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NAMFS Critiques FHFAOIG Report on Property Inspections

The National Association of Mortgage Field Services [1] (NAMFS) recently issued a critique of an audit performed [2] by the Federal Housing Finance Agency’s Office of the Inspector General (FHFAOIG). NAMFS doesn't believe that the report properly assessed the over 15 million inspections done each year in the United States.

The audit was initially done to assess the quality of assurance the FHFA has in place to mitigate risk and fraud. The audit posed questions about the quality and veracity of inspections, offering examples of manipulated, inaccurate, and incomplete inspection results as wholly representative of the work performed by the mortgage field services industries.

The NAMFS, however, offers a different view of the report.

In a release, the organization commented "[t]hat the 12 loan servicers reviewed for the audit ordered over 15 million pre-foreclosure property inspections during 2011 and 2012; of these 15 million inspections, the audit report examined eighty-four or .0000056 percent."

Furthermore, the group believes, "The OIG audit bases its analysis of quality control requirements for pre-foreclosure inspection processes on information drawn from the Enterprises' records and on inspections from the quality control files of twelve of the top loan servicers. This provides a very small pool of inspections drawn from quality control files that typically collect questionable inspection results."

The group also noted that auditors performed field work at Fannie Mae and Freddie Mac and the offices of loan services, and never mentioned whether auditors conducted field work at the offices of the mortgage field services providers.

"By performing field work at the offices of mortgage field services providers, the auditors would have been able to gather information on the quality control methods used prior to releasing inspection results to loan servicers," the group said.

NAMFS cites initial comments from the FHFA that pointed out problems with the OIG report. The FHFA said it "...does not believe that the report findings and the examples of deficiencies provide compelling support for the imposition of uniform standards and processes for all pre-foreclosure inspections of properties that collateralize delinquent loans held or guaranteed by the Enterprises."

The NAMFS commented that there have been quality control processes in place for a long time, and believes that understanding the processes, training, legislative requirements, and the quality control measures involved in pre-foreclosure inspections by mortgage field servicers is important.

"The National Association of Mortgage Field Services would like to take this opportunity to open a solution focused dialogue about the mortgage field services industry," said Eric S. Miller, Executive Director of NAMFS.