HUD to Replace REAC Inspections With a New Protocol – NSPIRE

The Department of Housing and Urban Development (HUD) is overhauling its Real Estate Assessment Center (REAC) physical inspection protocol due to negative press reports about substandard subsidized properties and HUD's concerns that owners are "gaming the system" to make minimal repairs to pass inspections. The change is taking place in two phases. First, HUD has reduced the notification time prior to REAC inspections to 14 calendar days for public and subsidized rental housing. HUD will also replace REAC inspections with a new physical inspection protocol known as the National Standards for the Physical Inspection of Real Estate (NSPIRE), which will feature new standards, protocols and processes that will apply to HUD's public housing, HUD-assisted and FHA-insured multifamily portfolios. HUD is launching a two-year demonstration program to test and refine the NSPIRE protocols before finalizing them. Major changes to be tested in the NSPIRE demonstration include:

• Requiring property owners and management agents to perform comprehensive annual self-inspections covering all of their units;
• Placing greater weight on health and safety deficiencies than on function and appearance; and
• Adopting a new scoring model that places the most emphasis inside the residents' units.

NAHB has filed public comments raising serious concerns about the ambiguous, vague NSPIRE health and safety standards under development. We emphasized that NSPIRE scoring must account for the fact that property owners and managers have the least amount of control over the inside of the unit and tenant-caused damages. HUD is still seeking volunteers to participate in the NSPIRE demonstration program. Besides helping to shape the new physical inspection protocol, the major advantage of participation is that volunteer properties will be exempt from REAC inspections during the demonstration. Interested owners can volunteer for the program by registering their property here. For more information, contact Michelle Kitchen at 800-368-5242 x8352.