The ultimate goal of any sports team is to win championships, and there has been a remarkable movement toward using data-based models to help build a winner. If you're a sports fan, you're probably familiar with the terms “advanced statistics” or “advanced analytics.” Appropriately, as it is draft season for the NFL, you may have been hearing about the annual “combine”, in which athletes are tested on multiple, standardized metrics so teams can get a better sense of their value leading up to draft day. The general idea behind this is that through the collection and analysis of advanced statistics, measures, and/or data for each athlete, trends can be discerned and decisions can be made based on tendencies. The data can then be used to predict potential future outcomes.

Real estate is no different, and the benefit of having standardized templates and data-based processes in place to provide market statistics and predict trends is tremendous. Imagine a database of information related to a portfolio of projects that allows the user to better understand what type of projects have healthy reserves, versus those that may be struggling; or data that can give a general sense of the cost to replace windows in a particular type of project in a specific region. Or further to that point, imagine the benefits of a data management system that would easily show you the short or long term cost savings for installing a more efficient window.

HUD Introducing a Better Process
To that end, the U.S. Department of Housing and Urban Development (HUD) is set to release a standardized reporting template that enables information to be gathered, analyzed and stored in a systematic, uniform way as part of their forthcoming revised guidance for underwriting FHA insured loans. The revised HUD Multifamily Accelerated Process (MAP) Guidelines are scheduled to be released in the coming weeks, and with it comes a revolutionary new database tool to improve the way Capital Needs Assessments (CNAs) are prepared. HUD's CNA e-Tool is an excel workbook (or compatible program that can be uploaded via the B2G system) that streamlines the reporting process for third party providers. The CNA e-Tool, which is a vast improvement over its predecessor, the RAD Excel Tool, is a standardized reporting template that will allow HUD, owners, lenders and third parties to better collect, share, and analyze properties, at an individual and portfolio level.

The Benefits of the CNA e-Tool
Even as the countercyclical General Service Administration (GSA) transactions ramp up, HUD continues to look for new ways to stay out in front and remain active in a down cycle for FHA-backed mortgages. The revised guidance, templates and e-Tool are an important part of this effort. Part of HUD's strategy remains heavily entrenched in supporting the preservation and improvement of aging public housing units. HUD recently announced that they are awarding $1.8BB to continue funding large scale improvements of affordable housing. An added benefit of the CNA e-Tool is the integration of energy auditing and utility analysis for existing properties. This module will allow for cataloguing of energy efficient improvements and maximizing their benefits for sustainability of an individual property or portfolio, as well as the national environment as a whole.

Sustaining affordable housing rents goes hand in hand with making them more affordable for owners and operators to maintain, and energy efficiencies and sustainability are great influencers on affordability and expenses. To that end, HUD is proposing to lend $0.75 on the dollar to finance energy improvements. The CNA e-Tool will allow owners, operators, lenders and insurers to make better decisions on how to best allocate such funding to ensure rents remain affordable, and housing units remain livable.

The Team Approach to Improving Affordable Building Stock
All things considered, when players come together, you have a stronger team, which is a recipe for success in providing sustainable, affordable, attractive rental housing. The key is information, and with the CNA e-Tool that information can be collected, conveyed and shared/analyzed more effectively. While the available database is still limited, as more property data is entered into the system, the depth, breadth, diversity of information, and thus the value of the database will continue to expand.

While there may be some initial growing pains as third parties, lenders, and even HUD learn to utilize these new tools, practice makes perfect! And the end result and long term benefits greatly outweigh the potential short term dip in productivity, as users become more familiar with the process. However, the learning curve should be short-lived because the process and data remains largely same; it is just the way in which it is conveyed that is new and radical.

Ultimately, improving the due diligence and underwriting process, and assembling a wealth of data will only strengthen the FHA insured real estate market, as well as streamline the management of assets and portfolios. Safe to say, the HUD team may be the first to adopt “advanced analytics”, but they won't be the last. Game On!

Instant Insights /

HUD Introduces New Tools As Part of Revised Underwriting Guidance

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