Finding Text
FINDING No. 2023-003: 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:
Escrow accounts.
Sample Size Information: Escrow accounts.
Identification of Repeat Finding and Finding Reference Number:
No.
Criteria: As required by the regulatory agreement, the Project is required to pay, when due, all taxes, assessments and other charges.
Statement of Condition: The Project is deficient in funding escrow deposits, as required by HUD and as a result, overdrew the account.
Cause: The Project did not properly fund the escrow accounts based on current period insurance premiums and tax rates.
Effect or Potential Effect: The escrow deposits are not sufficient to meet future obligations and the escrow deposits account was overdrawn.
Auditor Non-Compliance Code: Z – Other
Reporting Views of Responsible Officials:
The Project agrees with the finding and the auditor’s recommendations will be adopted.
Recommendation: The Project should make sufficient monthly deposits to the escrow accounts in a timely manner.
Response Indicator: Agree.
Completion Date: 06/30/2024
Response: The shortfall was due to the property insurance premium unexpectedly increasing by more than $170,000. The account was subsequently analyzed, and the monthly escrow deposit is now sufficient to cover the new rates.
Questioned Costs – Department of Housing and Urban Development $208,565