FAC Explorer

Finding 1167144 (2025-001)

Material Weakness Repeat Finding
Requirement
N
Questioned Costs
-
Year
2025
Accepted
2025-12-30
Audit: 378194
Organization: Culpepper Garden Ii, Inc. (VA)
Auditor: BROWN EDWARDS & COMPANY LLP

AI Summary

  • Issue: The mortgage company failed to update the monthly replacement reserve deposit amount from $3,604 to $3,939 starting 10/1/2024.
  • Impact: This oversight violates the HUD regulatory agreement requiring timely adjustments to deposit amounts.
  • Follow-up: Ensure the mortgage company updates the deposit amount and review processes to prevent future discrepancies.

Finding Text

Condition: Per the HUD regulatory agreement, the Corporation is required to make monthly replacement reserve deposits. The required deposit amount increased from $3,604 to $3,939 effective 10/1/2024. For the period from 10/1/2024 through 6/30/2025, the mortgage company continued to draft the $3,604 deposit. Cause: This occurred due to the mortgage company not updating audit-draft of the reserve deposit to the correct amount.

Corrective Action Plan

On july 29, 2024, management notified the mortgage company that the required deposit into the replacement reserve was increasing. The mortgage company, however, did not make the change to the monthly auto-draft until July 2025 mortgage payment and escrows were drafted. At that time 7/8/25, the $3,015 underfunded reserve balance was funded in full

Categories

HUD Housing Programs

Programs in Audit

ALN Program Name Expenditures
14.155 MORTGAGE INSURANCE FOR THE PURCHASE OR REFINANCING OF EXISTING MULTIFAMILY HOUSING PROJECTS $3.24M
14.195 PROJECT-BASED RENTAL ASSISTANCE (PBRA) $1.01M