March 11, 2010
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In This Issue
A-133 Illustrative Audit Reports reflecting SAS 115
Clarification of FHA submission extensions
Audits of Supervised Lenders
PHA Conference Date
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GAQC Issues Updated A-133 Reports Reflecting SAS 115

Today the Governmental Audit Quality Center (GAQC) released new updated Office of Management and Budget (OMB) Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations
(Circular A-133) report illustrations that have been updated to reflect recently effective Statement on Auditing Standards (SAS) No. 115. 
Clarification on Extensions for FHA Submissions

Last week FHA announced that it was giving an automatic extension of 30 days for loan correspondents to file their audit, awaiting the Final Rule governing approval of loan correspondents to be issued.  Phone calls to LASS this week confirm that the automatic extension is for LOAN CORRESPONDENTS ONLY.  Non-supervised lenders must still file within the 90-day deadline, which for this year is March 31st.   Loan correspondents are still to complete their submission of the Annual Certification (V-form) and renewal fee by March 31st.
Guidance for Audits of Supervised Lenders

We have received several phone calls regarding the existence of an audit guide for supervised lenders.  At this time, no such guidance exists.  Further, we do not anticipate any Guide to be issued this year.  Until a chapter specific to supervised lenders is issued, we encourage auditors to use the existing guidance in Chapter 7 of the HUD Audit Guide with the following changes.

The parenthetical references are for the specific paragraph from the 4060.1 Mortgagee Approval Handbook.
  1. Supervised lenders (SL's) are not required to provide copies of state licensing as a mortgagee (2-3).
  2. SL's are not required to submit their net worth (2-5) or liquidity (2-6) to renew approval.  However, they may be asked by FHA to verify during a compliance review. (This may change with the new LASS filing requirements)
  3. SL's are not required to have mortgage lending as a primary activity (2-26).  Subsidiaries are not considered approved as supervised lenders.
  4. They can act as fiduciaries for holding funds (2-26 C.)
  5. Supervised loan correspondents must have a letter or written agreement with its sponsor indicating that the sponsor will purchase all loans. (2-28 C.)
  6. They are not required to submit credit reports on officers.  (3-2 A. 4.)
  7. Resumes of officers are not required A list of names and SSNs is sufficient(3-2 A.5.)
  8. They do not have to provide evidence of an acceptable funding program (3-2 A.13.)
  9. Supervised loan correspondents may service upon approval by HUD (6-6).
We believe this list represents the majority of the differences.  They are still subject to the QA requirements.  The above constitutes the majority of the differences, at least for now.
Annual PHA Conference
Agenda and speakers will be announced in a few weeks.

Date: June 10-11, 2010.

Location: Planet Hollywood Resort & Casino, Las Vegas

Course Registration: Click Here

Room Reservations: We have reserved a block of rooms.  The room rate for June 9 - 10 is $99.  The rate for June 11 is $119.  To make a reservation call 866-317-1829.  Reservations must be made by Monday, May 10 to received the group rate.