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HUD Notice 2016-03 Clarifications

Clarifications About REAC Industry Standard Requirements

We have received many questions about the new HUD notice regarding additional scrutiny on the quality of repairs. While many of the questions also expressed a lot of dismay at the stark change of direction, we were able to clarify a number of concerns.

Has this changed all of the deficiency standards?

No, nothing really has changed here in terms of what makes something a deficiency. Everything you learned about REAC before is true. What has changed is an evaluation of how things are repaired. Essentially the previous standard of (for example) “Is that wall cracked” has been replaced by, “Has this wall been properly repaired”.

Every Inspector is different – How can I possibly prepare?

Don’t personalize your inspections. Your inspection is according to a single set of standards – not Bob or Larry or Susan’s standards. If you properly identify issues and repair them professionally, you will be fine. Preparing professionally basically means: don’t use spray foam to fit a pothole, or cold patch asphalt to fix a stone retaining wall – don’t take the easiest approach.

As far as inspectors being different, this is true and always has been. We look at it as there is the industry standards approach, and then the not so by the book approach. So, long story short: if you properly prepare for an inspection, the variables will take care of themselves.

Other Questions About Industry Standard Requirements

  • Can you recommend a solution to repair gaps in breaker panels that would meet industry standards?
  • In order to fill in gaps in a breaker panel, there are a number of products. We have seen sheet metal attached to the panel on the outside of the gap, attached by adhesive and painted to finish. You can also use an electrical gasket, aka spacing gasket (found in the electrical aisle of your hardware store). Whatever change that you make to the panel, ensure that the repair cannot be removed without the aid of special tools and that it is not negatively affecting the electrical equipment. If you have a question, please consult with a licensed electrician before making any changes.
  • Will this [rule change] only pertain to HUD programs where the agency has a financial concern, or do you see this branching out into all projects/programs regardless?
  • This rule change applies to any housing program that is required to utilize the UPCS inspection code as it’s monitoring inspection code. This would include: 1) Public Housing, 2) HUD Multifamily Section 8, 3) LIHTC, 4) HOME, 5) HUD mortgaged properties (such as 221d3, 221d4, etc). As HUD REAC dictates what is and isn’t in the UPCS Inspection code, when they update rules (such as the one we are discussing here) they are updating it for all funding programs that utilize it, such as Low Income Housing Tax Credits and HOME.

Please let us know if you should have any questions, or if you would like information about scheduling an inspection with one of our staff of professional Inspection Analysts, who will let you know anything and everything you need to do before your inspection.

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