GAO Identifies Weaknesses and Improvements Needed by HUD Related to Physical Inspection Process and Oversight of Inspectors

The Government Accountability Office (GAO) issued a report, HUD Should Improve Physical Inspection Process and Oversight of Inspectors, on March 21. The report identified a number of weakness and offers recommendations to address them. HUD’s Real Estate Assessment Center (REAC) has a standardized process to identify physical deficiencies at public housing and privately-owned HUD-assisted multifamily properties. REAC’s inspection process annually identifies properties that are in poor physical condition and contain life-threatening health and safety issues.

GAO concluded that the inspection process has several weaknesses. For example, REAC has not conducted a comprehensive review of its inspection process since 2001 even though new risks have emerged, such as property owners misrepresenting the conditions of their properties. A comprehensive review could help REAC identify risks and ensure it is producing inspections that are reliable, replicable, and reasonable. In addition, REAC does not track its progress toward meeting its inspection schedule for certain properties, which could hinder HUD’s ability to take enforcement actions. In the wake of concerns that inspections were not always identifying troubled properties, REAC made eight recommendations in January 2017, to improve the inspection process, but HUD only approved three of the recommendations and had not implemented any of them as of December 2018.

REAC uses contractors to inspect properties. These contract inspectors are trained and overseen by quality-assurance inspectors hired directly by REAC. REAC’s processes to select, train, and monitor both contract inspectors and quality-assurance inspectors, however, have weaknesses. For example:

  • REAC does not verify the qualifications of contract inspector candidates before they are selected to begin training to become certified inspectors.
  • REAC lacks formal mechanisms to assess the effectiveness of its training program for contract and quality-assurance inspectors. Unlike other professional inspection organizations, REAC does not have continuing education requirements.
  • REAC has not met targets for the number and timeliness of its inspection oversight reviews of contract inspectors. For instance, REAC has not met its target of conducting three quality-assurance reviews of poor-performing contractors per quarter. As a result, if deficiencies at properties are not identified and recorded by contract inspectors, they may not be addressed in a timely manner. In addition, REAC’s standards for its quality-assurance inspectors have not been updated to reflect their broader job duties, such as conducting inspector-oversight reviews and coaching and mentoring contract inspectors.

GAO provides 15 areas for improvement. For example:

  • REAC should undertake a comprehensive review of the inspection process in order to better identify risks and ensure inspections are reliable, replicable, and reasonable.
  • REAC should resume reporting on sampling errors and develop a process to address properties that fall below certain cutoff scores when the sampling error is taken into account. This would provide REAC the information it needs to identify properties that may require more frequent inspections or enforcement actions.
  • REAC should improve its on-time performance of multifamily property inspections to provide HUD with more timely information on the physical condition of properties and the information needed to take any enforcement actions.

HUD Should Improve Physical Inspection Process and Oversight of Inspectors (GAO-19-254) is available at: