Finding 1213757 (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: Replacement reserve account. Sample Size Information: All replacement reserve deposits for the year ended September 30, 2025. Identification of Repeat Finding and Finding Reference Number: Yes, 2024-001. Criteria: In accordance with HUD, timely monthly deposits must be made to the Project’s replacement reserve account. Statement of Condition: The Project overfunded the replacement reserve account by $634. Cause: The Project over-corrected the prior period finding, depositing more funds than necessary to resolve the issue. Effect or Potential Effect: Overfunding results in noncompliance with HUD deposit requirements and impacts cash availability for operations. Auditor Non-Compliance Code: N – Reserve for Replacements Deposits Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: Management should implement procedures to ensure that the correct amount is deposited into the replacement reserve account each month. An approved form HUD-9250 should be obtained to remove the excess funds. Response Indicator: Agree. Completion Date: 9/30/2026 Response: The verification of the correct funding amounts is now confirmed against the approved form HUD-9250 on a monthly basis. This step has been added to the month-end close process.