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News from HUD could impact owners and management agents

November 4, 2015

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The U.S. Department of Housing and Urban Development recently released two reports that could impact owners and property managers of HUD projects. These reports are significant because they could lead to having HUD contact you for information, and possibly wanting to visit your office.

The first report issued: The Office of the Inspector General (OIG) for HUD determines the Office of Asset Management did not comply with its requirements for monitoring management agents costs.

The objective:

The first report was released in August as the Office of the Inspector General (OIG) released a report that examined the U.S. Department of Housing and Urban Development’s Office of Multifamily Asset Management and Portfolio Oversight. As reported by the National Affordable Housing Management Association, the purpose of the audit was to ensure that front line and direct costs were not excessive across portfolios by determining if HUD accurately monitored management agents.

According to the report, OIG found that HUD did not properly oversee its management agents. The report showed that HUD failed to conduct thorough evaluations of the front line costs and the direct costs of its management agents’ portfolios to ensure that those costs were not in excess of reasonable amounts across the agent’s portfolio. These reviews were insufficient and less detailed because HUD’s officials did not fulfill the monitoring requirements for management agent portfolios.

OIG’s concern:

As a result of these insufficient assessments, OIG is concerned excessive amounts are being charged to HUD projects and thus operating funds may not be available to maintain HUD properties.

Necessary actions to be taken by HUD:

The Director of HUD’s Office of Multifamily Asset Management and Portfolio Oversight must now ensure compliance with its handbook requirements. These rules stipulate that HUD must perform management reviews of its agents’ central office activities and conduct onsite reviews every 18 months.

The second report issued:

The second report came after HUD recently began to inform owners and management agents of two nationwide studies being conducted by the Department. The first of these evaluations was the HUD Improper Payment for Quality Control for Rental Subsidy Determination Study, which reviewed the extent and origins of errors in eligibility determinations associated with tenant rent and applicable utility allowances on HUD projects. In the second analysis, the Utility Allowance Comparison Study, the difference between HUD program participant utility allowances and out of pocket utility costs is evaluated. Although this study also examined the differences in the project-developed utility allowance schedule and the HUD Utility Schedule Model’s utility allowance schedule.

What this update means for property managers:

For those who manage numerous Section 8 projects, there is not only more of a chance that they will be selected to be in both of these studies, but that all of their projects will be as well. The studies will be conducted between December 2015 through March 2016, where tenant information needed for rent calculation will be gathered.

In addition, under the HUD Improper Payment for Quality Control for Rental Subsidy Determination Study, Section 8 property managers will also be required to submit a survey on their project certification practices, staff training and quality control methods.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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