Herman Ransom, Director, Office of Multifamily Housing - Hud-Oig

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Case Narrative – Loan Number 492-8492165Mortgage amount: $163,975Date of loan closing: July 31, 2009Status as of November 30, 2011: Legal action to commence foreclosurePayments before first default: TwoTotal claim paid: $0HUD loss: N/AUnderwriting deficiencies:• Loan application was completed incorrectly• Coborrowers’ assets included property purchased• Coborrowers’ payroll was not sufficiently documented• Appraisal contained two comparables more than 6 months oldOther deficiencies• PrimeLending did not obtain required credit report during early default reviewSummary:Loan Application Was Completed IncorrectlyPrimeLending marked both the initial and final loan applications incorrectly. The loanapplications showed that the coborrowers would be owner occupants, but they never intended toreside at the property as it was purchased for the mother of one of the coborrowers. Thecoborrowers already had an FHA loan on the property they occupied. PrimeLending stated thatit incorrectly marked the loan applications.Coborrowers’ Assets Included Property PurchasedThe coborrowers’ assets on the loan application included the property purchased. By includingthe purchased asset, the coborrowers’ assets to liability increased. PrimeLending stated that theproblem was caused by a data entry error. With the inclusion of the purchased property in thenet worth, the coborrowers’ net assets totaled $141,985, and without the inclusion of the propertypurchased, the net worth was $2,985.Coborrowers’ Payroll Was Not Sufficiently DocumentedFHA’s loan file contained only one 2-week payroll record as income documentation, a duplicateof that 2-week payroll documentation, and a verification of current employment. The desktopfinding report required 1 full month’s earnings and current employment verification.PrimeLending claimed that a data entry error caused it to not obtain the full month’s payrolldocumentation.36
PrimeLending Did Not Obtain Required Credit Report during Early Default ReviewPrimeLending did not obtain a required credit report during its early default review for this loan.PrimeLending’s January 2010 quality control plan required it to obtain a credit report for loansthat defaulted within the first six payments. PrimeLending stated that it obtained a credit reportbut did not upload the report to the loan file. Because of the age of the report, the creditreporting company could not recreate it. There was no documentation showing thatPrimeLending obtained the credit report as required.37
Page 1 and 2: Issue DateFebruary 28, 2012Audit Re
Page 3 and 4: TABLE OF CONTENTSBackground and Obj
Page 5 and 6: RESULTS OF AUDITFinding: PrimeLendi
Page 7 and 8: PrimeLending Did NotProperly Review
Page 9 and 10: single family loans, the TOTAL Mort
Page 11 and 12: SCOPE AND METHODOLOGYWe performed o
Page 13 and 14: APPENDIXESAppendix ASCHEDULE OF QUE
Page 15: Comment 2Comment 315
Page 19: Comment 419
Page 22 and 23: Comment 622
Page 24: Comment 924
Page 27 and 28: Further, TOTAL Mortgage Scorecard U
Page 29 and 30: Appendix DMortgage amount: $120,280
Page 31 and 32: Case Narrative - Loan Number 493-90
Page 42: Case Narrative - Loan Number 493-90

Herman Ransom, Director, Office of Multifamily Housing - Hud-Oig

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