Safeguard is considering changing its policies on removal of Health Hazard and Debris (in debris removal states) from properties in the pre-sale status and would like your input on the changes being proposed.

Currently, most of Safeguard's clients are removing health hazards and debris found in vacant properties that are in the collection or foreclosure status (pre-sale) per guidelines. Since the guidelines do not spell out what is considered a health hazard it has been left up to the contractor to make a judgment call as to what is a health hazard and needs to be removed.

As we all know, one person's treasure is another person's health hazard or debris. We have reviewed the number of law suits and mortgagor complaints we and our clients have been receiving and have determined that over fifty percent of the claims are related to the removal of health hazards from the property pre-sale that are then claimed by the
mortgagor or occupant as personals.

We would like to instruct our contractors and institute a policy that no debris or health hazard are to be removed from properties that have not yet gone to sale without prior approval from the client unless the health hazard or debris pose an immediate danger or will cause a citation to be issued. All other debris and health hazards will need to be
bid and require an approval from the client before they are removed.

Please review this idea. Your input will greatly be appreciated.

Thanks.

Following please find some of the responses we have received from our clients and the industry (that have agreed to share their opinions) regarding the removal of Health Hazards and debris from the property in the pre-sale stage of the delinquency.

We have received a total of sixty-two responses. Fifty-seven of them were in favor of not removing any H/H or debris pre-sale unless the health hazards or debris pose an immediate danger or will cause a citation to be issued. All other debris and health hazards should be bid and require an approval from the client before they are removed.  Four preferred to stay with the current procedures.

One agreed with the debris removal but not with the H/H.

Robert

I think that if the removal is in response to a citation or poses an imminent health hazard we should all be fine. I too am uncomfortable with removing things pre-sale. I am not sure how cumbersome it would be to contact local authorities when the contractor feels an imminent health hazard is at hand but I think that's an option.

I agree with your proposal. If we are not yet in title to the property and the debris or health hazard will not cause a citation to be issued, the property should remain until we obtain title to the property and are ready to place the property in cc.

I am in full agreement. Removing debris prior to sale is a risky business and should only be done under special circumstances with the client's approval.

I agree with this policy.

I don't agree with the Hazards part. On the debris yes, we should wait, and; I do believe clare is waiting to remove. On the Hazardous materials, if we do not remove them and something was to happen ( i.e. a fire), I think [the servicer] would be held responsible for not removing the hazardous items in a vacant property. Causing insurance claims to be denied.

In response to your email, I agree with you that Health Hazards and Debris removal should be done at conveyance time. At least that's what we do with our properties.

I agree with your proposal.

Just a few thoughts. The HUD regs as they stand are pretty specific with regards to health hazards and debris removal though some of the language is vague. I have pasted the general reg from All Regs below.

I believe it has become confusing due to various interpretations of the regs with respect to health hazards. An example would be tires and paint. HUD previously did not include these as health/safety hazards. As HUD went to using outside servicers (Golden Feather, CitySide, Frist Preston, some of those servicers started to expand the definition of health hazards and subsequently started to deem paint and tires under this heading. I have yet to find a Mortgage Letter or any other documentation that expands the definition of health hazardous items as described in Mortgagee Letter 97-31. I have seen memos from HUD to various mortgagees responding to specific questions, but no official notifications. Though a response to a specfic mortgagee may be considered as approval, the question of whether this is to be considered HUD's official policy still remains unanswered. Any items not specifically mentioned in the mortgagee letter, are still referred to HUD for disposition and any interpretations of vague language should be left to the HUD agent.

I agree!!!! For safety's sake, all interpretations should be left to the investor. I guess my concern revolved around the fact that we are identifying things like paint, tires, pools, etc as health hazards and by the definition in the regs, they don't qualify as health hazards. It's the final statement, "anything that poses an immediate threat to health or safety" that creates the confusion. If there is any doubt that some characteristic meets that final criteria, then those issues should be addressed by HUD. I believe that statement has been interpreted liberally when a much more conservative approach should be taken.

Robert- Would it be possible that in situations where debris/personals are throughout the yard and preventing a grass cut, the contractor supply a bid to move the items out of the way so that the grass can be maintained? If we are not removing them pre-sale, we cannot maintain the yards timely and then the cost to cut continues to grow.

Hi. I like your proposal. Just this week I had a discussion with a borrower over 12 pails of paint removed from the property. Paint is considered hazardous simply because land fills won't take it with routine garbage. Homeowners believe they can use old paint, especially in AR where there many homes are needed to be painted.

I agree. It's too much of a fine line with debris/personals/hazards. We just need to make sure that the contractors are paying attention to the pre-sale/post-sale factor. We don't need to be paying trip charge fees if the debris should have actually been removed. Thanks Robert.