Important Information In This Issue

Transcription

1 Reaching Out to Mortgagees for Stronger Partnerships Issue 9. March 2012 MCM UpDate is published by Michaelson, Connor & Boul to provide news, information, and tips on how Mortgagees and Servicers can avoid the issues that cause delays in processing property conveyance to HUD. Our communication goal is to help Mortgagees and Servicers improve the way requests are submitted, not only increasing the opportunity for approvals, but receiving the decision more quickly. MCB is also reaching out to fellow HUD Contractors by including relevant mortgagee compliance topics for Field Service Managers and Asset Managers. For past issues of MCM UpDate, go to MCB s website: For suggestions on topics to be published in MCM UpDate, send them to: mcm-info@mcbreo.com. Important Information In This Issue Page Make the Most of Your Overallowable Request 2 Winterization and Thawed Properties 3 Surchargeable Damage Requests 3 New 2012 Grass Cut Pricing Schedule/Calculation Examples 3 Grass Cut Calculation Examples Using the 2012 Cost Schedule 5 Part BCD Claims Subcategory 6 Proper Claim Submission Avoids a Demand Best Way to Appeal 6 Photographs A Critical Element of Documentation 8 Reconveyance Acceptance Procedures 10 Resources and Contacts 13 Attention FSM s! Important Info on Pages 11 and 12 MCM UpDate from MCB March 2012

2 Make the Most of Your Overallowable Request Items Needed for Structural or Foundation Repair First and second itemized bids on licensed/qualified contractor letterhead with information or recommendations that support the work; should also support that the work is necessary and time sensitive (cannot be delayed until after conveyance). Major bids for structural issues should have the origination appraisal attached. Clear explanation of the cause of damage, with relevant photos that pertain to the damage and its cause. Items Needed for Major Violations Any and all correspondence with the city of code enforcement stating what is critical to repair, and what items may be delayed until property is ready to be re-occupied (that can be addressed after conveyance.) Items to include on Occupied Property Requests: Documentation to show the Protecting Tenants at Foreclosure Act (PTFA) applies at this property. The Mortgagee s attorney must review to ensure a copy of a bona fide lease is provided that abides by the terms in the PTFA. Additionally, the payment history and state statutes of tenant rights should be provided. Overallowables Appeal vs. Resubmit. Sometimes during the initial review, we need additional information or documentation in order to make a decision. In these cases, we must deny the OA in P260, with an explanation of our need for further documentation, such as in this example: Instead of resubmitting a new request as instructed, many Mortgagees are appealing the same OA with the required documentation. This practice actually works as a detriment to the Mortgagee. Here s why: The MCM has two separate groups who review Overallowables: 1. the Preconveyance team reviews and renders first decisions on the initial requests, and subsequent resubmittals. If the Mortgagee wishes to dispute the decision, the Mortgagee has the option to appeal. 2. the Appeals team is an escalated level, who reviews and renders decisions on appeals only. When a Mortgagee submits an appeal instead of resubmitting a new OA request as instructed, the first decision is rendered by the Appeals group. Once this group renders a decision, there are no further opportunities for appeal. So, essentially, your request would be reviewed and decided once. Resubmit a new OA when instructed, and provide the required documentation in a new request. MCM UpDate from MCB March 2012

3 Winterization and Thawed Properties Winterization season is from October 1 through March 31 (unless climactic conditions require extended treatment periods); refer to Mortgagee Letter for requirements. The MCM is getting reports from several Field Service Managers (FSM s) of an increase in property damage caused by frozen pipes that have burst. The following summarizes Mortgagee responsibility: If the property is not secured or winterized timely, any damages (such as water damage, plumbing damage and thawing expenses) associated with the freeze damage will be remediated at the Mortgagee s expense prior to conveyance. If freeze damage is discovered at first time vacancy and the property was secured timely, the Mortgagee should file an insurance claim in an attempt to recover funds for repair. If freeze damage is discovered at first time vacancy, we will consider bids to thaw the lines. The mortgagee should winterize if the plumbing has minor damage. If the plumbing is damaged and causes water damage, yet the insurance company denies the claim for legitimate reasons, the mortgagee will need to submit a surcharge request to convey as is with freeze damage. At this point, the Mortgagee needs to ensure that all visible broken or damaged plumbing is capped to prevent future damage. Surchargeable Damage Requests We are seeing that Mortgagees are submitting surcharge requests to convey properties as is with damages, stating the insurance claim was denied, but then not providing the insurance documents. We need insurance documents (settlement or denial) whenever they are applicable on surcharge requests. HUD Announces New 2012 Grass Cut Cost Schedule For most states, initial grass cuts are allowed between April 1 and October 31. HUD has provided a new Grass Cut Schedule for 2012, which was proposed by the Mortgage Bankers Association (MBA) that supersedes all other cost schedules. A copy of the new Schedule is on the following page. Height is allowed for within the initial grass cut schedule pricing. You can also obtain a copy in the updated FAQ s for ML on HUD s website at: See page 5 for grass cut calculation examples. MCM UpDate from MCB March 2012

4 HUD s 2012 Grass Cut Cost Schedule Use stated price for 15,001 to 25,000 sf, then $25 per add l 10,000 sf MCM UpDate from MCB March 2012

5 Using the Grass Cut Schedule to Calculate Cost to Lot Size Before you calculate and submit your Overallowable (OA) Request: Do not include the size of the home as part of the lot size. Consider large trees that will reduce the amount of ground to be mowed. Read the comments in the OA decision carefully for any special instructions; for example, in the case of a very large lot, you may be directed to mow the perimeter only. Scenario #1 Initial grass cut for a property with a lot size of 14,000 square feet in California. Formula Total Base 10,001 to 15,000 = $120 Additional None 0 Total $120 Scenario #2 Initial grass cut for a property with a lot size of 54,692 square feet in Iowa. Formula Total Base 15,001 to 25,000 = $130 Additional 54,692 25,000 = 29,692 10,000 = 3 x $25 = 75 Total $205 Scenario #3 Grass Re-cut for the same property in Iowa. Formula Total Base 15,001 to 25,000 = $125 Additional 154,692 25,000 = 29,692 10,000 = 3 x $25 = 75 Total $200 MCM UpDate from MCB March 2012

6 Sub-Category in P260 for Part BCDE Claims Allows Separate and Independent Attachment Uploading of Supporting Documentation Yardi has added a sub-category under the Form 27011B that will allow the uploading of attachments containing Part BCDE supporting documentation (photos, docs, etc.) before the Part BCDE Claim is submitted. This is of particular benefit to Mortgagees who utilize separate (and multiple) vendors to provide relevant documentation to support their claim. The Part B-E Claim forms should continue to be uploaded to the Part B,C,D,E Sub-category. If your supporting documentation is part of the same file as the Claim, then it should be uploaded to the Part B,C,D,E Sub-category. Do not upload the Part B-E Claim itself to the Supporting Documentation sub-category. The Supporting Documentation Sub-category is to be used for photos, and other relevant documents only to support the expenses on the Claim. Submitting All Documentation with the Claim Avoids a Demand But When You Do Receive a Demand.Here s How to Appeal HUD and the MCM encourages that all documentation to support claim submissions are complete and correct. Correct claims submissions greatly reduces the chance that a demand will be issued. However, when the claim review results in a demand, the Mortgagee has an opportunity to appeal. The MCM appeals staff receives and processes hundreds of demand appeals each week. We see a wide variety of appeal packages and documentation submissions that range from the clear and concise, to the sloppy and incomplete. Remember if we are unable to locate the information in your package to satisfy the dollar amount and reason for the demand, we will deny your appeal and uphold the demand amount. Here are some tips to help make your appeal review move more smoothly and quickly: 1. Be sure that all documentation is included to cover the entire amount of the demand. We have seen a number of appeals where the documentation submitted does not cover the entire dollar amount of the demand. When a demand is issued for both P&P and tax/insurance reasons, some Mortgagees are sending two separate appeals one from their P&P MCM UpDate from MCB March 2012

7 group/contractor, and one from their tax/insurance group/contractor. The MCM will review and respond to one appeal; don t jeopardize your appeal opportunity by submitting two separate appeals, and risking an amount upheld unnecessarily. Coordinate with your vendors and/or internal departments so that one appeal submission includes all documentation and appeal reasoning to cover all issues within the demand at the same time. 2. Submit only the documentation needed to satisfy the demand amount. There is no need to upload a 40 page document when the paid dollar amount(s) we are looking for is on one or two pages. Submit only the page(s) necessary that contain proof that the amount in the demand was paid. 3. Make sure the documentation clearly shows the dollar amounts and dates. It is extra helpful when the amount/date is highlighted or circled. Remember, the MCM reviews a wide array of formats, styles and documents, which vary from Mortgagee to Mortgagee. It is to your benefit to call attention to dollar amounts, dates, etc. on your documents; we can process your rescission more quickly and accurately. Circled or highlighted info enables quicker review and issuance of a rescission. Going through dozens of pages full of data, with no guidance from the person who submitted the documentation/appeal is like looking for a needle in a haystack. If we can t find the info to reconcile the claim line item, we will deny the appeal and proceed with collections. MCM UpDate from MCB March 2012

8 Sending s to 1. Subject Line: Enter FHA case number and type of appeal. P260 does not automatically populate this information. Without a case number, we are unable to pull your appeal in P260 to review. By placing the type of appeal next to the case number, we can assign workflow and process more quickly. Many Mortgagees are already doing this: Tax/insurance P&P HOA Utilities Combo (any combination of the above) 2. Save yourself a step. There is no need to send s to this box to: Request the review status of an appeal already submitted. A response will be provided once the appeal is worked. Advise that you are submitting payment for the demand. Photographs A Critical Element of Documentation! We emphasize the importance of photos over and over again as being a critical element to your supporting documentation. Depending on the type of transaction submitted, the quality of these photos can make or break the logic presented in your request, claim or appeal. Inspection photos to illustrate property maintenance/protection, photos accompanying a bid for work to be done or before/after photos to support completion of work. Photo Problems We Continue to See: No photos at all. Photos that are not date-stamped, or photos that do not support the bid for work. All photos in one attachment, not in chronological order. We are unable to tell the difference between inspection photos and contractor photos. Photos are too small, poor quality. MCM UpDate from MCB March 2012

9 Photo Quality Good vs. Poor These are actual photos, taken from real cases. Bad Good MCM UpDate from MCB March 2012

10 MCB Reconveyance Acceptance Procedure Returning a Property to HUD Inventory Please ensure the following items have been uploaded to P260 under Add Attachments - Title Evidence and 27011A: 1. Copy of the Preliminary Notice of Intent to Re-convey letter. 2. Copy of documentation proving the reason for the re-conveyance has been corrected; if it was for a mobile home issue, include any or all pertinent documentation (Affidavit of Affixture, Certificate of Title, Certificate of Attachment or Manufactured Housing Endorsement). For any other issue, whether it was a defective title issue or mortgagee neglect, submit all proof that the issue has been corrected to MCB/HUD s satisfaction. 3. All inspection reports with current photos of the property showing work completed to correct the original reason for the reconveyance. 4. Once all documentation has been uploaded to P260, send MCM-Reconveyance (MCM- Reconveyance@mcbreo.com) an with the case numbers of the properties and the reason for reconveyance to be returned to HUD s inventory. If approved the mortgagee will upload the following to P260: o A new 27011A with the words Re-conveyance written at the top and description ***Re-Conveyance***. o Proof that the deed conveying title to HUD has been sent for recording. Sufficient proof includes a copy of the deed and a copy of the check for the recording fees. o Please be advised that this property is under the care of the mortgagee until the deed is recorded into HUD s name and re-acquisition approval is issued. 6. After that information is uploaded to P260, the mortgagee will MCM- Reconveyance (MCM-Reconveyance@mcbreo.com) to notify. 7. The MCM will then send one that will include the following people: 1) the FSM advising the property has been promoted to a Step 1 and 2) Nettie James, Chief, HUD Review & Compliance Section to notify HUD that the claim can be paid and 3) a copy to the mortgagee. *Mortgagee will also send a new HUD Form to Nettie James, HUD, th Street NW, Room 6251, Washington, DC with the words Re-conveyance written at the top and description. Claim is to include a copy of the final approval issued by MCB* At this point HUD has accepted the property back into inventory. MCM UpDate from MCB March 2012

11 MCM Messages for the Field Service Manager MCM Requests for Surcharge Inspections/Estimates: When the MCM requests a surcharge estimate/inspection from the FSM, it is generally to determine the actual dollar amount of damage that exists at the property. In some cases the FSM s are sending back a recommendation to demo, or that the property is too damaged to repair and provides a demo bid. In these scenarios, we are already aware of the property condition and need the estimates to determine the potential dollar amount to demand from the Mortgagee. Please provide an itemized cost estimate to repair that is calculated by cost estimating software; this document will serve as supporting documentation to demands that are issued to Mortgagees. The current HPIR form being used with the cost to cure section filled out is not detailed enough and is not sufficient to be used as documentation to support a demand. Reporting Damaged Properties Potential Need to Reconvey Upon discovery of a damaged property, send an notification through P260 to: mcm-reportdamage@mcbreo.com. Upload photos and inspection findings in P260 under the appropriate categories for inspections and/or photos. Format the Subject Line of the as case number and damage. For example, Damage In the body of the , briefly describe the condition of the property. Place the property in a Step 3, HOM Code 7 in P260. The disposition must be approved by your GTR before it shows up in our queue. MCB will review, request additional documentation from the Mortgagee where necessary, and begin the reconveyance process (or issue a demand) if warranted. How to Determine the Status of a Reconveyance Check the history and/or the Communications Log in P260 for dates and type of communications that occur between the MCM and Mortgagee. For example: o Date of the Preliminary Notice of Intent to Reconvey o Date of the Billing Letter o Date of the Notice of Intent to Administrative Offset o Appeals submitted by the Mortgagee; Appeal decisions rendered by the MCM Placing Properties in Step 3 in P260. Although FSMs have the P260 capability to move properties in and out of HOM status, please do not perform this function for any Mortgagee related issue - leave this function to the MCM. It is the MCM s responsibility to initiate reconveyance when appropriate and the MCM will perform this step in P260. Upon doing so, we will notify the HOC GTR and the FSM. The FSM is responsible for preserving and protecting the property throughout the reconveyance process. MCM UpDate from MCB March 2012

12 MCM Messages for the Field Service Manager How to Send a Demand Request to the MCM: Upload supporting documentation to P260 as an attachment under the category Accounting and sub-category Reimburseables. Label the description as Supporting Documentation for Demand. Through P260, send an to mcm-demands@mcbreo.com. o If there are multiple charges for different expenses for the same case, send only one and list all the charges to be itemized not a separate for each charge. Format the Subject Line of the as case number, reason for demand and dollar amount. Example: : Water Charge, $15.75 In the body of your , state the amount that is due from the Mortgagee, and ensure the calculations are clear. Also state that supporting documents are in P260. Make sure your documents and calculations clearly support the dollar amount demanded. MCB will review your request and issue the necessary demands. The MCM Boxes are for Notification Only! Be sure to upload the attachments to P260 do not send with the . No need to send screen shots of P260 within your ; this adds to the file size. Field Service Managers can send suggestions for topics of interest and request additional personnel to be added to the MCM UpDate distribution to: mcm-info@mcbreo.com MCM UpDate from MCB March 2012

13 MCB Points of Contact MCM UpDate Issues MCB Customer Service Reconsideration/Rescission Requests: Demands/Reconveyances Voluntary Reconveyances Re-Acquisition (return a property to HUD inventory) Inquiries for Deed Recording Notification of Violations HUD Web Page on MCM HUD FAQ s for P260 Internet Portal Contact List for FSM and AM Contractors Yardi Help Desk for P260 Resources mcm-info@mcbreo.com mcm-appeals@mcbreo.com mcm-volreconvey@mcbreo.com mcm-reconveyance@mcbreo.com mcm-deeds1@mcbreo.com mcm-violations@mcbreo.com hudhelp@yardi.com MCB Contacts Preconveyance, Surcharge and Emergency P&P Requests Susan Sipe (405) Susan.sipe@mcbreo.com Justin Park (405) Justin.park@mcbreo,com Ryan McDoulett (405) Ryan.mcdoulett@mcbreo.com Part A Claims Leana Lim (714) Leana.lim@mcbreo.com Part BCDE Claims Sheree McClure (405) Sheree.mcclure@mcbreo.com Title Gwen VanEvery (405) Gwen.vanevery@mcbreo.com Reconveyance/Reacquisitions Cynthia Diaz (714) Cynthia.diaz@mcbreo.com Appeals for All Request Decisions, Demands and Reconveyances Dustin Harjo (405) Dustin.harjo@mcbreo.com Occupied Conveyance Greg Nelson (405) Greg.nelson@mcbreo.com MCM UpDate from MCB March 2012