HUD Introduces Streamlined MOR Scheduling

Last week, HUD introduced a New Risk-based Management & Occupancy Review Schedule. For some time, industry stakeholders have been advised that HUD wishes to Streamline the MOR process to reduce the number of reviews. Two new Final Rules were posted outlining the streamlined process and the MOR schedule.

  1. Streamlining Management and Occupancy Reviews for Section 8 Housing Assistance Programs
  2. Section 8 Housing Assistance Programs Management and Occupancy Review Schedule

 This changes the MOR scheduling for the following Section 8 Housing Assistance Payments (HAP) Programs:

  1. New Construction,
  2. Substantial Rehabilitation,
  3. State Housing Agencies,
  4. New Construction financed under Section 515 of the Housing Act of 1949,
  5. Loan Management Set-Aside Program,
  6. HAP Program for the Disposition of HUD-Owned Projects, and the
  7. Section 202/8 Program.

The rule applies regardless of whether the review is conducted by a Traditional Contract Administrator (TCA), Performance-based Contract Administrator (PBCA), or by HUD staff. 

Note: This change does not apply to Mark-to-Market. Section 519(b)(1) of MAHRA requires CAs to monitor the status of projects renewed under Mark-to-Market at least annually. Therefore, this schedule would not and could not apply to restructured Mark-to-Market properties. 

The new Final Rule outlining Streamlining Management & Occupancy Reviews for Section 8 Housing Assistance Programs is effective on September 26, 2022. That means that the frequency of MORs described below will begin with the first MOR conducted on or after September 26, 2022.  

Here is a brief synopsis of the change. 

HUD assigns a Risk Classification for each property. The Risk Classifications are:

  • Not Troubled;
  • Potentially Troubled; or
  • Troubled 

The Risk Rating System is based on several factors including, but not limited to, the MOR Score, the REAC Score, vacancy rate, etc. Additional information is provided in the Final Rule.  

Please note that scheduling changes only apply to properties with a Risk Classification of Not Troubled. If a property's Risk Classification is Not Troubled and:

  • If the score on the MOR conducted on 9/26/2022 or later is Unsatisfactory, the next MOR will be conducted within 12 months
  • If the score on the MOR conducted on 9/26/2022 or later is Below Average, the next MOR will be conducted within 12 months
  • If the score on the MOR conducted on 9/26/2022 or later is Satisfactory, the next MOR will be conducted within 24 months
  • If the score on the MOR conducted on 9/26/2022 or later is Above Average, the next MOR will be conducted within 36 months
  • If the score on the MOR conducted on 9/26/2022 or later is Superior, the next MOR will be conducted within 36 months

Section 8 properties with a Risk Classification of Potentially Troubled or Troubled will continue to participate in annual Management & Occupancy Reviews. 

HUD has also clarified that Reviewers must review the tenant files for each sampled file going back to the previous MOR. So, if the last MOR was two years ago, the files selected will be reviewed for compliance for the two-year period between MORs.  

Please note that there are other factors that could prompt more frequent review of the property regardless of the Risk Classification or MOR score. This includes, but not limited to, a declining risk classification.  

Also, note that HUD has implemented a different schedule when a new owner and/or management agent takes over a property; these properties will be inspected within 6 months of a change in ownership regardless of the most recent MOR score.  

This means that it is even more important to have a resource explaining HUD's requirements for each question asked during the MOR and to have a method to make sure that the property is completely prepared to provide reviewers with what they need to monitor compliance. 

Check out the RBD FASTForms MOR Package. This package includes information about each question asked during the Site Review and File Review portion of the MOR including links to HUD guidance and an explanation of that guidance. 

The package also includes a template that allows you to create paper or electronic "MOR Binders" for individual properties. Sample policies, checklists and other valuable tools are also included. 

Remember, when an owner/agent purchases any RBD FASTForm, that purchase applies to any property within the owner/agent's portfolio.