Finding Text
Reference Number 2022-002 - Eligibility Finding Reference Number 2022-002 - Eligibility Finding Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Federal Programs: Home Investment Partnership Program Assistance Listing Number 14.239 Department of Housing and Urban Development Recommendation: We recommend that the Organization: 1. Develop and implement a comprehensive policy and procedure for verifying tenant eligibility and calculating rent amounts in compliance with HOME program requirements. 2. Provide training to staff responsible for tenant intake, income verification, and rent calculations to ensure compliance with federal regulations. 3. Perform periodic reviews and audits of tenant files and rent schedules to ensure ongoing compliance. Response: HOMECorp will make use of Yardi Breeze Premier Affordable Property Management CRM feature which allows both HOMECorp and our tenants to track their program compliance, maintenance requests, leases, lease renewals and annual recertifications. This information will be saved/stored in the cloud. This was implemented on 05/01/23 through coordination of the Yardi Implementation Team and the executive director. During 2021 – 2022, HOMECorp’s management team was significantly impacted by COVID and despite PPP loan retention efforts we lost all our staff and transitioned our HUD Certified Housing Counselor to Property Manager. During this time, the Executive Director, left as well as two (2) interim Executive Directors, who responsibilities were general management. They lacked the training and experience in Affordable Housing Management to help our property manager to maintain our program compliance procedures. Since the new Executive Director onboarded in April 2023, the property manager has been trained on our policy and procedure for verifying tenant eligibility and calculating rent amounts in compliance with HOME program requirements, tenant intake, income verification, and rent calculations to ensure compliance with federal regulations. This is done in Yardi Affordable compliance worksheet. Quarterly periodic reviews and audits of tenant files and rent schedules are performed to ensure ongoing compliance. Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Federal Programs: Home Investment Partnership Program Assistance Listing Number 14.239 Department of Housing and Urban Development Condition: During the audit, it was noted that the organization did not comply with the eligibility requirement of the Home Investment Partnership Program. The Organization did not maintain adequate documentation to verify, 1). Income eligibility and 2). Rent limitations for 7 out of 9 families receiving housing under the HOME Investment Partnerships Program. The missing or incomplete records included income verification forms, household composition details, and supporting income documentation (e.g., pay stubs, tax returns, or third-party verification). Reference Number 2022-002 - Eligibility Finding Federal Awards Finding – Material Weakness - Failure to Maintain Tenant Files with Adequate Documentation Criteria: 24 CFR §92.1 and §92.203, require participating jurisdictions ensure that only low-income or very low-income families, as defined in 24 CFR §92.2, receive housing assistance. Organizations must determine the annual income of each family, including all persons in the household, in compliance with 24 CFR §92.203. According to 24 CFR sections 92.216 and 92.252, HOME-assisted rental housing units must be occupied only by households that qualify as low-income families. Also, rents charged for HOME-assisted units must not exceed the lesser of: The fair market rent for comparable units in the area as established by HUD; or A rent that does not exceed 30 percent of the adjusted income of a family earning 65 percent of the median income for the area, as determined by HUD.For rental projects with five or more units, at least 20 percent of the HOME-assisted units must be occupied by very low-income families and meet more stringent rent limitations. Additionally, 24 CFR §92.508 requires participating jurisdictions to maintain documentation supporting the income eligibility of each assisted family, for programs with continuing affordable housing requirements. Cause: The organization lacks a comprehensive process and internal controls to ensure all required income eligibility, occupancy and rent calculation documentation is collected, reviewed, and retained in compliance with federal regulations. Effect: The Organization does not maintain required documentation in compliance with the requirements listed above. Failure to comply with these federal requirements could have resulted in ineligible households occupying HOME-assisted units and rent amounts charge in excess of federal limits, potentially creating financial burdens on tenants. This affects compliance with the loan agreements from the county of Essex, New Jersey Department of Consumer Affairs, and New Jersey Housing and Mortgage Finance Agency.