fbpx

search

REAC Industry Standard Repair Clarifications

HUD REAC Provides Clarification on Industry Standards Repair Requirements On August 9, 2016, HUD REAC provides clarifiations to the industry on the requirements in HUD Notice 2016-03 Regarding Requirements for Repairs to be Completed within Industry standards. In this email to some in the industry, HUD provided a copy of a PowerPoint presentation that was used to train active REAC Inspectors on the new requirements. We have posted the PowerPoint presentation here to view: Industry standards inspection guidance and application Some of the highlights on this presentation include the following clarifications: Caulking that is approved for exterior use is allowed for the repair of brickwork, such as ASTM approved caulking Repairs to refrigerator gaskets with tape that are less than one inch ARE permitted PVC is allowed on gutters, so long as the PVC is painted to patch Plywood on drywall IS permitted, so long as the plywood on the wall is an access point to electrical or plumbing (we would recommend painting such plywood access panels to match the surrounding areas). There are new specific details on what is expected on water heater or boiler flue and chimney installation and repair A General Requirement on Workmanlike Repairs While these examples provide some needed insight into specific requirement clarifications, it is very impor...
Continue reading

Industry Standard Repair Rule Change to REAC

HUD REAC released a notice on their website this week (July 5, 2016) entitled " Industry Standard Repair ", which indicates a new standard that details that all repairs made to properties must be "made in a good and workmanlike manner with materials that are suitable for the purpose and free from defects". This new standard outlines a series of specific items and deficiencies that will be determined to be "good and workmanlike". Before we detail these new changes, it should be noted that this is a significant departure from previous interpretations of the UPCS (Uniform Physical Condition Standards), which typically focused on the existence of a qualifying condition instead of evaluating for the manner of repair or design. This new standard outlines the following standards to all items in the inspection item list: (a) Ensure that all components, as repaired, perform its intended purpose and function; and (b) That all repairs are finished in manner reasonably compatible in design and quality with the original and adjoining decorative materials "Each repair shall be made in accordance with the industry standard for that particular inspectable item (e.g. hole in the drywall be repaired using the same or equivalent materials, have the same texture, and shall have minimal deviation from and/or have an indistinguishable difference from...
Continue reading

Interim Recertifications & New Overtime Rules

What are the processing guidelines when changes are reported? When a tenant requests an interim recertification or when a tenant reports changes in income or other circumstances as required, the owner must take the following steps when processing an interim recertification. Interview the tenant to obtain information on the reported change. The owner must also review and ask if there have been other changes to family composition, income, assets, or allowances since the most recent certification. Obtain third-party verification of the income or other facts reported as changed since the last recertification and maintain documentation in the tenant file The EIV system must be used at the time a tenant reports a change in employment or income to determine if any information has been provided by the employer or if the tenant had unreported income. However, because of the delay in reporting requirements by state agencies, EIV may not contain data that can be used to verify employment or income for use in processing interim recertifications in instances where tenants report a change in employment or income. In these cases, the owner will need to use another method of verification. Input any changes to the tenant's income or other characteristics in the owner's software program and print the HUD-50059 Document the resulting changes in th...
Continue reading

How you can create a Database Adjustment to handle Local Code Issues

  Don't Violate Local Code to Pass Your REAC Inspection How you can create a Database Adjustment to handle Local Code Issues Understanding how to utilize the REAC inspection appeal process is the only way to ensure that you are getting the full benefits of the protocol applied to your property. An appeal can be viewed as the final step of the inspection process and is the only way that certain conditions can be considered or applied. Just like filing your taxes where you can easily overlook certain deductions that may be applicable without the help of an expert, you can also find many instances where exceptions may apply to your REAC inspection. There may be various points that can be returned for issues resulting from inspector error, conditions beyond your control, or a local area code variance. For example , did you know that the local area code requirements supersede the Federal code? You may be in compliance with the local area, but not conforming to the Uniform Physical Conditions Standards (UPCS) protocol used by REAC. The best way to appropriately deal with that scenario is to consult a licensed trade professional for advice; if they determine you are in compliance with local area code requirements, then filing a Database Adjustment appeal of the REAC inspection, either before or following the REAC inspection, is th...
Continue reading

REAC Inspector Business Rules and Code of Conduct

On February 5, 2016, a notice was issued that created new business rules for active REAC Inspectors. This new set of REAC Inspector business rules is an update to the existing inspector business rules dated January 20, 2006. This memorandum sets forth basic rules of behavior, a Code of Conduct, and instructions to REAC inspectors on how to handle situations that may arise. In this article, we are going to discuss the parts of the notice that affect Owners/Managers of HUD-insured/assisted housing. If you are interested in reviewing the sections regarding administrative actions on REAC Inspectors, you can review a copy of the HUD REAC Physical Inspection/Inspector Administration Business Rules - Inspector Performance Monitoring. The major changes to the REAC Inspector Business Rules that will affect owners/managers relate to updates to the Code of Conduct. Here is the section of the notice that relates to what REAC Inspectors can and cannot do: Inspectors must: Display the REAC-issued photo identification card throughout the entire inspection; Respect resident privacy. For example, inspectors must not attempt to open a closed door in a residence; they defer to the property representative; Comply with reasonable requests from residents and project representatives during the inspection; Defer all questions from residents regarding t...
Continue reading

Interim Recertifications for HUD Section 8 programs

Interim Recertifications for HUD Section 8 programs - Part 1 Determining when an Interim Recertification (IR) is warranted and what effective date to utilize is often challenging. This portion of our three-part series will provide guidance on reporting requirements and optional changes, processing IRs, refusing IRs and the all-important question of what effective date to utilize. This information applies to HUD Project-Based Section 8 properties only, as IR never apply to the LIHTC program What are tenants required to report? All tenants must notify the owner when: A family member moves out of the unit; The family proposes to move a new member into the unit; NOTE: At a minimum, owners must apply screening criteria for drug abuse and other criminal activity, *including State sex offender registration, and use of the EIV Existing Tenant Search to persons proposed to be added to the household, including live-in aides. The owner must make sure that the person also discloses and provides verification of his or her SSN. An adult member of the family who was reported as unemployed on the most recent certification or recertification obtains employment; or The family's income cumulatively increases by $200 or more per month. What are optional reporting requirements? Tenants may request an IR due to any changes occurring since the last re...
Continue reading

HUD Final Rule - Streamlining Administrative Regulations

On March 8, 2016, HUD published a Final Rule on Streamlining Administrative Regulations The effective date of the Final Rule is April 7, 2016. Portions of this final rule affect the Public Housing (PH) Program, the Housing Choice Voucher (HCV) program, the Community Planning and Development (CPD) Programs and the following Multi Family Housing Programs: Project-Based Section 8 (New Construction, State Agency-Financed, Substantial Rehabilitation, Rural Housing Services, Loan Management Set-Aside and Property Disposition Set-Aside) Section 8 Moderate Rehabilitation Rent Supplement Program Section 202 Supportive Housing for the Elderly (including Project Assistance Contract and Project Rental Assistance Contract (PRAC) Section 811 Supportive Housing for Persons with Disabilities (including PRAC and Project Rental Assistance) Section 236 Interest Reduction Payments Program Rental Assistance Payment (RAP) Program Sections 221(d)(3) and (d)(5) – FHA Insurance Programs for New Construction or Substantially Rehabilitated Multifamily Rental Housing We encourage you to review the regulations . US Housing Consultants will provide more detailed articles as information becomes available.  

Handling 401(k) Accounts on Tax Credit Programs

401(k) Accounts in HUD Sec 8 and LIHTC programs Do you know the answers to these questions? If a 401(k) account is only accessible if a hardship is proven, should the asset be considered when determining eligibility for a HUD or LIHTC household? Does investment income based on market fluctuations need to be reflected as income on the asset? Are withdrawals from a 401(k) account considered income? This article will assist in answering some of the common 401(k) questions as it relates to the affordable housing industry, specifically HUD Section 8 and Low Income Housing Tax Credits. What is a 401(k) account? A 401(k) is a retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before any deductions. Taxes aren't paid until the money is withdrawn from the account. How are 401(k) accounts verified? A 401(k) must be verified directly with the employer or plan administrator. In the affordable housing world, the cash value of assets needs to be reflected on the certification. Therefore, verification of the market value along with verification of costs to convert the asset into cash (taxes/penalties) is necessary. It is also necessary to verify interest/dividends and whether the applicant/tenant is receiving periodic payments. Is the 401(k) account income or an asset? If an applicant/te...
Continue reading

Tax Credit UPCS Inspection Updates

IRS to Update the LIHTC Inspection Requirements The Internal Revenue Service (IRS) will post in the Feb. 25 Federal Register a change to regulations that govern the Low-Income Housing Tax Credit Compliance Monitoring. This rule is final as of February 25, 2016, and will be set to expire on February 22, 2019. These changes revise and clarify the requirement to conduct physical inspections, specifically the number of units selected. The IRS will concurrently issue Revenue Procedure 2016-15 (https://www.us-hc.com/images/pdfs/rev-proc_16-15.pdf) to provide that the minimum number of low-income units in an LIHTC development that must undergo physical inspection is the lesser of 20 percent of the low-income units in the property, rounded up to the nearest whole number, or the sampling scale that is currently used by REAC, which set the maximum sample at 27 units (https://www.us-hc.com/the-score/issue-71.html#reac-sample). This same rule applies to determine the minimum number of units that must undergo low-income certification review (file audit). It is important to note that state agencies remain able to conduct larger samples if they choose to set a policy to inspect larger amounts of units. The other important part of this change is that the "same unit" rule is being eliminated as part of this update to the regulations. The same un...
Continue reading

What Paperwork Is Required on REAC Documents

Having the appropriate documentation available at the start of your REAC Inspection may expedite the process Fire Alarms inspection reports within the last 12 months. Sprinkler inspection reports within the last 12 months If the property was built prior to 1979 – The inspector will pull 5 tenants files at random and look for the lead paint disclosure form that every tenant had to sign when they signed their lease, as well as the lead base paint inspection report. If you have a backup generator – Maintenance/test log dating back 12 months without any dates missing. Copy of your rent roll (NOT Alphabetical – Must be Numerical and separated by building) Boiler certificates Elevator certificates If you have a call for aid pull cord system, is it monitored offsite? (If yes, then have an inspection report from within the last 12 months. If no, then don't worry about it – they will have to be tested.) Make sure that your elevator room door is locked and labeled "Elevator Room". All keys to every room in the building, for all buildings (including any breaker panels that may be locked), will be needed. A site map would be helpful but not required Resident notification letter of inspection. Site square footage measurements are broken down into two separate numbers: Parking lot/Driveways/Roadways Walkways/ Steps (If you don't have the exac...
Continue reading

REAC Inspection Bed Bug Update

Important REAC Update Effective February 1, 2016, properties undergoing a UPCS/REAC Inspection will no longer be allowed to omit units reported to have bed bugs from their sample unit list. Inspector Notice No. 2016-01 states, "Researchers through HUD's Office of Lead Hazard Control and Healthy Homes have concluded after conducting thousands of inspections that the likelihood of bed bug transfer to an inspector from an infested unit is remote." The notice goes on to report that "REAC is issuing this notice amending the inspection protocol to require the inspection of all units in the sample, including those reported to have bed bugs." What this means for property representatives You are still required to report the known presence of bed bugs to the REAC Inspector when you meet before the inspection. If you indicate that there are units included within the sample that are known to have bed bugs the Inspector will call and report the information to the REAC Technical Assistance Center and proceed with normal inspection protocol, including those units. Unlike other infestations, the presence of bed bugs will not be scored as a deficiency on your REAC Inspection report. Our recommendation Do not refuse entry into units known to have a bed bug infestation. If you refuse entry to a unit based on the presence of bed bugs your inspectio...
Continue reading

Student Restrictions: HUD vs. LIHTC vs. HOME

  US Housing Consultants receives numerous inquiries regarding student status and proper documentation of applicant/tenant files to ensure compliance. This article applies to properties with HUD Section 8, Low-Income Housing Tax Credit (LIHTC) and/or HOME funding. Confirming student status requirements are met is a critical piece in determining eligibility. Applying student rules based on funding can be challenging, especially when properties have multiple funding sources in which an applicant/tenant may need to meet separate student-related rules in order to qualify. Here are some guidelines that we hope will be helpful when determining eligibility for a household with a student(s). Why are there student restrictions in affordable housing? For LIHTC… The LIHTC student restrictions were primarily implemented to prevent dormitory and/or transient housing. For HUD… The HUD student restrictions were primarily implemented for two reasons: To address incidents of children of wealthy parents receiving federal housing assistance; and To address incidents of college students obtaining federal housing assistance without their educational financial assistance counted as income for purposes of income eligibility for federal housing assistance. For HOME… In 2013, HUD revised regulations governing the HOME program and decided that HOME ...
Continue reading

Documenting Applicant Real Estate & Tips for REAC Preparation

In the affordable housing industry, asking the right questions and obtaining proper documentation are imperative when ensuring real estate owned by an applicant/tenant is handled in accordance with HUD and LIHTC requirements. This article focuses on the intricacies involved with properly documenting applicant/tenant files in an effort to accurately calculate the cash value or net income on real estate. (For Low-Income Housing Tax Credit owners/managers, please refer to your state monitoring agency for specific guidance.) Terminology you should be aware of Market Value - Market value is an estimate of the value of real estate based on what a knowledgeable/willing buyer would likely pay for it. There are a number of factors that would affect the market value of real estate, including location and condition of the real estate. Documentation that may be utilized to verify the market value of real estate includes: Appraisal Statement from real estate agent Current tax valuation or assessed value from the Assessor's office only if 100% valuation is used. On-line resources (such as Zillow and/or Trulia) Costs to Convert - In order to determine the cash value of real estate, it is necessary to verify how much it will cost to convert the asset into cash, e.g., settlement costs, real estate commissions, etc. This needs to be done regardle...
Continue reading

Social Security Income Guidance for HUD & LIHTC

Social Security Income Guidance for Applicants at HUD & LIHTC Properties Has any of you been challenged with the verification and calculation of Social Security (SS) or Supplemental Security Income (SSI) when working with an applicant or tenant who collects or might be entitled to collect these benefits? You would think that this type of income would be easy to verify and calculate, but some of you may be surprised with this month's article that there are challenges when dealing with this type of income for HUD, LIHTC or a combination of both. Verification of SSA Benefits Years ago, the Social Security Administration (SSA) announced it would stop providing Property Managers third party verifications. As a result, Property Managers have to rely on documentation provided by applicants to verify SS and SSI income to determine income eligibility and/or tenant rent. Annual award letters provided by an applicant can be utilized to verify gross Social Security benefits for the applicable year. For example, the award letter recipients received in 2014 stating 2015 benefits can be utilized for certifications effective in 2015. SSA letters are good for the full year because they are not dated and they are provided after a COLA or no COLA has been announced. If an SSA letter is dated, it is likely due to a change in benefits. SSI verif...
Continue reading

Employment Guidance for HUD and LIHTC Properties

Have you ever noticed that 3rd party Verification of Employment (VOE) forms and paycheck stubs don't always match? What if your applicants don't have 4-6 recent paycheck stubs? It is difficult to determine the best reasonable approach for calculating anticipated income when the information provided to you is insufficient. HUD Section 8 LIHTC HUD Section 8 layered with LIHTC We will provide guidance on what to look for when determining initial (move-in) eligibility based on verifications of employment (VOEs) and paycheck stubs. Ultimately, your files need to be well documented to support your income calculations, ensuring proper rent calculation for HUD as well as income eligibility for both the HUD and LIHTC programs. Remember, owners/agents (O/A) need to use the best reasonable approach to calculating anticipated income. Obtaining the best documentation will assist you with this task. For HUD Section 8 properties, paycheck stubs and Verification of Employment forms received directly from the employer are acceptable as third-party verification if the following criteria are met: The document is dated within 120 days of receipt by owner/agent; An unaltered original is provided; The documentation was complete; and The document is current (for example, documentation of public assistance may be inaccurate if it is not recent and does...
Continue reading

Working with Self-Employment Income

Of the all the income sources that need to be verified for affordable housing programs, self-employment income has to be one of the most challenging. There are so many factors to consider when determining income for those who are self-employed: Is the person self-employed? Is this new business or existing business? Did they file a tax return? Forms certifying to self-employment can be confusing for the applicant/tenant. It is important for management to have a thorough understanding of the forms they are required to use and the supporting documentation being requested. Required documentation to support self-employment income varies widely and while the following are general guidelines, a review of your state specific requirements is recommended. Types of Self-Employment The first step is to determine just what sort of "self-employed" the household member is. Generally, self-employment household members are either: Owners of businesses Sub-Contractors who are paid by an employer with a 1099 There are times when the individual is not sure if they are considered self-employed. Processing third party verification and additional clarification will assist in understanding if the applicant/tenant is self-employed or an independent contractor. Household Employees vs Self-Employment According to the IRS, applicants/tenants are considered...
Continue reading

Commonly Overlooked REAC Deficiencies: Building Exterior Wall Stains

Commonly Overlooked REAC Inspection Deficiencies This summer we are starting a four-part series about some of the REAC deficiencies that clients are saying they have "never heard of before". With the recent addition of newly trained REAC inspectors, many of whom have a greater attention to detail, many deficiencies that had been overlooked for years are now becoming part of the everyday REAC inspection. In the next few issues of The Score, we will detail what these issues are and how you can best prepare for your inspection. Stains on the Outside of Building Exterior Walls One of the most frequent issues that we have heard that clients are surprised by are stains on the outside buildings. Just as with the rest of the issues in this series, this deficiency has been part of the UPCS Inspection code since its origin in 1999. The deficiency is recorded by the percentage of any one side of a building, what we commonly refer to as a "face" or "side" of a building. In any one side of the building, if less than 50% of the wall is affected by stains, it is a Level 1 (Minor) deficiency, and if it is more than 50% of the wall, it is a Level 2 (Major) deficiency. Stains can include moss, dirt, water stains, or any other discoloration on the walls or siding. This same deficiency also applies to peeling and deteriorated paint on exterior wall...
Continue reading

Handling Issues with EIV Discrepancies

How to Handle the Complex World of EIV Discrepancies... In 2001, the President's Management Agenda was released and established the reduction of erroneous payments as a key government-wide priority and required government agencies to measure improper payments annually, develop improvement targets and corrective actions and track results. Based on a HUD study, it was estimated that 3.2 billion dollars (yes, billion!!) of improper payments were being paid out on an annual basis. As a result of this and the President's Management Agenda, HUD established a Rental Housing Integrity Improvement Project, otherwise known as the RHIIP initiative. The goal of the initiative was to address the causes of errors and improper payments and to ensure "the right benefits go to the right persons." To assist in meeting RHIIP's goals, HUD developed and began implementation of the UIV (Upfront Income Verification) which is now known as the Enterprise Income Verification (EIV) system. In the first four years of EIV's implementation, there was a 60% reduction in gross improper payments. Bottom line: EIV is an effective tool and the system has eliminated a huge amount of improper payments. A critical piece of EIV that assists with reducing improper payments is the EIV Income Discrepancy Report. Knowing how to resolve and properly document the tenant fi...
Continue reading

HUD HOME Program Updates

Important HUD HOME Program Changes It's finally spring in the Northeast, and with the change in temperatures, inevitably you'll take some time to do some spring-cleaning. With that in mind, this month we'll discuss getting your HOME in order – HOME-assisted units that is. There are a number of recent changes to the HOME Program and it's important to review your practices. Recent Changes and Updates to Compliance with the HOME Program It's finally spring in the Northeast, and with the change in temperatures, inevitably you'll take some time to do some spring-cleaning. With that in mind, this month we'll discuss getting your HOME in order – HOME-assisted units that is. Q&A About HOME Where can I find HOME regulations? In July 2013 HUD published the HOME final rule with a number of changes for both existing and newly funded HOME projects. The Final Rule and charts indicating applicability can be found here: https://www.hudexchange.info/home/home-final-rule/ Who monitors compliance of my HOME-assisted units? Your Participating Jurisdiction (PJ) is responsible for overseeing compliance. This is frequently the HFA, but may be another government entity. Do HOME regulations apply to all of my units? HOME requirements apply to HOME-assisted units only. How do I know which units are HOME-assisted? Every assisted project will have a HO...
Continue reading

REAC Inspection Required Documentation

What Documents Are Required on REAC Inspection The initial part of the REAC inspection is a review of documentation with the REAC Inspector. All of this documentation, with the exception of the generator run-up records, does not impact your overall score and is recorded mostly as a survey and direction for the REAC Inspector. It is a great way to start your day to ensure that you have all of this documentation neatly organized and ready for the REAC Inspector. Systems and Safety Certificates A good portion of the required documentation consists of information about the property's systems and safety documentation, this will include copies of recent inspection certificates, including: Fire alarm inspection reports from within the last 12 months Sprinkler inspection reports within the last 12 months For backup generators, you should provide a maintenance/test log dating back 12 months without any dates missing Boiler Inspection Certificates Elevator inspection Certificates Copy of Inspection Report for Call For Aide System if it is monitored by a third party Information About Your Property After the review of your recent inspection and certificate documentation, there are a number of items about your property that the inspector will need to review. Some of these items can be maintained from one inspection to the next, as the inform...
Continue reading

Latest Blogs

17 February 2020
REAC Inspections
  New Quality Assurance Insurance (QAI) Re-Inspection Process​Earlier this month, HUD instituted a new Quality Assurance Inspection (QAI) process, which may be done within five (5) days of the REAC inspection. Effective February 3, 2020, REAC ...
06 February 2020
HUD and Tax Credit Compliance
HUD Provides Clarification on Assistance AnimalsSixty-Percent of all Fair Housing complaints relate to the denial of reasonable accommodations and those complaints regarding the denial of an assistance animal are one of the most common...
06 February 2020
HUD and Tax Credit Compliance
    IRS Provides Long-Awaited Guidance on Determining Income Limits under the Average Income TestOn January 30, 2020, the IRS published Rev. Rul. 2020-4. This revenue ruling provided long-awaited guidance on how to compute the new incom...
06 February 2020
HUD and Tax Credit Compliance
HUD Publishes a Proposed Rule Implementing HOTMA HUD published a proposed rule implementing the provision of the Housing Opportunity Through Modernization Act (HOTMA), which was signed into law in 2016. The proposed rule contains massive c...
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...

Blog Archive