Keynote Speaker Audio Laurie Maggiano Deputy Director, Office of Single Family Asset Management US Department of Housing and Urban Development, Washington, D.C. To resurrect the shattered lives of Hurricanes Katrina, Rita and Wilma victims, Keynote Speaker Laurie Maggiano urged the importance of cooperation, communication and understanding for success throughout the property p reservation industry. The Federal Housing Authority handles more than 300,000 mortgages with a $22.5 billion outlet of impaired loans in the FEMA-declared disaster areas eligible for individual assistance. These volumes make it imperative to develop cooperation and open communication lines to ensure the interests of all segments in the industry are protected. HUD continues to make a difference in the disaster areas and has already established a Resource and Recovery Center, along with task forces in Baton Rouge and Washington, D.C., all focused on addressing the after-effects of the hurricanes. HUD also released Mortgagee Letter 2005-41 to help clarify ways to initiate recovery efforts. ML 05-41 addressed inspection, extension, conveyance, moratorium a nd reimbursement issues that needed revision based on industry suggestions in light of the disaster. However, a disaster relief policy plan still needs to be cooperatively established to help better prepare the industry for future disasters. Introduction Audio Robert Klein CEO Safeguard Properties, Inc. Robert Klein opened the conference, reiterating the purpose of uniting all industry components to build a cooperative consensus. Despite representatives from different sectors, every attendee was there to speak on his or her own behalf to answer, ask or challenge questions, responses and policies. “We are not perfect. We make mistakes. At times we need clarification. Sometimes we are right, other times we are not right at all,” Klein explained of the mortgage field servicers. “But we must take responsibility for what we do and provide accurate information to our clients. That is the purpose of the conference. To get as much clarification as possible.” Panelists of the 2-day conference included representatives from Aurora Home Loans, CitiMortgage, Countrywide Home Loans, Wells Fargo Home Loans, Bank of America, Midland Mortgage, Superior, GMAC, HSBC, MCS, Fidelity Field Services, First American Default Outsourcing, Assurant Insurance, HUD, VA, Fannie Mae, Freddie Mac, the M&M contractors, and Safeguard Properties. Guest Speaker Audio John B. Breaux Louisiana State Senator Senator John Breaux, who spent more than 30 years in Congress, addressed conference attendees and explained that with more than 300,000 damaged homes, Hurricanes Katrina, Rita and Wilma created a disaster greater than any other in history. The magnitude of damage will make the task of restoring the area to normalcy very difficult. Referencing a study performed by Louisiana State University, Sen. Breaux said the hurricanes wiped out 11 years of job growth in the state and reduced the population by half a million people, which will most likely cause them to lose a Congressional seat. The state believed it was protected by a levy system built to withstand a Category 3 storm, so the area was heavily populated and built up based on the security and protection the government assured was available to the city. Sen. Breaux said the federal government has the ability to immediately assist these areas in light of the levy failures, but a lack of communication and delay in response led to the failure to stabilize the area. Sen. Breaux said the areas hit by the disasters should not bear the sole burden of funding recovery. The disasters hit the “United” States of America, which are just that - - united, not individual. Sen. Breaux suggested a national disaster relief plan, one that covers not only the victims of hurricane and flood, but also those in earthquake states like California, or tornado- prone areas like Kansas. The cost could be evenly absorbed by all states, and in turn available to all as protection in case of disaster. Future protection proposals are needed, Sen. Breaux emphasized, for assurance to residents in the damaged areas that they will be protected if disaster strikes again. The demolition process has also been a cause for concern to many lenders. In light of almost every municipality using a different system to flag properties for demolition and without concrete dates or information to support action, many servicers are concerned about protecting their interest in properties. Sen. Breaux reassured servicers that while properties obstructing relief efforts may be demolished, it is vital that states contact servicers before demolishing large areas. Sen. Breaux recognized the National P&P Conference as an excellent forum to share ideas and openly communicate. He concluded with “We will learn from this disaster; and if you don’t, it’s another disaster.” FEMA Representative Audio Mike Hirsch United States Department of Homeland Security Mike Hirsch broached issues of gathering and sharing information, processing claims and releasing funds. Robert Klein of Safeguard expressed concern for the lack of information sharing between the disaster area municipalities and the servicers. The industry is doing its best to address the disaster on-site, but servicers need access to inspection results and information. One of the challenges currently facing the servicers is municipalities refusing to release inspection information based on the privacy act. But Mr. Klein argued that because the servicer’s name is on the title with the borrower, it is the servicer’s right to know about a property they have vested interest in. Mr. Hirsch explained that he cannot provide a detailed answer about how to improve communication, but he can pass on aggregate data to anyone who calls his office. He can be reached at (202)646-4099 or by email at Michael.Hirsch@DHS.gov. Session I: General Disaster Issues Audio Hurricanes Katrina, Rita and Wilma have not only left damage and destruction in their wake, but many unanswered questions and issues on how to deal with these after-affects. Servicers broached multiple concerns and looked for guidance in how to deal with the most common uncertainties they now face. Moratoriums Audio Moratoriums on foreclosures are implemented to provide the borrower and the servicer “time and space” to preserve home ownership. HUD, Fannie Mae and Freddie Mac implemented a 90-day moratorium in the declared disaster area to freeze both active foreclosures and the initiation of any new foreclosures to allow the borrower and servicer time to adjust to damage. Foreclosure sale dates should be postponed if scheduled. The 90-day moratorium only applies to the initiation of new foreclosures for VA loans. Loss Draft Inspections Audio FHA, VA, HUD, Fannie Mae and Freddie Mac all have existing policies in place with instructions to servicers on the release of insurance funds to borrowers making repairs. All of the investors will be reviewing their existing loss draft instructions to ensure efficient and cost-effective measures are in place to protect the servicers, without limiting the resources to borrowers that want to repair and rebuild. A concern of the servicers is that the majority of repairs will fall below the minimum $15,000 initial release of funds. With a lack of licensed and qualified contractors in the disaster areas funds may be released without repairs being completed timely or correctly. Fannie Mae released Lender Letter 02-05 with clear instructions regarding the disbursement of insurance funds to borrowers. Freddie Mac released instructions to servicers regarding insurance proceeds in a September 7th bulletin. Details can be found at FHLMC Release of Insurance Proceeds. Rebuilding Efforts and Proposals Audio Several state and city politicians and non-profit organizations have proposed their ideas on how to rebuild the cities and affected areas. Three proposals are sound and have gathered credible backers to support the review by congress. National Flood Insurance Program/HR 3922, a bill that would allow mortgagors outside the FEMA-declared hazard flood zones to buy into the program now for retroactive coverage, remains pending. If the bill is not approved, many lenders and borrowers will be left with no way to care for or repair their properties. The cost of the retroactive insurance is costly to the borrower but would offer a solution for repairing or rebuilding. Articles in The Times Picayune and LA Times discuss a proposal for a Usufruct system that would allow the city to assume legal rights to properties in order to facilitate the rebuilding efforts and design of the city. The Usufruct system would not require the city or controlling municipality to coordinate with the lenders or servicers. This proposal has little support and backing but its root concept has influence on other proposals, including the Baker Bill. The Baker Bill, HR 4100 will establish a Louisiana Recovery Corporation [LRC] in which properties would be bought by the LRC and then sold to developers that would redevelop and market the property. This bill does not guarantee the loan would be paid in full, thus servicer and lender concern. However, this option may be the most cost- effective solution for the servicers and lenders. Definition of Vacancy Audio During the hurricanes, many residents were forced to evacuate their homes and property causing servicers to experience difficulty in distinguishing when a property is actually vacant or only temporarily vacant from evacuation. Investors have not issued guidance to servicers on how to proceed with securing these homes. Servicers are hesitant to proceed with securing and protecting their investment due to lack of instruction on how to asses the cost and legal implications of trespassing. Investors instructed servicers to document all contact attempts and correspondence and to use sound judgment when proceeding to secure any property in the disaster-affected areas. Interviewing neighbors and friends can provide information on the homeowner’s status. Not proceeding with securing and preservation of the affected properties will result in damages getting worse over time. It was recommended that servicers evaluate properties on a case-by-case basis and proceed with securing properties confirmed vacant by neighbors or contact with borrowers. However, servicers are hesitant to proceed with securing of current loans because no instruction has been given regarding reimbursement of the cost. Mold Remediation Audio With a moratorium on foreclosures servicers will not be conveying properties to HUD until after February 28, 2006. HUD policy only allows servicers to identify the cause of the mold and stop future growth, and does not allow for remediation. Mold will continue to grow and spread throughout the property after the water infiltration has bee n stopped (i.e. roof leak, broken pipes, etc.). Different interpretation of “stopping future growth” by the M&M contractors further complicates the issue. Several M&M’s require full remediation and others only require the cause of the mold to be addressed. HUD clarified that only the cause of the mold needs to be addressed. This is a concern of the servicers because as time passes, mold will continue to grow in homes and servicers run the risk of losing entire properties to mold damage. Waiting for clarified instruction only causes the problem to worsen. Servicers would like specific guidelines for treating mold to be developed to protect the servicers and investors from losing properties to mold. Mold is already present in the vacant properties in the disaster areas. If no action has been taken to remediate since the hurricanes then it is bound to continue to grow at a rapid rate due to the warm temperatures of the region. Conveyance of Uninsured/Unrepaired/Demolished Properties Audio VA and HUD are in discussions over their guidelines on conveying uninsured or unrepaired properties, but no changes have been implemented. Generally, properties must be repaired before they will be accepted in conveyance. If a shortfall exists in the money awarded in an insurance claim in comparison to the cost of repairs, there remains uncertainty as to who will cover the cost of repairs. Under the same idea, there isn’t clarity as to who will be accountable for the balance of the loan in the conveyance of demolished properties. Some of these properties will be redeveloped, keeping it from being a total loss, but at this point there is no local consensus to which areas are prime for rebuilding and which will be simply walked away from. Joe Schilling of the National Vacant Properties Campaign is working to connect lenders and borrowers with city code officials to alert all parties when a home is being demolished. For guidance or updates on this process, contact Joe Schilling by email at JMS33@vt.edu. Per HUD guidelines, properties demolished with no prior notification to the servicer will be accepted at conveyance with no additional repercussions to the servicer. However, documentation showing when the servicer became aware of the demolition must be provided. Demolished properties can be conveyed without prior approva l from HUDin disaster areas onlyas long as the supporting documentation is included. Due to outdated flood maps and requirements by FEMA, many of the affected properties did not require flood insurance as a contingency of the mortgage agreement. Home owner insurance policies will issue funds to cover the wind and water damage, but without the additional flood insurance many properties will not be able to be repaired to meet new city code requirement of raising the home above sea level. HUD and VA are reviewing options for servicers regarding properties with insufficient insurance proceeds to properly repair or rebuild prior to conveyance. Session II: Investor Specific Disaster Conce rns Audio HUD ML 2005-41 Audio The provisions of HUD ML 2005-41 are only applicable to the disaster-declared areas eligible for individual assistance. Inspections Audio An extension to complete inspections within a 60-day timeframe for properties within the disaster-declared areas has been implemented. Normal 25-35 day inspections for every area outside of the disaster zone have also been extended and need to be completed within 25 to 40 days. In addition, HUD will reimburse servicers an additional $15 for inspections performed in the disaster area, even if the property was inspected following Katrina and hit again by Rita, meaning it needed to be inspected two times within the 60- day window. Photos Audio HUD will reimburse servicers for up to 200 photographs per properties in the disaster- declared areas that qualify for individual assistance. Hazard Claims Audio In areas of disaster, the hazard claims process will be slowed because of the volume of claims. Conveyance extensions on properties awaiting the completion of hazard claims are anticipated and per HUD guidelines, should be approved. For now, any servicer requesting a conveyance extension from an M&M should be approved for 90 additional days. Changes to the deadlines may occur in the future, but for now, servicers should be filing extensions as soon as they are aware one will be needed. Second Bids Audio HUD policy does not require second bids for debris removal or non-debris removal bids in the disaster-affected areas. Emergency Repairs Audio The emergency repair allowable has been increased to $750 and is only to be used for roof repairs. Session III: M&M Best Practices Audio This session was designated as an opportunity for the M&M contractors to share their perspective and concerns with the servicers. Inaccurate Information Audio HUD forms, over-allowable request, and extension requests are often submitted to the M&M contractors with incorrect or incomplete case numbers and discrepancies in first- time vacancy and foreclosure sale dates. The M&M contractors request servicers to explain why a first-time vacancy date has changed on forms and requests submitted. A valid reason for first-time vacancy date discrepancies is when a property is reported vacant and a contractor is ordered to complete the initial secure, but upon his or her arrival, the property is found occupied and an eviction has to be completed. Timeliness of Bids Audio The M&M contractors requested servicers to submit both first and second bids together for approval, rather than separately. It is understood that not all second bids will be available at the same time as the first bid, but the five-day window M&Ms are required to respond to bids does not begin until the first and second bids a re received. Servicers may still be asked to provide second bids on work that the HUD guidelines do not require second bids, but M&M contractors evaluate loans on a case-by-case basis and may determine which work needs a second bid based on the history of the property or the photos provided. Servicers are not opposed to providing these second bids; however, extensions to convey should be approved to allot for the extra time that is needed to obtain the second bid. M&M contractors are receiving bids for work that is not required for conveyance and review of these bids create additional work for the M&M. Servicers are providing bids for items that could be considered mortgagor neglect because they have been asked to by other M&M contractors. There is no consensus between M&M contractors as to the definition of mortgagee and mortgagor neglect. Servicers also provide these bids as a safeguarding measure to ensure property damage or conditions are documented and avoid properties being reconveyed due to mortgagee neglect. Roof Repairs Audio Servicers are submitting bids to tarp without bids to repair. Or, servicers tarp for the allowable and do not proceed to repair. This triggers the M&M’s to reconvey the property due to failure to properly preserve and protect the property. Servicers advised that the value of the property does not always warrant the roof to be repaired. Some properties are valued at or less than the cost to repair or replace the roof. Servicers request that the M&M review the value of the property before forcing a repair or replacement. Mobile Home Conveyance Audio M&M contractors routinely receive mobile homes into their inventory without proper titling of the property and without the vehicle title being purged. Servicers agreed that this should not happen and recognize more diligence is needed when conveying mobile or manufactured homes. Winterizations Audio M&M contractors often find that all of the water is not being blown out of the pipes during the winterization performed. Servicers and field service providers recognize this is a requirement of the guidelines. However, older properties often have pipes and plumbing configurations that prevent this, therefore if the remaining water is minimal and does not contribute to any damages it should not be seen as a conveyance or non- performance issue. It is not always cost-effective to winterize a wet system, fill the system with antifreeze, and turn the heat on for older properties. Servicers requested that M&M contractors review the age of the property and boiler before proceeding with bid approval to restart the system per HUD ML 2002-10. Many cases warrant a system shutdown only. Code Enforcement Audio Properties are regularly received into M&M inventory with liens and city code violations. Servicers are expected to contact municipalities to check code compliance before conveying a property and make every effort to do so. However, cities may not record a lien or violation until after conveyance. These exceptions should be reviewed on a case-by-case basis prior to being re-conveyed back to the servicer. Additionally, some code violations and liens pre-date servicer control of the property. These violations and liens are claimable to HUD. Over-Allowable Requests Audio Illegible, hand-written over-allowable are often submitted to the M&M’s. However, several M&M contractors do not currently accept email transmissions. HUD will review the issue and work towards implementing electronic submission. NHMSI did state that they receive electronic forms from many servicers with links to photos and property condition information. They added that the forms submitted by Safeguard are user- friendly and efficient. Servicers would like bid approval to be submitted electronically as well. HUD and the M&M contractors agreed that this is a valid request and more efficient, however, the servicers are required to have a signed bid approval form in the file. Hazard Insurance Claims Audio Servicers are submitting bids to repair damages instead of filing an insurance claim. The review of these bids creates additional work for the M&M’s and causes additional delays in conveyance. Servicers advised that bids are provided as soon as reported to protect themselves against claims of mortgagee neglect even when the insurance claim has been filed. The M&M contractors would like to see detailed documentation regarding the length of time it takes to settle an insurance claim and the diligence of the servicer to follow up on the status of the claim. Servicers may convey un-repaired properties with non-surchargeable damage; however, servicers must still file an insurance claim and reduce the amount of their claim. Additionally, servicers must be absolutely sure there has been no failure on their obligation to preserve and protect their interest (including timely initiation of foreclosure) and disclose all damage details to HUD. Extensions Requests Audio M&M contractors are not permitted to grant extensions past 90 days for routine P&P work, such as, lock changes, debris removal, and boarding. Servicers agree and offered that extensions for these requests are a result of unusual activity at a property after the initial secure was completed (i.e. vandalism, additional dumping of trash, or the property becomes reoccupied). If a bid for work is approved by M&Ms, but servicers will not be able to complete the approved work before the conveyance date, an extension request should be filed. If the request is denied, servicers should still finish the work and handle the extension denial through the appeal process. M&Ms should give more detailed explanations when denying an extension request. HUD advised that if the M&M grants an extension request without proper authorization, HUD can deny the request and curtail the servicer for the interest. Conveyance Audio Work can be completed after the conveyance deadline but cannot be claimed for reimbursement. If the work was completed per bid approval after conveyance the amount can be claimed, however, interest cannot be claimed. This will be further clarified in an upcoming mortgagee letter. M&M contractors are receiving properties into inventory with tarped roofs even though approval was given to repair. Servicers responded that it is not always cost-effective to repair roofs of properties with low re-sale value. Properties can be conveyed with a tarp if conveyed within 30 days of foreclosure sale or first time vacancy. HUD stated that properties can be conveyed with normal household chemicals, such as a few cans of paint, laundry or dish detergent, or cleaning agents, and this will be even further clarified in the upcoming mortgagee letter. Session IV: M&M/HUD Issues Audio Second Bids Audio Although HUD guidelines only require second bids for debris removal, the M&M’s are requesting second bids for all types of work. In order to help reduce the number of second bids requested, servicers request that the M&M’s provide detail as to why a second bid is required so that they can build business rules and make the bid process more efficient. M&M’s would like the servicers to be more thorough in their review of bids and automatically provide second bids on any items that seem excessive. Servicers have been instructed to complete work per the second bid provided by the M&M’s contractors. Often the bids are not apples to apples and the servicer cannot complete the work for the lower amount. M&Ms have been authorizing their contractors to perform work on pre-conveyed properties and are requesting servicers to reimburse the M&M’s contractor for the work. These situations should be escalated to the GTR/HOC for review. HUD Offset Policy Audio As outlined in Mortgagee Letter 2002-19, servicers can rebut demand letters and if the appeal is denied, it can be escalated to the GTR. While the process is in appeal, an offset should not be issued. If the GTR denies the appeal for the demand letter they must provide a detailed reason to the servicer. However, M&M contractors are not required to forward the denial paperwork from the GTR. Mold Audio Servicers are required to recognize the cause of mold and stop the water infiltration, but not remediate mold in a property. However, even if the cause of mold is stopped, it will still continue to spread. HUD’s policy remains that it is the responsibility of the M&M contractor to remediate mold. M&M Contractors Entering Property Prior to Conveyance Audio M&M contractors are not permitted to enter a property pre-conveyance without the cooperation and authorization from the servicer. Servicers should escalate these occurrences to the GTR. GTR Approval Threshold Audio HUD policy does not require confirmation to servicers that extension request appeals were reviewed by the GTR, servicers requested that the GTRs response should be made available to the servicer upon request. Only over-allowable requests for surchargeable damage repairs exceeding $2500 need GTR approval. Servicers are not required to automatically submit second bids for bids exceeding $2500, however, the GTR can line item approve or deny these bids or request a second bid. Requests for Extensions to Convey Audio M&Ms are not permitted to approve extension requests on pending hazard claims beyond 90 days; however, in many cases, this is not enough time for a hazard insurance claim to be filed and settled. Servicers requesting extensions must provide a detailed reason for the request for an extension to convey beyond 90 days. M&Ms require documentation to support the reason for the request, or they will assume the servicer has not been utilizing due diligence to settle the claim and get a response from the insurance carrier. Special consideration will be given for claims in the disaster areas, but servicers need to explain that this is the situation when they are requesting the extension. M&M contractors should provide detail as to why the extension request is denied. Yard Maintenance Audio HUD policy does not allow M&Ms to give open-ended approval on re-cuts for the entirety of the grass cut season, but M&Ms should be able to approve a “per grass cut amount” per property. HUD guidelines require bushes to be trimmed at least once during grass cut season. However, if the bushes do not need to be trimmed at the initial grass cut, a servicer can wait until it is necessary. If bushes need to be cut more than once during the season, the work must be bid to HUD. Servicers would like clarification from HUD as to when shrubs must be trimmed. Servicers do not trim shrubs prior to conveyance if the shrubs or bushes do not impede walkways or cause a violation or deterioration to the property. Audio Administrative Remedy Report. (ARR) Non-Compliance Letters Audio M&Ms are not required to respond to ARR letters sent to the servicer. HUD policy allows the servicer to request documentation supporting an issued non-compliance or demand letter. When servicers respond to a non-compliance or demand letter, they should receive confirmation of its receipt and the documentation will be stored in the loan file. If a letter is resolved in a servicer’s favor, it will be removed from the Administrative Remedy Report. Marketable Condition Audio M&Ms issue non-compliance or demand letters for work that prevents a property from being in marketable condition, not convey condition, such as failure to remove garden hoses or rocks from the yard, repair holes in the walls, or minor ceiling damage. HUD requires servicers to repair all damaged items if the damage is covered by the hazard insurance claim. For example, if a hazard claim is filed to fix a leaking roof, any ceiling damage caused by the roof damage must also be fixed. HUD clarified that if a swing-set is in good, working condition and does not pose a city code violation then it is not required to be removed prior to conveyance. HUD also clarified that missing fixtures need to be replaced. Utility Transfers Audio M&M contractors are required to transfer utilities into their name upon conveyance. IF M&Ms fail to transfer or de-activate utilities at the time of conveyance, servicers receive outstanding utility bills in their name. If the M&M is not diligently transferring the utilities into their name servicers should escalate the situation to the GTR. Session V: Service r Best Practices Audio Bankruptcy Procedures Audio Current investors/insurers require servicers mitigate damages regardless of bankruptcy status. These requirements have lead to many lawsuits filed against servicers for violating bankruptcy laws and trespassing when taking actions to secure and protect the property. As a result of lawsuits, servicers are hesitant to take any action during bankruptcy status. It is recommended that servicers receive written permission from bankruptcy trustee prior to proceeding with any actions. Servicers that fail to secure and protect vacant properties in bankruptcy will be liable for damages as a result of mortgagee neglect. Servicers are required to have regular contact with bankruptcy trustees, therefore full knowledge of the status of the property. Because of this requirement, HUD will not reimburse for monthly property inspections during bankruptcy status. Pre-Sale Securing Policy Audio Currently the HUD guidelines do not distinguish between pre and post sale and require all locks to be changed upon vacancy verification to properly secure the property. However, servicers are hesitant to secure all locks prior to the property going to sale because of liability and the fear of trespassing lawsuits filed by the mortgagor. HUD recognizes the hesitation of the servicer; however, the vacancy clause of the deed should protect the servicer. Servicers would like additional clarification and instruction on proceeding with preservation work on properties classified as vacant and being maintained, vacant and secure, vacant and abandoned or unsecure. Servicers have been held liable for damages that occurred during maintenance and control of the property by a third party (realtor, management company, or condo associations). It has also been the experience of many servicers that vacant and secure properties are not always abandoned and uncared for, for example, vacation homes. These situations have also resulted in lawsuits for trespassing. It was recommended by one servicer that servicers request copies of the MLS or broker contract for all properties with an active listing on the MLS or posted for sale by a broker. This documentation should be provided as just cause for not proceeding to change locks or winterize a property. Likewise, maintaining frequent communication with the broker and documenting the file is crucial to avoiding claims of mortgagee neglect. Proper Documentation of Property Condition Audio Investor/insures recommend documenting the condition of the property with photos and/or video recording to reduce claims of mortgagee neglect. Photos provide “cheap insurance” to the contractor and the servicer. Every angle of every room should be photographed at the time of the initial secure, therefore, providing accurate FTV documentation of the property. While video recording is not a service performed by many field service providers, it is certainly an option that should be explored. Mobile/Manufactured Homes Audio Foreclosure attorneys should be responsible for assuring proper title of mobile/manufactured homes, however, they are reviewing loan origination papers, which are not always accurate. Most of the title and conveyance issues stem from incomplete or inaccurate loan origination. As a result of the loan origination issues, servicers rely on the field service providers to alert them of a mobile home status. Additionally, Freddie Mac provides a report of all mobile homes on file and it is recommended servicers review the report on a regular basis. It is an estimated that it costs $6000.00 to convert a mobile home titled as personal property to real property, not including the conversion of the title (this cost will vary by state and county). Servicers violate laws in some areas if they take action to secure the mobile home prior to it being converted to real property. Servicers should review these on a case-by-case basis with their legal counsel. City Code Enforcement Audio Representatives from several cities reiterated that the key to avoiding city code violations and citations is to keep the property clean, free of debris, and free of health and safety hazards. City code officials are willing to work with the servicers and resolve issues prior to issuing violation and citations but often do not know who the lien holder is. It is recommended that servicers post a notice on their vacant properties notifying the city who to contact in the event of vagrancy, debris, or safety hazards. Hazard Insurance Claims Audio It is the responsibility of the hazard insurance carrier to prove that an exclusion applies when denying a claim for damages. Servicers should be thorough in their detail and documentation when filing an insurance claim. In addition, servicers should not accept standard denials without explicit detail supporting the reason for the denial of the claim. Mold damage is covered by insurance policies when it is the result of a covered loss, such as flood, or roof damage that allowed water infiltration. Water leakage over a period of time, such as a small roof leak not repaired, is typically an excluded condition in the insurance policy, therefore the resulting mold would not be covered. Conclusion The growth of the industry is dependent on the ability of all sectors to come together, discuss and develop policies, guidelines and practices that best ensure the longevity of the industry. The second annual National Property Preservation Conference was successful in opening the lines of communication between the servicers and investors. Maintaining this communication and remembering “We’re all in this together. Let’s make it work!” are vital to future growth, improvement and success.
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