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.

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.

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.

Update the Conveyance, Assignment, and Assumption Agreement to require purchasers to report final property outcomes and identifying information including those of third-party purchasers when applicable.

Enhance data collection and processing controls to ensure consistency in reporting data.

Enhance existing demonstration guidance within the Conveyance, Assignment, and Assumption Agreement to provide further detail regarding documentation retention requirements.

Require that the PLUS system for receiving, processing, and assigning applications tracks applications and captures application intake, screening, and status, including key dates; captures data on the type of underwriter used; includes a portal for receiving documents and communicating with lenders; and generates FHA loan numbers. This will allow HUD to identify, monitor, and address processing delays and issues on a continuous basis; evaluate its performance and processes; and manage future challenges.

Update policies and procedures to include methods that will be used when applications exceed underwriter capacity, align intake and screening processes, and explain when timeframes will be enforced, including in PLUS.

Issue an industry wide letter to reinforce how intake, screening, and enforcement of timeframes will be handled.

Update relevant policies and procedures for appraiser roster management so that they align with each other and with regulations and reflect HUD practice. At a minimum, the policies and procedures should clearly cover appraiser roster status, license expiration, disciplinary actions, removals, data accuracy, and documentation.

Maintain historical data for each appraiser record, including history on expiration dates, when appraisers are moved on or off the appraiser roster and when they are and are not allowed to be assigned to conduct appraisals.

Improve quality assurance processes by adding steps to verify that the appraiser roster is accurate and reliable over time through testing of its logic-based system controls and data fields.

Update Handbook 4000.1 to require servicers to share information regarding foreclosure moratoriums with borrowers.

Simplify the process for accessing its FAQs on Single Family’s website, including adding a clickable link on its website home page that will take borrowers directly to the FAQs.

Review the two loans in our sample that did not receive appropriate servicing and take administrative actions if appropriate.

Require the transaction specialist contractor to change its application review process to prevent incomplete applications from being considered during vacant loan sales and that recommendations to approve applications are supported by written analysis.

Implement improved verification checks to prevent participation of restricted entities.

Implement an improved process to review and update program controls before each sale to achieve its mission objectives.

Develop and implement adequate procedures and controls to ensure that (1) staff issues notices of violation and default within 15 calendar days of the inspection report release date and (2) the Office of Multifamily Asset Management and Portfolio Oversight is made aware when notices are not issued within 15 calendar days after the inspection report release date and takes action as appropriate to ensure that future notices are issued in a timely manner.

Status

HUD has implemented a process of sending notifications to the field offices' centralized inboxes when a failed inspection has been released with instructions to issue a Notice of Default or Notice of Violation within 15 days. The field office logs this task into the Asset Management Processing System (AMPS) and assigns it to an Account Executive. Field office management tracks the progress of the task in AMPS. HUD is building a reporting tool to see if the task has been properly entered into iREMS and addresses the field office instances where it has not. The construction of this tool has been delayed due to limited staff resources. As of January 2025, the reporting tool was undergoing review and testing prior to implementation. The final action target date was November 29, 2024.

Analysis

Implementing procedures and controls for the timely issuing of notices would ensure that property owners are held accountable for correcting life-threatening deficiencies in a timely manner thus reducing the risk of families living in units that are unsafe for longer periods.

The implementation of this recommendation has the potential to directly impact the health and safety of families.

Include language in future notices of violation and default clearly stating that owners are required to inspect all units (including vacant units), common areas, grounds, building systems, and sites as part of the owner survey and require owners to include sufficient detail in the surveys to show (1) when the survey was conducted and (2) that the survey was a complete survey of the project.

Status

HUD will update the Notice of Default and Notice of Violation in conjunction with updates related to NSPIRE. These updates have been delayed by limited staff resources and pending policy clarifications and system changes for NSPIRE.

The final action target was November 29, 2024.

Analysis

The inclusion of language in the notices would ensure that property owners are aware of their responsibilities to inspect all units, common areas, grounds, building systems, and sites and perform repairs of identified deficiencies to protect families from living in units that are not decent, safe, and sanitary.

The implementation of this recommendation has the potential to directly impact the health and safety of families.