Finding Text
2023-1 Transfer from Replacement Reserve Account Without Prior HUD Approval
Condition: There was a $4,000 transfer made from the Replacement Reserve account to the Operating Account in December 2023.
Criteria: According to HUD 4350.1-Rev-1 requires owners/mortgagors to request prior approval from HUD for use of replacement reserve funds.
Cause: A $4,000 transfer was made in December 2023 from the Replacement Reserve account without an approved 9250 on file. HUD approval was received in January 2024.
Effect: The Project is not in compliance with HUD regulations as it relates to obtaining proper approval prior to use of replacement reserve funds.
Recommendation: I recommend management follow regulations in HUD 4350.1-Rev-1.