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“.

This notice established several clarifications for REAC Inspections. Firstly, it defined very specific reasons for delaying REAC inspections. Secondly, it clarified the approval process. The owner will have to receive written approval from HUD prior to any contact with a REAC Inspector. Once the inspector attempts to schedule, it will be too late to delay. Lastly, the notice clarifies that this refers only to inspections procured through the Reverse Auction Program (RAP), not FHA-Insured assets.

Specific Reasons for Approving Delays of REAC Inspections

• Major Rehab: The HUD Field Office may only approve the delay of a REAC inspection for major rehabilitation if the owner/agent informed the Field Office of the rehabilitation before receiving notification of the inspection date.  [Major Rehab is defined as] Major recapitulation 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 at the time the inspector is trying to schedule an inspection.
• Other Emergency: An emergency such as a fire or water damage occurred at the property. The damage needs to be beyond the owner’s control, and affect more than 30% of the unitsHUD Approved Repair Plan: The project has a HUD-approved repair plan as a result of the prior score(s) below 60 and it covers the period during which HUD or an inspector is trying to schedule an inspection.

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