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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.
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.
Develop and implement a process to ensure that the reserve for replacement requirements in HUD’s business documents are consistent for all converted properties.
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.
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.
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.
Provide training to field staff members to ensure that they have the skills necessary to complete MORs of converted properties.
Develop and implement a plan to determine how to implement the risk-based approach to review the Rental Assistance Demonstration properties that have not had subsequent management and occupancy reviews (MORs) in more than 3 years and to require periodic MORs going forward.
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Complete the initial management and occupancy reviews (MORs) for the Rental Assistance Demonstration properties that have not had an initial MOR.
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Determine the appropriate timeframe for when initial management and occupancy reviews (MORs) should be completed for all properties that convert under the Rental Assistance Demonstration and issue updated guidance that includes a system to track the timeliness of initial MORs.
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