Finding 1229770 (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: Replacement reserve deposits. Identification of Repeat Finding and Finding Reference Number: Yes, 2024-001 Criteria: In accordance with HUD, monthly deposits must be made to the Project’s replacement reserve account for authorized amounts, and any increase requires an approved form HUD-9250. Statement of Condition: The Project overfunded the replacement reserve account by $1,750 for the current year and did not withdraw $800 to clear finding 2024-001. Cause: The Project made two additional deposits in excess of the HUD approved monthly funding requirement. Effect or Potential Effect: Overfunded reserve for replacement. Auditor Non-Compliance Code: N – Reserve for Replacements Deposits. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendation will be adopted. Recommendation: Management should submit a form HUD-9250 to withdraw the excess deposits and implement procedures to ensure the correct amounts are deposited into the replacement reserve account each month. Response Indicator: Agree Completion Date: 12/31/2026 Response: The Project will submit a form HUD-9250 to withdraw the excess replacement reserve deposits as recommended. In addition, management will strengthen its review procedures to ensure that replacement reserve deposits are made in the correct HUD-approved amounts and that all reserve account adjustments are addressed on a timely basis.