Audit 385755

Reference Number 2022-002 - Eligibility Finding Reference Number 2022-002 - Eligibility Finding Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Federal Programs: Home Investment Partnership Program Assistance Listing Number 14.239 Department of Housing and Urban Development Recommendation: We recommend that the Organization: 1. Develop and implement a comprehensive policy and procedure for verifying tenant eligibility and calculating rent amounts in compliance with HOME program requirements. 2. Provide training to staff responsible for tenant intake, income verification, and rent calculations to ensure compliance with federal regulations. 3. Perform periodic reviews and audits of tenant files and rent schedules to ensure ongoing compliance. Response: HOMECorp will make use of Yardi Breeze Premier Affordable Property Management CRM feature which allows both HOMECorp and our tenants to track their program compliance, maintenance requests, leases, lease renewals and annual recertifications. This information will be saved/stored in the cloud. This was implemented on 05/01/23 through coordination of the Yardi Implementation Team and the executive director. During 2021 – 2022, HOMECorp’s management team was significantly impacted by COVID and despite PPP loan retention efforts we lost all our staff and transitioned our HUD Certified Housing Counselor to Property Manager. During this time, the Executive Director, left as well as two (2) interim Executive Directors, who responsibilities were general management. They lacked the training and experience in Affordable Housing Management to help our property manager to maintain our program compliance procedures. Since the new Executive Director onboarded in April 2023, the property manager has been trained on our policy and procedure for verifying tenant eligibility and calculating rent amounts in compliance with HOME program requirements, tenant intake, income verification, and rent calculations to ensure compliance with federal regulations. This is done in Yardi Affordable compliance worksheet. Quarterly periodic reviews and audits of tenant files and rent schedules are performed to ensure ongoing compliance. Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Federal Programs: Home Investment Partnership Program Assistance Listing Number 14.239 Department of Housing and Urban Development Condition: During the audit, it was noted that the organization did not comply with the eligibility requirement of the Home Investment Partnership Program. The Organization did not maintain adequate documentation to verify, 1). Income eligibility and 2). Rent limitations for 7 out of 9 families receiving housing under the HOME Investment Partnerships Program. The missing or incomplete records included income verification forms, household composition details, and supporting income documentation (e.g., pay stubs, tax returns, or third-party verification). Reference Number 2022-002 - Eligibility Finding Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Criteria: 24 CFR §92.1 and §92.203, require participating jurisdictions ensure that only low-income or very low-income families, as defined in 24 CFR §92.2, receive housing assistance. Organizations must determine the annual income of each family, including all persons in the household, in compliance with 24 CFR §92.203. According to 24 CFR sections 92.216 and 92.252, HOME-assisted rental housing units must be occupied only by households that qualify as low-income families. Also, rents charged for HOME-assisted units must not exceed the lesser of: The fair market rent for comparable units in the area as established by HUD; or A rent that does not exceed 30 percent of the adjusted income of a family earning 65 percent of the median income for the area, as determined by HUD.For rental projects with five or more units, at least 20 percent of the HOME-assisted units must be occupied by very low-income families and meet more stringent rent limitations. Additionally, 24 CFR §92.508 requires participating jurisdictions to maintain documentation supporting the income eligibility of each assisted family, for programs with continuing affordable housing requirements. Cause: The organization lacks a comprehensive process and internal controls to ensure all required income eligibility, occupancy and rent calculation documentation is collected, reviewed, and retained in compliance with federal regulations. Effect: The Organization does not maintain required documentation in compliance with the requirements listed above. Failure to comply with these federal requirements could have resulted in ineligible households occupying HOME-assisted units and rent amounts charge in excess of federal limits, potentially creating financial burdens on tenants. This affects compliance with the loan agreements from the county of Essex, New Jersey Department of Consumer Affairs, and New Jersey Housing and Mortgage Finance Agency.

Reference Number 2022-003 - HQS Finding Federal Awards Finding – Material Weakness - Failure to perform Housing Quality Standards Inspections Condition: During the audit, it was identified that the Organization did not perform the required on-site inspections to determine compliance with housing quality standards for properties and units funded with HOME funds during the period of affordability for 9 out of 9 units Criteria: 24 CFR sections 92.209(i), 92.251(f), and 92.504(d) require participating jurisdictions to perform on-site inspections to ensure compliance with property standards and housing quality standards. Cause: The noncompliance was due to lack of staffing and oversight. Effect: Failure to perform the required inspections increases the risk that properties and units do not meet housing quality standards or property standards, potentially jeopardizing the health and safety of tenants and placing the Organization at risk of noncompliance with federal requirements. Recommendation: We recommend the Organization: 1. Develop and implement a monitoring system to track and schedule required inspections. 2. Allocate sufficient resources to ensure timely inspections are conducted. 3. Provide training for staff on the inspection requirements Response: During 2020 – 2022, HOMECorp’s management team was significantly impacted by COVID and despite PPP loan retention efforts we lost all our staff and transitioned our HUD Certified Housing Counselor to Property Manager. Due to staffing shortages and restricted to access to apartments as a result of health concerns, our property manager was unable to perform Housing Quality Standards Inspections. The new Executive Director has contracted with a General Contractor to help assist our property manager with Housing Quality Standards Inspections. These inspections are conducted annually with detailed inspection logs for HVAC, Painting, Fire Safety, and major unit renovations maintained and tracked in our digital database. These logs are reviewed and updated on a quarterly basis to ensure timeliness in compliance and maintenance requests.

Reference Number 2022-004 - Eligibility Finding Reference Number Reference Number 2022-004 - Eligibility Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Response: HOMECorp will make use of Yardi Breeze Premier Affordable Property Management CRM feature which allows both HOMECorp and our tenants to track their program compliance, maintenance requests, leases, lease renewals and annual recertifications. This information will be saved/stored in the cloud. This was implemented on 05/01/23 through coordination of the Yardi Implementation Team and the executive director. During 2021 – 2022, HOMECorp’s management team was significantly impacted by COVID and despite PPP loan retention efforts we lost all our staff and transitioned our HUD Certified Housing Counselor to Property Manager. During this time, the executive Director left as well as two (2) interim Executive Directors, who responsibilities were general management. They lacked the training and experience in Affordable Housing Management to help our property manager to maintain our program compliance procedures. Since the new Executive Director, onboarded in April 2023, the property manager has been trained on our policy and procedure for verifying tenant eligibility and calculating rent amounts in compliance with HOME program requirements, tenant intake, income verification, and rent calculations to ensure compliance with federal regulations. This is done in Yardi Affordable compliance worksheet. Quarterly periodic reviews and audits of tenant files and rent schedules are performed to ensure ongoing compliance. 2022-004 - Eligibility Finding Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Federal Programs: National Housing Trust Program Assistance Listing Number 14.275 Department of Housing and Urban Development Effect: The Organization does not maintain required documentation in compliance with the requirements listed above. Noncompliance with NHTF Program eligibility standards jeopardizes the program’s ability to achieve its intended purpose of serving extremely lowincome families. This failure may lead to ineligible tenants occupying HTF-assisted units, exposing the organization to potential repayment of funds or loss of future program funding. This affects compliance with the loan agreement from the New Jersey Department of Consumer Affairs. Recommendation: We recommend that the Organization: 1. Develop and implement a comprehensive policy and procedure for verifying tenant eligibility in compliance with NHTF program requirements. 2. Standardize income determination methods across all NHTFassisted programs and projects, ensuring compliance with either 24 CFR 5.609 or IRS Form 1040 definitions. 3. Require and retain all necessary source documentation (minimum of two months) and signed certifications for all tenant files. 4. Conduct annual income and family size verifications in accordance with NHTF requirements. 5. Periodically review and audit tenant files to identify and correct deficiencies. 6. Provide training to staff responsible for tenant intake, income verification, and tenant certification to ensure compliance with federal regulations. Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Federal Programs: National Housing Trust Program Assistance Listing Number 14.275 Department of Housing and Urban Development Condition: During the audit, it was noted that the Organization did not comply with the eligibility requirement of the National Housing Trust Fund Program "NHTF program". The Organization did not maintain adequate documentation as follows: 1). to verify income eligibility 2). signed tenant certifications attesting to income and family size 3). annual attestation from the administrator of the program attesting to the family size and annual income or alternatively, indicate the current dollar limit for very low or low-income families for the family size of the tenant and state that the tenant's annual income does not exceed this limit. We noted this for 1 out of 1 families receiving housing under the NHTF Program. The missing or incomplete records included income verification forms, household composition details, and supporting income documentation (e.g., pay stubs, tax returns, or third-party verification) as well as signed tenant and administrator certifications. Criteria: The National Housing Trust Fund Program, "HTF program" requires strict compliance with income-targeting requirements, ensuring that only extremely low-income families, as defined in 24 CFR 93.2, occupy HTF-assisted units. Income determination must be conducted using one consistent method—either “annual income” as defined in 24 CFR 5.609 or “adjusted gross income” as defined by the IRS Form 1040 series. The grantee must examine at least two months of source documentation evidencing annual income and obtain written certification from the family regarding income and family size. Program administrators must annually confirm compliance through proper documentation or certification. Cause: The organization lacks sufficient internal controls and oversight to ensure compliance with the NHTF Program eligibility requirements. Staff administering the program were either unaware of or did not adhere to the income documentation and certification standards.