The American Recovery and Reinvestment Act of 2009 (Recovery Act) provided the Department of Agriculture (USDA) with $28 billion in funding. Of this amount, $1 billion was allotted to fund Single-Family Housing (SFH) Direct Loans to borrowers.
OIG reviewed loan file documents to determine if field personnel followed policies and procedures and made proper eligibility determinations regarding borrowers and the homes they purchased.
OIG found these approved borrowers (1) had no history of stable and dependable income, (2) had a credit history that did not indicate the ability and willingness to repay a loan, and (3) did not meet repayment ability guidelines. Based on OIG’s overall sample results, OIG estimates that
1,450 loans (18 percent), with a projected total value of $173 million, may have similar issues that would have resulted in ineligible borrowers or those with higher risk of default receiving loans.