1	National P&P Conference Follow Up to HUD Session Panelists: Laurie Maggiano, HUD Leslie Bromer, HUD Tom Rose, HUD Santa Ana HOC Robert Klein, CEO Safeguard Properties Marc Hinkle, PHH Mortgage Jack Evans, Chase Home Finance Barb Komisarof, Bank of America Sherilee Massier, Wells Fargo Caroline Reaves, MCS
2	Total P&P Costs to Date Is work completed per bid approval included in total P&P costs to date? Yes, when the cost of work to be completed exceeds the scheduled amount the lender must request an over-allowable. All requests to exceed cost limits should advise/include amounts spent to-date on the request. The M&M can then determine if approval of those additional costs are feasible. When debris is removed from a 1 unit dwelling in excess of 12 cubic yards then that amount is counted against the total allowable for debris removal and any subsequent debris removal services will require an over-allowable.
3	Debris Removal If a servicer removes 10 cans of paint per bid approval, does that negate the 12 cyd allowable to remove debris and health hazards on subsequent visits to the property? Yes
4	Debris Removal If a servicer removes 14 cyds of exterior debris per bid approval, does that negate the 12 cyd allowable to remove debris and health hazards on subsequent visits to the property? Yes
5	Debris Removal Servicers would like clear instruction as to when debris removal should be claimed per CYD or per man hours following an Eviction. Any debris removal required for an eviction will be reimbursed as man-hours (whether removing debris from the interior or exterior/curb-side) even if the work is not performed on the date of the actual eviction. No bids are required.
6	2ND Bids M&M Contractors are requiring 2nd bids for exterior debris or health hazard items that are bid less than $200, and cannot be removed by the CYD allowable. Mortgagees will not be asked to obtain a second bid for an over-allowable expense if the cost of the item or service is $250.00 or less.
7	Demand Letters - Winterization Servicers are receiving large demand letters in the amount of $1000 for “possible freeze damages” because the plumbing lines would not hold pressure at the time of the M&M’s initial inspection. The only evidence provided by the M&M is a quote to look for broken pipes behind the walls. Servicers are not required to perform pressure tests on dry heating systems. If a small amount of water is found in the system, then the servicers should only receive a demand letter for the amount of the winterization claimed. The $1000 demands are excessive and fail to provide proof of actual damages.
8	Demand Letters – Winterization HUD Answer: ML 2007-03 included a reference in Attachment 7, describing winterization requirements for plumbing systems that indicated that all water must be removed from systems. That language is being revised as follows: “Unless otherwise specified by local variation, the winterization process must include cleaning toilets and draining of all plumbing and heating systems in a manner sufficient to prevent freeze and/or other damage.” Demand letters related to winterization will not be issued unless actual damage has occurred or the M&M is required to re-winterize because the property is not properly winterized. When issuance of a demand is appropriate, the M&M may only demand costs actually incurred to correct the problem.
9	Demand Letters - Securing Servicers are receiving demand letters requesting reimbursement of all securing fees, when only one door or opening was not secured. For example, 2 locks and 2 padlocks are installed and claimed on the Part B totaling, $160. Property conveys with all 4 locks intact but a crawl space was left unsecure. Is a demand for the $160 justified, or should it be considered an issue of non-compliance?
10	Demand Letters - Securing HUD Answer: HUD has clearly defined its minimum securing requirements in Attachment 3, item 1 of ML 2007-03. Failure to complete those minimum securing requirements is grounds for denial of securing fees even if some of the tasks were performed.
11	Demand Letters – Appeals Demand Letter Appeal Process – ML 2007-03 changed the appeal process for demand letters, now requiring servicers to appeal to the REO Director within 15 days of the date the letter was issued. 80-85% of demand letters are rescinded by the M&M management when appealed. When the demand is not rescinded and the servicer forwards the appeal to the HOC, it is automatically denied based on not being submitted within 15 days. Is it HUD’s intention for servicers to send all appeals to the REO Director? With 80-85% rescission rate, this would not be an efficient process for the REO Director.
12	Demand Letters - Appeals HUD Answer: If, following conveyance an M&M contractor finds potential reconveyance or demand issues, they send an email notifying the servicer of the issue and requesting clarification. It is our understanding that the vast majority of issues are resolved at this stage. However, if the issue is not resolved, the M&M must obtain permission from the GTR to issue a formal Notice of Intent to Reconvey or Notice of Intent to Collect by Administrative Offset. It is receipt of either of these documents that may be sent via email and followed by regular mail that triggers the 15 day appeal opportunity.
13	Non-Compliance Servicers are still receiving denied bids and extension request, and reconveyances for minor infractions; such as one missing inspection report, a wrong date entered on a form, and an inspection report missing one piece of information. These instances should be elevated immediately to the GTR and or REO Director with jurisdiction.
14	Over Allowable Requests Servicers are receiving denied bid requests because the first and second bids are either 1) too close in price, stating “not independent and competitive”; or 2) too far apart in price, stating “not the same scope”. How are servicers to proceed?
15	Over Allowable Requests HUD Answer: Upon receipt of two competitive and independent bids for the same scope of work, M&M contractors may not deny bid approval or request a third bid, solely on the basis that the first and second bids are too close in price. Mortgagees should not submit bids that are far apart in price. When bids are far apart mortgagees must reconcile them prior to submission. If multiple bids are far apart in value, the M&M may request a revised bid, a third bid or provide a not-to-exceed amount that would be acceptable for completion of the work. As a reminder, when a second bid is required, mortgagees must obtain an independent and competitive bid and submit both bids with the over-allowable request. Field service companies or contractors may not submit second bids directly to the M&M contractor.
16	Over Allowable Requests Servicers are receiving 2nd bid requests for exterminations and both bids are denied stating, “complete for the allowable.” Licensed exterminators will not complete for the allowable for $50 or $110. Is a certified exterminator required for minor (possible) roach infestation that can be cured with over the counter products? Insects or vermin that can safely be removed with over-the-counter products do not require professional extermination.
17	Over Allowable Requests Are approved and signed over allowable expenses claimable if the OA request contains an inaccuracy, such as a mis-typed date? M&M contractors should not approve over-allowable requests if they are aware that some of the information is incorrect. However, if an over-allowable request has been approved and the work was performed properly, an inaccuracy in the request form is not justification for denial of a claim reimbursement.
18	Winterization Some HOCs are upholding large dollar demand letters and requiring servicers to maintain the heat at properties that do not share common utilities. This is contradictory to the instructions in ML 2007-03. Servicers are not required and should not be requested to repair heating systems unless the property is in the possession of the mortgagee during a period when there is a requirement for the heat to remain on.
19	Mold Remediation Repairing the source of moisture does not prevent the mold from spreading. This is an issue pre-sale due to the length of the foreclosure process in several states. Has HUD given consideration to approving mold remediation and cleaning beyond stopping the moisture or source of the mold?
20	Mold Remediation HUD Answer: A mortgagee must take reasonable action to remediate the cause of the mold (i.e., patch the roof) and complete any other required preservation and protection actions related to minimizing further mold damage (i.e. remove soaked carpeting) prior to conveyance of a property. In most cases this will require an over-allowable request. HUD will review the over-allowable request and make a determination if there is sufficient cost benefit to proceed with the work. These decisions will generally be made by the GTR. The EPA web-site’s guide to mold is specific in that “mold spores will not grow if moisture is not present.” See www.epa.gov/iaq/molds/moldbasics.html
21	City Permits for Repairs The pulling of city permits typically results in city violations that must be cured prior to conveyance. These violations are usually minor, resulting from wear and tear. Is pulling city permits a requirement for completing repairs at a property? If so, when is it appropriate?
22	City Permits for Repairs HUD Answer: Each lender and/or field service provider should be familiar with the state and/or jurisdictional requirements related to city ordinances or local law. If and when a building permit is required by local law prior to performing preservation and protection services, then the permit must be obtained. If the code violations found are health & safety related and/or a minor repair, complete the work. If it is a major repair contact the M&M contractor. The M&M contractor should intercede with the community on municipal liens (i.e., on properties such as those being placed in the ACA program) or permit the repairs.