Established in 1965, the Department of Housing and Urban Development or HUD aims to make sure all citizens of the United States have equal opportunity and fairness in housing. While it promotes the increase of affordable rentals and makes sure there are opportunities in rental markets, it also supports home ownership and development in the community.
If you receive any type of HUD adequate housing for funding, at some point your property may be subject to a Management and Occupancy Review (MOR). The goal of the MOR is to maintain adequate housing for vulnerable populations, to protect FHS insurance funds, to provide proper management and compliance with HUD standards and to ensure the physical and financial wellbeing of properties.
The MOR process involves three steps:
1. The Desk Review – completed by the owner in advance of an on-line inspection to pull relevant project information and prepare the HUD reviewer for and on-site inspection.
2. The On-site Review – conducted by HUD to examine property–relevant materials such as maintenance-related documentation, REAC or physical property inspections, recent audits, preventative maintenance plans, capital improvement plans, the resident application and other resident-related documentation and occupancy materials.
3. The Close-out/Summary Report – provided by the HUD reviewer which rates each of seven categories as either A (acceptable) or C (corrective action required). The reviewer will describe any conditions that require corrective action and provide a timeline for when corrections must be met to ensure errors or omissions do not reoccur.
Preparing for MORs can take a great deal of time and energy but can be readily accomplished with some forethought and commitment.
The MOR is performed either on an annual basis or using a risk-based approach. If the risk-based approach is chosen, the MOR’s are based on the last MOR rating as follows:
· Unsatisfactory/Below Average – Every year
· Satisfactory – Every Other Year
· Above Average & Superior – Every 3 years
· Full Mar-2-Market – Every Year
The frequency of reviews may also be determined based of events as described in the HUD Handbook 4350.1, Chapter 6, Par. 6-4 – Conducting Management Reviews:
· After a project commences occupancy, and following a change in project ownership/management;
· When physical, financial or management problems exist;
· When deficiencies have been identified at other projects of the same owner/management agent;
· Prior to granting a preliminary approval of a transfer of physical assets (TPA) proposal and;
· As necessary to monitor the owner/agent’s implementation of any required corrective actions or project improvement efforts.
As an incentive for the owner or agent, once a property has successfully completed the MOR, they look forward to the following rewards of compliance:
· No additional action is needed if there are no findings.
· More confident employees.
· Possible lower repair & maintenance costs based on good management skills.
· Ability to continue participating in the program.
· Ultimately, (hopefully) monetary gains due to “Superior” property management practices and physical condition.
Conversely, there are also consequences of non-compliance, such as the following administrative actions:
· Subsidy assistance abatement or suspension.
· Sanctions – e.g. loss of future participation.
· Replacement of the management agent.
· Flag in Active Partners Performance System (APPS).
· Referral to HUD’s Department Enforcement Center (DEC).
HUD Form 9834 is used to document the Management and Occupancy Review and consists of three parts:
1. Desk Review
2. On-Sire Review, which includes:
· Addendum A – Tenant File Review Worksheet.
· Addendum B – FHEO (Sections I, II & III).
· Addendum C – Notification to Owner.
· Addendum D – State Lifetime Sex Offender Statistics.
3. The Summary Report.
HUD Form 9834 was designed to assess management and provide oversight of Multi-Family projects, it determines the level of compliance with HUD’s business agreement and ensures compliance with the terms and conditions of HUD agreements as well as it helps to monitor HUD’s Office of Fair Housing & Equal Opportunity (FHEO).
Inasmuch as Form 9834 is the first step in the process, it is helpful if owners and agents to seek assistance and/or training prior to tackling the Form. The Management and Occupancy Review Specialist (MORS) training is specifically designed to provide an in-depth understanding of the process used by HUD staff and Contract Administrators in the conducting the MOR. However, MORS is geared toward property management and staff who wish to enhance their skills and become more complete housing professionals.
Many of the areas covered by the MOR is also a crucial part of the project’s annual audit conducted by the external auditors. As a result, the project’s external auditor is a valuable resource to utilize in preparation for the MOR since the annual financial audit also covers compliance. The external auditor issues a report on compliance which indicates whether the project was in compliance with HUD regulations as well as other provisions of grants, laws and regulations. A properly conducted financial audit should already have given owners and management some assurance on the project’s compliance.