Finding 4324 (2023-001)

FINDING No. 2023-001: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Rental Housing Projects, ALN 14.155 Finding Resolution Status: Unresolved. Information on Universe Population Size: All management fee expenses. Sample Size Information: All management fee expenses. Identification of Repeat Finding and Finding Reference Number: Yes, 2022-001. Criteria: As required by HUD, the Project shall only use funds as specified in the Regulatory Agreement and owes the management company fees at the rate specified in the Project Owner’s/Management Agent’s Certification (Form HUD-9839-B). Statement of Condition: As a result of an expired Form HUD-9839-B, the Project has been overcharged management fees, resulting in an unauthorized loan to the Management Company. Cause: The Project’s Form HUD-9839-B expired and a new one was not prepared nor approved by HUD. Effect or Potential Effect: The Project has made an unauthorized loan to the management company as a result of overpaying management fees of $4,014. Auditor Non-Compliance Code: J – Unauthorized Management Fees. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations will be adopted. Recommendation: The Project should implement procedures to monitor the expiration of HUD required documents to ensure timely preparation and approval. Response Indicator: Agree Completion Date: 3/31/2024 Response: To ensure timely renewals, management created a separate department that will handle all management certification renewals.