Finding Text
2022?1 Reserve for Replacement Monthly Deposits Not Made Condition: Management failed to make the required monthly deposit into the reserve for replacement bank account from January 2020 through December 2022. Criteria: According to the Regulatory Agreement, ?mortgagor will establish and maintain a reserve fund for replacements in a separate account in a bank?Concurrently with the effective commencement of rental assistance payments under the Housing Assistance Payment Contract, the Mortgagor will deposit an amount?per month unless a different date or amount is approved in writing by HUD?. Cause: Per management, the Property does not have enough operating funds to make the required deposit and requested a suspension from HUD but was denied. Effect: The reserve for replacement account is underfunded by $41,472, related to deposits that were never made to this account. A memo entry reflecting the outstanding payments due to the account was made during the audit. Recommendation: I recommend management adhere to the Regulatory Agreement as it relates to required monthly deposits into the reserve for replacement account.