Mother Theodore Corporation

Finding reference number: #2019-001 CFDA title and number (Federal award identification number and year): Mortgage Insurance for the Purchase or Refinancing of Existing Multifamily Housing Projects, CFDA 14.155 (073-11303 and 2005) Auditor non-compliance code: N - Reserve for replacements deposits Finding resolution status: Resolved Universe population size: The universe population size is not applicable to the finding. Sample size information: The sample size information is not applicable to the finding. Noncompliance information: See statement of condition 2019-001 for noncompliance information. Name of Federal agency: U.S. Department of Housing and Urban Development Pass-through entity: N/A Questioned costs: $2,406 Criteria: Pursuant to the Regulatory Agreement, the Corporation is required to make monthly deposits into a separate reserve for replacements in the annual amount determined by HUD. Statement of condition #2019-001: At December 31, 2019, total required deposits to the reserve for replacements of $2,406 had not been made due to HUD not properly informing the mortgagee of the reserve for replacements increase for July 2018 or July 2019. Effect: The Corporation is not in compliance with the terms of the Regulatory Agreement. The reserve for replacements is underfunded by $2,406 at December 31, 2019. Cause: HUD did not properly inform the mortgagee of the reserve for replacements increase for July 2018 or July 2019. As a result, the required July 2017 deposit amount was still being used. Recommendation: Management should transfer $2,406 from the operating account to the reserve for replacements. Completion date: March 12, 2020 Management Response: Agree. Management made the required deposit to the reserve for replacements on March 12, 2020.