Provide documentation to show that prices paid for purchases of products and services totaling $970,381 were fair and reasonable or reimburse the project from nonproject funds for any amounts that were not fair and reasonable.

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.

Improve its procedures for detecting and sanctioning improper voluntary terminations.

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.

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.

Identify all unallowable fees and reimburse from non-project funds.

Amend and resubmit the management agreements and the management certifications for HUD approval and ensure that the agreements do not conflict with the management certifications.

Develop and implement adequate controls over payments for services that are part of the management fee.

Provide training and technical assistance to the owner and its management agent to ensure compliance with the terms of its mortgage and other applicable HUD requirements.

Recalculate the project’s annual surplus cash balances for 2013, 2014, and 2015 after resolution of recommendations 1A, 1C, 1D, and 1F to determine whether the project should make additional payment to HUD from surplus cash toward its mortgage beyond the $13,740 that it paid during the audit.