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Demonstration Program to Assess the National Standards for the Physical Inspection of Real Estate (NSPIRE)

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. 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 outcomes.”

Clarified Goals of NSPIRE Reforms

“The NSPIRE Model is designed to better identify those Owners/Agents who are not adhering to minimum compliance standards by:

  • Establishing more objective, better-defined deficiency definitions which will be validated by a third-party contractor.
  • Requiring properties to complete and submit their annual self-inspection results electronically.
  • Incorporating less complex inspection protocols using indicators aligned to quality.
  • Adopting a new scoring model that places the most emphasis on the areas considered the most important – the residents’ homes.

Three Categories of Deficiencies with Work Order Requirement 

“The Three Categories of Deficiencies are Health and Safety; Function and Operability; and Condition and Appearance, with each category ideally resulting in emergency work orders, routine work orders, and other maintenance respectively”

The new NSPIRE Model appears to have the intention of focusing on not just identifying the issues but also ensuring that findings are resolved following each inspection.

New Standards Which Are “Critical to Quality” 

“These new ”objective standards” will be in the form of [Critical to Quality] CTQs. CTQs will be a well-defined subset of the entire set of NSPIRE Standards.  These CTQ’s will have a high correlation to overall quality and are calibrated to provide strong assurance that a property is not in compliance with HUD’s minimum property standards. Simply put, when a deficiency is noted against a CTQ or a number of CTQs, there will be a high correlation to substandard conditions within a property. This direct correlation to quality allows for inspections built around CTQs to evaluate fewer standards but remain highly effective in determining substandard conditions.”

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