From Mike Olsen:

I have looked at the finding you reported, everything there looks good. Based on what you have told me, these findings were found from a review of your clients HUD loans by HUD. In reviewing your findings, HUD has resolved the findings and shows them as complete. When you read question 7 of the certification questions, the last part of the questions states “except for those instances on non-compliance, if any, that the Mortgagee reported to HUD…” Although the Mortgagee didn’t report these to HUD, it was a HUD examiner who found and reported the findings. Therefore, I believe that these findings have been reported to HUD and they have been closed and cleared by HUD. Therefore, I believe that your client should be able to answer YES to this question. In my conversations with Monique at HUD, she told me that when they are reviewing the audits, they are looking at mainly 3 things in relation to this question, Net Worth, Liquidity, and Operating Loss which have not been reported to HUD by the client. At the conference, I expressed concern that findings related to Quality Control would also apply to this question, which she agreed. However, HUD has not taken it to that level that I know of, however they easily could. I still believe that in your case, this has been disclosed to HUD and your client has essentially been given approval by HUD to continue, at lest that is how I view this.