Finding Text
Finding reference number: 2022-001
Title and CFDA: Flexible Subsidy Loan 14.164
Type of Finding: FA
Finding resolution status: In process
Identification of repeat finding: 2021-002
Criteria: The Flexible Subsidy Loan "Residual Receipts Note" clause 3(a) cites that the entire principal together with interest is immediately due and payable when the HUD Section 202 mortgage is paid off.
Statement of Condition: During our audit for the year ended December 31, 2021, we inquired and requested documentation regarding the repayment status of the Flexible Subsidy Loan from the Agency's officers and from its management company. The Agency did not have documentation regarding the mortgage status of the Flexible Subsidy Loan available since the HUD Section 202 mortgage was paid off in November 2016.
Cause: The Agency is waiting for a response from HUD as to their inquiry regarding the repayment of the Flexible Subsidy Loan.
Effect of Potential Effect: Based on the literal terms of the Flexible Subsidy Loan, the Agency appears to be in default as it has not established repayment with HUD.
Auditor non-compliance code: S
Amount of questioned costs: $0
Reporting Views of Responsible Officials: We continue to follow up, as we diligently have over many recent months, starting in 2008. Most recently, via an attorney, who, like Pilgrim Towers, has not been able to elicit any response from HUD to resolve this matter.
FHA/Contract number: CT26M000251
Questioned Costs: $0
Context: It has been brought to the Agency's attention that the repayment of the HUD Section 202 mortgage that they would need to contact their HUD field representative regarding repayment of the Flexible Subsidy Loan.
Recommendation: We recommend that the Agency follow up with its HUD field representative to determine the next steps regarding the repayment terms of the Flexible Subsidy Loan.
Auditor's Summary of the Auditee's Comments on the Findings and Recommendations: Pilgrim Towers, Inc. concurs with the audit finding. The Board of Directors is in communication with HUD to negotiate repayment terms.
Response Indicator: A
Completion date of proposed recommendation: December 31, 2023
Response: We continue to follow up, as we diligently have over many recent months, starting in 2008. Most recently, via an attorney, who, like Pilgrim Towers, has not been able to elicit any response from HUD to resolve this matter.