HUD Guidelines
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This Mortgagee Letter provides updated consolidated property and preservation (P&P) guidance for foreclosed properties that had been secured by FHA-insured mortgages, and provides cross-references to the compliance requirements within HUD handbooks, regulations and current P&P guidelines. This Mortgagee Letter:
Changes the process requirements for over-allowable expenses, including; o Setting a per property allowable cost limit; and o Mandating submission of all documents to the Mortgagee Compliance
Manager (MCM) through HUD‟s P260 system; Emphasizes FHA‟s current conveyance condition standards; and also,
o Re-introduces requirements for removal of interior debris and maintain the property in broom-swept condition; and
Reminds servicers of FHA‟s inspection requirements.
This Mortgagee Letter and its attachment (Exhibits A and B) supersede Mortgagee Letter 2008-31 (and its attachment) in its entirety.
Effective Date of Mortgagee Letter
The requirements presented herein are effective on July 13, 2010.
Changes to Over-allowable Requests
Pursuant to the guidance issued herein, a mortgagee may request over-allowable approval from HUD only if its property and preservation costs exceed $2,500 per property. This $2,500 property and preservation amount does not include one time major repair items – e.g. roof replacement and demolition. Exhibit B to this Mortgagee Letter lists the new maximum property preservation allowable cost schedule, which also includes a per item cost maximum. Property and preservation charges that exceed $2,500 per property must be pre-approved by HUD‟s MCM through the web-based P260 internet portal. The process for over-allowable approval is described in Exhibit A, Section 1, page 5.
VA GUIDELINES
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1. Purpose. This circular describes minimum requirements for the inspec-tion of properties securing VA-guaranteed home loans and the mainten-ance, preservation, and repair of any properties found to be abandoned. Additionally, this circular contains a table of the maximum fees that will be reimbursed by VA for those services in a claim under the loan guaranty.
2. Background. In the past, VA Regional Loan Centers provided annual releases detailing the requirements for property preservation and tables of maximum reimbursable amounts for services in their areas of jurisdiction. With the transition to the VA Loan Electronic Reporting Interface (VALERI) environment and to a nationwide jurisdiction, this is no longer practical. Therefore, this circular is issued to provide nationwide guidance and a single property preservation fee schedule.
3. Exhibits. Exhibit A describes VA policy on property preservation and Exhibit B is a table listing the maximum amounts to be reimbursed by VA on a claim under the guaranty. VA will review these policies and amounts at least annually and issue new guidance as appropriate.
4. RESCISSIONS:
a. Circular 26-08-9 is hereby rescinded.
b. This circular is automatically rescinded January 1, 2012.
By Direction of the Under Secrtary