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.

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.

Repay the project from non-project funds $263,289 for ineligible salary expenses.

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.

Repay the project from non-project funds $110,710 for ineligible offsite accounting expenses.

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.

Repay the project from non-project funds $99,160 for ineligible personal health insurance expenses of the owner.

Repay the project from non-project funds $4,179 for excessive bank fees.

Repay the project from non-project funds $1,352 for expenses related to the identity-of-interest hair salon.

Obtain approval from HUD for a lease agreement with the hair salon.

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.

Pay the project $620,937 in uncollected rent from non-project funds.

Pay the project from non-project funds $162,462 in lease agreement charges not deposited into Cypress Meadows’ bank account.

Remove Skyline Crest Enterprises, LLC, as the operator and replace it with a HUD-approved independent operator.

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.

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.

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.

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.

Improve its procedures for detecting and sanctioning improper voluntary terminations.

Update Handbook 4000.1 to require the voluntary termination of insurance consent form to include an explanation that voluntary termination differs from mortgage insurance premium cancellation and the disclosure of any outstanding partial claims to put $285,215 to better use.