Management Information Memorandum 15-17: The OIG High-Risk 7(a) Loan Review Program

On September 30, 2015 the OIG issued Management Information Memorandum 15-17, The OIG High-Risk 7(a) Loan Review Program.  The memorandum provides an update on our oversight activities of the High Risk 7(a) Loan Review Program from April 2015 to September 2015.  This memorandum contains no recommendations.

We identified potential material lender noncompliance with SBA’s requirements on two of the four high-dollar/early-defaulted loans reviewed during this period.  SBA honored its guaranty on these two loans for approximately $2.9 million and we intend to present our findings to SBA management in a future report for appropriate action.  Moreover, it appeared that the lender materially complied with SBA’s origination and closing requirements on the other two loans we reviewed.  SBA honored its guaranty for approximately $2.3 million on these two loans.

Finally, we identified material lender deficiencies with one other high-dollar/early-defaulted loan during a previous audit.  This loan was referred to our Investigations Division due to suspicious activity.  During the current reporting period, we referred this loan to SBA management to address the material lender deficiencies, as appropriate.  Because this loan was purchased in October 2010, we did not make any formal recommendations to SBA.