HUD APPS Baseline Is Now A Requirement for A HUD Loan

HUD Baseline Requirements

We recently heard from HUD Headquarters that HUD Baseline Requirements are now being required in order to receive a firm commitment on an FHA insured loan.

How did HUD Baseline Requirements come about?

The Office of Inspector General performed an audit on properties that received two consecutive failing REAC scores. They found that while performing a HUD 2530 Previous Participation review, that HUD relied on incomplete information to assess risk factors. This is because participants were not being properly flagged for consecutive failing REAC and MOR scores.

HUD concluded that they did not have an automated process in place to flag participants. The property did not have a baseline set up in the system and it impacted their ability to ensure all parties involved received a flag.

What this means for the industry

The Baseline must be set up in the HUD system. This means all tiers in the structure that make up the ownership to the Borrowing Entity and for the General Contractor. For now, we understand that the Managing Agent can receive conditioned approval prior to closing. So, you might as well have filed a 2530 application. Filing in the system allows Business Partners the ability to track a submission through the approval process, timely update information and much more! Secured Systems Consulting is a national top-rated HUD compliance consulting firm with over 25 years of experience specializing in advising owners, developers and managing agents in the affordable housing industry with their HUD transactions. Contact Us to help you navigate HUD Baseline requirements.