Finding 1160960 (2025-001)

FINDING No. 2025-001: 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: Residual receipts account. Sample Size Information: Residual receipts account. Identification of Repeat Finding and Finding Reference Number: No. Criteria: As required by HUD regulations, residual receipts account balances in excess of $250 per unit must be applied on a monthly basis to offset Section 8 HAP payments up to the full amount of the monthly subsidy request, depending on the amount of residual receipts available for the offset. Monthly offsets must continue until the residual receipts account reaches the retained balance level of $250 per unit. Statement of Condition: The Project did not offset monthly Section 8 HAP with excess residual receipts in the amount of $494 in a timely manner. Cause: The Project did not abide by the HUD requirement for offsetting Section 8 HAP payments with excess residual receipts in a timely manner. Effect or Potential Effect: The Project received excess Section 8 HAP payments and is liable for the residual receipts available for recapture at year end. Auditor Non-Compliance Code: R – Section 8 Program Administration. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: Management should keep track of the balance in the residual receipts account available for offsetting Section 8 HAP payments. Also, management should ensure timely submission of payment requests through the contract administrator upon discovery of residual receipts available for recapture. Response Indicator: Agree. Completion Date: 03/31/2026 Response: Property accountants will notify the Community Managers and Regional Managers of any residual receipt excess funds monthly to ensure proper and timely payment requests. Management will submit the excess funding in September of 2025 to rectify the current situation.