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HUD Releases Initial Look at NSPIRE Inspection Standards

On August 20, 2019, HUD released the first of the new NSPIRE protocols which will be expected to become active once the pilot/demonstration program has concluded. This is a first look at what deficiencies will look like under NSPIRE, the inspection protocol which will eventually take the place of UPCS. HUD has created a webpage where they are going to be posting new deficiencies as they work through the pilot program. To clarify, these standards are not currently in effect, but we expect these new standards to be revised and additional standards to be released. This inspection protocol is a significant departure from UPCS, which used a series of severity ratings. Instead of determining what makes something (1) minor, (2) major and (3) severe, NPSIRE will list a series of possible deficiencies for each item, and inspectors will make a Yes or No determination. In this initial release, HUD chose to provide five examples: (1) Chimneys , (2) Exit Signs , (3) Sinks , (4) Smoke Detectors , and (5) Trash Chutes. New Standards, New Style for Deficiencies ​​​​​​ Using Chimneys as the first example, the deficiency has changed from the existing three-tier set of deficiencies under UPCS to a new standard that has seven different deficiencies. The additional new standards represent new tests which will be performed on chimneys during an inspe...
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Owner's Responsibilities on Notifications to Residents Regarding Inspections

July 8, 2019 HUD's Office of Multifamily Housing Asset Management and Oversight released a memorandum reiterating the rules surrounding notice prior to entering resident's units, availability of documentation for residents to review, and clarification on handling resident complaints and an update to House Rules for assisted properties. Owner's Responsibility to Notify Residents of a Physical Inspection The code of Federal Regulations at 24 CFR, part 200, subpart P, §200.857(g) states that an "Owner must notify its residents of any planned physical inspection of their units or the housing development generally." Residents should be given at least 24 hours notice of a planned inspection unless state and/or local law requires more than 24 hours notice. HUD encourages owners to give as much advance notice as possible to residents. Owner's Responsibility to Make Inspection Documents Available to Residents These documents include: Notice of Default and/or Notice of Violation Owner's Certification of Non-Compliance and Copy of the 100% Survey (Following score under 60 or a Demand for Corrective Action) The owner must post a notice stating the availability of this documentation on a bulletin board (or equivalent) with contact information for the local HUD representative. The memorandum states that HUD is encouraging residents to notify ...
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Carbon Monoxide Detectors to Become Required in Assisted Housing

The House Financial Services Committee passed a bill - the Safe Housing for Families Act of 2019 (H.R. 1690 ), and it will likely move forward to a full vote in the near future. The bill provides $300 million over three years to fund the installation and maintenance of carbon monoxide detectors in HUD-assisted housing units that have combustion-fueled appliances. This rule would apply to all HUD subsidized units. The effective date of this requirement is still not certain. Additionally, there is no detail yet provided on how the funding in HR1690 will be allocated. CARBON MONOXIDE DETECTORS IN FEDERALLY ASSISTED HOUSING. ​​​​​​ "(A) IN GENERAL.—Each owner of a dwelling unit assisted under this section shall ensure that not less than one carbon monoxide detector is installed per floor in the dwelling unit in accordance with standards and criteria acceptable to the Secretary for the protection of occupants in the dwelling unit. "(B) REHABILITATION.—Each owner of a dwelling unit assisted under this section that is located in a property that is undergoing or planning a substantial rehabilitation project shall ensure that, during that rehabilitation, not less than one carbon monoxide detector is installed per floor in the dwelling unit in accordance with standards and criteria acceptable to the Secretary for the protection of occupan...
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REAC Provides Clarification on Non-Industry Standards Rules and Determinations

Enter your text here ...HUD REAC Released a PowerPoint document (Click here) in an email to REAC Inspectors. This presentation is intended to provide clarify to sometimes subjective interpretations of what is considered to be "Non-Industry Standard" repairs. This document includeds a series of photogaphs with "Final Decisions" about what is considered to be a deficiency and what is not; much of this is contrary to previous statements and perceptions of the Non-Industry Standard Requirement.  The primary concept of the Non-Industry Standard rule is that "All Repairs must be done in a good and workmanlike manner with materials which are suitable for the purpose and free of defects," – good and workmanlike is then defined as "finished in a manner which is reasonably compatible with the design and quality of the original and adjoining decorative materials" HUD REAC/NSPIRE Clarifications on Non-Industry Standards  Repairs to asphalt parking lots using concrete are now considered to be acceptable  Peeling paint on a porch which is suspected to be lead-based paint was stated to be not be a current deficiency but will be included in a future update (peeling paint on a porch is actually already a deficiency, it can be recorded as Patio/Porch/Balcony, Level 3, damaged railing Repair to any surface with tape of any kind is n...
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HUD REAC Announces Outline for Participation in NSPIRE Self Inspection Pilot Program

HUD Published a notice in the Federal Register on May 23, 2019 entitled " Notice of Emergency Approval of Information Collection for Physical Inspection of Real Estate (NSPIRE) .: This notice includes information about developing a new standardized eletronic software system to collect information about property maintenance and inspections. HUD will distribute this software to properites who participate in the two-year pilot program. This notice outlines a process for the NSPIRE demonstration program, where participants in the pilot program submit copies of documentation and participate in feedback. Owners/Agents will be provided with inspection software that will enable them to easily document and submit deficiencies that are present within dwelling units or electronically submit work order receipts. Completed work orders would provide reasonable assurance that every dwelling unit was evaluated for deficiencies and maintenance needs. Owners/Agents will have to provide copies of property information, building systems certificates, fire alarm systems and local code violations. According to HUD's website, the goals of NSPIRE are to: Prioritizes health, safety, and functional defects over those about appearance. Focus is on the areas that impact residents. This model includes more objective standards, value-added inspection protocol...
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HUD Provides Clarification on Enforcement Measures if Owner Fails to Comply with 14-Day REAC Notice

On May 1, 2019, HUD Released a memorandum entitled " What to do when a Project Receives a Zero as a Result of an Owner Refusing to Allow HUD to Inspec t." The notice clarifies a few areas: If a property fails to complete an inspection after the initial 14-day notice, the property will be given a presumptive score of zero. if an inspection can be completed in the next seven calendar days, the score of that inspection will be made final. If the inspection is not completed within the next seven calendar days, the score of zero will be considered final and the property will be subject to enforcement. The memo includes instructions for HUD Account Executives and Resolution Specialists on how to update information about properties which are to be delayed from REAC inspections for reasons of (a) substantial rehab, (b) presidentially declared disasters, (c) existing approved corrective action plans which have not been completed, and (d) fire/water damage that has affected more than 30% of the units. If a property fails with a score of zero for refusal to comply, all controlling participants will be issued a Tier-2 flag on their APPS record. Once a property fails and HUD has issued a Notice of Default (NOD), a cure period will be establsihed (typically 60 days), HUD will place the property on a reinspection list to have another inspectio...
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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, these changes are expanding upon the documentation requirements for REAC appeals already in place, adding new levels of detail 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 inspection (b) the ...
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Conquering REAC Compliance Workshop in Minneapolis May 23, 2019

Event Registration Join us at Minnesota Multi-Housing Association (MHA) training center in Bloomington, MN for a full day of training on REAC Compliance. With all of the changes to the REAC Inspection Requirements in 2019, it is more important than ever to fully understand the regulations. REAC is now only providing limited notice prior to inspections (14 days) and is discussing new ways to increase scrutiny on physical standards. This training will discuss these new changes, and how the current rules work within the existing inspection model. Register for the event by clicking here.

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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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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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 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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Latest Blogs

24 August 2019
REAC Inspections
On August 21, 2019, HUD published a set of proposed rules in the Federal Register "Notice of Demonstration To Assess the National Standards for the Physical Inspection of Real Estate and Associated Protocols" 24 CFR Parts 5 and 200; [Docket No. FR–6...
21 August 2019
REAC Inspections
On August 20, 2019, HUD released the first of the new NSPIRE protocols which will be expected to become active once the pilot/demonstration program has concluded. This is a first look at what deficiencies will look like under NSPIRE, the inspection ...
16 July 2019
REAC Inspections
July 8, 2019 HUD's Office of Multifamily Housing Asset Management and Oversight released a memorandum reiterating the rules surrounding notice prior to entering resident's units, availability of documentation for residents to review, and clarificati...
09 July 2019
REAC Inspections
The House Financial Services Committee passed a bill - the Safe Housing for Families Act of 2019 (H.R. 1690), and it will likely move forward to a full vote in the near future. The bill provides $300 million over three years to fund the installation...
05 June 2019
REAC Inspections
Enter your text here ...HUD REAC Released a PowerPoint document (Click here) in an email to REAC Inspectors. This presentation is intended to provide clarify to sometimes subjective interpretations of what is considered to be "Non-Industry Standard"...

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