WASHINGTON — The board in charge of sanctioning mortgage lenders that violate Federal Housing Administration policies is ineffective and slow at a time when the volume of loans backed by the agency is exploding, according to an inspector general’s report scheduled for release today.
The report responds to concerns raised by Sen. Charles Grassley, R-Iowa, who questioned the FHA’s ability to weed out fraudulent lenders approved to do business with the agency. These lenders are chasing the borrowers who are flocking back to the agency for low- down-payment mortgages now that the subprime industry has vanished. The agency insures lenders against defaults.
“Tax dollars are at risk because this board is a toothless tiger,” Grassley said in a statement. “It’s not visible and moves slowly.”
