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 Inspect." 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 inspection completed. This will occur for projects which fail because of the results of a REAC Inspection as well as those with a zero for failure to comply.
  • It was also clarified that the 14-day notice memorandum does apply to FHA Insured Projects under the 542(b) Risk Share program which also have a project based HUD Section 8 HAP contract. All other FHA insured programs are not subject to the 14-day notice at this time.
  • The memo includes a new template for a "Notice of Default" letter. This letter provides detailed instructions on the steps required for the owner/agent to complete to clear the non-compliance. This letter includes new standards for reporting on the full survey required after a failed inspection, and new steps for projects which were constructed prior to 1978 to certify that the issues cited on the REAC are not in relation to any Lead Based Paint Issues.

Please let us know if you should have any questions about what to do in the event that a property fails a REAC Inspection, or to take proactive steps to find new ways to truly stay in physical compliance at all times.
HUD REAC Announces Outline for Participation in NS...
HUD Notice on Processes to Delay REAC Inspection S...

Latest Blogs

13 January 2020
REAC Inspections
Resident Involvement in REAC/NSPIRE Inspection Process​​As part of the NSPIRE pilot process, HUD has announced that additional processes will be added to engage the residents in the REAC/NSPIRE process. You can read the press release on HUD's website...
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...

Blog Archive