The appropriations bill submitted by the U.S. House of Representatives Committee for Transportation Housing and Urban Development noted that inspections by the Real Estate Assessment Center (“REAC”) are duplicative and contradictory with already existing state and federal inspections. We have seen this on several deals where the Illinois Department of Public Health requires an action that REAC considers non-compliant. The Committee directed HUD to issue regulations limiting REAC inspections to only those facilities insured under Section 232 for which there are no state or federal inspections. REAC scores are currently relevant when refinancing under (a)(7) or when applying for an assignment of the HUD mortgage to a new property owner (TPA). The Committee directed FHA to provide a status report on implementation by December 31, 2011.

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