As you may be aware, under the new M&M contract, M&Ms are authorized to complete conveyance work that they report the mortgagee has left undone and to claim reimbursement for that work from HUD (see National Property Preservation Conference 2004 HUD Sessions Summary).  When this occurs, the M&M will send a "performance letter" to the servicer--not a monetary demand letter as under the old M&M contract, but a letter advising the servicer that  performance has failed to meet HUD's guidelines.
 
Since the implementation of the new contract, several of our clients have provided us with copies of performance letters they've received, and we have researched the claims by the M&Ms that gave rise to each letter.  In the most cases, we were able to provide documentation to demonstrate that work was completed according to HUD's regulations, and our review enabled our clients to respond accordingly to the M&M.

While these performance letters do not contain demands for reimbursement, they are at least as significant as the demand letters issued under the previous contract, because HUD includes such issues in their analysis of each servicer's overall performance.  As we learned at the National Property Preservation Conference, HUD intends to establish incentive programs for servicers whose performance meets or exceeds their requirements, and claims of servicer non-compliance could be cause for HUD's rating a servicer's performance lower than it should be rated.
 
For this reason, we strongly urge all of our clients to immediately forward to us copies of any performance letters they receive.  We will research each claim and provide evidence to show that the work was, in fact, in compliance.  And of course, if we should discover any substandard work, we will immediately address the issue with the contractor.
 
Please forward all non-performance letters to our Operations Specialist Kellie Beyer (Kellie.Beyer@safeguardproperties.com).  If you have any questions or comments related to this topic, please feel free to call Kellie at 800-852-8306, extension 1362.