Real Estate Assessment Center (REAC) and Its Subsystems
The Real Estate Assessment Center's mission is to provide and promote the effective use of accurate, timely and reliable information assessing the condition of HUD's portfolio; to provide information to help ensure safe, decent and affordable housing; and to restore the public trust by identifying fraud, abuse and waste of HUD resources.
Among REAC’s responsibilities are the following:
- To standardize the way HUD evaluates the condition of PHAs, multifamily properties and HUD-regulated lenders
- To continuously assess PHA and housing property performance and to refer problem indicators to other HUD components for program intervention or enforcement action
There are three subsystems within REAC which are of interest to the multifamily industry and auditors:
Office of Lender Activities and Program Compliance and Its LASS Subsytem
Financial Assessment Subsystem (FASS): FASS is an automated system that supports the collection, validation, and assessment of financial data, including financial statement information, for multifamily housing properties insured and/or subsidized by HUD. This financial data is used by Office of Public and Indian Housing, REAC, and other HUD program offices, including the Office of Housing, and the Enforcement Center (EC), to assess multifamily properties for noncompliance and poor performance. The FASS supports this goal by automating the submission of annual financial data for properties with HUD subsidies, grants, and/or FHA-insured mortgages. It also facilitates management and prioritization of the multifamily housing portfolio by performing automated assessments of the financial data, highlighting projects for which compliance deficiencies are identified. REAC sets and applies uniform financial reporting standards for HUD’s multifamily housing programs, including a standard chart of accounts and supplemental compliance data, and annual audits of financial statements prepared in accordance with generally accepted accounting principles (GAAP). See the section below titled, “Guidelines for Reporting and Attestation Requirements of Uniform Financial Reporting Standards,” for more information. Click here to access documents and guidance relating to the FASS (including User Guides for both multifamily housing and PHAs) and click here to access frequently asked questions.
Quality Assurance Subsystem (QASS): The REAC QASS conducts reviews of workpapers of participating independent auditors for compliance with generally accepted auditing standards (GAAS) and the HUD Consolidated Audit Guide. Further, the reviewers read the financial statements for disclosures required by the HUD financial accounting handbook (4370.2, REV-1). QASS staff also recommends sanctions for practitioners whose work is determined to be substandard as the result of workpaper review.
Physical Assessment Subsystem (PASS): PASS collects and assesses data on the physical condition of HUD properties via the REAC Physical Inspection Protocol. The protocol defines the process for properly completing an assessment. All assessments must follow the protocol to be accepted by REAC. This guarantees a standard and objective approach.
The Office of Lender Activities and Program Compliance is responsible for the oversight of FHA lenders. They use the Lender Assessment Subsystem (LASS) system to assist them with carrying out their responsibilities.
The LASS system is used by both lenders and their CPAs to submit their annual CPA-prepared audits and financial statements as part of renewing their FHA lender approval as part of the recertification process (and works similarly to the FASS system and electronic submission descriptions above). To obtain further instructions on accessing the LASS system you can access the User Manual for LASS. The Financial Data Template (FDT) Line Definition Guide is also available and defines each of the line items on the FDT and Data Collection Form (DCF) and provides a list of required fields, by line number, on the FDT and DCF. With regard to instructions to the required agreed-upon procedures engagement on submissions into LASS, click here. Finally, for frequently asked questions and answers regarding the LASS, click here.