HUD Announces Transformation of Multifamily Division

Published by Teresa Garcia on Monday, July 1, 2013
Journal thumb July 2013

The U.S. Department of Housing and Urban Development (HUD) announced plans in April to overhaul the structure and operating model of its multifamily division. The transformation will consist of four initiatives: workload sharing; risk-based processing and underwriting in production; creating specialist support in asset management; and streamlining the headquarters and field organization model. Changes are scheduled to begin this fall and will be fully implemented by 2016.

Although the new operating model that will result from the reorganization is expected to save between $40 million and $45 million annually, HUD said that the primary goal is not to save money but to develop a more efficient, sustainable operating model.

“This transformation will help multifamily better perform its mission by ensuring that the developments that we are involved in financing can get done faster, better, more efficiently across the country at any given time. It will also really help us be able to focus on preservation of the existing affordable portfolio that multifamily is involved with today,” said Carol Galante, Federal Housing Administration (FHA) Commissioner and Assistant Secretary for Housing, in a video statement. HUD said this would be the first major restructuring in multifamily since 1998.

Background
“We’ve made great strides over the years in refining our operations and processes, but there were still things to do to bring the operating model into the 21st century,” said Marie Head, HUD deputy assistant secretary for multifamily housing.

HUD began planning the changes last year to build upon improvements introduced in recent initiatives, such as the workload sharing and risk-based underwriting procedures. Proposed changes are part of the department’s efforts to improve job succession planning. Head said restructuring the operating model and rethinking specific roles will provide a better workload balance for staff.

Summary of Initiatives
Workload Sharing
If an individual, team or office experiences a spike in volume, the workload can be shared with colleagues in production and asset management across the country. HUD said workload sharing will alleviate pressure on staff and reduce wait time and backlogs for customers. The initiative is being tested in several hubs and has received positive feedback from staff and customers, said HUD.

Risk-Based Processing and Underwriting
Production applications will be evaluated for risk and complexity, and then assigned to the appropriate underwriter. More experienced underwriters will handle riskier and more complicated cases. Underwriters will oversee an application from beginning to end and will bring in help from technical experts as necessary. HUD will clarify roles and streamline the underwriting process to make sure that simple applications are not over-processed. HUD said this risk management approach has already been successfully implemented in its Rental Assistance Demonstration program and low-income housing tax credit (LIHTC) pilot program.

Troubled Asset Specialist and Account Executive Roles
Senior managers in the asset management group will focus on at-risk assets in their role of troubled asset specialists. The existing role of project manager will become an account executive position focused on the office’s non-troubled portfolio. HUD said many field offices already informally assign work according to variations of this work allocation model, but that a formalized approach will more consistently balance staff workloads and improve efficiency.

Headquarters and Field Office Reorganization
Reorganization will affect staff at the headquarters and field office levels. Headquarters will be structured around four main offices: the Office of Asset Management and Portfolio Oversight, which will result from merging the Office of Asset Management, the Office of Housing Assistance and Grants Administration (HAGA) and the Office of Housing Assistance Contract Administration Oversight (HACAO); the Office of Multifamily Production, previously known as the Office of Development; the Office of Recapitalization, previously known as the Office of Affordable Housing Preservation, which will focus on recapitalizing assisted housing; and the Office of Field Operations, which will provide field support.

At the field level, 17 hubs will be consolidated into five hubs and five satellite locations, for a total of 10 multifamily field locations. The five hubs are New York City; Atlanta; Chicago; Fort Worth, Texas; and San Francisco. The corresponding satellites are Boston; Jacksonville, Fla.; Detroit; Kansas City, Mo.; and Denver.

The multifamily hub and satellite locations were chosen based on business need, current and projected workload balance across offices and regions, potential talent pools and the number of current employees. HUD said the chosen locations offered the best position for future flexibility and growth.

Initial Impressions
Reactions to the announced changes were mixed. “Some folks see the proposed changes as long overdue and others are very concerned about field office closures,” said Denise Muha, executive director of the National Leased Housing Association (NLHA). Muha explained that many owners are concerned about the loss of long-standing relationships with HUD field office staff.

State housing agencies have similar concerns about losing local HUD relationships. “[Members] have strong working relationships with the field offices they work with. There’s a certain level of customer service, familiarity and convenience [with the local offices],” said Garth Rieman, director of housing advocacy and strategic initiatives at the National Council of State Housing Agencies (NCSHA). “Partners and friends and professional colleagues are having their lives disrupted, and this can be painful on a personal level, as well as a professional level.”

Rieman added that NCSHA members understand that changes at the local level are a compromise for improved operating efficiency and consistency across field offices.

Staff Impact
Head said HUD has tried to anticipate the concerns of affected field office and headquarters staff. “Our human talent is important to us. We want to treat our employees fairly and respectfully during this pretty dramatic change,” said Head.

Part of HUD’s strategy to ease the transition for employees is giving them a chance to stay with the department. “Every multifamily staff that wants to stay in multifamily will have the opportunity to do that,” said Head. Some employees will be asked to relocate and will be offered relocation benefits. If they opt out of those offers, they may elect to take a buyout of up to $25,000 or early retirement, if eligible.

Employees with questions about the changes may consult a frequently asked questions page on the department’s website or speak directly with special staff the department has delegated to address questions on the changes.

“We want to be responsible for our own future and that’s why we think the changes proposed are much needed,” said Head. “We want to make sure we’re the architects of our own future.”

HUD said it will not launch any reorganization or role changes until union negotiations are completed.