Following are some additional questions submitted to HUD by FHA servicers, requesting clarification on a number of points in MLs 2002-10 and 2002-19.

We will keep you updated as clarification is received.

1:
If the M&M does not respond to an over-the-allowable request within the required 10 business day turnaround time frame I am assuming we can add the # of days in excess of the 10 days to the end of our normal 30 day conveyance time frame.

2: Unpaid Taxes
Can we claim tax disbursements if they were paid after conveyance but the taxes were for a period prior to conveyance? It seems that the objective is to pay the taxes, who and when should be irrelevant, unless duplicate payments are made.

3: Condo / HOA Fees
This section indicates we have the ability to claim penalties/interest and late fees incurred by the former mortgagor but it does not mention the attorney fees and costs we are charged by the associations for their expenses incurred trying to collect their dues from the mortgagor. I would think that these expenses fall into the category of mortgagor incurred expenses as well.

4: Mortgagee Neglect
"When a lender's failure to properly preserve and protect results in damage to the property, (e.g. roof leak results in interior damage and the property is conveyed to HUD without prior approval), HUD may either re-convey the property to the lender or seek reimbursement from the lender for the cost of repairs (24 CFR 203.379(c)). If the cost of repair is equal to or less than $2,500, HUD will reduce the claim payment by the cost to repair the property damage. "

My question with this paragraph is do we get a chance to respond to what apparently looks like an automatic claim deduction? What if we disagree with HUD's assessment that the repairs are the result of mortgagee neglect or non wear and tear? It appears that our claim will automatically be reduced for amounts = $2,500 without any type of notice or chance to dissent.

5: Demolition Notices and Reimbursements
"Lenders must forward copies of all notices pertaining to demolition orders and notices of demolition hearings to the M&M contractor immediately upon discovery and prior to conveyance and application for insurance benefits. Within 10 calendar days of receiving the notice, the M&M contractor will obtain a decision from the appropriate HUD GTR and advise the lender on appropriate and necessary action, which may include allowing the demolition to proceed or a request for postponement until after conveyance to allow the Department the option of salvaging repairable properties. The Department will not entertain appeals of demolition decisions. Since demolition is an extreme measure, the Department expects few of these notices from lenders."

6:
What if the property is demolished while we are waiting for a HUD decision? Also, do we have two choices, 1) convey damaged or 2) repair, after approval, assuming we will be reimbursed our expenses. Is it a correct assumption to say that we will not be asked to repair and absorb the cost for non mortgagee neglect issues ?

7: Approve/Disapprove Lender Requests to Exceed Maximum Allowable Preservation and Protections Limits
One question on this section : If our O/A request is denied I am assuming we convey "as is" ? In other words we are not expected to still perform the work and incur the cost just because an M&M does not approve the O/A ?

8: Debt Collection and Administrative Offsets
The very last bullet point in this section, top of page 12, states "Notice that the lender may enter into a written agreement with the Secretary to repay the debt"

Does this mean instead of incurring an offset we can choose to send in a check ? If an offset is inevitable this would simplify the accounting debacle that the current offset process currently creates.