Finding Text
Criteria: Per the Compliance Requirement, “Owner shall not, without the prior written consent of HUD, convey, assign, transfer, dispose of, or encumber any of the mortgaged property or permit the conveyance, transfer, or encumbrance of such property.
Condition, The Corporation without written consent from HUD and/or approval from HUD enter into a line of credit of $40,000 with PNC bank.
Cause: The Corporation did not follow HUD directive regarding applying for a loan without prior written consent from HUD,
Effect: The Corporation is liable to pay the line of credit as of December 31, 2021 in the amount of $40,202.62 and cannot use the Project funds to pay-off the line of credit.
Recommendation: We recommend that the Corporation pay-off the line of credit with its own funds and not of the Projects.
Views of Responsible Officials and Corrective Action Plan: No disagreements with the audit finding.