oversight

NOVA Financial & Investment Corporation's FHA-Insured Loans With Downpayment Assistance Gifts Did Not Always Meet HUD Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2015-07-09.

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

         NOVA Financial & Investment
           Corporation, Tucson, AZ
        Federal Housing Administration Single-Family
                    Mortgage Insurance




Office of Audit, Region 9       Audit Report Number: 2015-LA-1005
Los Angeles, CA                                        July 9, 2015
To:            Kathleen A. Zadareky
               Deputy Assistant Secretary for Single Family Housing, HU

               Dane M. Narode
               Associate General Counsel for Program Enforcement, CACC

               //SIGNED//
From:          Tanya E. Schulze, Regional Inspector General for Audit, 9DGA
Subject:       NOVA Financial & Investment Corporation’s FHA-Insured Loans With
               Downpayment Assistance Gifts Did Not Always Meet HUD Requirements


Attached is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector
General’s (OIG) final results of our audit of NOVA Financial & Investment Corporation’s use of
downpayment assistance programs in conjunction with Federal Housing Administration (FHA)-
insured loans.

HUD Handbook 2000.06, REV-4, sets specific timeframes for management decisions on
recommended corrective actions. For each recommendation without a management decision,
please respond and provide status reports in accordance with the HUD Handbook. Please furnish
us copies of any correspondence or directives issued because of the audit.

The Inspector General Act, Title 5 United States Code, section 8M, requires that OIG post its
publicly available reports on the OIG Web site. Accordingly, this report will be posted at
http://www.hudoig.gov.

If you have any questions or comments about this report, please do not hesitate to call me at
213-534-2471.
                    Audit Report Number: 2015-LA-1005
                    Date: July 9, 2015

                    NOVA Financial & Investment Corporation’s FHA-Insured Loans With
                    Downpayment Assistance Gifts Did Not Always Meet HUD Requirements




Highlights

What We Audited and Why
We audited NOVA Financial & Investment Corporation based on a referral from the U.S.
Department of Housing and Urban Development’s (HUD) Quality Assurance Division detailing
a separate lender that originated Federal Housing Administration (FHA)-insured loans that
contained ineligible downpayment assistance gifts. The HUD Office of Inspector General’s
(OIG) analysis identified NOVA as a lender with the highest origination volume in the
geographic region that participated in similar downpayment assistance gift programs. Our
objective was to determine whether NOVA originated loans with downpayment assistance in
accordance with HUD FHA rules and regulations.

What We Found
NOVA’s FHA-insured loans with downpayment assistance gift funds did not always comply
with HUD FHA rules and regulations, putting the FHA mortgage insurance fund at unnecessary
risk, including potential losses of $48.5 million for 709 loans. NOVA also inappropriately
charged borrowers $376,102 in misrepresented discount fees and $7,110 in fees that were not
customary or reasonable. This condition occurred because NOVA did not do its due diligence,
relied on development authorities’ program guidelines, and assumed downpayment assistance
eligibility based on the reputation of the participating master loan servicer. The premium rate
attached to the ineligible loans put borrowers at a distinct disadvantage due to higher monthly
mortgage payments imposed on them.

What We Recommend
We recommend that HUD determine legal sufficiency to pursue civil and administrative
remedies against NOVA for incorrectly certifying that mortgages were eligible for FHA
mortgage insurance. We also recommend HUD require NOVA to (1) stop originating FHA
loans with ineligible gifts; (2) indemnify HUD for 709 FHA loans that were originated with
ineligible downpayment assistance gifts, resulting in funds to be put to better use of $48.5
million; (3) reimburse borrowers for $376,102 in misrepresented discount fees and $7,110 in fees
that were not customary or reasonable; (4) reduce the interest rate for borrowers who received
downpayment assistance; (5) reimburse borrowers for overpaid interest as a result of the
premium interest rate; and (6) update all internal control checklists to include specific HUD rules
and regulations governing downpayment assistance, premium interest rates, and allowable fees.
Table of Contents
Background and Objective......................................................................................3

Results of Audit ........................................................................................................4
         Finding: NOVA’s FHA-Insured Loans With Downpayment Assistance Gift Funds
         Did Not Always Meet HUD Requirements ..................................................................... 4

Scope and Methodology .........................................................................................11

Internal Controls ....................................................................................................13

Appendixes ..............................................................................................................14
         A. Schedule of Questioned Costs and Funds To Be Put to Better Use ...................... 14

         B. Auditee Comments and OIG’s Evaluation ............................................................. 15

         C. Criteria ....................................................................................................................... 41

         D. Summary of Loans With Ineligible Downpayment Assistance….........................43

         E. Summary of Loans With Inappropriate Fees ........................................................ 55




                                                                     2
Background and Objective
The Federal Housing Administration (FHA) was created by Congress in 1934 and provides
mortgage insurance on loans made by FHA-approved lenders throughout the United States and
its territories. FHA is the largest insurer of mortgages in the world, having insured more than 34
million properties since its inception. FHA’s Mutual Mortgage Insurance Fund provides lenders
with protection against losses as a result of homeowners defaulting on their mortgage loans.
Lenders bear less risk because FHA will pay a claim to the lender in the event of a homeowner’s
default. Loans must meet certain requirements established by FHA to qualify for insurance.
FHA generally operates from self-generated income and only recently received part of its
funding from taxpayers.

Under most FHA programs, the borrower is required to make a minimum downpayment of at
least 3.5 percent of the lesser of the appraised value of the property or the sales price.
Additionally, the borrower must have sufficient funds to cover borrower-paid closing costs and
fees at the time of settlement. State housing finance agencies and development authorities are
significant sources of home-ownership assistance programs, such as assistance with closing costs
or rehabilitation. A majority of these programs include providing funding to borrowers for the
FHA minimum cash investment. Although the U.S. Department of Housing and Urban
Development (HUD) does not approve downpayment assistance programs, such programs and
the lenders using the programs must ensure that funds provided comply with HUD FHA rules
and regulations. Funds used to cover the required minimum cash investment, as well as closing
costs and fees, must come from acceptable sources and be verified and properly documented.

NOVA Financial & Investment Corporation is a nonsupervised lender that was approved to
originate FHA-insured loans on October 8, 1996, and received direct endorsement authority on
November 9, 2009. NOVA’s headquarters office is located at 6245 East Broadway Boulevard,
Tucson, AZ. NOVA maintains 20 branches nationally and is licensed in Arizona, Alabama,
Alaska, California, Colorado, Florida, Illinois, Oregon, Utah, New Mexico, Nevada,
Washington, Texas, and Virginia. NOVA originated 3,590 FHA loans during the period August
1, 2011, to July 31, 2014.

Our objective was to determine whether NOVA originated loans with downpayment assistance
in accordance with HUD FHA rules and regulations.




                                                 3
Results of Audit

Finding 1: NOVA’s FHA-Insured Loans With Gift Funds Did Not
Always Meet HUD Requirements
NOVA’s FHA-insured loans that included downpayment assistance gift funds did not always
comply with HUD FHA rules and regulations. In addition, NOVA improperly charged fees that
were misrepresented, non-customary, or unreasonable. We identified 709 FHA-insured loans
that contained an ineligible gift. This condition occurred because NOVA did not do its due
diligence, relied on the development authorities’ program guidelines, and assumed downpayment
assistance eligibility based on the reputation of the participating master loan servicer. As a
result, NOVA put the FHA mortgage insurance fund at unnecessary risk, including potential
losses of $48.5 million for 709 loans reviewed. FHA borrowers were also charged $376,102 in
misrepresented discount fees and $7,110 in fees that were not customary or reasonable.
Additionally, the ineligible loans put borrowers at a distinct disadvantage due to higher monthly
mortgage payments.

NOVA Allowed Premium Pricing Associated With Downpayment Assistance
NOVA inappropriately originated FHA loans that included ineligible downpayment assistance
gifts provided by programs administered through two State of Arizona development authorities:
Home in Five Advantage Mortgage Origination Program and Pima Tucson Homebuyer’s
Solution. Using the Single Family Data Warehouse 1, we identified 405 FHA-insured loans 2
endorsed from May 1, 2011, to August 31, 2014, that included ineligible gifts (see appendix D).
NOVA reported an additional 304 FHA loans within our audit period that also used
downpayment assistance for the loans’ minimum required investments 3 and were likely
ineligible.

            Ineligible loans             Number of            Unpaid principal         Estimated loss
               identified              ineligible loans          balance               to HUD (risk)
         Reviewed by OIG                      405             $       57,215,592      $      28,607,796
         Reported by NOVA                     304                     39,765,976             19,882,988
                  Totals                      709             $       96,981,568      $     48,490,784 4

NOVA inappropriately allowed premium pricing to be used as a source for borrowers’
downpayments and allowed gifts that did not meet the level required by HUD FHA rules and

1
  Single Family Data Warehouse is a large collection of database tables dedicated to support analysis, verification,
and publication of FHA single-family housing data.
2
  Of the 420 loans reviewed, 3 were paid in full and 12 contained the required 3.5 percent minimum cash investment
outside the ineligible gift, resulting in 405 loans.
3
  Of the 304 additional loans, 125 were originated under the Pima Tucson and Home in Five programs. The
remaining 179 loans were originated using similar programs administered by other development authorities.
4
  The estimated loss or potential risk was calculated using HUD’s 50 percent loss rate (see appendix A).


                                                          4
regulations. As a requirement for program participation, borrowers were given mortgage interest
rates (premium rate) that were above the prevailing market rate of interest for mortgages without
downpayment assistance, equating to premium pricing. The premium interest rate was computed
by adding the development authorities’ program costs and targeted revenue margin to the rate at
which participating investment banks were
willing to purchase Government National
Mortgage Association (GNMA) mortgage-            FHA borrowers were given higher
backed securities.                               than market interest rates in exchange
                                                           for downpayment assistance.
The downpayment assistance gifts did not
comply with HUD FHA’s rules and
regulations on premium pricing and the description of acceptable gifts (see appendix C). The
gifts were not true gifts as defined by HUD. They were indirectly repaid by the borrowers
through the premium rate in combination with the development authorities’ funding mechanism.

•   The FHA loans’ premium prices were used to fund the programs by recapturing the
    downpayment assistance and the programs’ operating costs and to fund future downpayment
    assistance through the sale of the increased market value bundled loans. According to HUD
    Handbook 4155.1, paragraph 5.A.2.i, the funds derived from a premium-priced mortgage
    may never be used to pay any portion of the borrower’s downpayment.

•   To be considered a gift, HUD Handbook 4155.1, paragraph 5.B.4.a, states that there must be
    no expected or implied repayment of the funds to the donor by the borrower. NOVA did not
    comply with the “no repayment” requirement for the downpayment assistance gifts. The
    borrower indirectly repaid the ineligible gift through the premium-priced mortgage, making
    the gift ineligible.

NOVA Used Programs That Depended on a Circular Funding Mechanism
NOVA used programs administered by the development authorities that were structured with the
intention of generating revenues to perpetually fund the downpayment assistance programs.
NOVA simultaneously approved borrowers for both the FHA mortgage loans and downpayment
assistance gifts. To do this, the development authorities worked with U.S. Bank and
participating investment banks that assisted them in raising capital. Once the FHA loan was
approved, a NOVA loan officer reserved the funds for both the FHA mortgage and
downpayment assistance gift in the eHousing Plus 5 loan reservation program. The premium rate,
once determined, became a fixed rate and was nonnegotiable by either NOVA or the borrower.
The premium rate was locked at the same time the funds were reserved. Once the rate was
locked, it became an enforceable commitment between U.S. Bank 6, as the master loan servicer,
and NOVA as it was the price at which U.S. Bank agreed to purchase the servicing rights. The
closed mortgage loans were pooled by U.S. Bank, which purchased the servicing rights of each
loan that contained downpayment assistance provided by the development authorities. The



5
  eHousing is the downpayment program administrator, ensuring that interest is posted, funds are available, and all
loan files submitted comply with the downpayment assistance program guidelines.
6
  Master servicer means U.S. Bank in its role as master servicer under the servicing agreement.


                                                          5
investment banks contractually purchased the pooled premium-priced GNMA mortgaged-backed
securities.

                                              The development
                                                 authorities
                                            administered the gift
                                                programs by                    Participating
                                                maintaining                  investment banks
          Proceeds from the                   agreements with                  calculated the
          sale were used to                investment banks, U.S.         preimium interest rates
            reimburse the                    Bank, NOVA, and                based on prevailing
             development                       eHousing Plus.              market rates and the
              authorities.                                                      development
                                                                           authorities' expected
                                                                                 revenues.


  Loans were bundled
   by U.S. Bank and                                                                    NOVA qualified
     sold as GNMA                                                                     borrowers for both
    mortgage-backed                                                                   the FHA mortgage
    securities to the                                                                      loan and
      participating                                                                     downpayment
   investment banks.                                                                    assistance gift.
                                                            NOVA reserved the
                                                          qualified FHA mortgage
                                                          loan and downpayment
                              The loan was closed
                                                            assistance gift. The
                              and servicing rights
                                                           premium interest rate
                               were sold to U.S.
                                                            was locked, and the
                                     Bank.
                                                          development authorities
                                                               committed the
                                                            downpayment gift.



NOVA Did Not Ensure Downpayment Assistance Was Eligible
As the originating lender, NOVA was responsible for ensuring that FHA-insured loans complied
with all HUD FHA rules and regulations. In this instance, NOVA was responsible for ensuring
that the downpayment assistance gifts provided by development authorities met HUD FHA
requirements. NOVA did not properly conduct its due diligence by ensuring the downpayment
assistance gifts provided by the development
authorities complied with the appropriate          NOVA did not ensure downpayment
HUD FHA rules and regulations.                     assistance complied with HUD FHA
Additionally, NOVA assumed downpayment
assistance eligibility based on the
                                                   rules and regulations.
participation of key program participants (for
example, the master servicer). NOVA signed lender agreements with the development
authorities to participate in the downpayment assistance programs. Therefore, NOVA originated
FHA loans on behalf of the development authorities. The agreements contained language
indicating NOVA’s knowledge that the downpayment assistance was to be reimbursed and
would include a higher than market interest rate to provide for such reimbursement (see excerpts
below).




                                                      6
Home in Five Advantage Mortgage
Neither the premium interest rate nor the repayment of the Home in Five gifts was
disclosed in the signed lender agreements. However, based on interviews with NOVA,
the development authorities, and participating investment banks and a review of 232
FHA loans originated with a gift from Home in Five, we determined that a premium
interest rate was a requirement of program participation and the premium rate was used to
reimburse the development authorities. In the Home in Five program, the lender
provided the downpayment assistance gift on behalf of the development authorities at
closing.




Although the lender agreement does not specifically spell out development authority
reimbursement, the GNMA purchase agreement between the development authorities
and the participating investment bank states that the development authorities would be
reimbursed for the downpayment assistance grant.




Pima Tucson Homebuyer’s Solution
The lender agreement excerpts below show that the Pima Tucson program required
borrowers to obtain a premium interest rate in exchange for downpayment assistance.
The agreement further illustrated how the premium interest rate was implemented to
provide the funds for downpayment assistance.




                                        7
FHA Borrowers Receiving a Downpayment Assistance Gift Paid More
Although both programs were administered in a similar manner, they differed in how the
premium rate was disclosed to the borrower. Loans associated with the Pima Tucson program
contained a certification signed by the borrower, stating that the downpayment assistance carried
a premium rate as a requirement for program participation. Loans associated with the Home in
Five program did not contain a similar signed certification. Neither NOVA nor the applicable
development authorities were able to say with certainty how or whether the premium rate was
disclosed to the borrower.

Imposing a higher interest rate on borrowers that otherwise would not have been eligible for an
FHA mortgage loan results in a higher mortgage payment compared to qualified FHA borrowers
that do not receive downpayment assistance. The premium interest rate, required to receive
downpayment assistance, will always result in a higher mortgage payment for the borrower.
Based on interviews with a sample of FHA borrowers 7 who received a gift associated with a
premium interest rate, it appeared that they were not always fully aware of the premium rate or
its impact on their mortgage. Specifically, 11 of the 16 borrowers stated that they were not fully
aware of how receiving the downpayment assistance gift impacted their loan terms.

Fees Were Not Reasonable or Customary
NOVA charged and collected $376,102 in discount fees that were not used for their intended
purpose (see appendix E). HUD defines discount points as fees paid to reduce the interest rate
on a loan. The misrepresented discount fees were a portion of NOVA’s compensation for
originating loans under the downpayment assistance programs and not intended to reduce the
interest rate of the loans (see appendix C).




7
    We interviewed 16 borrowers. See the Scope and Methodology section for details on the selection methodology.


                                                          8
In addition, NOVA charged and collected $7,110 in fees that were not customary or reasonable
to close FHA mortgage loans (see appendix E). These fees were charged in association with the
downpayment assistance programs and were not reasonable or customary to close the FHA
mortgage loan. Fees identified as not customary or unreasonable were listed as bond program
fees, bond transfer fees, and tax and service fees on the settlement statements. For example, we
identified $225 listed as a bond transfer fee or “to be announced” application fee, a $300 funding
fee, and a $150 transfer fee. In addition, we identified a U.S. Bank tax service fee of $85, which
is prohibited according to HUD requirements.

Conclusion
NOVA’s FHA-insured loans that included a premium interest rate associated with downpayment
assistance gift funds did not always comply with HUD FHA rules and regulations. As a result,
NOVA put the FHA mortgage insurance fund at unnecessary risk, including potential losses of
$48.5 million for 709 loans. This condition occurred because NOVA did not do its due diligence,
relied on the development authorities’ program guidelines, and assumed downpayment
assistance eligibility based on the reputation of the participating master loan servicer. The
premium rate imposed on FHA borrowers put them at a distinct disadvantage due to higher
monthly mortgage payments. In addition, NOVA charged FHA borrowers $376,102 in
misrepresented discount fees and $7,110 in fees that were not customary or reasonable.

Recommendations
We recommend that HUD’s Associate General Counsel for Program Enforcement

1A.        Determine legal sufficiency and if legally sufficient, pursue civil and administrative
           remedies (31 U.S.C. (United States Code) 3801-3812, 3729, or both), civil money
           penalties (24 CFR (Code of Federal Regulations) 30.35), or both against NOVA, its
           principals, or both for incorrectly certifying to the integrity of the data, the eligibility for
           FHA mortgage insurance, or that due diligence was exercised during the origination of
           709 loans with potential losses of $48.5 million.

We recommend that HUD’s Deputy Assistant Secretary for Single Family Housing require
NOVA to

1B.        Immediately stop originating FHA loans with ineligible gifts as part of downpayment
           assistance programs that result in a premium interest rate for the borrower.

1C.        Indemnify HUD for 405 FHA loans that were originated with the ineligible gift as part of
           the downpayment assistance programs, resulting in funds to be put to better use of
           $28,607,796 8.




8
    See appendix A for explanation funds to be put to better use.


                                                             9
1D    Indemnify HUD for the additional 304 loans originated under the Home in Five, Pima
      Tucson, and similar downpayment programs that may contain ineligible downpayment
      assistance, resulting in funds to be put to better use of $19,882,9888. HUD must review
      the 304 loans to determine whether they were insurable without the ineligible
      downpayment assistance.

1E.   Reimburse FHA borrowers $376,102 for the unallowable, misrepresented discount fees
      and $7,110 for fees that were not customary or reasonable.

1F.   Collaborate with loan servicers to reduce the interest rates for FHA borrowers who
      received downpayment assistance, were charged a premium interest rate, and have not
      refinanced or terminated their original FHA loan.

1G.   Reimburse FHA borrowers for overpaid interest as a result of the premium interest rate
      for those who received downpayment assistance, were charged a premium interest rate,
      and have refinanced or terminated their original FHA loan.

1H.   Update all internal control checklists to include specific HUD FHA rules and regulations
      governing downpayment assistance, premium interest rates, and allowable fees.




                                              10
Scope and Methodology
We performed our audit fieldwork from October through January 2015 at the NOVA corporate
office in Tucson, AZ, and a NOVA office in Phoenix, AZ. Our audit period covered loans
originated from May 1, 2011, to August 31, 2014.

To accomplish our objective, we

•     Reviewed HUD regulations and reference materials related to single-family requirements;

•     Interviewed appropriate NOVA management and staff personnel;

•     Interviewed parties involved with the downpayment assistance programs, including
      Maricopa-Phoenix and Pima-Tucson Industrial Development Authorities, the Community
      Investment Corporation, Raymond James Independent Financial Advisors, and George K.
      Baum & Company;

•     Reviewed documentation for the Pima Tucson and Home in Five downpayment programs;

•     Reviewed loans that contained an ineligible downpayment assistance gift;

•     Interviewed 16 FHA borrowers; and

•     Reviewed the NOVA quality control plan and 5 files for quality control.

For our review of NOVA’s FHA loan originations related to downpayment assistance gift
programs, we reviewed 420 loans that were originated with a downpayment assistance gift.
Using the Single Family Data Warehouse, we identified loans originated by NOVA that likely
contained a downpayment assistance gift, based on the lender identification code and the
percentage of the downpayment assistance gift dictated by each downpayment assistance
program. 9

•     For the Pima Tucson program, we identified 188 of 8,824 loans that likely contained
      ineligible downpayment assistance gifts.

•     For the Home in Five program, we identified 232 of 6,694 loans that likely contained
      ineligible downpayment assistance gifts.




9
    The downpayment assistance was based on a percentage of the FHA loan amount.


                                                        11
NOVA also provided a listing of all loans in our audit period that were originated with
downpayment assistance and were premium priced. We reconciled the data from the Single
Family Data Warehouse and NOVA’s listing and identified 304 additional FHA loans that also
contained downpayment assistance similar to the 420 identified.

For our borrower interview sample, we selected the 15 most recently endorsed Pima Tucson
loans and the 15 most recently endorsed Home in Five loans. We also included two loans that
had their own funds to close in addition to the downpayment assistance received. We
interviewed 16 borrowers due to time constraints, borrower availability, and results of the
borrower interviews.

To perform our quality control file review, we requested a listing from NOVA of all quality
control reviews performed during 2009-2014. NOVA provided 2,208 loans that were reviewed
for quality control. We performed limited testing and reviewed 5 loan files of the 2,208 to
determine whether the quality control plan and a sample of the plan and the lender’s review of
FHA files met HUD’s requirements.

We conducted the audit in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain sufficient, appropriate
evidence to provide a reasonable basis for our findings and conclusions based on our audit
objective. We believe that the evidence obtained provides a reasonable basis for our findings
and conclusions based on our audit objective.




                                               12
Internal Controls
Internal control is a process adopted by those charged with governance and management,
designed to provide reasonable assurance about the achievement of the organization’s mission,
goals, and objectives with regard to

•   Effectiveness and efficiency of operations,

•   Reliability of financial reporting, and

•   Compliance with applicable laws and regulations.

Internal controls comprise the plans, policies, methods, and procedures used to meet the
organization’s mission, goals, and objectives. Internal controls include the processes and
procedures for planning, organizing, directing, and controlling program operations as well as the
systems for measuring, reporting, and monitoring program performance.

Relevant Internal Controls
We determined that the following internal controls were relevant to our audit objective:

•   Controls intended to ensure that FHA loans originated with the downpayment assistance gifts
    met HUD FHA’s requirements.

•   Controls intended to ensure that fees paid by FHA borrowers were properly disclosed,
    represented accurately, reasonable, and customary.

We assessed the relevant controls identified above.

A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, the
reasonable opportunity to prevent, detect, or correct (1) impairments to effectiveness or
efficiency of operations, (2) misstatements in financial or performance information, or (3)
violations of laws and regulations on a timely basis.

Significant Deficiencies
Based on our review, we believe that the following items are significant deficiencies:

•   NOVA did not have adequate controls to ensure that FHA loans originated with
    downpayment assistance gifts met HUD FHA’s requirements (finding).

•   NOVA did not have adequate controls to ensure that fees paid by FHA borrowers were
    disclosed, accurately represented, and reasonable in accordance with HUD FHA’s
    requirements (finding).



                                                  13
Appendixes

Appendix A
           Schedule of Questioned Costs and Funds To Be Put to Better Use

      Recommendation                           Unreasonable or        Funds to be put
                             Ineligible 1/      unnecessary 2/        to better use 3/
          number
              1C                                                       $28,607,796
              1D                                                       $19,882,988
              1E             $376,102               $7,110
            Totals           $376,102               $7,110             $48,490,784


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. In this instance, the ineligible costs are the discount fees charged
     to FHA borrowers that were misrepresented on the HUD-1, Settlement Statement (see
     appendix E).

2/   Unreasonable or unnecessary costs are those costs not generally recognized as ordinary,
     prudent, relevant, or necessary within established practices. Unreasonable costs exceed
     the costs that would be incurred by a prudent person in conducting a competitive
     business. In this instance, the unreasonable costs were those fees that were charged to
     FHA borrowers that were not customary or reasonable, such as bond program fees, bond
     transfer fees, and tax service fees (see appendix E).

3/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (OIG) recommendation is
     implemented. These amounts include reductions in outlays, deobligation of funds,
     withdrawal of interest, costs not incurred by implementing recommended improvements,
     avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
     that are specifically identified. In this instance, implementation of recommendations 1B
     and 1C to indemnify loans not approved in accordance with HUD FHA’s requirements
     will reduce FHA’s risk of loss to the insurance fund. The amount for recommendation
     1B was calculated as $57,215,592 (see appendix D) in unpaid principal for 405 loans
     multiplied by the 50 percent FHA loss severity rate. The amount for recommendation 1B
     was calculated as $39,765,976 in unpaid principal for 304 loans multiplied by the 50
     percent FHA loss severity rate. The 50 percent loss rate is based on HUD’s Single
     Family Acquired Asset Management System’s “case management profit and loss by
     acquisition” computation for the first quarter of fiscal year 2015, based on actual sales.




                                               14
Appendix B
             Auditee Comments and OIG’s Evaluation



Ref to OIG    Auditee Comments
Evaluation




                               15
Comment 1




Comment 2




Comment 3




            16
Comment 4


Comment 3




Comment 3




            17
Comment 5




Comment 6




            18
Comment 7




Comment 8




            19
Comment 9




Comment 10




Comment 11




             20
Comment 3
Comment 4




Comment 3


Comment 6




Comment 3




            21
Comment 4




Comment 12




Comment 13




             22
Comment 13




             23
Comment 13




Comment 13




Comment 1

Comment 6




             24
25
26
27
Comment 6




            28
29
30
Comment 6




            31
32
33
Comment 6




            34
35
36
                                OIG Evaluation of Auditee Comments

Comment 1          Like NOVA, OIG recognizes housing finance agencies provide homeownership
                   opportunities to low and moderate income families. However, OIG disagrees
                   with their assertion that the audit report is not consistent with and contradicts
                   clear and binding HUD guidance related to housing finance agencies and
                   downpayment assistance programs. The audit report does not attempt to
                   reinterpret HUD Handbook 4155.1, Mortgagee Letter 2013-14, or Interpretative
                   Rule Docket No. FR-5679-N-01. In fact, the audit report does not dispute or
                   address housing finance agencies and their ability to provide downpayment
                   assistance. Rather, the audit report used criteria as stated in HUD Handbook
                   4155.1 regarding premium pricing, gift funds, and fees 10 to illustrate how the FHA
                   loans identified were not underwritten in accordance with HUD requirements.

Comment 2          For clarification, the elements of the finding NOVA described as sub-findings are
                   what was determined to be the causes of the finding that NOVA’s FHA-insured
                   loans with downpayment assistance gift funds did not always meet HUD
                   requirements. The actual subsections of the finding, as stated in the audit report,
                   are 1) NOVA allowed premium pricing associated with downpayment assistance,
                   2) NOVA used programs that depended on a circular funding mechanism, 3)
                   NOVA did not ensure downpayment assistance was eligible, 4) FHA borrowers
                   receiving a downpayment assistance gift paid more, and 5) fees were not
                   reasonable or customary.

Comment 3          OIG disagrees that NOVA met all HUD guidelines regarding its due diligence.
                   NOVA was obligated as the lender to conduct its due diligence to ensure that
                   planned downpayment assistance gifts met the requirements described in HUD
                   Handbook 4155.1. The relevant provisions that governed NOVA’s due diligence,
                   which it did not conduct, are as follows:

                   •   In order for funds to be considered a gift, there must be no expected or
                       implied repayment of the funds to the donor by the borrower (HUD Handbook
                       4155.1 5.B.4.a). To receive downpayment assistance, borrowers had to agree
                       to mortgage interest rates (premium rates) that were above the prevailing
                       market rate of interest for mortgages without downpayment assistance. The
                       agreements between NOVA, the housing finance agencies, and US Bank
                       required reimbursement to the housing finance agencies upon the sale of the
                       mortgages in the secondary market. The borrowers will pay back a substantial
                       portion of the downpayment assistance “gift” through higher mortgage
                       payments over the life of the loan and the required premium interest rate
                       enabled housing finance agency reimbursement upon the subsequent bundled
                       mortgage backed security sale. Therefore, repayment was expected and/or
                       implied.



10
     See appendix C.


                                                     37
            •   The funds derived from a premium priced mortgage may never be used to pay
                any portion of the borrower’s downpayment (HUD Handbook 4155.1 5.A.2.i).
                Where the premium pricing is used to pay any portion of the borrower’s
                downpayment, the loan would be ineligible even where the source of the
                downpayment is considered acceptable to HUD, such as a housing finance
                agency. Premium pricing is only permitted by HUD to allow lenders to pay a
                borrower’s closing costs, and/or prepaid items. In this case, the premium
                pricing was solely to enable the sale of the increased market value bundled
                loans (mortgage backed securities) to recapture the downpayment assistance
                and the programs’ operating costs and to fund future downpayment assistance.
                This is an ineligible use.

Comment 4   OIG does not disagree with Interpretative Rule Docket No. FR-5679-N-01 and
            Mortgagee Letter 2013-14 that housing finance agencies, as instrumentalities of
            State or local governments, may provide downpayment assistance. The audit
            report did not dispute housing finance agencies are an acceptable source of funds
            and for this reason, the references were not included in the audit report. Neither
            HUD’s interpretive ruling nor its related Mortgagee Letter 2013-14 contemplate
            the use of premium pricing by a lender to reimburse the housing finance agency.
            The Housing and Economic Recovery Act of 2008 amended Section 203(b)(9)(C) of
            the National Housing Act to preclude the abuse of the program where a seller (or
            other interested or related party) funded the homebuyer’s cash investment after
            the closing by reimbursing third-party entities, including, specifically, private
            non-profit charities. Similarly, it would be contrary to the intended purpose of the
            Housing and Economic Recovery Act to allow a local governmental entity to do
            the very same thing.

Comment 5   Although OIG agrees with NOVA that the premium interest rate was set by the
            housing finance agencies, OIG disagrees that the rate was not charged by the
            lender. In its acceptance to participate in the downpayment assistance programs,
            NOVA also accepted the premium interest rates that were charged to FHA
            borrowers. These premium rates were above the prevailing rates for FHA
            borrowers that did not receive downpayment assistance. Therefore, NOVA did
            utilize premium pricing, which was used to fund borrowers’ downpayment
            assistance and for housing finance agency reimbursement. See comment 3.

Comment 6   OIG disagrees with NOVA’s assertion that the lack of specific guidance from
            HUD regarding housing finance agencies and premium pricing in response to
            letters written by the National Association of Local Housing Finance Agencies
            implies the practice is not improper or acceptable. In support, NOVA provided
            three letters written by the National Association of Local Housing Finance
            Agencies addressed to HUD in 2004, 2011, and 2015. Absent from the letters are
            guidance or regulations from HUD specifically indicating premium pricing in
            relation to downpayment assistance is acceptable. In fact, the letters could be
            interpreted as showing HUD has had concerns about this type of program dating




                                              38
              back to 2004. NOVA did not provide any response from HUD to the three letters
              cited in 2004, 2011, and 2015.

Comment 7     OIG disagrees with NOVA’s interpretation that gifts provided by programs
              administered through State and local development authorities who have programs
              providing home ownership assistance to low and moderate income families are
              never considered ineligible downpayment assistance. Downpayment assistance,
              even when provided by State and local development authorities, must meet
              requirements found in HUD Handbook 4155.1. In order for funds to be
              considered a gift, there must be no expected or implied repayment of the funds to
              the donor by the borrower. See comment 3.

Comment 8     OIG acknowledges that housing finance agencies have used various funding
              mechanisms as part of their downpayment assistance programs. However, the
              downpayment assistance programs described in the audit report are not housing
              bonds, tax credits, or HOME funds. Rather, the programs discussed in the audit
              report are part of the “To Be Announced – TBA” market and have only recently
              been used by housing finance agencies. The “To Be Announced” market was
              created in the 1970’s to facilitate the forward-trading of mortgage-backed
              securities issued by Fannie Mae, Freddie Mac and Ginnie Mae. “To Be
              Announced” trades are ‘placeholders’ for the purchase or sale of mortgage pools.
              The circular funding mechanism described in the audit report allows
              downpayment assistance reimbursement and a perpetually funded program
              through the premium interest rate. In comparison, mortgage revenue bonds are
              tax-exempt bonds that State and local governments issue through housing finance
              agencies to help fund, typically, below market interest rate mortgages. See
              comments 3 and 4.

Comment 9     Nova states that FHA is not concerned with how a donor obtains the gift funds;
              however this is not accurate. The cited reference in NOVA’s response, HUD
              Handbook 4155.1 5.B.4.e, provides that the source of the funding must not have a
              prohibited interest in the transaction. See comments 3 and 4.

Comment 10 OIG does not agree with NOVA’s interpretation that the audit report found loans
           acceptable where the borrower paid off the mortgage loan. The three loans
           identified in the audit report that were paid in full were removed from the total
           unpaid principal balance calculation and reimbursement of the misrepresented
           discount points because the loans no longer presented a risk to HUD. At no point
           did the audit report infer the downpayment assistance gifts used in the origination
           of the three loans was acceptable. To the contrary, the three loans also contained
           ineligible downpayment assistance gifts. See comments 3 and 4.

Comment 11 OIG disagrees with NOVA’s assertion that they should not have known that the
           development authorities would be reimbursed for the downpayment assistance
           grant. As stated in the audit report, interviews conducted with NOVA employees
           indicated their knowledge of the downpayment assistance process. The two



                                               39
              downpayment assistance programs identified in the audit report are identical in
              their design and funding mechanism. The main difference was with respect to
              how the funds were provided at closing. With the Home in Five Advantage
              Mortgage program, NOVA provided the downpayment assistance at closing on
              behalf of the development authorities. With the Pima Tucson Homebuyer’s
              Solution program, the development authorities provided the downpayment
              assistance at closing. However, the required premium interest rate which enabled
              reimbursement upon the subsequent bundled mortgage backed security sale was
              identical for both programs.

Comment 12 During the audit, NOVA provided an email from a former HUD employee dated
           August 2011. The email and its contents was not included in the audit report
           because OIG determined that email referred to industrial development authority
           bond programs and not specifically the Home in Five Advantage Mortgage or the
           Pima Tucson Homebuyer’s Solution programs, both of which are not bond
           programs. Therefore, the email did not indicate an opinion or approval of either
           program that was identified in the audit report.

Comment 13 We disagree with NOVA that borrowers received an enormous advantage and
           benefit. In response to the audit report section “FHA Borrowers Receiving
           Downpayment Assistance Gifts Paid More”, NOVA discussed the net present
           value benefit of the loans in question and stated first-time homebuyers typically
           refinance within 5-7 years. NOVA’s assumptions are based on hypothetical
           scenarios that do not supersede any HUD guidance or regulations. The purpose of
           the subsection in the audit report “FHA Borrowers Receiving Downpayment
           Assistance Gifts Paid More” was intended to show that the required premium
           interest rate put an unnecessary burden or disadvantage on FHA borrowers in the
           form of higher monthly mortgage payments, compared to borrowers that did not
           receive downpayment assistance. As stated in the audit report, borrowers were
           also not always fully aware of the premium interest rate or its impact on their
           mortgage. It also can’t be assumed that borrowers are always aware of their
           refinance options. For clarification and to avoid confusion to the reader, the
           report was edited and the associated table removed.




                                              40
Appendix C
                                             Criteria


HUD Handbook 4155.1
     2.A.2.a Maximum Mortgage Amount for a Purchase
     In order for FHA to insure this maximum loan amount, the borrower must make a
     required investment of at least 3.5% of the lesser of the appraised value or the sales price
     of the property.

       2.A.2.c Closing Costs as Required Investment
       Closing costs (non-recurring closing costs, pre-paid expenses, and discount points) may
       not be used to help meet the borrower’s minimum required investment.

       5.A.1.a. Lender Responsibility for Estimating Settlement Requirements
       For each transaction, the lender must provide the initial Good Faith Estimate, all revised
       Good Faith Estimates and a final HUD-1 Settlement Statement, consistent with the Real
       Estate Settlement Procedures Act, to determine the cash required to close the mortgage
       transaction.

       In addition to the minimum downpayment requirement described in HUD Handbook
       4155.1 5.B.1.a, additional borrower expenses must be included in the total amount of
       cash that the borrower must provide at mortgage settlement. Such additional expenses
       include, but are not limited to closing costs, such as those customary and reasonable costs
       necessary to close the mortgage loan, discount points, and premium pricing on FHA-
       insured mortgages.

       5.A.2.a Origination Fee, Unallowable Fees, and Other Closing Costs
       Lenders may charge and collect from borrowers those customary and reasonable costs
       necessary to close the mortgage loan. Borrowers may not pay a tax service fee.

       5.A.2.c Discount Points
       Discount points paid by the borrower become part of the total cash required to close and
       are not eligible for meeting the minimum down payment requirement.

       Section 5.A.2.i Premium Pricing on FHA-Insured Mortgages
       The funds derived from a premium priced mortgage may never be used to pay any
       portion of the borrower’s downpayment and must be disclosed on the GFE [good faith
       estimate] and HUD-1 Settlement Statement.

       Section 5.B.1.a Closing Cost and Minimum Cash Investment Requirements
       Under most FHA programs, the borrower is required to make a minimum downpayment
       into the transaction of at least 3.5% of the lesser of the appraised value of the property or
       the sales price.




                                                 41
       Section 5.B.4.a Description of Gift Funds
       In order for funds to be considered a gift, there must be no expected or implied
       repayment of the funds to the donor by the borrower.

       Section 5.B.5.b Documenting the Transfer of Gift Funds
       The lender must document the transfer of the gift funds from the donor to the borrower.

       Section 5.B.4.d Lender Responsibility for Verifying the Acceptability of Gift Fund
       Sources
       Regardless of when gift funds are made available to a borrower, the lender must be able
       to determine that the gift funds were not provided by an unacceptable source, and were
       the donor’s own funds.

HUD Handbook 4155.2
     Paragraph 6.A.3.a Collecting Customary and Reasonable Fees
     The lender may only collect fair, reasonable, and customary fees and charges from the
     borrower for all origination services. FHA will monitor to ensure that borrowers are not
     overcharged. Furthermore, the FHA Commissioner retains the authority to set limits on
     the amount of any fees that a lender may charge a borrower(s) for obtaining an FHA loan.




                                                42
 Appendix D
                     Summary of Loans With Ineligible Downpayment Assistance

                                                                 Items not        Funds derived from
                     FHA loan information                       documented         premium-priced
                                                                 properly        mortgage not disclosed
                     Original mortgage           Unpaid loan    Gift    Gift                 Good Faith
Case number                            Status 11                                  HUD-1
                          amount                  balance      letter transfer                Estimate
022-2385828                      $78,452     A       $75,755                        X            X
022-2398628                      $58,913     A       $56,705             X          X            X
022-2400484                      $96,306     A       $92,771             X          X            X
022-2402485                      $64,804     A       $62,576             X          X            X
022-2403077                     $122,489     A      $118,087             X          X            X
022-2404361                     $155,138     A      $150,026                        X            X
022-2405344                      $61,367     A       $59,257             X          X            X
022-2405909                     $124,699     A      $120,412                        X            X
022-2406310                     $112,917     A      $109,035                        X            X
022-2408494                     $101,134     A       $97,729                        X            X
022-2408538                     $100,152     A       $96,852                        X            X
022-2408646                     $116,844     R      $112,994                        X            X
022-2408797                     $198,341     A      $191,664                        X            X
022-2409323                     $120,772     A      $116,807                        X            X
022-2409947                      $69,321     A       $67,045             X          X            X
022-2410186                      $83,460     A       $80,602                        X            X
022-2410577                     $105,061     A      $101,612             X          X            X
022-2410685                      $96,224     A       $93,065                        X            X
022-2411152                     $136,482     A      $132,001                        X            X
022-2411175                     $131,572     A      $127,048                        X            X
022-2412532                     $171,830     A      $165,922                        X            X
022-2414658                      $80,514     A       $77,830             X          X            X
022-2414839                     $107,448     R      $104,113                        X            X
022-2415160                      $88,369     A       $85,485             X          X            X
022-2415624                      $98,679     A       $95,592             X          X            X
022-2416297                     $126,859     R      $124,398                        X            X
022-2417841                     $157,003     A      $151,879                        X            X
022-2418882                     $108,007     A      $104,628             X          X            X
022-2420052                      $88,369     A       $85,343             X          X            X
022-2420516                     $112,917     A      $109,050                        X            X
022-2421318                      $98,188     A       $94,915                        X            X


 11
      A=active, R=refinanced, T=terminated


                                                   43
                                                                        Items not           Funds derived from
                  FHA loan information                                 documented            premium-priced
                                                                        properly           mortgage not disclosed
                   Original mortgage           Unpaid loan             Gift    Gift                       Good Faith
Case number                          Status 11                                              HUD-1
                        amount                  balance               letter transfer                      Estimate
 022-2422061                  $114,880       A           $111,209                 X            X             X
 022-2422394                  $103,797       A           $100,409                              X             X
 022-2422444                   $96,224       A            $93,083                 X            X             X
 022-2422791                  $109,971       A           $106,457                 X            X             X
 022-2423354                  $169,144       A           $163,739                              X             X
 022-2423506                  $153,174       A           $148,175                              X             X
022-2424060 12                 $75,605       A            $73,137                              X             X
 022-2424127                  $127,326       A           $123,257                              X             X
 022-2424337                   $96,224       A            $93,149                 X            X             X
 022-2424684                  $123,717       A           $120,037                 X            X             X
 022-2425945                  $100,152       A            $97,019                              X             X
 022-2428033                  $115,862       A           $112,699                 X            X             X
 022-2428788                  $148,265       A           $144,218                 X            X             X
 022-2429328                  $165,938       R           $161,409                              X             X
 022-2429334                  $134,518       A           $130,925                 X            X             X
 022-2430089                  $108,007       A           $105,059                 X            X             X
 022-2430349                   $71,677       A            $69,763                              X             X
 022-2431793                  $131,572       R           $128,589                              X             X
022-243232712                  $66,768       A            $65,098                 X            X             X
 022-2432391                  $103,642       R           $101,017                              X             X
 022-2432986                  $102,564       A           $100,133                              X             X
 022-2434068                  $176,739       A           $171,915                              X             X
 022-2435300                   $89,351       A            $87,325                              X             X
 022-2435477                   $97,206       A            $94,610                 X            X             X
 022-2435670                   $90,842       A            $88,828                              X             X
 022-2436568                  $122,710       A           $120,080                 X            X             X
 022-2437403                  $152,192       A           $148,818                              X             X
 022-2437636                  $117,826       A           $115,214                              X             X
 022-2439071                  $115,827       A           $113,381                              X             X
 022-2440527                   $83,460       A            $81,736                              X             X
 022-2440612                  $141,391       A           $138,151                 X            X             X
 022-2441892                  $114,781       R           $112,797                              X             X
 022-2441913                  $191,369       A           $187,080                              X             X



 12
   The loan contained ineligible downpayment assistance; however, it had funds to meet the minimum cash
 investment without the downpayment assistance.


                                                        44
                                                            Items not        Funds derived from
                FHA loan information                       documented         premium-priced
                                                            properly        mortgage not disclosed
                Original mortgage           Unpaid loan    Gift    Gift                 Good Faith
Case number                       Status 11                                  HUD-1
                     amount                  balance      letter transfer                Estimate
 022-2441959             $149,737      A       $146,381                        X            X
 022-2443228             $140,409      R       $137,509                        X            X
 022-2443598             $133,536      A       $130,899                        X            X
 022-2444180             $121,262      A       $118,721                        X            X
 022-2444564             $165,938      A       $162,219                        X            X
022-244460812             $70,695      A        $69,134                        X            X
 022-2445191             $112,917      A       $110,585             X          X            X
 022-2446072             $126,663      A       $124,047             X          X            X
 022-2446303              $67,750      A        $66,287             X          X            X
 022-2448175             $127,645      A       $124,998             X          X            X
 022-2448508             $125,975      R       $123,420                        X            X
 022-2448940             $108,989      A       $106,729                        X            X
 022-2448986             $103,098      R       $101,738                        X            X
 022-2449170              $63,822      A        $62,444                        X            X
 022-2449351             $106,043      A       $103,844             X          X            X
 022-2449561             $139,428      R       $137,503             X          X            X
 022-2449821              $87,878      A        $86,056                        X            X
 022-2450179              $90,824      A        $88,940                        X            X
 022-2450337              $77,569      A        $75,960                        X            X
 022-2450372             $147,283      A       $144,228                        X            X
 022-2450524             $114,880      A       $112,497                        X            X
 022-2451054              $93,279      A        $91,344                        X            X
 022-2452820             $132,554      A       $129,924             X          X            X
 022-2453231             $103,098      A       $100,864                        X            X
 022-2453595             $136,482      A       $134,015                        X            X
 022-2453747             $181,649      A       $177,712                        X            X
 022-2456107              $91,805      A        $89,984                        X            X
 022-2456273             $103,098      A       $101,643                        X            X
 022-2456300             $186,459      A       $182,760                        X            X
022-245646012            $124,185      R       $122,471                        X            X
 022-2456766             $149,623      R       $146,655                        X            X
022-245710212             $86,896      A        $85,325                        X            X
 022-2457306             $142,373      R       $139,800             X          X            X
 022-2457597              $97,697      A        $95,801                        X            X
 022-2457647              $83,460      A        $81,840                        X            X
 022-2457732             $106,043      A       $103,985                        X            X
 022-2457857              $91,315      A        $89,665             X          X            X


                                              45
                                                          Items not        Funds derived from
              FHA loan information                       documented         premium-priced
                                                          properly        mortgage not disclosed
              Original mortgage           Unpaid loan    Gift    Gift                 Good Faith
Case number                     Status 11                                  HUD-1
                   amount                  balance      letter transfer                Estimate
022-2457994            $125,681      A       $123,460                        X            X
022-2458087            $128,627      A       $126,811                        X            X
022-2458449            $188,718      A       $185,307                        X            X
022-2458659             $76,587      A        $75,203                        X            X
022-2458919            $105,463      A       $103,557                        X            X
022-2459496            $125,681      A       $123,460                        X            X
022-2460176             $68,732      A        $67,490                        X            X
022-2460630             $93,279      A        $91,785                        X            X
022-2460929             $83,460      A        $81,985                        X            X
022-2461092             $91,119      A        $89,626             X          X            X
022-2461107             $88,369      A        $86,807                        X            X
022-2461737            $131,572      R       $129,587                        X            X
022-2463137            $103,443      A       $101,811             X          X            X
022-2463274            $137,464      A       $135,161                        X            X
022-2463694            $167,902      A       $165,311                        X            X
022-2463796            $171,830      A       $168,952                        X            X
022-2464161             $89,351      A        $87,854                        X            X
022-2464228            $174,284      A       $171,365                        X            X
022-2464569            $137,365      A       $135,198                        X            X
022-2465541            $161,230      A       $158,686             X          X            X
022-2465824             $92,083      A        $90,754                        X            X
022-2465847            $179,905      A       $177,066             X          X            X
022-2466025            $134,518      A       $132,442                        X            X
022-2466031            $124,974      A       $123,210                        X            X
022-2467910            $165,938      A       $163,377             X          X            X
022-2467927            $144,337      A       $142,299                        X            X
022-2468236            $103,540      A       $101,942             X          X            X
022-2470217            $122,735      A       $121,395                        X            X
022-2470281            $123,717      R       $122,132             X          X            X
022-2470319             $79,532      A        $78,409             X          X            X
022-2470348            $112,484      A       $110,896                        X            X
022-2470978            $103,098      A       $101,643                        X            X
022-2471416            $100,152      A        $98,738                        X            X
022-2471582            $129,510      A       $127,682                        X            X
022-2472802             $89,743      A        $88,476             X          X            X
022-2473032            $108,007      A       $106,624             X          X            X
022-2473221             $80,514      A        $79,483             X          X            X


                                            46
                                                          Items not        Funds derived from
              FHA loan information                       documented         premium-priced
                                                          properly        mortgage not disclosed
              Original mortgage           Unpaid loan    Gift    Gift                 Good Faith
Case number                     Status 11                                  HUD-1
                   amount                  balance      letter transfer                Estimate
022-2473338            $108,007      A       $106,482             X          X            X
022-2473481            $146,655      A       $144,777                        X            X
022-2473656            $109,971      A       $108,562                        X            X
022-2473787            $109,971      A       $108,562             X          X            X
022-2473820             $97,781      A        $96,529             X          X            X
022-2474021            $166,822      R       $164,903                        X            X
022-2474543            $162,011      A       $159,936             X          X            X
022-2476153             $78,158      A        $77,157             X          X            X
022-2476617            $131,572      R       $130,058                        X            X
022-2477159            $113,407      A       $111,955                        X            X
022-2477795            $115,862      A       $114,499                        X            X
022-2477924            $117,826      A       $116,568                        X            X
022-2477947            $108,007      A       $106,905             X          X            X
022-2478233            $137,464      R       $135,883                        X            X
022-2478761            $157,003      A       $155,156                        X            X
022-2478790            $142,373      A       $140,735                        X            X
022-2478811            $136,482      A       $134,912             X          X            X
022-2479012            $152,192      R       $150,639             X          X            X
022-2479087             $85,963      A        $85,045             X          X            X
022-2480129            $102,991      A       $102,052             X          X            X
022-2480482             $73,150      A        $72,369                        X            X
022-2480821            $113,792      A       $112,423             X          X            X
022-2480975            $103,981      A       $102,871             X          X            X
022-2481022            $196,886      A       $194,464                        X            X
022-2481147            $117,826      R       $116,408                        X            X
022-2481754            $155,455      A       $153,832                        X            X
022-2482693            $139,027      A       $137,576                        X            X
022-2482897            $137,464      A       $136,029             X          X            X
022-2482901            $117,727      A       $116,498                        X            X
022-2483291            $145,319      R       $143,802                        X            X
022-2483495            $146,791      A       $145,293                        X            X
022-2483988             $68,732      A        $68,015             X          X            X
022-2485234             $78,452      A        $77,615                        X            X
022-2485313            $157,003      A       $155,572             X          X            X
022-2485450            $152,192      A       $150,805             X          X            X
022-2485654            $139,397      A       $138,098                        X            X
022-2485806            $147,283      A       $145,970             X          X            X


                                            47
                                                            Items not        Funds derived from
                FHA loan information                       documented         premium-priced
                                                            properly        mortgage not disclosed
                Original mortgage           Unpaid loan    Gift    Gift                 Good Faith
Case number                       Status 11                                  HUD-1
                     amount                  balance      letter transfer                Estimate
 022-2486180             $125,681      A       $124,535             X          X            X
 022-2486223             $149,737      A       $148,372             X          X            X
 022-2486570             $161,029      A       $159,561                        X            X
 022-2487077             $117,328      A       $116,259             X          X            X
 022-2487206             $117,826      A       $116,752                        X            X
 022-2488116             $142,274      A       $140,977             X          X            X
 022-2488615             $112,917      A       $111,888                        X            X
 022-2488831             $147,283      A       $145,940                        X            X
 022-2489174             $101,134      A       $100,191                        X            X
 022-2489548             $147,283      A       $145,940             X          X            X
 022-2489837             $159,065      A       $157,615             X          X            X
 022-2491007             $110,481      A       $109,600             X          X            X
 022-2491036             $127,645      A       $126,627                        X            X
 023-5182698             $152,192      A       $146,117                        X            X
 023-5184551             $137,260      A       $132,440                        X            X
 023-5187094             $166,920      A       $160,393                        X            X
 023-5226589             $176,739      T             $0                        X            X
 023-5245116             $206,196      A       $198,955                        X            X
 023-5247730             $196,377      A       $189,481                        X            X
023-525115712             $48,602      A        $46,895                        X            X
 023-5257412             $175,757      A       $169,585                        X            X
 023-5258496             $123,717      A       $120,758                        X            X
 023-5265366             $160,256      A       $155,026                        X            X
 023-5268391             $153,174      R       $148,038                        X            X
 023-5271896             $203,348      A       $196,529                        X            X
 023-5275392             $150,228      A       $144,953                        X            X
 023-5283058             $122,735      A       $119,084                        X            X
 023-5300786             $195,395      A       $189,151                        X            X
 023-5310255             $127,645      A       $123,365                        X            X
 023-5313029             $162,011      A       $157,492                        X            X
 023-5320237             $159,976      A       $154,611                        X            X
 023-5323679             $181,649      A       $175,721                        X            X
 023-5325809             $191,468      A       $185,219                        X            X
 023-5330975             $117,826      A       $113,980                        X            X
023-533313112            $119,790      R       $117,518                        X            X
 023-5339502             $166,920      A       $161,586                        X            X
 023-5341797             $117,826      A       $114,709                        X            X


                                              48
                                                            Items not        Funds derived from
                FHA loan information                       documented         premium-priced
                                                            properly        mortgage not disclosed
                Original mortgage           Unpaid loan    Gift    Gift                 Good Faith
Case number                       Status 11                                  HUD-1
                     amount                  balance      letter transfer                Estimate
 023-5342095             $210,123      A       $203,408                        X            X
 023-5345015             $129,310      A       $125,178                        X            X
 023-5357233             $225,735      A       $219,438                        X            X
023-535753512             $88,369      A        $85,545                        X            X
 023-5358821             $152,192      A       $147,947                        X            X
 023-5361995             $194,904      A       $189,467                        X            X
 023-5370003             $139,428      A       $135,539    X                   X            X
023-537222012             $98,087      A        $95,351                        X            X
 023-5374947             $233,197      A       $226,692                        X            X
 023-5381274             $168,884      A       $164,173                        X            X
 023-5384156             $214,814      A       $209,077                        X            X
023-538431412            $114,346      A       $111,840                        X            X
 023-5384973             $155,138      A       $150,811                        X            X
 023-5386974             $129,609      R       $127,257                        X            X
 023-5390355             $159,203      A       $156,114                        X            X
 023-5394885             $144,337      A       $141,064                        X            X
 023-5399223             $171,830      A       $167,240                        X            X
 023-5403080             $116,353      A       $113,715                        X            X
 023-5403681             $215,916      R       $212,085                        X            X
 023-5404635             $168,490      A       $164,407                        X            X
023-541070312            $127,645      A       $124,720                        X            X
 023-5421055             $189,378      A       $184,889                        X            X
 023-5429138             $122,735      A       $119,923                        X            X
 023-5432318             $169,866      A       $166,059                        X            X
 023-5432403             $157,052      R       $154,398                        X            X
 023-5432540             $127,546      A       $124,624                        X            X
 023-5433517             $181,649      A       $177,487                        X            X
 023-5436326             $168,884      A       $165,099                        X            X
 023-5438096             $177,721      A       $173,649                        X            X
 023-5441180             $152,192      A       $148,930                        X            X
 023-5444634             $199,124      A       $195,261                        X            X
 023-5451346             $184,594      A       $180,548                        X            X
 023-5451375             $151,210      R       $148,404                        X            X
 023-5452703             $151,603      A       $148,472                        X            X
 023-5457594             $135,500      A       $132,701                        X            X
 023-5457650             $169,866      A       $166,357                        X            X
 023-5460354             $111,443      R       $109,658                        X            X


                                              49
                                                            Items not        Funds derived from
                FHA loan information                       documented         premium-priced
                                                            properly        mortgage not disclosed
                Original mortgage           Unpaid loan    Gift    Gift                 Good Faith
Case number                       Status 11                                  HUD-1
                     amount                  balance      letter transfer                Estimate
 023-5468959             $141,293      A       $138,309                        X            X
 023-5474347             $161,986      A       $158,565                        X            X
 023-5476637             $124,601      A       $121,910                        X            X
 023-5479265             $115,371      A       $112,879                        X            X
 023-5481541             $231,072      A       $227,506                        X            X
 023-5481558             $109,971      A       $107,740                        X            X
 023-5491085             $152,192      A       $149,036                        X            X
 023-5493693             $145,319      A       $142,305                        X            X
 023-5501862             $123,717      A       $121,208                        X            X
 023-5506440             $181,649      A       $177,625                        X            X
 023-5507185             $171,830      A       $168,496                        X            X
 023-5507258             $206,196      R       $202,214                        X            X
 023-5508247             $112,917      A       $110,470    X                   X            X
 023-5508860             $294,566      A       $288,592                        X            X
023-551052312             $68,197      A        $66,964                        X            X
 023-5510829             $135,990      R       $133,232                        X            X
 023-5518107             $175,757      A       $172,193                        X            X
 023-5518759             $190,387      T             $0                        X            X
 023-5519196             $159,065      A       $155,839                        X            X
 023-5519279             $127,645      A       $125,056                        X            X
 023-5523188             $163,975      R       $161,922                        X            X
 023-5526677             $148,559      R       $146,126                        X            X
 023-5527739             $205,214      A       $201,232                        X            X
 023-5528422             $142,373      A       $140,176                        X            X
 023-5530773             $162,011      A       $158,867                        X            X
 023-5541724             $117,826      A       $116,317                        X            X
 023-5542686             $196,377      A       $192,828                        X            X
 023-5545828             $211,217      A       $207,679    X                   X            X
 023-5547053             $162,011      A       $159,147                        X            X
 023-5551189             $157,592      A       $154,744                        X            X
 023-5554094             $206,196      A       $202,551                        X            X
 023-5557254             $216,015      A       $212,397                        X            X
 023-5563214             $112,917      A       $110,965                        X            X
 023-5564176             $244,391      A       $240,388                        X            X
 023-5567143             $208,160      A       $204,673                        X            X
 023-5567563             $140,409      R       $138,611                        X            X
 023-5567671             $134,518      A       $132,315                        X            X


                                              50
                                                          Items not        Funds derived from
              FHA loan information                       documented         premium-priced
                                                          properly        mortgage not disclosed
              Original mortgage           Unpaid loan    Gift    Gift                 Good Faith
Case number                     Status 11                                  HUD-1
                   amount                  balance      letter transfer                Estimate
023-5567738            $153,174      R       $151,212                        X            X
023-5576218            $131,572      R       $129,368                        X            X
023-5577417            $218,371      A       $215,001                        X            X
023-5577446            $171,830      A       $169,179                        X            X
023-5584657            $147,283      A       $145,010                        X            X
023-5586028            $127,645      A       $125,675                        X            X
023-5586273            $265,010      A       $260,829                        X            X
023-5586982            $115,371      A       $113,591                        X            X
023-5588557            $101,624      A       $100,056                        X            X
023-5591092            $127,546      A       $125,745                        X            X
023-5591562            $119,790      A       $117,942                        X            X
023-5591585            $245,471      A       $241,683                        X            X
023-5591897            $171,830      A       $169,404                        X            X
023-5594496            $169,757      A       $167,138    X                   X            X
023-5596829            $117,826      A       $116,008                        X            X
023-5597644            $141,391      A       $139,209                        X            X
023-5598003            $203,250      A       $200,114                        X            X
023-5600250            $164,933      A       $162,605                        X            X
023-5600331            $119,790      A       $117,942                        X            X
023-5601119            $153,174      A       $151,012                        X            X
023-5602455            $132,456      A       $130,586                        X            X
023-5602931            $230,743      A       $227,486                        X            X
023-5603546            $172,812      A       $170,372                        X            X
023-5604608            $152,192      A       $150,044                        X            X
023-5604672            $172,812      A       $170,372                        X            X
023-5605025            $145,319      A       $143,268                        X            X
023-5606014            $150,228      A       $148,107                        X            X
023-5606276            $157,102      A       $154,884                        X            X
023-5610258            $117,826      R       $116,317                        X            X
023-5615232            $123,717      A       $121,970                        X            X
023-5615357            $182,631      A       $180,292                        X            X
023-5615719            $142,373      A       $140,363                        X            X
023-5615856            $200,305      A       $197,477                        X            X
023-5619113             $95,243      A        $93,898                        X            X
023-5620459            $202,268      R       $200,204                        X            X
023-5620987            $129,609      A       $127,779                        X            X
023-5622046            $125,681      A       $123,907                        X            X


                                            51
                                                          Items not        Funds derived from
              FHA loan information                       documented         premium-priced
                                                          properly        mortgage not disclosed
              Original mortgage           Unpaid loan    Gift    Gift                 Good Faith
Case number                     Status 11                                  HUD-1
                   amount                  balance      letter transfer                Estimate
023-5623137            $175,213      A       $172,969                        X            X
023-5625918            $157,592      A       $155,574                        X            X
023-5626019            $181,649      A       $179,322                        X            X
023-5628837            $140,311      A       $138,514                        X            X
023-5629508            $171,830      A       $169,629                        X            X
023-5630801            $110,461      A       $109,046    X                   X            X
023-5632014            $254,633      A       $252,259                        X            X
023-5632775            $162,011      A       $159,936                        X            X
023-5636097            $130,099      A       $128,433                        X            X
023-5637346            $127,645      A       $126,010                        X            X
023-5637930            $133,733      A       $132,195                        X            X
023-5638495            $161,029      R       $159,386    X                   X            X
023-5638653            $112,917      A       $111,471                        X            X
023-5639297            $111,443      A       $110,161                        X            X
023-5639330            $127,543      A       $125,909                        X            X
023-5639709            $196,278      A       $193,764                        X            X
023-5640339            $152,192      A       $150,243                        X            X
023-5641118            $166,920      A       $164,782                        X            X
023-5642687            $139,428      A       $137,824                        X            X
023-5644070            $162,011      A       $159,936                        X            X
023-5648486            $109,971      A       $108,562                        X            X
023-5650546            $179,685      R       $177,618                        X            X
023-5650791            $174,775      A       $172,764                        X            X
023-5651535            $136,383      R       $134,991                        X            X
023-5652865            $147,283      A       $145,397                        X            X
023-5655231            $171,830      R       $169,853                        X            X
023-5655356            $142,274      A       $140,637                        X            X
023-5655514            $137,464      A       $135,810                        X            X
023-5655645             $79,532      A        $78,617                        X            X
023-5656640             $93,279      A        $92,084                        X            X
023-5657218            $157,102      A       $155,295                        X            X
023-5659857            $157,102      A       $155,295                        X            X
023-5661998            $166,822      A       $165,081                        X            X
023-5662182            $238,598      A       $235,791                        X            X
023-5666812            $120,772      A       $119,319                        X            X
023-5666864            $147,283      A       $145,780                        X            X
023-5667036            $163,876      A       $161,948                        X            X


                                            52
                                                          Items not        Funds derived from
              FHA loan information                       documented         premium-priced
                                                          properly        mortgage not disclosed
              Original mortgage           Unpaid loan    Gift    Gift                 Good Faith
Case number                     Status 11                                  HUD-1
                   amount                  balance      letter transfer                Estimate
023-5668468            $214,051      A       $211,533                        X            X
023-5670563            $198,341      A       $195,955                        X            X
023-5670694            $196,377      R       $194,327                        X            X
023-5670744            $137,464      A       $135,997                        X            X
023-5670796            $152,093      A       $150,263                        X            X
023-5672196            $225,834      A       $223,117                        X            X
023-5673060            $142,274      A       $140,600    X                   X            X
023-5674904            $194,413      A       $192,126    X                   X            X
023-5676890            $176,739      A       $174,660                        X            X
023-5677397            $151,995      A       $150,246                        X            X
023-5677867            $127,645      A       $126,109                        X            X
023-5679092            $219,537      A       $216,836                        X            X
023-5680026            $101,134      A        $99,917                        X            X
023-5680288            $154,646      A       $152,785                        X            X
023-5682258            $270,171      A       $267,287                        X            X
023-5682663            $155,138      A       $153,230                        X            X
023-5684273            $139,918      A       $138,391                        X            X
023-5687791            $169,866      A       $168,053                        X            X
023-5688541            $108,007      A       $106,854                        X            X
023-5688564            $193,431      A       $191,412                        X            X
023-5688570            $140,311      A       $138,813                        X            X
023-5697362            $124,699      A       $123,368                        X            X
023-5702456            $136,383      A       $134,959    X                   X            X
023-5702853            $167,902      A       $166,110                        X            X
023-5705627            $275,793      A       $272,914                        X            X
023-5705656            $197,359      A       $195,252                        X            X
023-5705662            $119,790      A       $118,673                        X            X
023-5705951            $179,685      T             $0                        X            X
023-5706067            $162,011      A       $160,282    X                   X            X
023-5707033            $173,794      A       $172,137                        X            X
023-5708442            $139,428      A       $137,940                        X            X
023-5708993            $270,019      A       $267,137                        X            X
023-5711763            $199,372      A       $197,471                        X            X
023-5713039            $185,478      A       $183,498    X                   X            X
023-5713101            $204,517      A       $202,334    X                   X            X
023-5717581            $129,609      A       $128,373                        X            X
023-5717625            $118,808      A       $117,675    X                   X            X


                                            53
                                                                            Items not           Funds derived from
                     FHA loan information                                  documented            premium-priced
                                                                            properly           mortgage not disclosed
                     Original mortgage           Unpaid loan              Gift    Gift                        Good Faith
 Case number                           Status 11                                                 HUD-1
                          amount                  balance                letter transfer                       Estimate
  023-5717677                   $152,192        A           $150,568                                X                 X
  023-5720489                   $251,853        A           $249,452                                X                 X
  023-5721418                   $127,645        A           $126,455       X                        X                 X
  023-5722625                   $134,360        A           $133,079       X                        X                 X
  023-5724054                   $110,461        A           $109,408                                X                 X
  023-5724973                   $119,790        A           $118,673                                X                 X
  023-5725609                   $201,286        A           $199,410                                X                 X
  023-5726502                   $160,341        A           $158,846                                X                 X
  023-5727277                   $228,288        A           $226,160                                X                 X
  023-5727304                   $150,228        A           $148,796                                X                 X
  023-5727406                   $173,302        A           $171,686                                X                 X
  023-5727905                   $188,522        A           $186,765       X                        X                 X
  023-5728033                   $155,138        A           $153,692                                X                 X
  023-5730440                   $147,283        A           $145,910       X                        X                 X
  023-5730594                   $176,739        A           $175,091       X                        X                 X
  023-5732096                   $166,920        A           $165,589       X                        X                 X
  023-5732890                   $188,522        A           $186,725                                X                 X
  023-5733981                   $200,270        A           $198,403                                X                 X
  023-5738117                   $245,471        A           $243,183       X                        X                 X
  023-5739325                   $229,270        A           $227,133                                X                 X
  023-5745060                   $125,681        A           $124,535                                X                 X
  023-5746253                   $188,522        A           $186,765                                X                 X
  023-5749112                   $213,069        A           $211,331       X                        X                 X
Ineligible loans             $58,247,206        -        $57,215,592       21         68           405            405
   Minimum
    required                   $1,089,185       -          $1,063,998       -         1            12                 12
investment met 13
  Terminated 14                  $546,811       -                    0      -          -            3                 3
        Totals               $59,883,202        -        $58,279,590       21         69           420            420




   13
      The 12 loans (highlighted in gray) contained ineligible downpayment assistance; however, the loans had enough
   funds to meet the minimum cash investment without the downpayment assistance.
   14
      The three loans (highlighted in blue) contained ineligible downpayment assistance; however, the loans were
   terminated.


                                                           54
Appendix E
                  Summary of Loans With Inappropriate Fees

                            Recommendation 1D
                                              Noncustomary or
             FHA case      Discount fees
                                              unreasonable fees
              number         charged
                                                  charged
             022-2400484                                     $460
             022-2415624              $987
             022-2424127               $45
             022-2441913                                     $460
             022-2443228                                     $460
             022-2445191                                     $460
             022-2448508                                     $460
             022-2448940                                     $276
             022-2449170                                     $460
             022-2456300                                     $460
             022-2477159                                     $150
             022-2478761                                     $460
             022-2478811                                     $560
             023-5182698            $1,522
             023-5184551            $1,373
             023-5187094            $1,699
             023-5226589            $1,767
             023-5245116            $2,062
             023-5247730            $1,964
             023-5251157              $486
             023-5257412            $1,758
             023-5258496            $1,237
             023-5265366            $1,603
             023-5268391            $1,504
             023-5271896            $2,033
             023-5275392            $1,502
             023-5283058            $1,227
             023-5300786            $1,954
             023-5310255            $1,276
             023-5313029            $1,620
             023-5320237            $1,600
             023-5323679            $1,816
             023-5325809            $1,915



                                      55
               Recommendation 1D
                                Noncustomary or
FHA case      Discount fees
                                unreasonable fees
 number         charged
                                    charged
023-5330975            $1,178
023-5333131            $1,198
023-5339502            $1,669
023-5341797            $1,553
023-5342095            $2,101
023-5345015            $1,293
023-5357233            $2,257
023-5357535              $884
023-5358821            $1,522
023-5361995            $1,949
023-5370003            $1,394
023-5372220              $981
023-5374947            $2,332
023-5381274            $1,689
023-5384156            $2,148
023-5384314            $1,143
023-5384973            $1,551
023-5386974            $1,296
023-5390355            $1,592
023-5394885            $1,443
023-5399223            $1,718
023-5403080            $1,164
023-5403681            $2,159
023-5404635            $1,685
023-5410703            $1,276
023-5421055            $1,894
023-5429138            $1,227
023-5432318            $1,699
023-5432403            $1,571
023-5432540            $1,275
023-5433517            $1,816
023-5436326            $1,689
023-5438096            $1,777
023-5441180            $1,522
023-5444634            $1,991
023-5451346            $1,846
023-5451375            $1,512


                         56
               Recommendation 1D
                                Noncustomary or
FHA case      Discount fees
                                unreasonable fees
 number         charged
                                    charged
023-5452703            $1,516
023-5457594            $1,355
023-5457650            $1,699
023-5460354            $1,114
023-5468959            $1,413
023-5474347            $1,620
023-5476637            $1,246
023-5479265            $1,154
023-5481541            $2,311
023-5481558            $1,100
023-5491085            $1,522
023-5493693            $1,453
023-5501862            $1,237
023-5506440            $1,816
023-5507185            $1,718
023-5507258            $2,062
023-5508247            $1,129
023-5508860            $2,946
023-5510523              $682
023-5510829            $1,360
023-5518107            $1,758
023-5518759            $1,904
023-5519196            $1,591
023-5519279            $1,276
023-5523188            $1,640
023-5526677            $1,486
023-5527739            $2,052
023-5528422            $1,424
023-5530773            $1,620
023-5541724            $1,178
023-5542686            $1,964
023-5545828            $2,112
023-5547053            $1,620
023-5551189            $1,576
023-5554094            $2,062
023-5557254            $2,160
023-5563214            $1,129


                         57
               Recommendation 1D
                                Noncustomary or
FHA case      Discount fees
                                unreasonable fees
 number         charged
                                    charged
023-5564176            $2,444
023-5567143            $2,082
023-5567563            $1,404
023-5567671            $1,345
023-5567738            $1,532
023-5576218            $1,316
023-5577417            $2,184
023-5577446            $1,718
023-5584657            $1,473
023-5586028            $1,276
023-5586273            $2,650
023-5586982            $1,154
023-5588557            $1,016
023-5591092            $1,275
023-5591562            $1,198
023-5591585            $2,455
023-5591897            $1,718
023-5594496            $1,698
023-5596829            $1,178
023-5597644            $1,414
023-5598003            $2,033
023-5600250            $1,649
023-5600331            $1,198
023-5601119            $1,532
023-5602455            $1,325
023-5602931            $2,307
023-5603546            $1,728
023-5604608            $1,522
023-5604672            $1,728                 $460
023-5605025            $1,453
023-5606014            $1,502
023-5606276            $1,571
023-5610258            $1,178
023-5615232            $1,237
023-5615357            $1,826
023-5615719            $1,424
023-5615856            $2,003


                         58
               Recommendation 1D
                                Noncustomary or
FHA case      Discount fees
                                unreasonable fees
 number         charged
                                    charged
023-5619113              $952
023-5620459            $2,023
023-5620987            $1,296
023-5622046            $1,257
023-5623137            $1,752
023-5625918            $1,576
023-5626019            $1,816
023-5628837            $1,403
023-5629508            $1,718
023-5630801            $1,105
023-5632014            $2,546
023-5632775            $1,620
023-5636097            $1,301
023-5637346            $1,276
023-5637930            $1,337
023-5638495            $1,610
023-5638653            $1,129
023-5639297            $1,114
023-5639330            $1,275
023-5639709            $1,963
023-5640339            $1,522
023-5641118            $1,669
023-5642687            $1,394
023-5644070            $1,620
023-5648486            $1,100
023-5650546            $1,797
023-5650791            $1,748
023-5651535            $1,364
023-5652865            $1,473
023-5655231            $1,718
023-5655356            $1,423                   $89
023-5655514            $1,375
023-5655645              $795
023-5656640              $933
023-5657218            $1,571
023-5659857            $1,571
023-5661998            $1,668


                         59
               Recommendation 1D
                                Noncustomary or
FHA case      Discount fees
                                unreasonable fees
 number         charged
                                    charged
023-5662182            $2,386
023-5666812            $1,208
023-5666864            $1,473
023-5667036            $1,639
023-5668468            $2,141
023-5670563            $1,983
023-5670694            $1,964
023-5670744            $1,375
023-5670796            $1,521
023-5672196            $2,258
023-5673060            $1,423
023-5674904            $1,944
023-5676890            $1,767
023-5677397            $1,520
023-5677867            $1,276
023-5679092            $2,195
023-5680026            $1,011
023-5680288            $1,546
023-5682258            $2,702
023-5682663            $1,551
023-5684273            $1,399                 $375
023-5687791            $1,699
023-5688541            $1,080
023-5688564            $1,934
023-5688570            $1,403
023-5697362            $1,247
023-5702456            $1,364
023-5702853            $1,679
023-5705627            $2,758
023-5705656            $1,974
023-5705662            $1,198
023-5705951            $1,797
023-5706067            $1,620
023-5707033            $1,738
023-5708442            $1,394
023-5708993            $2,700                 $610
023-5711763            $1,994


                         60
               Recommendation 1D
                                Noncustomary or
FHA case      Discount fees
                                unreasonable fees
 number         charged
                                    charged
023-5713039            $1,855                  $610
023-5713101            $2,045
023-5717581            $1,296
023-5717625            $1,188
023-5717677            $1,522
023-5720489            $2,519
023-5721418            $1,276
023-5722625            $1,344
023-5724054            $1,105
023-5724973            $1,198
023-5725609            $2,013
023-5726502            $1,603
023-5727277            $2,283
023-5727304            $1,502
023-5727406            $1,733                 $300
023-5727905            $1,885
023-5728033            $1,551
023-5730440            $1,473
023-5730594            $1,767
023-5732096            $1,669
023-5732890            $1,885
023-5733981            $2,003
023-5738117            $2,455
023-5739325            $2,293
023-5745060            $1,257
023-5746253            $1,885
023-5749112            $2,131
  Totals             $376,102               $7,110




                         61