Finding 22665 (2022-004)

Finding # 2022-004 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: HUD Handbook 4381.5 REV-2. paragraph 2.6 states that the management agent may assume management responsibility only after: a. The HUD Loan/Asset Management staff has issued a letter approving the agent proposed by the owner; and b. The Owner and agent have executed and submitted the appropriate Management Certification form (Form HUD-9839a). Statement of Condition: The Corporation entered into a Property Management Agreement with YWCA Golden Gate Silicon Valley (YWCA GGSV) on March 1, 2021. The Corporation did not obtain a letter of approval from HUD and did not execute or submit Form HUD-9839a. Cause: The Corporation did not comply with HUD Handbook 4381.5 REV-2. paragraph 2.6. Effect or Potential Effect: The Corporation is not in compliance with the HUD regulatory agreement dated January 1, 2013 paragraph 21. Auditor Non-Compliance Code: J - Unauthorized Management Fees Questioned Costs: $161,786 Reporting Views of Responsible Officials: Management agrees with finding. Context: During testing of compliance requirements with the HUD regulatory agreement, we noted management had not complied with HUD Handbook 4381.5 REV-2. paragraph 2.6. Recommendations: We recommend that the Corporation obtain a letter from HUD approving the appointment of YWCA GGSV as management agent and that the Corporation execute a Form HUD-9839a. 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