U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 April 3, 1997 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER TI-447 TO: ALL TITLE I LENDING INSTITUTIONS SUBJECT: REPORTING NONCOMPLIANCE ACTIVITIES Lenders are required to promptly report to HUD the discovery of any material misstatements of fact, borrower misuse of loan proceeds, dealer noncompliance or other significant violations in the Title I Program. This letter provides a simple format for reporting program violations and provides guidance for reporting incidents of noncompliance. Some of the most common noncompliance activities involve the following: o Misstatements of fact on the credit application and falsified documentation. o Borrower use of the loan proceeds for debt consolidation, automobiles, downpayment requirements and other personal items. o Failure of the borrower to permit the required on-site inspection. o Borrowers, dealers or inspection companies falsely certifying that the improvements are completed. o Borrower failure to submit an executed Completion Certificate. o Dealers not complying with their contractual obligations with the borrowers (e.g. failure to complete all work as specified or inferior workmanship). o Dealers kicking back a portion of the proceeds to the borrower. In addition, lenders are encouraged to report advertising and marketing by dealers or others that is inaccurate or deceptive. -2- Attached is a suggested format, that is not mandatory, for lenders to use to send to HUD when program violations are suspected. It is not necessary to submit inspection reports, or other supporting documentation, unless it is requested by HUD. The reporting format should be prepared on company letterhead, or attached to company letterhead, and addressed as follows: J. Parker Deal Director, Quality Assurance Division Department of Housing and Urban Development c/o 451 7th Street, S.W., Room B-133/P3214 Washington, D.C. 20410 If you have any questions about this letter, please write to J. Parker Deal, Director, Quality Assurance Division, at the above address or call Mr. Deal at (202) 708-2830, extension 105. Sincerely, Nicolas Retsinas Assistant Secretary for Housing Federal Housing Commissioner Attachment Date: REPORT OF NONCOMPLIANCE Name of Borrower:________________________ Phone No.:_____________ Property Address:__________________________________ Loan Amt: _________ Loan Date:_________ Inspection Date: ______ Lender Loan No.:__________ Loan Officer: ________________ Correspondent/Originating Lender Name, Location and Lender Approval Number: _________________________________________________________________ _________________________________________________________________ _________________________________________________________________ INDIRECT LOAN (Dealer Loan): Name of Dealer:__________________________ Phone No.:___________ Dealer Address:__________________________________________________ Dealer Tax I.D.#:__________________________ Noncompliance Activities:________________________________________ _________________________________________________________________ _________________________________________________________________ DIRECT LOAN: Noncompliance Activities:________________________________________ _________________________________________________________________ INSPECTION RESULTS _____% of improvements not completed as listed on the application _____% of loan amount used for purposes other than eligible improvements. Ineligible improvements include:__________________________ _________________________________________________________________ The incomplete work consists of:_________________________________ _________________________________________________________________ Borrower and/or Dealer reason for incomplete improvements/misuse: _________________________________________________________________ _________________________________________________________________ Unable to complete inspection due to ____________________________ _________________________________________________________________ HUD--56005