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Notice of Demonstration To Assess the National Standards for the Physical Inspection of Real Estate and Associated Protocols

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–6160–N–01]. This publication outlines the demonstration (pilot) program for NSPIRE, which is to start 60 days from this publication and extend for an unspecified amount of time. The stated goal is to perform at least one test inspection on 4,500 properties nationwide. In much of the publication, there are references to making the inspection requirements smaller and more focused on Quality and Livability. When reading these goals and aspirations of this reform, it is important to understand that streamlined does not mean easier; these new standards appear to have a broader and more expansive evaluation of HUD financed and assisted properties. 100% Annual Owner/Agent Self-Inspections ​​​​​​ "For the first time, [HUD NSPIRE] will incorporate comprehensive, annual self-inspections by property management staff. The methods and results of which will be an integral part of HUD's real estate inspection process. By making these regular, comprehensive self-inspections a part of HUD's physical assessment regimen, property managers will be more engaged in the process and more vested in the outco...
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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 Notice on Processes to Delay REAC Inspection Scheduling

On March 21, 2019, HUD Released a Notice titled " Approving the Delay of a Physical Inspection Beyond the New Real Estate Assessment Center (REAC) Inspection Notification Timelines ". There are restrictions on what will be allowed to delay REAC Inspections which are procured through the Reverse Auction Program (this does not apply to FHA-Insured Assets). ​ Major Rehab: The HUD Field Office may only approve the delay of an inspection for major rehabilitation if the owner/agent informed the Field Office of the rehabilitation  before receiving notification of an inspection date   [Major Rehab is defined as] Major recapitliation such as refinance or allocation of LIHTC where the total cost is more than $15,000 per unit. Presidential Disaster Declaration (PDD): The project is located in an area/county covered by a PDD during the period an inspector is trying to schedule an inspection. Other Emergency: An emergency such as a fire or water damage occurred that was beyond the owner's control occurred that effects more than 30% of the units. HUD Approved Repair Plan: The project has a HUD approved repair plan as a result of prior score(s) below 60 and it covers the period during which HUD or an inspector are trying to schedule an inspection. National Leased Housing Association (NLHA) provided a notice regarding the Pilot P...
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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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Preparing for New REAC Realities: A Time to Re-Exam Your Policies and Procedures

With the onset of the new 14-day notice REAC Inspection rule; it is time for management companies and owners to develop new metrics for physical compliance. A large portion of the intent of the new HUD initiative is to end what they refer to as "Just in Time" repairs and the practice of owners/agents simply operating their properties under the guise of preparing for the exam, instead of looking at the quality of their communities. While the presumption that the entire industry operated their properties in this manner is deeply flawed, the perception has resulted in a set of new challenges for the industry. At this moment, owner/agents need to develop a new set of metrics and operating standards to address REAC readiness on an everyday basis. Many in the industry have developed procedures that rely on the last REAC score to determine if a property is ready or in need of additional attention. However, many REAC Inspections were deeply flawed due to poor quality and inconsistent results, making these inspections a poor standard for risk rating. We, at US Housing Consultants, are working with a number of companies who are now developing new maintenance operating procedures. These policies procedures are creating new standards and policies for physical compliance, creating: Layers of internal inspections Quality control procedures RE...
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New Scheduling Rules for REAC Inspection Released 

HUD Released new rules for inspectors participating in the Reverse Auction Program in a document titled " UPCS Inspection Services Purchase Order Terms and Conditions ". These new rules will go into effect on March 25, 2019. Much of the document deals with federal contractor payment and performance requirements for REAC Inspectors, but there are elements of this document which directly affect owners and agents of Multifamily and Public Housing Properties. Scheduling Methodology : REAC Inspectors will create a schedule of properties and the dates that the inspectors have assigned the properties prior to notifying any of the owner/agents. One of those dates will be fourteen days from the initial notification date and the second date will be a final date within seven days of the first inspection date if the first inspection is unsuccessful. Notification Procedure : REAC Inspectors must call ​ ​the  owner /agent exactly 14 calendar days prior to the inspection to notify the owner/agent of the inspection date and then send an email confirmation as well. A confirmation by the owner/agent is not required to proceed with the scheduled date.  If there is a holiday, the contractor should notify the property the day proceeding or following the holiday, thus providing a 13-day or 15-day notification to the property . Non-Complianc...
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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.

IRS Publishes Final Regulations on Utility Allowances

– Changes to Actual Consumption Sub-metering from Renewable Energy Sources On March 4, 2019, the IRS published final regulations to amend the utility allowance requirements for Low-Income Housing Tax Credit (LIHTC) projects. While the final regulations carry forward many of the requirements in the temporary regulations published March 3, 2016, a few of the provisions were modified prior to being adopted in the final regulations. These changes are summarized below. Energy obtained directly from renewable sources – Qualification as a Renewable Energy Source Per 1.42-10 (e)(1)(i), an energy source may qualify as a renewable energy source described in Section 48 or Section 45, even if the building owner does not actually qualify for or receive any credits under Section 48 or Section 45 for the renewable energy source. (See 1.42-10(e)(1)(i)(D)) Temporary Regulations – The text of paragraph 1.42-10(e)(1)(i)(C) in the temporary regulations was unclear as to whether the owner of the energy source had to qualify for, or receive credit for, the energy source in order for the energy source to meet the requirements of the 1.42-10(e)(1)(i). Final Regulations – The final regulations provided clarification by adding paragraph (D) to 1.42-10(e)(1)(i), which states: "Determinations under (e)(1)(i)(C)( 1 ) and ( 2 ) take into account only the man...
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IRS Amends LIHTC Compliance Monitoring Requirements

On February 13, 2019, the IRS approved final regulations to amend the compliance monitoring requirements for Low-Income Housing Tax Credit (LIHTC) projects. The final regulations will be published in the Federal Register on February 26, 2019. Read the final regulations here. While the final regulations carry forward many of the requirements in the temporary regulations published February 25, 2016, a few of the provisions were changed prior to being adopted in the final regulations.  The changes include: Changes to Sample Size – The required minimum sample size for low-income unit and certification inspections is now solely based on the sample size required by the Minimum Unit Sample Size Chart provided in Revenue Procedure 2016-15, referenced as "Table to Paragraph (c)(2)(iii)" in the final regulations. This is the same sample size required by HUD for REAC Inspections. See 1.42-5 (iii)(b). This table uses a scale of 1-27 units based on the size of the property . ​ Previously, under the temporary regulations and through the publication of Revenue Procedure 2016-15, the required sample size for inspection was the lesser of 20% of the low-income units or the number of low-income units reflected in the Minimum Unit Sample Size Chart in the Revenue Procedure. The final regulations removed the 20% component of this rule and inste...
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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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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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