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HUD Findings for FHA Approved Lenders |
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During the last few weeks AHACPA has received various questions and comments from members related to FHA findings. As a result, we wish to provide additional guidance on the following matters. Upfront MIP Payments 4000.1 II.A.7d.
The confusion for many lenders appears to be the difference between business days or calendar days. HUD is enforcing the 10-day definition as calendar days, not business days. Although the Handbook reference above does not indicate a preference between these two days, the governing regulations do stipulate calendar days. This interpretation is based on the actual regulation. 24 CFR §203.280 – One-time or Up-front MIP Lenders and their auditors should be aware that late fees and interest at 4% are being assessed for these late remittances. Notice of Material Events Also, we have received no fewer than 3 inquiries regarding missed filings of Notices of Material Event (NOM). The majority of these calls are dealing with the requirement to notify HUD of the existence of a quarterly loss in excess of 20% of net worth. In each instance the lender /auditor discovered the missing NOM after the client had answered the lender certification questions. This raises the question of how these should be handled. First, we remind everyone that the net worth requirements are to be met at all times during the year. However, FHA included specific requirements related to reporting when there is a significant loss. In particular, HUD indicates the following: Handbook 4000.1, I.A.7.h. – Operating Loss FHA has been examining the submitted the financial statements. IF a net loss of that magnitude exists, HUD is noting the following:
Most of these lenders referred to the Mortgagee Review Board are being assessed penalties near $10,000. All of this can be avoided by ensuring the client is aware of these requirements, has the internal control to ensure that these violations do not exist, and questions compliance with the requirements BEFORE answering the certification questions. Further AHACPA wishes to remind users of the following requirements related to Notices of Material Violations. Here is FHA’s guidance from the LEAP Manual: 5.6 Notice of Material Event
Such notices must be submitted through LEAP. The Lender chooses the Institution menu and then selects “Notice of Material Event”. It is then completed as outlined in the software. Once submitted the Lender should then monitor LEAP and follow the subsequent instructions from FHA. Failure to follow these guidelines is resulting in many additional findings from FHA. |
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20th Annual Public Housing Authority (PHA) Conference Course Fee: $650 ($600 for AHACPA Members) The Cosmopolitan of Las Vegas |
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Save the Date - More information to be announced |
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21st Annual Multifamily Conference FHA Lender Update - Las Vegas One-day Update Courses and Webinars to be announced Courses will be posted on AHACPA's Training Calendar |
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CPE Credit Information |
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Objective: To learn HUD accounting, auditing, and electronic submission requirements and how to efficiently implement those requirements. |
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AHACPA is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.NASBAregistry.org. | |
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Affordable Housing Association of Certified Public Accountants (AHACPA)
459 N. 300 W. Suite 11
Kaysville, UT 84037
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