Reaching Out to Mortgagees for Stronger Partnerships Issue 10. July 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: http://www.mcbreo.com/mortgagee-compliance-manager-mcm.html For suggestions on topics to be published in MCM UpDate, send them to: [email protected].

Important Information In This Issue

Page Mortgagee Letter 2012-11 – effective August 1, 2012 Documentation to Satisfy ML 2012-11 Requirements Unapproved Delays in Property Conveyance Occupied Conveyance Notice to Occupant of Pending Acquisition – Letter Template Evictions While An Occupied Conveyance Request is Pending Postings on Properties Not Yet Conveyed Stating HUD Ownership

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Claims Without Conveyance of Title (CWCOT) Program

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Reconveyance Acceptance Procedures Resources and MCB Contacts

7 10

5 5 6

Mortgagees: Be sure the MCM has your up-to-date and correct contact/email information so you receive all notices regarding occupied conveyance, demands, reconveyances, appeal responses, etc. See page 10 for MCM contacts.

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Effective August 1 - Mortgagee Letter 2012-11 On June 20, 2012, the U.S. Department of Housing and Urban Development published Mortgagee Letter 2012-11 that will take effect on Wednesday, August 1. ML 2012-11 will supersede portions of ML 2002-19 and provides clarification on title approval at the time of conveyance, specifically as it pertains to: • • • •

Unpaid taxes Condominium Homeowners’ Association Fees Unpaid utility bills Manufactured Housing Titles

All other requirements within ML 2002-19 remain in effect: • Internal Revenue Liens • Code Violations • Property Condition at Conveyance The effective date is Wednesday, August 1, 2012 27011A Claims that are submitted beginning August 1 must meet the new requirements.

Key Changes for Mortgagees: • Mortgagees must pay all outstanding taxes, HOA fees and utility (water, sewer, electric, gas, waste, etc.) charges up to the date of conveyance. • Mortgagees must provide statements in the Mortgagee Comments section of the 27011A to certify that 1) payment(s) was (were) made, amount(s) and 2) the time period(s) covered. • Documentation to support all payments must be included with the 27011A submission. See page 4 for examples of acceptable documentation. • A property that conveys with outstanding fees still owed to the taxing jurisdiction or HOA may result in reconveyance of the property back to the Mortgagee. • Title evidence for manufactured housing must be documented in the Mortgagee Comments section of Form 27011A.

Special Note: Extensions of Time will not be granted in order for Mortgagees to gather supporting documents or provide final payments to these agencies.

HUD Field Service Managers – please continue to send outstanding HOA and/or utility bills for review to: [email protected]. The MCM staff reviewing the incoming email requests will distribute internally as appropriate.

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Effective August 1 - Mortgagee Letter 2012-11 (continued)

Submitting a Complete HUD-27011 Part A Package – HUD Handbook 4330.4, Chapter 2 a. Copy of the Part A o ML 2012-11 now requires certification of payments to HOA, tax and utility agencies (as applicable) to be stated in the Mortgagee Comments section. b. Copy of the deed to HUD filed for record c. Copy of the Mortgage Insurance Certificate d. Copies of the last tax bills paid to each taxing authority o ML 2012-11 now requires HOA and/or utility documentation e. Copy of HUD’s letter approving damaged conveyance of the property under 24 CFR 203.379 (a), if applicable f. The Mortgagee’s certificate that the conditions of 24 CFR 203-379 (b), relating to the fire damage have been met, if applicable g. Copy of the documentation that will verify appropriate action was taken to protect and preserve the property, if applicable Upload the package to P260. As stated in the Mortgagee Letter, any questions should be directed as follows:

To obtain a copy of ML 2012-11, go to this link: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/letters/mortgagee

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Documentation to Satisfy ML 2012-11 Requirements It is important to provide documentation that will support the payment of taxes, HOA and utility fees. Similar to the requirements of the Part D tax submissions all along, as long as dates, dollar amounts and the nature of the charge is clear, most any type of documentation will suffice. Examples include: • Check copies • Screen shots from accounting systems • Loan history Be sure to include the information in the Mortgagee Comments section of the Form 27011A. More on Documentation… You will find more information about how to provide the right documentation to support pre-conveyance requests, claimed expenses and appeals in the following past issues of

July 2010 ● December 2010 ● January 2011 ● April 2011 ● June 2011 ● March 2012 To download past issues of MCM UpDate, go to MCB’s web site: http://www.mcbreo.com/mortgagee-compliance-manager-mcm.html

Unapproved Delays in Property Conveyance Mortgagees who fail to foreclose and convey a property within the timeframe allowed within HUD guidelines and regulations run the risk of reconveyance or incurring added expenses via a demand. If additional time is needed to convey a property due to reasons that are outside of the Mortgagee’s realm of control, a request for extension of time should be submitted through P260, along with sufficient documentation to support the request. HUD should not be liable to reimburse expenses that accrue unnecessarily on those properties that are held up in the conveyance process due to Mortgagee-caused delays, and may exercise the authority outlined in HUD Handbook 4330.4, 2-11 Protection and Preservation of Properties:

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Notice to Occupant of Pending Acquisition – Letter Template The letter template for the Notice to Occupant of Pending Acquisition that was attached to Mortgagee Letter 2012-06 needs a slight modification before the Mortgagee sends to the Mortgagor. At the top of page 2, insert the address of the MCM – not the Mortgagee’s address. This information will not vary from letter to letter, so we suggest Mortgagees re-create the template with this information.

Insert the MCM address here: Michaelson, Connor & Boul Attn: Occupied Conveyance 4400 Will Rogers Parkway, Suite 300 Oklahoma City, OK 73108 Remember to upload the letter to P260 under Pre-Conveyance, Subcategory: “Notice of Pending Acquisition Mortgagee”. Any hard copies mailed to MCB will be returned to the Mortgagee.

Evictions While an Occupied Conveyance Request is Pending There has been a noticeable trend of eviction actions taking place while a request for occupied conveyance is pending with MCB. Upon receipt of a request for occupied conveyance, MCB immediately notifies the Mortgagee via email through P260 that a request was received, and to hold any eviction proceedings until the Mortgagee is notified that the occupied conveyance request was approved or denied. We are finding that the Mortgagee is not forwarding this notification to their foreclosing attorneys, or other parties contracted by the Mortgagee for eviction services. This is resulting in a panicked mortgagor calling MCB while authorities are on-site to carry out the eviction. MCB then attempts to make phone contact with the Mortgagee in order to provide the authorized stop to the eviction. It is often at this time that we discover that our contact person within the Mortgagee’s office has moved, leaving us with no contact for occupied conveyance. Mortgagees need to heed the communications issued to them regarding occupied conveyance! Also, please be sure that we are kept current with the proper contacts – which includes, name, phone number and email address. Please send contact changes and updates to Greg Nelson, MCM Occupied Conveyance Supervisor at [email protected]. MCM UpDate from MCB

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Postings on Properties Not Yet Conveyed Stating HUD in Ownership Several Mortgagees (or their vendors) are posting notices on properties, or providing communications to Homeowners’ Associations, property managers and/or local municipalities that state HUD is the owner of a particular property. The problem is – the property has not yet conveyed to HUD, and is oftentimes only in the very early stages of pre-conveyance.

Mortgagees are expected to remain responsible for properties up to the time of conveyance, and should not publish such erroneous information. Inquiries of this nature by HOA’s or others that are made to the MCM regarding a property in preconveyance are being referred back to the Mortgagee.

Claims Without Conveyance of Title (CWCOT) Program Lenders who are participating in the Claims Without Conveyance of Title (CWCOT) Demonstration Program need to provide the MCM with certain information in order to alert us to those loans that fall under this program and to enable us to determine the allowable amount of the title policy. When submitting the title package for a CWCOT loan, please follow these few instructions: •

When uploading the title package to P260, put a note in the description that this is a CWCOT case. For example:

•

Place a note on the cover letter of the title package indicating the case is part of the CWCOT Demonstration Program. It is extra helpful to circle or highlight this info to call attention to the Program.

•

Proof of the Fair Market Value, so we can verify the accuracy of the amount of the title insurance. This can be a copy of the HUD Form 91022 OR a copy of the appraisal that you used to determine the Fair Market Value.

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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 ([email protected]) an e-mail 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 e-mail MCMReconveyance ([email protected]) to notify. 7. The MCM will then send one e-mail 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 27011 to Nettie James, HUD, 451-7th Street NW, Room 6251, Washington, DC 20410 with the words “Re-conveyance” written at the top and description. Claim is to include a copy of the final email approval issued by MCB*

At this point HUD has accepted the property back into inventory.

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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 email notification through P260 to: [email protected]. • Upload photos and inspection findings in P260 under the appropriate categories for inspections and/or photos. • Format the Subject Line of the email as case number and “damage”. For example, “123-456789 Damage” • In the body of the email, 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. Continue to send HOA and Utility issues to: [email protected] How to Determine the Status of a Reconveyance • Check the email 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

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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 email to [email protected]. o If there are multiple charges for different expenses for the same case, send only one email and list all the charges to be itemized – not a separate email for each charge. • Format the Subject Line of the email as case number, reason for demand and dollar amount. Example: “123-456789: Water Charge, $15.75” • In the body of your email, 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 Email Boxes are for Notification Only! Be sure to upload the attachments to P260 – do not send with the email. No need to send screen shots of P260 within your email; 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: [email protected]

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Resources 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

http://www.mcbreo.com/mortgagee-compliance-manager-mcm.html http://www.mcbreo.com/mortgagee-compliance-manager-mcm.html [email protected]

Contact List for FSM and AM Contractors

http://www.hud.gov/offices/hsg/sfh/reo/mm/mminfo.cfm

Yardi Help Desk for P260

[email protected]

[email protected] [email protected] [email protected] [email protected] [email protected] http://www.hud.gov/offices/hsg/sfh/nsc/mcm.cfm http://www.hud.gov/offices/hsg/sfh/nsc/mcmfaqsII2010.pdf

MCB Contacts Preconveyance, Surcharge and Emergency P&P Requests Susan Sipe (405) 595-2024 [email protected] Justin Park (405) 585-2023 Justin.park@mcbreo,com Ryan McDoulett (405) 595-2025 [email protected] Part A Claims Leana Lim (714) 230-3620 [email protected] Part BCDE Claims Sheree McClure (405) 595-2032 [email protected] Title Gwen VanEvery (405) 595-2016 [email protected] Reconveyance/Reacquisitions Cynthia Diaz (714) 230-2390 [email protected] Appeals for All Request Decisions, Demands and Reconveyances Dustin Harjo (405) 595-2012 [email protected] Occupied Conveyance Greg Nelson (405) 595-2020 [email protected]

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