Finding Text
Finding reference number: #2025-001 Assistance Listing title and number (Federal award identification number and year): Mortgage Insurance for Purchase or Refinancing of Existing Multifamily Housing Projects, Assistance Listing No. 14.155 (Project identification number 044-11134, 2008) Auditor non-compliance code: N – Reserve for replacement deposits Finding resolution status: Completed Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Name of federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $99,135 Statement of condition #2025-001 (Assistance Listing No. 14.155): Effective May 1, 2025, the required monthly deposit to the reserve for replacements increased from $12,539 to $63,106 based on the capital needs assessment and replacement reserve analysis. The Corporation did not increase the monthly deposits and as of June 30, 2025, the reserve for replacements account is underfunded by $99,135. Criteria: Pursuant to the Regulatory Agreement, the Corporation shall establish and maintain a reserve for replacements in a separate account and make monthly deposits in amounts as approved in writing by HUD. Effect or potential effect: The Corporation is not in compliance with the terms of the Regulatory Agreement. At June 30, 2025, the Property's reserve for replacements account is underfunded by $99,135. Cause: The increase in deposits was not billed by the loan servicer until July 2025. Recommendation: Management should transfer $99,135 from the operating account to bring the reserve for replacements account current. Completion date: July 1, 2025 Management's response: Management concurs with the finding and recommendation. On July 1, 2025, management transferred $99,135 to the reserve for replacements account.