oversight

December 22, 1995

AUDIT RELATED MEMORANDUM
96-CH-212-1805


MEMORANDUM FOR: Donald J. Jakob, Director, Multifamily Division,
       Ohio State Office

FROM: Dale L. Chouteau, District Inspector General for Audit,
   Midwest

SUBJECT: Broadview Health Center
    Columbus, Ohio

  We have closed out our audit of the Broadview Health Center in
Columbus, Ohio. After we presented the project's owner with our
draft finding describing improper use of Project funds, he
refinanced the project with a conventional mortgage and cancelled
the FHA mortgage insurance.

   The objectives of our audit were to: (1) evaluate the owner's
compliance with the Regulatory Agreement, HUD regulations and other
HUD requirements relating to the project's physical condition, and
its financial and other general management practices; and (2)
determine whether the owner was using and safeguarding the
project's assets properly. We concentrated our review on the
collection of receipts and cash disbursements, particularly cash
distributions and repayments of advances.

  The audit was part of our Operation Safe Home initiative. We
selected Broadview for audit because HUD's records indicated that
project funds may have been improperly used.

  The audit showed that the project paid the owner $328,800 in
violation of the Regulatory Agreement. While the project was not
in a surplus cash position, it distributed $258,300 directly to the
owner and repaid $22,200 in owner advances. It also paid $48,300
for expenses not related to the project.

  HUD insured the Broadview Health Center's mortgage on July 14,
1989 for $2,985,600 under Section 232 of the National Housing Act.
On March 17, 1995, after receiving our draft finding, the owner
refinanced the Project with a conventional mortgage. Because of
processing mixups, HUD did not terminate the FHA insurance until
November 8, 1995. We verified that HUD has cancelled the FHA
mortgage insurance.

    If you have any questions, please contact me at (312) 353-7832.

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