| MCB/M&M Contractor Preservation Checklist |
| Friday, 16 March 2001 | |
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Please see the following revised letter released from the HUD Marketing and Management Contractor, MCB, advising the servicers of the procedures and documentation requirements that are to be followed to protect and preserve FHA properties from the discovery of vacancy until their conveyance to HUD. Michaelson, Conner & Boul, Inc. Preservation & Protection Checklist This checklist is provided to you as a courtesy
to assist you in understanding the During many Mortgagee Neglect Determinations and Assessment Reviews, it was noted the mortgagees.mortgagee agents, in these cases, were repeating several of the same errors. MCB had implemented a program to assist
Mortgagees with the correct procedures Please review with your Servicing Companies, and P & P Departments and clarify all properties MUST be thoroughly inspected at each, 25-35 day inspection. Inspection documentation, with the MINIMUM required information; as stated in HUD handbook "Administration of Insured Home Mortgages" Number 4330.1 REV-5, pages 9-26/27. (Contact Government Printing 1-800-767-7468 to order copy) IS THERE ANY APPARENT DAMAGE? ARE THERE ANY APPARENT ROOF LEAKS? DOES THE HOUSE/GARAGE CONTAIN PERSONAL PROPERTY? Personal property MUST be REMOVED AND ANY DISPUTES RESOLVED REGARDING THIS ISSUE, PRIOR TO CONVEYANCE TO HUD, as stated, 4330.1 REV-5, 9-11 (24 CFR 203.381) OCCUPANCY "On the day the deed is filed for record, the mortgagee MUST CERTIFY (Certification occurs when 27011A Claim form is filed!) that the property is VACANT AND FREE OF PERSONAL PROPERTY,?UNLESS HUD has agreed to accept title with the property occupied. THIS APPLIES WHETHER TITLE IS ACQUIRED BY FORECLOSURE OR BY DEED-IN-LIEU OF FORECLOSURE." (pg. 9-36). Submit bids for the removal/disposal of personal property per legal local code and laws, for the area where the property is located. If you are unsure what distinguishes personal property, see 97-31, pg. 7 and seek local counsel for guidance. Demand letter will be sent for the legal removal/disposal of personal property left at conveyance. IS THE PROPERTY SECURE? We would appreciate your assistance and request properties are re-keyed to the #67767 and A389, to facilitate our free Preconveyance Inspection program. Please see PRECONVEYANCE INSPECTIONS. Demand letter will be sent if the property is found unsecured at our Initial Inspection, after conveyance to HUD. Securing and subsequent damages caused by unauthorized entry will be assessed to the FHA Insured Claim. IS THE HOUSE WINTERIZED? **PARTIAL WINTERIZATION is an improper and inadequate winterization process. The 27011 C Claim, Reimbursement for winterization will be denied, and a demand letter for Mortgagee Neglect Assessment will be issued to the mortgagee and will include the winterization fee AND all freeze damages/property damages, caused by Mortgagee's failure in due diligence to properly winterize the property. ARE THERE ANY REPAIRS NECESSARY TO ADEQUATELY PRESERVE AND
PROTECT THE PROPERTY? MORTGAGEE NEGLECT OCCURS WHEN A MORTGAGEE FAILS IN THE DUE DILIGENCE OF THE PRESERVATION AND PROTECTION OF THE PROPERTY. Property damages which are caused by ongoing, correctable, issues and conditions, and are discovered by the Mortgagee/mortgagee agent, and these known conditions and issues are ALLOWED TO CONTINUE UNABATED, TO DAMAGE AND DETERIORATE THE PROPERTY, IS DETERMINED AS MORTGAGEE NEGLECT! Conditions which are found at the property and
are violations of the city code and or state law,as it pertains to
SAFETY AND HEALTH ISSUES, MUST be corrected, upon discovery and
prior to conveyance to HUD, including, but not limited to: DOES THE PROPERTY HAVE A BASEMENT AND
WORKING SUMP PUMP? Determination of Mortgagee Neglect has been
upheld and properties rejected by HUD and or a demand letter will
be sent for all damages caused by mortgagee neglect. The
properties, in all cases, were allowed to cumulate water, and the
water soaked through to the interior ceilings, the entire property
structure sustained water ARE THE WEEDS, GRASS CUT TRIMMED PROPERLY,
AND ARE THE SHRUBS TRIMMED? IS SEASONAL SNOW REMOVED,
PROMPTLY? IDENTITY OF THE INSPECTOR? DETERMINATION OF MORTGAGEE NEGLECT HAS BEEN UPHELD, because the inspection did not have the inspector's identity, plus other inspections were submitted with several blank columns and sections or totally blank with dates only. The determinations finding stated, "the Mortgagee is therefore, not in a position to assure HUD that adequate preservation and protection was performed". Please review the Handbook pertaining to the MINIMUM inspection information required per HUD guidelines, and forward to your Servicing Companies, Contractor, Sub-contractors, etc. PHOTOS WILL BE REQUIRED COLOR photos MUST be taken before and after the work completion of ALL Over Allowable (HUD approved work.) This requirement for PHOTOGRAPHIC PROOF will be necessary and required for the submission and review of the 27011 C Claim. The original part C MUST have local HUD Office approvals attached. PHOTOS ARE NECESSARY FOR THE REVIEW OF THE SUPPORTED QUALITY, COMPLETION AND ADEQUACY OF APPROVED WORK, plus Preservation and Protection actions or inaction by the mortgagee/mortgagee agent and the conveyance condition of the property, as documented regarding the MCB Initial Inspection Report and Property Appraisal Review, after conveyance to HUD. FREE PRE-CONVEYANCE INSPECTIONS Michaelson, Connor & Boul has initiated a program to assist the MORTGAGEES. In providing this service, at our expense, we are assured the property is maintained and conveyed in the correct conveyance condition. We have experienced several instances, whereby the property was in need of corrective action, and the mortgagee's agent failed in the due diligence of Preserving and Protecting the property. Several mortgagee neglect issues had never been relayed to the mortgagee, who conveyed the property and then became subject to a Mortgagee Neglect review and assessment to the FHA Insured Claim OR claim rejection and Reconveyance action. Repair due to Mortgagee Neglect, are completed at Mortgagee's expense OR an Assessment demand letter is filed against the Claim, for remittance to HUD. This program has been very effective in determining the property is in conveyance condition. MCB PROTECTS HUD's ASSETS IN ASSURING THE PRESERVATION & PROTECTION COMPLIANCE AND ASSISTS THE MORTGAGEES TO PROTECT THEIR ASSETS, PER HUD GUIDELINES, PRIOR TO CONVEYANCE TO HUD. MORTGAGEES ARE ENCOURAGES TO CALL OR SEND AN E-MAIL REQUEST FOR THIS FREE SERVICE. IN REVIEWING THIS INFORMATION, I WOULD LIKE TO STRESS TO ALL MORTGAGEES AND MORTGAGEE AGENTS TO READ HUD HANDBOOKS, WHICH PERTAIN TO THE ADMINISTRATION OF INSURED CLAIMS. REMEMBER MORTGAGEE LETTER 97-31, SECTION 1, PARAGRAPH B (PG. 3). THIS PARAGRAPH STATES IN PART THAT?" PROPERTIES WHICH BECOMES DAMAGED BECAUSE OF MORTGAGEE NEGLECT ALSO REQUIRE THE MORTGAGEE TO REPAIR THE DAMAGE? WHERE THE DECISION? IS TO REQUIRE THE MORTGAGEE TO REPAIR, HUD WILL NOT REIMBURSE THE MORTGAGEE FOR THE COST IF THESE REPAIRS." EACH PROPERTY HAS A MAX. ALLOWABLE EXPENSE ALLOCATED FOR THE PRESERVATION AND PROTECTION OF THE PROPERTY. MORTGAGEES ARE TO SUBMIT FOR HUD APPROVAL, ONCE THIS MAXIMUM HAS BEEN EXPENDED, WITHIN HUD GUIDELINES. Mortgagees please contact MCB, directly by
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