Finding 1152392 (2024-002)

FINDING No. 2024-002: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155 Finding Resolution Status: Unresolved. Information on Universe Population Size: The insurance and escrow tax account. Sample Size Information: All insurance and tax escrow deposits. Identification of Repeat Finding and Finding Reference Number: Yes, 2023-001 Criteria: Per HUD guidelines, the Project may not excessively fund its escrow accounts. Statement of Condition: Although the Project remains tax-exempt, continued funding to the tax escrow accounts was noted during the audit period, and it was determined that insurance and tax escrows were excessively funded by $9,722. Cause: The Project maintained excessive deposits in the insurance and tax escrow accounts totaling $9,722. Effect or Potential Effect: The Project is unable to utilize excess funding to satisfy current operating obligations. Auditor Non-Compliance Code: S – Internal Control Deficiencies. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendation will be adopted. Recommendation: The Project should make the appropriate transfers out of the insurance and tax escrow accounts to remedy the overfunding and perform regular analysis to ensure that funding is adequate but not excessive. Response Indicator: Agree. Completion Date: 12/31/2025 Response: The verification of the correct funding amounts is now confirmed on a monthly basis and has been added to the monthly close checklist.