HUD’s Plan to Transform Office of Multifamily Housing

By 2016, the Office of Multifamily Housing (MFH) expects to complete a transformation of the way HUD works from a 1970s operating model to a 21st century model that applies industry best practices, improves ability to manage risk and deliver excellent customer service, and increases accountability and national consistency.

“Multifamily is one of HUD’s core programs, and this is its first major restructuring since 1998,” said Marie Head, Deputy Assistant Secretary for Multifamily Housing Programs. “We have to change in order to be nimble and keep pace with the marketplace by leveraging technology, reducing our footprint as appropriate, and enhancing customer service in ways that will help ensure that we perform as a 21st century institution. In today’s budget climate, we must also look for every opportunity to increase our operating efficiency, but we also have to keep in mind the impact of these changes on our employees. We will be doing all we can to move forward on the plan in a way that offers workers as much flexibility as possible.”

HUD’s MFH provides mortgage insurance to HUD-approved lenders to facilitate the construction, substantial rehabilitation, purchase, and refinancing of multifamily housing projects, as well as administering a number of project-based rental assistance programs. In addition to improving program effectiveness, MFH estimates that the transformation plan will generate up to $45 million in annual savings once implementation is complete.

Plan Involves Four Initiatives

The new model is intended to align MFH with other areas of HUD and offer clearer roles and new opportunities for people within MFH. The transformation involves four initiatives:

Workload sharing to address fluctuations in volume. Workload sharing allows offices, teams, and even managers to distribute workload across the country in both Production and Asset Management. If an office, team, or individual experiences a spike in volume, other offices, teams, or individuals with extra capacity can pick up the work. This will mitigate pressure on staff, and reduce wait time and backlogs for customers. Workload sharing is already being piloted in several hubs, and has received positive feedback from both staff and customers.

Risk-based underwriting and processing in Production. Production applications will be segmented according to risk and complexity, and then assigned to the appropriate underwriter. More experienced underwriters will process riskier, more complex applications. The underwriter will manage the end-to-end review of each application, drawing in technical experts such as construction analysts and appraisers as needed. This approach will increase the efficiency of processing applications, provide improved customer service, and better manage risk.

Account Executive and Troubled Asset Specialist support in Asset Management. This Asset Management model will enable Multifamily experts to better manage risk while creating more manageably scoped roles for staff. Troubled Asset Specialists, a new role, will focus on addressing challenges associated with at-risk assets. Account Executives, today’s Project Managers, will focus on the non-troubled portfolio.

Streamlined organizational model in both headquarters and the field. MFH will align its organizational structure as part of this transformation, streamlining decision-making and enhancing accountability.

In its headquarters, MFH will streamline and focus its structure, with four main offices: Multifamily Production, Asset Management and Portfolio Oversight, Recapitalization, and Field Operations. These changes will reduce duplication and provide better support and service to both the field and external customers and stakeholders.

In the field, MFH will be simplifying its presence to improve consistency and more closely mirror the regional structure used elsewhere in HUD. Currently, there are 17 hub offices managing 50 field offices. MFH will consolidate 17 hubs into five future hubs and each hub will also have a satellite location, except for Chicago and New York, which will have one additional support office. In all, there will be a total of 12 field locations:

• New York as the hub and Boston and Baltimore as the satellite offices, covering Connecticut, Vermont, Massachusetts, Maine, New Hampshire, Rhode Island, New York, New Jersey, Pennsylvania, Virginia, West Virginia, Maryland, Delaware, and Washington, D.C.;
• Atlanta as the hub and Jacksonville as the satellite office, covering Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Puerto Rico, and the U.S. Virgin Islands;
• Chicago as the hub and Detroit and Minneapolis as the satellite offices, covering Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin;
• Fort Worth as the hub and Kansas City as the satellite office, covering Arkansas, Louisiana, New Mexico, Oklahoma, Texas, Kansas, Iowa, Missouri, and Nebraska; and
• San Francisco as the hub and Denver as the satellite office, covering Colorado, Montana, North Dakota, South Dakota, Utah, Wyoming, California, Arizona, Hawaii, Nevada, Washington, Alaska, Idaho, Oregon.

Pertaining to the consolidation, in November 2013, MFH updated its plan to additionally retain multifamily staff in Minneapolis and Baltimore. These officers were added to provide additional geographic coverage and support for critical multifamily work in the New York and Chicago regions, the two largest regions in terms of staff and workload. Minneapolis will be a satellite of the Chicago hub and the Baltimore office will be a satellite of the New York hub.

In addition, MFH will continue conducting on-site inspections as required by HUD policies and procedures. HUD manages assets and reviews applications from around the country, even where there’s no nearby field office. The proposal for consolidating offices doesn’t include any plans for replacing MFH positions with contractors.

Transformation Timeline

The transformation is occurring in waves over two years, starting in FY 2014. Details regarding the planned transformation of other HUD Multifamily Housing operations and timing for consolidation of offices have been updated, including plans for reallocated HUD staff to report for duty in the following waves:

• Spring of 2014: Fort Worth/Kansas City (Wave 1).
• Fall of 2014: Chicago/Detroit (Wave 2).
• Winter of 2014: Atlanta/Jacksonville (Wave 3).
• Spring of 2015: New York/Boston (Wave 4).
• Summer of 2015: San Francisco/Denver (Wave 5).

As the work of consolidation moves forward, HUD intends to temporarily transfer the day-to-day work of the properties located with offices in question to other offices/regions, so that workload distribution and staff training may be intensively pursued. While Wave 1 progresses, owners/agents in Arkansas, Louisiana, New Mexico, Oklahoma, Texas, Kansas, Iowa, Missouri, and Nebraska should begin receiving word of their new contacts.