The REAC Impossible Newsletter
Volume 1, Number 2 February 2020
Head-Scratcher of the Month
REAC denying Inspection score appeals dishonestly

REAC inspection score appeals are being denied at an alarming rate. The justification for the denials is increasingly arbitrary, intentional, and dishonest. This is landlord abuse! The result nationally is millions wasted on appeals, more frequent inspections, and lost financing and contracts - money that could be better spent maintaining residents’ units. And it’s another barrier to low-income housing investment. The Appeals office has jumped on the corruption bandwagon plaguing our nation’s capital!

Before going further allow me to stipulate to my credentials: Years as a former Federal Inspector General forensic auditor flushing out abuse and mismanagement at DHHS and VA.  Wrote numerous books on federal compliance laws, REAC Inspections and filed hundreds of REAC appeals.

Secretary Carson has embarked on a bus tour to learn about barriers to housing investment. Executive Order 13878 established a White House Council on Eliminating Regulatory Barriers to Affordable Housing: “…for many Americans, the supply of available housing has not kept pace with the demand … driving up housing costs. …outdated and overly burdensome, …and costly regulatory requirements and restrictions prolong the completion of new housing supply and those costs are shifted to the consumer...” The Secretary would be well served make the REAC Appeals office his first bus stop.  

The REAC Appeals office routinely changes the rules without notification, uses unpublished and non-existent regulations, and intentionally misapplies and ignores regs. The Appeals office manager, Sam Tuffour, says he denies appeals because he “does not trust the evidence”. Rather than accept subject matter experts’ evidence Tuffour defers to ambiguous REAC inspector photos, rejects experts letters not on a letterhead (not a requirement), or rejects experts’ statements because evidence was “late” - despite being submitted timely to REAC. Below is a flavor of the abuse and dishonesty.

Operable door crash bar lock

A REAC inspection report cited a 7.92 point Level 3 deficiency for an inoperable door crash bar lock. The REAC inspector recorded the lock as inoperable because the property could not get the key fast enough. The crash bar is locked during the day to accommodate disabled residents. A locksmith hired by the property determined that the lock was operable and wrote a letter for the appeal. Suspicious REAC was ignoring subject matter experts’ statements, we included a video showing the functioning door lock. The video is above and beyond REAC’s evidentiary requirements. 

REAC decision: “Property states the door lock is engaged during the day to accommodate disabled residents. Third party documentation concurs. Third party inspected the lock approximately 6 weeks after the REAC inspection. Denied.”

REAC agreed the lock works, but chose to ignore the video evidence and deny based on a 6 week delay in hiring a locksmith. There is no such 6-week rule! REAC used a non-existent rule to deny the appeal!

What’s ludicrous about the decision is REAC ignored the 2 week delay in releasing the Inspection Report. It also ignored that the evidence was submitted within the legal 30 day time limit. Mr. Tuffour confirmed a 6-week rule does not exist but refused to return the 7.92 points to the REAC score. REAC made up a rule to deny the appeal. Dishonesty! 

If no one calls Mr. Tuffour on the dishonesty not only will it continue, it will continue to INCREASE! 

Door weatherstripping not missing

The REAC Inspector recorded a deficiency for missing door weatherstripping and photographed the door.  No defect should have been recorded. There is no deficiency when weatherstripping is not part of an original door design. The property submitted a licensed Engineer’s letter confirming weatherstripping was never part of the door design. Usually a slam dunk win! But not anymore!

REAC accepted the Engineer’s finding that weatherstripping was not part of the door design, but denied the appeal anyway. The reason given? REAC said the REAC Report photo showed door jamb damage. Missing weatherstripping and damaged door jambs are two different deficiencies! In other words, the adjudicator ignored the weatherstripping defect and created a new defect. That despite the REAC Report including nothing about a damaged door jamb. 

Imagine! Would the adjudicator have deducted additional points if the photo also showed peeling paint, or a damaged lock? The REAC Inspector cited a defect for missing weatherstripping, not door jamb damage. It’s a REAC Inspector’s job to record defects and appeals job to adjudicate appeals. It is not an adjudicator’s job to conduct field inspections from a cubicle in Washington, DC. The appeals office ignored the weatherstripping issue and substituted a brand new defect to justify a denial. Flagrant abuse of authority!

Disgusted at this blatant abuse, we endeavored to see what would happen if we reported a defect missed by the REAC inspector. The REAC inspector missed badly burned circuit breakers - a serious defect REAC inspectors should not miss! We appealed several defects, but we self-reported the breaker issue. REAC Appeals ruled on the appealed issues, but instructed the property to report the circuit breaker issue to the REAC Inspector Administration (IA) office. REAC did not deduct points for the circuit breaker defects like it did for the weatherstripping/ damaged door jamb. It also did not take the initiative to refer the issue to the IA office. Instead, Appeals told the property to report the issue to IA. A serious health and safety defect was treated cavalierly, and differently from the weatherstripping appeal. Plus, since REAC does not trust appeals evidence why would it trust properties to fix serious self-reported defects. 

As an aside the centerpiece of NSPIRE will be reporting the results of annual self-inspections to REAC. Seems odd since REAC has trust issues!

Door operable despite damaged hinge

The REAC inspection report included a 9.1 point defect for a damaged door hinge. However, it’s allowable for a door to have damaged hardware as long as the damage does not prevent the door from functioning properly. The Inspector, when reminded of the rule told the property it could appeal. The property hired a qualified independent subject matter expert, a licensed general contractor (GC), and appealed. The GC’s letter confirming the door operated properly despite a damaged hinge was submitted.

The REAC Appeals adjudicator ignored the door hardware rule and denied the appeal without citing the regulation. The reason for omitting a citation is the rule does NOT support the denial. The rule: Federal Register / Vol. 77, No. 154, states, “Level 3: One entry door or fire/emergency door does not function as it should or cannot be locked because of damage to the door's hardware.” 

The rule only applies when damage to the door’s hardware causes the door to not function as it should. The GC confirmed the door operated as it should despite the hinge damage. The adjudicator intentionally ignored the rule, thus dishonestly denying the appeal.  That’s intentional abuse!

It should be noted the person who filed the appeal owns one HUD financed property, a small multifamily building. The owner spent thousands getting the building REAC ready only to be victimized by an incompetent REAC inspector, and a dishonest appeals office. The owner would have wasted a lot of money on an appeal had it not been done pro bono. Pro bono because the owner is a decent caring landlord and the victim of incompetence and dishonesty. REAC should be sending a thank you card for housing subsidized residents. Wouldn’t be surprised if the owner stops renting to subsidized residents. Who wants to be exposed to indiscriminate inspection mandates and a dishonest appeals office. To avoid another disaster at the hands of incompetent inspectors and dishonest appeals adjudicators money will have to be spent on consultants getting the building “REAC ready” and escorting inspectors. No point filing an appeal if the score ends up being noon-representative of the true property condition. 

Property employee statements unacceptable

In one recent denial the appeals adjudicator stated, “Written statements provided by personnel associated with the property are not considered objective documentation to corroborate inspector’s errors”. Another denial said: “Property claims unit is located on … floor. Documentation was sufficient to support request.” Well, which is it? Are property personnel statements acceptable or not acceptable? I coach properties to submit property personnel statements because they might be accepted. REAC never cites the regulatory prohibition against accepting property personnel statements. Because there is none!

To ignore evidence from one source and not another is ludicrous. “Independent” sources such as contractors usually have long standing relationships with properties. Why would paid contractors’ statements be considered objective while those of property employees never are? They are both paid by the property. Both sources have something in common; neither want to bite the hand that feeds. Other government agencies don’t discount employee statements. REAC simply wants to make it as difficult as humanly possible to win an appeal. That’s abuse!

REAC appeals won’t accept personnel statements and doesn’t trust other non-personnel evidence. What’s left! If no evidence is acceptable why is the appeals office even in business! Why not send the adjudicators into the field doing inspections so they can experience firsthand the impact of their dishonest denials.

Defects are recorded in the wrong location

REAC Inspectors regularly record defects incorrectly and it can have a huge negative impact on the Score. For example, an electrical defect recorded in Building Systems rather than in Common Areas can reduce a REAC score by 12 points. A common mistake! It’s a waste of time to appeal these errors because the appeals office policy is to allow the location error to stand. Mr. Tuffour told me the reason for this policy is a “software limitation”. Per Mr. Tuffour REAC has been working on fixing the problem. REAC started doing inspections 20 years ago! There is never any hurry to remedy shortcomings that would benefit the landlord. REAC has had no problem increasing the number of inspected items over the past 20 years. The new items all needed software adjustments. 

Tip of the iceberg

The above examples are only the tip of an iceberg. More to be published! The Appeals office will fight tooth and nail to deny! This despite every single REAC inspector makes 10 plus points worth of inspection errors, including the supervisors! The denial rationales keep getting more bizarre. Appeals are denied seemingly because Mr. Tuffour does not trust the evidence. One would have to be incredibly naïve not to know bad actors inhabit practically every company and government agency. I don’t doubt there are properties that falsify appeals evidence! Just as there are public housing employees that embezzle. The difference being embezzlement is newsworthy! News deters! 

Knowing you have bad actors is not a reason to punish the vast majority who are honest and trying desperately to comply with a seriously flawed inspection program administered by a central cabal of too many incompetent, dishonest, and/or advocate bureaucrats. As a deterrent, wouldn't it be prudent to publicize the wrongdoing, versus punishing everyone, in secret! It goes deeper than not just trusting the evidence. Trust is a convenient excuse to cover-up the real reasons: bias toward landlords, job security, and dislike for top management (appeals adjudication honesty took a sharp downturn starting in 2016). Regardless, appeals are being denied intentionally! Mr. Tuffour told me he’d provide training to “fix” the issues we discussed. An admission of guilt? A culture of dishonesty is cured not with training, but a paradigm shift

Speaking of trust the previous REAC Director lied when he told me that the HUD Office of General Counsel (OGC) had reviewed the legality of the REAC inspection non-industry standard repair policy – another squeeze the owner policy based mostly on distrust and faulty premises! Through the Freedom of Information Act I learned that the Director never asked OGC to review the legality of the policy. REAC’s dishonesty is not confined to the appeals office.  

Property owners, REAC Consultants and law firms don’t push back nearly enough.  They don’t want to poke the dragon! I don’t blame them! REAC has a rich history of retaliating against the “opposition” and whistleblowers. And HUD has a blank check and lots of enforcement tools to deal with “undesirable” properties (those that fail REAC inspections - conducted by incompetent inspectors with flawed inspection standards): Properties face losing management contracts, rescinded mortgages, civil money penalties, and/or more frequent inspections. Not to mention increased homelessness as a result of property owners waking up to the sad reality of bedding down with HUD. 

Trust this: you can easily end up spending more than the positive cash flow from a low interest HUD mortgage on the laughable repairs required to keep your asset in “good repair”. Ever more of my clients are selling their troublesome assets, made so by a govt that is there to help; help rentees, not so much the rentors. A govt to assist one group at the expense of another is misgovernance at best and corruption at worst.

I know about REAC corruption firsthand. Years ago I told REAC I was planning to expose how the inspection program was putting lives at risk, and creating barriers for low-income renters. The response was to quickly terminate my REAC inspector contract. REAC inspection polices were contributing to resident deaths. REAC was not even checking for operable Carbon Monoxide detectors and inspection policies do not consistently identify deplorable living conditions. It took the HUD OIG, GAO and several major newspaper reports for REAC to finally admit it’s inspection policies were ineffective. Consequently, REAC is changing its inspection protocols, again, via NSPIRE. More changes by a REAC that hasn’t been able to get it right for 20 years of trying! 

Conclusion

The Appeals office conduct is unacceptable. Denying the vast majority of appeals dishonestly creates a barrier that’s costing the housing industry millions in fixing nonsensical “repairs”, more frequent inspections, and lost financing and contracts - something Secretary Carson probably wants to know about! Samuel Tuffour has managed the Appeals office in REAC for many years. It may be time for a change!  

If you are concerned about REAC Appeals dishonesty, abuse and mismanagement join me in sending this article to HUD OIG , GAO and the HUD Press Office . The watchdogs want to know about abuse/mismanagement in Govt programs. Otherwise they would not publish contact info. 

The REAC Impossible Newsletter will bring you another chapter next month on REAC barriers to low-income resident housing. Stay tuned!
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