Finding Text
Program: Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Projects Federal Assistance Listing No.: 14.155 Federal Grantor: Department of Housing and Urban Development Statement of Condition: January 1, 2025 increase in replacement reserve deposits was not implemented. Criteria: HUD regulations require that a replacement reserve deposit increase be implemented timely. Effect: Noncompliance with required replacement reserve deposits. Replacement reserve deposits were underfunded by $3,027. Cause: Mortgage servicer failed to increase monthly invoice which went unnoticed by management company. Context: During testing, it was noted that the replacement reserve deposit increase effective for January 1, 2025 had not been implemented. It was noted that the increase was communicated by HUD to the mortgage servicer via email. Recommendation: Management should establish procedures to ensure that replacement reserve increases are implemented by the mortgage servicer to ensure accurate monthly billing and payment. Management’s Response and Corrective Action Plan: Management will establish additional procedures to ensure that future replacement reserve deposit changes are implemented by the mortgage servicer. Management is making the 2025 shortage deposit to the replacement reserve.