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

Underwriting deficiencies by loanCasenumberDisputedaccountsAppraisal notreviewedDebt & assetdeficienciesOtherdeficiencies511-0153486 x492-8717246 x493-9082225 x492-8705878 x491-9600782 x x x493-9572318 x492-8492165 x x511-0178080 x492-8634079 x511-0074780 x x493-9219962 x493-9075326 xTotals 7 4 4 1PrimeLending Did NotManually Underwrite LoansWhen Credit ReportsContained Disputed ItemsFor 7 of the 20 loans reviewed (35 percent), PrimeLending did notmanually underwrite loans when the borrower’s credit report containeddisputed items. FHA requirements state that any credit report containingdisputed items must be manually underwritten. 4 HUD-FHA reaffirmed toPrimeLending in a letter, dated June 10, 2010, 5 that credit reportscontaining disputed items required manual underwriting instead ofautomated underwriting. Prior to the letter dated June 10, 2010,PrimeLending did not require loans with disputed items to be manuallyunderwritten, only that the loans be reviewed by an underwriter beforeclosing. Two loans in our review contained disputed items after HUD-FHA notified PrimeLending. These loans closed from 8 to 9 days afterPrimeLending received the HUD-FHA notification. Because manualunderwriting guidelines are generally more stringent than automatedunderwriting, it was unknown whether the loans would have qualified forFHA insurance as PrimeLending did not manually underwrite the loans.45FHA’s Technology Open To Approved Lenders (TOTAL) Mortgage Scorecard User Guide, page 21PrimeLending received the letter on June 21, 2010.6