Finding 1074704 (2023-001)

2023-001 14.155 – Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Criteria or specific requirement To ensure that assisted tenants pay rents commensurate with their ability to pay, tenants must undergo annual recertification. They must also undergo an interim recertification when their family’s income cumulatively increases by $200 or more per month. Any changes should be input on the tenant’s HUD-50059 form, and, for interim recertifications, if the tenant complied with the reporting requirements, rent increases should be implemented after a 30 day advance notice period. Condition During testing, we identified that certain tenants had an improper amount of rent calculated and applied to their rental agreement or paid an incorrect amount. Context Of the three tenants tested, one tenant had an inaccurate amount listed on the Cash Value of Assets section of their HUD-50059 form, which, in turn, affected the amount of rent that they were required to pay. Another tenant underwent an interim recertification, which noted that a rent increase was required, and notification was given to the tenant in May 2023. However, that increase was implemented retroactively to April 2023. Cause For the first situation noted above, the Cash Value of Assets calculated by the Organization only summed five of the six months’ bank statements provided for average, but the total was still divided by six months. For the second situation, the tenant had only recently moved in, and they had been in the process of applying for government benefits at the time of the move in. During the tenant application process, the tenant was notified that a rent increase would be required once the benefits went into effect. However, the official notice was not provided with 30 days advance notice prior to implementing the increase. Effect Two tenants had incorrect amounts applied to their rental agreements. Recommendation Procedures should be reviewed to ensure that all tenants pay an accurate amount for their rental agreements. Views of responsible officials See corrective action plan.