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Report Fraud, Waste and Abuse
  • Recommendation Number: 2025-NY-1001-001-G
  • Status: Open
  • Date Issued: February 27, 2025

Provide indemnification agreements or documentation to support the eight loans in which it identified fraud, material misrepresentations, or other material findings that it did not acceptably mitigate or self-report to HUD. Implementation of this recommendation will protect the FHA insurance fund from an estimated loss of $639,397.

Publication Report

2025-NY-1001 | February 27, 2025

CMG Mortgage, Inc., Did Not Have a Sufficient Quality Control Program for FHA-Insured Loans

We performed an audit of CMG Mortgage, Inc., to evaluate its quality control (QC) program for originating and underwriting Single Family Federal Housing Administration (FHA)-insured loans.  We selected CMG for review based on its loan volume and… more

Related Recommendations

Housing

  •  
    Status
      Open
      Closed
    2025-NY-1001-001-A

    Update its QC plan and related processes and procedures to align with requirements for loan selection, including maintaining data and documentation showing how sample sizes and loan selections were determined.

  •  
    Status
      Open
      Closed
    2025-NY-1001-001-B

    Update its QC plan and related processes and procedures to align with requirements for (1) loan file reviews and reverifications of borrower information, (2) mitigation of findings, and (3) reporting findings to HUD when required.

  •  
    Status
      Open
      Closed
    2025-NY-1001-001-C

    Demonstrate that its training for staff and management has been updated to reflect changes made to its QC plan and related processes and procedures in response to recommendations 1A and 1B, and to cover the underlying HUD requirements for lender QC programs, and provide proof of training to HUD.

  •  
    Status
      Open
      Closed
    2025-NY-1001-001-D

    Conduct up to 588 additional post-closing QC reviews to meet sample size and composition requirements and submit the results to HUD, including all findings of fraud or material misrepresentation, along with any other material findings that it is unable to mitigate. If required, CMG should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

  •  
    Status
      Open
      Closed
    2025-NY-1001-001-E

    Review the 276 EPD loans not previously selected for review and submit the results to HUD, including all findings of fraud or material misrepresentation, along with any other material findings that it is unable to mitigate. If required, CMG should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.

  •  
    Status
      Open
      Closed
    2025-NY-1001-001-F

    Evaluate its QC files for the 242 loans in which it identified material findings to confirm whether it self-reported to HUD all findings of fraud or material misrepresentation, along with any other material findings that its records did not show have been acceptably mitigated. If required, CMG should execute indemnification agreements or reimburse claims paid to help protect the FHA insurance fund from unacceptable risk.