HUD M&M III and Property Preservation Meeting
March 19th, 2010
As discussed in the March 12th edition of the MBA Advocacy Update, On March 10, 2010, the MBA’s Property Preservation Workgroup met with staff from the Department of Housing and Urban Development (HUD) to address issues surrounding an upcoming Mortgagee Letter implementing the new Management and Marketing (M&M) contract and process.
MBA Meets with HUD on Property Preservation Issues
On March 10, 2010, 19 members of MBA’s Property Preservation Workgroup met with staff from the Department of Housing and Urban Development (HUD) to address three primary issues surrounding an upcoming Mortgagee Letter implementing the new Management and Marketing (M&M) contract and process: definition of conveyance condition; line item fee schedule, overall property cap, and the process for “over allowable”.
First, HUD clarified that it is not redefining the definition of conveyance condition. HUD explained that recent language used would be removed because it inappropriately referenced rules relevant only to conveying occupied properties, which are rare.
Further, HUD clarified that it will publish an allowable fee schedule for property preservation (P&P) work. If a P&P expense is within the allowable amount, permission is not needed to perform the work. If a particular cost exceed the published line-item maximum, however, the servicer can perform the work without pre-approval, but must document why the cost was more (e.g., initial grass cut on
an overgrown property versus maintenance cut). HUD would then determine if the cost was reasonable and reimbursable in full. MBA expressed concern that servicers will perform work that is not reimbursed. MBA seeks additional clarification on how to get permission to exceed these per item allowables rather than risk being denied after incurring the cost.
HUD also reiterated a $2,500 maximum per property cap. MBA expressed concern that the cap was over inclusive and would require far more pre-approvals on routine work than necessary when one large repair cost exceeds the cap. MBA suggested removing large repairs from the $2,500 cap to reduce the servicer’s and HUD’s cost/time of processing approvals for routine maintenance. HUD is now contemplating this change. The Workgroup also suggested that HUD stay engaged in pre-approving large repairs, so it can determine if the repairs improve HUD’s return on investment. HUD was receptive to this recommendation.
HUD also agreed it will not require overallowables to be submitted as a supplemental claim. This provides for a more streamlined, consolidated process and saves the servicer and HUD significant money and staffing.
Finally, HUD agreed it would not require the use of the “Property Inspection Report” (HUD 9519-A) at this time. All information required on the form, however, must still be transmitted to HUD. HUD plans to require the form in the future when systems are capable of populating the form.
For more information, contact Vicki Vidal (202) 557-2861 vvidal@mortgagebankers.org or Sandra Troutman (202) 557-2858 stroutman@mortgagebankers.org.
About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, Ohio and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 700 employees. Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.