Finding Text
Finding 2024-001: U.S. Department of Housing and Urban Development, Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Projects (Section 223(f)/207).
Statement of Condition: During the year ended December 31, 2024, only four of the required twelve monthly deposits of debt service savings were deposited into the residual receipts account.
Criteria: The Debt Service Savings Agreement requires that 50% of the monthly debt service savings be deposited into the Project's residual receipts account in monthly deposits of $2,111.
Effect: Noncompliance with HUD regulations.
Cause: Operating cash shortfalls.
Context: A test to compare actual deposits to the residual receipts account to the required deposits to the residual receipts account. During the year ended December 31, 2024, actual deposits to the residual receipts account were $8,444 and the required deposits to the residual receipts account were $25,331.
Questioned Costs: N/A
Recommendation: We recommend that management fund the delinquent residual receipts deposits as soon as the Project has sufficient operating cash flow.
Views of Responsible Officials and Corrective Action Plan: Management agrees with the finding and will fund the delinquent residual receipts as operating cash flow allows.