Finding 1089480 (2024-001)

Assistance Listing (Federal award identification number and year): Mortgage insurance for the purchase or refinancing of existing multifamily housing projects, Assistance Listing Number 14.155, 2013 (Project identification number 085-11150) Auditor non-compliance code: J - Unauthorized management fees Finding resolution status: In process 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. Name of Federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $14,248 Statement of condition 2024-001: For the year ended June 30, 2024, the Corporation did not have a HUD approved Project Owner's/Management Agent's Certification (HUD-9839-B). Criteria: Pursuant to the regulatory agreement and HUD Handbook 5381.5 REV-2, the Corporation's management agent must have an approved Project Owner's/Management Agent's Certification (HUD- 9839-B). Effect: The Corporation is not in compliance with the regulatory agreement. Management fees should not be paid without an approved Project Owner's/Management Agent's Certification (HUD-9839-B). Cause: The Property changed management agent's effective October 1, 2021 and HUD has not returned an executed Project Owner's/Management Agent's Certification (HUD-9839-B) to the new management agent. Recommendation: Management should continue to request the executed Project Owner's/Management Agent's Certification (HUD-9839-B) from HUD. Management should not pay any management fees until the executed Project Owner's/Management Agent's Certification (HUD-9839- B) is received. Completion date: June 30, 2025 Management's response: Agree. Management received email correspondence from HUD on August 12, 2021 that stated the Agent is approved to take over management immediately and the Project Owner's/Management Agent's Certification (HUD-9839-B) would be retroactively effective. Management has continued to seek the executed Project Owner's/Management Agent's Certification (HUD-9839-B) from HUD.