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

2. Copyright 2012, Murphy Consulting LLC. All rights reserved.
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 2530
1st 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.
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4. Common Mistakes – paper 2530
2nd 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.
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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.
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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 .
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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.
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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.

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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.
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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.

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Flag:
Failure to File Financial Statements
Automatic System Generated Flag
May be removed by HUD staff after filing occurs
Must specifically request its removal.
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Flag:
Unacceptable Physical Condition
Failing REAC Physical Inspection Score
May avoid a Flag if a 1st time failed REAC
May be resolved by HUD PM, at their discretion, after a subsequent passing REAC
Utilize Appeal and Database Adjustment opportunities.
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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.
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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.

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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.
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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.

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