Finding Text
FINDING NO. 2022-001 Questioned Costs: $2,985 Information on Universe And Population Size: Total amount of replacement reserve deposits Sample Size Information: N/A Criteria: In accordance with Section 2(a) of the Regulatory Agreement, the Organization is required to fund the replacement reserve monthly in an amount determined by HUD. Condition: The Organization and its lender did not fund the replacement reserve in the full amount as required by HUD. Cause: HUD issued increase notices via HUD-9250 forms effective May 1, 2021 on March 11, 2021 and effective May 1, 2022 on December 31, 2022. Adjustments were not made by the Organization and lender to adjust the monthly remittance to account for the increases. Effect: The replacement reserve account is underfunded by $2,985 at July 31, 2022. Recommendation: The regulatory agreement was terminated upon closing of the refinance in December 2022. Going forward management should coordinate with the lender to ensure a process is in place to adjust the monthly remittance annually as deposit increase notices are received.