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We audited the U.S. Department of Housing and Urban Development’s (HUD) oversight of multifamily housing properties with failing Real Estate Assessment Center (REAC) scores or life-threatening exigent health and safety (EHS) deficiencies.  Our objective was to determine whether HUD had effective oversight of multifamily housing properties to ensure that the properties were maintained in decent, safe, and sanitary condition.

The effectiveness of HUD’s oversight of physical conditions in multifamily housing properties could be improved.  Of the sampled properties that we reviewed, HUD did not (1) issue 45 percent of notices of violation or default to multifamily property owners in a timely manner for failure to maintain their properties in decent, safe, and sanitary condition; and (2) receive or maintain (a) 18 percent of the required EHS certifications to support that property owners corrected life-threatening deficiencies, (b) nearly 19 percent of owners’ surveys identifying all physical deficiencies, and (c) 13 percent of owners’ certifications that all deficiencies identified in REAC inspections and the owners’ surveys had been corrected and properties complied with HUD’s physical condition standards.  HUD also did not ensure that its staff complied with its policy for granting extensions to cure periods specified on the notices of violation or default for 8 of the 11 approved extension requests.  Further, HUD (1) could not support that it submitted 11 of 18 required quarterly or semiannual reports to Congress on the physical condition of assisted multifamily properties assessed through REAC and (2) did not submit 7 reports to Congress by the statutory due date.

These issues occurred because HUD did not have sufficient procedures and controls in place at the regional and headquarter level to ensure compliance with requirements.  Further, HUD lacked sufficient oversight of its staff to ensure that adequate documentation was received and maintained to monitor multifamily housing properties’ timely compliance with physical condition standards and to report oversight results to Congress in a timely manner.  As a result of HUD’s not issuing notices in a timely manner, it delayed the start of the cure period for the owners to correct identified deficiencies, which increased the risk that residents were subjected to substandard living conditions for a longer period.  Further, HUD’s staff did not always have the surveys and certifications necessary to monitor whether multifamily housing property owners complied with HUD’s requirement to maintain housing in a decent, safe, and sanitary condition.  Lastly, Congress did not always receive timely information concerning the physical condition of assisted multifamily housing properties, and HUD was uncertain whether required reports and schedules were issued to Congress.

We recommend that the Director of Multifamily Asset Management and Portfolio Oversight 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 issued late and takes action as appropriate to ensure that future notices are issued in a timely manner.  Additionally, we recommend that the Director (1) include more specific language regarding owner surveys in future notices of violation and default; (2) develop and implement adequate procedures and controls to ensure that owner surveys, certifications, and other relevant records are maintained and retrievable from an easily accessible location and that staff members with the appropriate level of authority approve extensions to cure periods in notices of violation and default when necessary; and (3) assess and streamline the processes for preparing, reviewing, and approving the reports as appropriate to ensure that the reports are submitted to Congress on or before the required due date.

Recommendation Status Date Issued Summary
2024-CH-0001-001-A Open February 13, 2024 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.
2024-CH-0001-002-A Open February 13, 2024 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.
2024-CH-0001-002-B Open February 13, 2024 Develop and implement adequate policies, procedures, and controls to ensure that owner certifications and surveys and other relevant documents related to properties that fail inspections or are noted as having EHS deficiencies are maintained and retrievable from an easily accessible location.
2024-CH-0001-002-C Open February 13, 2024 Develop and implement adequate controls to ensure that HUD staff with the appropriate level of authority approves extensions to the notices of violation and default cure periods in writing and that documentation is maintained to support such approvals.
2024-CH-0001-003-A Open February 13, 2024 Modify the queries used to generate the schedules of properties that accompany the reports to Congress to consider a larger range of dates to ensure that properties that failed consecutive inspections are appropriately identified on all applicable schedules.
2024-CH-0001-003-B Open February 13, 2024 Assess and streamline the processes for preparing, reviewing, and approving the reports as appropriate to ensure that the reports are submitted to Congress on or before the required due date.
2024-CH-0001-003-C Open February 13, 2024 Implement adequate procedures and controls to ensure that documentation is maintained to support that the reports were submitted to Congress.