FHA Insured Loans
Generally, servicers are not permitted to convey a property back to HUD if the property has sustained damage due to fire, flood, earthquake, hurricane, tornado, or mortgagee neglect (for mortgages insured on or after January 1, 1977) without securing prior approval from HUD. If permission is not granted to convey the property with damages, then the mortgagee is responsible for repairing the property, with or without insurance proceeds.

In many instances, for the sake of expediency and to eliminate or minimize the costs of debenture interest, HUD will allow the conveyance of a property with damages and deduct the amount of insurance proceeds, if any, or the estimate to repair, from the mortgagee's insurance benefit. While this method may be expedient, it poses substantial costs to both mortgage servicers and HUD, because it prevents either party from obtaining recoverable depreciation from the insurance carrier and other benefits of obtaining insurance funds and repairing properties. In most cases, it is not cost-effective to convey properties in damaged condition.

Safeguard's Role
Because of its presence in several distinct niches within the mortgage field services industry, Safeguard is uniquely positioned to effectively assist its clients in the hazard claims administration process and obtain maximum recovery, by expediently repairing properties for the amount of funds received, without corporate contribution from the servicer, so as to minimize the costs associated with conveyance delays.

Safeguard's Hazard Insurance Claims Recovery Department (HICRD) is staffed with experienced insurance industry specialists, and the department uses the services of over 300 specialty repair contractors to perform property repairs and more than 3,000 qualified inspectors to verify repair progress and completion. Not only does Safeguard have the HICRD staffed with insurance experts and professionals to administer and process claims and to consult on improper claim denials, but Safeguard also has the benefit of many years' experience providing mortgage field services. As a result, Safeguard has a comprehensive understanding of the various Investor/Insurer preservation and protection guidelines to which its clients are subject. The HICRD has also developed a discrete unit within the department focused on getting properties repaired for funds obtained and without corporate contribution whenever possible.

All of these areas work together to assist Safeguard's clients in obtaining maximum recovery for damaged properties, mitigating against claims of mortgagee neglect, documenting that obligations for recovery under an insurance contract have been met, and, when a property is being repaired, completing the repairs as timely as possible so as to allow the prompt sale or conveyance of the property.

Claim Denials
Safeguard is well aware that many insurance carriers will routinely deny damaged property claims filed by mortgage servicers. Many of these denials are not proper or consistent with the insurance contract. It is estimated that, in the aggregate, millions of dollars annually go unrecovered due to improper or invalid grounds for claim denials that are not known to or pursued by mortgage servicers. With its knowledge and experience in both the mortgage field services and insurance industries, Safeguard can consult with its clients and other insurance industry professionals to assist its clients in obtaining reversals of improper claim denials.