On September 27, 2018 the Office of Inspector General (OIG) released Audit 2018-LA-0007 in
which it conducted a review on HUD’s preforeclosure sale claim process.
After conducting their review, the OIG stated HUD currently has insufficient requirements and
procedures in relation to the preforeclosure claim process. Specifically, HUD does not have the
necessary procedures in place to limit the payment of interest and other costs when servicing
delays exist. The report estimates $413 million in overpayment based upon a statistical sampling
of 72 loans which was then projected across a total population of 27,634 loans.
OIG’s recommendation to HUD involves implementing a regulatory change to require the curtailment
of preforeclosure interest and other costs when servicing delays exist. The servicing delays
specifically referenced within this audit were untimely foreclosure institution, missed deadlines for
completing the preforeclosure marketing period, and delays in the timeline to complete the
CRFS expects HUD to issue a proposed rule change to 24 CFR 203 in the near future. CRFS
Compliance is monitoring for this release and will provide further communication as proposed changes
To review the full report from the OIG, please click here.