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HOME Program Monitoring Guide for State Recipients and Subrecipients

COMPLIANCE MONITORING PROCEDURES & CHECKLISTS
FOR LPAS

[ TOC | Intro | Part I | Part III | Part IV ]

Part II

Compliance Monitoring Procedures & Checklists for LPAs


Compliance & Monitoring Responsibilities of LPAs

This section contains guidance to LPA on how to ensure compliance of their programs and projects with HOME regulations. It consists of 2 essential compliance tasks:

  1. Maintaining appropriate program and project-level file documentation to ensure compliance with regulatory requirements; and
  2. Conducting ongoing monitoring of projects upon completion.

File Checklists

Maintaining appropriate project file documentation will be facilitated by the use of file checklists. While these checklists are not required, they are recommended. If you choose not to use these, review your file checklists to ensure that you have all of the necessary documentation.

The file checklists that follow are:

Program checklists pertain to the critical files necessary to have sufficient documentation of overall program compliance, while project checklists reflect the file documentation required for each individual house, building or project funded with HOME funds.

Ongoing Monitoring Responsibilities of LPAs

Home Buyer Assistance Programs

The ongoing monitoring requirements for owner-occupied rehab and home buyer assistance programs are to ensure that:

  1. the owner maintains the home as his/her principal residence during the compliance period, and

  2. if the home is sold, that any HOME funds are recaptured as required by the note and mortgage.

A properly recorded note and mortgage stipulating the terms of repayment of the HOME funds will be discovered by the closing attorneys or title company at time of sale, and to this extent it is self-enforcing. If the documents are not recorded, annual contact with the family as prescribed below (preferably with receipt of a mortgage statement or utility bill) and a review of local tax records is necessary to verify that they still own the home.

To ensure ongoing occupancy, the LPA may annually contact the family or send a non-forwarding certified letter to the family requesting them to certify that they still live there.

Files should be kept of the annual review activities recommended above, showing that each assisted household has been contacted, and that resales have been properly handled.

If a resale occurs and funds are recaptured prior to completion of the minimum compliance period, the funds should be returned to HTFC. If funds are received outside of the minimum compliance term, they will be treated as Program Income under the terms of your written agreement with HTFC. The Program Income file should document the receipt, and the funds should be deposited and reused for eligible HOME activities, or transferred to HTFC if required by your agreement. Recaptured funds and program income received after an agreement is closed out should be handled following the terms of the close-out agreement.

Owner-Occupied Rehab Programs

Under HOME regulations, there is no minimum ongoing compliance period for owner-occupied rehab. However, if the LPA has chosen to impose a compliance period, then it should follow procedures similar to those identified for homebuyer assistance.

If a resale occurs and funds are recaptured under an optional note and mortgage, these are considered Program Income, and not Recaptured Funds. Document the receipt of funds the Program Income file, and deposit and reuse of the funds as Program Income, or transfer to HTFC as required by your written agreement with HTFC.

Rental Rehab Programs

The ongoing monitoring requirements for rental rehab are to ensure that:

  1. the project owner maintains the appropriate mix of VLI and LI tenants throughout the compliance period;

  2. the owner properly collects the required information and annually determines the income eligibility of tenants in the assisted units;

  3. the owner collects rents that do not exceed the HOME maximum rents, when adjusted for tenant-paid utility allowance;

  4. the owner maintains the units to HQS standards; and

  5. if the project is sold, the new owner complies with the same requirements (unless a foreclosure occurs).

LPAs should consider the capacity of the property owner/manager to meet all of these obligations, and determine when it might be in the best interest of smooth operation and timely compliance to assist the owner or directly conduct some of these duties.

Regulations require that each project be reviewed at least annually to determine that the owner is meeting the occupancy and rent obligations. This may be done through onsite review or offsite review of reports and files. An owner's occupancy report is permissible, and a recommended version of that report can be found at the HOME Program web site at:  www.hud.gov/offices/cpd/affordablehousing/library/forms/rentalcomplianceproject.pdf.

In addition, on-site unit inspections for HQS compliance be conducted only every 1 to 3 years. For the annual review (other than HQS), the LPA should contact the owner, obtain rent rolls, and income certification documents to determine that the owner is complying with items 1 through 3 above. This can be done on-site (which is recommended) or by the owner submitting documents to the LPA for review. The LPA should collect such documentation and also record notes of its review. Data collection forms and checklists are attached to assist the LPA with this review.

On-site inspections are required:

Projects with more than 25 total unitsAnnually
Projects with 5 to 25 unitsEvery other year
Projects with fewer than 5 unitsEvery third year

The inspection should be done by the LPA or contracted persons, using a HUD Section 8 HQS inspection form, noting violations of the rules. If the property is pre-1978 and is subject to the LBP rules, then the inspection must include visual assessment, and the inspector must have taken the visual assessment course online at HUD:  www.hud.gov/offices/lead/training/visualassessment/h00100.htm).

If violations are found that appear to be tenant-caused, and there is evidence that the owner has been making a good faith effort to maintain HQS standards (documented by annual HQS inspections forms in the file), then the LPA may use discretion in obtaining the owner's consent to correct minor violations without citing it as a finding. However, if the violations are major and widespread, appear to be long-standing, and there is no evidence of ongoing efforts to maintain HQS standards (such as the absence of any HQS inspection documentation in the files), then the LPA should cite the HQS violations as part of the annual monitoring letter.

Any findings of non-compliance must be in writing to the owner, with a copy to HTFC, noting the findings and specifying the actions and time frame required to remediate the violation. The monitoring file should also contain any owner responses or follow-up, including notes of phone conversations and meetings.

HTFC HOME Program
LPA Owner-Occupied Rehab Program File Checklist


YesNoComments

PJ Contract/Agreement
____
____
________________________________________
PJ Lender Agreements (if any)
____
____
________________________________________
Administrative Plan Documents File    
       Marketing/Outreach Plan
____
____
________________________________________
       Application Processing Procedures
____
____
________________________________________
       Written Rehab Standard
____
____
________________________________________
       Procurement Policy
____
____
________________________________________
       Owner Agreement
____
____
________________________________________
       Note & Mortgage (if applicable)
____
____
________________________________________
       Processing Documents
____
____
________________________________________
Affirmative Marketing Record   
       Advertisement file
____
____
________________________________________
       Record of Owner Outreach efforts
____
____
________________________________________
       M/WBE Contractor Outreach Record
____
____
________________________________________
       Section 3 Outreach Record
____
____
________________________________________
       Beneficiary Data
____
____
________________________________________
Appeals by Applicants
____
____
________________________________________
Environmental Review Record    
       Public Comments and Complaints
____
____
________________________________________
       NOI/RROR
____
____
________________________________________
Conflict of Interest
Determination Records
____
____
________________________________________
Financial Records   
       Project Set-Up Reports
____
____
________________________________________
       Invoices, Vouchers, Disbursement Trail
____
____
________________________________________
Monitoring Records   
       LPA monitoring of projects
____
____
________________________________________
       HTFC monitoring letters/response
____
____
________________________________________
Resales/Foreclosures
____
____
________________________________________
Program Match Documentation
____
____
________________________________________
Administrative Cost Documentation
____
____
________________________________________
Program Income
____
____
________________________________________
Program Audits & Response to Findings
____
____
________________________________________


HTFC HOME Program
LPA Owner-Occupied Rehab Project File Checklist


Project Identifier (project no., location, name)  _______________________________________________________

YesNoComments
Owner application
____
____
________________________________________
Owner income verification
____
____
________________________________________
Verification of ownership
____
____
________________________________________
After-rehab/construction value determination
____
____
________________________________________
Pre-construction HQS Inspection report
____
____
________________________________________
Environmental checklist & record
____
____
________________________________________
Relocation determination/records
____
____
________________________________________
Work write-up/specifications
____
____
________________________________________
LBP Checklist Addendum (if pre-1978)
____
____
________________________________________
Cost estimate
____
____
________________________________________
Contractor bid package/proposals   
       Proposal Document Form
____
____
________________________________________
       Contractors Invited to Bid
____
____
________________________________________
       Bids Received/ Reviewed
____
____
________________________________________
       Contractor Selection
____
____
________________________________________
Construction Documents   
       Certificate of contractor insurance
____
____
________________________________________
       Construction contract
____
____
________________________________________
       Building permits & Notice to Proceed
____
____
________________________________________
       Change orders (if applicable)
____
____
________________________________________
       Progress inspections for draws
____
____
________________________________________
       Contractor Affidavit/Waiver of liens
____
____
________________________________________
       M/WBE contract report
____
____
________________________________________
       Certificate of final inspection/HQS
____
____
________________________________________
IDIS/Financial documentation:   
       Project set-up form
____
____
________________________________________
       Contractor invoice(s)/vouchers
____
____
________________________________________
       Evidence of contractor disbursement
____
____
________________________________________
       Payment certification vouchers
____
____
________________________________________
       Project completion report
____
____
________________________________________
       Note and mortgage (if applicable)
____
____
________________________________________


LBP Addendum to Project File Checklists
LBP Compliance ItemComplies:
Yes/No
Notes
Project commitment after 1/10/02  
Project Exemption Documentation (if applicable)  
LBP Pamphlet given  
Disclosure given to buyer/occupant  
Visual assessment or risk assessment conducted & in file  
Risk Assessment Disclosure to owner  
Scope of work addressed LBP hazards  
Contractor qualifications/certification  
Occupant protections implemented  
Clearance report  
Clearance Disclosure to Owner  
If rental, ongoing maintenance procedures  


HTFC HOME Program
LPA Home Buyer Assistance Program File Checklist


Project Identifier (project no., location, name)  _______________________________________________________

YesNoComments
PJ Contract/Agreement
____
____
________________________________________
Lender Agreements (if any)
____
____
________________________________________
Administrative Plan Documents File   
       Marketing/Outreach Plan
____
____
________________________________________
       Processing Procedures
____
____
________________________________________
       Rehab Standards (if rehab)
____
____
________________________________________
       Procurement Policy
____
____
________________________________________
       Owner Agreement
____
____
________________________________________
       Note & Mortgage
____
____
________________________________________
       Processing Documents
____
____
________________________________________
Affirmative Marketing Record   
       Advertisement file
____
____
________________________________________


       Record of Owner Outreach efforts
____
____
________________________________________
       M/WBE Contractor Outreach Record
____
____
________________________________________
       Section 3 Outreach Record
____
____
________________________________________
       Beneficiary Data
____
____
________________________________________
Appeals by Applicants
____
____
________________________________________
Environmental Review Record   
       NOI/RROR
____
____
________________________________________
       Public Comments and Complaints
____
____
________________________________________
Conflict of Interest Determination Records
____
____
________________________________________
Financial Records   
       Project Set-Up Reports
____
____
________________________________________
       Invoices, Vouchers, Disbursement Trail
____
____
________________________________________
Monitoring Records   
       Self-monitoring of projects
____
____
________________________________________
       HTFC monitoring of program
____
____
________________________________________
Resales/Foreclosures
____
____
________________________________________
Program Match Documentation
____
____
________________________________________
Administrative Cost Documentation
____
____
________________________________________
Program Income & Recaptured Funds Documentation
____
____
________________________________________
Program Audits & Response to Findings
____
____
________________________________________


HTFC HOME Program
LPA Home Buyer Assistance Program Project/Buyer File Checklist


Project Identifier (project no., location, name)  _______________________________________________________

YesNoComments
Buyer application
____
____
________________________________________
Buyer income verification
____
____
________________________________________
After-rehab/construction value determination
____
____
________________________________________
HQS Inspection report
____
____
________________________________________
Environmental checklist
____
____
________________________________________
Relocation notice to seller
____
____
________________________________________
Buyer loan commitment/agreement
____
____
________________________________________
Note and mortgage recorded
____
____
________________________________________
IDIS/financial documentation:
____
____
________________________________________
       Verified project set-up form
____
____
________________________________________
       Evidence of disbursement
____
____
________________________________________
       Project completion report
____
____
________________________________________


If rehab/new construction funded by HOME:  
Plans & Specifications
____
____
________________________________________
LBP Checklist Addendum (if pre-1978)
____
____
________________________________________
Cost estimate
____
____
________________________________________
Contractor bid package/proposals
____
____
________________________________________
       Proposal Document Form
____
____
________________________________________
       Contractors Invited to Bid
____
____
________________________________________
       Bids Received/Review Documentation
____
____
________________________________________
       Contractor Selection
____
____
________________________________________
Construction Documents
____
____
________________________________________
       Certificate of contractor insurance
____
____
________________________________________
       Construction contract
____
____
________________________________________
       Building permits & Notice to Proceed
____
____
________________________________________
       Change orders (if applicable)
____
____
________________________________________
       Progress inspections for
       construction draws
____
____
________________________________________
       Contractor Affidavit/Waiver of liens
____
____
________________________________________
       M/WBE contract report
____
____
________________________________________
       Certificate of final inspection/HQS
____
____
________________________________________
IDIS/financial documentation:
____
____
________________________________________
       Contractor invoice(s)/vouchers
____
____
________________________________________
       Evidence of contractor disbursement
____
____
________________________________________
       Payment certification vouchers
____
____
________________________________________


HTFC HOME Program
LPA Home Buyer Assistance Program Annual Compliance Review Checklist

Name/Unit AddressDate
Occupancy
Verified
Date
Ownership
Verified
Or Resale


________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________
________________________________________________________________________________________


HTFC HOME Program
LPA Rental Rehab Program File Checklist


 YesNoNA/Comments
PJ Contract/Agreement
____
____
________________________________________
Lender Agreements (if any)
____
____
________________________________________
Administrative Plan Documents File   
       Marketing/Outreach Plan
____
____
________________________________________
       Application Processing Procedures
____
____
________________________________________
       Written Rehab Standard
____
____
________________________________________
       Procurement Policy
____
____
________________________________________
       Owner Agreement
____
____
________________________________________
       Note & Mortgage
____
____
________________________________________
       Processing Documents
____
____
________________________________________
Affirmative Marketing Record   
       Advertisement file
____
____
________________________________________
       Record of Owner Outreach efforts
____
____
________________________________________
       M/WBE Contractor Outreach Record
____
____
________________________________________
       Section 3 Outreach Record
____
____
________________________________________
       Beneficiary Data
____
____
________________________________________
Environmental Review Record   
       NOI/RROR
____
____
________________________________________
       Public Comments and Complaints
____
____
________________________________________
Conflict of Interest Determination Records
____
____
________________________________________
IDIS Records   
       Project Set-Up Reports
____
____
________________________________________
       Invoice, Voucher Disbursements Trail
____
____
________________________________________
Monitoring Records   
       Self monitoring of projects
____
____
________________________________________
       HTFC monitoring of Program
____
____
________________________________________
       Resale Approvals
____
____
________________________________________
Program Match Documentation
____
____
________________________________________
Administrative Cost Documentation
____
____
________________________________________
Program Income Documentation
____
____
________________________________________
Program Audits & Response to Findings
____
____
________________________________________


HTFC HOME Program
LPA Rental Rehab Program Owner/Property File Checklist


Project Identifier (project no., location, name)  _______________________________________________________

 YesNoComments
Owner application
____
____
________________________________________
Inspection report
____
____
________________________________________
Environmental checklist
____
____
________________________________________
Real estate taxes current at
time of funding
____
____
________________________________________
Evidence of property insurance
____
____
________________________________________
LPA/Owner agreement
____
____
________________________________________
LBP Addendum (if pre-1978 property)
____
____
________________________________________
Work write-up & specifications
____
____
________________________________________
Cost estimate
____
____
________________________________________
Contractor bid package/proposals  
       Bid Documents
____
____
________________________________________
       Bids Received
____
____
________________________________________
       Contractor Selection Documentation
____
____
________________________________________
Construction Documents  
       Certificate of contractor insurance
____
____
________________________________________
       Construction contract
____
____
________________________________________
       Building permits & Notice to Proceed
____
____
________________________________________
       Change orders
____
____
________________________________________
       M/WBE Contracting report
____
____
________________________________________
       Progress inspections for
       construction draws
____
____
________________________________________
       Contractor Affidavit/Waiver of liens
____
____
________________________________________
Covenants, Note and mortgage recorded
____
____
________________________________________
Certificate of final inspection/HQS
____
____
________________________________________
IDIS/financial documentation:
____
____
________________________________________
       Verified project set-up form
____
____
________________________________________
       Invoice, vouchers, disbursement trail
____
____
________________________________________
       Project completion report
____
____
________________________________________
Occupancy
____
____
________________________________________
       Tenant Selection Plan
____
____
________________________________________
       Waiting List
____
____
________________________________________
       Affirmative Marketing Plan & Records
       (if 5+HAUs)
____
____
________________________________________
       Monthly Rent Rolls/Unit Turnover List
____
____
________________________________________
       Lease w/ Addendum Provisions
____
____
________________________________________


HOME Rental Project

Status Summary



Date of Status Check:   ________________________________


HOME Assisted Unit (HAU) Count:

 
Required
Occupied
Over-Income/
Vacant
         VLI
______
______
______
         LI
______
______
______
 

Are Project Files Complete?
YES
NO
Do Rent Rolls reflect HOME limits?
YES
NO
Are Tenant Files Complete?
YES
NO
Are Recertifications current?
YES
NO
Do Leases meet HOME requirements?
YES
NO
Are Unit Inspections current?
YES
NO


HTFC HOME Rental Project

Unit Review Checklist



Unit No.VLILIOI/
Vacant
Contract
Rent
Last Income
Certification Date
Last HQS
Inspection Date
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
Total___________________________________________________________________
Required___________________________________________________________________


HOME LPA Rental Project

Annual Monitoring Review:   Individual Tenant File Review Checklist



Summary  

Unit No.___________
Date of Most Recent Certification_______________________
Income status (circle 1)

  
VLILIOver Income

   Maximum Allowable Rent    $_____  
              Utility Adjustment    $_____  
          Actual Contract Rent    $_____



  
File Document Checklist:Document In File
Rental Application/Income Disclosure Form_______

Eligible Income Calculation Form_______

Income Verification Documents_______

Executed Lease_______

HQS Inspection Form



_______

HQS Inspection Results  (circle 1)

PassFail
Conditions to be corrected: 
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________
______________________________________________________________________________________

Last updated on 10/29/03

For more information about SONYMA mortgages call: 1-800-382-HOME (4663)