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HUD 2530 & APPS Mistakes, Misconceptions & Flags HUD 2530 & APPS Mistakes, Misconceptions & Flags © www.hud2530help.com Murphy Consulting Denise Murphy.

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Presentation on theme: "HUD 2530 & APPS Mistakes, Misconceptions & Flags HUD 2530 & APPS Mistakes, Misconceptions & Flags © www.hud2530help.com Murphy Consulting Denise Murphy."— Presentation transcript:

1 HUD 2530 & APPS Mistakes, Misconceptions & Flags HUD 2530 & APPS Mistakes, Misconceptions & Flags © Murphy Consulting Denise Murphy Making the Complex Comprehensible Making the Complex Comprehensible ™

2 Paper vs Electronic HUD’s Benefit:  Significantly reduces review time  Confirms BPRS is done  Confirms that borrower has an APPS Coordinator Industry Benefit:  Ability to easily pull past REAC & MOR score info  Ability to see Flags and know Critical Findings prior to 2530 submission. Copyright 2012, Murphy Consulting LLC. All rights reserved.

3 Common Mistakes – paper st page  All principals listed in block 7, page 1  All of these same principals on signature line and on page 2 (and in the same order)  A good Org Chart attached which includes roles, % and relationships (do not include “extra” parties)  Borrowers not reading the Certification Statements. Copyright 2012, Murphy Consulting LLC. All rights reserved.

4 Common Mistakes – paper nd page  Missing Dates of participation  Missing loan status or default (these are “as of” reporting)  Missing MOR / REAC Scores Special Note  HUD is updating the OMB form this summer  Do not send HUD the 2 pages of instructions – these are not part of the form. Copyright 2012, Murphy Consulting LLC. All rights reserved.

5 Common Problems – APPS 2530  Coordinator does not understand transaction or organization structure  Organization Tier Structure is not correct / complete  Previous Participation List has not been updated  Coordinator does not have access to certify principals. Copyright 2012, Murphy Consulting LLC. All rights reserved.

6 Top signs the APPS Coordinator does not know what they are doing They ask:  “How do I associate the organization to the property?”  “We are already in APPS because we already manage HUD properties.”  “APPS let me add him, but now APPS won’t let me certify.” Copyright 2012, Murphy Consulting LLC. All rights reserved.

7 Specialty Organizations – not clearly spelled out in the Regs Trusts  Must have Tax ID # if doing APPS 2530  Only need to clear Trustees, not beneficiaries Non-Profits  Must clear those who “control and direct the operations of the organization”  This can mean:  all board members and board officers  a limited list identified in corporate docs as a governing body  sometimes other organization officers. Copyright 2012, Murphy Consulting LLC. All rights reserved.

8 BPRS Mistakes  Can NOT be corrected by the Help Desk  Addresses & Names can be corrected by a Coordinator after they gain access to TIN/ SSN  Must go thru HUD Headquarters to correct: – TIN or SSN data entry errors – Legal Structure – Type of Ownership. Copyright 2012, Murphy Consulting LLC. All rights reserved.

9 MAP Guide vs. Real World  There is no “Participant Certification page” in APPS  All references to this need to be stricken from the MAP Guide  The “Edit Certification” page from APPS is not a Participant Certification page  This is a worthless print-out to add to you application  The only acceptable APPS Certification is an actual APPS Submission with a Submission Package  This requires an FHA# be assigned  In order to submit an “e-2530 Previous Participation Certification” at the pre-app stage (or any stage), you will need an FHA#. Copyright 2012, Murphy Consulting LLC. All rights reserved.

10 More MAP Guide vs. Real World  You do not “register” in APPS – the only place to “register” is BPRS  All references to this need to be stricken from the MAP Guide  HUD needs to clarify the current requirement for “APPS baselines”  If submitting paper 2530, only BPRS should be required. Copyright 2012, Murphy Consulting LLC. All rights reserved.

11 2530 Flag... APPS Flag... HUD Flag  The are all the same – Flags are placed for poor performance on participation in HUD properties and programs but often only cause problems when approval of a new HUD 2530 form is submitted  During HUD’s processing of this form, HUD checks for Critical Findings and Flags. Copyright 2012 Murphy Consulting LLC. All rights reserved.

12 Stay Ahead of HUD’s Critical Findings Applicants submitting via APPS have access to the data that feeds into HUD’s Critical Findings Report Check the Schedule A Unsatisfactory and Below Average MOR’s Failing REAC Physical inspections (under 60) Loan Defaults Check the Certification Statements False responses require explanations Check the Flag Report in APPS Direct HUD Flags placed on principals. Copyright 2012 Murphy Consulting LLC. All rights reserved.

13 Running a Flag Report Borrower can run a Flag Report for any Tax ID # they have access to as a Coordinator or User in WASS. 1. Coordinator must assign the APPS Update (AUP) role to the Tax ID, for their own and/or User’s WASS ID in Participant Assignment Maintenance 2. Go into APPS system – Select Flag Report from the Reports drop-down menu. Copyright 2012 Murphy Consulting LLC. All rights reserved.

14 Flag: Failure to File Financial Statements  Automatic System Generated Flag  May be removed by HUD staff after filing occurs  Must specifically request its removal. Copyright 2012 Murphy Consulting LLC. All rights reserved.

15 Flag: Unacceptable Physical Condition  Failing REAC Physical Inspection Score  May avoid a Flag if a 1 st time failed REAC  May be resolved by HUD PM, at their discretion, after a subsequent passing REAC  Utilize Appeal and Database Adjustment opportunities. Copyright 2012 Murphy Consulting LLC. All rights reserved.

16 Flag: Unsatisfactory Management Review  May be resolved by HUD PM after a subsequent passing MOR, if there are not repeat findings  PCBA Contract renewal causing Flag retention problems. Copyright 2012 Murphy Consulting LLC. All rights reserved.

17 Flag: False or Incomplete 2530  Failure to notify HUD and obtain approval of changes within the owner entity or to the ownership of the organization  Instances of this Flag being placed have significantly increased in the past year. Copyright 2012 Murphy Consulting LLC. All rights reserved.

18 Flag: Financial Default  Technical Default on a HUD loan  Issue can be cured but Flag will not be removed from the Flag Report  Remains as part of previous participation record for 10 years. Copyright 2012 Murphy Consulting LLC. All rights reserved.

19 Flag: Non-compliance with any HUD Obligation  Ouch !  Typically for Regulatory Agreement violations but also can be placed for other matters at HUD’s discretion. Copyright 2012 Murphy Consulting LLC. All rights reserved.

20 Common Misperceptions of Borrowers  HUD must remove a Flag once you fix the problem – Not true  The Property “belongs” to the Owner, so they get to call the shots – This is a “HUD Asset”  If the HUD PM says it’s OK, then I don’t have to worry about my Flags – Don’t count on it, be sure to follow up and assure your Flag Report is clear. Copyright 2012 Murphy Consulting LLC. All rights reserved.

21 Best Practices for Borrowers  Address MOR & REAC issues immediately  Be proactive in checking the Flag Report  Discuss Flags with HUD Project Manager  Maintain a good relationship with HUD. Copyright 2012 Murphy Consulting LLC. All rights reserved.

22 Questions? Copyright 2012 Murphy Consulting LLC. All rights reserved.


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