Finding 1132639 (2024-001)

Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Housing Projects (073-11543 and 2011) Auditor non-compliance code: N-Reserve for Replacements Deposits Finding resolution status: Resolved Universe population size: 12 months of deposits to the reserve for replacements. Sample size population: 12 months of deposits to the reserve for replacements. Noncompliance information: See statement of condition 2024-001 for noncompliance. Name of Federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $6,108 Statement of condition # 2024-001: As of December 31, 2024, required deposits to the reserve for replacements totaling $6,108 had not been made. Criteria: Pursuant to item 2(a) of the Regulatory Agreement (form HUD-92465), the Corporation shall establish or continue to maintain a reserve fund for replacements in a separate account and make monthly deposits in amounts as approved in writing by HUD. Effect: The Corporation is not in compliance with the Regulatory Agreement and the reserve for replacements is underfunded by $6,108 as of December 31, 2024. Cause: Management oversight. Recommendation: The Corporation should transfer $6,108 from the operating account to the reserve for replacements account. Completion date: March 6, 2025 Management Response: Management concurs with the finding and agrees with the auditor's recommendation. A transfer was made to fully fund the reserve for replacements account on March 6, 2025.