Effective July 13, 2010
All FHA Approved Servicers
FHA has consolidated and updated property and preservation (P&P) guidelines for foreclosed properties. Key guidelines outlined in the mortgagee letter follow:
- A servicer may request approval for specific expenses that exceed the maximum allowable, only if total P&P costs exceed $2,500 for the property. (Exhibit B of ML 2010-18 provides the maximum allowable reimbursement for each P&P service.)
- Mortgage Compliance Manager (MCM) administers all preservation activities. Servicers must use the web-based portal P260 for requests and notifications.
- Servicers are reminded that they are responsible for three types of inspections: occupancy, initial vacant property, and vacant property inspections.
- Prior to conveyance to HUD, the property must be in “broom-swept” condition and undamaged by fire, earthquake, flood, hurricane, and/or tornado.
- HUD will hold servicers responsible for failure to preserve and protect the property in accordance with P&P requirements. In addition to surcharges for P&P non-compliance, HUD may pursue other enforcement actions.
Exhibit A of ML 2010-18 servicers details requirements for P&P. The requirements include:
- Before and after digital photos
- Guidelines for securing the property
- Roof repairs
- Pools, hot tubs and spas
- Yard maintenance and snow removal
- Claim procedures, requests for extensions, reimbursement appeals, and record retention
How does it change or benefit the industry:
This mortgagee letter provides a concise source of updated guidelines for property preservation requirements when a mortgage secured by FHA insurance is foreclosed and the lender plans to convey the property to HUD. The maximum allowable costs, the inspection and condition requirements, and the communication process with HUD is clearly outlined is this mortgagee letter.
About this AllRegs HUD Mortgagee Letter Synopsis: