Triple the Workload But Don't Increase the Staff

Is this a recipe for disaster or not? It's not if people were sitting around twiddling their thumbs. In FY2007 the FHA processed 1100 applications from lenders. The number of applications tripled in FY2008, but the same twenty-two people processed the applications as the FHA share of new loans went from 2% in the days of the subprime boom to 20% today.

In FY2007 I don't think the application handlers were twiddling their thumbs

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as they handled one application a week, which, to me, seems reasonable, maybe a little light but reasonable. Requiring the handlers to handle three applications a week would result in delays or errors in processing. It's the latter problem that an audit by the HUD Inspector General revealed.

The FHA did not have sufficient controls in place to ensure that regulations were being met. They did not check with other offices about their experience with the lenders. Nor did they collect all fees that were due. Or make sure that all supporting documents were obtained. Or that lender certifications were appropriate.