Finding Text
Finding # 2022-002 Federal Grantor: Department of Housing and Urban Development AL # / Program : 14.155 - Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects Type of Finding: Federal Award Finding Finding Resolution Status: Unresolved Information on 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. Criteria: The Corporation entered into a regulatory agreement with HUD dated January 1, 2013 on form HUD-92466M (Rev. 04/11). Section VI. Paragraph 36. f. states the Corporation shall not without prior written approval of HUD convey, assign or transfer any right to receive the Rents of the Mortgaged Property, except as provided in the Security Instrument. Statement of Condition: The Corporation entered into an Assignment of Leases with YWCA Golden Gate Silicon Valley (YWCA GGSV) on March 1, 2021. Cause: The Assignment of Leases constitutes an unauthorized distribution of project assets to an affiliate organization. Effect or Potential Effect: The Corporation is not in compliance with the HUD regulatory agreement dated January 1, 2013 Section VI Paragraph 36. f. Auditor Non-Compliance Code: H - Unauthorized Distribution of Project Assets Questioned Costs: $161,786 Reporting Views of Responsible Officials: Management agrees with finding. Context: During testing of commercial rents, it was noted that the Corporation had assigned their interest in the commercial leases to YWCA GGSV. Recommendations: We recommend the Corporation terminate the Assignment of Leases agreement with YWCA GGSV and that the commercial rents due under the leases be paid to the Corporation. Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Management agrees with finding. Response Indicator: Agree Completion Date: 12/31/2022 Response: See Corrective Action Plan