MBA Offers Comments on HUD CNA e-Tool

The Mortgage Bankers Association, in an Apr. 30 letter, shared its concerns with HUD regarding the bureau’s Capital Needs Assessment e-tool implementation.

A Capital Needs Assessments is a due diligence report on a multifamily property’s physical condition that identifies specific repairs and replacements needed immediately as well as long-term capital repairs and replacements. Use of the CNA e-Tool became mandatory as of November 1, 2017 for FHA multifamily mortgage insurance applications, and since February, HUD has mandated use of its CNA e-Tool–an effort to automate data collection and analysis–for Rental Assistance Demonstration conversions, 10-year update Capital Needs Assessments for FHA-insured multifamily properties and other asset management events including partial claim payments. HUD asked for comments from interested parties on its e-Tool.

After consulting with member firms, MBA submitted its letter to HUD commenting on four areas: whether the proposed collection of information is necessary, how much time the proposed collection of information would consume, how to enhance the quality, utility and clarity of the information collected and ways to minimize the burden of information collection.

The letter identified several “urgent” ways HUD can improve the CNA e-Tool, including creating a “save” function, as currently the user will lose all progress if he or she is inactive in the system for more than 30 minutes. In addition, the maximum file upload size should be increased. Currently, the maximum size of individual uploads is limited to 5 MB, but a single photo can approach 2.5 MB. Therefore, based on HUD’s expectation of 100-200 photos with each e-Tool submission, an e-Tool submission would require 50-200 uploads just for photos. Though HUD has suggested lenders compress the photos for submission, the e-Tool does not currently accept compressed or zip files.

“We recommend increasing the allowable file size commensurate with submission requirements and/or allow compressed or zip files,” the letter said.

At the moment, information submitted through the e-Tool cannot be edited once submitted. If changes are required after submission, all previously submitted information must be resubmitted. “Similarly, if a single additional document is requested from HUD, the entire submission must be re‚Äźcreated in its entirety and resubmitted, essentially duplicating the effort required,” MBA said. “HUD staff has been further duplicating efforts by requesting the traditional CNA narrative, sometimes in addition to the narrative submission through the e-Tool.”

MBA also noted the e-Tool has no amortization schedule built in for proper reserve analysis of years 11-20, which leads to flags on every submission. “Because of this, the lender has to submit an additional document showing the criteria have been met,” the letter said. “We recommend adding an amortization table for proper reserve analysis of years 11-20.”

While MBA expressed serious concerns with HUD about the e-Tool, it noted its members value HUD’s efforts to streamline the e-Tool’s preparation, submission and analysis functions and support the department’s efforts to automate key production and asset management data collection. “We therefore are hopeful that these comments will be useful in resolving issues that our members experience regarding use of the CNA e-Tool and that HUD can rapidly make meaningful progress against these shared objectives,” the letter said.