Finding reference number: #2025-001 Assistance Listing (federal award identification number and year): Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, CFDA No. 14.155 (Project identification number 047-11056, 2007) Auditor non-compliance code: Z – Other Finding resolution status: Cleared Universe population size: The universe population size is not applicable to the finding. Statistically valid sample: Not applicable Name of federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $-0- Was the sampling statistically valid: N/A Statement of condition of #2025-001: For the year ended December 31, 2024, the Corporation did not submit the Data Collection Form to the Federal Audit Clearinghouse in the time period required by Uniform Guidance. Criteria: Pursuant to the Uniform Guidance, the Corporation is required to submit the Data Collection Form to the Federal Audit Clearinghouse within the earlier of 30 calendar days after receipt of the auditor's report or 9 months after the entity's fiscal year end. Effect or potential effect: The Corporation is not in compliance with the Uniform Guidance Section 200.512. Cause: Due to administrative delays, the 2024 audit report was not issued until December 18, 2025. Recommendation: The Corporation should submit the Data Collection Form to the Federal Audit Clearinghouse within the required time period. Reporting response: Management concurs. The 2024 Data Collection Form could not be filed by the September 30, 2025 due date because the 2024 audited financial statements were not issued until December 18, 2025. The Form was submitted to the Federal Audit Clearinghouse on September 18, 2026. Responsible contact: Holly Sweis, Intrepid Professional Group, on behalf of the Board of Directors.
Finding reference number: #2025-002 Assistance Listing (federal award identification number and year): Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, CFDA No. 14.155 (Project identification number 047-11056, 2007) Auditor non-compliance code: B – Failure to make required residual receipt deposit Finding resolution status: Outstanding Universe population size: The universe population size is not applicable to the finding. Statistically valid sample: Not applicable Name of federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $40,444 Was the sampling statistically valid: N/A Statement of condition of #2025-002: The required residual receipts deposit in the amount of $40,444 per the 2024 Computation of Surplus Cash, Distributions and Residual Receipts was not deposited into a residual receipts fund within ninety (90) days after fiscal year end. Criteria: Pursuant to the Regulatory Agreement, the Corporation is required to deposit surplus cash into a separate residual receipts fund within ninety (90) days after the fiscal year end. Effect or potential effect: The Corporation is not in compliance with the terms of the Regulatory Agreement. Cause: Due to administrative delays, the 2024 audit report was not issued until December 18, 2025. Recommendation: Management should make all required residual receipts deposits per the annual Computation of Surplus Cash, Distributions and Residual Receipts within ninety (90) days after the fiscal year end. Reporting response: Management concurs. The 2024 surplus cash computation, and therefore the amount due to residual receipts, was not available until the 2024 audited financial statements were issued on December 18, 2025. No distributions were made from project funds in 2024 or 2025, and the funds remained in the Corporation's operating account and were used for project operations. The Corporation established a residual receipts account in the name of the Corporation and deposited the full $40,444, with $14,487 deposited on September 17, 2026 and the remaining $25,957 will be deposited in 2026. The 2025 computation of surplus cash reflects a deficiency, and no additional deposit is due for 2025. Going forward, the annual computation will be completed with the audit and any required deposit made within ninety days of year-end.
Finding reference number: #2025-003 Assistance Listing (federal award identification number and year): Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, CFDA No. 14.155 (Project identification number 047-11056, 2007) Auditor non-compliance code: M – Security Deposits Finding resolution status: Cleared Universe population size: 12 months Statistically valid sample: 3 months Name of federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $542 Was the sampling statistically valid: Yes Statement of condition of #2025-003: The Corporation did not maintain resident security deposits in an amount equal or greater than resident security deposits liabilities at all times during the year ended December 31, 2025. At December 31, 2025, the resident security deposit account was underfunded by $542. Criteria: Pursuant to the Regulatory Agreement, residents' security deposits should be funded in an amount which shall at all times equal or exceed the aggregate of all outstanding obligations. Effect or potential effect: Failure to fund resident security deposits could result in the inability of the Corporation to return security deposits to resident upon the termination of the resident's lease. Cause: Management did not transfer deposits from 2025 move-ins that were received into the operating account into the security deposits account as of December 31, 2025. Recommendation: Management should ensure the security deposit account is adequately funded and transfer funds, if necessary, from the operating account to adequately fund the security deposit account. Reporting response: Management concurs. Security deposits collected from new residents during 2025 were received into the operating account, and the corresponding transfer to the resident security deposit account was not completed before year-end. The Corporation transferred $542 from the operating account to the security deposit account on September 17, 2026, fully funding the account. Effective September 2026, security deposit receipts are transferred to the deposit account monthly and the account is reconciled to the tenant deposit ledger as part of the monthly close.
Finding reference number: #2025-004 Assistance Listing (federal award identification number and year): Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, CFDA No. 14.155 (Project identification number 047-11056, 2007) Auditor non-compliance code: J – Unauthorized management fees Finding resolution status: Cleared Universe population size: The universe population size is not applicable to the finding. Statistically valid sample: Not applicable Name of federal agency: Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $14,487 Was the sampling statistically valid: N/A Statement of condition of #2025-004: Management fees of $14,487 were prepaid at December 31, 2025. Criteria: The HUD-approved management certification (form HUD-9839-B) provides for the payment of management fees equal to 4.39% capped at a residential fee yield per unit per month of $48. Effect or potential effect: The Corporation is not in compliance with the HUD approved management agent certification and Regulatory Agreement. As a result, the Property's cash position at December 31, 2025 is understated by $14,487. Cause: The management agent did not update the adjusted management fee percentage for the rent increase effective August 2, 2025. Recommendation: Management should ensure the management fee percentage is being updated each time a rent increase is received. Management should reimburse the Property $14,487 for the fees prepaid. Reporting response: Management concurs. Following the HUD-approved rent adjustment effective August 2, 2025, the management fee percentage was not recalculated to hold the fee yield at the approved $48 per unit per month, and fees collected during 2025 exceeded fees earned by $14,487. The excess was recorded as a prepaid management fee, and the Agent reimbursed the Corporation $14,487 in full on September 17, 2026. The Agent recalculated the fee percentage effective September 2026, and its procedure now requires the percentage to be recalculated and documented each time HUD approves a rent adjustment, with the resulting yield reviewed against the approved cap at each month-end close.