“It’s About Time!” was the theme of the Third Annual Property Preservation Conference held in Washington D.C. in November 2006.  The steering committee, key note speakers, and panelists all shared ideas to formulate an agenda designed to reduce conveyance time frames and improve efficiencies in the servicing of loans through foreclosure and transfer of properties. The conference attendees embraced the theme and contributed their viewpoints as to what current issues extend the conveyance timelines. This collaboration led to proposed resolutions and suggested establishment of working groups to work closely with the investors to focus on reducing the inefficiencies in the current processes.

The primary focus of the conference this year was on long term goals and opportunities in streamlining the conveyance process, thus saving HUD, servicers, and M&M contractors time and money.  The sessions and discussions were not designed to solve all of the issues in a two-day conference, rather to foster brainstorming of ideas and suggestions for efficiency.

The first day of the conference was comprised of informative sessions which discussed the current process for over allowables, second bids and conveyances and proposals to HUD for speeding the process.

Acting Director, Single Family Asset Management Laurie Maggiano opened the session with a strategic overview of HUD’s focus in the coming months.   Laurie shared that HUD recognizes they are at a crossroads and are losing market share in originations of new loans, partially due to the expansion of the sub-prime lending market.  HUD is reviewing changes to revitalize their market share, but they also recognize servicers have left the FHA market because of the expense and difficulty associated with the servicing requirements.  One of HUD’s strategic goals for this year is to streamline the servicing from default to conveyance and establish rules that are more consistent with the conventional market, without losing the borrower protections in place.

• Eliminate occupied conveyance notifications
• Allow market value bids at foreclosure sale
• Reduce Title evidence cost
• Optional Flat Fee P&P Option, in lieu of itemized cost schedule

HUD has a fairly extensive project running to determine the actual costs of preservation services to develop one flat fee for all work, thus eliminating 99% of over allowable costs.  HUD’s proposed model would allow servicers to opt the one flat fee for all properties or the itemized P&P schedule before end of year 2007.

HUD will begin tracking the time from foreclosure to claim filing and acquisition costs to establish bench marks by which servicers can be measured and compensated accordingly.  The goal is to revise the tier ranking system based on empirical data, not how HUD “felt” about the servicer’s performance.

Top Ten Ways to Save Time

FHA Coming Attractions

• $350 for temporary roof repairs
• $1050 to secure in ground swimming pools
• Increase the allowable to secure and re-secure properties without prior approval
• Clarification regarding the distinction between temporary and permanent roof repairs
• Clarification of conditions for conveying properties with mold
• Requirement of digital photographs
• Revision of the wet (radiant) winterization process
• Increase in the maximum number of annual inspections
• Allow mortgagees to submit one bid for the entirety of the grass cut season
• Exclusion of common household chemicals from the definition of health hazards

Joe McCloskey, Managing Partner Lyons McCloskey LLC, provided an overview of the current over allowable process and led the discussion on the value of working together to propose suggestions for efficiency.  The length of time between initial secure and conveyance is 15 days, best case scenario, due to the current over allowables and bid process.  In reality, 20 days elapse between securing and conveyance.  Each day between foreclosure and conveyance costs HUD about $1 million per day.  With roughly 80% of properties affected by the bid process, a reduction in the number of days to convey a property will save HUD millions of dollars each year.

80% of the properties that convey to HUD are affected by the current bid process.  This extraordinary exception rate impacts servicer costs, impact in the community, and servicer’s reputation.  Increasing the over allowables, while maintaining cost controls can eliminate 80% of the bids and delays in conveyance.  A reduction in the number of days to convey a property will save HUD millions of dollars each year. 

Common over allowable requests are submitted for approval to remove common household chemicals and paint, installation of sump pumps, boarding and reglazing, yard maintenance, and resecuring.  Only a small number of O/A requests are submitted for the larger, more costly items such as roof repairs.  Additionally, 36% of O/A requests are for items less than $200.

In addition to a request for broader authorization of allowables, servicers and field service providers proposed that HUD consider modifying the process by implementing performance based approaches such as post-claim audit, similar to the claim process in place for VA loans and the post-underwriting reviews for FHA loans.

There is also an incentive to create standardization across the industry within the federal government and with Fannie Mae and Freddie Mac. Standardization within the industry’s preservation and protection rules can be accomplished through a collective effort of the industry to 1) gather data on the existing allowables and suggest realistic thresholds to reduce the number of exceptions; 2) establish new thresholds for P&P actions not included in the current cost schedules; and 3) establish controls to build HUD’s confidence and that there are reasonable costs through quality assurance programs.

There is also a great opportunity to improve efficiency by creating a common platform by which the industry communicates and provides documentation.  There is an opportunity for investors to create the platforms by which servicers can make use of existing technology.  Taking advantage of email and digital photos enables faster and more accurate data transmission.  Setting a standard of reviewing photos with O/A requests prior to requesting second or third bids will also speed the conveyance timeline. 

HUD is working to create one platform for data gathering and to communicate with the M&M contractors.

MCS CEO Allan Martin suggested that the industry, specifically the MBA, organize a panel to establish common data fields for preservation and establish one platform for the required data recording, transmission, and reporting.  Paul Magaha agreed and added that the field inspectors and contractors should be included in this group because they should be given one set of data fields too.  In order to accomplish this, Robert Klein, CEO of Safeguard advised that there is a tremendous opportunity to take advantage of technology.  It is to our benefit to use this technology in our quality control measures too.

Servicers create business rules to address 95% of properties and handle the exceptions outside of those processes.  Servicers had to create individual solutions to accommodate the information as a result of no automation or standardization of preservation data.  As the number of exceptions continue to rise servicers take on more costs.  VP with CitiMortgage Ed Stanton suggested pooling resources to identify one platform and work with the MBA and HUD to establish.  Leslie Bromer agreed and will add this to the list of opportunities.

Another suggestion for improving communication within the industry is to develop comprehensive industry training on the FHA insurance policy for the servicers, M&M contractors, field service providers, and GTR’s.  A common venue would be very beneficial to improving education and reducing tension.  The training should encompass issues outside of preservation guidelines.  Bankruptcy, hazard insurance claims, and loss mitigation all affect preservation actions and should be included in ongoing training.

2nd Bid Process

Mary Cambero from MCB advised that 2nd bids are requested when the 1st bid seems excessive.  In effort to reduce these requests, Mary suggested servicers provide photos, comments, location, and documentation to support the bid amount.  Servicers recognize the lack of documentation causes delay, however, the requests vary by M&M contractor.  The lack of consistency between the M&M contractors causes the confusion, delays, and inefficiencies.

Most servicers are submitting photos with every bid request but still receive 2nd bid requests for small dollar amounts (less than $200).  Servicers often receive approval on the 1st bid before the second bid is submitted to the M&M and receive more approvals for the 1st bid than the 2nd bid.  This results in additional days to convey, which costs HUD, M&M Contractors, and servicers money.

Leslie Bromer suggested implementing a quality control process to review 1st bids before submitting to the M&M contractor to ensure more thorough documentation.  Leslie also emphasized the necessity to be clear when requesting bids for unusual circumstances.  HUD is reviewing current allowables in an effort to reduce the number of bids.  HUD will consider setting standards for the M&M contractors to follow when requesting 2nd bids, such as a minimum dollar amount.

Allan Martin suggested that the post-claim audit would save more money in reviewing work completed photos than the current bid and second bid process.

Robert Klein, CEO of Safeguard shared that we recognize the need for regularly occurring inspections; however, it is not logistical to schedule and route in the field.  The rule creates more inefficiency when field inspectors are on a block and have to return to the same block the next day to meet the timeframes.  Increasing the timeframe to 20-40 days would accomplish HUD’s goal of monthly inspections, while maintaining the controls to accurately determine vacancy date.

Leslie Bromer clarified that the definition of first time vacancy is the date in which you should have discovered the property vacant.  Therefore, if the monthly inspection was completed on the 36th day, the FTV is to be reported as the 35th day from the last inspection.  Likewise, if the servicer receives reports of vacancy from other means, such as city code enforcement or sheriffs, the day of notification is the FTV date.

Bid Approvals and Extension Requests

Leslie Bromer stated that servicers are not to estimate foreclosure sale, redemption, title, and conveyance dates on O/A request forms if the foreclosure sale has not occurred.  Servicers should clearly state that the sale date has not occurred or been scheduled.

Extension requests have been denied due to first time vacancy dates changing.  M&M contractors are not recognizing the states that require a personal property eviction even when the property is vacant.  In these cases, the servicer uses the personal property eviction date as the new FTV date.  Leslie suggested the servicer clearly explain the situation on the forms being submitted to the M&M contractors.  Additionally, servicers should clearly explain why the expected conveyance date changes.

Brandon Kirkham from First Preston reported being cited by HUD for missing and incomplete information on O/A forms due to the missing dates and blank fields.  Brandon suggested that HUD provide universal guide on the rules for O/A and Extension request forms.  The M&M contractors need consistent feedback and documentation from HUD. The guide should also contain guidance on appropriate and reasonable actions to be taken by the GTR.  The M&M contractors cannot “sharpen their toolkits” without feedback and guidance from HUD.  The spy inspectors should also be provided with clear instruction, guidance and training.

Hazard Insurance Claims

Servicers are not required to file extension requests for reasonable diligence to initiate foreclosure for damaged properties, and these extensions should be granted until the hazard claim is settled.

In the case when a property is scheduled for sale and becomes damaged, servicers should request permission to postpone sale to better investigate the situation and determine if is necessary to file a hazard insurance claim.  Servicers must be very clear in their documentation to support the need to change the first legal date.

Pre-conveyance Inspections

Despite the voluntary option to complete pre-conveyance inspections, HUD would like to see a lot more participation in the process.  HUD considers these inspections as a win-win-win situation and they will work with the M&M contractors to gather data on the number of days to coordinate and complete these inspections.  Robert Klein, CEO of Safeguard shared that inspections provide an invaluable training tool for the contractors and field service providers.

In cases where pre-conveyance inspections have been completed the servicers are being cited for items of mortgagor neglect and marketable condition, not conveyance condition.  Servicers would like HUD to provide a checklist of items to help clarify the difference between marketable condition and conveyance condition.

Pre-conveyance inspections must be completed prior to reconveying a property back to HUD.

Non-Performance Letters

M&M contractors are not required to respond to rebuttals of non-performance letters issued.  Most servicers are reviewing and responding to every letter issued and providing rebuttals when the letter was issued in error.  Servicers use these letters as a tool to measure the performance of their field service vendors.  These letters also affect a servicer’s tier ranking, therefore, the M&M contractors should respond to the rebuttals in effort to ensure accuracy of information and should provide supporting documentation.

HUD tracks the letters on the ARR report and will be reviewing the information in the summary.

Damaged Properties

Servicers must request permission to convey with surchargeable damages, but servicers have not ever received permission to do so.  Boris Whiteside from NHMSI shared that there is pressure on the M&M contractors to not accept conveyance of a damaged property.

M&M contractors are reporting a high rate of properties being conveyed with non-surchargeable damages, without documenting the Part A claim form accordingly.

Servicers are receiving reconveyances due to severe mortgagor neglect prior to FTV.  Leslie Bromer stated that the servicers ensure they initiated foreclosure timely and suggested that servicers accelerate foreclosure in cases of non-monetary default when necessary to eliminate cases of severe mortgagor neglect.

Servicers requested clarification on the difference between mortgagor and mortgagee neglect.  M&M contractors are expecting servicers to repair properties due to “deferred maintenance by the mortgagor”.   Mortgagees cannot stop mortgagors from malicious vandalism and other damages prior to the eviction.  There is no incentive for M&M contractors when damaged properties are conveyed, because they do not have a mechanism or insurance proceeds to complete the repairs, resulting in reconveyance of all damaged properties.  There is an abundance of this situation for 203K loans, which is also a training opportunity for the M&M contractors.

M&T Mortgage Vice President Joe Morrison asked that HUD consider initiating rules or penalties based on the non-compliance issue.  One late or incomplete inspection is resulting in reconveyance, which is a “heavy toll” for such a minor infraction of the rules.   Marlene Robinson emphasized the importance of timely and thorough inspections to eliminate these situations.  She also added that pre-conveyance inspections should be completed in these cases to document the property condition.

Robert Klein, CEO of Safeguard mentioned another example of penalties that are not in perspective with non-compliance regarding mold.  Properties are being reconveyed for damages, such as mold, that are discovered and documented at first time vacancy.  Then a monthly inspection is completed late and the servicer is being held responsible for the damages.  Marlene Robinson agreed that these cases should be reviewed more closely and the servicer should appeal the reconveyance.  Servicers are appealing the reconveyance decision, but it is time consuming and costs HUD time and money, due to the time that elapses during the process.

Reconveyance

M&M contractors are required to notify the servicer about reconveyance within 30 days of conveyance and it is the M&M’s responsibility to maintain the property while reconveyance is in the appeal process.   It is the responsibility of the M&M contractor to maintain the property after notice of acquisition, regardless of EDI errors. HUD recognizes the system issues, but servicers are required to send a hard copy of conveyance notification, thus M&M contractors must maintain the property.

M&M Contractors are required to specify the deficiency and reason for reconveyance.  HUD has a standard letter for the M&M contractor to use, but servicers are receiving a request for information before receiving the reconveyance letter.  Leslie stated that the M&M contractor should be as specific as possible in the letter.

Utility Transfers

Demand Letters

Session IV – Quality Assurance  Audio Link Session IV

Each field service provider, Safeguard, MCS, Fidelity, and First American, shared the quality controls they have in place.  Quality controls include strict vendor hiring practices, photo requirements, random onsite visits with vendors, and internal quality audits on work order updates.  These quality controls are required by the servicers and are a condition of service performance contracts.

Chase Home Finance AVP of Property Preservation Jack Evans explained their quality control measures for their vendors.  Chase established a vendor scorecard in which all vendors are monitored by.  The scorecard is developed from a random sample of work orders and is completed monthly.

Chase also has high risk field officers in the field to complete QC inspections at the properties.  Chase also completes regular site visits to each of its vendors to view operations and ensure they each have quality control processes in place.

Servicers and Safeguard use non-performance and demand letters as a quality control measure too.  Each letter is reviewed and responded to, with additional follow up with the responsible field vendor.

Will HUD consider completing an analysis of the 2nd bid data and raise the allowable to reduce the delays in conveyance associated with 2nd bids?

Leslie Bromer agrees that many of the 2nd bids are probably not necessary and HUD will evaluate the information.

HVH reported not receiving documentation and photos to support roof damage and bids.  The documentation is critical because deteriorated roofs are not to be addressed unless there is an active leak. Water stains on the ceiling is not necessarily proof of an active leak.

Leslie Bromer reiterated that details and supporting documentation is required on O/A requests.

Robert Klein, CEO of Safeguard asked that M&M contractors review the photos and documentation of the 1st bid prior to asking for the 2nd or 3rd bid.

1st and 2nd bid discrepancies, such as 10 cyds of exterior debris and 25 cyds.  How do M&M contractors expect servicers to verify bids match?

Bids from servicers should be channeled through the servicer and if there is a drastic difference, the field service provider is responsible for placing the property in convey condition regardless of which bid is approved.  Photos should also be reviewed to reconcile the differences in the bid amounts.

Will HUD consider an allowance for monetary settlement instead of reconveyance if damages can be repaired?

Leslie Bromer stated that regarding surchargeable damages the amount of the claim should be reduced by the amount of damages.  If damages are less than $2,500, servicers are required to reduce their claim amount by $2,500.  Situations where properties should not be repaired because there is no return on the investment upon resale will be reviewed by HUD.

HUD is reviewing some options regarding the conveyance of properties completely destroyed by the hurricanes.  They are looking to give servicers availability to convey properties with damages without reducing their claim for the amount of the repair costs.

Can P&P work be claimed if the O/A request is submitted and work is completed prior to the conveyance date, but the approval is received after conveyance date?

Leslie Bromer answered, "yes."

Will MCB be required to respond within 5 days, instead of 10?

MCB is required by their contract to respond within 10 days, and HUD does not know when their contract will be re-written.  Servicers would like extensions to be granted while waiting for over allowable approvals.  HUD will look at reducing the number of items that require a 2nd bid.  Servicers are encouraged to submit their over allowable requests timely, and not at the last minute.

Does the M&M have another 5 or 10 days to respond to O/A requests when they ask for additional information to support the request?

Yes, however, HUD will review this situation as it is causing significant delays in conveyance.

Day 2

Session I – Investor Updates  Audio Link Session I Investor Updates

Dept. of VA

Monthly inspections are required upon 60 days of delinquency and should continue until the property conveys to the VA.  Upon notification of vacancy servicers should immediately ensure the property is secured.  The VA does not approve bid requests prior to foreclosure; they complete an audit of expenditures after conveyance to HUD and will pay justified claims with supporting documentation.

The VA is working to implement standardization across the nation regarding costs and policies to minimize the discrepancies between the regional loan centers.  While no major changes are expected to preservation guidelines, the VA is expecting to change timing of delinquency reporting.

The wording in the VA guidelines states to initiate preservation action when a property is found vacant and abandoned, however no clear definition of abandoned has been provided.  “Abandoned” generally describes properties that are not cared for.  However, there are many vacant properties that are not abandoned and may have furniture, but require winterization and preservation actions to protect the property.  Carl said the determination of whether a property is vacant is not the responsibility of the field service provider, and suggest servicers protect all properties that are not maintained by another property.

Servicers are experiencing an increase of claim disputes from the VA resulting in a reduction of cost payables.  Servicers should provide adequate documentation needs to accompany the claim.  The VA reviews the pricing for services across the country and makes adjustments to the pricing schedule on a regular basis.  Servicers should escalate disputes to the regional loan office.  Issues should be directed to the person who approved the claim, then the servicing officer, and then finally the loan administration officer. 

VA will consider expanding the number of reimbursable property inspections in areas that require more frequent inspections, such as Chicago.

Fannie Mae Update

Scott Angus of  Fannie Mae emphasized that there is no “one size fits all approach” for property preservation actions and associated costs.  Fannie Mae has developed a servicing guide intended to assist  the servicer to make good decisions on behalf of Fannie Mae.  Fannie Mae issued several lender letters to address the unique needs of the hurricane-affected borrowers.  These letters limited foreclosure actions in the hurricane-affected areas.  Fannie Mae implemented new delinquency reporting codes to for neutral reporting.

In effort to streamline the bid process, Fannie Mae created one email address for all preservation bid requests submitted.

Freddie Mac Update

Default Supervisor Michael Foreman provided an overview of letters issued by Freddie Mac to address the hurricane-affected areas last year.  Freddie Mac is requesting additional property inspections in the zone 3 zip codes.  Additionally, Freddie Mac is considering reimbursement for all property inspections with mortgage insurance, but not for non-insured loans.

Like Fannie Mae, Freddie Mac also has one central office and email address for processing P&P requests nationwide.  The central office tracks all bid requests by type and amount, making the reporting of the data easier.  Additionally, servicers like the system and feel it is user friendly and improves efficiencies.  Servicers are able to submit photos and documentation with bid requests and receive approval within 48 hours.  Servicers should state, “urgent” in the subject line if a quick response is needed.

Freddie Mac has system programming in place to automatically pay claims for over allowable approvals when the claim 104 form is submitted, eliminating the need for a secondary review.

Keith Woodcock from the city of Dearborn, MI emphasized the “cancerous” affect blighted properties have on entire neighborhoods.  Elected officials are working on legislation to improve the conditions of blighted communities.  Code Enforcement officials are in the neighborhoods and witness the quick deterioration of vacant homes due to neglect and vandalism.  The rapid decline in property condition causes neighbors to leave the area, placing the responsibility of property maintenance on the city itself.  The city is then tasked with keeping properties clean, secure, and safe.  City code enforcement admittedly does not fully understand the servicing industry, guidelines, and legal actions.

In the recent past, it has become more common for cities across the country to list properties with active citations or violations on a public website.  However, many cities do not, making it difficult for servicers to proactively monitor and resolve citations/violations timely.   Further complicating the communication and resolution is the lack of proper and/or current servicer contact information on the recorded title.  This leads to the perception that the servicers do not care and Cities sending notices to corporate offices, where they get lost or delayed in the internal mail system.

Some Code Enforcement officials recognize the servicers' need to abide by investor/insurer guidelines and their intention to proactively maintain properties.

As a result of these two challenges, Deb Oakley, Vicki Vidal (MBA), session panelists, and session attendees agreed that a working group should be established to address the issue of better and direct communication between the servicing/lending institutions and the nation’s municipalities.

One recommended solution discussed at the conference was to investigate the potential for the development of a Website that provides servicers' current contact information.  The Website should be accessible by city code officials throughout the country to identify the proper contact person, and improve the channels of communication.  Centralizing the contact information of each servicer within a common website would enable the industry to provide a tool designed to break down the communication barriers currently encountered by servicers and cities.

Another solution proposed was for servicers to create one central person to act as the liaison between the city and the servicer.  Deb suggested using the field service providers as that liaison.  Code enforcement stressed the need for servicers to update their recordings and file deeds and transfers timely.  Deb suggested servicers donate properties to land banks and work with cities to rehab the properties in lieu of a charge off and abandonment.   Cooperating servicers could pool properties in one area and donate together to help build a new, revitalized neighborhood.  And lastly, Deb suggested servicers create receiverships where funds can be advanced for the rehabilitation of the property, which is a risk for the servicer, but would help improve community conditions.

Session III – Disaster Update  Audio Link Session III

Deputy Director/Chief of Staff for the LRA, Adam Knapp provided an overview of Louisiana’s home owner assistance program and an update of the services available to the affected home owners.  Over 100,000 applicants have been identified so far, with over 80,000 applications submitted to date.  The application and award process requires several hours of counseling to ensure full understanding of the program, escrow accounts, disbursement agreements, and the associated covenants.  The MBA was instrumental is working with the servicers and LRA to establish all of these details to promote rebuilding of Louisiana while protecting the servicers.

Senior Director with the MBA, Vicki Vidal provided details regarding the LRA program.  The lender can choose to enter into a Memorandum of Understanding with the state regarding the escrow accounts to be set up for the disbursement of the grant funds.  Servicers cannot use grant proceeds to pay down the balance of the loan without the agreement of the LRA Director.

The grant programs were designed to provide benefits for uninsured damages and rebuild neighborhoods and communities.  Servicers are encouraged by Fannie Mae, Freddie Mac, HUD, and the Dept. of VA to subordinate to the LRA and MBA to help rebuild and promote home ownership in Louisiana and Mississippi.

Chairman of Mississippi Bankers Association, Charles Parrott discussed the compensation plan of the MBA grants to home owners.  The MBA assistance program does not require escrow and disbursement accounts be set up, as the LRA plan does.  The funds can be applied per home owner discretion.  Home owners are not required to pay off the balance of the loan or be used to repair the home, however they are required to pay past due mortgage payments.  The grant awards do not erase the borrower’s responsibility to pay off the balance of the loan, the servicer still retains the right to collect payment or initiate foreclosure.

Former Louisiana Commissioner of Insurance Robert Wooley shared his views on the  hurricane’s impact on the insurance industry.  Availability and affordability of insurance in Louisiana is an issue for home owners and servicers due to over $12 billion issued and many supplemental claims yet to be filed.  As insurance settlements rise, so does the cost of insurance.  The insurance commission is monitoring price gouging and will take action when necessary.  Louisiana also passed legislation to require licensing of insurance adjusters to avoid inflated or underpaid claims seen for Hurricanes Katrina and Rita as a result of uneducated adjusters.  Louisiana passed legislation to allow home owners the ability to file claims up to two years from the date of the disaster.

The industry has seen a significant number of hazard insurance settlement checks issued directly to the borrower and not listing the lender or servicer as co-payee.  The services should file a complaint with the Louisiana Department of Insurance to receive payment.

A class action lawsuit was filed on behalf of borrowers in Louisiana against the force-placed insurance carriers.  The lawsuit was filed on August 29, 2006 claiming force-placed insurance policy settlements were filed and paid to the servicers and borrowers are entitled to a portion of the proceeds.  The lawsuit was filed in the United States District court for the Eastern district of Louisiana.  The filing case number is 06-5485, Section C, Magistrate 4.

Merrill Lynch-Wilshire Manager, Asset Preservation and Disaster Relief, Jennifer Feickert shared their best practices established for all FEMA declared disasters.  The team’s responsibilities and tasks were implemented as a result of the lessons learned from Hurricanes Katrina and Rita.

Merrill Lynch-Wilshire created a mini-servicing unit within their servicing department, which leverages specialists from loss mitigation, bankruptcy, foreclosure, and customer service to function as a SWAT team in response to newly declared disasters.   The affected properties are immediately flagged in their system with a special code, which allows the calls to be routed to the specially trained team and easy identification and reporting of the borrowers affected by natural disasters.

Jennifer mentioned that the national conference calls hosted by Safeguard Properties served as an excellent resource to solicit information and best practices from other servicers.  These conference calls served as a catalyst for the brainstorming and development of the special disaster team now set up and functioning.

Jack Evans from Chase Home Finance also shared that Chase was caught off guard when Katrina hit and the disaster was a learning process for him and his staff.  Chase is now watching the weather daily and tracking the information.  Chase is looking to be more proactive and use their High Risk Field Officers to go to the affected area and obtain answers and resources.

The industry, in general, relies on the FEMA declarations and notifications, but 3 to 5 weeks may elapse from date of the disaster to the date of notification.  Safeguard monitors these notifications and recognizes that FEMA issues declarations by county, not by specific affected zip codes or neighborhoods.  Safeguard relies on its field vendors to notify us of affected and non-affected areas.

Servicers are looking for policies from HUD, Department of VA, and private investors regarding the damaged properties without available insurance proceeds.  HUD is reviewing the issue and plans to issue a mortgagee letters soon.  The Dept. of VA has not yet seen examples of properties being conveyed without adequate insurance coverage and they do not expect to release special instruction for these properties.   Servicers are anticipating an increase in the number of damaged properties without sufficient insurance proceeds to make repairs when the foreclosure moratoriums are lifted and grant money becomes available.

Field service providers had their own challenges when the hurricanes hit including shortage of field vendors, lack of lodging and materials, and the need to gather more detailed inspection data for the servicers.  These challenges resulted in internal audits of preparedness for the next disaster.  Specialized response teams are now in place to coordinate the assignments of field vendors and living accommodations.  Safeguard also programmed extended FEMA inspection questionnaires for their field vendors in effort to gather critical reporting data for its clients.

Conclusion

Opportunity for efficiency was the focus of the third annual National Property Preservation Conference.  Mortgage servicers and investors recognize the rapidly advancing technology and want to take advantage of its cost and time saving benefits.  Taking advantage of technology to speed the transmission of information and assist in quality control measures can eliminate some of the existinginefficient and costly controls in place by HUD and other investors.