Corrective Action Plans

Corrective Action Plan: The Owner has taken corrective action by terminating the current management agent and engaging a new management company with demonstrated experience in HUD assisted housing compliance. The new management agent will assume responsibility for all occupancy and recertification activities and will implement procedures to ensure that annual and interim recertifications are completed accurately and within HUD required timeframes. The Owner will oversee the performance of the new management agent through regular compliance reviews and will take any additional corrective measures necessary to ensure continued adherence to HUD regulations and prevent recurrence of this finding. Anticipated Completion Date: The implementation of training and procedures is expected to be completed by December 31, 2026.

Corrective Action Plan: The Owner has taken corrective action by terminating the current management agent and engaging a new management company with demonstrated experience in HUD assisted housing compliance. The new management agent will assume responsibility for all occupancy and recertification activities and will implement procedures to ensure that annual and interim recertifications are completed accurately and within HUD required timeframes. The Owner will oversee the performance of the new management agent through regular compliance reviews and will take any additional corrective measures necessary to ensure continued adherence to HUD regulations and prevent recurrence of this finding. Anticipated Completion Date: The implementation of training and procedures is expected to be completed by December 31, 2026.

Corrective Action Plan: The Owner has taken corrective action by terminating the current management agent and engaging a new management company with demonstrated experience in HUD assisted housing compliance. The new management agent will assume responsibility for all occupancy and recertification activities and will implement procedures to ensure that annual and interim recertifications are completed accurately and within HUD required timeframes. The Owner will oversee the performance of the new management agent through regular compliance reviews and will take any additional corrective measures necessary to ensure continued adherence to HUD regulations and prevent recurrence of this finding. Anticipated Completion Date: The implementation of training and procedures is expected to be completed by December 31, 2026.

CORRECTIVE ACTION PLAN2025-001 [2023-001]—TRACKING AND VALUATION OF MORTGAGE RECEIVABLES AND AMOUNTS DUE TO GRANTORType of Finding: (A) Material Weakness in Internal Control Over Financial ReportingStatement of ConditionWhile the Housing Trust has begun a complete review of its loan portfolio, the project has not yet been completed. Therefore, we were unable to obtain sufficient audit evidence to support the Housing Trust’s tracking and valuation of its mortgage receivables and amounts that are due to grantor.Per our audit procedures, we noted that management was unable to provide the following:A reasonable methodology for estimating its allowance for loan losses.Funding provided by grantors for the loan programs that should also be classified as amounts that are due to grantor.Not all current year loans were recorded in the general ledger (approximative $512,066) and approx. $481,201 were recorded twice.A net prior year adjustment of $36,460 for mortgages receivable and $35,000 for land leases held was necessary.Reclassification between loans accounts and grant revenue were necessaryContextThe Housing Trust has a portfolio of over six-hundred individual mortgage receivables that include both non-amortizing and amortizing loans, which management has valued at approximately $25,291,075. These loans have been funded by several sources, including federal, state, and local funding. Some of the grantors have established in their agreements that these funds do not belong to the Housing Trust, but actually belong to the grantor. CriteriaThe Housing Trust should ensure it has a board-approved policy for its loan portfolio to ensure that these assets are properly tracked, classified, and maintained with specialized loan management software that can perform the following:Loan Classification and TrackingEach loan is properly identified with its funding source (federal, state, local, etc.) and type of restriction Each loan agreement has the funding source specifiedThe current status of each loan is tracked (current, delinquent, defaulted)Loan funding that has been established as due to the grantor is properly tracked.Compliance and ReportingEnsure the loans comply with the specific guidelines of their respective funding source. Audit trails are available for all transactions and valuations.The receivables and related interest accruals supported by the loan management software should be reconciled to the Housing Trust’s accounting software.Financial TrackingThe valuation of the portfolio should be updated periodically (at least quarterly) for any changes in loan status or market conditions.All new loans should be recorded in the general ledger A loan loss policy was established that includes a loan loss methodology incorporating risk classes based on the borrower’s ability to repay. However, the calculations seem to follow a different methodology established afterwards. The policy should be updated with calculation methodology and with the backup research of historical data. A loan review committee should be responsible for reviewing and approving the classifications of loans and the associated allowance for loan losses which should be supported by high-quality data collection on each borrower’s payment history and any relevant economic indicators. The calculations and methodology should follow the approved policy, or the policy should be improved to include all factors mentioned above.EffectThe auditors were not able to verify the accuracy of the loan records and financial statements related to mortgage loans, the related accrued loan interest, the allowance for loan losses and loan funding that should also be recorded as due to grantor. CauseWhile the Housing Trust has begun a complete review of its loan portfolio, the project has not yet been completed. Therefore, the loan portfolio tracking and valuation have not yet been designed or implemented to support its policies and procedures or provide the loan review committee with a workable system for reviewing, approving and monitoring the organization’s mortgage receivable portfolio. The methodology seems to be changing, and the calculations do not seem to be accurate,RecommendationWe recommend the Housing Trust update policies and procedures for its loan portfolio as identified in the “Context” section of this finding to include methodology, risk assessment, historical loan data research, calculations method with reasoning.View of Responsible OfficialThe Housing Trust acknowledges the finding. Due to turnover in prior years, historical loan records and tracking systems were incomplete or inaccurate. Since then, SFCHT has taken the following steps:A second title company has been contracted to obtain final loan data for the 2026 loan portfolio. A title company will also be engaged annually at year-end to identify and resolve any differences arising during the year.Establish one master loan inventory using Portfol data. This inventory will serve as the master loan control schedule for monthly financial reconciliations. All differences will have a documented resolution, including reconciliation of receivables and related interest between the two systems. Reconciliations will be completed by the 15th business day of the following month.Create a new loan-recording process for every loan closing.Create a Due to Grantor Matrix based on findings from the annual loan review performed by the title company. Supporting documentation, such as grant agreements, correspondence, or other applicable documentation, will be maintained.Review the ASC 326 loan loss methodology to ensure it reflects the actual calculation methodology and is supported by appropriate research. This review will be performed quarterly.Establish a formal loan review committee and process to review loan calculations and the allowance for loan losses. The committee will meet quarterly and review reports from Portfol. Meeting minutes will document updates, decisions, and changes.Corrective Action Plan TimelineFinalize and implement the loan loss methodology: by December 2026Begin monthly Portfol-to-QBO reconciliations: by September 2026Fully hand over all loans to Amerinat by end of 2026; Land Leases will remain “in-house”Continue staff training and Executive-level reviewDesignated Employee Responsible for Corrective Action-Director of Operations-Accounting Specialist2025-002 [2023-002]—FINANCIAL CLOSE AND RESTATEMENTS TO BEGINNING NET ASSETSType of Finding: (A) Material Weakness in Internal Control Over Financial ReportingStatement of ConditionDuring the audit of the financial statements, we noted that material adjustments and restatements were necessary to correct errors in the current and previously reported financial statements. A summary of the areas and the net effect of the changes are as follows: Type Amount, net Accounts Receivable $ (13,490) Grants and Contracts Receivable 830,747 Accrued Interest 5,798 Amortizing Loan Receivable 419,551 Non-Amortizing Loans Receivable (433,722) Land Held in Trust (61,323) Other Assets (145,000) Prepaid Expenses (61,940) Notes Receivable (195,000) Developments Projects (184,559) Real Estate Inventory to Sell (333,079) Fixed Assets (785,081) ROU Accumulated Amortization (7,511) Accounts Payable (807) Due to Grantor 10,000 Grant Advances (97,963) Accrued Expenses (6,249) Other Current Liabilities 52,841 Lease Liabilities 7,845 Notes Payable (9,710) Net Assets 1,154,733 Total $ 146,081 CriteriaAccounting Standards Codification (ASC) 265 “Presentation of Financial Statements—Communicating Internal Control Related Matters Identified in an Audit” requires that deficiencies in internal control over financial reporting be communicated to those charged with governance when the design or operation of a control does not allow management or employees to prevent or detect misstatements on a timely basis.The correction of material misstatements indicates the existence of a material weakness in internal control over the maintenance of the organization’s financial statements.EffectThe material adjustments and restatements resulted in significant changes to the current year balances and beginning balances of the organization’s unrestricted and restricted net assets. These adjustments could potentially undermine the stakeholders' confidence in the financial information presented by the organization and may lead to difficulties in securing future funding or maintaining current donor relationships.CauseThe material misstatements were caused by a weakness in the development and implementation of internal controls and financial reporting processes, as well as significant turnover in the organization’s management.RecommendationWe recommend the Housing Trust strengthens its internal controls and financial reporting processes to prevent future occurrences of such errors. This could involve adding additional staff, training current accounting staff and implementing more robust review procedures to ensure that all financial reporting is in strict accordance with GAAP. View of Responsible OfficialThe Housing Trust acknowledges the finding. In prior years, however, internal controls were insufficient. There was no formal month-end close or review process, and prior audits relied on outdated balances without verification. Under new leadershipA formal monthly close calendar has been established, with the monthly close to be completed within 10-15 business days.Create a supporting schedule for every balance sheet account. These schedules will be used as part of the monthly reconciliation process and will be certified.A grant receivable roll-forward will be prepared for each grant, compared to QuickBooks, and reconciled monthly.Each development project will have its own subledger, which will be reconciled monthly.A detailed fixed asset register will be maintained and reconciled quarterly.6. To help prevent future restatements, establish a formal journal-entry control process that requires appropriate supporting documentation and approvals.7. Establish a policy requiring documentation and approval for any changes made to beginning balances.8. The CEO and Finance Committee will perform monthly analytical reviews using the balance sheet, profit and loss statement, and actual-to-budget comparisons.9. Establish a reconciliation exception and audit adjustment log to track outstanding issues requiring resolution, including a timeline for resolving each item.Corrective Action Plan Timeline The timeline to complete this is prior to December 31, 2026.Designated Employee Responsible for Corrective Action-Director of Operations-Accounting Specialist2025-003 [2024-003] - GRANT TRACKING AND SEFA RECONCILIATIONFederal Agency: U.S. Department of Housing and Urban Development (HUD)Federal Program: Housing Opportunities for Persons With AIDS (HOPWA)Assistance Listing Number: 14.241Award Number and Period: [NMH240051], [November 1, 2024 – October 31, 2027]Type of Compliance Requirements: Internal Controls Type of Finding: (B) Significant Deficiency in Internal Control Over Financial ReportingKnown Questions Cost: NoneStatement of ConditionDuring our audit, we identified initial differences between expenditures reported on the Schedule of Expenditures of Federal Awards (SEFA) and the general ledger. Management subsequently provided additional supporting schedules and completed a reconciliation of the SEFA to the general ledger. However, the reconciliation required manual effort because one federal award included program income amounts that had not been properly reconciled or corrected, another federal award had expenses that did not belong to the award, and recycled funds were tracked separately partially only from new grant funds in the accounting records. Some of expenses did not have appropriate backup documentation, however, the billing to the grant was correct. Expenses from program income for salaries did not match the timesheets. CriteriaPer 2 CFR 200.302 and 200.510(b), recipients of federal awards must maintain accurate, current, and complete records that adequately identify the source and application of funds. Grant expenditures must be traceable to the financial records and properly classified. Program income, including recycled funds, must be used and tracked in accordance with federal requirements and grantee policies. Specifically, all grants should be tracked separately in the general ledger, and the revenue and expenses should match the reimbursement grants. The SEFA reconciliation should be done thoroughly and discrepancies reconciled or resolved, if that is the case. The policies for recycling the funds should be updated with the financial tracking in the general ledger and update with all grantor recommendations. The HOPWA program policy was updated in July 2025.The recycled funds received/spent should be separately tracked and used per policies and grantor recommendations.EffectThe lack of properly tracking expenditures and recycled funds increases the risk of misstating the SEFA, billing non-allowable or duplicate costs to the grantor, and not meeting timeliness or use restrictions related to program income. This may lead to questioned costs or future audit findings.Recycled funds not properly tracked separately may result in noncompliance with the application of loan funding. CauseThe issues stemmed from frequent staff turnover and the complexity of accounting for loans and recycled funds across departments. RecommendationWe recommend the Housing Trust:Revise and implement grant management policy and procedures that ensure each grant has a dedicated general ledger account.Require all reimbursement requests to be supported by general ledger detail.Ensure program income and recycled funds are separately tracked in accordance with federal guidelines (separate classes).Establish regular reconciliations between Finance and Program records to maintain consistency.View of Responsible OfficialThe Housing Trust acknowledges the finding. Corrective Action Plan: 1. A master grant register has been created that includes all active grants and federal awards.2. Each grant will have a unique class/project established in QuickBooks to capture payroll and other grant-related expenses. Reports will be generated monthly.3. Each grant will be reconciled monthly.4. Grant reimbursement requests will be supported by appropriate documentation.5. Payroll review procedures have been established to confirm that payroll costs are properly allocated to grants.6. Program income will be tracked separately for all applicable income and expenditures.7. Monthly SEFA reconciliations will be completed for all grants, including grants that do not meet the definition for inclusion in the SEFA.8. A grant reconciliation exception log will be established to track outstanding issues, responsible parties, and timelines for resolution. Corrective Action Plan Timeline- Finalize and adopt new Grant Management Policies: by September 2026- Implement monthly SEFA reconciliations: by September 2026- Complete staff training on program income and federal grant tracking: by September 2026Designated Employee Responsible for Corrective Action-Director of Operations-Accounting SpecialistCurrent Year Findings 2025-004 - Program Income Federal Agency: U.S. Department of Housing and Urban Development (HUD)Federal Program: Housing Opportunities for Persons With AIDS (HOPWA)Assistance Listing Number: 14.241Federal Award: [NMH240051], [November 1, 2024 – October 31, 2027]Compliance Requirement: Program Income Known Questions Cost: None Type of Finding: (F, G) Significant Deficiency in Internal Control Over Compliance of Federal Awards and Instance of Noncompliance related to Federal Awards Statement of Condition During 2025, the Housing Trust received certain repayments of loans originally funded by HOPWA awards. Of this amount, certain amount may have remained unspent or had not been recorded/reconciled in accordance with HUD requirements as of December 31, 2025. Management did not maintain a documented control to identify HOPWA repayment receipts, determine the applicable award requirements, reconcile receipts and expenditures among IDIS, QuickBooks, and the program-income subsidiary record, and document approval of their disposition. Criteria Under 2 CFR 200.307(c), program income earned after a Federal award’s period of performance is subject to Federal requirements only when required by Federal agency regulations or the terms and conditions of the award, and the Federal agency may establish appropriate disposition requirements through closeout. HUD may require HOPWA-funded loan repayments received after the original award period to be recorded as program income.CauseThe Housing Trust had not designed and assigned ownership of a formal program-income and grant-closeout control addressing repayments generated from HOPWA-funded loans after the originating award’s period of performance. Effect Program income may have been subject to incorrect or untimely reporting/use, increasing the risk of noncompliance and misstatement of federal expenditures. Known questioned costs were unknown. RecommendationHousing Trust should implement a documented monthly program-income reconciliation and grant-closeout control that identifies the originating award, applicable HUD disposition requirement, IDIS receipt, QBO classification, eligible use, remaining balance, reviewer approval, and resolution of differences. Evidence of HUD determinations for post-period receipts should be retained with the reconciliation.Views of Responsible Officials: SFCHT acknowledges the finding and notes that the New Mexico HOPWA program is the only documented HUD grant that funds mortgages.Management has established a formal process to identify and track repayments associated with HOPWA-funded loans. Management will maintain a subsidiary program income register that identifies the originating federal award, receipts, applicable HUD disposition requirements, accounting classification, eligible expenditures, and remaining balance. Program income activity will be reconciled monthly among loan-servicing records, QBO, IDIS, and supporting program records. Written HUD determinations regarding post-period repayments will be retained when applicable.Corrective Action Plan TimelineAn onsite meeting with HUD HOPWA representatives is scheduled for September 10, 2026, at the Santa Fe offices. During this meeting, policies and procedures, including the program income policy, will be reviewed and formalized, and a HUD determination log will be established.The HOPWA Program Income Register will be implemented, and repayment schedules for HOPWA loans will be documented in the master loan inventory. Implementation date: July 2026.HOPWA program income will be expended before additional HOPWA IDIS reimbursement requests are approved.A historical review of HOPWA loans and funding sources will be completed. Target date: August 2026.QBO, Portfol, Amerinat, and IDIS will be reconciled monthly. Beginning: July 2026 and ongoing.Post-period repayments and related HUD determinations will be reviewed. Target date: September 2026.Designated Employee Responsible for Corrective Action Director of Operations, with assistance from the Accounting Specialist and HOPWA HUD program staff, as applicable.Signature Title

Finding 2025-001: Reporting – Community Development Block Grant/State’s Program and Non- Entitlement Grants in Hawaii Name of Contact Person: Ashley Carson, Chief Counsel Management’s Views and Corrective Action Plan: The Legal & Compliance Department is responsible for the submission of the Annual Performance Report for the Recovery Housing Program and agree with the finding. For 2025, MaineHousing was experiencing an error in HUD’s Disaster Recovery Grant Reporting (DRGR) system with submission of the report and reached out to HUD for assistance. HUD was non-responsive to the first two requests for assistance, and a third request was not made until after the report filing deadline. HUD responded to the third request and assisted by providing technical assistance which allowed the report to be submitted. The report was not filed in a timely manner due to the DRGR system errors and the elapsed time between follow-ups with HUD. As system errors for DRGR are a common issue, the following corrective action will ensure that MaineHousing is proactive in the submission of Annual Performance Report for Recovery Housing. The Annual Performance Report for the Recovery Housing Program is due on October 30th. No later than September 15th each year, MaineHousing will attempt to verify any issues with the DRGR system ahead of the reporting deadline and immediately reach out to HUD for technical assistance with any issues found. MaineHousing will gather the information for the Recovery Housing Annual Performance Report at least 45 days ahead of the October 30th deadline (if available) and attempt submission of that report no later than October 5th. If errors occur in DRGR in submitting the report, MaineHousing will immediately contact HUD and continue to follow up weekly until the issue is resolved, attempting other modes of contact if HUD is unresponsive. If the report cannot be submitted in a timely manner, MaineHousing will request that HUD confirm in writing that late submission is acceptable given the circumstances. Proposed Completion Date: Completed

Finding 2025-004: Eligibility – Housing Choice Vouchers Name of Contact Person(s): Allison Gallagher, Director of Housing Choice Vouchers Management’s Views and Corrective Action Plan: The Housing Choice Voucher (HCV) Department at MaineHousing agrees with the finding. The error occurred during the Annual Recertification process on September 1, 2025. While an interim recertification on January 1, 2025 correctly noted the removal of a household member and indicated that the voucher would be downsized, this information was not correctly carried forward and processed during the annual recertification. During the annual recertification, the household’s voucher size was correctly downsized, but the payment standard of $1,801 was mistakenly retained instead of applying the correct one-bedroom standard of $1,383. While the difference in payment standards is $418, the actual HUD subsidy calculation resulted in a Housing Assistance Payment (HAP) overpayment of $335 per month for four months or $1,340 in total. Upon identification of the error, HCV provided the tenant with the required 30-day notice and processed the necessary corrections to the voucher calculation. To prevent recurrence and ensure compliance with HUD regulations, the HCV Department has strengthened its annual recertification quality control procedures. The department has transitioned from a 75% monthly sample review to a mandatory 100% Quality Assurance (QA) review of all monthly processed Annual Recertifications. Proposed Completion Date: Completed

Management will enhance its review of grant reimbursement requests by comparing billed amounts to supporting expense detail before submission and resolving any differences timely. Additional billing review training has been implemented, and management will continue working with the funding agency to resolve the overpayment.

Finding 2025-010: Noncompliance and Significant Deficiency – Allowable Activities and Allowable Costs Agreement or Disagreement: The Agency agrees with the finding. Planned Corrective Action: The Agency will establish written cost-allocation procedures to ensure that expenditures are charged only to the program receiving the benefit and that all allocations are reasonable, equitable, consistently applied, and adequately supported. The Agency will take the following actions: Cost-Allocation Procedures • Review all methodologies used to allocate shared costs among the Public Housing, Housing Choice Voucher, and other Agency programs. • Establish written procedures identifying allowable costs, allocation methods, required supporting documentation, and approval responsibilities. • Ensure costs directly benefiting one program are charged entirely to that program. • Allocate shared costs using a reasonable and documereplacented basis that reflects the benefit received by each program. • Review and update allocation methodologies whenever programs, staffing, services, or operating conditions change. Property Insurance and Prior Allocations • Review property insurance expenses to ensure costs associated with Public Housing properties are not charged to the Housing Choice Voucher Program. • Verify and correct the $14,202.98 property insurance allocation identified during fiscal year 2025. • Review the approximately $24,964.76 in similar allocation errors identified during the two preceding fiscal years. • Record all necessary correcting entries in accordance with applicable accounting requirements and guidance from the Agency’s auditor. • Retain documentation supporting the review, calculations, correcting entries, and final disposition of the prior-period amounts. Documentation and Supervisory Review • Require invoices, allocation calculations, and supporting documentation to be reviewed before expenditures are charged to a federal program. • Implement a supervisory approval process for shared costs and expenditures affecting multiple programs. • Document the allocation basis, calculation, programs charged, reviewer, and date of approval. • Periodically review significant expense accounts to identify allocation errors and ensure corrections are made promptly. • Reconcile financial reports and general-ledger activity to supporting invoices and allocation documentation. Training and Ongoing Monitoring • Provide training to accounting and administrative personnel regarding federal cost principles, allowable costs, and allocability requirements. • Ensure staff understand that federal program funds may only be used for costs that benefit that program. • Conduct periodic internal reviews of expenditures charged to the Housing Choice Voucher Program. • Report the results of monitoring activities and any unresolved allocation issues to the Executive Director and Board of Commissioners. • Provide additional training or corrective guidance when errors or inconsistencies are identified. Management will periodically evaluate compliance with the cost-allocation procedures and report the results and any unresolved deficiencies to the Board of Commissioners. Estimated Completion Date: Written cost-allocation procedures and supervisory review requirements will be implemented by October 31, 2026. The review and correction of the fiscal year 2025 property insurance allocation and prior-year allocation errors will be completed by December 31, 2026, with quarterly monitoring thereafter. Responsible Parties: Executive Director, financial and accounting personnel, applicable program staff, contracted accounting professionals, and Board of Commissioners.

Finding 2025-009: Noncompliance – Special Tests and Provisions Agreement or Disagreement: The Agency agrees with the finding. Planned Corrective Action: The Agency will establish written procedures and a compliance calendar addressing waiting-list administration, annual utility allowance reviews, and required inspection quality-control reviews. The Agency will take the following actions: Waiting-List Administration • Review existing waiting-list records and procedures. • Maintain documentation supporting applications, preferences, applicant selections, withdrawals, removals, updates, and offers of assistance. • Ensure applicants are selected in accordance with the Administrative Plan and documented waiting-list order. • Restrict and monitor access to waiting-list records. • Periodically reconcile system-generated waiting-list reports to supporting documentation. • Conduct and document periodic waiting-list purges in accordance with the Administrative Plan. Utility Allowances • Complete and document an annual review of the Voucher program’s utility allowance schedules. • Retain utility rates, consumption information, calculations, conclusions, and supporting documentation. • Present revisions to the Board for approval when an adjustment is warranted. • Document the review even when no change to the utility allowance schedule is required. Inspection Quality Control • Establish procedures for selecting and completing the required number of quality-control inspections. • Ensure the quality-control sample is selected in accordance with applicable HUD requirements. • Use a qualified individual other than the original inspector to perform the quality-control review. • Document the units reviewed, deficiencies identified, comparison to the original inspection, and corrective action taken. • Apply the HUD inspection standard in effect for the Voucher program at the time of the inspection. • Use quality-control results to identify training needs and improve inspection consistency. Management will review compliance with these requirements periodically and report the results and any unresolved deficiencies to the Board of Commissioners. Estimated Completion Date: Written procedures and the compliance calendar will be implemented by October 31, 2026. The outstanding utility allowance review and initial inspection quality-control review will be completed by December 31, 2026, with annual and periodic monitoring thereafter. Responsible Parties: Executive Director, Housing Choice Voucher program staff, designated inspection personnel, and Board of Commissioners.

Finding 2025-008: Material Weakness in Internal Control Over Compliance – Housing Choice Voucher Program Agreement or Disagreement: The Agency agrees with the finding. Planned Corrective Action: The Agency will develop and implement a comprehensive system of written internal controls and compliance procedures for the Housing Choice Voucher Program. The Agency will also: • Develop standardized tenant-file checklists covering eligibility, income, assets, deductions, citizenship or eligible immigration status, Social Security numbers, EIV documentation, rent reasonableness, inspections, leases, HAP contracts, annual and interim reexaminations, portability, and other applicable requirements. • Require the checklist to be completed and maintained in each participant file. • Establish and document supervisory or quality-control reviews of an appropriate sample of applicant and participant files. • Correct deficiencies identified during supervisory reviews and document the corrective action taken. • Update the Administrative Plan to incorporate applicable HOTMA provisions and current HUD guidance. • Establish procedures for reviewing HUD notices, regulations, handbooks, and other program guidance. • Provide regular training to employees responsible for administering the Voucher program. • Clearly assign program responsibilities and develop written procedures to reduce dependence on the knowledge of individual employees. • Maintain a compliance calendar for recurring program responsibilities and reporting deadlines. • Provide the Board with periodic reports regarding compliance reviews, deficiencies identified, and corrective actions completed. Estimated Completion Date: Checklists and supervisory-review procedures will be implemented by October 31, 2026. Written procedures, policy updates, and initial staff training will be completed by December 31, 2026, with ongoing monitoring thereafter. Responsible Parties: Executive Director, Housing Choice Voucher program staff, designated supervisory staff, and Board of Commissioners.

Housing Voucher Cluster – FALN No. 14.871 & 14.879 – Allowable Costs, Payroll Disbursements - AB Recommendation: We recommend the Commission implement procedures to ensure payroll costs charged to the Housing Voucher Cluster are properly supported, accurately allocated, and reconciled to payroll records. Management should review and approve payroll allocations and investigate any variances to ensure compliance with 2 CFR 200.430. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. This error was caused by HCHC’s timekeeping and payroll system, ADP. The error resulted in overtime hours for certain employees being paid twice in one pay period. ADP has admitted to the error and reimbursed HCHC for the costs. In order to ensure that this type of error does not occur again, HCHC is taking a number of steps. Payroll and Overtime Reconciliation: Human Resources will print and review the overtime report for each payroll cycle and reconcile the overtime hours reflected on the report against the applicable employees’ payroll records/pay stubs. Any discrepancies identified during this review will be researched and addressed promptly. Time and Attendance System: The Commission is transitioning to a new time and attendance system that is better aligned with the Commission’s operational and payroll needs. The goal of this transition is to strengthen timekeeping controls, improve the accuracy of payroll information, and provide clearer documentation to support payroll processing and allocation. Employee Payroll Review and Reporting Procedures: The Commission is updating the Employee Handbook to provide employees with clear guidance on reviewing their pay and reporting potential payroll discrepancies. The updated guidance will outline the process employees should follow if they believe they have been overpaid, underpaid, or identify another discrepancy with their compensation. Name(s) of the contact person(s) responsible for corrective action: Ikea Smith, HR Manager and Bei Hua, CFO Planned completion date for corrective action plan: January 1, 2027.

Housing Voucher Cluster – FALN No. 14.871 & 14.879 – HQS Failed Inspections - N Recommendation: We recommend that the Commission review their abatement procedures to ensure any unit that has not met the HQS standards is properly abated as well as review their procedures for enforcing correction of deficiencies to tenants. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: HCHC believes that this finding was caused by the previous inspection company failing to properly communicate the results of its inspections. The new inspection companies are required to use the Commission’s Yardi software to schedule, perform and enter results. This will enhance the speed and accuracy of inspection reporting. In addition, the inspection companies are required to provide weekly reports that will be discussed and reviewed with the voucher team. Based on the results of the inspection the voucher team will be able to send abatement letters, warning letters, and/or proposed termination letters to ensure compliance with the inspection and abatement process. Name(s) of the contact person(s) responsible for corrective action: Crystal Gorham, Director of Rental Assistance Planned completion date for corrective action plan: All corrections should be reflected by December 2026.

Housing Voucher Cluster – FALN No. 14.871 & 14.879 – HQS Inspections - N Recommendation: We recommend the Commission review its HQS inspection policies and procedures and discuss these standards with the third-party inspection company that it utilizes for these inspections to ensure all inspections are performed timely and that all necessary documentation is maintained for each inspection. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: HCHC’s third-part inspection company was not able to meet the terms of its contract or the HCVP requirements, partly due to staff turnover. As a result, HCHC terminated the contract as of the end of June, 2026, and hired two new contractors. HCHC has a third inspection company under contract to fill in when needed. Staff is providing the new contractors with a detailed SOP to ensure a mutual understanding of all necessary inspection actions. HCHC staff will meet with the inspection companies weekly to discuss progress, results and issues that arise during inspections. Name(s) of the contact person(s) responsible for corrective action: Crystal Gorham, Director of Rental Assistance Planned completion date for corrective action plan: in progress all correction should be reflected by December 2026.

Housing Voucher Cluster – FALN No. 14.871 & 14.879 – Eligibility - E Recommendation: We recommend that the Commission review its process for collecting third party income support to ensure that accurate data is used as part of the rent and HAP calculation. Explanation of disagreement with audit finding: There is no disagreement with the audit finding. Action taken in response to finding: HCHC staff attended a NAHRO training that provided an in-depth review of programmatic changes. In the training the HUD hierarchy of collecting documents was reviewed while also referencing the Commission’s Administrative Plan. The voucher team meets at least monthly to discuss HCVP issues, tools, and solutions that both meet the needs of the participants and comply with HUD regulations. Name(s) of the contact person(s) responsible for corrective action: Crystal Gorham, Director of Rental Assistance Planned completion date for corrective action plan: September 2026.

Finding: 2025-001 and 2025-002 Federal Agency: Department of Housing and Urban Development Federal Program: Housing Choice Vouchers Audit Finding: Material Weakness Condition Identified: During the audit review of 40 participant files tested for compliance with eligibility, annual reevaluations, tenant rent, utility allowances, and housing assistance payment requirements, the audit identified the following errors: o 15 files were not completed in a timely manner. o 1 file miscalculated the total tenant payment due to incorrect deductions applied. o 9 instances of misaligned utility responsibility across HAP Contract and Lease Agreement. Corrective Action Plan The Ferndale Housing Commission is committed to correcting all findings and ensuring accuracy in file completion, correct participant deductions, as well as correct utility responsibilities in the future. It is worth noting that the FHC was not made aware of the Zip-Code payment standards until 2026, although during a shortfall meeting held on August 25, 2025, the utility payment standards were mentioned and confirmed that they were pulled from the HUD SAFMR website, nothing regarding zip code payment standards were mentioned. Planned Corrective Actions The following actions have been implemented to ensure accuracy in reporting: All annual and interim rent certifications will be reviewed by management for accuracy prior to being accepted and submitted. o The zip code payment standards will be implemented after the HUD required mandatory one-year waiting period. The transition was explained in a letter sent to all HCV participants. o The Ferndale Housing Commission has repositioned staff to bring delinquent annual/interim reexaminations current. The restructuring was based on the strengths of the staff and has resulted in greatly reduced instances of delayed reexaminations. o All files will be reviewed for accuracy by management before submission to PIC to ensure correct uniformity and correct calculation of income, deductions, allowances, assets, payment standards, and utility responsibilities. Staff Training and Management Overview o The FHC has established mandatory weekly meetings to discuss file accuracy and ensure all staff follow the same rules, regulations, payment standards, deductions, allowances. o During the mandatory meetings, the HUD 50058 forms will be used as teaching tools and completed by hand by each staff member to ensure full understanding of the 50058 and accuracy in reporting responsibilities. o There have been monthly delayed annual recertification reports pulled and discussed with staff, with deadlines provided to bring all reports current. Strengthened Internal Controls The FHC has established checklists to be included in each file during reexamination. The checklists will list each procedure to be followed, as well as a list of mandatory documents that must be included in each file. Management will review each file prior to finalization until a noted consistency in reexamination has been reached, then periodical reviews will be implemented. Anticipated Date of Completion The corrective actions outlined have either been fully implemented or will be implemented by October 31, 2026.

Finding: 2025-001 and 2025-002 Federal Agency: Department of Housing and Urban Development Federal Program: Housing Choice Vouchers Audit Finding: Material Weakness Condition Identified: During the audit review of 40 participant files tested for compliance with eligibility, annual reevaluations, tenant rent, utility allowances, and housing assistance payment requirements, the audit identified the following errors: o 15 files were not completed in a timely manner. o 1 file miscalculated the total tenant payment due to incorrect deductions applied. o 9 instances of misaligned utility responsibility across HAP Contract and Lease Agreement. Corrective Action Plan The Ferndale Housing Commission is committed to correcting all findings and ensuring accuracy in file completion, correct participant deductions, as well as correct utility responsibilities in the future. It is worth noting that the FHC was not made aware of the Zip-Code payment standards until 2026, although during a shortfall meeting held on August 25, 2025, the utility payment standards were mentioned and confirmed that they were pulled from the HUD SAFMR website, nothing regarding zip code payment standards were mentioned. Planned Corrective Actions The following actions have been implemented to ensure accuracy in reporting: All annual and interim rent certifications will be reviewed by management for accuracy prior to being accepted and submitted. o The zip code payment standards will be implemented after the HUD required mandatory one-year waiting period. The transition was explained in a letter sent to all HCV participants. o The Ferndale Housing Commission has repositioned staff to bring delinquent annual/interim reexaminations current. The restructuring was based on the strengths of the staff and has resulted in greatly reduced instances of delayed reexaminations. o All files will be reviewed for accuracy by management before submission to PIC to ensure correct uniformity and correct calculation of income, deductions, allowances, assets, payment standards, and utility responsibilities. Staff Training and Management Overview o The FHC has established mandatory weekly meetings to discuss file accuracy and ensure all staff follow the same rules, regulations, payment standards, deductions, allowances. o During the mandatory meetings, the HUD 50058 forms will be used as teaching tools and completed by hand by each staff member to ensure full understanding of the 50058 and accuracy in reporting responsibilities. o There have been monthly delayed annual recertification reports pulled and discussed with staff, with deadlines provided to bring all reports current. Strengthened Internal Controls The FHC has established checklists to be included in each file during reexamination. The checklists will list each procedure to be followed, as well as a list of mandatory documents that must be included in each file. Management will review each file prior to finalization until a noted consistency in reexamination has been reached, then periodical reviews will be implemented. Anticipated Date of Completion The corrective actions outlined have either been fully implemented or will be implemented by October 31, 2026.

FINDING No. 2025-002: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155 Recommendation: Management should take corrective measures to prevent further escrow disbursements for exempt taxes and should obtain timely refunds for amounts that were incorrectly disbursed. Action Taken: Management has properly filed the real estate exemption forms with the District of Columbia in prior years. When real estate funds were improperly withdrawn by the mortgage company and/or its tax vendor, management promptly identified the issue and recorded a journal entry (debit accounts receivable, credit escrow deposit) to recognize the receivable. Beginning in 2024 and continuing through 2025, management made multiple attempts to follow up with the mortgage company representatives to request the refund. Management has taken proactive and persistent steps to pursue resolution. As of early 2026, the refund has been successfully received. Management also expects that the mortgage company will no longer withdraw real estate tax payments for the property going forward. Based on the above, management believes appropriate controls were in place and effectively operated, as evidenced by the timely identification of the issue and the actions taken to remediate it. If the Oversight Agency for Audit has questions regarding the plan, please call Irene Phillips at 954-835-9200. Sincerely yours, Irene Phillips, CFO Irene Phillips CFO

Oversight Agency for Audit, Senior Citizens Housing Development Corporation of Washington respectfully submits the following corrective action plan for the year ended December 31, 2025. Name and address of independent public accounting firm: Bellows Associates, P.A., 5401 N University Drive, Suite 201, Coral Springs, Florida 33067. Audit period: January 1, 2025 through December 31, 2025 The findings from the December 31, 2025 schedule of findings and questioned costs are discussed below. The findings are numbered consistently with the numbers in the schedule. SECTION III - FINDINGS AND QUESTIONED COSTS – MAJOR FEDERAL AWARD PROGRAMS AUDIT FINDING No. 2025-001: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155 Recommendation: Management should submit a form HUD-9250 to withdraw the excess deposits and implement procedures to ensure the correct amounts are deposited into the replacement reserve account each month. Action Taken: The Project will submit a form HUD-9250 to withdraw the excess replacement reserve deposits as recommended. In addition, management will strengthen its review procedures to ensure that replacement reserve deposits are made in the correct HUD-approved amounts and that all reserve account adjustments are addressed on a timely basis.

Finding Number: 2025-001 Planned Corrective Action: The Housing Authority has contracted with the Nelrod Company a national technical consulting firm specializing in Federal Assisted Housing Programs to perform our rent reasonableness determinations. All files moving forward will have a rent reasonableness determination. Anticipated Completion Date: 9/3/2026 Responsible Contact Person: Zackary Dye, Executive Director

The Cooperative will make deposits to the general operating reserve to meet the HUD regulatory agreement. In September 2025, the Cooperative entered into a management agreement with Paramark Real Estate Services to manage the Cooperative. The management agent will implemement a process to ensure deposits are made as required by the regulatory agreement.

The Cooperative will obtain appropriate approvals for withdrawls exceeding 20% of the general operating reserve to meet the HUD regulatory agreement. In September 2025, the Cooperative entered into a management agreement with Paramark Real Estate Services to manage the Cooperative. The management agent will implement a process to ensure approvals are obtained as required by the regulatory agreement.

A master schedule has been crated to identify all critical due dates for regulatory requirements. An internal log is maintained to identify all due dates on critical reporting timelines and regulatory requirements.

We will review the findings with the community and review the internal controls together and go over the importance of following the internal controls. Meet with the community and review internal controls.

Authority's Response and Planned Corrective Action: The Authority accepts the recommendation of the auditor. The Authority will increase oversight in the Housing Voucher Cluster to ensure that established internal control policies are being followed on a timely basis. Crystal Coleman, Contract Administrator HCV Program, is responsible for implementing this corrective action by December 31, 2026.

Authority's Response and Planned Corrective Action: The Authority accepts the recommendation of the auditor. The Authority will increase oversight in the Housing Voucher Cluster to ensure that established internal control policies are being followed on a timely basis. Crystal Coleman, Contract Administrator HCV Program, is responsible for implementing this corrective action by December 31, 2026.