Audit 394208

Finding 2025-001: Mortgage Insurance – Rental Housing (Section 207), federal assistance listing number 14.134 Criteria: East Main Street Apartments is required to determine surplus cash requirements annually. If surplus cash exists, the amount must be transferred from the operating account to the residual receipts account within 90 days of the Project’s fiscal year-end. Condition: The required deposit of $13,025 for the year ended December 31, 2024 was not made within the 90-day timeline. Context: We reviewed the residual receipts deposits during the year. Cause: East Main Street Apartments’ surplus cash was not performed timely. Effect: East Main Street Apartments is not in compliance with the HUD Regulatory Agreement as it relates to the management of the residual receipts reserve. Recommendation: East Main Street Apartments should ensure residual receipts are made within 90 days of year-end in accordance with the HUD Regulatory Agreement. Views of management and planned corrective action: East Main Street Apartments agrees with the finding and will make the required payment.

Finding 2025-002: Mortgage Insurance – Rental Housing (Section 207), federal assistance listing number 14.134 Criteria: The HUD Handbook requires owners to perform and document inspections of each unit on at least an annual basis. Condition: Unit inspections were not performed during the year. Context: We reviewed 4 tenant files for documentation of unit inspections. Cause: East Main Street Apartments did not ensure unit inspections were performed during the year. Effect: The tenant’s unit may not be in a decent, safe, and sanitary condition. Recommendation: We recommend that East Main Street Apartments resume unit inspections and ensure those inspections are properly documented in the tenant files. Views of management and planned corrective action: East Main Street Apartments has resumed unit inspections and will ensure those inspections are properly documented in the tenant files.