source:
  type: guide
  id: hud-4000-1-v-d-fraud-misrepresentation-and-other-findings
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part V — d. Fraud,
    Misrepresentation, and Other Findings (04/10/2025)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part V — d. Fraud,
    Misrepresentation, and Other Findings (04/10/2025).
  coverage_tier: operative
obligations:
- id: hud-4000-1-v-d-fraud-misrepresentation-and-other-findings-full
  canonical_id: hud-4000-1-v-d-fraud-misrepresentation-and-other-findings-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part V — d. Fraud, Misrepresentation,
    and Other Findings (04/10/2025)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part V — d. Fraud,
      Misrepresentation, and Other Findings (04/10/2025)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'd. Fraud, Misrepresentation, and Other Findings (04/10/2025)
      i. Definitions (A) Finding A Finding is a determination of defect by the Mortgagee.
      (B) Material Finding In the context of mortgage origination and underwriting,
      a Finding is Material if disclosure of the Finding would have altered the Mortgagee’s
      decision to approve the Mortgage or to endorse or seek endorsement from FHA
      for insurance of the Mortgage. In the context of mortgage servicing, a Finding
      is Material if it has an adverse impact on the Property and/or FHA. (C) Mitigated
      Finding In the context of mortgage origination and underwriting, a Finding has
      been Mitigated if the Mortgagee has adequately addressed the deficiencies underlying
      the Finding, and such deficiencies have been remedied so that the Mortgagee’s
      decision to approve the Mortgage or to endorse or seek endorsement from FHA
      for insurance of the Mortgage is acceptable to FHA. In the context of mortgage
      servicing, a Finding has been Mitigated if the Mortgagee has adequately addressed
      the deficiencies underlying the Finding, and such V. QUALITY CONTROL, OVERSIGHT,
      AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 2. Institutional
      Quality Control Program Requirements Handbook 4000.1 1702 Last Revised: 11/26/2025
      deficiencies have been remedied through mortgage servicing actions taken by
      the Mortgagee so there is no longer an adverse impact on the Property and/or
      FHA. ii. Standard The Mortgagee must monitor all FHA-insured Mortgages it originates,
      underwrites, services, or purchases, including those Mortgages originated by
      sponsored Third-Party Originators (TPO), for potential fraud, material misrepresentations,
      or other Material Findings. Suspected instances of fraud, material misrepresentations,
      and other Material Findings must be investigated and documented by the Mortgagee’s
      QC team, who must determine whether or not fraud or material misrepresentation
      actually occurred, or whether Material Findings exist. iii. Internal Reporting
      to Senior Management The Mortgagee’s written QC Plan must contain a process
      for QC staff to report Findings identified through the QC process to senior
      management that complies with the following requirements. (A) Time Frame for
      Reporting For all Mortgages selected, Mortgagees must complete the initial Findings
      report within 60 Days of the date of selection. Initial review Findings must
      be reported to the Mortgagee’s senior management within 30 Days of completion
      of the initial Findings report. The Mortgagee’s final Findings report must be
      issued within 60 Days of the date the initial review Findings were reported
      to senior management. (B) Corrective Action Plan Mortgagee senior management
      must review and respond to each instance of fraud, material misrepresentation,
      or other Material Finding. The Mortgagee’s final report must identify the corrective
      and curative actions being taken, the timetable for completion, and any planned
      follow-up activities. (C) Follow Up The Mortgagee must discuss all Findings
      with the responsible party(ies) in order to ensure corrective action and to
      prevent similar Findings from occurring in the future. V. QUALITY CONTROL, OVERSIGHT,
      AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 2. Institutional
      Quality Control Program Requirements Handbook 4000.1 1703 Last Revised: 11/26/2025
      iv. External Reporting to FHA (A) Fraud and Material Misrepresentation The Mortgagee
      must report to FHA all Findings of fraud and material misrepresentation. (B)
      Material Findings The Mortgagee must report to FHA all Material Findings concerning
      the origination, underwriting, or servicing of a Mortgage that the Mortgagee
      is unable to mitigate. (C) Mitigated Findings Findings that do not involve fraud
      or material misrepresentation and were already Mitigated by the Mortgagee do
      not have to be reported to FHA. (D) Time Frame for Reporting The Mortgagee must
      report all Findings of fraud or material misrepresentation to FHA immediately.
      The Mortgagee must report all other Material Findings that the Mortgagee is
      unable to mitigate to FHA no later than 90 Days after the completion of the
      initial Findings report. (E) Corrective Action Plan For all Findings that must
      be reported, the Mortgagee must identify what actions have been taken to attempt
      to mitigate each Finding, and report any planned or pending follow-up activities.
      (F) Method of Reporting (1) Title II Mortgages The Title II Mortgagee must use
      the Self-Report feature in the Loan Review System (LRS) to report Title II Mortgage
      Findings to FHA. FHA may request supporting documentation, including the endorsement
      case binder, the QC report, and any other documentation necessary for FHA to
      fully evaluate the Finding. (2) Title I Loans The Title I Lender must make a
      Report of Non-compliant Activities to report Title I Loan Findings to FHA. The
      Report must be on the Title I Lender’s letterhead and detail the Finding(s)
      and Corrective Action Plan. The report must contain the following information,
      if applicable, to assist in any FHA review: • Title I Loan number V. QUALITY
      CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees
      3. Loan Level Quality Control Program Requirements Handbook 4000.1 1704 Last
      Revised: 11/26/2025 • Borrower name, address and telephone number • Property
      address • Loan amount • Loan date • Property inspection date • Title I Lender
      loan number • Loan officer • Dealer name, address, telephone number, and Taxpayer
      Identification Number (TIN) • Manufactured Home Loan retailer name, address,
      and telephone number The report must be sent to: Housing Office of Lender Activities
      and Program Compliance Attn: Director, Quality Assurance Division Department
      of Housing and Urban Development 451 7th Street, S.W. Washington, DC 20410 If
      the Title I Loan has been insured by HUD, the insurance on the Title I Loan
      will stay in effect. If the Non-Compliant activity was caused or sanctioned
      by an employee of a Title I Lender, HUD may request that the Title I Lender
      indemnify HUD for any loss sustained, or may impose other sanctions against
      the Title I Lender. (G) Suspected HUD Involvement If the Mortgagee suspects
      HUD employees or contractors were involved in fraud or material misrepresentation,
      the Mortgagee must refer the matter directly to HUD’s Office of Inspector General
      (OIG)). All referrals to the OIG should be made to the OIG Hotline’s call center
      at 1-800-347-3735 or via the OIG Hotline’s website at www.hudoig.gov/hotline.
      v. Required Documentation The Mortgagee must retain all QC review results, including
      all selection criteria, review documentation, Findings, and actions taken to
      mitigate Findings. 3. Loan Level Quality Control Program Requirements Mortgagees
      must perform QC reviews of FHA-insured Mortgages the Mortgagee and its Affiliates
      originate, underwrite, or service. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE
      A. Quality Control of Lenders and Mortgagees 3. Loan Level Quality Control Program
      Requirements Handbook 4000.1 1705 Last Revised: 11/26/2025'
  judgment: false
