Finding 971191 (2023-003)

U.S. Department of Housing and Urban Development Finding 2023-003, CFDA #14.155 Section 223(f) – Insured Mortgage Condition: As of December 31, 2023, the replacement reserve account was underfunded by $714. Beginning in April of 2023, the increase in the monthly required deposit amount was inadvertently not made and the required amount from March 2023 continued to be paid throughout 2023. This caused the annual replacement reserve to be underfunded by $714 at December 31, 2023. Criteria: The Project’s regulatory agreement required monthly deposits of $3,541.49 be made into the replacement reserve account beginning in April 2023. Cause: Management did not update the financial institution on the increased deposit requirement. Effect: The replacement reserve account is underfunded at December 31, 2023, by $714. Recommendation: Management should deposit $714 into the replacement reserve account and ensure the monthly deposits are made in the correct amount. View of Responsible Officials: Management will transfer $714 to the replacement reserve account, will monitor the monthly replacement reserve deposits in the future, and will notify the financial institution of future increases.