Finding Text
FINDING No. 2024-001: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155
Finding Resolution Status: Resolved.
Information on Universe Population Size: All replacement reserve deposits for the year ended December 31, 2024.
Sample Size Information: All replacement reserve deposits for the year ended December 31, 2024.
Identification of Repeat Finding and Finding Reference Number: No.
Criteria: In accordance with HUD, timely monthly deposits must be made to the Project’s reserve for replacement account.
Statement of Condition: As a result of not requesting a timely increase to the reserve for replacement account, the Project made unauthorized deposits to the account totaling $18,000.
Cause: The Project’s reserve for replacement funds authorization form expired on April 30, 2024. An updated funds authorization form was not submitted in a timely manner and HUD’s approval was not obtained until January 8, 2025.
Effect or Potential Effect: The Project overfunded the reserve for replacement account by $18,000 in the current year.
Auditor Non-Compliance Code: N – Reserve for Replacements Deposits.
Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations have been adopted.
Recommendation: Management should implement procedures to ensure that the increase to the reserve for replacement account is properly applied with timely HUD authorization via form HUD-9250.
Response Indicator: Agree.
Completion Date: 01/08/2025
Response: Staff training has been provided to ensure the correct RR amounts are deposited and a timely increase from HUD is received. This has been included in the monthly reporting procedures.