Finding Text
Assistance Listing Number, Federal Agency, and Program Name - 14.129, U.S. Department of Housing and Urban Development: HUD-insured Mortgage (Section 232) Federal Award Identification Number and Year - N/A, 2022 Pass-through Entity - N/A Finding Type - Material weakness and material noncompliance with laws and regulations Repeat Finding - No Criteria - All audited financial statements required by HUD should be submitted to the Real Estate Assessment Center (REAC) within the required time frame after the fiscal year end, as stipulated in the Regulatory Agreement. Condition - The Organization did not submit audited financial statements to REAC within the required time frame after the fiscal year end for the year ended December 31, 2022. Questioned Costs - None Identification of How Questioned Costs Were Computed - N/A Context - During 2022, the Organization closed the Hilty Home facility. The Organization did not complete an audit for Hilty Home Real Estate, LLC; therefore, the Organization did not submit audited financial statements to REAC for the fiscal year ended December 31, 2022. The Organization does not intend to complete the audit requirement and REAC submission for the year ended December 31, 2022 or as any future fiscal periods. Cause and Effect - The Organization is not in compliance with the requirements specified within the Regulatory Agreement. Management concluded to forgo the audit and REAC submission in order to manage expenditures for cash flow purposes and is working with HUD to come to a resolution. Recommendation - All required REAC filings should be completed. Views of Responsible Officials and Planned Corrective Actions - No further corrective action will be taken. The Section 232 HUD-insured mortgage is in default. The mortgage servicer made claim on the HUD insurance and has been paid. HUD is working through the process to bring the note/mortgage to sale later in 2023 or early 2024.