REAC Inspection Changes

REAC inspection changes have been a hot topic as of late. The U.S. Department of Housing and Urban Development (HUD) spoke at the National Affordable Housing Management Association’s (NAHMA) Winter Meeting. The Real Estate Assessment Center’s (REAC) new direction took more than an hour to discuss.

REAC Deputy Assistant Donald Lovoy explained the rationale for the changes. The new rules have many owner/agents (O/A) scratching their heads.

“We have a contingent of people who are basically ‘performing to the test,’” he says. “They are not spending a lot of time maintaining their properties. They are spending a lot of time and resources preparing for the inspection.”

Lovoy says the exterior focus often comes at the expense of the units where our residents live.

Controversy

The most controversial piece of the changes is the new 14 calendar day inspection notification.  Compare that to up to 90 days before. Those who cannot (or will not) comply, will receive a zero score. They then have seven more days to have the REAC inspection without penalty. Owner/Agents have expressed concern the 14 day period is not enough advance notice.

Yet, HUD has identified five problem areas with the current model. The REAC inspection changes will address these.

• Inspections do not always identify the extent of health and safety conditions.
• Properties can pass examination even with poor unit conditions.
• Scoring model no longer aligns with expectations about housing quality.
• Some owners preparing for inspections, rather than performing maintenance year-round.
• Deficiencies are not all Critical to Quality (CTQ).

For example, a misplaced natural gas water-heater flue is a CTQ which can cause death.

As a result, the Inspection Task Force’s mission is threefold. They want to:

• Conduct a wholesale reexamination of REAC inspections
• Place the most significant emphasis on eliminating health and safety hazards
• Ensure owners adopt sound maintenance practices year-round

REAC will roll out new software to make sure O/As are inspecting 100% of their units each year (which is the HAP and ACC). O/As can also generate work orders. This will provide proof properties are complying with the changes..

REAC Inspection Model

The new REAC Inspection Model includes three levels of inspection. They include Self-Inspections & REAC Contracted Inspections to assure the property’s condition. HUD Quality Assurance Inspections will provide evidence to support enforcement and/or sanctions.

There are also three new categories of deficiencies.

1. Safety & health.
2. Function
   and operability.
3. Condition & appearance

REAC inspectors will look at the units, interior, and exterior of each property.

Lovoy says it is “all about looking at the units at least once a year.”

Changes to Inspectable Areas and Scoring

The REAC Inspection Changes will narrow the current five inspectable areas into three. HUD calls it a “simplified, intuitive approach.”

The new scoring system weighs heavily on the condition of the dwelling units. As a result, it will now 50% of the final score. Please note, if the property fails this one component, it will not pass REAC Inspection. Fifty-percent is the “failure threshold value,” as shown in the image below.

While the REAC Inspection Changes begin this year for most properties across the United States, Region III will serve as the test case. HUD chose Region III because of the mix of property types.

• Urban
• Rural
• Apartments
• Detached/semi-detached
• Public housing/multi-family/office of healthcare programs.

During this two-year demonstration, HUD requires inspections of all properties. This is in lieu UCPS inspections. Meanwhile, the scores in these cases will be “only advisory.” Yet, if the conditions are bad enough, HUD will reinspect using UCPS.

Region III properties will begin self-inspections in the 3rd Quarter of FY2019. CTQ inspections will start the 4th Quarter.

For all properties outside of Region III, the REAC Inspection Changes go into effect March 21. Download HUD’s full REAC Inspection Changes presentation.

“The health and safety issues have becoming more and more prevalent. We just can’t stay in smoke,” Lovoy explains.

“We have 9 million families.. that deserve to be living in safe and sanitary housing in good repair.”

Therefore, he says HUD needs “to do what has to be done to make that happen, and that’s basically what this is about.”