Finding Text
US Department of Housing and Urban Development
Section 207/223(f) Mortgage Insurance Program
Assistance Listing No. 14.134
Criteria: The Project is required by HUD to make monthly deposits to the
replacement reserve in the amount prescribed by HUD.
Condition: The Project is required by HUD to make monthly deposits to the
replacement reserve in the amount prescribed by HUD. Payments for the year
under audit were lower than the required deposits.
Cause: The Project made monthly deposits to the replacement reserve using
the previous HUD communicated amount and did not update the deposit with
the new amount.
Effect: The Project was not in compliance with HUD requirements regarding
monthly deposits to the replacement reserve.
Perspective Information: At December 31, 2024, cumulative replacement
reserve account deposits were short by $6,222.
Recommendation: Management should make a catch-up deposit to the reserve
for replacements for $6,222. We recommend the Project strengthen procedures
to ensure updates to the monthly replacement reserve deposits are made in the
correct amount.
View of Responsible Officials: Managing Agent concurs with the finding
and agrees with the auditors' recommendation. Management made a
deposit of $6,222 on June 5, 2025. No further action is required.