HUD has granted the requested extension for the implementation of ML 2007-03.
HUD ML 2007-03 Extension

Call Summary
The purpose of the call was to obtain clarification of the new Preservation and Protection guidelines released in ML 2007-03.  Representatives with HUD, including Senior Housing Specialist Leslie Bromer and Atlanta HOC Debbie Bonelli provided some initial clarification and answers to questions from the servicers and M&M Contractors.
 
Inspection without Monetary Default
HUD included the requirement for these inspections as a result of the numerous rebuttals from servicers stating the damages were a result of mortgagor neglect prior to possession.  HUD is requiring these inspections be completed and will reimburse when unsolicited information is received by the servicer that indicates the property may be vacant.  Servicers should take action to inspect properties that may be vacant when notified of disconnected utilities, neighbor complaints, or posted city citations/violations.  While the inspections are reimbursable, there is no claim process for servicers if the loan does not go into foreclosure. 
 
Damage Due to Mold
Leslie stated that the guidelines really do not offer a change to HUD's policy on Mold.  However, it is the servicer's responsibility to stop the mold growth and source of water/moisture.  While some HOC's are approving the installation of dehumidifiers, others are not and it is not standard operating procedure to approve bids to install dehumidifiers.  Leslie added that requests for these should be submitted if the property is subject to a long foreclosure period.
 
Claim Submission and Documentation
Servicers cannot submit claim forms B, C, D, and E on the date the deed is filed.  Leslie will have this corrected.
 
Properties Conveyed with Non-Surchargeable Damage
Servicers are required to include a description of the damage in the mortgagee comments section of the Part A claim form.  The documentation should include evidence of FTV, condition report at the time of FTV, and a chronology of inspection reports.  Servicers already provide this information with over allowable requests and it is a duplication of efforts to provide on the Part A form.  Debbie Bonelli advised that this information must be provided upon request to the M&M Contractor.  Leslie added that the mortgagee comments must be clearly documented with the non-surchargeable damages.
 
Servicers are able to convey properties with a tarp on the roof, if the roof damage is non-surchargeable.  Servicers are to notify the M&M in advance, however no method or procedure is in place for this notification.  Both servicers and M&M Contractors requested clarification on how this process is to work.
 
Initial Vacancy Property Inspection
Leslie stated the date of vacancy discovery starts the 30 day time requirement to convey; not the date of securing.  Servicers do not actually take possession until the property is secured, thus the time clock to convey should begin after possession.
 
Servicers requested clarification regarding the reimbursable inspection fee if a vacant and secured property is inspected and the interior cannot be inspected (such as the property is found re-occupied).  HUD will review this scenario.
 
Servicers are concerned that M&M Contractors will consider all damages mortgagee neglect and surchargeable if the property is not secured within 5 days of FTV discovery.  Leslie stated that HUD will discuss how to look at compliance with this requirement, but if the property is in foreclosure, there should not be a delay in securing.  Leslie added that if the property is secured on the 6th or 7th day, damages will not automatically be considered mortgagee neglect, however, the servicer must do their due diligence to ensure timely foreclosure actions and completion and accuracy of monthly inspections.
 
Photos
Photos are required to document monthly inspections.
 
Pre-Conveyance Inspections
Pre-conveyance inspections are not mandatory but are encouraged.  Servicers should contact the respective GTR if M&M Contractors are not willing to cooperate and complete these inspections.
 
HUD will consider allowing for a small extension of time to allow for servicers to organize and complete these inspections.
 
Over Allowable Requests
Servicers may submit requests electronically with pre-approval from the M&M Contractor.  Servicers may contact the respective GTR if M&M Contractors are not willing to work with servicers to submit over allowable requests electronically.  Approved over allowable requests still need to be faxed to the servicer with signature.
 
Winterizations
The winterization process appears to be more cumbersome, yet allowables have decreased in several areas.  Additionally, the utilities must be on to perform the system check and winterization.  These issues will result in every winterization being bid, which will result in more over allowable requests and possible damages and delays in the conveyance process.  Leslie will review this with HUD.
 
Securing
Leslie clarified that the "one unit" securing allowable is to be used as the reimbursable amount for one lock change, and the servicer can secure the property without prior approval up to the MSAF.  Local ordinance does supersede guidelines, and servicers should refer to local ordinances before boarding properties. 
 
The guidelines do not state which key codes are required for securing, which will require M&M Contractors to coordinate inspections with their contractors.  Candace Fraley with Hooks van Holm asked if they will be required to remove the knob locks and deadbolts and install a padlock in Philadelphia.  Debbie Bonelli and Leslie will review this issue.
 
Regional variation for Chicago requires the installation of cloth screening, which may not meet city code requirements for securing.  Leslie advised that HUD will review this requirement.
 
Regional variation for Long Beach requires the installation of security screens, which is costly and requires each screen to be custom cut for each opening.  This will cause delays in securing and in the conveyance process.  HUD will review this requirement.
 
The cost of reglazing is not pre-approved, therefore over allowable approval is required.  Thus, it does not count towards the maximum securing allowable. 
 
Pool Securing
Leslie will review the discrepancies in the pool securing descriptions on pages 20 and 21.  One diagram provides added support with crossbars, while the other diagram only requires 2x4 installed in one direction but requires the installation of a tarp to prevent the pool from refilling.
 
Servicers requested direction for how to secure above ground pools.  HUD will review.
 
The reimbursable amount of $2.05 to secure in-ground pools should be calculated based on the square footage of the framing built, not the square footage of the pool.  The smallest in-ground pool is typically 16x32, which totals the $1050 allowable, which will result in over allowable requests for pool securing.  HUD will take this under advisement.
 
Maximum Allowable Cost Per Property
Leslie stated that the total aggregate of preservation expenses does not include the costs spent per over allowable approval from HUD.  Only work completed for the preservation allowables, and by definition in the letter, counts towards total costs per property.
 
Reconveyance
M&M Contractors are to notify servicers within 30 days of conveyance and have 10 days to provide the M&M with additional documentation.  Servicers requested clarification on when the appeal process and 15 days begins - the date notified of conveyance or the date the servicer is notified of a pending reconveyance?
 
The GTR is required to issue decision on reconveyance within 60 days of conveyance, with the exception of title issues.  If a property conveys without marketable title, the GTR will issue decision after title deficiencies are discovered.
 
Utility Service Transfers
Servicers will not be able to transfer utilities into HUD's name, but can send notice to the utility company and to the M&M Contractor.  Utility companies are not accepting notice from servicers and do not transfer the utilities upon notice from the M&M contractors, resulting in utility bills sent to the servicer the following months.   One servicer stated they are currently sending notice to the utility company to terminate services within 7 days.  Leslie stated that this is not an issue that can be resolved in a mortgagee letter, and suggested it be escalated to the P&P Working Group. 
 
2nd Bids
Servicers are concerned that the requirement for second bids for the installation of sump pumps and pumping water from basements will lead to additional damages and delay conveyance.  Sump pumps are standard items and the price does not fluctuate enough to justify a second bid.  Leslie will take the issue under consideration.
 
It is the servicer's responsibility to determine if local ordinance requires the installation of an RPZ valve.  Traditionally, field service providers supply this information to their clients.
 
Debris Removal Following Evictions
Page 36 of the guidelines states "removal of curbside debris following an eviction will be reimbursed as man-hours.  No more than 4 man-hours at $20 per man-hour will be reimbursed for the removal..."  HUD's intention was 4 man-hours, per 4 men, thus a maximum allowable of $320. 
 
This change to man-hours versus debris removal by cubic yard is a change, but does not address the issues surrounding evictions and the dumpster requirement in Detroit.
 
Large Appliance Removal
There are discrepancies in the allowables for appliance removal, such as North Carolina has an allowable of $130, whereas South Carolina's allowable is only $30.  If this is not a typo, over allowable requests will be submitted to remove appliances in several states.
 
Refrigerator doors are only to be removed if jurisdictional requirement.  In general, refrigerator doors should not be removed if the refrigerator is in good working condition.
 
Over Allowable and Extension Requests
Both of these sections state that M&M Contractors are required to respond to requests within 5 business days.  Servicers would like clarification as to whether or not this applies to MCB as well.  HUD will review and advise.
 
Convey Condition
Hooks van Holm requested clarification as to the definition of convey condition, because the mortgagee letter does not address tree limbs touching the roof or exposed wires, but they often receive properties in inventory with these items.  HUD will review, however Debbie Bonelli stated that servicers are not under the same contract as M&M Contractors and should only be addressing health and safety issues, or items causing damage. 
 
Extension Request
Participants on the call, including servicers and M&M Contractors, requested an extension for implementation of the new preservation and protection guidelines.  Additional time is needed to coordinate communication between parties, complete necessary system programming, and to obtain clarification from HUD on several items.  Leslie will take the suggestion back to HUD and will issue clarification within the next week.