Develop and implement a plan to review the reserve for replacement accounts for all converted properties from the date on which the account was established to the date of the review. Based on the reviews completed, HUD should take appropriate actions to ensure that reserve for replacement accounts are appropriately funded or determine whether overfunded accounts should have the deposits suspended for a specified period.
Publication Report
2025-CH-0001 | December 18, 2024
HUD’s Office of Multifamily Needs To Improve Its Oversight of PBRA and FHA-Insured PBV Properties Converted Under RAD
HUD’s Office of Housing contracts with performance-based contract administrators to administer the housing assistance payments (HAP) contract with owners. Through RAD, HUD oversees the HAP contracts for converted properties and monitors owners for… moreRelated Recommendations
Housing
- Status2025-CH-0001-001-AOpenClosed
Review the non-life-threatening health and safety and other deficiencies observed by the audit team and ensure that property owners and agents make the necessary corrections to the deficiencies as appropriate.
- Status2025-CH-0001-001-BOpenClosedPriorityPriority
We believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.
Determine the appropriate timeframe for when initial MORs should be completed for all properties that convert under RAD and issue updated guidance that includes a system to track the timeliness of initial MORs.
Status
HUD has not provided a draft plan for corrective action yet.
Analysis
Failure to determine the timing of the initial MORs could delay HUD's performance of the MORs, which may result in property owners' untimely corrective actions, and thus potentially impact the health and safety of families.
The implementation of this recommendation has the potential to directly impact the health and safety of families.
- Status2025-CH-0001-001-COpenClosedPriorityPriority
We believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.
Complete the initial MORs for RAD properties that have not had an initial MOR.
Status
HUD has not provided a draft plan for corrective action yet.
Analysis
Completing initial MORs would assist HUD in holding property owners accountable for maintaining the conditions of their properties and sufficient reserve for replacement accounts balances, which could impact property owners' ability to make needed capital repairs.
The recommended corrective action has the potential to directly impact the health and safety of families.
- Status2025-CH-0001-001-DOpenClosedPriorityPriority
We believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.
Develop and implement a plan to determine how to implement the risk-based approach to review the RAD properties that have not had subsequent MORs in more than 3 years and to require periodic MORs going forward.
Status
HUD has not provided a draft plan for corrective action yet.
Analysis
Developing a plan to implement the risk-based approach would establish the criteria for identifying properties that are at a higher risk of noncompliance.
The recommended corrective action would help HUD to monitor property owners' compliance with its requirements and thus, potentially protect families from living in unsafe units.
- Status2025-CH-0001-001-EOpenClosed
Provide training to field staff members to ensure that they have the skills necessary to complete MORs of converted properties.
- Status2025-CH-0001-001-FOpenClosed
Review the reserve for replacement account balances for the 13 properties (11 underfunded and 2 overfunded) to determine whether the balances are maintained in accordance with the applicable HUD requirements and executed HUD business documents and require owners to fully fund any underfunded reserves and determine whether any overfunded accounts should have the deposits suspended for a specified period.
- Status2025-CH-0001-001-GOpenClosed
Review the HUD business documents, such as the RAD conversion commitment, HAP contract, and regulatory agreement, for the four properties that did not contain consistent reserve for replacement information and update the documents to be consistent as appropriate.
- Status2025-CH-0001-001-HOpenClosed
Issue guidance to RAD property owners clarifying that the owner is responsible to follow both the HUD business documents and the property’s business documents and that the most restrictive document indicates the amount and timing of the annual deposits into the reserve for replacement account.
- Status2025-CH-0001-001-IOpenClosed
Develop and implement a process to ensure that the reserve for replacement requirements in HUD’s business documents are consistent for all converted properties.
- Status2025-CH-0001-002-AOpenClosed
Implement adequate procedures and controls to ensure that servicing lenders comply with HUD time requirements in scheduling initial inspections of FHA-insured RAD PBV properties.
- Status2025-CH-0001-002-BOpenClosedPriorityPriority
We believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.
Determine an appropriate timeframe in which non-FHA-insured PBRA properties converted under RAD should be initially inspected, work with REAC to ensure that inspections are ordered and completed within that timeframe, and update HUD’s publicly available and internal guidance to ensure consistent messaging in accordance with HUD’s determination.
Status
HUD has not provided a draft plan for corrective action yet.
Analysis
Determining the appropriate timeframe for initial inspections would result in the timely identification and correction of life-threatening and non-life-threatening deficiencies.
The recommended corrective action has the potential to directly impact the health and safety of families.