Finding Text
Criteria: Pursuant to the Regulatory Agreement, monthly deposits to a reserve for replacement account must be made in the amount established by HUD.
Statement of Condition: Replacement reserve deposits in the amount of $2,878 as of June 30, 2024, were not deposited into the account as required by the Regulatory Agreement.
Cause: The mortgage servicer did not increase the monthly billings for replacement reserves on December 1, 2022 and 2023, as required by HUD. The Company failed to notice and correct this oversight.
Effect: The Company was not in compliance with the Regulatory Agreement relative to the required replacement reserve deposits.
Auditors’ Non-Compliance Code: B - Owners must deposit replacement reserves monthly in the amount prescribed by HUD.
Amount of Questioned Costs: $0
Reporting Views of Responsible Officials: The Company will make the delinquent deposit subsequent to year end.
Context: This was not a sampling audit procedure.
Recommendation: Make the required delinquent deposit to the replacement reserve account and ensure that all future deposits are made as required by the Regulatory Agreement.
Auditors’ Summary of Auditee’s Comments on the Findings and Recommendations: Auditee agreed with auditors’ findings.
Response Indicator: Accepted
Completion Date: Open
Response: Management will fund the delinquent amount as soon as possible.
Contact Person: Lauren Rodriguez