Finding 572330 (2024-001)

FINDING No. 2024-001: Section 207/223(f) Mortgage Insurance for the Refinancing of Existing Multifamily Housing Projects, ALN 14.155 Finding Resolution Status: Resolved. Information on Universe Population Size: All replacement reserve deposits for the year ended December 31, 2024. Sample Size Information: All replacement reserve deposits for the year ended December 31, 2024. Identification of Repeat Finding and Finding Reference Number: No. Criteria: In accordance with HUD, timely monthly deposits must be made to the Project’s reserve for replacement account. Statement of Condition: As a result of not requesting a timely increase to the reserve for replacement account, the Project made unauthorized deposits to the account totaling $18,000. Cause: The Project’s reserve for replacement funds authorization form expired on April 30, 2024. An updated funds authorization form was not submitted in a timely manner and HUD’s approval was not obtained until January 8, 2025. Effect or Potential Effect: The Project overfunded the reserve for replacement account by $18,000 in the current year. Auditor Non-Compliance Code: N – Reserve for Replacements Deposits. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendations have been adopted. Recommendation: Management should implement procedures to ensure that the increase to the reserve for replacement account is properly applied with timely HUD authorization via form HUD-9250. Response Indicator: Agree. Completion Date: 01/08/2025 Response: Staff training has been provided to ensure the correct RR amounts are deposited and a timely increase from HUD is received. This has been included in the monthly reporting procedures.