Audit 41265

Finding reference number: 2022-001 Assistance listing title and number (Federal award identification number and year): 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Finding resolution status: Completed Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Noncompliance information: See statement of condition 2022-001 for noncompliance information. Statistically valid sample: N/A Name of Federal Agency: U.S. Department of Housing and Urban Development Pass through entity: N/A Questioned costs: N/A Statement of condition 2022-001: Valley Court Apartments received a score of 42c on a physical inspection performed by a representative of HUD on June 2, 2022. Criteria: Pursuant to item 19 of the regulatory agreement (form HUD-92466M) and HUD Handbook 4350.3, the Corporation shall keep the property in decent, safe, sanitary condition and good repair. Effects or potential effect: The Corporation is not in compliance with the terms of the regulatory agreement and HUD Handbook 4350.3. Cause: Valley Court Apartments has experienced staffing issues with maintenance employees for an extended period of time and as a result, routine inspections and maintenance was not being completed timely. Recommendation: Management should conduct routine unit and general property inspections and deficiencies should be corrected in a timely manner. Completion date: December 31, 2023 Management Response: Agree. Management has corrected all deficiencies noted during the physical inspection and has completed a 100% unit inspection to identify and correct any additional deficiencies noted.

Finding reference number: 2022-001 Assistance listing title and number (Federal award identification number and year): 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Finding resolution status: Completed Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Noncompliance information: See statement of condition 2022-001 for noncompliance information. Statistically valid sample: N/A Name of Federal Agency: U.S. Department of Housing and Urban Development Pass through entity: N/A Questioned costs: $65,000 Statement of condition 2022-002: During the year ended December 31, 2022, the Corporation received a distribution while in violation of the regulatory agreement. Criteria: Pursuant to items 14 of the regulatory agreement (form HUD-92466M), the Distributions shall not be taken after HUD has given notice to borrower of a violation of the regulatory agreement. Effects or potential effect: The Corporation was paid a distribution in the amount of $65,000 after receiving notice of a violation of the regulatory agreement. Cause: Management received a notice of violation of regulatory agreement on June 7, 2022 related to a physical inspection completed on the Property. Management inadvertently paid a distribution after receiving notice of violation of the regulatory agreement. Recommendation: The Corporation should reimburse $65,000 to Valley Court Apartments. Completion date: December 31, 2023 Management Response: Management concurs with the finding and recommendation and reimbursed Valley Court Apartments during the year ended December 31, 2023.

Finding reference number: 2022-001 Assistance listing title and number (Federal award identification number and year): 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Finding resolution status: Completed Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Noncompliance information: See statement of condition 2022-001 for noncompliance information. Statistically valid sample: N/A Name of Federal Agency: U.S. Department of Housing and Urban Development Pass through entity: N/A Questioned costs: N/A Statement of condition 2022-001: Valley Court Apartments received a score of 42c on a physical inspection performed by a representative of HUD on June 2, 2022. Criteria: Pursuant to item 19 of the regulatory agreement (form HUD-92466M) and HUD Handbook 4350.3, the Corporation shall keep the property in decent, safe, sanitary condition and good repair. Effects or potential effect: The Corporation is not in compliance with the terms of the regulatory agreement and HUD Handbook 4350.3. Cause: Valley Court Apartments has experienced staffing issues with maintenance employees for an extended period of time and as a result, routine inspections and maintenance was not being completed timely. Recommendation: Management should conduct routine unit and general property inspections and deficiencies should be corrected in a timely manner. Completion date: December 31, 2023 Management Response: Agree. Management has corrected all deficiencies noted during the physical inspection and has completed a 100% unit inspection to identify and correct any additional deficiencies noted.

Finding reference number: 2022-001 Assistance listing title and number (Federal award identification number and year): 14.155 Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Finding resolution status: Completed Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Noncompliance information: See statement of condition 2022-001 for noncompliance information. Statistically valid sample: N/A Name of Federal Agency: U.S. Department of Housing and Urban Development Pass through entity: N/A Questioned costs: $65,000 Statement of condition 2022-002: During the year ended December 31, 2022, the Corporation received a distribution while in violation of the regulatory agreement. Criteria: Pursuant to items 14 of the regulatory agreement (form HUD-92466M), the Distributions shall not be taken after HUD has given notice to borrower of a violation of the regulatory agreement. Effects or potential effect: The Corporation was paid a distribution in the amount of $65,000 after receiving notice of a violation of the regulatory agreement. Cause: Management received a notice of violation of regulatory agreement on June 7, 2022 related to a physical inspection completed on the Property. Management inadvertently paid a distribution after receiving notice of violation of the regulatory agreement. Recommendation: The Corporation should reimburse $65,000 to Valley Court Apartments. Completion date: December 31, 2023 Management Response: Management concurs with the finding and recommendation and reimbursed Valley Court Apartments during the year ended December 31, 2023.