We have previously issued memos and alerts discussing the non-compliance letters the M&Ms are authorized to issue when they believe that a servicer has conveyed a property without complying with one or more of HUD's conveyance requirements.  At the time of those earlier memos, we asked to be provided with copies of all non-compliance letters issued to our clients, both so that we could review and respond to any claims of non-compliance at properties we serviced and so that we could track the kinds of claims made in these letters, to help us evaluate our existing procedures and ensure that all HUD requirements are being met.

For several months now we have been reviewing these non-compliance letters, and we have identified a common issue cited in letters from National Home Management Solutions, Inc. (NHMSI), concerning winterization of steam/wet heat systems.

In response to NHMSI's non-compliance letters making reference to this issue, we have modified our procedure for completing winterizations on steam/wet systems in the states covered by NHMSI: in the states of New York, New Jersey, and Florida, Safeguard will follow the radiant winterization procedure for FHA properties with steam/wet heat systems.  That is, bids will be submitted to fill the system with antifreeze and keep the system operational, as described under the Radiant Heat section of ML 2002-10, Attachment 7.

Please also note that Safeguard routinely seeks authorization during winterization season to perform a system shutdown on FHA properties with radiant systems, in an effort to prevent damage while awaiting approval of the bid to perform the full 2002-10 winterization.  In light of the procedural change described above, we will also extend this practice to include FHA properties in NHMSI states with steam/wet systems.

If you have any questions or concerns regarding these changes, please contact me at Robert.Klein@safeguardproperties.com.

Thank you.