Finding Text
Statement of Condition During the year ended October 31, 2022, the mortgage lender did not require the project to make the required monthly deposits to the replacement reserve in the total amount of $69,996. The project is required to make monthly deposits to the reserve in the amount of $5,833. Criteria The regulatory agreement requires that the project make monthly deposits to its replacement reserve. Cause The mortgage lender did not implement monthly deposits to the replacement reserve account in keeping with the regulatory agreement requirements. Effect or Potential Effect Failure to make monthly payments resulted in an underfunding of the replacement reserve and a violation of the regulatory agreement. Recommendation Management should establish internal controls or procedures to ensure that the replacement reserve is funded in accordance with the terms of the regulatory agreement. Auditor Noncompliance Code N - Reserve for replacements deposits Finding Resolution Status Resolved Reporting Views of Responsible Officials Management transferred $93,333 to the replacement reserve account effective March 22, 2023 to fund the delinquent amount. In addition, management contacted the mortgage lender to reinstate monthly reserve funding beginning April 1, 2023.