Finding Text
Criteria: Under the Capital Advance Program Regulatory Agreement, the mortgagor (Company) is required to establish and maintain a replacement reserve to aid in funding extraordinary maintenance and repair and replacement of capital items. The replacement reserve funds must be deposited in a federally insured depository in an interest-bearing account. An amount as required by HUD ($24,000 annually) will be deposited monthly in the reserve fund. Condition: Although the total annual required deposit was made, the Company did not make the deposits on a monthly basis to the replacement reserve account. Cause: The management agent of the Company did not implement a process to make the monthly deposits on a timely basis. Effect: The Company did not meet the replacement reserve funding requirement under the Capital Advance Program Regulatory Agreement requiring monthly deposits. $ -- Identification as a Repeat Finding, if applicable: 2021-001 Recommendation The Company should implement a process to adhere to the Regulatory Agreement requirements and ensure that the replacement reserve account deposits are completed monthly. Views of Responsible Officials and Planned Corrective Action The Company agrees with the finding and the recommendation. See Part V Corrective Action Plan