hud's new mor rule

September 26, 2022

The site visits and audits for multifamily Section 8 properties, known as MORs, have been moved to a new risk-based management and occupancy review schedule. Effective September 26th, HUD has streamlined the MOR scheduling, potentially reducing the number of MOR reviews. This final rule applies to the following Section 8 Program participants:

New construction;
Substantial rehabilitation;
State housing agencies;
New construction financed under Section 515 of the Housing Act of 1949;
Loan management set-aside;
HAP Program for the disposition of HUD-owned projects; and
Section 202/8 Program

This rule, however, exempts the Mark-to-Market restructured properties. Section 519(b)(1) of MAHRA requires Cas to monitor the status of projects renewed under Mark-to-Market at least annually.

The new MOR schedule establishes a frequency for the completion of MORs based on a site’s previous MOR score and its HUD risk classification of “Troubled,” “Potentially Troubled,” and “Not Troubled.” HUD’s risk rating considers the site’s financial characteristics, such as low debt service coverage ratio, recent defaults, excessive vacancies, low REAC scores, tenant input provided directly to HUD, and pending foreclosure or partial claim payments. CHFA does not determine a property’s risk rating.

MORs that occur on or after September 26th will set the timeframe for the next MOR based on the MOR score and HUD risk status as listed in the chart below.

Please note that if, however, there is a change in management or ownership, the final rule requires that a MOR must be conducted within six months of the change regardless of the results of the previous MOR.

The HUD notice can be found here.

Please reach out to your property’s MOR Officer with any questions relating to this update.

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