We recommend that the Southwest Region Director of Multifamily Housing require Beverly Place’s owner to provide support to show that the subsidies for 11 tenants with falsified income were accurate or repay HUD $150,082 for those subsidies. Repayment must be from non-Federal funds.
2017-FW-1009 | June 29, 2017
Beverly Place Apartments Subsidized Nonexistent Tenants, Unqualified Tenants, and Tenants With Questionable Qualifications
Housing
- Status2017-FW-1009-001-BOpenClosed$150,082Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
- Status2017-FW-1009-001-COpenClosed$77,621Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
We recommend that the Southwest Region Director of Multifamily Housing require Beverly Place’s owner to provide support to show that the subsidies for 18 tenants without files or without adequate income documentation in their files were accurate or repay HUD $77,621 for those subsidies. Repayment must be from non-Federal funds.
- Status2017-FW-1009-001-DOpenClosed
We further recommend that the Southwest Region Director of Multifamily Housing require its contract administrator for Beverly Place to verify that the owner’s recently implemented quality control program is working as designed.
- Status2017-FW-1009-001-EOpenClosed
We further recommend that the Southwest Region Director of Multifamily Housing ensure that the project-based contract administrator’s review process includes steps to obtain reasonable assurance that tenants being reported as subsidized at Beverly Place live in the subsidized units.
2017-LA-1004 | June 13, 2017
Cypress Meadows Assisted Living, Antioch, CA, Was Not Administered in Accordance With Its Regulatory Agreement and HUD Requirements
Housing
- Status2017-LA-1004-001-COpenClosed$263,289Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Repay the project from non-project funds $263,289 for ineligible salary expenses.
- Status2017-LA-1004-001-DOpenClosed$283,307Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Remove $283,307 in ineligible accrued salary fees payable from its financial statements and records and ensure that these expenses are not accrued or paid for with project funds.
- Status2017-LA-1004-001-EOpenClosed$110,710Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Repay the project from non-project funds $110,710 for ineligible offsite accounting expenses.
- Status2017-LA-1004-001-FOpenClosed$129,416Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Remove $129,416 in ineligible accrued offsite accounting fees payable from its financial statements and records and ensure that these expenses are not accrued or paid for with project funds.
- Status2017-LA-1004-001-GOpenClosed$99,160Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Repay the project from non-project funds $99,160 for ineligible personal health insurance expenses of the owner.
- Status2017-LA-1004-001-HOpenClosed$4,179Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Repay the project from non-project funds $4,179 for excessive bank fees.
- Status2017-LA-1004-001-IOpenClosed$1,352Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Repay the project from non-project funds $1,352 for expenses related to the identity-of-interest hair salon.
- Status2017-LA-1004-001-JOpenClosed
Obtain approval from HUD for a lease agreement with the hair salon.
- Status2017-LA-1004-001-KOpenClosed$65,232Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Provide documentation to support that $65,232 in disbursements was used on reasonable and necessary operating expenses or repay the project from non-project funds.
- Status2017-LA-1004-001-LOpenClosed$620,937Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Pay the project $620,937 in uncollected rent from non-project funds.
- Status2017-LA-1004-001-MOpenClosed$162,462Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Pay the project from non-project funds $162,462 in lease agreement charges not deposited into Cypress Meadows’ bank account.
- Status2017-LA-1004-001-NOpenClosed
Remove Skyline Crest Enterprises, LLC, as the operator and replace it with a HUD-approved independent operator.
- Status2017-LA-1004-001-OOpenClosed
Develop and implement written policies and procedures for the management of the project, including but not limited to financial policies for cash disbursements, cash receipts, and documentation requirements.
2017-KC-0005 | June 12, 2017
Owners of Cooperative Housing Properties Generally Charged More for Their Section 8 Units Than for Their Non-Section 8 Units
Housing
- Status2017-KC-0005-001-AOpenClosed$3,144,894Funds Put to Better Use
Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.
Create and implement policies and procedures or change program regulations to prevent multifamily housing properties from charging more for Section 8 units than for comparable non-Section 8 units. For the 25 properties reviewed, this measure would prevent as much as $3,144,894 of Section 8 funds from subsidizing non-Section 8 units in the next year.
2017-KC-0003 | May 22, 2017
HUD Did Not Ensure That Lenders Properly Processed Voluntary Terminations of Insurance Coverage on FHA Loans and Disclosed All Implications of the Terminations to the Borrowers
Housing
- Status2017-KC-0003-001-AOpenClosed$3,035,819Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Investigate the 14 loans with unpaid mortgage amounts totaling $3,035,819, and require the lenders to obtain the borrowers consent, reinstate the insurance coverage, or take other action as appropriate given the facts of each particular loan.
- Status2017-KC-0003-001-BOpenClosed
Remind lenders that voluntary termination is not the correct termination type to record third-party sales and that borrower consent is required to terminate insurance, even if the loans are indemnified.