 X X X 3ZMM9E X X
X 132102 X X X 1IYNI1 X X X A8WA0Y X X
X 15FSDE X X X X 1JBACU X ABNDF3 X X X
X 18253N X X X 1MZIMM X X X X AHRJKK X X X X
X 19BI20 X X X 1N2UIH X X X AIE7R5 X X
X 1AL763 X X X 1NP7GP X X X X AQLTJ2
X 1B4S0Q X X X X X 1Q953Q X X X AR8PCS X X
X 1VZCMF X X X X X 1RAVSN X X X ARESRY X X
Totals 140 2 16 4 77 52 4 120 140 2 12 4 62 46 5 108 140 2 12 7 64 64 3 113
28
LEGEND TOTALS
A Appraiser Count 420
B Appraiser Identification Number N/A
C Roster shows State license that was not found in Registry. 6
D Registry shows additional State license(s) not shown on roster. 40
E Registry shows different name then that shown on roster. 15
F Roster State license(s) number different due to removed data. 203
G Roster State license(s) number different due to added data. 162
H Roster State license(s) number completely different 12
I Appraiser had one or more deficiencies 341
29
Appendix C
SUMMARY OF SANCTIONED APPRAISERS
Legend
A Appraiser Identification Number
B Appraiser received sanction
C Appraiser received sanction and was not terminated
D Appraiser terminated more than 30 days after receipt of sanction
E Appraiser conducted appraisals while under sanction
F Number of appraisals conducted while under sanction
A B C D E F A B C D E F A B C D E F
P2P825 X X 18L3FR X X 9EUFJG X X 1
CQN5AC X X V3PFSL X 4R4LGN X
S1ZQIK X X G54DJY X X 5Z2CID X
UKKP5X X X 67PZBL X X 1D8BKG X
DTS5Q9 X X 6R17TP X JK1L7B X X
4Y9WQG X X RLWGS1 X XSU2G6 X X
CH0HM5 X X V06JY0 X F35GRB X X
EHDNDB X X 8Y17AA X X EIR611 X X
RAQRMZ X X X3R2LG X X C4AS9H X
UIEI7I X X X 10 BNBAC7 X X TG14TI X
PA5H7T X X H48WYD X X LFMYRL X
16KHTW X X 9VDLFH X X A3PAX9 X X
IUJWVZ X X S47AT4 X 2J8DPS X X X 4
TZMVQ6 X X X77UBH X X DMIHCN X X
V469EL X X UKKSQP X X 2QT5VC X
KZLCYP X X MRYJC0 X X K5PTPK X
6CXMIU X X ZB8XG2 X VEYWJU X
63HHMA X X JRB4V3 X X 7 8RGGRN X
SUT4WU X X Z0VFTA X X 3SH9C8 X
VCPG85 X X 4DRKN9 X X 6HZRDQ X
TKIKV5 X X PIY0XZ X X X 1 D9EFBN X
5ZLIS2 X X K2SZDR X WKLWB3 X
DB38MQ X 9UUPRN X X BLAWDW X
V1T7CG X X 0WPF4E X X KX86ZA X
94UPU3 X X WZD6P8 X VE6XKF X
FYQLFM X X GD85T5 X X 0JLLCW X
SE0JH7 X X NVF9R7 X X 1XCRI0 X
W6E7ND X X KI1UNK X FD11I4 X
RAI3ZQ X X ABKP24 X KFCS23 X X
7HTGI3 X X X 1 ELCJYZ X IHVW3Q X X
PG7JIP X W9E2RU X HQ3HGU X X
25UIHH X X 256R19 X QN2RTY X X X 1
RG84D2 X X EN1R14 X Y47B5E X
AII6BL X DV6MBL X A78NRK X X
ZZHFX0 X X W9LYJW X 50HEQ3 X X X 2
B7X9LH X X ILUJHB X 3NLI1W X X
30
A B C D E F A B C D E F A B C D E F
429SXU X F2UR1K X XMPPLL X
CAQIC2 X AA36GP X GFKCZK X
NMLVZH X X IDDX44 X F82DHJ X
079RP2 X 8N2D5P X
Totals 39 0 34 2 11 40 1 17 2 8 40 0 14 4 8
B C D E F
Totals 119 1 65 8 27
Legend
A Appraiser identification number
B Appraiser received sanction.
C Appraiser received sanction and was not terminated.
D Appraiser terminated more than 30 days after receipt of sanction
E Appraiser conducted appraisals while under sanction.
F Number of appraisals conducted while under sanction
31
Appendix D
SUMMARY OF INELIGIBLE APPRAISALS
Legend
A Appraiser Count
B Appraiser Identification Number
C Number of appraisals conducted before Registry showed valid license
D Number of appraisals conducted after Registry showed expired license
E Number of appraisals conducted after Registry showed expired license but before 30-day control
F Number of appraisals conducted more than 30 days after license expiration
G Total number of appraisers who conducted appraisals after license expiration
H Number of appraisers who conducted appraisals after 30-day control
A B C D E F G H A B C D E F G H A B C D E F G H
X 6YFSX3 77 0 0 0 X 4FCHCW 0 0 0 0 X 7GWCVL 0 0 0 0
X 76X7WK 70 0 0 0 X 4IG2VP 0 0 0 0 X 7Y2SN1 0 0 0 0
X 9PXX3D 68 0 0 0 X 4JCC7G 0 15 0 15 X X X 9Q0YYM 0 0 0 0
X 4A7G1U 0 61 0 61 X X X 4MLQGC 0 0 0 0 X FBPXZG 0 0 0 0
X 7I8BWT 37 0 0 0 X 4RCM42 0 0 0 0 X GDBK2N 0 0 0 0
X 8NXWZR 36 0 0 0 X 4TLTPW 0 0 0 0 X MYGS20 0 0 0 0
X HHLUPK 35 0 0 0 X 556LDN 0 0 0 0 X NBUSA2 0 0 0 0
X A39W3M 34 0 0 0 X 5C0IX8 0 0 0 0 X NMBS8B 0 0 0 0
X 4BULJT 33 0 0 0 X 5DNSAF 0 0 0 0 X PIY0XZ 0 0 0 0
X 62QREC 31 0 0 0 X 5E17DU 0 0 0 0 X VJ4ABN 0 0 0 0
X 8EAISE 31 0 0 0 X 5GV8IW 0 0 0 0 X ZXW4EC 0 0 0 0
X ARN32U 31 0 0 0 X 5HFUR9 0 100 0 100 X X X 026P8Y 0 0 0 0
X 6ZQYBD 30 0 0 0 X 5MUYSR 0 0 0 0 X 03YE6V 0 0 0 0
X 661BGX 29 0 0 0 X 5QJKJ6 0 0 0 0 X 08RSSU 0 0 0 0
X 73KBMZ 0 29 0 29 X X X 5V2F5C 0 0 0 0 X 0913MM 0 0 0 0
X 44CLVE 25 0 0 0 X 5Y5N4H 0 0 0 0 X 09LDXF 0 0 0 0
X 6FC3B9 25 0 0 0 X 5Z3WJB 0 0 0 0 X 0AZ4DI 0 0 0 0
X 8G5SI6 24 0 0 0 X 65S8QN 0 0 0 0 X 0BQ4KC 0 0 0 0
X NXVZE1 0 23 0 23 X X X 6AAQNF 0 0 0 0 X 0EQP2U 0 0 0 0
X 57EC4P 19 0 0 0 X 6ACY5Z 0 0 0 0 X 0KGDHY 0 0 0 0
X 3SRNDW 18 0 0 0 X 6FKFME 0 0 0 0 X 0QJDST 0 0 0 0
X 97ZRZM 17 0 0 0 X 6UXSMD 0 0 0 0 X 0QK2IS 0 0 0 0
X 2QP8FL 16 0 0 0 X 714XVD 0 0 0 0 X 0QSH0M 0 0 0 0
X NW1M67 15 0 0 0 X 75CN5B 0 0 0 0 X 0VH4ZU 0 0 0 0
X AXLKUY 15 0 0 0 X 77EDEF 0 0 0 0 X 0VLG9G 0 0 0 0
X 11L6CX 15 0 0 0 X 7B8KVJ 0 0 0 0 X 0Y33G7 0 0 0 0
X 2QC0LG 14 0 0 0 X 7G0SRQ 0 0 0 0 X 132102 0 0 0 0
X 8547BH 0 14 0 14 X X X 7HZ3DK 0 0 0 0 X 15FSDE 0 0 0 0
32
A B C D E F G H A B C D E F G H A B C D E F G H
X 8XKZVP 14 0 0 0 X 7IMC68 0 0 0 0 X 18253N 0 0 0 0
X 8DIYIM 0 11 0 11 X X X 7RYD9U 0 0 0 0 X 19BI20 0 0 0 0
X B77UPJ 11 0 0 0 X 7SADP8 0 0 0 0 X 1AL763 0 0 0 0
X 2J8PYY 10 0 0 0 X 7SREGW 0 0 0 0 X 1B4S0Q 0 0 0 0
X 4MLIKM 10 0 0 0 X 7VFDEQ 0 0 0 0 X 1FWDCJ 0 0 0 0
X MRK6Z7 9 0 0 0 X 7X2AFX 0 0 0 0 X 1IJR84 0 0 0 0
X 6SHQGF 9 0 0 0 X 80736J 0 0 0 0 X 1IYNI1 0 0 0 0
X 7UE78Z 0 9 0 9 X X X 8491FX 0 0 0 0 X 1MZIMM 0 0 0 0
X 8VHCCB 9 0 0 0 X 87FT3M 0 0 0 0 X 1N2UIH 0 0 0 0
X 9N1LFP 9 0 0 0 X 88KQUT 0 0 0 0 X 1NP7GP 0 0 0 0
X VQYCIL 0 8 0 8 X X X 8AH8U4 0 0 0 0 X 1Q953Q 0 0 0 0
X 5QUFR1 8 0 0 0 X 8ELCHW 0 0 0 0 X 1RAVSN 0 0 0 0
X 5XSQYQ 8 0 0 0 X 8HISGL 0 0 0 0 X 1VZCMF 0 0 0 0
X KVKSTU 8 0 0 0 X 8KGWMV 0 0 0 0 X 20LGA4 0 0 0 0
X 0QNUJH 8 0 0 0 X 909103 0 0 0 0 X 20MASU 0 0 0 0
X 3ZMM9E 7 0 0 0 X 90KTQ1 0 0 0 0 X 2131JE 0 0 0 0
X 54PS78 7 0 0 0 X 954GUU 0 0 0 0 X 25LD5U 0 0 0 0
X 8Z43VY 6 0 0 0 X 99PSEY 0 0 0 0 X 28TLZH 0 0 0 0
X 9WACAB 0 6 0 6 X X X 9AR82F 0 0 0 0 X 2I0832 0 0 0 0
X 0S1F6K 5 0 0 0 X 9BSQVP 0 0 0 0 X 2KQN30 0 0 0 0
X 6SL0N0 5 0 0 0 X 9CIAPV 0 0 0 0 X 2NUSSA 0 0 0 0
X 9JNUZM 5 0 0 0 X 9DCHZU 0 0 0 0 X 2QL6X0 0 0 0 0
X 9W5HTY 5 0 0 0 X 9FQLC9 0 0 0 0 X 2SC4VS 0 0 0 0
X 9W655R 5 0 0 0 X 9GNURC 0 0 0 0 X 2ZJXKD 0 0 0 0
X BB5YVJ 5 0 0 0 X 9IK9LR 0 0 0 0 X 3134GN 0 0 0 0
X 5F7BXC 4 0 0 0 X 9MAV0C 0 0 0 0 X 31DNLU 0 0 0 0
X GUIYT3 4 0 0 0 X 9QCN05 0 0 0 0 X 33U72A 0 0 0 0
X 8SLUU1 4 0 0 0 X 9S9TYP 0 0 0 0 X 359WXN 0 0 0 0
X GK86ZA 4 0 0 0 X 9UG7NL 0 0 0 0 X 3CPA0I 0 0 0 0
X TZ3V0X 4 0 0 0 X 9UHJFV 0 0 0 0 X 3JHIB5 0 0 0 0
X XY4CP7 4 0 0 0 X 9Z3GHP 0 0 0 0 X 3N889X 0 0 0 0
X 2HAURJ 4 0 0 0 X 9ZRSCL 0 0 0 0 X 3UU5S7 0 0 0 0
X 5K2KEP 0 4 0 4 X X X A2UHSN 0 0 0 0 X 466557 0 0 0 0
X 8JCDCG 4 0 0 0 X A7LLP4 0 0 0 0 X 46EQUJ 0 0 0 0
X 5Y1LMH 3 0 0 0 X A8WA0Y 0 0 0 0 X 47194K 0 0 0 0
X CCKDHQ 3 0 0 0 X ABNDF3 0 0 0 0 X 474XEE 0 0 0 0
X 1JBACU 3 0 0 0 X AHRJKK 0 0 0 0 X 4896CU 0 0 0 0
X 5A6S9B 0 3 0 3 X X X AIE7R5 0 0 0 0 X 48Y8SD 0 0 0 0
X 5NR7JU 3 0 0 0 X AQLTJ2 0 0 0 0 X 4B5YXP 0 0 0 0
X 74HQD3 3 0 0 0 X AR8PCS 0 0 0 0 X 4C6DID 0 0 0 0
X 7ED2IL 3 0 0 0 X ARESRY 0 0 0 0 X 4F0K6C 0 0 0 0
X 9K4L8Q 3 0 0 0 X ARK69T 0 0 0 0 X 4HG45X 0 0 0 0
X 2QK9DF 2 0 0 0 X ATTJ8A 0 0 0 0 X 4NP3JM 0 0 0 0
X 4CXX7I 2 0 0 0 X B2JAR8 0 0 0 0 X 5AUYJ3 0 1 1 0 X
X B671LE 2 0 0 0 X B5AX04 0 0 0 0 X 5PMS2S 0 1 0 1 X X
X P4P6YQ 2 0 0 0 X B8G2ZC 0 0 0 0 X 5SAV8Z 0 0 0 0
X 2D80LB 2 0 0 0 X B9SR2D 0 0 0 0 X 6Q30SB 0 0 0 0
X 5XQXP5 0 2 0 2 X X X JQS5IK 0 0 0 0 X 7NNJCN 0 0 0 0
33
A B C D E F G H A B C D E F G H A B C D E F G H
X 74I15Z 2 0 0 0 X KLKTA5 0 0 0 0 X 7R0Z8N 0 0 0 0
X 7KT3GM 2 0 0 0 X L1BST0 0 0 0 0 X 85VDJ2 0 0 0 0
X A6G3CG 2 0 0 0 X L5JA0M 0 0 0 0 X 8XUZ1M 0 0 0 0
X MY4SWW 0 1 1 0 X X LU1A17 0 0 0 0 X 9CECTT 0 0 0 0
X XMK9KW 0 1 0 1 X X X MYIBE1 0 0 0 0 X 9EKPM3 0 0 0 0
X 4LEDAA 1 0 0 0 X N4L1ZK 0 0 0 0 X 9KF9RW 0 0 0 0
X 88EAWQ 1 0 0 0 X N8FRDX 0 0 0 0 X AAK47S 0 0 0 0
X ACG0GE 1 0 0 0 X NKBCKB 0 0 0 0 X BID1BH 0 0 0 0
X X7ANPH 1 0 0 0 X P2LRBT 0 0 0 0 X BXASWU 0 0 0 0
X 3CC3B5 0 55 0 55 X X X PA8VDS 0 0 0 0 X BY2432 0 0 0 0
X 3EWAPZ 0 1 0 1 X X X PFB2T6 0 0 0 0 X CFT5KZ 0 0 0 0
X 6QF6LL 1 0 0 0 X PQS1PU 0 0 0 0 X CQMNQB 1 0 0 0
X A3XVTU 1 0 0 0 X PR0TVA 0 0 0 0 X CU1Q4B 0 0 0 0
X E3TQ6P 0 0 0 0 X Q96THY 0 0 0 0 X CUL2SU 0 0 0 0
X 6DTUG1 0 0 0 0 X R6S1KA 0 0 0 0 X D6TRYB 0 0 0 0
X 9NQW4V 0 0 0 0 X RGAB8U 14 0 0 0 X D84ZMS 0 0 0 0
X K0FZ2F 0 0 0 0 X RWELJT 0 0 0 0 X DAKCJZ 0 0 0 0
X 2LLKGV 0 0 0 0 X S7RY2L 0 1 0 1 X X X DGW7KF 0 0 0 0
X 386KQU 0 0 0 0 X SANS60 0 0 0 0 X E8TMXF 0 0 0 0
X 6SIFVW 0 0 0 0 X SK99M4 0 0 0 0 X EAZGRY 0 0 0 0
X 8683I9 0 0 0 0 X TDECQR 0 0 0 0 X ECS7MC 2 0 0 0
X BELX9H 0 0 0 0 X TFLTM7 0 0 0 0 X EQKQJZ 0 0 0 0
X D43N52 0 0 0 0 X TQK7VA 0 0 0 0 X EWYFDR 0 0 0 0
X G475YB 0 0 0 0 X U9098L 0 0 0 0 X FUU0IC 0 0 0 0
X L4YACE 0 0 0 0 X L2KV6Y 0 0 0 0 X FXZUSY 0 0 0 0
X N2MBXR 0 0 0 0 X P54XYY 0 0 0 0 X G2FZGL 0 0 0 0
X RH9MSJ 0 0 0 0 X CHUW7U 0 0 0 0 X GR45PD 0 0 0 0
X V1VLJT 0 0 0 0 X XBG96G 0 0 0 0 X GSKQBC 0 0 0 0
X WQ19JF 0 0 0 0 X 9JN0MV 0 0 0 0 X GWVJDF 0 0 0 0
X UA257S 0 0 0 0 X D63ZH3 0 0 0 0 X 65LP45 0 0 0 0
X UYZG00 0 0 0 0 X FZ1GYS 0 0 0 0 X 3BHGBH 0 0 0 0
X V1BUN2 0 0 0 0 X HIFU2N 0 0 0 0 X 6RPW2K 0 0 0 0
X V28AJ4 0 0 0 0 X IKCZ2I 0 0 0 0 X 89Z2G6 0 0 0 0
X V7JUJR 0 0 0 0 X L3WRSK 0 0 0 0 X 2KEU69 0 0 0 0
X VANVMB 0 0 0 0 X MSRP24 0 0 0 0 X 7Z90EY 0 0 0 0
X VQMKUI 0 0 0 0 X NHI9NU 0 0 0 0 X 5B8ZGA 0 1 1 0 X
X W12QJZ 0 0 0 0 X NVN7DY 0 0 0 0 X 5H2Z97 0 0 0 0
X WWHTU0 0 5 4 1 X X X QS1ZMI 0 0 0 0 X CDBQUW 0 0 0 0
X X3R2LG 0 1 1 0 X X V2KKNY 0 0 0 0 X UP4MYW 0 0 0 0
X X59S90 0 1 1 0 X X W2LBDK 0 0 0 0 X R7BKIT 0 1 1 0 X
X XFZ9QT 0 0 0 0 X Z1LNPF 0 0 0 0 X ZSUR8M 0 0 0 0
X XRIHWR 0 0 0 0 X ZFUQ9L 0 0 0 0 X 1VIVQS 0 0 0 0
X XVGT96 0 0 0 0 X ZLS9E3 0 0 0 0 X 1XW046 0 0 0 0
X XVS2W8 0 0 0 0 X ZRP4PZ 0 0 0 0 X 21M7EA 0 1 1 0 X
X XX3UVZ 0 0 0 0 X ZZGD8Q 0 0 0 0 X 29QKV5 0 0 0 0
X Y5IGQ1 0 0 0 0 X EZTAPF 0 0 0 0 X 2IHJX0 0 1 1 0 X
X Y5SYG9 2 0 0 0 X JI0JFE 0 0 0 0 X 2J8DPS 0 0 0 0
X YMUQJN 0 0 0 0 X XFXLLW 0 0 0 0 X 2MF9Q7 0 0 0 0
34
A B C D E F G H A B C D E F G H A B C D E F G H
X YQ849R 0 0 0 0 X ZLEC4V 0 0 0 0 X 2XW58Y 0 0 0 0
X Z0JWRQ 0 0 0 0 X GWLV4J 0 0 0 0 X 2ZSEH2 0 0 0 0
X Z6FM75 0 0 0 0 X MKWJ7C 0 0 0 0 X 355RPM 0 0 0 0
X 0LKM9L 0 0 0 0 X CAC2AY 0 0 0 0 X 41NL56 0 4 4 0 X
X 11A3AL 0 0 0 0 X V9PHSU 0 0 0 0 X 43LZLP 0 0 0 0
X CMQSU4 0 0 0 0 X 3WFTUL 0 0 0 0 X HBE0PC 0 0 0 0
X F54XJM 0 0 0 0 X 7PHL4Q 0 0 0 0 X HMB4KG 0 0 0 0
X FSEJ7R 0 0 0 0 X FISTR7 0 0 0 0 X HT17JK 0 0 0 0
X HK5UBG 0 0 0 0 X FKBFHS 0 0 0 0 X HTUPMI 0 0 0 0
X L8L56J 0 0 0 0 X 1REWS6 0 0 0 0 X IJ58JT 0 0 0 0
X YVY9A1 0 0 0 0 X 1VG2FS 0 0 0 0 X J9NMRF 0 0 0 0
X 1JXDCG 0 0 0 0 X 2R5S13 0 0 0 0 X GZDUWN 0 0 0 0
X 592CS9 0 0 0 0 X 2Z3F8M 0 0 0 0 X HAW8EJ 0 0 0 0
X 9Q7U5T 0 0 0 0 X 42KDKW 0 0 0 0 X XM88TF 0 0 0 0
X 9QZLUW 0 0 0 0 X 5TW5K5 0 0 0 0 X CZL7KZ 0 0 0 0
X A1E5Q0 0 0 0 0 X T0A4FC 0 0 0 0 X 29LMLY 0 0 0 0
TOTAL 140 985 235 7 228 18 15 140 14 116 0 116 3 3 140 3 10 9 1 7 1
LEGEND TOTALS
A Appraiser Count 420
B Appraiser Identification Number N/A
C Number of appraisals conducted prior to Registry showing valid license 1002
D Number of appraisals conducted after Registry showed expired license. 361
E Number of appraisals conducted after Registry showed expired license, but prior to 30 day control 16
F Number of appraisals conducted more than 30 days after license expiration. 345
G Total number of appraisers that had conducted appraisals after license expiration 28
H Number of appraisers that conducted appraisals after 30 day control. 19
35
Appendix E
SUMMARY OF APPRAISER APPLICATION PACKAGES
REQUESTED
Summary of application packages requested
Appraiser key Requested Provided Not provided Not required
9DNEQY X X
9WLE7C X X
YGH3TK X X
0HVAB0 X X
3Q96F8 X X
5GPCKL X X
5QQN07 X X
A94I0P X X
B2JW2C X X
IHBX6R X X
JDAGLJ X X
L9FMKP X X
TQLRZW X X
UELT44 X X
WBXS3L X X
YD6LV5 X X
Z17D5X X X
0TI9UN X X
19Y7VH X X
1BUJK2 X X
24AMRK X X
2QL6X0 X X
3FA10E X X
3QESDU X X
51AWML X X
52V8KC X X
5DA6VZ X X
5DJZ9R X X
5ZQWBK X X
6HLB0P X X
75G046 X X
7F9HJG X X
7RWG36 X X
7WAJY0 X X
8WPGZZ X X
92GKRU X X
9Q9ZGW X X
9SELC9 X X
AQETAU X X
FKP2JP X X
GH3V8J X X
HAERMG X X
HPSLDA X X
HXKE5F X X
I1GKFE X X
JRKY9P X X
K3TVHU X X
KYQIYX X X
NA0758 X X
NBMMCU X X
NZ47BW X X
PNNIJW X X
PPHACX X X
Q60832 X X
QB73TL X X
QPTE9W X X
RMS5I2 X X
36
Summary of application packages requested
Appraiser key Requested Provided Not provided Not required
SCFVFJ X X
SHRDYQ X X
SQWMDL X X
SYD8VI X X
TIBXPC X X
W8GB03 X X
Y4MR04 X X
YK2SRX X X
YMPPJA X X
ZGBNJ6 X X
Totals 67 14 50 3
37
Appendix F
CRITERIA
A. Office of Management and Budget (OMB) Circular A-123, Management Accountability and
Control (effective June 21, 1995), attachment II, Establishing Management Controls, states,
“[m]anagement controls are the organization, policies, and procedures used to reasonably
ensure that (i) programs achieve their intended results; (ii) resources are used consistent with
agency mission; (iii) programs and resources are protected from waste, fraud, and
mismanagement; (iv) laws and regulations are followed; and (v) reliable and timely
information is obtained, maintained, reported and used for decision making….A subset of
management controls are the internal controls used to assure that there is prevention or timely
detection of unauthorized acquisition, use, or disposition of the entity’s assets….management
controls shall be consistent with...Compliance With Law and Separation of Duties and
Supervision.”
B. OMB Circular A-123, Management’s Responsibly for Internal Control (effective beginning
fiscal year 2006), appendix A section I, Introduction, states, “Management is responsible for
developing and maintaining effective internal control,” which “provides assurance that
significant weaknesses in the design or operation of internal control....would be prevented or
detected in a timely manner.” “Continuous monitoring and testing should help to identify
poorly designed or ineffective controls... .”
C. The Government Accountability Office’s Standards for Internal Control in the Federal
Government (GAO/AIMD-00-21.3.1), Risk Assessment (page 10), states, “internal control
should provide for an assessment of the risks the agency faces form both external and
internal sources.” Page 20, Monitoring, states, “monitoring should assess the quality of
performance over time and ensure that the findings of audits and other reviews are properly
resolved” and “should generally be designed to assure that ongoing monitoring occurs in the
course of normal operations.”
D. HUD Handbook 2225.6, appendix 20, item number 13(a), Technical and Miscellaneous
Reference Files, states, “participant files should be destroyed when superseded or obsolete.”
E. Mortgagee Letter 94-54, dated November 7, 1994, section IV, states, “[t]o be eligible for
placement on the Lender Selection Roster, and appraiser must be state licensed or certified in
accordance with the minimum licensing criteria established by the Appraiser Qualifications
Board (AQB) of the Appraisal Foundation to be placed on HUD’s FHA appraiser roster. The
AQB minimum requirements for licensing are 75 hours of education, 2000 hours of
experience and passing a written examination.”
F. Mortgagee Letter 96-26, effective May 1, 1996, Competency, states that appraisers must be
either state licensed or certified to be placed on HUD’s FHA appraiser roster. Mortgagee
Letter 99-35, dated November 24, 1999, states, “appraisers must be state licensed or certified
in accordance with the minimum licensing criteria established by the Appraiser
Qualifications Board, not be listed on either the General Services Administration’s
38
Suspension or Debarment List, HUD’s Limited Denial of Participation List, or HUD’s Credit
Alert Interactive Voice Response System, and pass a HUD/FHA examination on appraisal
methods and reporting.”
G. HUD Handbook 4150.2, section 1-1, effective July 1, 1999, requires that all appraisers be
state licensed or certified to be placed on the FHA appraiser roster.
H. Federal Register 4620-F-02, effective June 13, 2003, Final Rule the Summary, states,
“appraisers on the roster must have credentials based on the minimum licensing/certification
standards required by the Appraiser Qualifications Board of the Appraisal Foundation.”
I. Regulations at 24 CFR [Code of Federal Regulations] 200.204, effective June 13, 2003,
state, “[a]n appraiser, whose license or certification in any state has been revoked, suspended,
or surrendered as a result of a state disciplinary action, will be automatically removed from
the Appraiser Roster. This removal will remain in effect until HUD receives evidence
demonstrating that the state-imposed sanction has been lifted.” Additionally, “[a]n appraiser
whose licensing or certification in a state has expired is automatically removed from the
Appraiser Roster in that state and may not conduct FHA appraisals in that state. This
removal will remain in effect until HUD receives evidence of the appraiser license with
certification renewal.” Further, “[r]easons for removal from roster include...failure to
maintain eligibility requirements for placement on the Appraiser Roster.”
J. Mortgagee Letter 2003-09, dated June, 20, 2003, Highlights of Final Rule, states that causes
for removal from the FHA appraiser roster include an appraiser’s failing to maintain
eligibility requirements for placement on the roster.
39
HUD Did Not Have Adequate Internal Controls over Its FHA Appraiser Roster
Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-03-04.
Below is a raw (and likely hideous) rendition of the original report. (PDF)