Transcript Highlights of New HUD ML - Universal Mortgage Field Services

HUD Mortgagee Letter &
Conveyance Condition
Introduction
Objectives
In this module you will learn about:
• Conveyance Condition
• Securing
• Debris
• Roof
• Winterization
• Documentation
Effective July 13, 2010, HUD Mortgagee Letter (2010-18 HUD ML) outlining cost
allowances, time frames, and procedures for preserving and securing properties as well as
placing properties into conveyance condition is in effect for all FHA Insured Properties.
New Guideline Expectations
• Documents are not submitted electronically through HUD’s P260 electronic
information system
• All bids submitted will be checked for accuracy with third party cost
estimators
Change to Conveyance Condition Standards
• Remove all interior debris and the property left in broom swept condition
• Properties will no longer convey with a tarp on the roof
Additional Securing Expectations
• Both a deadbolt and knoblock will now need to be changed per access
*Please visit “Forms & Docs” in PPW for a copy of the HUD Mortgagee Letter
A property must be undamaged by fire, flood, earthquake, hurricane, tornado, boiler
explosion, or mortgagee neglect and be left in a safe and sanitary condition. A
property must be secured, the lawn maintained, winterized (as applicable), and must
not contain interior or exterior debris or personal property. The interior must be in
broom-swept condition, and vehicles must be removed. If a property is damaged due
to mold resulting from the mortgagee’s failure to protect and preserve, the mortgagee
must remediate the cause of the mold and complete and other required P&P actions
to minimize further mold and/or water damage prior to conveyance of the property.
Properties will no longer convey with a tarp present. All repairs must be made preconveyance.
What this means:
Properties are not required to be left in broom-swept condition and interior debris
including personal property must be removed. A property cannot be conveyed
with damages with directly impact the safety or sanitation of the property.
Properties will no longer convey with tarpaulin or boarding, unless required by
local jurisdiction.
It is extremely important to have all conveyance condition work orders turned in on
time. Our Clients have very specific time frames given to them by HUD to complete
work. If the work is not completed on time, it may not be reimbursed by HUD.
Therefore, if Vendors do not turn their ICC work orders in correctly and on time,
there may be possible chargebacks. Here are some possible conveyance related
circumstances that may result in chargebacks:
• Losses incurred by Universal or the Clients due to delayed conveyance
• Incorrect determination of conveyance condition
• Failure to thoroughly document the property condition at each visit
• Insufficient completion photos documenting all work performed
• Failure to submit bids for all items preventing conveyance condition
• Excessive bidding on items that do not have a standard allowable
• Failure to supply new before photos on bid approved work
• Issues resulting in property re-conveyance
• Failure to report damages
Inspections
All aspects of a property need to be
inspected to determine if any issue exists
which would make the property unsafe,
unsanitary, or damaged. This includes the
interior, exterior, roof, and perimeter of
lot. Provide wide angled photos of each
interior room, all exterior walls including
crawl space and roof, electrical meters,
plumbing, and mobile home foundations.
If the property condition is not adequately
documented by the photos, conveyance
condition issues that are found may be
charged back to cover the cost of repairs
needed.
Securing Guidelines
Lock Change:
Both knoblocks and existing deadbolts are to be changed when securing an FHA property.
• Initial Secure (Pre-Sale) – One entry door, as specified on work order
• Final Secure (Post-Sale) – All entry ways that provide immediate access to the
living area, attached garage, or basement.
- Double lock sliding doors
- Secure overhead garage doors only if no other locking mechanism
exists. Place padlock in the track.
Re-glazing Windows:
HUD prefers re-glazing in lieu of boarding windows unless local law requires boarding or if
the property is situated in a high crime area and is prone to vandalism.
• Provide bids to re-glaze all broken windows
• Boarding is not to be completed unless written approval is received or work
order instructions state to board and bid after the fact
• If bidding to board a window, include a bid to re-glaze too
Roof Repair
Properties are no longer considered in conveyance
condition if there is a tarp on the roof, regardless if
the tarp was pre-existing. Active leaks need to be
repaired or patched prior to conveyance.
• Repair/patch roof within the HUD
allowable
• If the repair exceeds the allowable,
submit a bid to repair/patch the
damaged area
When an active leak is found, repair the roof for the HUD allowable. For Clients that allow bid
after the fact (BATF), tarp temporarily only if the repair cannot be completed for the allowable
and BATF. In additional submit a bid to repair the damaged area. BATF and invoices submitted
for tarping that exceed the HUD allowable will not be accepted. For Clients who do not allow
BATF, complete or bid tarping or repair for the Client allowable.
Debris
Do not remove any debris, hazards, or personal property without prior written
approval. Submit bids in cubic yards to remove interior and exterior debris,
hazards, and personal property.
Bids need to be separated by type and location: Interior debris, Interior hazards,
Exterior debris, Exterior hazards, and Personal Property.
Broom Swept Condition
In order for a property to be ICC, no debris may be present and the property must be
left in broom swept condition. Ensure all rooms, cabinets, closets, crawl spaces,
attics, basements, sheds, etc are included when completing and bidding the
removal of debris.
On FHA properties, floors, bathtubs, sinks, showers, and counters cannot be dirty
which includes being covered in dirt, cobwebs, insect remains, or any other debris.
The exterior and interior of appliances are to be free of dist, dirt, hazardous
materials or condition. Such appliances include but are not limited to refrigerators,
dishwashers, ovens, stoves, laundry appliances, and interior HVAC units.
The cost to put the property in broom swept condition is included in the cost per
cubic yard of the interior debris allowable. A separate fee may not be charged. If a
property is not conveyed in broom swept condition, the debris removal may be
subject to a chargeback.
Pools
Secure pools with a cover that prevent entry, either deliberate or accidental. Fences
need to be secured to restrict access if applicable.
• Secure in-ground pools including hot tubs or
spas that share the same filtering system
• Bid to board pools. If local code does not
require pools to be boarded, bids to secure a
pool using a safety cover are acceptable
• Bid monthly pool service if required by law
• Bid to remove above-ground pools if they are
in poor condition, non-functional, and can not
be covered. Also include a bid to fill in the
depression.
Seasonal Services
Grass Cuts:
Grass cut season is April 1 – October 31 for all states except
Alaska (June 1 – September 30). An initial grass cut is
permitted at the beginning of each grass cut season.
Initials may be completed when needed during any month
of the year in the following states/territories: AL, AZ, CA,
FL, GA, GU, HI, LA, MI, NM, NV, PR, SC, TX, and VI.
Winterization:
Properties are to be winterized between October 1st and
March 31st, unless climatic conditions require earlier and/or
extended winterization treatment periods.
Follow HUD Regulations
Demolition Guidelines:
In such cases where a local jurisdiction has determined a property to be
uninhabitable and mandates demolition of a property, obtain approval from
Universal. Report violation or demolition notice to Universal.
Mold Guidelines:
If a property is damaged due to mold resulting from the mortgagee’s failure to
protect and preserve, the mortgagee needs to remediate the cause of the mold and
complete and other required P&P actions to minimize further mold and/or water
damage prior to conveyance of the property.
• Report all mold and upload a damage report
• Provide bids to remediate source of mold
• Provide bid to clean and treat contaminated materials
Follow HUD Regulations
Utilities:
• Utilities are to be inactive unless needed to protect the property (sump pump,
dehumidifier, etc.)
• At condominiums keep water services and utilities on if the systems are shared
with other units
• Where there is an existing sump pump, check to make sure it is operational. If it
is, leave the electricity active to prevent flooding.
• If the water supply source is a public system, contact the utility company to turn
off the water at the curb. Do not cut water lines or remove water meters.
• If the water supply is a private well, turn of f the well at the breaker panel and
tape off the breaker, disconnect the water supply line between the property and
pressure tank, and install a hose bib on the pressure tank side of the breaker.
Determining ICC Status
Property Status (Including but not limited to the following):
Work has been performed according to HUD guidelines:
-Property is secure from unauthorized entry, all locks have been changed
-Property is fee of boarding and damaged windows
-Grass height does not exceed two inches
-No violations posted
-No damage present from vandalism
-Winterization complete
-All debris (interior, exterior, personals, hazards, etc) have been removed
-Property is in broom swept condition
-The pool/spa has been pumped, treated, or covered to HUD guidelines
-No active roof leaks. No tarps present.
-No hazardous conditions present
-No damages to the exterior or interior of the property
ICC Status
YES
Determining ICC Status
Property Status (Including but not limited to the following):
Work has NOT been performed according to HUD guidelines:
-Property unsecure and does not prevent unauthorized entry to the interior
-Grass in excess of two inches
-Violations/notices posted
-Hazardous conditions present
-Damages present from vandalism
-Interior and exterior debris, and hazardous materials present
-Personal property is present and a bid has not been submitted to remove
or store personal property
-Tarp present or damages present on roof
-Boarding present in non approved boarding areas
-Interior or exterior damage is present
ICC Status
NO
Once conveyance condition status has
been determined, report it in PPW.
Conveyance Condition reporting is one of
the most critical issues involved in
completing a work order. Failure to
correctly determine, report, and bid
Conveyance Condition status and issues
are the leading causes of follow-up work
orders, late work, and chargebacks.
Notate ICC Status in the
“Comments/Notes” box
on the “Bid/Completion”
page. Also include bids
for all items notated.
Reconveyance
A condition called reconveyance is the result of a property being conveyed with issues that
render the property unacceptable to HUD. This happens when a Vendor reports a property is
ICC when it is in fact, not ICC. Reconveyance takes place at the expense of the Vendor who
failed to identify the Conveyance Condition issues in order to remedy prior to conveyance.
Any losses incurred by the Client may be charged back to the original Vendor who claimed
ICC status incorrectly.
Post-Conveyance Condition
Once a property has conveyed to HUD, it is placed in
what is called “Post Conveyance Condition.” This is
most similar to the REO concept of Marketing
Condition, meaning the property needs to be placed in
a condition to sell on the open market. This involves
repairs that are considered “cosmetic” including
painting, carpet replacement, appliance replacement,
etc. Submit bids to make the property attractive,
appealing, and comparable to other homes in the
neighborhood.
Change both knoblocks and existing
deadbolts when securing FHA property for
HUD.
Replace the locking mechanism on the
specified entry doors to the key code listed
on the work order.
• Initial Secure (Pre-Sale) – One
entry door as specified on work
order
• Final Secure (Post-Sale) – All
entryways that provide
immediate access to the living
area, attached garage, or
basement
If antique hardware exists, do not remove the hardware
and instead secure with a padlock and hasp if no other
locking mechanism exists. Provide clear documentation
including photos that substantiate why a knoblock or
handle set could not be utilized.
• Caution is to be exercised when removing
locksets and replacing locking mechanisms. Do
not damage or otherwise cause deterioration of
the door upon which work was performed
• Document key codes and location of doors on
the completion side of the “Bid/Completion”
page in PPW
Additional Securing Guidelines:
Windows and Doors: Do not brace or nail windows or doors shut. Replace locking
mechanisms on windows or doors if inoperable or missing.
Sliders: Double lock sliding doors as needed.
Detached/Attached Garage Doors and Outbuildings: Should be secured with a padlock
and hasp if no other locking mechanism exists.
Overhead Garage Doors: If an automatic garage door opener is present, unplug it and
leave the remote key in a kitchen counter drawer. Secure OVH garage door on the interior
by installing a padlock in the track if no other mechanism exists. Doors need to be left in a
condition that allows for opening and closing without use of an automatic opener when
the padlock is removed. If the door is broken and will not open manually, submit two bids:
One to repair and one to replace.
Boarding and Re-Glazing Guidelines
Provide bids to re-glaze all broken windows.
Include location of each window, dimensions
per window, steps needed to re-glaze and
materials to be used when bidding to reglaze.
Boarding is not to be completed unless
written approval is received or work order
instructions say to board and BATF.
Only bid to board if required by local code or in high vandal areas.
Pool/Spa Securing
Secure pools with a cover that prevents entry, either deliberate or accidental. Use of a
standard tarp held down by sandbags or bricks is not acceptable. Pool safety covers
should meet the American Society for Testing and Materials F1346-91 standard which
requires that a pool cover be able to hold a minimum of 485 pounds per five square
feet. If local ordinance requires the pool to be maintained, provide bids for monthly
maintenance including utility activation needed and contact information for local
utilities.
Provide bids to remove above-ground
pools only if they are in poor condition, if
they cannot be covered, or if they add no
value to the property. If applicable, bid to
fill in the depression.
What is Debris?
Debris includes:
• Home improvement materials that match the structure or color of the house
such as bricks, tile, and shingles.
• Items of no value not considered personal property including household
cleaners, laundry detergents, soap, health and beauty products, cat litter, boxes,
bags, etc.
Debris does not include:
• Free-standing appliances such as refrigerators, air conditions, washers, dryers,
and permanently affixed vanity mirrors.
Everything other than appliances or fixtures connected to the property is to be removed.
Do not remove any debris, hazards, or personal
property without prior written approval.
• Submit bids to remove interior & exterior debris,
hazards, and personal property in cubic yards
• Provide an itemized list of debris, personals,
and hazards in the comments
• Exterior debris includes all items outside the property’s main structure. Also includes
items in sheds, detached garages, etc ONLY if the outbuilding is unsecure
• Interior debris includes all items found inside the property’s main structure and any
secure outbuildings. Includes rooms, closets, cabinets, attics, basements, garages, etc.
Hazards
All hazards are to be bid in cubic yards as a separate line
item as debris. Bid at the HUD allowable for debris
removal unless local codes require special disposal
procedures. Hazards include but are not limited to:
- Paint cans
- Tires
- Raw food/garbage
- Cleaning chemicals
- Pool chemicals
- Any other chemicals
- Glass, glass panes, broken light bulbs, etc
- Anything that poses a health risk
Properties can no longer be considered in conveyance condition if there is a tarp on the
roof of a property, regardless if the tarp was pre-existing. If a tarp is present, provide a
bid to repair/replace the roof. HUD now requires that an active leak be repaired or
patched prior to conveyance.
Roof Repair
Include dimensions of damaged area(s),
dimensions of repair area(s), location(s) of the
damaged area, materials to be used including
but not limited to shingle type & rating,
sheathing, underlayment, flashing, drip edge,
and vent system when providing a roof repair
bid.
If any interior damages exist due to the roof
leak, submit a bid to repair the damage on a
separate line item.
Refer to your work order for more specific
details regarding procedures. Some Clients
have allowables to tarp and BATF, some do
not. Always refer to your work order.
Winterization season for all states is October 1 – March 31. Early or late winterizations
can be performed due to climatic conditions.
For more detailed information on completing winterizations, see the Winterization
module or refer to documents in “Forms & Docs” in PPW.
The new Mortgagee Letter 2010-18 requires the following types of written
documentation as justification:
• Local Codes/Ordinances requiring procedures which vary from standard HUD
expectations
• Reports from www.weather.com documenting climatic conditions outside of
the October 1 – March 31 season
• Crime statistics or police reports when needed
Photo Documentation
Photo documentation is critical to establish both the property’s condition and as
documentation of the work performed at the time of service. Provide before, during, and
after photos from the same angle clearly demonstrating all work completed.
• Provide photos of the street sign, front of the property, property address,
exterior walls, front and back yard, roof, basement, garage, detached
buildings, porches, attic, and all interior walls.
• Provide wide-angled shots of every interior
room that depicts ceilings, floors, and appliances.
• Provide photos of all damaged areas and
violations and submit bids to repair when
applicable.
During this module you learned about:
• Conveyance Condition
• Securing
• Debris
• Roof
• Winterization
• Documentation