In October 2016, the U.S. Department of Housing and Urban Development (HUD) issued revisions to Chapter 7 of the Consolidated Audit Guide for Audits of HUD Programs (HUD Audit Guide), FHA-approved Lenders Audit Guidance. The changes to Chapter 7 reflect updated references and updates terminology used in the chapter.
HUD Handbook Reference Changes
The issuance of HUD Handbook 4000.1 resulted in the retirement of certain mortgagee letters and chapters of HUD Handbook 4060.1. References were updated to reflect the change to HUD Handbook 4000.1. HUD Handbook 4000.1 only applies to single family lenders with the exception of I.A.1-I.A.9, which also apply to multifamily lenders.
Regulatory Terminology Changes
HUD added references to regulatory definitions to update current requirements. Following are a few examples:
- In the description of the program objective for FHA-approved lenders, HUD notes that for the Home Equity Conversion Mortgage Program, successors or assigns are not included in the borrower definition as is the case in forward mortgages.
- In section 7-3, Audit and Reporting Requirements, HUD notes that while exempted from having an annual audit in accordance with the HUD Audit Guide, a small supervised lender must still submit a copy of its unaudited regulatory report that is aligned with its fiscal year end and is signed by a corporate officer. In this section, HUD also added a definition of a major HUD-assisted program in the discussion of requirements for the compliance report relating to major HUD programs.
- In section 7-5, Compliance Requirements and Suggested Audit Procedures Applicable to Lenders With Both Title I and Title II Authorities, HUD states that cash and cash equivalents constitute liquid assets and defines what is included in cash and cash equivalents.
The changes to Chapter 7 were effective upon issuance. For filing purposes, Chapter 7 is updated in its entirety with these changes.