COMPLIANCE FINDING DOCUMENTATION - ACUIA



9000.83 HUD Compliance Audit Program – Loan Settlement (Title II Lender)Client:Closing Date:Current Version: 11/2010 View Document SignoffsTitleNameDatePrepared by 1Prepared by 2Prepared by 3Reviewed by 1Reviewed by 2Reviewed by 3Reviewed by 4Preparer Comments: Note:The engagement team should use the FI HUD attribute sampling guidance to determine the appropriate sample size for each attribute being tested. For example, if the attribute being tested relates to documents included in a loan file then the engagement team should use the number of loan files related to that attribute as the population for sample selections. This form is also required to be signed-off by the manager and in-charge. Overall ObjectiveThe objective of this audit program is to document the auditor's tests of compliance related to HUD-approved Title II mortgagee’s responsibilities related to settling and completing loan transactions. GuidanceLoan origination fees should normally compensate the mortgagee for the required services. However, HUD has specified the types and amounts of additional charges and fees, which the mortgagee may collect from the borrower. Additionally, the mortgagee is responsible for promptly submitting up-front mortgage insurance premiums to HUD following loan settlement, disbursing the funds and completing the transaction in accordance with the closing documents without undue delay (24 CFR 203.284).Mortgagee letter 2010-20 allows non-approved FHA lenders (e.g., third-party originators) to participate in FHA programs through sponsorship by an FHA-approved Direct Endorsement mortgagee. An FHA-approved mortgagee may permit its sponsored third-party originator to perform some or all of the origination and processing task related to a loan transaction with the exception of tasks that must be executed within the FHA Connection system. HUD will hold FHA-approved mortgagees responsible for compliance with FHA requirements for all aspects of an FHA loan transaction, whether performed by the approved mortgagee or by its sponsored third-party originator. HUD expects that all approved mortgagees will diligently monitor and evaluate the activities and performance of those they sponsor and will continue to review and evaluate all activities and performance and take appropriate action to enforce its requirements when violations occur.The audit program should be modified to address the audit requirements identified in the guidance referenced above for every applicable requirement identified. 1Identify the person primarily responsible for completion of this section:StepNo.SUGGESTED AUDIT PROCEDURESDATEW/PREFREMARKS1.Verify there are no changes to the auditee’s policies and procedures for settling and completing loan transactions from the understanding obtained during the risk assessment process.2.Select a representative sample of HUD loans for testing from those settled during the audit period.a.Examine the signed settlement statement (Form HUD-1) and test its mathematical accuracy. Compare amounts listed on the HUD-1 to other authentic loan documents.b.Review the fees and charges collected from the mortgagors as shown on loan settlement statements to determine whether they are equal to the mortgagee’s actual out-of-pocket costs for the related service or the maximum charge allowed by HUD, whichever is lower. Determine whether the origination fee did not exceed 1 percent of the loan amount. Compare the fees and charges to the guidelines contained in HUD Handbook 4000.2. Report any differences as findings.c.Review the mathematical accuracy of calculation of points and closing costs. Determine whether any differences noted are material or unreasonable. Any indications of significant non-compliance or discriminatory practices should be noted and investigated with the mortgagee.d.Review computations and supporting data for amounts collected to establish escrow accounts for taxes and hazard insurance. Reconcile and report on any differences.e.Review computations and supporting data for interest collected from the mortgagor at loan closing. Reconcile and report on any differences.f.The Form HUD-92900 contains the acquisition cost of the property. The HUD-1 contains the amount of the insured mortgage. Compare the amount of the insured mortgage to the acquisition costs to determine whether the mortgagor made the required minimum investment.g.Examine the canceled check or other supporting documentation for evidence that the mortgagee submitted the mortgage insurance premium to HUD, in accordance with HUD requirements at the time of closing. Determine whether payment reached HUD’s depository within 10 calendar days of closing (Mortgagee Letter 2005-28 dated June 20, 2005).h. Compare the purchase contract and the HUD-1 for agreement as to sales price, earnest money and any seller concessions.Conclusion:The objective set forth at the beginning of this audit program section has been achieved and all "findings" identified have been evaluated for appropriate reporting in accordance with the HUD Handbook 4060.1 and Handbook 2000.04, Consolidated Audit Guide for Audits of HUD Programs.Yes _____ No _____ Signature __________________________________________________________Explanation of "No" conclusion____________________1The principle compliance requirements related to HUD-assisted programs are provided in the HUD Handbook 4060.1 and Handbook 2000.04, Consolidated Audit Guide for Audits of HUD Programs. When there have been changes to the compliance requirements and the changes are not yet reflected in the guidance referred to above, the auditor should determine the current compliance requirements and modify the audit procedures accordingly. ................
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