Guaranteed Loans for Single-Family Housing Under Review

The Office of Inspector General (OIG) for the Department of Agriculture is reviewing the spending of approximately $10.5 billion in Recovery Act funds that the Department received to help low-income individuals purchase homes in rural areas. To date, the OIG has issued four memoranda identifying weaknesses in the processes for submitting, reviewing, and approving guaranteed loan applications, including:

• Inaccurate documentation of borrowers' eligibility
• Waiving requirements regarding borrowers' ratios of total debt to income
• Use of independent mortgage brokers to originate guaranteed loans
• Review and approval of guaranteed loan applications by agency loan specialists without supervisory checks.

1.  Weaknesses in the Underwriting System for Guaranteed Single Family Housing Loans
2.  Waivers of Debt Ratio Requirements for Guaranteed Single Family Housing Loans
3.  Lenders' Use of Brokers for Guaranteed Single Family Housing Loans
4.  Weaknesses in the Processing and Approving of Guarantees for Single Family Housing Loans