MortgageReverse

HUD OIG Reiterates Faith in Reverse Mortgage Program

During the “Keeping HECMs Honest – The Inspector General’s Point of View,” session at the National Reverse Mortgage Lenders Association Annual Conference in San Diego last week, Assistant Special Agent in Charge, Office of the Inspector General (OIG), U.S. Department of Housing and Urban Development (HUD), Michael Stolworthy, explained the role of the OIG and what the task force investigating mortgage fraud was looking for.

OIG is the law enforcement branch of HUD, with the authority to make arrests and execute search warrants. With the FHA now having a 30% market share in the mortgage market, with over 5.5 million mortgages with a total insurance in force of $696 billion dollars, single-family mortgage investigations are a priority for HUD and the OIG. To this extent, the National Mortgage Fraud Team (NMFT) was created in December 2008.

Stolworthy made a point of pointing out that the NMFT is pulling out and examining all early defaults and early claims, financial institution complaints and information, and all HECM cash outs. He also pointed out that the cash outs were being investigated because one of the leading indicators of fraud is that all the money is taken out up front. However, after being informed that the fixed rate reverse mortgage product requires all the money to be taken out up front, Stolworthy noted that he would keep that in mind.

The NMFT is looking for commonalities, where the same appraisers and lenders are popping up repeatedly. In one case involving the forward mortgage industry cited by Stolworthy, the same appraiser appeared 4400 times in suspected files.

Write to Reva Minkoff

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