HUD-Commissioned Study Recommends Property Standards Phaseout

Minimum property standards left on the books too confusing, study says

July 1, 2003

By ANNE LINEBERRY

According to the study, the remnants of the once all-inclusive construction and technology standards are causing confusion at the state and local level and are no longer necessary.

Back in the early 1980’s, Congress passed a law which allowed for builders to comply with model and local building codes as a means of satisfying HUD mortgage insurance requirements, thus eliminating the relevance of virtually all of the HUD minimum property standards, according to the executive summary of the study.

“The legislation hasn’t been cleaned up to respond to the reality,” said David Engel, director of affordable housing research and technology.

According to Engel, confusion reigns when local and state governments consider whether certain odds and ends of the regulations that remain on the books apply to particular instances.

“People don’t know that they’re phased out,” Engel said of the many MPS that have fallen by the wayside in light of the 1983 law. He said that HUD hopes to “clean everything up to reflect the new reality.”

In addition to eliminating MPS, the study recommends doing away with the Technical Suitability of Products (TSP) program, which is rooted in the 1937 Technical Circulars issued by the FHA.

Aside from carpet manufacturers and a few other producers, the summary said, industry standards have come to follow the recommendations of the International Code Council’s Evaluation Services, Inc. (ICC-ES).

The study says that the effect of eliminating the program will be zero on HUD-insured family housing because TSP acceptance is no longer performed or required.

Engel noted that builders ran into regulatory bureaucracy when trying a new building technique, causing them to run in circles attempting to determine which government agency was responsible for allowing the practices. Because the HUD rules are still existing, though largely unenforced, they have become a cumbersome hurdle to utilizing new technologies, he said.

According to Engel, the “confusion is a barrier to innovation.”

HUD’s Office of Policy Development and Research commissioned the National Institute of Building Sciences to produce the study, which was released in March.

The study gave a history of MPS, which were written up in 1935, about a year after the Federal Housing Administration’s establishment. MPS were commissioned to protect FHA-insured mortgages, according to the summary. Soon after, the Minimum Construction Requirements were issued, the summary said.

According to the summary by 1973 the code was “no longer a default standard for deficiencies in local code enforcement, the MPS had become a defacto, and largely prescriptive, construction code.”

Regarding the vestiges of MPS left on the books, the study specifically recommends the elimination of the one-and two-family portion of the MPS and separating the one- and two-family mortgage programs from the multi-family programs.

The summary states that administrative changes could be used to implement study recommendations, because there is no federal law mandating MPS.

Engel says that the recommended changes would allow the written regulations “to reflect the way the program really works.”

Anne Lineberry is MortgageDaily.com‘s editor. She previously worked as an online editor/producer for DallasNews.com and on the Metropolitan desk for the print edition of The Dallas Morning News. Email Anne at AnneLineberry@MortgageDaily.com