Compliance diligence proves the old adage that “an ounce of prevention is worth a pound of cure,” especially when it’s the federal government minding the scales. That was the summary message delivered by Ben Slayton, president, The Lender Approval Department, speaking about implementing an effective quality control plan during a Reverse Mortgage Compliance conference in New York last week, sponsored by the American Conference Institute. This was the first reverse mortgage event held by ACI in more than two years but sponsors told RMD it is likely they will do another one sooner; probably in the fall of 2011.

In his thorough presentation, Slayton advised listeners that a changing auditor-to-lender ratio does not favor a casual attitude toward keeping accurate records and being in compliance with HUD/FHA requirements. Here’s how the scorecard looks: Last year, there were approximately 6,000 correspondent lenders originating reverse and forward mortgages and approximately 150 HUD auditors. Next year, there will be approximately 2,500 lenders and some 175 auditors. Do the math, Slayton notes. “It means every 12 to 18 months, you’ll be audited.”

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The Department of Housing and Urban Development is soliciting public comments on a proposal to conduct a reverse mortgage study to determine the extent in which consumer protection issues exist and to define additional appropriate consumer protections if necessary.

Called for in the Housing and Economic Recovery Act of 2008 (HERA), the Secretary of HUD is required to conduct a study to examine and determine “appropriate consumer protections and underwriting standards” for the HECM program to ensure the purchase of additional financial products is appropriate for the consumer.

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U.S. Treasury Secretary Tim Geithner announced that John G. Walsh will become Acting Comptroller of the Currency when John Dugan leaves office on August 14.

Mr. Walsh currently serves as Chief of Staff and Public Affairs for the Office of the Comptroller of the Currency (OCC), a position he has held since October 17, 2005. In that position, he has been engaged in all aspects of the OCC’s operations.

Mr. Walsh joined the OCC from the Group of 30, a consultative group that focuses on international economic and monetary affairs. He joined the Group in 1992, and became Executive Director in 1995. Mr. Walsh served on the Senate Banking Committee from 1986 to 1992 and as an International Economist for the U.S. Department of the Treasury from 1984 to 1986.

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Bloomberg is reporting that California mortgage brokers are facing closer scrutiny as the state adopts a federal law aimed at curbing the fraud and abuse that helped decimate the housing market.

Brokers in the nation’s most populous state will be required by July 31 to have passed criminal-background and credit checks, as well as licensing exams. California, along with about a third of U.S. states, previously didn’t require mortgage sellers to have individual licenses.

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The Department of Housing and Urban Development announced that $79 million is available for a broad range of housing counseling programs to help families find and preserve housing.  The available funding is an increase of $21 million, or 27 percent, over last year.

According to the agency, the grants will be awarded competitively to hundreds of HUD-approved counseling agencies and State Housing Finance Agencies across the nation that offer a variety of services including how to avoid foreclosure, how to avoid mortgage scams, how to purchase or rent a home, how to improve credit scores, and how to qualify for a reverse mortgage.

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Under duress, even family members may be driven to steal from a senior relative who is receiving reverse mortgage proceeds. “There’s a lot of family fraud” in the reverse mortgage business, says Charles Martinez, a HUD field supervisor for quality assurance.

And, the problem may go unnoticed in some cases for some time, according to Barry McLaughlin, special agent in charge of the Midwest Region of HUD’s Office of Inspector General. “In many cases, when fraud occurs, it could be a year or two down the line before we actually know there’s a problem.”  McLaughlin says HUD is weighing moves that could prevent family fraud from occurring in the future.

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In this year alone, the Federal Housing Administration’s Mortgagee Review Board (MRB) has taken nearly 1,500 administrative sanctions against lenders said the agency in a statement Monday.  These sanctions include reprimands, probations, suspensions, withdrawals of approval, and civil money penalties.

The MRB published dozens of administrative actions against FHA-approved lenders who failed to meet its requirements in the Federal Register.

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