Finding 577945 (2023-003)

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: Total rent revenue for the year ended June 30, 2023. Sample Size Information: All monthly HAP requests for the year ended June 30, 2023. Identification of Repeat Finding and Finding Reference Number: No. Criteria: As required by HUD regulations, a HUD approved rent change must be executed as of its effective date upon election and acceptance of an automatic rent increase. Statement of Condition: The Project did not implement the accepted HUD approved rent change to its monthly HAP requests as of the June 6, 2022 effective date resulting in a $12,819 omission. Cause: The Project did not follow HUD regulations for the gross rent change resulting in an underpayment of HAP for each unit. Effect or Potential Effect: The Project is not in compliance with HUD regulations for not executing a rent change as of the effective date, resulting in a $12,819 under collection of HAP. Auditor Non-Compliance Code: R – Section 8 Program Administration. Reporting Views of Responsible Officials: The Project agrees with the finding and the auditor’s recommendation will be adopted. Recommendation: The Project should comply with HUD regulations for executing the required rent change as of its effective date and all earned revenue should be recorded in the correct accounting period. Response Indicator: Agree. Completion Date: 6/30/2024 Response: The compliance department will provide additional training to the manager on implementing HUD approved rent increases.