HUD released its revised contingency plan last night, and NLHA’s Denise Muha quickly shared the update with members. One of the biggest questions on everyone’s mind: What happens to Real Estate Assessment Center (REAC) and NSPIRE inspections during a lapse in federal funding?
What’s Changing for REAC/NSPIRE Inspections During the Shutdown?
According to HUD’s September 29, 2025 updated plan, any inspection already procured by HUD and funded with prior obligations will continue. This is the vast majority of inspections that are scheduled.
For mortgagee-procured inspections, if the servicing mortgagee is responsible for arranging the inspection, those will also move forward.
There are also new distinctions that now apply to inspections completed by HUD Quality Assurance employees. If there is a threat to life or the property, HUD QA staff will perform these inspections. However if there is no such threat then the inspection will be cancelled. HUD QA staff will also schedule inspections even during the shutdown.
The Catch: Delays in Inspection Reports
While the majority of inspections will still take place, HUD staff that are responsible for reviewing and releasing reports will not be working during the shutdown. This means that inspection reports will be substantially delayed. Backlogs will be inevitable once HUD staff return, further slowing report releases. Owners and managers must begin corrective action on all findings (not just Health and Safety) even without the official report in hand.
Practical Steps for Owners & Managers
To stay ahead:
Take detailed notes and photos during inspections. This will help you immediately identify deficiencies and start repairs.
Act quickly on known issues. Don’t wait for HUD’s paperwork to begin corrective actions.
Consider additional support. Our shadow service can provide on-the-ground assistance, ensuring issues are documented and addressed swiftly during this period of uncertainty.
Key Takeaway
HUD’s revised contingency plan balances resident safety with operational limits. Inspections will largely continue, but the reporting pipeline will stall, creating challenges for compliance timelines. Proactive preparation — and reliable backup support — will be essential until the federal government fully reopens.
