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Additional REAC Listening Sessions Announced

  Below are additional REAC Listening Sessions, you are all encouraged to attend these events and express your opinions. From the responses received from other listening sessions, it is clear that the attempt to use a sledgehammer for reform, where a scalpel was needed, is creating a lot of anxiety among the 98% of the owners and agents who were working diligently to remain in compliance and has done nothing to reform the other 2%.  A simple four-point plan could achieve the stated aims to change the overall focus of REAC inspections to unit condition and health and safety issues. Change the percentage of score dedicated to units from 35% to 50%; make the other four areas worth 12.5% each. This will increase the penalty of unit items and reduce non-unit deficiencies. Add new health and safety requirements such as carbon monoxide detectors Change the notice time to 30 days with some flexibility on scheduling to account for vacations, work schedules, and general availability of the professionals who work at these properties. Create better monitoring of REAC Inspectors to ensure consistency and professionalism among inspectors.  These changes could be enacted easily and would address the overall concerns without any chaos. We encourage you to advocate for sensible solutions (such as these) which address the concerns ...
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HUD REAC Publishes Additional Requirements for Database Adjustment Appeals

​As of March 20, 2019,  additional rules will be added to documentation required in order for REAC appeals involving "Ongoing Modernization Work in Progress". Essentially, the changes are expanding upon the documentation requirements for REAC Appeals already in place, adding new levels of details and additional scrutiny. The following language was added to REAC's website: Changes to the below documentation requirements for the Database - Modernization Work in Progress will be effective on or after March 20, 2019 inspections Modernization Work in Progress – Properties and developments undergoing modernization work in progress may qualify for a database adjustment for observed deficiencies actively being worked on at the time of the inspection. What is supporting documentation for a DBA request based on modernization work in progress? To request a database adjustment based on modernization work in progress at the time of inspection, the request must be submitted within the 45-day timeframe and include: 1. An executed contract with a copy of the scope of work, including change orders if applicable; 2. A Notice to Proceed with start and completion dates; 3. An affidavit from the contractor's authorized representative identifying: (a) the modernization work in progress that it was performing at the time of the ins...
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HUD Announces Effective Date of New 14 Day Notice for REAC Inspections

HUD Released a notice today confirming to limit the notice time for REAC Inspections to not more than 14 days. The following communication was released today, which indicates this change will go into effect 30-days from the date of the notice for all future inspections (not including inspections currently scheduled or included in a previous auction). Currently, HUD's Real Estate Assessment Center (REAC) provides advance notice before a scheduled inspection which frequently extends up to 120 days. This amount of lead time allows certain public housing authorities and property owners to undertake cosmetic, 'just-in-time' repairs to their properties rather than adopting year-round maintenance practices. Today's notice is part of a wholesale reexamination of REAC's inspection process that Secretary Carson launched shortly after taking office. HUD will be consulting with PHAs and property owners over the next several months to discuss other improvements to REAC's process. Beginning 30 days after publication of this notice, HUD employees and contract inspectors acting on behalf of HUD shall provide property owners and their agents 14 calendar days of notice prior to their inspection. If an owner/agent declines, cancels or refuses entry for an inspection, a presumptive score of "0" (zero) will be recorded. If the second attempt results...
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Proposed Reforms from REAC Listening Session

We had the opportunity to attend a listening session with REAC at the NLHA conference in January. At this session, REAC provided a high-level list of goals and intentions that are planned to be executed starting this year. The overall aims of these reforms were to address what was stated as a practice of "preparing for the exam", instead of focusing on ensuring that all units and properties were in a constant state of full readiness and compliance. 15 Day Notice: This is the element of the reform plan which has the greatest likelihood of being enacted this year, sooner rather than later. This would mean that after the anniversary date, the property could be notified at any time of  an inspection  and rescheduling or seeking a negotiated date would not be entertained, other than possibly until the following week. The logistics of this change could change the way that inspections are assigned to contract REAC Inspectors, however, the logistics are likely to take some time to work out. However, it was very clear that a form of this initiative will be in the future. Inspection Scoring: There is a proposal to change the overall nominal value to 50% of the score for dwelling units - this number is currently 35%. The other four inspection areas would be combined into two areas to "simplify" the code. Building Exteriors, Site,...
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New US Housing Consultants Compliance Portal

On February 5, 2019, US Housing Consultants released a new private portal site for our File Review/Approval and HAP Processing Clients.  This new portal site replaces our previous portal which was managed through Salesforce's native environment. This new portal is designed for our clients to start new file review cases and upload resident files, add comments, requests, and review past cases. This new portal has more functionality, a modern look and feel, and a design which will allow us to add a lot more features, including reporting, greater security, and billing tracking for our file review/approval service. This new site can be found at https://portal.us-hc.com   Regional and Corporate users can log-in to view all of their properties (assets) with a single login. Up to eight contacts can be assigned to each property Users can add files in one single workflow when adding a case. There is an easy to use search option to quickly search through all previous and current cases. Users will be able to view information about their property, including income limits and other documents that our analysts have stored about the property. For system administration users, we will be adding a view to the portal where you will be able to see orders for each transaction

Renowned Compliance Trainer Amanda Gross Joins US Housing Consultants

US Housing Consultants expands its industry leading affordable housing consulting services with the addition of compliance training seminars CONCORD, N.H., January 8, 2019 (Newswire.com) - U.S. Housing Consultants is proud to announce that Amanda Gross has joined their team of dedicated affordable housing consultants and trainers. As of Jan. 8, 2019 Amanda joined U.S. Housing Consultants as the Vice President of Training and Compliance Policy. In her new role, she will bring exciting, new training options for the owners and managers of HUD, Tax Credit, and USDA RD properties. Amanda Gross joins U.S. Housing Consultants with a wealth of knowledge and a reputation as one of the premier trainers in the industry. She has blazed her own path from site management to compliance director and then to an industry leading trainer and consultant. Amanda is regularly a speaker at industry events and works closely with Housing Finance Authorities throughout the country to perform and organize training sessions. She has developed a training style which is engaging and calming, communicating complex topics in a way that makes everyone feel that they too can conquer the challenges in affordable housing compliance. Amanda has a passion for the positive effects affordable housing can have on low-income families. Her training seminars reinforce the...
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The Capital Concerns of 202 PRAC Program

In the mid-nineties to mid-2000s the affordable housing industry saw an explosion in the number of properties approved and built under the Section 202 PRAC program. This was a terrific program that which was restricted to non-profit sponsors providing housing for the elderly, and the operating subsidy was guaranteed for forty-years – securing housing for the elderly for many years. However, the problem with a 40-year compliance period is that periodically the property requires revitalization, and the only way that 202 PRAC properties can afford to pay for major repairs is through the reserve for replacement (R4R) account – and budget-based rent increases. Over the last few years we have seen more and more 202 PRACs enter into their 20th year or beyond, and many of the major and minor components are aging and starting to fail – and unfortunately – what is being deposited into their reserves has not been updated to reflect the new realities. Coupling this with very few or infrequent rent increases, and restrictions on the program -- restricting owners from funding revitalization with additional debt. This has forced properties to pick and choose what systems to replace or upgrade, deferring maintenance and putting the initial investment at risk. Due to this concern, HUD has now taken a keener interest in these properties and worki...
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HUD Looks to a New Future for REAC Inspections

​ On October 24, 2018 HUD's Office of Public Relations released a statement which discusses the future of physical inspections performed through the HUD Real Estate Assessment Center (REAC). In this statement, HUD expresses the interest in an update to the REAC Inspection System, specifically in the scoring model. The memo states that " it has become clear that REAC's 20 year old scoring system needs to be changed to better reflect the conditions of the properties where more than two million families call home ." The memo indicates a desire to design a better inspection system that finds a way to evaluate properties in a manner that aims to evaluate how properties are complying with an overall obligation to provide decent, safe, sanitary housing instead of just passing minimal requirements of the REAC Inspection process. HUD promises both a long-term review as well as immediate changes that better focus on conditions inside the housing units, with a greater emphasis placed on lead-based paint hazards and mold infestation. It is unclear at this time what the reforms to HUD's REAC Inspection system will look like; the statement from HUD promises a new simplified inspection system and an integration with the HUD Initiative "Protect our Kids!", which applies a specific focus on environmental issues such as lead-based paint and mold....
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HUD Suspends e-Tool Requirement for PRAC Properties

HUD's Office of Multifamily Housing released a Memorandum on August 3, 2018 which suspended the use of the HUD CNA e-tool for Section 202 or 811 properties with PRAC assistance. Originally the HUD Notice 2016-18 was issued to guide the process and timeline for implementation of the CNA e-tool across the Office of Multifamily Housing. This was initially required to be put into effect by November 1, 2017, and final implementation was delayed until February 1, 2018, and required the use for (a) ten-year updates on insured properties, (b) partial payment of claims, and (c) 202 and 811 PRACs. The requirement still remains in place for 10 year updates on insured properties and partial payment of claims. In the Memorandum released this August, HUD states that they do not have the technological capacity for needs assessors to submit CNAs on behalf of PRAC projects, and despite attempts at a workaround, the process for PRACs to submit CNAs using the CNA e-tool has been inefficient and cumbersome. The CNA e-tool may be reinstated for PRAC properties at some point in the future, but for the time being, budget based rent increases will no longer require an e-tool submission. Account Executives at HUD can use traditional Capital Needs Assessments for budget based rent increases and restructuring of reserve for replacement accounts.  

New Mold and Mildew Requirement for REAC Inspections

HUD REAC has instituted some new changes to how it will be testing for Mold and Mildew in apartments and common areas. On a select number of REAC Inspections , an additional process using infrared technology will be utilized. In this undated memorandum , HUD REAC discusses the dangers to health and safety that mold and mildew can pose to residents and staff working on a property. HUD is looking for ways to reduce the number of occurrences and the overall risk to residents by trying to detect issues with moisture and mold before it becomes a health hazard. Every room will be viewed by infrared and tested with a moisture reader if any moisture is observed by the inspector, generally meaning that they see darkened areas or water damaged surfaces. The infrared device is managed by a second inspector who will accompany the primary inspector for the sole purpose of using the infrared device. The good news is that any results which are observed through the infrared technology will not affect your score, at least not directly. Just as with any other inspection, having a second inspector present during the process inevitably slows the inspection down and frequently affects the score as there are two people reviewing the property. From the view of one of our Inspection Consultants, they found the process to be awkward and slowed the pace ...
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HUD REAC & Non-Industry Standards: Spray Foam

Of the many REAC Compliance questions that come to us at US Housing Consultants, the one that has been presented to us most frequently recently has been about if the use of "spray foam" is appropriate under the REAC "non-industry standards" requirements. Essentially the question is: is there ever a moment when you can use spray-foam-in-a-can (such as "Great Stuff") to seal penetration and holes. There is not a single clear answer, but instead, it is slightly more nuanced. We are going to attempt to explore the concept here. Not all Spray Foam Is Equal: this is part of the issue for many in the industry - not understanding that use of products such as Great Stuff can be used if the materials are properly rated. For example, if you are looking to enclose a penetration, such as around a pipe going through a wall or a cabinet, you need to use a spray foam that is rated to have been tested by ASTM E84 and ASTM E814. This spray foam will be bright orange to differentiate it from other standard spray foam, as this orange foam is intended for fire-blocking purposes. If you use this properly rated spray foam to fill in penetration, it should not be cited as an issue, as the non-industry standard rule states that so long as the appropriate material is used and applied properly, then it shouldn't be an issue. Repairs Need to Be Done Profes...
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HUD REAC Releases New REAC Compilation Bulletin (4.0 V3)

HUD REAC Releases New Compilation Bulletin - 4.0 Version 3, Effective October 2, 2017 Are you ready for some changes to REAC? More changes are on the way from HUD REAC! The much anticipated new version of the REAC/UPCS Compilation Bulletin (HUD REAC Compilation Bulletin, 4.0 V3) is about to be released by the HUD Real Estate Assessment Center. The official, updated protocol is scheduled to be released from HUD and go into effect on October 2, 2017 and US Housing Consultants was able to get a firsthand look at the impending updates and changes in the new version. This new version of the REAC Compilation Bulletin is a daunting ninety-five pages of densely worded clarifications and new changes, guidelines and specific updates for all REAC inspections. Many of the changes and updates appear to be a consolidation of the recent HUD Inspector Notices as well as the UPCS Guidance and Protocol Clarification Guide and Lead-Based Paint updates that were issued within the last few years. HUD has compiled those changes as well as adding some new guidelines and clarifications in this new version. The majority of the updates, guidelines and examples appear to be related directly to the recent Industry Standard Repairs Requirements that were added last year. HUD has added more specific explanations and more detailed guidelines along with genera...
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HUD REAC Presentation Recap March 9, 2017

HUD has released a new PowerPoint presentation as of March 9, 2017, as part of their Dine & Learn series. Many of these clarifications are reiterations of existing rules. Many of the rules that need clarification and reinforcement are a little surprising, as the issues are not new and the clarifications are really reinforcing basic rules. It appears that these clarifications are the result of some observations made through reviews of photographs from REAC Inspections as well as observations made by Quality Assurance REAC Inspectors. Recording Same Issue Twice : For example, if a bedroom door was missing the hardware, some inspectors were recording both Level 2 for inoperable hardware and Level 3 for surface damage because there was a hole greater than 1". They are to record one of the two deficiencies, and they must choose the higher-level deficiency, in this example: The Level 3 hole. Two Issues on Exterior Walls in Same Vicinity: Much like the doors, building exterior walls were another discussion in the webinar with REAC. When there are both cracks and gaps, and missing pieces/holes/spalling in one area of an exterior wall, the inspectors are to only record one of the two deficiencies and choose the highest severity level; the only time in which two to record two is if there is an associated Health and Safety deficiency. ...
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HUD REAC Failed Inspection Changes

There have been changes that deal with the laws that govern what happens when a property fails its REAC Inspection, added to a recent appropriations bill. This appropriations bill included Section 223 that details changes to the required provisions for properties that score 59 or lower on an Inspection. The most notable changes are that enforcement actions begin after the first failed REAC, not the second consecutive inspection, as was previously stated, and that the options for enforcement action have expanded from four options to nine. The highlights of the new law are: On REAC scores 59 or less, the HUD Office must notify the owner/agent within 15 days that they are in default of their regulatory agreement for their failure to maintain the property in a decent, safe, and sanitary condition; previously this was 30 days. When notifying the owner of the default of the regulatory agreement, the HUD office is required to provide a time span for the owner to conduct a 100% survey inspection and repair all of any and all issues; this is typically a 60 day period, but now that section has been replaced with "a specific timetable", which leaves open the possibility of both shorter and greater periods to correct issues. Previous rules and regulations set out four options for enforcement on failed REAC Inspections, this has now been exp...
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Recent Changes to UPCS Inspection Services Purchase Order Terms and Conditions

The Impact of Recent Changes to UPCS Inspection Services Purchase Order Terms and Conditions On April 15, 2017, HUD REAC released " Uniform Physical Condition Standards (UPCS) Inspection Services Purchase Order Terms and Conditions ," which is essentially a set of business rules for HUD REAC Inspectors. Much of this document deals with intricate details known to REAC Inspectors about what processes must occur when conducting inspections. The majority of the information in this document has little or no impact on the Multifamily Housing management industry, but some of it does. For the convenience of our readers, we have highlighted the document linked above, and will summarize the changes here as well: In section 5, there are new changes that relate to scheduling and confirmation requirements for REAC Inspections. Among that is a welcome new requirement that inspectors must provide notification if the REAC inspector assigned to a property is being changed, as well as new, much more precise requirements on the steps and required documentation for giving owner and agents notice of the physical inspection. In the document, there are very specific outlines for cancellation, substitution of REAC Inspectors, cancellation due to conditions outside of owner's control (fire, weather, etc.). The most notable new requirement in this sectio...
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REAC Hazard Scoring & Tips for LIHTC Acquisition Rehabs

Did the REAC Inspector record that deficiency correctly? The UPCS Compilation Bulletin is full of valuable and useful information for REAC inspections, but the information in the protocol is only useful if the REAC inspector knows how to interpret and comprehend the UPCS guidelines. Our clients often share some of the horror stories from their recent REAC inspections and the inspectors they've encountered. Many of these stories didn't need to occur if only the inspector had a better understanding of the protocol! Take for instance this one that comes to us from a recent REAC inspection in Chicago. During the inspection, the REAC inspector observed a broken plastic child's toy chair with sharp edges in a bedroom that clearly belonged to the resident. The inspector recorded the deficiency as a [Health and Safety], [Unit, Bedroom], [Hazards], [Sharp Edges – This Does Pose a Risk of Bodily Injury], by the inspector selecting and recording this deficiency in the report, it assigns this deficiency as a Level 3 Exigent Health and Safety item that can carry significant point loss. The deficiency of a broken child's toy with sharp edges is, indeed, a health and safety item that is recordable per the UPCS protocol. However, should the property be deducted points for the 'clearly resident owned property?' No, this deficiency should not hav...
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HUD Releases “UPCS Guidance & Protocol Clarification”

​ This week HUD released a document titled "UPCS Guidance & Protocol Clarification" ...which will be effective as of May 23, 2016. This document addresses inquiries submitted by REAC Inspectors. The document, while helpful in some respects, contains a few changes that represent significant alterations to the UPCS Inspection Protocol, as well as clarifying questions about the process of performing REAC and UPCS Inspection to reiterate long-held practices. Overgrown/Penetrating Vegetation. The very first item addressed states that "There is some vegetation touching a fence but it is not causing any damage. Is this a defect?" HUD REAC answers, "No defect." This answer is simple and would be satisfactory if it were not for page 47738, Appendix 2 of the Federal Register stating "Vegetation contacts or penetrates an unintended surface, such as buildings, gutters, fences/walls, roofs, HVAC units, etc., but you see no visible damage" as a Level 2 deficiency. Fundamental changes to inspection protocols, such as removing a deficiency needs to be done through the Federal Register, so this change appears to be limited only to "Fences". We spoke with a HUD REAC staff person, and it appears that this change is limited to overgrown vegetation making contact with fences or in land areas that are not in active use. All that being said, this ...
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New HUD protections for victims of harassment and survivors of domestic violence

  HUD announces new protections for victims of harassment and survivors of domestic violence to go into effect on October 14, 2016. Many municipalities have adopted local nuisance ordinances for the purpose of allowing landlords to evict domestic violence survivors and others who seek police or emergency assistance. Private and public housing providers should make sure that should they choose to evict based on local nuisance ordinances that they are not in violation of the Fair Housing Act. HUD is taking this issue seriously. "On the 22nd anniversary of the Violence Against Women Act, HUD makes it clear that no one should have to choose between calling 9-1-1 and being evicted," said HUD Secretary Julian Castro. "A home should be a sanctuary where everyone can live without the threat of violence or harassment. The actions we take today will work together to protect the housing rights of victims of harassment and survivors of domestic violence." We want to make you aware of HUD's final Harassment Rule titled Quid Pro Quo and Hostile Environment Harassment and Liability for Discriminatory Housing Practices under the Fair Housing Act . The final rule specifies how HUD will evaluate claims of "hostile environment" and "quid pro quo" harassment in both private and publicly-assisted housing. "Hostile environment" sexual harassment...
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HUD Releases Notice Regarding Lead-Based Paint

  On October 3, 2016, HUD Multifamily released Notice H 2016-10 ...which deals with Lead-Based Paint disclosures and inspection documentation reviewed during REAC Inspections. In this notice, HUD reminds us all of the dangers of lead poisoning, especially to young children. Lead poisoning has been linked to neurological and mental development issues, and possibly the most tragic part of lead poisoning is that is entirely preventable. As part of the effort to reduce exposure to Lead Based Paint, HUD REAC has reviewed documentation as part of their inspections to determine the existence of lead-based paint inspection reports and lead-based paint disclosures. The rules for when this is applicable have been refined as part of this Memorandum. For properties constructed prior to 1978 (Major rehab date does not negate this, the original construction date is the only date used for this determination), if the REAC inspector is not provided lead risk assessment reports, Lead Risk Assessment, or inspection records and lead-based paint disclosures, then the Owner/Agent will have to provide copies of these inspections to the HUD Field Office after the REAC Inspection. It has also been clarified that there are properties that are exempt from the Lead Safe Housing Rule (LSHR). These properties include: Any property constructed after 1978...
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HUD Notice 2016-03 Clarifications & Student Tips for Compliance

Over the last month we have received many questions about the new HUD notice regarding additional scrutiny on the quality of repairs. While many of the questions also expressed a lot of dismay at the stark change of direction, we were able to clarify a number of concerns. Has this changed all of the deficiency standards? No, nothing really has changed here in terms of what makes something a deficiency. Everything you learned about REAC before is true. What has changed is an evaluation of how things are repaired. Essentially the previous standard of (for example) "Is that wall cracked" has been replaced by, "Has this wall been properly repaired". Every Inspector is different - How can I possibly prepare? Don't personalize your inspections. Your inspection is according to a single set of standards - not Bob or Larry or Susan's standards. If you properly identify issues and repair them professionally, you will be fine. Preparing professionally basically means: don't use spray foam to fit a pothole, or cold patch asphalt to fix a stone retaining wall - don't take the easiest approach. As far as inspectors being different, this is true and always has been. We look at it as there being the industry standards approach, and then the not so by the book approach. So, long story short: if you properly prepare for an inspection, the variabl...
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