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# 

# Department of Housing and Urban Development

# Audit of Loans with Downpayment Assistance

**Contract Number C-OPC-22550**

# 

# 

# Final Report

**February 6, 2004**

**Contents**

**[Page Number]{.underline}**

**Executive Summary v.**

## I. Introduction 1 

**II. Audit Methodologies 4**

**III. Key Findings 7**

**IV. Intrinsic Data Summary**

> **Description of Sample 9**
>
> **Spotlight on Gifts 14**

**V. Data Integrity Missing Data Elements 26 TINs 27**

**FICO or Credit Scores 29**

**Remaining Elements 31**

**VI. Insights and Recommendations Clarity of Source Documentation 36**

**Timing Impacts Accuracy 37**

**Data Entry Errors 38**

**Systemic Issues 38**

**Other Observations 39**

> **Appendix I Data Entry Form Guide 41**
>
> **Appendix II SMSA Gift Source Distribution By Year**
>
> **Figure 9-1A: Relative Gifts vs. Non-Profit Gifts 52**
>
> By Fiscal Year of Endorsement (ATL SMSA)
>
> **Figure 9-2A: Relative Gifts vs. Non-Profit Gifts 53**
>
> By Fiscal Year of Endorsement (IND SMSA)
>
> **Figure 9-3A: Relative Gifts vs. Non-Profit Gifts 54**
>
> By Fiscal Year of Endorsement (SLC SMSA)

**Appendix III Discrepancies between the Binder Data and**

> **CHUMS Data**
>
> **Table 19-1A: Dollar Fields Where Gift Amounts Were 56**
>
> **Greater in the Case Binder Than In the**
>
> **CHUMS Records**
>
> **Figure 19-2A: Dollar Fields Where Total Assets Available 58**
>
> **Were Greater in the Case Binder Than In**
>
> **The CHUMS Records**
>
> **Figure 19-3A: Dollar Fields Where Borrower Required 60**
>
> **Investment was Greater in the Case Binder**
>
> **Than In The CHUMS Records**
>
> **Table 20-1A: Dollar Fields Where Gift Amounts Were 62**
>
> **Less in the Case Binder Than In the**
>
> **CHUMS Records**
>
> **Figure 20-2A: Dollar Fields Where Total Assets Available 64**
>
> **Were Less in the Case Binder Than In**
>
> **The CHUMS Records**
>
> **Figure 20-3A: Dollar Fields Where Borrower Required 66**
>
> **Investment was Less in the Case Binder**
>
> **Than in the CHUMS Records**

**Appendix IV Implied Average Source of Funds When**

> **Gifts Are Present**
>
> **Figure 13-1A: National Sample 69**
>
> **Figure 13-2A: Combined SMSA Sample 69**
>
> **Figure 13-3A: Atlanta SMSA Sample 70**
>
> **Figure 13-4A: Indianapolis SMSA Sample 70**
>
> **Figure 13-5A: Salt Lake City SMSA Sample 71**
>
> **Executive Summary**
>
> The Department of Housing and Urban Development (HUD) and the HUD
> Office of Inspector General (OIG) are concerned about the potential
> for high claim rates on mortgages originated using downpayment
> assistance programs offered by non-profit organizations. This concern
> has led the OIG to question the risk prudence of insuring these loans.
> In addition, the OIG's examination of a small number of binders raised
> concerns that data on gift sources submitted by lenders via the
> Computerized Home Underwriting Mortgage System (CHUMS) were in many
> cases inaccurate or missing all together. In order to objectively
> assess the risk of these mortgages and to identify appropriate actions
> to reduce the risk, HUD engaged Concentrance Consulting Group Inc.,
> (Concentrance) to conduct an audit of at least 8,000 mortgage binders
> selected by HUD.
>
> The target sample distribution for review and coding included 5000
> binders from the national insurance portfolio and 1000 binders each
> from three SMSA target areas (i.e., Atlanta, Indianapolis and Salt
> Lake City). The final sample of 8294 binders reviewed and coded met or
> exceeded targets in each instance. The final sample included loans
> where there are no gifts and loans where gifts were provided from
> sources other than non-profit organizations.

The scope of the audit included a comparison of data found on key
documents in the case binder to the information lenders had transmitted
via the CHUMS system. The audit also encompassed the collection of
information on gift sources and amounts. The findings resulting from
this audit were coded in a Microsoft Access Database, pre-approved by
HUD. To ensure the accuracy of the data a three-stage quality control
review process was conducted. This audit was simply a comparison of data
elements found in the binder and the information transmitted by lenders
via the CHUMS and did not encompass traditional mortgage underwriting.
No additional, independent verification was conducted to determine the
validity of documentation contained in the case binders.

This report contains a high level analysis of selected intrinsic data
trends derived from the information collected during the review of the
binders. Our analysis of these trends is intended to provide insights
into the characteristics of the sample and is not deemed conclusive.
Some of these observed trends require further study, because our
analysis was limited to readily observed trends in the data and did not
include the depth of study required to make risk-based decisions.

> Data quality for the most part was good in the CHUMS and the binders,
> with data quality issues centered on borrower asset-related fields.
> Data discrepancies between CHUMS and the binders occurred most often
> in the total assets available field and the borrower required
> investment field. In the CHUMS, most data elements were populated at
> least 98% of the time, however the Tax Identification Number (TIN),
> gift amount and gift source fields were frequently missing or
> different from the information in the binder. Below are a list of key
> findings related to data quality, gifts and other characteristics of
> the sample:

-   TINs were missing 74% of the time when the binder indicated the
    presence of a non-profit gift.

-   Gift source and amount were missing from the CHUMS 28 % and 22% of
    the time respectively when a gift was known to be present based upon
    the binder review.

-   In the binder, supporting documents such as gift letters were
    frequently missing or incomplete.

-   The average gift from a relative was 9% higher than the average gift
    from a non-profit.

-   Median House prices and seller contributions tended to be higher
    when gifts from non-profits were present.

-   The CHUMS data quality was not greatly compromised by the limitation
    posed by the lack of multiple gift source fields. The number of
    instances where more than one gift source was present was minimal,
    155 cases.

-   Use of gifts from non-profit organizations increased over time (FY
    1999 -- FY 2002). This is especially evident in the SMSA sample.

-   In most cases total assets reported in the CHUMS were higher than
    total assets found during the binder review.

-   The binder review revealed an additional 1,012 gifts not reported by
    lenders via the CHUMS, representing over 28% of all gifts.

> Our recommendations relate to the key findings above: (1) address ways
> to improve data quality by enhancing validation capabilities in CHUMS
> for gift-related data fields, (2) conduct further study to determine
> the relationship between non-profit gifts and other file
> characteristics to including median house price and seller
> contribution, and (3) conduct primary research and analysis to
> determine the underlying source of discrepancies between CHUMS and the
> binder for borrower required investment and total assets available
> fields.

**I. Introduction**

> The Department of Housing and Urban Development (HUD) engaged
> Concentrance Consulting Group Inc. (Concentrance) to conduct an audit
> of data integrity of loans where downpayment assistance was provided.
> The audit focused primarily on loans where non-profit organizations
> provided gift funds to the borrower. The goals of the audit were to
> determine the extent to which the Computerized Home Underwriting
> Mortgage System (CHUMS) data is accurate and to collect information on
> sources of funds used by the borrower for downpayment and closing,
> including gift funds.
>
> HUD's Government Technical Representative (GTR) for the audit randomly
> selected case binders (binders) for the audit sample from single
> family insurance portfolios at a national level as well as three
> Standard Metropolitan Statistical Area (SMSA) levels. SMSA level
> binders were selected from the Atlanta (ATL), Indianapolis (IND) and
> Salt Lake City (SLC) portfolios. The GTR indicated that:

-   The resulting data samples were uniform across time based on
    insurance endorsement dates, which were between October 1999 and
    September 2002. This timeframe coincides with the timeframe when
    non-profit downpayment gift programs were becoming an important
    component of FHA's single-family insurance business, and is recent
    enough so that HUD can track default and claim experience of these
    loans.

-   The samples were comprised of purchase-money mortgages with
    loan-to-value ratios above 95 percent. This subset of the FHA
    portfolio represented first-time homebuyers with limited personal
    finances and a mandated target audience of both FHA business and
    downpayment gift providers.

> The target sample distribution for review and coding included 5000
> binders from the national insurance portfolio and 1000 binders each
> from the three SMSA target areas. The final sample distribution of
> 8294 binders reviewed and coded met or exceeded these targets. The
> final sample included loans where there are no gifts and loans where
> gifts were provided from sources other than non-profit organizations.
>
> In order to conduct the audit, data was provided to Concentrance from
> two sources:

-   The CHUMS, which is HUD's vehicle for lenders to submit
    electronically the data on insured mortgage loans.

-   The case binder, which is a paper storage file used to house the
    documents associated with the HUD insured mortgage. The case binders
    include copies of legal instruments and other closing forms, the
    borrower's financial information and the property appraisal or other
    indication of property value.

> In order to meet the goals of this audit, one of the key tasks was to
> compare data found in the case binder to data reported by lenders via
> the CHUMS and to code that data into a database developed by
> Concentrance. Concentrance was instructed to use the Mortgage Credit
> Analysis Worksheet (MCA Worksheet), HUD-1 and credit report as the
> primary basis for comparison to information previously submitted to
> HUD via the CHUMS. Other documents in the case binder were reviewed as
> needed to assist in clarifying inconsistencies in the primary
> documents.
>
> The primary case binder documents used for this audit serve the
> following purpose in the lending and insurance process:

-   The MCA Worksheet is used as a pre-closing instrument by the lender
    and is completed to document compliance of the proposed loan with
    HUD's underwriting requirements.

-   The HUD-1 is a post-closing form used to record the settlement
    transaction.

-   The credit report contains the borrower's credit history and
    historical information found in the public record about any borrower
    involvement in legal proceedings.

> Another task of this audit was to collect information on gifts
> provided to borrowers to assist them in making their required
> downpayment. To satisfy this requirement of the audit, Concentrance
> reviewed the binders for additional information about the amount and
> sources of downpayment assistance and coded these findings in the
> database. HUD required Concentrance to provide this report of its
> findings on data integrity in the CHUMS versus the case binders. HUD
> asked that particular attention be given in the report to how and why
> sources of "gift" monies for downpayment might be miscoded or
> not-coded in the CHUMS. Based on the review and analysis of the data
> from the case binder audit, HUD asked Concentrance to formulate
> recommendations HUD might need to give to mortgagees to assure
> complete, accurate and correct data entry for gift-money amount and
> sources and what quality checks HUD should consider incorporating into
> the CHUMS to identify mistakes at initial submission of the mortgage
> data.

This report represents our final findings based on the review and coding
of 8,294 binders out of the total sample of 8,877. For various reasons,
583 binders were not available and not provided by the particular HUD
Homeownership Center (HOC). This audit is a comparison of data elements
found in the binder and the information transmitted by lenders via the
CHUMS. This audit did not encompass traditional mortgage underwriting
for accuracy, verification or prudence in decision-making relative to
any of the information within the binder. The lender's underwriting and
presentation within the case binder was presumed to be correct and meet
HUD requirements. No additional, independent verification was conducted
to determine the validity of documentation contained in the case
binders.

This report contains a high level analysis of selected intrinsic data
trends derived from the information collected during the review of the
binders. Our analysis of these trends is intended to provide preliminary
insights into the characteristics of the sample and is not deemed
conclusive. Some of these observed trends require further study, because
our analysis was limited to readily observed trends in the data and did
not include the depth of study required to make risk-based decisions.

> Our objectives for this report are to:

-   Provide an overview of our approach to this audit, including binder
    review methods and quality control. (Section II)

-   Share our key findings resulting from the audit (Section III)

-   Summarize selected intrinsic data trends. (Section IV)

-   Share insights relative to data integrity particularly as it relates
    to sources of funds for downpayment. (Section V)

-   Provide recommendations for steps that HUD might consider to improve
    the accuracy of data submitted by lenders via the CHUMS,
    particularly in the case of sources of funds for downpayment and
    closing. (Section VI)

-   Show additional detailed information to augment or further explain
    information in the body of the audit report. (Appendix I -- IV)

**II. Audit Methodologies**

##### **Review Process**

> Concentrance employed a team of ten data analysts to review mortgage
> case binders selected by HUD and to code their findings into a
> database developed by Concentrance. The data analysts were instructed
> to locate the HUD-1, MCA Worksheet, credit report and gift
> documentation in the mortgage binder. They were made aware of nuances
> associated with differences in real estate practices in the various
> locations sampled and alerted to the presence of multiple versions of
> the source documents in the binders. For example, we initially
> encountered two versions of the MCA Worksheet, a 4/95 version and a
> more recent 10/98 version. After finding a few of the 4/95 version in
> the early stages of the audit we discovered lenders were
> overwhelmingly using the 10/98 version. Less than 20 copies of the
> 4/95 version were found in the binders. In other instances, binders
> contained several copies of the HUD-1 and multiple copies of the MCA
> Worksheet. When multiple copies of the same documents were present
> determining the correct copy to use required a more extensive review.
> In those instances, the on-site manager or the business analyst
> assisted the data analysts in making the correct determination.
>
> With a HUD approved electronic data entry form and a Microsoft Access
> database, the Concentrance team of data analysts worked in pairs to
> review case binders and code results. The analysts compared selected
> data elements on these forms to the data entered by the lender via the
> CHUMS transmission. In instances where the information was
> inconsistent with or missing from the CHUMS, the analysts entered
> their findings from the binder review into the database. In cases
> where the information from the binder review matched the pre-populated
> CHUMS data, the database was programmed to allow the analysts to
> select the data resident in the applicable CHUMS field and
> automatically duplicate it in the binder field.
>
> For each data element the analysts were provided a description of the
> element, the location on the source document for coding the data
> element, and special instructions for selected data fields. The
> specific data elements subject to the audit along with special audit
> rationale and instructions can be found in Appendix I to this report.

##### **Quality Control**

> Concentrance performed three quality control reviews:

-   Pre-data entry

-   Analyst specific

-   Outlier

> Pre-data entry quality control involved a second-level review of more
> complex binders by the on-site manager or business analyst in
> collaboration with the data analysts. Data entry was completed based
> upon decisions made after the second-level review. Examples of binders
> that required pre-data entry quality control included but were not
> limited to cases where:

-   Multiple source documents were in the binder

-   Multiple entries for the same data element were on the HUD-1 or MCA
    Worksheet

-   Items in a column were changed but totals were not adjusted

-   The case number was not in the CHUMS sample database

-   Information on the source documents was illegible or missing.

> Analyst specific quality control reviews involved a random sample of
> at least 5% of binders for each data analyst. All results of the
> analyst's binder review were examined for accuracy. The results of
> this quality control showed an accuracy rate ranging from 98%- 99.9%
> for all data analysts.
>
> Outlier quality control reviews involved tests on data elements
> resident in the CHUMS. Data values from the binder results were
> compared to the CHUMS to test for differences beyond a reasonable
> tolerance, the tolerance level chosen varied by data element. For
> example, on such items as appraised value, original mortgage amount
> and borrower social security number the tolerance was zero. For other
> items such as gift amount, total assets and downpayment the tolerance
> started as low as \$500. Every attempt was made to verify the accuracy
> all outliers above the tolerance.
>
> Outlier quality control was performed on the following data elements:

-   Closing Costs

-   Appraised Value

-   Cash Required to Close

-   Borrower Required Investment

-   Original Mortgage Amount

-   Monthly Mortgage Payment

-   Total Assets Available

-   Total Closing Costs

-   Borrower Closing Costs

-   Gross monthly Income

-   Contract Sales Price

-   Gift Amount(s)

> A test was also performed to determine if the amount of borrower
> reserves after closing was greater than \$1,000, which was our
> threshold for this outlier. In cases where reserves were greater than
> \$1,000 we conducted an additional review of the binder documentation
> to ensure that borrower assets were coded correctly. Quality control
> results revealed that borrower assets above \$1,000 were not that
> unusual since 4,754 of the binders did not show a gift to the borrower
> and therefore, larger asset amounts would be expected. Even some of
> the binders with gifts had assets above \$1,000. In several cases,
> gifts from relatives exceeded \$30,000. The average gift from a
> relative was close to \$4,200, while the average gift from a
> non-profit was slightly over \$3,700. The median gift from a relative
> was \$3,500 and the median gift from a non-profit was \$3,566.
>
> Corrections resulting from quality control reviews were entered in the
> appropriate binder data fields in the database.
>
> **III. Key Findings**
>
> **[Data Quality]{.underline}**
>
> Data quality for the most part was good in both the CHUMS and in the
> binders. Binder source documents (MCA Worksheet, HUD1 and Credit
> Report) were present in all but a few cases. There were a limited
> number of fields where the data were missing or where there were major
> discrepancies between the CHUMS and the binder. Missing data and
> discrepancies were associated with borrower assets and
> investment-related fields.
>
> ***Data quality issues are centered on borrower asset related
> fields...***

-   In the binder, supporting documents such as gift letters were
    frequently missing or incomplete. The lack of this documentation was
    a major driver in missing TINs for non-profits. The gift source was
    missing in only 84 binders.

-   In the CHUMS, most data elements were populated at least 98% of the
    time, however the TIN, gift amount and gift source fields were
    frequently missing. TINs were missing 74% of the time when the
    binder indicated the presence of a non-profit gift. Gift source and
    amount were missing in the CHUMS 28 % and 22%, respectively, when a
    gift was known to be present based upon the binder review.
    Conversely, a gift source and amount were present in both the CHUMS
    and the binder 72% of the time.

-   Data discrepancies between CHUMS and the binders occurred most often
    in the total assets available field and the borrower required
    investment field.

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-   It was difficult to determine the borrower's total investment in the
    transaction because there was no uniformity among lenders as to what
    to include in the total assets available field on the MCA worksheet.

> ***The CHUMS data quality was not greatly compromised by the
> limitation posed by the lack of multiple gift source fields, as the
> number of instances where more than one gift source was present is
> minimal...***

-   There were only 155 instances in the sample with multiple gift
    sources. However, when multiple gifts occur there is no systematic
    choice of which source code is reported by the lender to the CHUMS.

**[Non-Profit Gifts]{.underline}**

> Non-profit gifts represented 45% of the total sample. Over 81% of
> these non-profit gifts in the sample were provided in FY 2001 and FY
> 2002. Differences in the characteristics of the transaction were
> evident in the data between binders with non-profit gifts and gifts
> from relatives or the absence of a gift. For example, the average gift
> from a relative was 9% higher than the average gift from a non-profit.
>
> Nearly 29% of all gifts in the national sample were from a non-profit,
> while nearly 62% of gifts in the SMSA samples were from a non-profit.
> The majority of non-profit gifts were in FY 2001 and FY 2002.
>
> ***In the Indianapolis SMSA sample median house price and seller
> contribution tended to be higher when gifts from non-profits were
> present...***

-   Median house prices were 4.55% higher than when the gift came from a
    relative.

-   Seller Contributions on average represented 38% of the funds
    required to close the transaction, while only 29% was required of
    the seller if the gift came from a relative.

> ***When builders were involved, gifts from non-profits were more
> prevalent as compared to other gift sources. Furthermore, the
> proportion of gifts from non-profits was higher in the SMSA sample
> than in the national sample\...***

-   In cases where a builder was the seller, gifts from non-profits
    represented 31% of these cases while gifts from relatives
    represented only 12%. Furthermore, in the national sample
    non-profits provided gifts 19% of the time and relatives provided
    gifts 13% of the time. Compared to the SMSA samples these percentage
    were 40% and 11%, respectively.

-   Gifts from non-profits represented 62% of all gift sources in the
    SMSAs. The percentage of non-profit gifts in the national sample is
    29%.

> **IV. Intrinsic Data Summary**
>
> **[Description of Sample]{.underline}**
>
> In this section an overview of the basic characteristics of the sample
> is provided. We examined the distribution of the sample by origination
> year and geography. Also examined was a segmented view of the extent
> to which gifts from all sources, including family and non-profits,
> were represented in the sample.

![](media/image2.wmf){width="5.432677165354331in"
height="3.206299212598425in"}

> Concentrance coded 8,294 binders out of a total population of 8,877.
> As depicted in Figure 1 above, the binders were distributed almost
> evenly across the three Fiscal Years. This distribution is uniform
> across time and was based on insurance endorsement dates between
> October 1999 and September 2002. This timeframe coincides with the
> timeframe when non-profit downpayment gift programs were becoming an
> important component of FHA's single-family insurance business, and is
> recent enough so that HUD can track default and claim experience of
> these loans.
>
> In Figure 2 below, the distribution of case binders by HOC shows that
> the Atlanta HOC, which included the Atlanta (ATL) and Indianapolis
> (IND) SMSAs, comprised the largest number of binders in the sample. In
> the Atlanta HOC, 40% of the binders were part of the national sample
> and the remaining 60% were part of the SMSA sample. The second highest
> number of binders came from the Denver HOC, which included the Salt
> Lake City (SLC) SMSA. The split in the Denver HOC between the national
> sample and the SMSA sample it 54% and 46%, respectively. All of the
> binders in the Philadelphia and Santa Ana HOCs were part of the
> national sample.

[Figure 2]{.underline}

![](media/image3.wmf)

To meet the 8,000 coded binder goal, roughly a 10% "bad" case rate was
factored into the 8,877 binder request to the HOCs. In general, a bad
case is defined as any case missing critical documents, such as the
HUD-1 or MCA Worksheet, or binders requested but not provided by the
HOCs. As shown in Figure 3 below, the geographic distribution of coded
binders closely mirrored the targeted distribution. This distribution
reflects the sampling strategy and the availability of binders from the
various HOCs. For a variety of reasons, 583 binders out of the 8,877
requested were not available, or could not be provided in time to be
included in the audit. However, every HOC provided enough binders to
meet the minimum established sample requirements. Binders from the
Philadelphia and Santa Anna HOCs were received very early in the process
while binders from the Atlanta and Denver HOCs comprised the majority of
the binders reviewed and coded in the second half of the project.

> Coded percentages in the Philadelphia and Santa Anna HOCs are slightly
> higher than coded percentages in the other HOCs (105% and 107% percent
> of the coding target, respectively).

![](media/image4.wmf){width="6.224409448818897in"
height="4.054724409448819in"}

> Figure 4 below represents the extent to which homebuilders are the
> sellers of the properties within the sample. Builders as sellers
> indicate that the properties securing the mortgages are new
> construction. The Atlanta HOC had the largest number of binders
> (1,103), where builders were the sellers of the properties. This
> represents 63% of the total number of binders where the builder was
> also the seller of the property. The HOC with the next highest number
> of binders where builders were the sellers of the properties was
> Denver with 409 binders or 23%.
>
> ![](media/image5.wmf){width="5.625196850393701in"
> height="3.354724409448819in"}
>
> Figure 5 below examines the distribution of case binders with gifts by
> HOC. Binders with gifts in the sample totaled 3,574. The Atlanta HOC
> had the most binders with gifts. At 1,698 gifts this represents
> approximately 48% of the total number of binders with gifts in the
> sample. The next highest HOC, Denver, had 35% fewer gifts than
> Atlanta. Denver binders with gifts represented 31% of the total gifts
> in the sample. The Philadelphia and Santa Anna HOCs had the least
> number of gifts in the sample representing 11% and 10% of total gifts
> respectively.
>
> [Figure 5]{.underline}
>
> ![](media/image6.wmf){width="5.625196850393701in"
> height="3.354330708661417in"}

**[Spotlight on Gifts]{.underline}**

> An objective of the audit was to gather information on gift assistance
> provided to the borrower for downpayment and closing. This section
> highlights our findings relative to the characteristics of binders
> with gifts in the sample. Particular attention was given to binders
> where gifts were provided by non-profit organizations. Various
> comparisons are presented among binders where non-profit gifts are
> involved and binders where gifts are provided by relatives or where
> gifts were not present in the transaction.
>
> ![](media/image7.wmf)
>
> Figure 6 above, shows a comparison of the percentage of binders with
> gifts for downpayment by gift source in the national and SMSA samples.
> Each category is represented as a percentage of the total number of
> gifts in the sample. Gifts from relatives and non-profit organizations
> collectively accounted for 89% of all gifts. The composition of
> non-profit versus relative gifts was nearly the exact opposite in the
> National and SMSA samples. The gift from a relative category included
> 30% in the national sample and 14% in the SMSA sample. While in the
> non-profit gift category 30% of the gifts were in the SMSA sample and
> the remaining 15% were in the national sample. The remaining
> categories (sources 3 through 12, most of which are now obsolete due
> to changes made by HUD) are 8% of all gifts and missing gift source
> makes up the balance of about 3%. There were no real differences in
> the national versus SMSA sample for these categories.
>
> A Gift from a relative was a major source of funds for homeowners in
> the sample, and the average gift from a relative tended to be higher
> than the average gift from any other source. For example, the average
> gift amount from a relative was \$4,192 while the average gift from a
> non-profit was only \$3,723. The median gift from a relative was
> \$3,500 and the median gift from a non-profit was \$3,566. The other
> gift sources were small in number and thus average gift amount is not
> a material finding.
>
> The gift source descriptions used by HUD during the sampling period
> (October 1999 through September 2002) were as follows:
>
> **Gift Source Code** **Gift Source Description**

1.  Relative

2.  Non-profit, religious or community organization

3.  Government Assistance (Formerly Federal)

4.  State Program (now obsolete)

5.  Local Government (now obsolete)

6.  Employer

7.  Own Funds (now obsolete)

8.  Unsecured Loan (now obsolete)

9.  Seller contribution (now obsolete)

10. Other (now obsolete)

11. Premium Interest Rate (now obsolete)

12. Secondary Financing (now obsolete)

> 99 Missing
>
> As noted earlier, all the above gift sources are now obsolete with the
> exception of gift source 1 (Relative), gift source 2 (non-profit) and
> gift source 6 (Employer). Most binders in the audit contained only one
> gift source. There were only 155 binders that contained multiple gift
> sources.
>
> [Figure 7]{.underline}
>
> ![](media/image8.wmf)
>
> Figure 7 above shows the distribution of gifts by source, further
> segmented by the four samples, National and the three SMSAs. The chart
> reflects that gifts from non-profits are more prevalent in the SMSA
> samples than in the national sample. The ATL and IND SMSAs were
> included in the sample due to their higher than average population of
> loans with gifts from non-profits. The national sample had 1817
> binders with a gift. When compared to the entire universe of binders
> with gifts (see figure 6), the percentage of binders with gifts from a
> relative increased to 58% for the national sample, versus 44% for all
> binders. Gifts from non-profit organizations drop to 29% in the
> national sample, down from 45% for all loans. The Remaining Categories
> and Missing or Unknown was about the same as the total sample. Gifts
> from relatives and non-profit organizations account for 87% of all
> gifts in the national sample, compared to 89% for all loans.
>
> The ATL sample had 517 binders with gifts. Of these cases, gifts from
> relatives were 28% of the sample, whereas 58% of gifts in the national
> sample were from relatives. However, gifts from non-profit
> organizations were 63% of the total in the ATL sample, versus 29% in
> the national sample. The Remaining Categories and Missing or Unknown
> were lower than the other samples at, 7% and 2% respectively. Even
> though the gift source distribution changed dramatically, favoring
> non-profit organizations, both the non-profit and family gift
> categories still accounted for 91% of all gifts in the ATL sample,
> compared to 89% for all loans and 87% for the national sample.
>
> IND sample had 575 binders with gifts. Compared to the national
> sample, gifts from relatives decreased to 21% of the sample, down from
> 58% in the national sample and 28% in the ATL sample. As in the ATL
> sample, gifts from a non-profit organization increased dramatically in
> IND to 72% compared to the national sample at 29% and 63% in the ATL
> sample. The Remaining Categories and Missing or Unknown were lower
> than or about the same as the other samples at 6% and 1% respectively.
> Gifts from relatives and non-profit organizations were 93% of all
> gifts in the IND sample, compared to 89% for all loans, 87% for the
> national sample and 91% for the ATL sample.
>
> The SLC sample had 665 binders with gifts. Compared to the national
> sample, gifts from relatives were 38% of the sample, versus 58% in the
> national sample. When compared to the ATL and IND gifts from relatives
> reflected an increase of 10% and 17% respectively. Gifts from
> non-profit organizations represent 53% of the SLC sample, compared to
> the 29% in the national sample, 63% in the ATL sample and 72% in the
> IND sample. The Remaining Categories and Missing or Unknown were
> similar to the other samples at 7% and 2% respectively. Gifts from
> relatives and non-profit organizations were 91% of all gifts in the
> SLC sample, compared to 89% for all loans, 87% for the national
> sample, 91% for the ATL sample and 93% for the IND sample.
>
> [Figure 8]{.underline}

![](media/image9.wmf)

In Figure 8 above, we examined the distribution of relative and
non-profit gifts using the national sample only (excluding the SMSA
samples). The chart shows gifts from relatives are greater than gifts
from non-profits for all fiscal years. In 2002, the percentage of gifts
from the two sources evens out.

> [Figure 9]{.underline}
>
> ![](media/image10.wmf)
>
> An examination of the relative and non-profit gift sources, Figure 9,
> in the combined SMSA samples (i.e., ATL, SLC and IND) revealed a total
> of 1,757 binders that contain gifts. As Figure 9 above shows, gifts
> from non-profit organizations were the major gift source. Only in 2000
> did the family gift source exceed gifts from non-profits. Information
> on the individual SMSAs can be found in Appendix II.

[Figure 10]{.underline}

> ![](media/image11.wmf)
>
> The chart above, Figure 10, depicts differences in median house prices
> among binders in the national and SMSA samples by gift source. In the
> national sample, the data seems to indicate that if the borrower
> received a gift from a non-profit, the median house price was
> approximately 1% higher than the median house price for borrowers
> receiving a gift from a relative. However, in the SMSA sample if the
> borrower received the gift from a non-profit organization, the median
> house price was 1.27% lower than the median house price for borrowers
> receiving a gift from a relative.
>
> [Figure 11]{.underline}
>
> ![](media/image12.wmf)
>
> The chart above, Figure 11, shows the median house price for each SMSA
> by gift source. In the ATL and SLC samples, the difference in median
> house price for gift from a non-profit versus a gift from a relative
> was not significant. The difference was less that .5% in the ATL
> sample and a little over 1% in the SLC sample. However, in the IND
> sample, the median house price was 4.55% higher if the gift came from
> a non-profit versus a relative.
>
> ![](media/image13.wmf)
>
> As shown in Figure 12 above, non-profit organizations provided
> downpayment assistance in 31% of the binders involving a builder.
> Relatives provided assistance in 12% of these binders. In 51% of the
> binders no gift was provided and in 4% of the binders other sources
> provided the gift. Figure 12 also shows that the most used gift source
> is non-profit when a builder is involved.
>
> ![](media/image14.wmf){width="5.375196850393701in" height="3.75in"}
>
> Figure 13 above shows an implied calculation of the source of funds
> for closing. It was necessary to derive the borrower's total
> investment because there is no uniform representation of the
> borrower's total investment on either the MCA worksheet or the HUD-1.
> For example, lenders were adding gifts from relatives to the Borrower
> Assets Available in accordance with the HUD Handbook 4000.2 REV-2,
> however, many lenders were not reflecting these gifts separately on
> the MCA worksheet or reporting them via the CHUMS.
>
> If the gift came from a non-profit organization, the task of
> determining how much of the borrower's own funds were in the
> transaction is a little less problematic. All gift funds from a
> non-profit organization were funneled through an approved settlement
> agent and thus are less likely to be co-mingled with the borrowers own
> funds.
>
> When gifts or contributions came from other gift sources, it was not
> always possible to determine how the funds were used in the
> transaction. This is especially true when the funds came from the
> seller of the property. In some cases, the underwriter detailed what
> portion of the seller contribution covered customary closing costs and
> what portion was used to cover pre-paid items. In other instances, the
> seller contribution was listed on the HUD-1 or MCA Worksheet without
> any indication of how the funds would be used.
>
> The implied source of funds used in Figure 14 was calculated based on
> the findings of the binder review. The calculation is as follows:

The chart in Figure 13 illustrates what portion of the funds for closing
came from the borrowers' own funds and was not a gift or seller
contribution. An interesting observation is the correlation between the
source of gift funds and the extent of the contribution from the seller.
If the gift came from a relative, the seller contributed an average of
27% of the funds in the transaction and the borrower is contributed 14%
of his or her own funds. However, if the gift came from a non-profit or
government agency, the seller contributed an average of 36% of the funds
in the transaction while the borrowers' own funds represented 11% of the
transaction costs. The borrower portion of the funds in the transaction
was very similar in the two examples; however there was a noticeable
difference in the amount contributed by the seller in the two
situations.

One explanation for the difference in the seller contributions between
the two gift sources is that the average gift from a non-profit was
smaller than the average gift from a relative, thus requiring that the
borrower and/or others invest more funds into the transaction.
Anecdotally, when relatives were involved we observed gifts covered not
only the downpayment and closing costs but additional amounts targeted
to pay off debts and even for reserves.

Information on the individual samples can be found in Appendix IV.

> [Figure 14]{.underline}
>
> ![](media/image15.wmf)
>
> The information shown above in Figure 14 should be considered in the
> context of the information in Figure 13. Figure 14 shows seller
> contributions as a percentage of the sales price. While Figure 13
> reflects that the seller contribution as a percentage of the total
> cost of closing was higher in instances where non-profit gifts were
> present, the overall seller contribution as a percent of sales price
> reflected in Figure 14 rarely exceeded the 6% limitation, in
> accordance with HUD guidelines.

### V. Data Integrity

> [Missing Data Elements]{.underline}
>
> ![](media/image16.wmf)
>
> The chart above, Figure 15, represents data missing from the binder
> based on the number of instances where the data should have been
> present or instances where the FICO score was missing from the credit
> report.
>
> At the outset of the project, we coded binders even if they were
> missing critical documentation such as the HUD-1 or MCA Worksheet. If
> the binder was missing both documents it was deemed a "bad case" and
> was not coded. The HUD-1 and MCA Worksheet contain all of the data
> elements except for FICO score, which is found on the credit report.
>
> There are 48 data elements on the data entry form. New data elements
> include gifts from up to 3 additional sources and FICO credit score.
>
> [Tax Identification Numbers (TINs]{.underline})
>
> The data field limitations of the CHUMS system to accept only one gift
> amount and one gift source contributed only marginally to the large
> number of missing non-profit Tax Identification Numbers (TINs) in the
> CHUMS as the number of multiple gift sources was not substantial.
> However, to the extent that multiple gifts were present in the binder,
> the lender had to choose which gift amount and source to report. In
> many of these instances, the lender added the multiple gifts and
> reported them as if they were one gift from one source. If the lender
> chose to report a gift source other than the non-profit or government
> agency this eliminated the opportunity to report the TIN.
>
> As a result of the binder reviews, we found 1,012 gifts associated
> with downpayment assistance programs that were not reported via the
> CHUMS. In addition, there were many instances where gifts were
> reported via the CHUMS as non-profit gifts but without a TIN. However,
> TINs for many of these binders were located during the binder review.
> In many instances the TIN numbers were not specifically identified in
> the binders. However, for many of the larger non-profits the
> letterhead on the gift letters allowed us to match TINs amongst the
> binders. Therefore, our ability to populate the TIN in the database by
> name and program association substantially reduced the final number of
> missing TINs.
>
> Table 1 below shows the distribution of TINs missing from the binders
> by HOC. In the Philadelphia HOC over 35% of the TINs were missing from
> the binders when the gift source was identified as a non-profit. In
> the 109 binders in the Santa Anna HOC, where the gift source was
> identified as a non-profit, the TIN was missing in nearly 34% of the
> cases. In the two HOCs, Denver and Atlanta, with the largest number of
> gifts from non-profits, the percentage of missing TINs was 11.22% and
> 11.38 % respectively.
>
> [Table 1]{.underline}

+-----------------------+-------------+--------------+----------------+
| > **Sample**          | **Number of | **Number     | **Percent      |
|                       | Non-Profit  | Missing**    | Missing**      |
|                       | Gifts**     |              |                |
|                       |             | **TINs**     |                |
+-----------------------+-------------+--------------+----------------+
| **National Sample**   | **526**     | **102**      | **19.39**      |
+-----------------------+-------------+--------------+----------------+
| Atlanta HOC           | 246         | 28           | 11.38          |
+-----------------------+-------------+--------------+----------------+
| Denver HOC            | 98          | 11           | 11.22          |
+-----------------------+-------------+--------------+----------------+
| Philadelphia HOC      | 73          | 26           | 35.62          |
+-----------------------+-------------+--------------+----------------+
| Santa Ana HOC         | 109         | 37           | 33.95          |
+-----------------------+-------------+--------------+----------------+
| **SMSA Sample**       | **1088**    | **151**      | **13.88**      |
+-----------------------+-------------+--------------+----------------+
| ATL                   | 324         | 69           | 21.30          |
+-----------------------+-------------+--------------+----------------+
| IND                   | 414         | 19           | 4.59           |
+-----------------------+-------------+--------------+----------------+
| SLC                   | 350         | 63           | 18.00          |
+-----------------------+-------------+--------------+----------------+

> In Table 2 below, the percent of missing TINs in the CHUMS for loans
> with a non-profit gift source is higher than the percentages reflected
> in Table 1 for binder missing TINs by HOC. Santa Anna had only 109
> loans identified in the Binder with a non-profit gift source, and
> 73.39% of the time the TIN was not provided. Upon binder review, the
> number of TINs missing in Santa Anna cases dropped to 33.95%. A
> similar comparison for Atlanta reveals that while only 11.38% of the
> TINs were missing from the case binders, that rate increases to over
> 79% in the CHUMS. In the Philadelphia HOC, the TINs were missing in
> 35.62% of the binders and 91.78% of the CHUMS records. And in Denver,
> the TIN was missing in 11.22% of the binders compared to 83.67% of the
> CHUMS records.
>
> Although the SMSA samples had the highest number of non-profit gifts
> they had the lowest number of missing TINs in both the binder review
> and in the CHUMS.
>
> [Table 2]{.underline}

+-----------------------+-------------+--------------+----------------+
| **Sample**            | **Number of | **Number     | **Percent      |
|                       | Non-Profit  | Missing**    | Missing**      |
|                       | Gifts**     |              |                |
|                       |             | **TINs**     |                |
+-----------------------+-------------+--------------+----------------+
| **National Sample**   | **526**     | **425**      | **80.80**      |
+-----------------------+-------------+--------------+----------------+
| Atlanta HOC           | 246         | 196          | 79.68          |
+-----------------------+-------------+--------------+----------------+
| Denver HOC            | 98          | 82           | 83.67          |
+-----------------------+-------------+--------------+----------------+
| Philadelphia HOC      | 73          | 67           | 91.78          |
+-----------------------+-------------+--------------+----------------+
| Santa Ana HOC         | 109         | 80           | 73.39          |
+-----------------------+-------------+--------------+----------------+
| **SMSA Sample**       | **1088**    | **764**      | **70.22**      |
+-----------------------+-------------+--------------+----------------+
| ATL                   | 324         | 226          | 69.75          |
+-----------------------+-------------+--------------+----------------+
| IND                   | 414         | 241          | 58.21          |
+-----------------------+-------------+--------------+----------------+
| SLC                   | 350         | 297          | 84.56          |
+-----------------------+-------------+--------------+----------------+

> [FICO or Credit Scores]{.underline}
>
> The FICO score was the next highest missing data element. A missing
> FICO score is an indication of nontraditional credit use by the
> borrower applying for the loan. Although a credit report was present
> in the binder for the borrower, the credit repository or credit
> reporting service was unable to provide a credit score due to the
> limited number of trade lines reported for the borrower. Trade lines
> are types of credit such as credit cards, installment loans and
> mortgages. Usually, the borrower has to have at least three trade
> lines open for at least six months in order for the credit repository
> to produce a credit score.
>
> Two other conditions may have contributed to the absence of a credit
> score in the binder. One, if the borrower had or appeared to have had
> multiple social security numbers, the credit reporting service either
> reported credit scores for each social security number or did not
> report a credit score at all. This situation occurs quite often when
> there are family members with the same name such as a father and son,
> junior and senior. Or, two, if someone with the same or a similar name
> as the borrower was reported as deceased the credit reporting service
> may not have provided a credit score. In the majority of the binders
> that we reviewed without a credit score, the reason was insufficient
> credit or trade lines to generate a score. A number of the borrowers
> with limited credit were infrequent users of credit. There were
> letters in the binder stating that the borrower operated on a cash
> basis.
>
> [Figure 16]{.underline}
>
> ![](media/image17.wmf){width="6.5in" height="3.809842519685039in"}
>
> Figure 16 above, shows the distribution of missing FICO scores by HOC.
> Of the 1101 binders coded in the Santa Anna HOC the FICO score was
> missing from the credit report 6.54% of the time. In the Atlanta HOC
> the FICO score was missing 5.84% of the time, 7.62% of the time in
> Denver and 6.65% of the time in Philadelphia.
>
> [Figure 17]{.underline}
>
> ![](media/image18.wmf){width="6.0in" height="3.177165354330709in"}
>
> There is a marginal percentage difference shown in Figure 17 above for
> missing FICO scores by gift source. There is less than a one percent
> difference in missing FICO scores if the gift source was relative or
> non-profit. The FICO score was just as likely to be missing if the
> gift came from a relative or if the gift came from a non-profit.
>
> [Remaining Elements]{.underline}
>
> While the data elements "Gift Source", "Cash from Borrower" and
> "Settlement Charges to Seller" made the Top 5 Missing Data Elements in
> the binder review; the incidence of missing data for these elements
> actually represents a very small percentage. For instance, there were
> 3574 gifts and the gift source was identified in nearly 98% of the
> binders. Relative to the other two remaining elements, most of the
> missing data was due to incomplete or illegible HUD-1 forms, as we
> were instructed to collect this data from the HUD1.
>
> [Figure 18]{.underline}
>
> ![](media/image19.wmf)
>
> In Figure 18, the distribution of missing gift sources is shown by
> sample. In the national sample the gift source was missing in 3.03% of
> the 1,817 binders with gifts. In the ATL, the gift source was missing
> in 1.93% of the binders, 1.39% of the binders in IND and in 1.64% of
> the binders in SLC.
>
> [Table 3]{.underline}

  ---------------------------------------------- ------------ -------------
  **Criteria**                                   **Number**   **Percent**

  Cases where the CHUMS Gift #1                  1012         28.32%
  **[Source]{.underline}** not reported and                   
  Binder showed evidence of Gift Source                       

  Cases where the CHUMS Gift #1                  792          22.16%
  **[Amount]{.underline}** was not reported and               
  Binder showed evidence of Gift Amount                       
  ---------------------------------------------- ------------ -------------

> Approximately 43.09% of the 8294 binders reviewed had a gift. As shown
> in Table 3 above, the CHUMS system was missing gift source data that
> was found as a result of the binder review in 1012 cases. And the
> CHUMS system was missing a gift amount in 792 cases where the binder
> review had a gift amount. In 220 cases neither gift amounts nor
> sources were identified in the CHUMS. A gift source and amount was
> present in both the CHUMS and the binder in 72% of the cases.
>
> Of the 8294 binders in this analysis, 3574 had at least at least one
> gift. There were 155 binders with multiple gifts. The CHUMS is
> designed to collect information on only one gift. As a result of this
> limitation, lenders often combine gifts from different sources. If a
> borrower receives downpayment assistance from a non-profit
> organization and a gift from a relative the lender is likely to record
> the entire gift as either from the non-profit organization or from the
> relative. We found evidence of both situations during the file review.
>
> The database used by Concentrance for coding was designed to accept up
> to four gifts and gift sources. If a borrower received multiple gifts
> from the same source the gifts were combined. Only one binder had a
> gift from more than two different sources.

[Figure 19]{.underline}

> ![](media/image20.wmf)
>
> Figure 19 above provides a comparison between data in the CHUMS and
> data from the binder review for three data elements where the dollar
> amount in the binder was greater than the amount in the CHUMS. For
> gift amount, the primary gift recorded in the binder exceeded the
> CHUMS reported gift by between \$1,000 and \$5,000 in over 800
> instances. For assets available, the discrepancies were far less
> frequent in every dollar group. However, the binder review revealed
> significant problems with binder calculations of required investment.
> The binder calculations of borrower required investments exceeded
> CHUMS in 1332 instances or 16% of the total sample. Refer to Appendix
> III for additional detailed information on these three data elements.
>
> [Figure 20]{.underline}
>
> ![](media/image21.wmf)
>
> Shown in Figure 20 above is the comparison between data in the CHUMS
> and data from the binder review for three data elements where the
> amount in the binder was less than the amount in the Chums. For gift
> amounts, differences were infrequent. For assets available, however,
> the binder had an amount less than what was reported by the lender in
> the CHUMS 3,534 times, or roughly 43% of the total sample. In 91
> binders, the Borrower Required Investment was less than the amount in
> the CHUMS. Appendix III provides additional detailed information on
> these three data elements.

###### VI. Insights and Recommendations {#vi.-insights-and-recommendations .unnumbered}

> The data integrity in the CHUMS was good for most data elements. Five
> areas were identified where major differences between the CHUMS and
> the binder were observed. These areas all relate to the identification
> of required and available funds for downpayment and closing. The
> specific data elements where information was missing or different in
> the CHUMS were [total assets available,]{.underline} [gift
> source,]{.underline} [gift amount]{.underline}, [borrower required
> investment]{.underline} and [Non-profit TIN]{.underline}.
>
> Relative to the borrower assets and required investment fields,
> lenders did not calculate and report this information uniformly in the
> sample of case binders that were the subject of this audit. This leads
> us to believe that lenders were confused and needed further guidance
> in these areas. And, it should be noted that HUD has since issued
> guidance addressing these areas which can be found in the HUD Handbook
> 4155.1 Rev-5, released October, 2003. In addition, updated
> instructions for endorsing a case were issued as of 9/2003 which
> provided specific direction relative to the source documents to be
> used when transmitting information for endorsement (see Appendix IV).
> The binders Concentrance reviewed were originated prior to the
> issuance of these directives. While Concentrance found these
> instructions to be clear, HUD might consider conducting an audit of
> binders subject to the new instructions to determine if the
> instructions in the revised HUD Handbook 4155.1 Rev-5 and the
> instructions for endorsing a case have improved the quality of data
> transmitted by the lenders.
>
> For the binders subject to this audit, the absence of the above
> instructions may have contributed to the data integrity issues for the
> fields in question. However, other reasons are also possible.
> Following is a synopsis of other possible reasons and associated
> recommendation:
>
> **[Clarity of Source Documentation]{.underline}**
>
> [Description of Problem]{.underline}
>
> For nearly every binder reviewed, the source documents containing the
> fields to be transmitted were available in the file. However, multiple
> versions or heavily marked up MCA Worksheets increased the difficulty
> of discerning which version or numbers to used as the final or
> definitive source for the lender's transmission to the CHUMS.
>
> [Recommended Solution]{.underline}
>
> HUD might consider issuing a directive to lenders requiring that the
> MCA worksheet included in the case binder submitted to HUD, represent
> the "final" loan data as well as the data transmitted via the CHUMS.
> Furthermore, the worksheet should be completed fully, without erasers
> and cross-outs.
>
> **[Timing Impacts Accuracy]{.underline}**
>
> [Description of Problem]{.underline}
>
> Because the MCA worksheet in the binder is completed prior to closing
> and in many cases changes occur after the MCA worksheet is completed,
> our reliance on this MCA worksheet as a source for many of the data
> elements may help to explain the difference in these fields (e.g..,
> required investment, borrower assets, etc.,). The data in the CHUMS
> may in fact be correct. However, the source documentation used in the
> binder review may not be the same as the source documentation used to
> transmit the data to the CHUMS.
>
> [Recommended Solution]{.underline}
>
> HUD should conduct additional compliance reviews to determine if
> lenders are following issued directives for data integrity,
> documentation and transmission to HUD via the CHUMS. During the
> compliance review particular attention should be given to whether or
> not the lender has included in the binder a copy of the source
> documentation used as the basis for transmitting data to the CHUMS.
>
> The CHUMS should be enhanced to include data edits, tabulation logic
> and "if, then" test to improve the quality of the data at submission.
> This approach takes advantage of the electronic tools available to
> provide, track and check data in "real time". Specifically, changes
> for editing the following data elements are recommended as
> enhancements to CHUMS:

  -------------- ------------------- -------------------------------------
  **Data         **Issue**           **Recommendation**
  Element**                          

  Gift Amount    Gift amount         Add logic to the CHUMS that would
                 reported with no    prohibit a lender from entering a
                 gift source         gift amount without a gift source.

  Gift Source    Gift source         Add logic to the CHUMS that would
                 reported with no    prohibit a lender from entering a
                 gift amount         gift source without a gift amount.

  Non-profit TIN Gift Source 2       Add logic to the CHUMS that would
                 reported with no    prohibit a lender from entering a
                 TIN                 gift source of 2 without entering a
                                     TIN. In addition, instruct the lender
                                     to enter the non-profit gift source 2
                                     if multiple gifts are involved.
  -------------- ------------------- -------------------------------------

> **[Data Entry Errors]{.underline}**
>
> [Description of Problem]{.underline}
>
> In many instances lenders simply made mistakes in keying by
> transposing numbers. In other instances lenders made mathematical
> mistakes. These types of errors were resident in the CHUMS and the
> binders.
>
> [Recommended Solution]{.underline}
>
> Enhanced editing, if not already implemented, could be added to the
> CHUMS to correct these problems.
>
> **[Systemic Issues]{.underline}**
>
> **Total Assets Available**
>
> [Description of Problem]{.underline}
>
> The total assets reported in the Binder were less than the total
> assets in the CHUMS in 43% of the sample (see Figure 20).
>
> [Recommended Solution]{.underline}
>
> Provide clarification to mortgagees on the definition of total assets
> on the MCA Worksheet (12 J) and what is expected to be transmitted to
> the CHUMS (e.g., verified assets only or all liquid assets on the
> application).
>
> **Note:** If the loan origination system (LOS) is the source of the
> transmission to the CHUMS, the LOS in some cases may automatically
> transmit all liquid assets versus verified liquid assets.
>
> **Borrower Required Investment**
>
> [Description of the Problem]{.underline}
>
> The binder review revealed a greater required investment from the
> borrower than the amount transmitted via the CHUMS in 16% of the
> sample.
>
> [Recommended Solution]{.underline}
>
> Further analysis is required to determine the cause of this
> difference. Interviews with lenders are recommended to gain further
> insight as to the lenders process for determining the borrower
> required investment. After determining the reason for the
> discrepancies recommendations can be formulated.
>
> **[Other Observations]{.underline}**
>
> **[Seller Contributions]{.underline}**
>
> [Description of Problem]{.underline}
>
> A preliminary analysis of the binder data suggests that there may be a
> correlation between gift source and the amount contributed by the
> seller. In both the total sample and the IND sample, we found a 9
> percentage point difference between the dollar amounts contributed to
> the transaction by the seller if the borrower received a gift from a
> relative versus a gift from a non-profit. For these transactions, the
> seller contribution rarely exceeded 6% of the sales price however; the
> total dollar contribution from the seller was greater than when gifts
> were provided by relatives.
>
> [Recommended Solution]{.underline}
>
> Additional research, including interviews with some of the parties in
> the transaction, should be conducted to determine if this observation
> is the result of ordinary market conditions or other factors.
>
> **[Median House Price]{.underline}**
>
> [Description of Problem]{.underline}
>
> The median house price was over 4% higher in the IND sample where
> borrowers received gifts from non-profits versus cases in which
> borrowers received gifts from relatives. All other samples showed no
> material difference in median house prices based on gift source. (See
> Figure 10 and 11 and Appendix IV)
>
> [Recommended Solution]{.underline}
>
> Additional research should be conducted to determine if the seller
> contributions and gifts from non-profits contribute to the noted
> differences in the median house price in the IND sample. Attention
> should also be given to instances where the seller was a builder. Some
> thought should be given to the possibility that these differences
> could be an indication that the sales price for the property was
> adjusted to recover some, or all of the seller contribution including
> the required donations to the non-profit.

######### Appendix I

> **Data Entry Form Guide**
>
> *Data Entry Form Guide*

+---------+-----------+----------------------+------------------------+
| Data    | Source    | Description          | Special Audit          |
| Element | Document  |                      | Rationale and          |
|         |           |                      | Instructions           |
+---------+-----------+----------------------+------------------------+
| General |           |                      |                        |
| Info    |           |                      |                        |
| rmation |           |                      |                        |
+---------+-----------+----------------------+------------------------+
| Case    | Binder    | A unique 10-digit    | Analysts were          |
| number  |           | identifier for each  | instructed to check    |
|         |           | loan assigned by     | the case number in the |
|         |           | HUD.                 | CHUMS field for a      |
|         |           |                      | match with binder      |
|         |           |                      | data.                  |
+---------+-----------+----------------------+------------------------+
| Case    | Data      | 0 -- default (good   | Initially, analysts    |
| Status  | Entry     | case)                | were instructed not to |
|         | Fo        |                      | code binders with      |
|         | rm/Access | 1 -- file is missing | status 1, 2 or 3.      |
|         | Database  | from folder          | Subsequently, based on |
|         |           |                      | the small number of    |
|         |           | 2 -- Wrong file in   | bad cases with this    |
|         |           | folder (case number  | status the GTM decided |
|         |           | mismatch)            | not to code binders    |
|         |           |                      | with status 1 through  |
|         |           | 3 -- HUD-1 and MCA   | 5.                     |
|         |           | Worksheet are BOTH   |                        |
|         |           | missing              |                        |
|         |           |                      |                        |
|         |           | 4 -- HUD-1 only is   |                        |
|         |           | missing              |                        |
|         |           |                      |                        |
|         |           | 5 -- MCA Worksheet   |                        |
|         |           | only is missing      |                        |
+---------+-----------+----------------------+------------------------+
| Data    | Data      | A two digit          |                        |
| Entry   | Entry     | designation for      |                        |
| O       | Fo        | Concentrance         |                        |
| perator | rm/Access | employees coding and |                        |
| ID      | Database  | keying data into the |                        |
|         |           | database             |                        |
+---------+-----------+----------------------+------------------------+
| Data    | Data      | Complete or          |                        |
| Entry   | Entry     | Incomplete (i.e.,    |                        |
| Status  | Fo        | skipped, or all      |                        |
|         | rm/Access | fields do not have   |                        |
|         | Database  | values)              |                        |
+---------+-----------+----------------------+------------------------+
| Time    | Data      | The time the audit   |                        |
|         | Entry     | database             |                        |
|         | Fo        | automatically stamps |                        |
|         | rm/Access | the file as          |                        |
|         | Database  | complete.            |                        |
+---------+-----------+----------------------+------------------------+
| Today's | Data      | The date the audit   |                        |
| Date    | Entry     | database             |                        |
|         | Fo        | automatically stamps |                        |
|         | rm/Access | the file as          |                        |
|         | Database  | complete.            |                        |
+---------+-----------+----------------------+------------------------+
| C       | Data      | Place for            |                        |
| omments | Entry     | explanation or       |                        |
|         | Fo        | comment on any       |                        |
|         | rm/Access | binder field in the  |                        |
|         | Database  | system.              |                        |
+---------+-----------+----------------------+------------------------+
| HUD-1   |           |                      |                        |
+---------+-----------+----------------------+------------------------+
| B       | HUD-1     | Person listed as the | The data analysts were |
| orrower |           | borrower.            | instructed to          |
| Name    | Item D    |                      | distinguish between    |
|         |           |                      | the borrower and       |
|         |           |                      | co-borrower comparing  |
|         |           |                      | the information on     |
|         |           |                      | borrower application   |
|         |           |                      | with the HUD-1.        |
+---------+-----------+----------------------+------------------------+
| Name of | HUD-1     | Person or entity     |                        |
| Seller  |           | selling the property |                        |
|         | Item E    |                      |                        |
+---------+-----------+----------------------+------------------------+
| Is the  | HUD-1     | Based on the name    | Analysts were          |
| Seller  |           | listed in Item E and | cautioned that in      |
| of the  | Item E    | other documentation  | instances where the    |
| P       |           | in the file a        | property was new       |
| roperty |           | determination is     | construction there was |
| a       |           | made if the seller   | an increased           |
| Homeb   |           | of the property is a | likelihood that the    |
| uilder? |           | builder.             | seller was also the    |
| Yes or  |           |                      | homebuilder.           |
| No      |           |                      |                        |
+---------+-----------+----------------------+------------------------+

+---------+-----------+----------------------+------------------------+
| Data    | Source    | Description          | Special Audit          |
| Element | Document  |                      | Rationale and          |
|         |           |                      | Instructions           |
+---------+-----------+----------------------+------------------------+
| Set     | HUD-1     | The date the         | Analysts were          |
| tlement |           | closing/settlement   | instructed to use the  |
| Date    | Item I    | agent collected      | settlement date and    |
|         |           | documents, signed by | not the disbursement   |
|         |           | the buyer and seller | date. If there were    |
|         |           | that complete the    | multiple HUD-1s the    |
|         |           | purchase of the      | latest or copy marked  |
|         |           | property.            | "Final" should be      |
|         |           |                      | used.                  |
+---------+-----------+----------------------+------------------------+
| C       | HUD-1     | The price agreed     | Analysts were          |
| ontract |           | upon by the seller   | instructed to check    |
| sale    | Line 101  | and buyer in the     | the Sales Contract if  |
| price   |           | sales contract as    | the HUD-1 and MCA      |
|         |           | consideration for    | Worksheet have         |
|         |           | sale of the          | different numbers and  |
|         |           | property.            | use the number that    |
|         |           |                      | matches the sales      |
|         |           |                      | contract.              |
+---------+-----------+----------------------+------------------------+
| Deposit | HUD-1     | Money provided prior | Analysts were          |
| or      |           | to closing by, or on | instructed to look for |
| Earnest | Line 201  | behalf of the buyer  | a cancelled check or   |
| Money   |           | to reduce the        | notations on the sales |
|         |           | contract sales       | contract if the        |
|         |           | price, prepaids and  | deposit or earnest     |
|         |           | closing costs.       | money amount is        |
|         |           |                      | missing. If an earnest |
|         |           |                      | money deposit is       |
|         |           |                      | located enter that     |
|         |           |                      | amount in the          |
|         |           |                      | database.              |
+---------+-----------+----------------------+------------------------+
| O       | HUD-1     | The balance owed by  | Analysts were          |
| riginal |           | the borrower prior   | instructed to look on  |
| M       | Line 202  | to the application   | the note and mortgage  |
| ortgage |           | of any payments.     | if the original        |
| Amount  |           |                      | mortgage amount was    |
|         |           |                      | missing. And, if the   |
|         |           |                      | mortgage amount is the |
|         |           |                      | same on both documents |
|         |           |                      | enter that amount in   |
|         |           |                      | the database.          |
+---------+-----------+----------------------+------------------------+
| Cash    | HUD-1     | The difference       | Analysts were          |
| from    |           | between any earnest  | instructed to:         |
| B       | Line 303  | money, prepaids and  |                        |
| orrower |           | mortgage(s) the      | a)  Conduct a more     |
|         |           | borrower is          |     extensive review   |
|         |           | responsible for at   |     if the cash from   |
|         |           | closing.             |     the borrower is    |
|         |           |                      |     substantially      |
|         |           |                      |     higher than the    |
|         |           |                      |     "Required          |
|         |           |                      |     Investment".       |
|         |           |                      |                        |
|         |           |                      | b)  Ensure that a      |
|         |           |                      |     mortgage is listed |
|         |           |                      |     on Line 202. If no |
|         |           |                      |     mortgage amount is |
|         |           |                      |     listed on Line     |
|         |           |                      |     202, check the     |
|         |           |                      |     binder to see if   |
|         |           |                      |     there is another   |
|         |           |                      |     completed HUD-1.   |
|         |           |                      |     If Line 202 is     |
|         |           |                      |     completed on the   |
|         |           |                      |     second HUD-1,      |
|         |           |                      |     enter any cash     |
|         |           |                      |     from the borrower  |
|         |           |                      |     in the database.   |
+---------+-----------+----------------------+------------------------+
| Set     | HUD-1     | Normal and customary | Analysts were          |
| tlement |           | charges to the       | instructed to include  |
| charges | Line 502  | seller plus any      | the amount on Line 502 |
| to      |           | other amounts the    | even if it includes    |
| Seller  |           | seller agrees to     | paying off mortgages.  |
|         |           | pay. The seller is   | If the right side of   |
|         |           | usually limited to   | the HUD-1 is blank,    |
|         |           | paying up to 6% of   | and there is only one  |
|         |           | the sales price as a | HUD-1 in the binder,   |
|         |           | seller contribution. | "999999" was chosen to |
|         |           |                      | indicate the           |
|         |           |                      | information is         |
|         |           |                      | missing.               |
+---------+-----------+----------------------+------------------------+

+---------+-----------+----------------------+------------------------+
| Data    | Source    | Description          | Special Audit          |
| Element | Document  |                      | Rationale and          |
|         |           |                      | Instructions           |
+---------+-----------+----------------------+------------------------+
| MCA     |           |                      |                        |
| Wo      |           |                      |                        |
| rksheet |           |                      |                        |
| (4/95   |           |                      |                        |
| or      |           |                      |                        |
| 10/98   |           |                      |                        |
| v       |           |                      |                        |
| ersion) |           |                      |                        |
+---------+-----------+----------------------+------------------------+
| B       | MCA       | The primary          | Analysts were          |
| orrower | Worksheet | borrower's Social    | instructed to check    |
| SSN     |           | Security Number      | the Credit Report and  |
|         | Line 2a.  |                      | make sure the SSN      |
|         | /2a.      |                      | matches the borrower's |
|         |           |                      | name.                  |
+---------+-----------+----------------------+------------------------+
| P       | MCA       | The indicated value  | Analysts were          |
| roperty | Worksheet | by sales comparison  | instructed to locate   |
| Ap      |           | approach (i.e.,      | the property value on  |
| praised | Line 4.   | compared to other    | the appraisal if the   |
| Value   | /4.       | properties in the    | information was        |
|         |           | sales market.        | missing from the MCA   |
|         |           |                      | Worksheet. The         |
|         |           |                      | appraised value by     |
|         |           |                      | sales comparison       |
|         |           |                      | approach was the only  |
|         |           |                      | value entered in the   |
|         |           |                      | database.              |
+---------+-----------+----------------------+------------------------+
| Total   | MCA       | Normal and customary | Analysts were          |
| Closing | Worksheet | costs paid to third  | instructed that it is  |
| Costs   |           | parties to transfer  | not unusual for the    |
|         | Line 5.a. | title to the         | closing cost to be     |
|         | /5a.      | property from the    | zero if there is a     |
|         |           | seller to the buyer. | large enough seller    |
|         |           |                      | contribution to cover  |
|         |           |                      | all closing costs.     |
+---------+-----------+----------------------+------------------------+
| Closing | MCA       | The portion of the   | Same as above.         |
| Costs   | Worksheet | closing costs not    |                        |
| paid by |           | paid by the seller.  |                        |
| B       | Line 5c.  |                      |                        |
| orrower | /5c.      |                      |                        |
+---------+-----------+----------------------+------------------------+
| C       | MCA       | The price agreed     | Analysts were          |
| ontract | Worksheet | upon by the seller   | instructed to check    |
| Sales   |           | and buyer in the     | the Sales Contract if  |
| Price   | Line 10a. | sales contract as    | the sales price is     |
|         | /10a.     | consideration for    | missing. Enter the     |
|         |           | sale of the          | sales price as         |
|         |           | property.            | indicated on the sales |
|         |           |                      | contract in the        |
|         |           |                      | database.              |
+---------+-----------+----------------------+------------------------+

+---------+-----------+----------------------+------------------------+
| Data    | Source    | Description          | Special Audit          |
| Element | Document  |                      | Rationale and          |
|         |           |                      | Instructions           |
+---------+-----------+----------------------+------------------------+
| R       | MCA       | 4/95 Version - Line  | Analyst were           |
| equired | Worksheet | 10h: Required        | instructed to record   |
| Inv     |           | Investment is        | what's on the form -   |
| estment | Line      | 10e-10g, or Mortgage | do not calculate!      |
| from    | 10h/12a   | Basis (10e) minus    |                        |
| b       |           | Mortgage (without    |                        |
| orrower |           | UFMIP) (10g). The    |                        |
|         |           | Mortgage Basis is    |                        |
|         |           | 10a+b+c-10d), or     |                        |
|         |           | Contract Sales Price |                        |
|         |           | (10a) plus Repairs   |                        |
|         |           | and Improvements     |                        |
|         |           | (10b) plus Borrower  |                        |
|         |           | Closing Costs (from  |                        |
|         |           | Line 5c) (10c) minus |                        |
|         |           | Sales Concessions    |                        |
|         |           | (10d). The Mortgage  |                        |
|         |           | (without UFMIP)      |                        |
|         |           | (10g) is the lesser  |                        |
|         |           | of 10f (1) or 10f    |                        |
|         |           | (2). Line 10f (1) is |                        |
|         |           | derived by           |                        |
|         |           | multiplying Mortgage |                        |
|         |           | Basis (line10e) by   |                        |
|         |           | 97/95/90%, if        |                        |
|         |           | \$50,000 or less,    |                        |
|         |           | multiply by 97%.     |                        |
|         |           | Line 10f (2) is      |                        |
|         |           | derived by           |                        |
|         |           | multiplying the      |                        |
|         |           | Value (line 4) by    |                        |
|         |           | 97.75%, if \$50,000  |                        |
|         |           | or less, multiply by |                        |
|         |           | 98.75%.              |                        |
|         |           |                      |                        |
|         |           | 10/98 Version --     |                        |
|         |           | Line 12a: Minimum    |                        |
|         |           | Downpayment is       |                        |
|         |           | 10c-11d, or          |                        |
|         |           | Unadjusted           |                        |
|         |           | Acquisition (10c)    |                        |
|         |           | minus Mortgage       |                        |
|         |           | Amount (11d). The    |                        |
|         |           | Unadjusted           |                        |
|         |           | Acquisition (10c) is |                        |
|         |           | Contract Sales Price |                        |
|         |           | (10a) plus Borrower  |                        |
|         |           | Paid Closing Costs   |                        |
|         |           | (from 5c) (10b). The |                        |
|         |           | Mortgage Amount      |                        |
|         |           | (11d) is Mortgage    |                        |
|         |           | Basis (11c) times    |                        |
|         |           | LTV Factor 97% or    |                        |
|         |           | less). Mortgage      |                        |
|         |           | Basis is Lesser of   |                        |
|         |           | Sales Price (10a) or |                        |
|         |           | Value (from Line 4)  |                        |
|         |           | plus Required        |                        |
|         |           | Adjustments (+/-)    |                        |
|         |           | (11b).               |                        |
+---------+-----------+----------------------+------------------------+

+---------+-----------+----------------------+------------------------+
| Data    | Source    | Description          | Special Audit          |
| Element | Document  |                      | Rationale and          |
|         |           |                      | Instructions           |
+---------+-----------+----------------------+------------------------+
| B       | MCA       | 4/95 Version -- Line |                        |
| orrower | Worksheet | 10m: Total           |                        |
| Costs   |           | Requirements is the  |                        |
| at      | Line      | sum of lines         |                        |
| Closing | 10m/12g   | 10h-10l, or Required |                        |
|         |           | Investment (10h)     |                        |
|         |           | plus Discounts (10i) |                        |
|         |           | plus Prepayable      |                        |
|         |           | expenses (10 j) plus |                        |
|         |           | MIP paid in cash (10 |                        |
|         |           | k) plus Non-Realty   |                        |
|         |           | and other items      |                        |
|         |           | (10l)                |                        |
|         |           |                      |                        |
|         |           | 10/98 Version --     |                        |
|         |           | Line (12g): Total    |                        |
|         |           | Cash to Close is the |                        |
|         |           | Sum of 12a-12f, or   |                        |
|         |           | Minimum Downpayment  |                        |
|         |           | (12a) plus Prepaid   |                        |
|         |           | Expenses (12b) plus  |                        |
|         |           | Discount Points      |                        |
|         |           | (12c) plus           |                        |
|         |           | Repairs/Improvements |                        |
|         |           | (Non-                |                        |
|         |           |                      |                        |
|         |           | Financeable) (12d)   |                        |
|         |           | plus Upfront         |                        |
|         |           |                      |                        |
|         |           | MIP Paid in Cash     |                        |
|         |           | (12e) plus Non-      |                        |
|         |           |                      |                        |
|         |           | Realty and Other     |                        |
|         |           | Items (12f).         |                        |
+---------+-----------+----------------------+------------------------+
| Amount  | MCA       | 4/95 Version -- Line | Analysts were          |
| Paid    | Worksheet | 10n: Amount Paid in  | instructed to count    |
|         |           | Earnest Money or     | sweat equity as a gift |
|         | Line      | other contributions  | if someone other than  |
|         | 10n/12h   | such as Sweat        | the borrower performed |
|         |           | Equity.              | the work.              |
|         |           |                      |                        |
|         |           | 10/98 Version --     |                        |
|         |           | Line (12h): Amount   |                        |
|         |           | Paid (Earnest Money, |                        |
|         |           | etc).                |                        |
+---------+-----------+----------------------+------------------------+
| Amount  | MCA       | 4/95 Version - Cash  | Analysts were advised  |
| Paid    | Worksheet | or Other (explain).  | that the "Amount Paid" |
| Source  |           | 1 = Cash, 2 =        | source is generally    |
|         | Line      | Premium Rate, 3-6    | cash. If the lender is |
|         | 10n/12h   | defined as needed    | providing a gift       |
|         |           |                      | through an increase in |
|         |           | 10/98 Version --     | the interest rate      |
|         |           | Same as 4/95 Version | (i.e., Premium Rate)   |
|         |           |                      | it may be listed on    |
|         |           |                      | the HUD-1 as a lender  |
|         |           |                      | credit.                |
+---------+-----------+----------------------+------------------------+
| Amount  | MCA       | 4/95 Version --      | Analysts were advised  |
| To Be   | Worksheet | Amount coming from   | that some gifts might  |
| Paid in |           | third party sources  | be Secondary financing |
|         | Line      | such as secondary    | (i.e., a grant with    |
|         | 10        | financing, etc.      | conditions). If the    |
|         | o/Defined |                      | gift was a grant, gift |
|         | as needed | 10/98 Version --     | source 12 was used and |
|         |           | Same as 4/95 Version | the gift amount was    |
|         |           |                      | entered in one of the  |
|         |           |                      | binder gift amount     |
|         |           |                      | fields.                |
+---------+-----------+----------------------+------------------------+
| Amount  | MCA       | 4/95 Version -- Cash | Since the 10/98        |
| to be   | Worksheet | or Other. 1 = Cash,  | version of the         |
| Paid in |           | 2 = Premium Rate, 3  | worksheet did not      |
| Source  | Line      | -6 defined as needed | contain a line item    |
|         | 10        |                      | for secondary          |
|         | o/Defined | 10/98 Version - Same | financing, the         |
|         | as needed | as 4/95 Version      | database was           |
|         |           |                      | programmed to accept   |
|         |           |                      | code 3 for secondary   |
|         |           |                      | financing.             |
+---------+-----------+----------------------+------------------------+

+---------+-----------+----------------------+------------------------+
| Data    | Source    | Description          | Special Audit          |
| Element | Document  |                      | Rationale and          |
|         |           |                      | Instructions           |
+---------+-----------+----------------------+------------------------+
| Assets  | MCA       | 4/95 Version -- Line | Analysts were advised  |
| Av      | Worksheet | 10p: Liquid Assets   | that it is not unusual |
| ailable |           | the borrower has     | for assets available   |
|         | Line      | available to meet    | to be zero as the      |
|         | 10p/12j   | the Cash To Close    | borrower may have      |
|         |           | requirement.         | received a gift large  |
|         |           |                      | enough to cover all    |
|         |           | 10/98 Version --     | costs.                 |
|         |           | Line 12j: Same as    |                        |
|         |           | 10/95 Version        | They were also         |
|         |           |                      | instructed to code     |
|         |           |                      | what was on the MCA    |
|         |           |                      | Worksheet, even if the |
|         |           |                      | amount shown was zero. |
|         |           |                      | However, if the field  |
|         |           |                      | was "blank" the        |
|         |           |                      | analysts were told to  |
|         |           |                      | enter "999999999" to   |
|         |           |                      | indicate the data was  |
|         |           |                      | missing.               |
+---------+-----------+----------------------+------------------------+
| Gross   | MCA       | 4/95 Version -- Line | In cases where the     |
| Monthly | Worksheet | 11f: Gross Monthly   | gross monthly income   |
| Income  |           | Income is the        | is missing, analysts   |
|         | Line      | borrower's total     | were instructed to     |
|         | 11f/13f   | monthly income       | locate the application |
|         |           | without any          | and enter the total    |
|         |           | deductions.          | amount of income for   |
|         |           |                      | all borrowers shown on |
|         |           | 10/98 Version --     | the application in the |
|         |           | Line 13f: Same as    | database.              |
|         |           | 10/95 Version        |                        |
+---------+-----------+----------------------+------------------------+

+---------+-----------+----------------------+------------------------+
| Data    | Source    | Description          | Special Audit          |
| Element | Document  |                      | Rationale and          |
|         |           |                      | Instructions           |
+---------+-----------+----------------------+------------------------+
| Total   | MCA       | 4/95 Version -- Line | Analysts were advised  |
| M       | Worksheet | 11f: Total Mortgage  | that if there were     |
| ortgage |           | Payment is 13a-13g,  | handwritten changes to |
| Payment | Line      | or Principal &       | the typed numbers,     |
|         | 13h/15h   | Interest -- 1^st^    | calculators are to be  |
|         |           | Mortgage (13a) plus  | used to verify the     |
|         |           | Monthly MIP (13b)    | correct total.         |
|         |           | plus Homeowners      |                        |
|         |           | Association fee      |                        |
|         |           | (13c) plus Ground    |                        |
|         |           | Rent (13d) plus      |                        |
|         |           | Principal & Interest |                        |
|         |           | --2^nd^ Mortgage     |                        |
|         |           | (13e) plus Hazard    |                        |
|         |           | Insurance (13f) plus |                        |
|         |           | Taxes & Special      |                        |
|         |           | Assessments (13g).   |                        |
|         |           |                      |                        |
|         |           | 10/98 Version --     |                        |
|         |           | Line 15h: Same as    |                        |
|         |           | 10/95 Version        |                        |
+---------+-----------+----------------------+------------------------+
| Total   | MCA       | 4/95 Version -- Line | Analysts were advised  |
| Fixed   | Worksheet | 13j: Total Fixed     | that if there were     |
| Payment |           | Payment is 13h+13i,  | handwritten changes to |
|         | Line      | or Total Mortgage    | the typed numbers,     |
|         | 13j/15j   | Payment plus         | calculators are to be  |
|         |           | Recurring Expenses   | used to verify the     |
|         |           | (from Line 12d).     | correct total.         |
|         |           | Recurring Expenses   |                        |
|         |           | are all debts and    |                        |
|         |           | obligations.         |                        |
|         |           |                      |                        |
|         |           | 10/98 Version --     |                        |
|         |           | Line 15j: Same as    |                        |
|         |           | 10/95 Version        |                        |
+---------+-----------+----------------------+------------------------+
| Total   | MCA       | 4/95 Version -- Line | Analysts were advised  |
| Monthly | Worksheet | 12d: Total Monthly   | that if there were     |
| P       |           | Payment is 12a-12c,  | handwritten changes to |
| ayments | Line      | or Total Installment | the typed numbers,     |
| (non-mo | 12d/14d   | Debt plus Child      | calculators are to be  |
| rtgage) |           | Support, etc. plus   | used to verify the     |
|         |           | Other.               | correct total.         |
|         |           |                      |                        |
|         |           | 10/98 Version --     |                        |
|         |           | Line 14d: Same as    |                        |
|         |           | 10/95 Version        |                        |
+---------+-----------+----------------------+------------------------+
| Total   | MCA       | An amount            | In some cases the      |
| Seller  | Worksheet | contributed by the   | total seller           |
| Contr   |           | seller to cover      | contribution may be in |
| ibution | Line      | borrower costs,      | two parts, 6% towards  |
|         | A3/A3     | including            | closing costs and a    |
|         |           | downpayment as part  | separate amount toward |
|         |           | of the gift          | downpayment. Analysts  |
|         |           | downpayment program. | were advised to ensure |
|         |           |                      | that contributions and |
|         |           |                      | gifts are              |
|         |           |                      | distinguished and      |
|         |           |                      | coded appropriately.   |
+---------+-----------+----------------------+------------------------+
| Tax     | MCA       | The agency's federal | Analysts were          |
| Identif | Worksheet | Identification       | instructed not to      |
| ication |           | Number issued by the | enter not applicable   |
| Number  | Line D    | Internal Revenue     | (i. e.,"888888888") if |
| of      |           | Service (IRS).       | the gift source is 2.  |
| Non     |           |                      | The TIN is always      |
| -profit |           |                      | available or missing   |
| Agency  |           |                      | (i.e., "999999999").   |
+---------+-----------+----------------------+------------------------+
| New     |           |                      |                        |
| Fields  |           |                      |                        |
+---------+-----------+----------------------+------------------------+
| Gift1   | MCA       | An amount given to   | Analyst were           |
| Amount  | Worksheet | the borrower for     | instructed to          |
|         | and/or    | downpayment and      | determine the gift     |
|         | Gift      | closing costs.       | amount by locating and |
|         | Letter    |                      | examining in order of  |
|         |           |                      | priority the MCA       |
|         |           |                      | Worksheet, HUD-1, Gift |
|         |           |                      | Letters or             |
|         |           |                      | Application.           |
+---------+-----------+----------------------+------------------------+

+---------+-----------+----------------------+------------------------+
| Data    | Source    | Description          | Special Audit          |
| Element | Document  |                      | Rationale and          |
|         |           |                      | Instructions           |
+---------+-----------+----------------------+------------------------+
| Gift1   | MCA       | The source of funds  | Analysts were          |
| Source  | Worksheet | given to the         | instructed to locate   |
|         | and/or    | borrower for         | and determine the      |
|         | Gift      | downpayment and      | source using the gift  |
|         | Letter    | closing costs.       | letters, if available. |
|         |           |                      | If the gift was from a |
|         |           |                      | non-profit, the        |
|         |           |                      | analysts were told to  |
|         |           |                      | enter the gift amount  |
|         |           |                      | in the binder gift1    |
|         |           |                      | amount field and enter |
|         |           |                      | the binder1 source     |
|         |           |                      | field in the database. |
|         |           |                      | In instances where no  |
|         |           |                      | gift letter was        |
|         |           |                      | available, analysts    |
|         |           |                      | were advised to review |
|         |           |                      | the remarks section of |
|         |           |                      | the MCA Worksheet for  |
|         |           |                      | references to the gift |
|         |           |                      | source. Finally, if no |
|         |           |                      | gift source was found  |
|         |           |                      | "999999" was used to   |
|         |           |                      | reflect that the gift  |
|         |           |                      | source was missing.    |
+---------+-----------+----------------------+------------------------+
| Name of | MCA       | The non-profit or    | Analyst were           |
| non     | Worksheet | govt Agency          | instructed to look at  |
| -profit | and/or    | providing the gift   | the letterhead and     |
| or Govt | Gift      | or acting as the     | signature block as a   |
| Agency  | Letter    | conduit between the  | source for the name of |
|         |           | borrower and the     | the non-profit         |
|         |           | provider of the      | community organization |
|         |           | gift.                | providing the gift and |
|         |           |                      | compare the name found |
|         |           |                      | to the list in the     |
|         |           |                      | lookup table on the    |
|         |           |                      | system.                |
+---------+-----------+----------------------+------------------------+
| Program | MCA       | The name of the      | Analysts were          |
| Name    | Worksheet | program the          | instructed to read the |
| used by | and/or    | non-profit or govt   | remarks section of the |
| Agency  | Gift      | Agency is using to   | MCA Worksheet and if   |
|         | Letter    | provide the gift.    | available the gift     |
|         |           |                      | letter to determine    |
|         |           |                      | program or agency.     |
+---------+-----------+----------------------+------------------------+
| Gift2   | MCA       | Same description as  | Same instructions as   |
| Amount  | Worksheet | Gift1 Amount         | Gift1 Amount           |
|         | and/or    |                      |                        |
|         | Gift      |                      |                        |
|         | Letter    |                      |                        |
+---------+-----------+----------------------+------------------------+
| Gift2   | MCA       | Same description as  | Same instructions as   |
| Source  | Worksheet | Gift1 Source         | Gift1 Source           |
|         | and/or    |                      |                        |
| Govt    | Gift      |                      |                        |
| Agency  | Letter    |                      |                        |
+---------+-----------+----------------------+------------------------+
| Name2   | MCA       | Same description as  | Same instructions as   |
| of      | Worksheet | Name1 non-profit or  | Name1 non-profit or    |
| non     | and/or    | govt Agency          | govt Agency            |
| -profit | Gift      |                      |                        |
| or govt | Letter    |                      |                        |
| Agency  |           |                      |                        |
+---------+-----------+----------------------+------------------------+
| Program | MCA       | Same description as  | Same instructions as   |
| Name2   | Worksheet | Program1 used by     | Program1 used by       |
| used by | and/or    | Agency               | Agency                 |
| Agency  | Gift      |                      |                        |
|         | Letter    |                      |                        |
+---------+-----------+----------------------+------------------------+
| Gift3   | MCA       | Same description as  | Same instructions as   |
| Amount  | Worksheet | Gift1 Amount         | Gift1 Amount           |
|         | and/or    |                      |                        |
|         | Gift      |                      |                        |
|         | Letter    |                      |                        |
+---------+-----------+----------------------+------------------------+
| Gift3   | MCA       | Same description as  | Same instructions as   |
| Source  | Worksheet | Gift1 Source         | Gift1 Source           |
|         | and/or    |                      |                        |
| Govt    | Gift      |                      |                        |
| Agency  | Letter    |                      |                        |
+---------+-----------+----------------------+------------------------+
| Name3   | MCA       | Same description as  | Same instructions as   |
| of      | Worksheet | Name1 non-profit or  | Name1 non-profit or    |
| non     | and/or    | govt Agency          | govt Agency            |
| -profit | Gift      |                      |                        |
| or govt | Letter    |                      |                        |
| Agency  |           |                      |                        |
+---------+-----------+----------------------+------------------------+

+---------+-----------+----------------------+------------------------+
| Data    | Source    | Description          | Special Audit          |
| Element | Document  |                      | Rationale and          |
|         |           |                      | Instructions           |
+---------+-----------+----------------------+------------------------+
| Program | MCA       | Same description as  | Same instructions as   |
| Name3   | Worksheet | Program1 used by     | Program1 used by       |
| used by | and/or    | Agency               | Agency                 |
| Agency  | Gift      |                      |                        |
|         | Letter    |                      |                        |
+---------+-----------+----------------------+------------------------+
| Gift4   | MCA       | Same description as  | Same instructions as   |
| Amount  | Worksheet | Gift1 Amount         | Gift1 Amount           |
|         | and/or    |                      |                        |
|         | Gift      |                      |                        |
|         | Letter    |                      |                        |
+---------+-----------+----------------------+------------------------+
| Gift4   | MCA       | Same description as  | Same instructions as   |
| Source  | Worksheet | Gift1 Source         | Gift1 Source           |
|         | and/or    |                      |                        |
| Govt.   | Gift      |                      |                        |
| Agency  | Letter    |                      |                        |
+---------+-----------+----------------------+------------------------+
| Name4   | MCA       | Same description as  | Same instructions as   |
| of      | Worksheet | Name1 non-profit or  | Name1 non-profit or    |
| non     | and/or    | govt Agency          | govt Agency            |
| -profit | Gift      |                      |                        |
| or govt | Letter    |                      |                        |
| Agency  |           |                      |                        |
+---------+-----------+----------------------+------------------------+
| Program | MCA       | Same description as  | Same instructions as   |
| Name4   | Worksheet | Program1 used by     | Program1 used by       |
| used by | and/or    | Agency               | Agency                 |
| Agency  | Gift      |                      |                        |
|         | Letter    |                      |                        |
+---------+-----------+----------------------+------------------------+
| Credit  |           |                      |                        |
| Report  |           |                      |                        |
+---------+-----------+----------------------+------------------------+
| Fico    | Credit    | Proprietary numeric  | Analyst were given the |
| Score   | Report    | score between        | following guidance and |
|         |           | 350-850 that         | instructions:          |
|         |           | indicates level of   |                        |
|         |           | risk.                | The borrower may have  |
|         |           |                      | three scores, one from |
|         |           |                      | each of the major      |
|         |           |                      | credit repositories.   |
|         |           |                      | Scores may vary based  |
|         |           |                      | on the amount of data  |
|         |           |                      | at the repository. If  |
|         |           |                      | the borrower has three |
|         |           |                      | scores, choose the     |
|         |           |                      | middle score and enter |
|         |           |                      | that number in the     |
|         |           |                      | database. If the       |
|         |           |                      | borrower has two       |
|         |           |                      | score, choose the      |
|         |           |                      | lower of the two and   |
|         |           |                      | enter that score in    |
|         |           |                      | the database. If the   |
|         |           |                      | borrower has only one  |
|         |           |                      | score, enter that      |
|         |           |                      | score in the database. |
|         |           |                      |                        |
|         |           |                      | If the borrower has    |
|         |           |                      | multiple scores from   |
|         |           |                      | the same repository,   |
|         |           |                      | drop the lower of the  |
|         |           |                      | two scores and then    |
|         |           |                      | follow the above       |
|         |           |                      | instructions.          |
|         |           |                      |                        |
|         |           |                      | Enter "99" if the      |
|         |           |                      | credit report is       |
|         |           |                      | missing from the       |
|         |           |                      | binder and "9" if the  |
|         |           |                      | credit report is in    |
|         |           |                      | the binder but the     |
|         |           |                      | credit score is        |
|         |           |                      | missing.               |
+---------+-----------+----------------------+------------------------+

######### Appendix II

> **SMSA Gift Source Distribution By Year**
>
> [Figure 9-1A]{.underline}

![](media/image22.wmf)

Figure 9-1A above shows Relative Gifts versus Non-profit Gifts by Fiscal
Year (ATL SMSA). The two gift sources are shown as a percentage of total
gifts for each insurance endorsement year in the ATL SMSA sample. Gifts
from a non-profit organization were higher than gifts from relatives in
every year except 2000.

> [Figure 9-2A]{.underline}
>
> ![](media/image23.wmf)

Figure 9-2A above shows Relative Gifts versus Non-profit Gifts by Fiscal
Year (IND SMSA). The two gift sources are shown as a percentage of total
gifts for each insurance endorsement year in the IND SMSA sample. Gifts
from a non-profit organization were higher than gifts from relatives in
every year.

> [Figure 9-3A]{.underline}
>
> ![](media/image24.wmf)
>
> Figure 9-3A above shows Relative Gifts versus Non-profit Gifts by
> Fiscal Year (SLC SMSA). The two gift sources are shown as a percentage
> of total gifts for each insurance endorsement year in the SLC SMSA
> sample. Gifts from a non-profit organization were higher than gifts
> from relatives in every year except 2000.

######### Appendix III

> **Discrepancies Between the CHUMS Data and Binder Findings**

[Table 19-1A]{.underline}

  -------------- -------------- -------------- -------------- --------------
  **Gift         **FY 2000**    **FY 2001**    **FY 2002**    **Total**
  Amount**                                                    

                                                              

  \>500 \<=1000  13             22             12             **47**

  \>1000 \<=5000 235            208            230            **673**

  \>5000         35             44             37             **116**

                                                              

  Total Cases    **283**        **274**        **279**        **836**

                                                              

  **ATL HOC**                                                 

  \>500 \<=1000  9              10             6              **25**

  \>1000 \<=5000 104            83             108            **295**

  \>5000         12             18             12             **42**

                                                              

  Total Cases    **125**        **111**        **126**        **362**

                                                              

  **DEN HOC**                                                 

  \>500 \<=1000  2              8              6              **16**

  \>1000 \<=5000 83             89             79             **251**

  \>5000         9              12             13             **34**

                                                              

  Total Cases    **94**         **109**        **98**         **301**

                                                              

  **PHL HOC**                                                 

  \>500 \<=1000  1              1              0              **2**

  \>1000 \<=5000 29             26             33             **88**

  \>5000         9              11             9              **29**

                                                              

  Total Cases    **39**         **38**         **42**         **119**

                                                              

  **SAN HOC**                                                 

  \>500 \<=1000  1              3              0              **4**

  \>1000 \<=5000 19             10             10             **39**

  \>5000         5              3              3              **11**

                                                              

  Total Cases    **25**         **16**         **13**         **54**
  -------------- -------------- -------------- -------------- --------------

  ---------------- -------------- -------------- -------------- --------------
  **Gift Amount**  **FY 2000**    **FY 2001**    **FY 2002**    **Total**

  **National                                                    
  Sample**                                                      

                                                                

  \>500 \<=1000    9              15             8              **32**

  \>1000 \<=5000   120            84             116            **320**

  \>5000           28             32             22             **82**

                                                                

  Total Cases      **157**        **131**        **146**        **434**

                                                                

  **Atlanta SMSA**                                              

  \>500 \<=1000    3              2              1              **6**

  \>1000 \<=5000   28             34             40             **102**

  \>5000           3              3              2              **8**

                                                                

  Total Cases      **34**         **39**         **43**         **116**

                                                                

  **Indianapolis                                                
  SMSA**                                                        

  \>500 \<=1000    1              3              1              **5**

  \>1000 \<=5000   44             30             23             **97**

  \>5000           2              2              4              **8**

                                                                

  Total Cases      **47**         **35**         **28**         **110**

                                                                

  **Salt Lake City                                              
  SMSA**                                                        

  \>500 \<=1000    0              2              2              **4**

  \>1000 \<=5000   43             60             51             **154**

  \>5000           2              7              9              **18**

                                                                

  Total Cases      **45**         **69**         **62**         **176**
  ---------------- -------------- -------------- -------------- --------------

[Table 19-2A]{.underline}

  -------------- -------------- -------------- -------------- --------------
  **Total Assets **FY 2000**    **FY 2001**    **FY 2002**    **Total**
  Available**                                                 

                                                              

  \>500 \<=1000  9              1              8              **18**

  \>1000 \<=5000 12             11             19             **42**

  \>5000         12             15             10             **37**

                                                              

  **Total        **33**         **27**         **37**         **97**
  Cases**                                                     

                                                              

  **ATL HOC**                                                 

  \>500 \<=1000  2              0              2              **4**

  \>1000 \<=5000 2              4              8              **14**

  \>5000         7              7              2              **16**

                                                              

  **Total        **11**         **11**         **12**         **34**
  Cases**                                                     

                                                              

  **DEN HOC**                                                 

  \>500 \<=1000  6              0              4              **10**

  \>1000 \<=5000 5              3              5              **13**

  \>5000         2              2              3              **7**

                                                              

  **Total        **13**         **5**          **12**         **30**
  Cases**                                                     

                                                              

  **PHL HOC**                                                 

  \>500 \<=1000  0              1              2              **3**

  \>1000 \<=5000 4              0              5              **9**

  \>5000         2              4              0              **6**

                                                              

  **Total        **6**          **5**          **7**          **18**
  Cases**                                                     

                                                              

  **SAN HOC**                                                 

  \>500 \<=1000  1              0              0              **1**

  \>1000 \<=5000 1              4              1              **6**

  \>5000         1              2              5              **8**

                                                              

  **Total        **3**          **6**          **6**          **15**
  Cases**                                                     
  -------------- -------------- -------------- -------------- --------------

  ---------------- -------------- -------------- -------------- --------------
  **Total Assets   **FY 2000**    **FY 2001**    **FY 2002**    **Total**
  Available**                                                   

  **National                                                    
  Sample**                                                      

                                                                

  \>500 \<=1000    7              1              6              **14**

  \>1000 \<=5000   8              7              14             **29**

  \>5000           4              10             6              **20**

                                                                

  **Total Cases**  **19**         **18**         **26**         **63**

                                                                

  **Atlanta SMSA**                                              

  \>500 \<=1000    0              0              1              **1**

  \>1000 \<=5000   1              1              2              **4**

  \>5000           3              0              0              **3**

                                                                

  **Total Cases**  **4**          **1**          **3**          **8**

                                                                

  **Indianapolis                                                
  SMSA**                                                        

  \>500 \<=1000    0              0              0              **0**

  \>1000 \<=5000   1              2              2              **5**

  \>5000           4              3              2              **9**

                                                                

  **Total Cases**  **5**          **5**          **4**          **14**

                                                                

  **Salt Lake City                                              
  SMSA**                                                        

  \>500 \<=1000    2              0              1              **3**

  \>1000 \<=5000   2              1              1              **4**

  \>5000           1              2              2              **5**

                                                                

  **Total Cases**  **5**          **3**          **4**          **12**
  ---------------- -------------- -------------- -------------- --------------

[Table 19-3A]{.underline}

  -------------- -------------- -------------- -------------- --------------
  **Borrower     **FY 2000**    **FY 2001**    **FY 2002**    **Total**
  Req. Inv.**                                                 

                                                              

  \>500 \<=1000  122            152            135            **409**

  \>1000 \<=5000 312            281            298            **891**

  \>5000         10             13             9              **32**

                                                              

  Total Cases    **444**        **446**        **442**        **1332**

                                                              

  **ATL HOC**                                                 

  \>500 \<=1000  51             69             82             **202**

  \>1000 \<=5000 95             83             113            **291**

  \>5000         0              4              0              **4**

                                                              

  Total Cases    **146**        **156**        **195**        **497**

                                                              

  **DEN HOC**                                                 

  \>500 \<=1000  39             52             32             **123**

  \>1000 \<=5000 102            113            89             **304**

  \>5000         1              1              2              **4**

                                                              

  **Total        **142**        **166**        **123**        **431**
  Cases**                                                     

                                                              

  **PHL HOC**                                                 

  \>500 \<=1000  19             25             19             **63**

  \>1000 \<=5000 79             69             95             **243**

  \>5000         8              8              7              **23**

                                                              

  **Total        **106**        **102**        **121**        **329**
  Cases**                                                     

                                                              

  **SAN HOC**                                                 

  \>500 \<=1000  13             6              2              **21**

  \>1000 \<=5000 36             16             1              **53**

  \>5000         1              0              0              **1**

                                                              

  **Total        **50**         **22**         **3**          **75**
  Cases**                                                     
  -------------- -------------- -------------- -------------- --------------

  ---------------- -------------- -------------- -------------- --------------
  **Borrower Req.  **FY 2000**    **FY 2001**    **FY 2002**    **Total**
  Inv.**                                                        

  **National                                                    
  Sample**                                                      

                                                                

  \>500 \<=1000    76             95             73             244

  \>1000 \<=5000   236            205            216            657

  \>5000           9              12             7              28

                                                                

  **Total Cases**  321            312            296            929

                                                                

  **Atlanta SMSA**                                              

  \>500 \<=1000    9              23             24             **56**

  \>1000 \<=5000   22             17             34             **73**

  \>5000           0              0              0              **0**

                                                                

  **Total Cases**  **31**         **40**         **58**         **129**

                                                                

  **Indianapolis                                                
  SMSA**                                                        

  \>500 \<=1000    25             23             28             **76**

  \>1000 \<=5000   14             15             18             **47**

  \>5000           0              0              0              **0**

                                                                

  **Total Cases**  **39**         **38**         **46**         **123**

                                                                

  **Salt Lake City                                              
  SMSA**                                                        

  \>500 \<=1000    12             11             10             **33**

  \>1000 \<=5000   40             44             30             **114**

  \>5000           1              1              2              **4**

                                                                

  **Total Cases**  **53**         **56**         **42**         **151**
  ---------------- -------------- -------------- -------------- --------------

[Figure 20-1A]{.underline}

  -------------- -------------- -------------- -------------- --------------
  **Gift         **FY 2000**    **FY 2001**    **FY 2002**    **Total**
  Amount**                                                    

  **All Cases**                                               

  \>500 \<=1000  11             10             8              **29**

  \>1000 \<=5000 16             13             16             **45**

  \>5000         1              2              9              **12**

                                                              

  **Total        **28**         **25**         **33**         **86**
  Cases**                                                     

                                                              

  **ATL HOC**                                                 

  \>500 \<=1000  3              6              3              **12**

  \>1000 \<=5000 10             2              8              **20**

  \>5000         1              0              4              **5**

                                                              

  **Total        **14**         **8**          **15**         **37**
  Cases**                                                     

                                                              

  **DEN HOC**                                                 

  \>500 \<=1000  4              4              4              **12**

  \>1000 \<=5000 3              4              6              **13**

  \>5000         0              2              3              **5**

                                                              

  **Total        **7**          **10**         **13**         **30**
  Cases**                                                     

                                                              

  **PHL HOC**                                                 

  \>500 \<=1000  1              0              0              **1**

  \>1000 \<=5000 1              5              2              **8**

  \>5000         0              0              1              **1**

                                                              

  **Total        **2**          **5**          **3**          **10**
  Cases**                                                     

                                                              

                                                              

  **SAN HOC**                                                 

  \>500 \<=1000  3              0              1              **4**

  \>1000 \<=5000 2              2              0              **4**

  \>5000         0              0              1              **1**

                                                              

  **Total        **5**          **2**          **2**          **9**
  Cases**                                                     
  -------------- -------------- -------------- -------------- --------------

  ---------------- -------------- -------------- -------------- --------------
  **Gift Amount**  **FY 2000**    **FY 2001**    **FY 2002**    **Total**

  **National                                                    
  Sample**                                                      

                                                                

  \>500 \<=1000    7              5              4              **16**

  \>1000 \<=5000   9              8              8              **25**

  \>5000           1              1              6              **8**

                                                                

  **Total Cases**  **17**         **14**         **18**         **49**

                                                                

                                                                

  **Atlanta SMSA**                                              

  \>500 \<=1000    1              1              2              **4**

  \>1000 \<=5000   3              2              3              **8**

  \>5000           0              0              1              **1**

                                                                

  **Total Cases**  **4**          **3**          **6**          **13**

                                                                

  **Indianapolis                                                
  SMSA**                                                        

  \>500 \<=1000    2              3              0              **5**

  \>1000 \<=5000   1              0              2              **3**

  \>5000           0              0              1              **1**

                                                                

  **Total Cases**  **3**          **3**          **3**          **9**

                                                                

  **Salt Lake City                                              
  SMSA**                                                        

  \>500 \<=1000    1              1              2              **4**

  \>1000 \<=5000   3              3              3              **9**

  \>5000           0              1              1              **2**

                                                                

  **Total Cases**  **4**          **5**          **6**          **15**
  ---------------- -------------- -------------- -------------- --------------

[Table 20-2A]{.underline}

  -------------- -------------- -------------- -------------- --------------
  **Total Assets **FY 2000**    **FY 2001**    **FY 2002**    **Total**
  Available**                                                 

                                                              

  \>500 \<=1000  117            133            101            **351**

  \>1000 \<=5000 697            787            789            **2273**

  \>5000         260            302            348            **910**

                                                              

  **Total        **1074**       **1222**       **1238**       **3534**
  Cases**                                                     

                                                              

  **ATL HOC**                                                 

  \>500 \<=1000  46             58             43             **147**

  \>1000 \<=5000 306            350            408            **1064**

  \>5000         92             123            132            **347**

                                                              

  **Total        **444**        **531**        **583**        **1558**
  Cases**                                                     

                                                              

  **DEN HOC**                                                 

  \>500 \<=1000  32             46             29             **107**

  \>1000 \<=5000 189            259            240            **688**

  \>5000         70             83             89             **242**

                                                              

  **Total        **291**        **388**        **358**        **1037**
  Cases**                                                     

                                                              

  **PHL HOC**                                                 

  \>500 \<=1000  25             18             13             **56**

  \>1000 \<=5000 122            108            88             **318**

  \>5000         46             54             71             **171**

                                                              

  **Total        **193**        **180**        **172**        **545**
  Cases**                                                     

                                                              

                                                              

  **SAN HOC**                                                 

  \>500 \<=1000  14             11             16             **41**

  \>1000 \<=5000 80             70             53             **203**

  \>5000         52             42             56             **150**

                                                              

  **Total        **146**        **123**        **125**        **394**
  Cases**                                                     
  -------------- -------------- -------------- -------------- --------------

  ---------------- -------------- -------------- -------------- --------------
  **Total Assets   **FY 2000**    **FY 2001**    **FY 2002**    **Total**
  Available**                                                   

  **National                                                    
  Sample**                                                      

                                                                

  \>500 \<=1000    77             89             74             **240**

  \>1000 \<=5000   436            400            407            **1243**

  \>5000           161            171            214            **546**

                                                                

  **Total Cases**  **674**        **660**        **695**        **2029**

                                                                

  **Atlanta SMSA**                                              

  \>500 \<=1000    7              12             6              **25**

  \>1000 \<=5000   58             103            106            **267**

  \>5000           27             45             53             **125**

                                                                

  **Total Cases**  **92**         **160**        **165**        **417**

                                                                

  **Indianapolis                                                
  SMSA**                                                        

  \>500 \<=1000    21             13             10             **44**

  \>1000 \<=5000   111            122            152            **385**

  \>5000           27             39             30             **96**

                                                                

  **Total Cases**  **159**        **174**        **192**        **525**

                                                                

  **Salt Lake City                                              
  SMSA**                                                        

  \>500 \<=1000    12             19             11             **42**

  \>1000 \<=5000   92             162            124            **378**

  \>5000           45             47             51             **143**

                                                                

  **Total Cases**  **149**        **228**        **186**        **563**
  ---------------- -------------- -------------- -------------- --------------

[Table 20-3A]{.underline}

  -------------- -------------- -------------- -------------- --------------
  **Borrower     **FY 2000**    **FY 2001**    **FY 2002**    **Total**
  Req. Inv.**                                                 

                                                              

  \>500 \<=1000  6              12             3              **21**

  \>1000 \<=5000 23             21             14             **58**

  \>5000         5              3              4              **12**

                                                              

  **Total        **34**         **36**         **21**         **91**
  Cases**                                                     

                                                              

  **ATL HOC**                                                 

  \>500 \<=1000  1              6              1              **8**

  \>1000 \<=5000 4              4              5              **13**

  \>5000         3              2              2              **7**

                                                              

  **Total        **8**          **12**         **8**          **28**
  Cases**                                                     

                                                              

  **DEN HOC**                                                 

  \>500 \<=1000  5              1              1              **7**

  \>1000 \<=5000 6              5              3              **14**

  \>5000         0              0              1              **1**

                                                              

  **Total        **11**         **6**          **5**          **22**
  Cases**                                                     

                                                              

  **PHL HOC**                                                 

  \>500 \<=1000  0              4              1              **5**

  \>1000 \<=5000 5              7              4              **16**

  \>5000         2              1              1              **4**

                                                              

  **Total        **7**          **12**         **6**          **25**
  Cases**                                                     

                                                              

                                                              

  **SAN HOC**                                                 

  \>500 \<=1000  0              1              0              **1**

  \>1000 \<=5000 8              5              2              **15**

  \>5000         0              0              0              **0**
  -------------- -------------- -------------- -------------- --------------

  ---------------- -------------- -------------- -------------- --------------
  **Borrower Req.  **FY 2000**    **FY 2001**    **FY 2002**    **Total**
  Inv.**                                                        

  **Total Cases**  **8**          **6**          **2**          **16**

                                                                

  **National                                                    
  Sample**                                                      

                                                                

  \>500 \<=1000    2              8              1              **11**

  \>1000 \<=5000   16             16             7              **39**

  \>5000           5              3              3              **11**

                                                                

  **Total Cases**  **23**         **27**         **11**         **61**

                                                                

  **Atlanta SMSA**                                              

  \>500 \<=1000    0              2              1              **3**

  \>1000 \<=5000   3              3              4              **10**

  \>5000           0              0              0              **0**

                                                                

  **Total Cases**  **3**          **5**          **5**          **13**

                                                                

  **Indianapolis                                                
  SMSA**                                                        

  \>500 \<=1000    1              1              0              **2**

  \>1000 \<=5000   1              0              0              **1**

  \>5000           0              0              0              **0**

                                                                

  **Total Cases**  **2**          **1**          **0**          **3**

                                                                

  **Salt Lake City                                              
  SMSA**                                                        

  \>500 \<=1000    3              1              1              **5**

  \>1000 \<=5000   3              2              3              **8**

  \>5000           0              0              1              **1**

                                                                

  **Total Cases**  **6**          **3**          **5**          **14**
  ---------------- -------------- -------------- -------------- --------------

######### Appendix IV

> **Implied Average Sources of Funds When Gifts Are Present**
>
> **By Sample**
>
> ![](media/image25.wmf)
>
> ![](media/image26.wmf)
>
> ![](media/image27.wmf)

![](media/image28.wmf)

> ![](media/image29.wmf)