In January, industry leaders from HUD, the MBA, the mortgage servicers and the field service business met in Washington DC to discuss upcoming changes to be implemented by HUD in 2009. The following are notes from that meeting provided by our Government/Industry Liaison Committee Chairman, Robet Klein.
HUD Update
By: Robert Klein, CEO Safeguard Properties
Chair, Government Liaison Committee
At the January meeting of the HUD P&P Working Group, Vance Morris, HUD’s Director, Office of Single Family Asset Management, outlined key initiatives for 2009.
The first and most significant initiative for the property preservation and servicing world will be the implementation of the M&M III contracts. Two major changes will come under M&M III.
The first change is the centralizing of mortgagee compliance in the National Servicing Center in Oklahoma City. Centralization will provide a huge benefit for servicers, as they will now have only one place to submit bids, compared with twelve currently.
A single compliance vendor will receive and respond to all servicers’ property preservation requests. Under the scope of work, the vendor will be required to respond to P&P requests within 48 hours. HUD also is in the process of procuring services from a system provider to allow servicers to submit over allowables and extensions electronically.
Centralization of compliance and the system enhancements should provide more consistency to servicers and allow them to complete work within the HUD required timeframes. In addition, the centralization offers consistency in bid approvals and requests for information, which will ensure that field contractors receive consistent information and instructions.
The second major change is that HUD will increase the number of M&M contractors in each market and will begin awarding assets on a new performance-based system. Under the new system, M&M contractors will be evaluated on a range of criteria, including the quality of their work, how quickly properties are sold, and HUD’s recovery cost in the sale of each asset.
HUD’s goal in implementing this performance-based system is to infuse competition to sell properties faster and at a fair price for HUD. It also will help manage volumes in markets with the highest concentration of properties, such as Ohio and Michigan.
Solicitations for the mortgagee compliance vendor will begin in February. The scope of work for the M&M III contract is expected to be released this spring. With the majority of current M&M contracts expiring in July and August, HUD is expecting to complete the transition by October 1, 2009. Once the transition takes place, servicers will submit all property preservation requests to the single vendor in Oklahoma City.
Mr. Morris also discussed two other initiatives.
In the coming months, HUD will review and implement standard cost structures for many of the property preservation costs incurred today. HUD is reviewing software alternatives and companies at this time, and hopes to implement the pricing matrix concurrent with the M&M III contract transition.
Additionally, HUD will release a clearly defined conveyance standard to servicers and M&M contractors. HUD expects the conveyance standard to include “broom swept” condition and removal of all interior debris. HUD is making this change in an effort to receive properties in better condition so that they can be marketed faster once they have been accepted into the M&M’s inventory.