VRC-MLCC HOUSING CORPORATION

Questioned Costs: N/A Information on Universe and Population Size: 14 Sample Size Information: 3 Noncompliance Information: Project management is required to maintain tenant files in accordance with legislation, regulations, and the terms and conditions of the major federal award program. Condition: Project management did not maintain tenant files in accordance with legislation, regulations, and the terms and conditions of the major federal award program. Criteria: Project management is to maintain files in such a way as to enable confirmation of compliance with legislation, regulations, and the terms and conditions of the major federal award program. Cause: Project management did not maintain files in such a way as to enable confirmation of compliance with legislation, regulations, and the terms and conditions of the major federal award program and the independent public auditor was not able to ascertain if management was complying with legislation, regulations, and the terms and conditions of the major federal award program. Effect or Potential Effect: Tenants receiving benefits under the major federal award program may not be eligible for those benefits. Type of Compliance Requirement: E. Eligibility Recommendation: Project management should maintain tenant files in accordance with legislation, regulations, and the terms and conditions of the major federal award program. Reporting Views of Responsible Officials: Those charged with governance agreed with the finding and will work to maintain tenant files in accordance with legislation, regulations, and the terms and conditions of the major federal award program.

Questioned Costs: $163 Information on Universe and Population Size: N/A Sample Size Information: N/A Noncompliance Information: Project did not make the total required deposits to reserve for replacements (RFR) accounting during the year ended December 31,2025 Condition: The RFR account is deficient $163 in deposits for the year ending December 31, 2025. Criteria: The Project did not make the full deposit required for the months of January and February so the annual deposits were deficient. Effect or Potential Effect: The Project did not make the full amount of the required deposits to RFR account during the year ended December 31, 2025 and the RFR account is deficient $163 in deposits as of December 31, 2025. Recommendation: The Project should make the required deposits as soon as feasible. Reporting Views of Responsible Officials: Those charged with governance agree with the finding and will make the remaining 2025 deposit due as soon as feasible

Questioned Costs: N/A Information on Universe and Population Size: 14 Sample Size Information: 2 Noncompliance Information: Project management is required to maintain tenant files in accordance with legislation, regulations, and the terms and conditions of the major federal award program. Condition: Project management did not maintain tenant files in accordance with legislation, regulations, and the terms and conditions of the major federal award program. Criteria: Project management is to maintain files in such a way as to enable confirmation of compliance with legislation, regulations, and the terms and conditions of the major federal award program. Cause: Project management did not maintain files in such a way as to enable confirmation of compliance with legislation, regulations, and the terms and conditions of the major federal award program and the independent public auditor was not able to ascertain if management was complying with legislation, regulations, and the terms and conditions of the major federal award program. Effect or Potential Effect: Tenants receiving benefits under the major federal award program may not be eligible for those benefits. Type of Compliance Requirement: E. Eligibility Recommendation: Project management should maintain tenant files in accordance with legislation, regulations, and the terms and conditions of the major federal award program. Reporting Views of Responsible Officials: Those charged with governance agreed with the finding and will work to maintain tenant files in accordance with legislation, regulations, and the terms and conditions of the major federal award program.

Finding 2020-001: Section 202 HUD Capital Advance Loan CFDA # 14.157 Questioned Costs: N/A Information on Universe and Population Size: N/A Sample Size Information: N/A Noncompliance Information: The Board of Directors of the Project Owner does not meet on an ongoing regular basis to oversee the management and regulatory compliance of the Project. The Property Management Agent hired by the Owner and approved by HUD currently provides the direct management of the Project. Condition: The Board of Directors of the Owner does not meet on an ongoing and regular basis to oversee the management and regulatory compliance of the Project. Criteria: Per HUD regulations, the HUD Regulatory Agreement, the PRAC Contract and Agreement, the Capital Advance Mortgage Note and the Use Agreement, the Board of Directors of the Owner is responsible for the Project?s overall compliance with the terms of these agreements. Cause: The Board of Directors did not meet on an ongoing and regular basis to sufficiently provide oversight of the Project. Effect or Potential Effect: The Board of Directors has not adequately provided for the oversight of the Project. Lack of ongoing and regular Board meetings has resulted in a material weakness in internal control over compliance with HUD requirements. Type of Compliance Requirement: S Recommendation: The Board of Directors should meet regularly on an ongoing basis to oversee the management and compliance of the Project. Reporting Views of Responsible Officials: The Board of Directors agrees with the finding and will meet on an ongoing regular basis to oversee management and compliance of the Project.

Finding 2019-001: Section 202 HUD Capital Advance Loan CFDA # 14.157 Questioned Costs: N/A Information on Universe and Population Size: N/A Sample Size Information: N/A Noncompliance Information: The Board of Directors of the Project Owner does not meet on an ongoing regular basis to oversee the management and regulatory compliance of the Project. The Property Management Agent hired by the Owner and approved by HUD currently provides the direct management of the Project. Condition: The Board of Directors of the Owner does not meet on an ongoing and regular basis to oversee the management and regulatory compliance of the Project. Criteria: Per HUD regulations, the HUD Regulatory Agreement, the PRAC Contract and Agreement, the Capital Advance Mortgage Note and the Use Agreement, the Board of Directors of the Owner is responsible for the Project?s overall compliance with the terms of these agreements. Cause: The Board of Directors did not meet on an ongoing and regular basis to sufficiently provide oversight of the Project. Effect or Potential Effect: The Board of Directors has not adequately provided for the oversight of the Project. Lack of ongoing and regular Board meetings has resulted in a material weakness in internal control over compliance with HUD requirements. Type of Compliance Requirement: S Recommendation: The Board of Directors should meet regularly on an ongoing basis to oversee the management and compliance of the Project. Reporting Views of Responsible Officials: The Board of Directors agrees with the finding and will meet on an ongoing regular basis to oversee management and compliance of the Project.

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